GST FLYERS – Updated as on 1st January, 2018
GST
Dated:- 8-1-2018
PDF DOWNLOAD
=============
Document 1
CENTRAL BOARD OF EXCISE & CUSTOMS
NEW DELHI
सीमा शà¥à¤²à¥à¤• à¤à¤µà¤‚ .
CUSTOMS
AND
केनà¥à¤¦à¥à¤°à¥€à¤¯
उतà¥à¤ªà¤¾à¤¦
CENTRAL,
EXCISE
शà¥à¤²à¥à¤•
à¤à¤¾à¤°à¤¤
सतà¥à¤¯à¤®à¥‡à¤µ जयते
• सरकार
GOVERNMENT
OF INDIA
देशसेवारà¥à¤¥ करसंचय
GST FLYERS
Updated as on 1st January, 2018
FOREWORD
Flyers on important topics of GST are being brought
out by the National Academy of Customs, Indirect Taxes,
&Narcotics (NACIN), the apex training institution under
the Central Board of Excise & Customs (CBEC). These
Flyers are being issued from time to
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
T……….
…..10
3. The Meaning and Scope of Supply
…..17
4. Composite Supply and Mixed Supply
..25
5. Time of Supply in GST…….
……..35
6. GSTonadvances received for futuresupplies 44
7. Conceptof Aggregate Turnover in GST..
8. Non-resident taxable person in GST……
9. Casual taxable person in GST…..
10. Input Service Distributor in GST……
……..53
…..55
.59
…..68
11. Composition Levy Scheme in GST…….
…..74
12. Reverse Charge Mechanism in GST………
…85
13. Tax Invoice and other such instruments in GST………..97
14. Accounts and Records in GST………
.114
15. Credit Note in GST….
122
16. Debit Note in GST……
..127
17. Electronic Cash/Credit Ledgers and Liability .131
Register in GST
18. Electronic Way Bill in GST……
..138
19. Input Tax Credit Mechanism in GST…….
.149
20. Transition Provisions under GST..
.158
21. Integrated Goods and Services Tax Act ….167
22. Compensation cess in GST….
…185
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
.400
44. National Anti-Profiteering Authority in GST ……406
45. Benefits of Goods and Services Tax (GST).…………………………………………..413
46. Special Audit in GST
…417
47. TDS Mechanism under GST………
.421
48. TCS Mechanism under GST..
…426
49. Inspection, Search, Seizure and Arrest..
.430
50. Appeals and Review Mechanism under GST.437
51. Recovery of Tax……
.449
Flyers Compiled by National Academy of Customs, Indirect
Taxes and Narcotics (NACIN), GST Team
Prepared by the following officers:
1. Shri Sanjeev Nair, Examiner (AR), CESTAT, Mumbai
2.
3.
4.
5.
(S. No. 4, 17, 24, 25, 26, 28, 34, 35, 36, 37, 38, 39, 40,
41, 42, 50)
Shri Deepak Mata, Asstt. Director, NACIN, Mumbai (S.
No. 6, 10, 12, 13, 14, 18, 23, 30, 43, 45)
Shri Girish Vadassery, Asstt. Commr. Ahmednagar (S. No.
2,7, 8, 9, 15, 16, 22, 31, 33, 44, 46)
Shri Shirish Gogate, Supdt., DTPS, Mumbai (S. No.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
gal advice
or opinion. For greater details, you are requested to refer to the
respective CGST/SGST/UTGST/IGST Acts, Rules, Notifications,
Circulars, Orders issued from time to time.
Chapter One
Registration under GST Law
Introduction
In any tax system registration is the most fundamental
requirement for identification of tax payers ensuring tax
compliance in the economy. Registration of any business.
entity under the GST Law implies obtaining a unique number
from the concerned tax authorities for the purpose of collecting
tax on behalf of the government and to avail Input tax credit
for the taxes on his inward supplies. Without registration, a
person can neither collect tax from his customers nor claim
any input tax credit of tax paid by him.
Need and advantages of registration
Registration will confer the following advantages to a taxpayer:
He is legally recognized as supplier of goods or
services.
He is legally authorized to collect tax from his
customers and pas
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e business of supplying goods or services
or both that are not liable to tax or wholly exempt from tax
or an agriculturist, to the extent of supply of produce out of
cultivation of land are not liable to register under GST. Also,
if all the supplies being made by a supplier are taxable under
reverse charge, there is no requirement for such a supplier
to register in light of Notification No. 5/2017-Central Tax
dated 19.06.2017.
Nature of Registration
The registration in GST is PAN based and State specific.
2
Registration under GST Law
Supplier has to register in each of such State or Union
territory from where he effects supply. In GST registration,
the supplier is allotted a 15-digit GST identification
number called “GSTIN” and a certificate of registration
incorporating therein this GSTIN is made available to the
applicant on the GSTN common portal. The first 2 digits
of the GSTIN is the State code, next 10 digits are the PAN
of the legal entity, the next two digits
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
a supplier within the meaning of the
term, and also if your aggregate turn over in the
financial year is above the exemption threshold of
20 lakh rupees (10 lakh rupees in special category
states except J & K). However, the GST law enlists
3
GST FLYERS
certain categories of suppliers who are required to
get compulsory registration irrespective of their
turnover that is to say, the threshold exemption of
20 lakh rupees or 10 lakh rupees as the case may
be is not available to them. Some of such suppliers
who need to register compulsorily irrespective of
the size of their turnover are those who are, –
Inter-state suppliers; However, persons making
inter-state supplies of taxable services and having
an aggregate turnover, to be computed on all India
basis, not exceeding an amount of twenty lakh rupees
(ten lakh rupees for special category States except
J & K) are exempted from obtaining registration
vide Notification No. 10/2017-Integrated Tax
dated 13.10.2017.
