Integrated Goods and Services Tax Act
GST Law and Procedure – GST Law and Procedure [January, 2019]
GST
Chapter Twenty One
Integrated Goods and Services Tax Act
The introduction of Goods and Services Tax (GST) is a significant reform in the field of indirect taxes in our country. Multiple taxes levied and collected by the Centre and states would be replaced by one tax called Goods and Services Tax (GST). GST is a multi-stage value added tax on consumption of goods or services or both.
2. A “dual GST” model has been adopted in view of the federal structure of our country. Centre and States will simultaneously levy GST on every supply of goods or services or both which takes place within a State or Union territory. Thus, there shall be two components of GST as under: –
i. Central tax (CGST):
(levied & collected under the authority of CGST Act, 2017 passed by the Parliament)
ii. State tax (SGST)
(levied & collected under the authority of SGST Act, 2017 passed by respecti
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of taxes on sale of goods in the course of interstate trade
4. The CST suffers from following shortcomings:
i. CST is collected and retained by the origin state, which is an aberration. Any indirect tax, by definition is a consumption tax, the incidence of which is borne by the consumer. Logically, the tax should accrue to the destination state having jurisdiction over such consumer.
ii. Input Tax Credit (ITC) of CST is not allowed to the buyer which results in cascading of tax (tax on tax) in the supply chain.
iii. Various accountal forms are required to be filed in CST viz., C Form, E1, E2, F, I, J Forms etc. which adds to the compliance cost of the business and impedes the free flow of trade.
iv. Another negative feature of CST is the opportunity it provides for “arbitrage” because of the huge difference between tax rates under VAT and CST being levied on intra-State sales and inter-State sales respectively
5. The IGST model would remove all these deficiencies. IGST is a mech
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Prescribed order of utilization of IGST/CGST/SGST credit:
The IGST payment can be done by utilizing ITC. The amount of ITC on account of IGST is allowed to be utilized towards payment of IGST, CGST and SGST in that order.
8. Nature of Supply
It is very important to determine the nature of supply – whether it is inter-state or intra state, as the kind of tax to be paid (IGST or CGST+SGST) depends on that.
i. Inter- state Supply:
Subject to place of supply provisions, where the location of the supplier and the place of supply are in
a) two different States;
a) two different Union territories; or
a) a State and a Union territory,
Such supplies shall be treated as a supply of goods or services in the course of inter-State trade or commerce.
Any supply of goods or services in the taxable territory, not being an intra-State supply shall be deemed to be a supply of goods or services in the course of inter-State trade or commerce. Supplies to or by SEZ are defined as inter-State sup
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al tourists
* Any other supply in the taxable territory which is not intra state supply
Thus, the nature of the supply depends on the location of the supplier and the place of supply. Both these terms have been defined in the IGST Act.
9. Location of Supplier broadly is the registered place of business or the fixed establishment of the supplier from where the supply is made. Sometime, a service provider has to go to client location for providing service. However, such place would not be considered as the location of supplier. It has to be either regular place of business or fixed establishment which is having sufficient degree of permanence and suitable structure in terms of human and technical resources.
10. Place of supply
10.1 Place of supply provisions have been framed for goods & services keeping in mind the destination/consumption principle. In other words, place of supply is based on the place of consumption of goods or services. As goods are tangible, the determination of
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e of Supply
1
Where the supply involves movement of goods, whether by the supplier or the recipient or by any other person.
Location of the goods at the time at which the movement of goods terminates for delivery to the recipient.
2
where the goods are delivered to recipient or any person on the direction of third person by way of transfer of title or otherwise, it shall be deemed that third person has received the goods
The principal place of business of such person
3
where there is no movement of goods either by supplier or recipient
Location of such goods at the time of delivery to recipient
4
where goods are assembled or installed at site
The place where the goods are assembled or installed
5
where the goods are supplied on board a conveyance, like vessel, aircraft, train or motor vehicle
The place where such goods are taken on board the conveyance
6
Where the place of supply of goods cannot be determined in terms of sub-section (2), (3), (4) and (5)
It shall be d
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3
Training and performance appraisal,
B2B : Location of such registered person;
B2C: Location where the services are actually performed.
4
Admission to an event or amusement park
Place where the event is actually held or where the park or such other place is located.
5
Organization of an event.
B2B : Location of such registered person;
B2C: Location where the event is actually held.
If event is held outside India :Location of the recipient
6
Transportation of goods including mails
B2B : Location of such registered person;
B2C : Location at which such goods are handed over for their transportation
7
Passenger transportation.
B2B : Location of such registered person;
B2C : Place where the passenger embarks on the conveyance for a continuous journey
8
Services on board a conveyance
Location of the first scheduled point of departure of that conveyance for the journey.
9
Telecommunication services.
Services involving fixed line, circuits, dish etc., place of supply
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ription of supply
Place of supply
1.
B2B
Location of such registered person
2.
B2C
(i) Location of the recipient here the address on record exists, and
(ii) the location of the supplier of services in other cases.
D. Place of supply of services in case of cross-border supplies 🙁 Section 13)
(Where the location of the supplier of services or the location of the recipient of services is outside India)
i. In respect of following category of services, the place of supply is determined with reference to a proxy.
Rest of the services are governed by a default provision.
S.No
Nature of service
Place of supply
1.
Services supplied in respect of goods that are required to be made physically available from a remote location by way of electronic means, (Not Applicable in case of goods that are temporarily imported into India for repairs and exported.)
the location where the services are actually performed, the location where goods are situated
2.
services supplied to an indiv
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f destination of the goods
8.
Passenger transportation.
Place where the passenger embarks on the conveyance for a continuous journey
9.
Services on board a conveyance.
The first scheduled point of departure of that conveyance for the journey.
10.
online information and database access or retrieval services”
The location of recipient of service.
ii. For the rest of the services other than those specified above, a default provision has been prescribed as under.
Default Rule for the cross border supply of Services other than nine Specified Services
S.No.
Description of supply
Place of supply
1
Any
Location of the Recipient of Service If not available in the ordinary course of business: The location of the supplier of service.
11. Supplies in territorial waters: Where the location of the supplier is in the territorial waters, the location of such supplier; or where the place of supply is in the territorial waters, the place of supply is be deemed to be in the coastal Stat
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sidered as 'zero rated supply' on which no tax is payable. However, ITC is allowed subject to such conditions, safeguards and procedure as may be prescribed, refund in respect of such supplies may be claimed by following either of these options:
i. supply made without payment of IGST under Bond and claim refund of unutilised ITC or
ii. supply made on payment of IGST and claim refund of the same.
14. Refund of integrated tax paid on supply of goods to tourist leaving India:
Section 15 of the IGST Act provides for refund of IGST paid to an international tourist leaving India on goods being taken outside India subject to such conditions and safeguards as may be prescribed. An international tourist has been defined as a non-resident of India who enters India for a stay of less than 6 months. IGST would be charged on such supplies as the same is in the course of export.
This Section was not made applicable from 1st July, 2017 and will be notified at a later date once the ecosystem for
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