A
pe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e-commerce operators need not take compulsory
registration and are entitled to avail the threshold
exemption of Rs. 20 Lakh as per Notification No.
65/2017-Central tax dated 15.11.2017.
Those ecommerce operators who are notified as
liable for GST payment under Section 9(5) of the
CGST Act, 2017
TDS Deductor
Input service distributor
Those supplying online information and data base
access or retrieval services from outside India to a
non-registered person in India.
A casual taxable person is one who has a registered business
in some State in India, but wants to effect supplies from
some other State in which he is not having any fixed place
of business. Such person needs to register in the State
from where he seeks to supply as a casual taxable person.
A non-resident taxable person is one who is a foreigner
and occasionally wants to effect taxable supplies from any
State in India, and for that he needs GST registration. GST
5
GST FLYERS
law prescribes special proce
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
try. The decision making
process will also be fast. Strict time lines have been stipulated
for completion of different stages of registration process.
An application has to be submitted on line through the
common portal (GSTN) within thirty days from the date
when liability to register arose. The casual and non-resident
taxable persons need to apply at least five days prior to the
commencement of the business. For transferee of a business
as going concern, the liability to register arises on the date
of transfer.
6
Registration under GST Law
The Proper Officer has to either raise a query or approve
the
grant of registration within three working days failing
which registration would be considered as deemed to have
been approved. The applicant would have to respond within
seven working days starting from the fourth day of filing
the original application. The proper officer would have to
grant or reject the application for registration within seven
working days thereaf
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
narios where cancellation
7
GST FLYERS
of registration can take place; the one when the taxable
person no more requires it (voluntary cancellation), and
another when the proper officer considers the registration
liable for cancellation in view of certain specified defaults
(Suo-motu cancellation) like when the registrant is not
doing business from the registered place of business or if
he issues tax invoice without making the supply of goods
or services. The taxable person desirous of cancellation of
Registration will apply on the common portal within 30
days of event warranting cancellation. He will also declare
in the application the stock held on the date with effect
from which he seeks cancellation. He will also work out
and declare the quantum of dues of payments and credit
reversal, and the particulars of payments made towards
discharge of such liabilities. In case of voluntary registration
(taken despite not being liable for obtaining registration),
no cancell
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y of issuing
notice to the person and hearing him on the issue.
Physical verification in connection with registration
Physical verification is to be resorted to only where it is
found necessary in the subjective satisfaction of the proper
officer. If at all, it is felt necessary, it will be undertaken only
after granting the registration and the verification report
along with the supporting documents and photographs
shall have to be uploaded on the common portal within
fifteen working days.
******
9
Chapter Two
Cancellation of Registration
in GST
Introduction:
The registration granted under GST can be cancelled for
specified reasons. The cancellation can either be initiated
by the department on their own motion or the registered
person can apply for cancellation of their registration. In
case of death of registered person, the legal heirs can apply
for cancellation. In case the registration has been cancelled
by the department there is a provision for revocation o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ax periods;
a) any registered person, other than a person paying tax
under Composition levy has not furnished returns for a
continuous period of six months;
a) any person who has taken voluntary registration under
sub-section (3) of section 25 has not commenced busi-
ness within six months from the date of registration;
a) registration has been obtained by means of fraud, will-
ful misstatement or suppression of facts
Procedurefor cancellation:
i.
A person already registered under any of the existing
laws (Central excise, Service tax, VAT etc.), but who
now is not liable to be registered under the GST Act
has to submit an application electronically by 31ST
December 2017, in FORM GST REG-29 at the
common portal for the cancellation of registration
granted to him. The Superintendent of Central Tax
11
GST FLYERS
iii.
iv.
V.
vi.
ii.
shall, after conducting such enquiry as deemed fit,
cancel the said registration.
The cancellation of registration under the State
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e to be registered or his registration is li-
able to be cancelled, the Superintendent of Central
Tax will issue an order in FORM GST REG-19,
within a period of thirty days from the date of appli-
cation or, as the case may be, the date of the reply to
12
vii.
viii.
ix.
Cancellation of Registration in GST
the show cause issued, cancel the registration, with
effect from a date to be determined by him and no-
tify the taxable person, directing him to pay arrears.
of any tax, interest or penalty.
The registered person whose registration is cancelled
shall pay an amount, by way of debit in the electronic
credit ledger or electronic cash ledger, equivalent to
the credit of input tax in respect of inputs held in
stock and inputs contained in semi-finished or fin-
ished 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 pay-
able on such goods, whichever is higher.
In case of capit
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
STR-10 through the common portal either
directly or through a Facilitation Centre notified by the
Commissioner.
Revocation of Cancellation:
i. When the registration has been cancelled by the
Proper Officer (Superintendent of Central Tax) on
his own motion and not on the basis of an applica-
tion,then the registered person, whose registration
has been cancelled, can submit an application for
revocation of cancellation of registration, in FORM
GST REG-21, to the Proper Officer (Assistant or
Deputy Commissioners of Central Tax), within a
period of thirty days from the date of the service of
the order of cancellation of registration at the com-
mon portal, either directly or through a Facilitation
Centre notified by the Commissioner:
ii.
However, if the registration has been cancelled for
failure to furnish returns, application for revocation
shall be filed, only after such returns are furnished
and any amount due as tax, in terms of such returns,
has been paid along w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
seven working days from the date
of the service of the notice in FORM GST REG-
24.
Upon receipt of the information or clarification in
FORM GST REG-24, the Proper Officer (Assis-
tant or Deputy Commissioners of Central Tax) shall
dispose of the application within a period of thirty
days from the date of the receipt of such information
or clarification from the applicant. In case the infor-
mation or clarification provided is satisfactory, the
Proper Officer (Assistant or Deputy Commissioners
of Central Tax) shall dispose the application as per
para (iii) above. In case it is not satisfactory the ap-
15
GST FLYERS
vi.
plicant will be mandatorily given an opportunity of
being heard, after which the Proper Officer (Assis-
tant or Deputy Commissioners of Central Tax) after
recording the reasons in writing may by an order in
FORM GST REG- 05, reject the application for
revocation of cancellation of registration and com-
municate the same to the applicant.
The revocat
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
supply.
The term, “supply” has been inclusively defined in the
Act. The meaning and scope of supply under GST can be
understood in terms of following six parameters, which can
be adopted to characterize a transaction as supply:
1.
Supply of goods or services. Supply of anything other
than goods or services does not attract GST.
17
GST FLYERS
2. Supply should be made for a consideration
3.
लं
4.
Supply should be made in the course or furtherance
of business
Supply should be made by a taxable person
5. Supply should be a taxable supply
556
6.
of
While these six parameters describe the concept
supply, there are a few exceptions to the requirement
of supply being made for a consideration and in the
course or furtherance of business. Any transaction
involving supply of goods or services without
consideration is not a supply, barring few exceptions,
in which a transaction is deemed to be a supply even
without consideration. Further import of services
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ls out
activities which shall be treated as neither supply of goods
nor supply of services – in other words, outside the scope of
GST.A few important ones are: –
1. Services by an employee to the employer in the
course of or in relation to his employment.
2.
3.
Services of funeral, burial, crematorium or mortuary
including transportation of the deceased.
Sale of land and, sale of building where the entire
consideration has been received after completion
certificate is issued or after its first occupation.
Actionable claims are included in the definition of goods,
however, schedule III provides that actionable claims other
than lottery, betting and gambling shall be neither goods
nor services.
Supply for consideration
Consideration has specifically been defined in the CGST
Act, 2017. It can be in money or kind. Any subsidy given
by the Central Government or a State Government is not
considered as consideration. It is immaterial whether the
payment is made by the re
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
stinct persons as specified in
section 25, when made in the course or furtherance
of business: Provided that gifts not exceeding fifty
thousand rupees in value in a financial year by an
employer to an employee shall not be treated as
supply of goods or services or both.
Supply of goods- (a) by a principal to his agent
where the agent undertakes to supply such goods
on behalf of the principal; or (b) by an agent to his
principal where the agent undertakes to receive such
goods on behalf of the principal.
Import of services by a taxable person from a related
person or from any of his other establishments outside
India, in the course or furtherance of business.
Supply in the Course or Furtherance of Business
20
The Meaning and Scope of Supply
GST is essentially tax only on commercial transactions.
Hence only those supplies that are in the course or
furtherance of business qualify as Supply under GST.
Hence any supplies made by an individual in his personal
capacity do
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Hence even an unregistered person
who is liable to be registered is a taxable person. Similarly,
a person not liable to be registered but has taken voluntary
registration and got himself registered is also a taxable
person.
It should be noted that GST in India is state-centric. Hence
21
GST FLYERS
a person making supplies from different states need to take
separate registration in each state. Further the person may
take more than one registration within a state if the person
has multiple business verticals. A person who has obtained
or is required to obtain more than one registration, whether
in one State or Union territory or more than one State or
Union territory shall, in respect of each such registration, be
treated as distinct persons for the purposes of GST. Hence
a supply between these entities constitutes supply under
GST.
Taxable supply
For a supply to attract GST the supply must be taxable.
Taxable supply has been broadly defined and means any
supply of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
pply of goods where the location of the supplier
and place of supply are in the same State or Union territory.
Imports, Supplies from and to SEZs are treated as deemed
inter-State supplies.
Composite/Mixed supply
A composite supply means a supply made by a taxable
person to a recipient comprising two or more supplies
of goods or services or any combination thereof, which
are naturally bundled and supplied in conjunction
with each other in the ordinary course of business, one
of which is a principal supply. For instance, a travel
ticket from Mumbai to Delhi may include service of food
being served on board, free insurance, use of airport
lounge. In this case, transport of passenger, constitutes
the pre-dominant element of the composite supply, and
is treated as the principal supply and all other supplies
are ancillary.
The GST Law lays down the tax liability on a composite or
mixed supply in the following manner.
Composite Supply comprising two or more
supplies one o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
arly identifiable
supplies. Some of the supplies will be a combination of
goods or combination of services or combination of goods
and services both. Each individual component in a given
supply may attract different rate of tax. The rate of tax to be
levied on such supplies may pose a problem in respect of
classification of such supplies. It is for this reason, that the
GST Law identifies composite supplies and mixed supplies
25
GST FLYERS
and provides certainty in respect of tax treatment under
GST for such supplies.
Composite Supply under GST
Under GST, a composite supply would mean a supply
made by a taxable person to a recipient consisting of two
or more taxable supplies of goods or services or both, or
any combination thereof, which are naturally bundled and
supplied in conjunction with each other in the ordinary
course of business, one of which is a principal supply;
Illustration: Where goods are packed and transported with
insurance, the supply of goods, pack
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ssued by CBEC in the
year 2012 as under –
“Bundled service' means a bundle of provision of various
services wherein an element of provision of one service is
combined with an element or elements of provision of any
other service or services. An example of 'bundled service'
would be air transport services provided by airlines
wherein an element of transportation of passenger by air is
combined with an element of provision of catering service
on board. Each service involves differential treatment as
a manner of determination of value of two services for the
purpose of charging service tax is different.
The rule is – 'If various elements of a bundled service are
naturally bundled in the ordinary course of business, it
shall be treated as provision of a single service which
gives such bundle its essential character'
Illustrations –
A hotel provides a 4-D/3-N package with the facility
of breakfast. This is a natural bundling of services
in the ordinary course of business.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
there is no attempt to offload the
value of one service on to another service that is chargeable
at a concessional rate.
Whether services are bundled in the ordinary course
of business would depend upon the normal or frequent
practices followed in the area of business to which services
relate. Such normal and frequent practices adopted in a
business can be ascertained from several indicators some of
which are listed below –
The perception of the consumer or the service receiver.
If large number of service receivers of such bundle of
services reasonably expect such services to be provided
28
Composite Supply and Mixed Supply
as a package, then such a package could be treated as
naturally bundled in the ordinary course of business.
Majority of service providers in a particular area
of business provide similar bundle of services. For
example, bundle of catering on board and transport by
air is a bundle offered by a majority of airlines.
The nature of the various servi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
.
29
29
GST FLYERS
The different elements are not available separately.
The different elements are integral to one overall
supply if one or more is removed, the nature of
–
the supply would be affected.
No straight jacket formula can be laid down to determine
whether a service is naturally bundled in the ordinary
course of business. Each case has to be individually
examined in the backdrop of several factors some of which
are outlined above.”
The above principles explained in the light of what constitutes
a naturally bundled service can be gainfully adopted
to determine whether a particular supply constitutes a
composite supply under GST and if so what constitutes the
principal supply so as to determine the right classification
and rate of tax of such composite supply.
Mixed Supply
Under GST, a mixed supply means two or more individual
supplies of goods or services, or any combination thereof,
made in conjunction with each other by a taxable person
for a single
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
g highest rate of tax.
The following illustration given in the Education Guide
of CBEC referred to above can be a pointer towards a
mixed supply of services: –
“A house is given on rent one floor of which is to be used
as residence and the other for housing a printing press.
Such renting for two different purposes is not naturally
bundled in the ordinary course of business. Therefore,
if a single rent deed is executed it will be treated as a
service comprising entirely of such service which attracts
highest liability of service tax. In this case renting for use
as residence is a negative list service while renting for
non-residence use is chargeable to tax. Since the latter
category attracts highest liability of service tax amongst
the two services bundled together, the entire bundle
would be treated as renting of commercial property.”
Determination of tax liability of tax liability of
Composite and Mixed Supplies
The tax liability on a composite or a mixed supply sha
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
other constituent supplies, such mixed
supply would qualify as supply of services and accordingly
the provisions relating to time of supply of services would
be applicable. Alternatively, the mixed supply, if involves
supply of goods liable to tax at higher rates than any other
constituent supplies, such mixed supply would qualify as
supply of goods and accordingly the provisions relating to
time of supply of services would be applicable.
32
Composite Supply and Mixed Supply
Certain clarifications on composite and mixed supply
given by CBEC
The printing industry in India in particular faces a dilemma
in determining whether the nature of supply provided is that
of goods or services and whether in case certain contracts
involve both supply of goods and services, whether the
same would constitute a supply of goods or services or if
it would be a composite supply and in case it is, then what
would constitute the principal supply. It is to be noted that
in case of compos
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cipal supply and therefore such supplies would
constitute supply of service falling under heading 9989 of
the scheme of classification of services.
33
GST FLYERS
In case of supply of printed envelopes, letter cards, printed
boxes, tissues, napkins, wall paper etc. falling under Chapter
48 or 49, printed with design, logo etc. supplied by the
recipient of goods but made using physical inputs including
paper belonging to the printer, predominant supply is that of
goods and the supply of printing of the content [supplied by
the recipient of supply] is ancillary to the principal supply of
goods and therefore such supplies would constitute supply
of goods falling under respective headings of Chapter 48 or
49 of the Customs Tariff.
******
34
Chapter Five
Time of Supply in GST
Time of Supply
In order to calculate and discharge tax liability it is important
to know the date when the tax liability arises i.e. the date
on which the charging event has occurred. In GST law, i
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
However, in other
cases, invoice needs to be issued before or at the time of
delivery of goods or making available goods to the recipient.
Similarly, an invoice for supply of services needs to be issued
before or after the provision of service but not later than
thirty days from the date of provision of service.
Time of supply of goods (Default Rule)
Earliest of the following dates
Date of issue of invoice by the supplier. If invoice
is not issued, then the last date on which supplier
is legally bound to issue the invoice with respect to
the supply.
Date on which supplier receives the payment.
Section 148 of the CGST Act, 2017, confers powers on
the government (on the recommendation of the GST
Council) to notify certain classes of registered persons
and the special procedures to be followed by such
persons including those with regard to registration,
furnishing of return, payment of tax and administration
of such persons. In exercise of powers conferred by this
sec
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e in rate). Notification no.
66/2017-Central Tax dated 15.11.2017 may be referred
to.
Time of supply of services (Default Rule)
Earliest of the following dates
If the invoice is issued within the legally prescribed
period under section 31(2) of the CGST Act, 2017
read with Rule 47 of CGST Rules, 2017 (which is
thirty days from the date of the supply of service),
then the date of issue of invoice by the supplier or
date of receipt of payment, which ever is earlier.
If the invoice is not issued within the legally
prescribed period under section 31(2) of the CGST
Act, 2017 then the date of provision of service or
date of receipt of payment, whichever is earlier.
37
GST FLYERS
Date on which recipient shows the receipt of
service in his books of account, in a case aforesaid
two provisions do not apply.
The supply of services shall deemed to have been made to
the extent it is covered by the invoice or by the payment, as
the case may be. For example, Firm 'A' receives an
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
charge basis
Earliest of the following dates
Date of receipt of goods
Date on which payment is entered in the books of
38
Time of Supply in GST
accounts of the recipient or the date on which the
payment is debited in his bank account, whichever
is earlier.
Date immediately following 30 days from the date
of issue of invoice or any other legal document in
lieu of invoice by the supplier.
However, if it is not possible to determine the time of
supply in aforesaid manner then the time of supply is the
date of entry of the transaction in the books of accounts of
the recipient of supply.
Time of supply of services when tax is to be paid on
reverse charge basis
Earliest of the following dates
Date of payment as entered in the books of account
of the recipient or the date on which the payment
is debited in his bank account, whichever is earlier
Date immediately following 60 days from the date
of issue of invoice or any other legal document in
lieu of invoice by the sup
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ian economy. A shopkeeper may issue
vouchers for specific supply i.e. supply is identifiable at the
time of issuance of voucher. In trade parlance, these are
known as single purpose vouchers. For example, vouchers
for pressure cookers or Television or for spa or haircut.
Similarly, a voucher can be general purpose voucher which
can be used for multiple purposes. For example, a Rs.
1000/- voucher issued by Shoppers' Stop store can be used
for buying any product at any Shoppes' Stop store. Time of
supply is different in case of single purpose voucher and in
the case of general purpose voucher.
Time of supply in the case of single purpose voucher i.e.
case where supply is identifiable at the time of issuance of
voucher is date of issue of voucher. However, in all other
cases of supply of vouchers, time of supply is date of
redemption of voucher.
40
Time of Supply in GST
Time of supply of goods or services (Residual
provisions)
In case it is not possible to determine th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
oods or
services
Where there is a change in rate of tax of supply of goods
or services, time of supply has to be determined in the
following manner:-
41
GST FLYERS
Invoice
issued
Payment
Supply is completed before the change in rate of tax
Time of supply Applicable
received
rate of tax
before date
before date
of change
of change
in tax rate
in tax rate
No
No
earliest of the New rate of
Yes
No
No
Yes
date of invoice tax
or payment
Date of issue of Old tax rate
invoice.
Date of receipt Old tax rate
of payment
Supply is completed after the change in rate of tax
Payment
Invoice
Time of sup-
Applicable
issued before
received
ply
rate of tax
date of
before date
change in tax
of change in
rate
tax rate
Yes
Yes
Yes
No
No
Yes
earliest of the Old rate of tax
date of invoice
or payment
Date of receipt New rate of tax
of payment
Date of issue New rate of tax
of invoice
However, the special procedure for payment of tax by
42
Time of Sup
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
on 12 to 14 of the CGST
Act, 2017. As per the said provisions, the time of supply is
determined with reference to the time when the supplier
receives payment with respect to the supply as well as a
few other references like issue of invoice, receipt of goods
etc. In general, the time of supply is earliest of issuance of
invoice or receipt of payment. Therefore, in case of advance
received for any supply, time of supply is fixed at the point
when advance is received, irrespective of the fact whether
the supply is made or not. Accordingly, GST needs to be
paid with reference to the time at which advance is received,
if any, and this requires compliances with a few procedures,
documentation and reconciliation of taxes paid on the
advances and supply made.
As
per the explanation 1 to Section 12 of the CGST Act,
2017 a “supply” shall be deemed to have been made to the
extent it is covered by the invoice or, as the case may be, the
payment. For instance, an advance of Rs. 1
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
f supply would arise only at the time of issue of invoice and
they need to discharge GST liability accordingly. But the
supplier of services are required to pay GST at the time of
receipt of advances.
Many of the goods which were in the highest tax bracket of
28% have been brought down to the 5/12/18% bracket after
the decision of the GST Council in its meeting held on
10.11.2017. Notification no. 41/2017-Central Tax (Rate)
dated 14.11.2017 has also been issued giving effect to the
revised rates. It may so happen that advances were given
when the rate was 28% and the supplier has paid tax on it.
Subsequently the rate has been reduced to say 18%. Now,
assuming supply happened after the change in tax rate and
45
GST FLYERS
the invoice for the same was also issued after the change
in tax rate, the time of supply, according to section 14 of
the CGST Act, is the date of issue of invoice. Therefore,
10% additional tax paid can either be adjusted against the
balance payment
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ate of its issue;
d) name, address and Goods and Services Tax Identifica-
46
GST on advances received for future supplies
tion Number or Unique Identity Number, if registered,
of the recipient;
e) description of goods or services;
f) amount of advance taken;
g) rate of tax (central tax, State tax, integrated tax, Union
territory tax or cess);
h) amount of tax charged in respect of taxable goods or
services (central tax, State tax, integrated tax, Union
territory tax or cess);
i) place of supply along with the name of State and its
code, in case of a supply in the course of inter-State
trade or commerce;
j) whether the tax is payable on reverse charge basis; and
k) signature or digital signature of the supplier or his au-
thorised representative.
What if the rate of tax or place of supply is not
determinable at the time of receiving advance payment?
The proviso to Rule 50 of the Rules ibid provides that
where at the time of receipt of advance, if the rate of
tax i
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
istered person issues a receipt voucher,
but subsequently no supply is made and no tax invoice is
issued in pursuance thereof, the said registered person
may issue to the person who had made the payment, a
refund voucher against such payment;
The refund voucher shall be as per Rule 51 of the Rules
ibid and shall contain following particulars:
a) name, address and Goods and Services Tax Identifica-
tion Number of the supplier;
b) a consecutive serial number not exceeding sixteen char-
acters, in one or multiple series, containing alphabets
or numerals or special characters' hyphen or dash and
slash symbolized as “-” and “/” respectively, and any
combination thereof, unique for a financial year;
c) date of its issue;
d) name, address and Goods and Services Tax Identifica-
tion Number or Unique Identity Number, if registered,
48
GST on advances received for future supplies
of the recipient;
e) number and date of receipt voucher issued in accor-
dance with the provisio
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
with the respective place
of supply (POS). Table 11B captures adjustment of tax
paid on advance received and reported in earlier tax
49
GST FLYERS
periods against invoices issued in the current tax period.
The details of information relating to advances would
be submitted in Table 11A only if the invoice has not
been issued in the same tax period in which the advance
was received. Whereas adjustments made in respect
of advances received during the earlier tax period,
but invoices issued in the current tax period would be
reflected in Table 11B.
It
may
be noted that dates for FORM GSTR-2 and FORM
GSTR-3 have not been notified so far.
GST on advance received by Composition dealer:
A Composition dealer is governed by Section 10 of the
Act ibid which states as under:
10. (1) Notwithstanding anything to the contrary contained
in this Act but subject to the provisions of sub-sections (3)
and (4) of section 9, a registered person,
whose aggregate
turnover in the preced
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Notification no.38/2017-Central Tax (Rate) dated
13.10.2017.Section 10 of the Act ibid also suggests that
a composition dealer has to pay, in lieu of tax payable by
him, an amount calculated at the prescribed rate. The
prescribed rate is applied on the turnover in the state
of the composition dealer. Turnover in a state has been
defined in Section 2(112) of the Act ibid as “turnover
in State” or “turnover in Union territory” means the
aggregate value of all taxable supplies (excluding the
value of inward supplies on which tax is payable by a
person on reverse charge basis) and exempt supplies
made within a State or Union territory by a taxable
person, exports of goods or services or both and inter-
State supplies of goods or services or both made from
the State or Union territory by the said taxable person
but excludes central tax, State tax, Union territory.
In Table 6 of the GSTR-4, the return for composition
taxpayer, the tax on outward supplies made shall
be
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
exports of goods or services or both and inter-State supplies of
persons having the same Permanent Account Number, to be
computed on all India basis but excludes central tax, State tax,
Union territory tax, integrated tax and cess.
The aggregate turnover is a crucial parameter for deciding
the eligibility of a supplier to avail the benefit of exemption
threshold of Rs. 20 Lakhs [Rs. 10 Lakhs in case of special
category States except J & K] and for determining the
threshold limit for composition levy. Let us dissect the
definition in small parts to understand the meaning clearly.
There are certain terms used in the definition which need a
bit of elaboration.
It
may be noted that the inward supplies on which the
53
GST FLYERS
recipient is required to pay tax under Reverse Charge
Mechanism (RCM) does not form part of the 'aggregate
turnover'. The law stipulates certain supplies like, Goods
Transport Agency services, services received from outside
India, to name a few
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or Composition Scheme.
However, the composition levy would be calculated on the
basis of turnover in the State.
******
54
Chapter Eight
Non-resident taxable person
Introduction
in GST
“Non-resident taxable person” means any person who
occasionally undertakes transactions involving supply of
goods or services or both, whether as principal or agent or
in any other capacity, but who has no fixed place of business
or residence in India.
A non-resident taxable person making taxable supply in
India has to compulsorily take registration. There is no
threshold limit for registration. A non-resident taxable
person cannot exercise the option to pay tax under
composition levy. He has to apply for registration at least
five days prior to commencing his business in India using a
valid passport (and need not have a PAN number in India).
A business entity incorporated or established outside India,
has to submit the application for registration along with its
tax ide
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ted or established outside India, the application
for registration shall be submitted along with its tax
identification number or unique number on the basis of
which the entity is identified by the Government of that
country or its PAN, if available.
The application for registration made by a non-resident
taxable person has to be signed by his authorized signatory
who shall be a person resident in India having a valid
PAN. On successful verification of PAN, mobile number
and e-mail address the person applying for registration as
a non-resident taxable person will be given a temporary
reference number by the Common Portal for making the
mandatory advance deposit of tax for an amount equivalent
to the estimated tax liability of such person for the period
for which the registration is sought. The registration
certificate shall be issued electronically only after the said
56
Non-resident taxable person in GST
deposit appears in his electronic cash ledger. The amount
depo
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y for the period for which the
extension.
Input Tax Credit: Input tax credit shall not be available
in respect of goods or services or both received by a non-
resident taxable person except on goods imported by him.
The taxes paid by a non-resident taxable person shall be
available as credit to the respective recipients.
Returns: The non-resident taxable person shall furnish
a return in FORM GSTR-5 electronically through the
Common Portal, either directly or through a Facilitation
Centre notified by the Commissioner, including therein
57
GST FLYERS
the details of outward supplies and inward supplies and
shall pay
the tax, interest, penalty, fees or any other amount
payable under the Act or these rules within twenty days
after the end of a calendar month or within seven days after
the last day of the validity period of registration, whichever
is earlier.
Refund: The amount of advance tax deposited by a non-
resident taxable person at the time of initial registration
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Rs. 20 Lakh (Rs. 10 lakh
for in case of Special Category States, other than the State
of Jammu and Kashmir.). A casual taxable person cannot
exercise the option to pay tax under composition levy.
He has to apply for registration at least five days prior to
commencing his business in India. The specified handicraft
goods are as under:
59
GST FLYERS
Sr.
No
1
Products
HSN Code
Leather articles (including bags, 4201, 4202,
purses, saddlery, harness, gar- 4203
ments)
2 Carved wood products (including 4415, 4416
boxes, inlay work, cases, casks)
3
Carved wood products (including 4419
table and kitchenware)
Carved Wood Products
4
5
Wood turning and lacquer ware
6
utility items]
7
་
4420
4421
Bamboo products [decorative and 46
Grass, leaf and reed and fiber 4601, 4602
products, mats, pouches, wallets
4823
(handloom products), Including 50,
8
Paper Mache articles
9
Textile
Handmade shawls,
58,61,62,63
stoles and scarves
10
Textiles hand printing
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Namda, Gabba
Any chapter
31
Wicker willow products
Any chapter
61
GST FLYERS
32
Toran
33
Articles made of shoal
Any chapter
Any chapter
A casual taxable person has to make an advance deposit of
tax in an amount equivalent to his estimated tax liability for
the period for which the registration is sought.
Registration:
A casual taxable person has to apply for registration at least
five days prior to the commencement of business. There is
no special form to register as a casual taxable person. The
normal FORM GST REG-01 which is used by other
taxable persons can be used for obtaining registration by
casual taxable person also. A casual taxable person, before
applying for registration, should declare his Permanent
Account Number, mobile number, e-mail address, State
or Union territory in Part A of FORM GST REG-01on
the common portal, either directly or through a Facilitation
Centre notified by the Commissioner.
The Permanent Account Number shall be validated o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
al for making the mandatory advance
deposit of tax for an amount equivalent to the estimated
tax liability of such person for the period for which the
registration is sought. The registration certificate shall be
issued electronically only after the said deposit appears
in his electronic cash ledger. The amount deposited shall
be credited to the electronic cash ledger of casual taxable
person. On depositing the amount, an acknowledgement
shall be issued electronically to the applicant in FORM
GST REG-02.
The casual taxable person can make taxable supplies only
after the issuance of the certificate of registration. The
certificate of registration shall be valid for the period
specified in the application for registration or ninety days
from the effective date of registration, whichever is earlier.
In case the casual taxable person intends to extend the period
of registration indicated in his application of registration,
an application in FORM GST REG-11shall be submitte
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d after fifteenth day but be-
fore the twentieth day of the following month.
d) FORM GSTR-3B to be filed but before the twentieth
day of the following month.
It may be mentioned that presently only FORM GSTR-1
and FORM GSTR-3B is required to be filed.
Special Returns procedure for registered persons with
turnover up to Rs. 1.5 Crore:
The government has notified that the registered persons
having aggregate turnover of up to 1.5 crore rupees in the
preceding financial year or the current financial year, as
64
Casual taxable person in GST
the class of registered persons who shall follow the special
procedure as detailed below for furnishing the details of
outward supply of goods or services or both.
The said persons shall furnish the details of outward supply
of goods or services or both in FORM GSTR-1 effected
during the quarter as specified in column (2) of the Table
below till the time period as specified in the corresponding
entry in column (3) of the said Table, n
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
specified in column (2) of the Table below till
the time period as specified in the corresponding entry in
column (3) of the said Table, namely
Sr. Month for which the details
No.
in
FORM GSTR-1 are fur-
nished
Time period for
furnishing the
details in FORM
GSTR-1
10th January, 2018
1
July – November, 2017
2
December, 2017
3
January, 2018
4
10th February,
2018
10th March, 2018
20
5
February, 2018
March, 2018
10th April, 2018
10th May, 2018
The special procedure or extension of the time limit for
furnishing the details or return, as the case may be, under
sub-section (2) of section 38 (GSTR-2) and sub-section (1)
of section 39 (GSTR-3) of the Act, for the months of July,
2017 to March, 2018 shall be subsequently notified in the
Official Gazette.
However, a casual tax person shall not be required to file any
annual return as required by a normal registered taxpayer.
Refund by Casual taxable person:
The casual taxable person is eligible for the refund
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ces or
both having same PAN as that of the ISD.
It is important to note that the ISD mechanism is meant
only for distributing the credit on common invoices
pertaining to input services only and not goods (inputs or
capital goods). Companies may have their head office at
one place and units at other places which may be registered
separately. The Head Office would be procuring certain
services which would be for common utilization of all units
across the country. The bills for such expenses would be
raised on the Head Office. But the Head Office itself would
not be providing any output supply so as to utilize the credit
which gets accumulated on account of such input services.
68
Input Service Distributor in GST
Since the common expenditure is meant for the business
of all units, it is but natural that the credit of input services
in respect of such common invoices should be apportioned
between all the consuming units. ISD mechanism enables
such proportionate distribut
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
both the amount of ineligible and eligible input
tax credit. The input tax credit on account of central tax
and State tax or UT tax in respect of recipient located in
the same state shall be distributed as central tax and State
tax or UT tax respectively. The input tax credit on account
of central tax and State tax or UT tax shall, in respect of a
recipient located in a State or Union territory other than
that of the ISD, be distributed as integrated tax and the
69
GST FLYERS
amount to be so distributed shall be equal to the aggregate
of the amount of input tax credit of central tax and State tax
or Union territory tax that qualifies for distribution to such
recipient. The input tax credit on account of integrated tax
shall be distributed as integrated tax.
Let's take an example to understand this concept. The
Corporate office of ABC Ltd., is at Bangalore, with its
business locations of selling and servicing of goods at
Bangalore, Chennai, Mumbai and Kolkata. Software
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tly attributable to. If input services
are attributable to more than one recipient of credit, the
distribution shall be in the pro-rata basis of turnover in the
70
Input Service Distributor in GST
State/Union Territory. For example, if an ISD has 4 units
across the country. However, if a particular input service
pertains exclusively to only one unit and the bill is raised
in the name of ISD, the ISD can distribute the credit only
to that unit and not to other units. If the input services are
common for all units, then it will be distributed according
to the ratio of turnover of all the units. The following
illustration will clarify the issue
M/s XYZ Ltd, having its head Office at Mumbai, is registered
as ISD. It has three units in different states namely ‘Mumbai’,
Jabalpur' and 'Delhi' which are operational in the current
year. M/s XYZ Ltd furnishes the following information for
the month of July, 2017 & asks for permission to distribute
the below input t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rata basis on the basis of
the turnover of all the units is as under: –
a) Unit Mumbai: (50000000/100000000) *1200000 =
72
Input Service Distributor in GST
Rs.600000
b) Unit Jabalpur: (30000000/100000000) *1200000
Rs.360000
c) Unit Delhi: (20000000/100000000) *1200000
Rs.240000
=
=
An ISD will have to file monthly returns in GSTR-6
within thirteen days after the end of the month and will
have to furnish information of all ISD invoices issued. The
details in the returns will be made available to the respective
recipients in their GSTR 2A. The recipients may include
these in its GSTR-2 and take credit. An ISD shall not be
required to file Annual return. An ISD cannot accept any
invoices on which tax is to be discharged under reverse
charge mechanism. This is because the ISD mechanism is
only to facilitate distribution of credit of taxes paid. The
ISD itself cannot discharge any tax liability (as person liable
to pay tax) and remit tax to government account. If ISD
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cheme,
a registered taxable person, whose aggregate turnover does
not exceed Rs. One crores (Rs. 75 lakh for special category
States except J & K and Uttrakhand) in the financial year
2016-17 may opt
may opt
for this scheme.
A taxpayer registered under composition levy scheme
74
Composition Levy Scheme in GST
has to pay an amount equal to certain fixed percentage of
his annual turnover as tax to the government. This tax has
to be paid on quarterly basis. Such taxpayer does not have to
maintain elaborate accounts and records and instead of two
monthly statements and a return (which a normal taxpayer
has to file under GST), he has to file a simple quarterly
return in FORM GSTR-04. The time Limit for GSTR-4
for the quarter July to September, 2017 has been extended
to 24th December, 2017 vide Notification No. 59/2017-
CGST.
However, upon opting for this scheme, he cannot
issue taxable invoice under GST law and can neither collect
GST from his customers nor can claim I
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
vices including services by way of extending
deposits, loans or advances shall not be taken into
account.
Registration and intimation under the scheme.
Registration under GST law is compulsory for opting for
the Composition scheme. A person who is registered under
existing laws and has obtained a provisional registration
under GST has to file an electronic intimation in the
FORM GST CMP-01 on the common portal (www.
gstn.gov.in). He can file this intimation either before the
appointed day (i.e. day on which GST came into force
01/07/2017) or within 30 days (or as extended by the
commissioner) of the appointed day (01/07/2017), (which
was later extended up to 16/08/2017). If he intimates after
the appointed day, he shall not collect GST and issue bill of
supply from the appointed day. Further such person has to
furnish a statement containing details of stock including the
inward supply of goods received from unregistered persons,
held by him on the day preceding the da
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ant financial year.
A person having a single PAN and registered in more than
one State under GST can opt for the scheme, provided
he meets all the conditions of the scheme, only if all such
registered persons opt for the Composition scheme. A
registered person cannot choose to opt for the Composition
scheme in one state and not in other states. Further, an
intimation for withdrawal from the scheme; or denial of the
scheme with respect to any one registered person under the
same PAN will be applicable for all such registered persons.
4. Effective Date for composition levy
77
GST FLYERS
Effective date for the taxpayers who are already registered
under the existing laws and obtained provisional registration
under GST law and intimates about opting for the scheme
either before the appointed day (01/07/2017) or within
30 days (or as extended) of the appointed day, shall be the
appointed date.
Effective date for registered taxpayer who intimates
about opting for the schem
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
iii.
iv.
V.
vi.
vii.
viii.
ix.
Composition Levy Scheme in GST
of business or residence in India.
A supplier of services except a person engaged in
supply of restaurant service.
A person engaged in providing inter-state supply of
goods.
A person engaged in supply of non-taxable goods i.e.
goods which are not taxable under GST law
A person engaged in supply of goods through an
Electronic Commerce Operator (ECO) who is re-
quired to collect Tax at source under section 52 of
the CGST Act.
The goods held in stock by him on the appointed day
have not been purchasedin the course of inter-State trade
or commerce or imported from a place outside Indiaor
received from his branch situated outside the State or
from his agent or principaloutside the State where reg-
istration under the Composition Scheme has been taken.
the goods held in stock by him have
been purchased from
supplier and where purchased, he pays the tax under the
reverse charge mechanism.
have not
an
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
person engaged in any other supply
has to pay 1% (0.5% CGST and 0.5% SGST/
UTGST) of turnover of taxable supplies of goods
in a state or Union Territory, as the case may be.
Bill of Supply
A taxable person opting for the scheme has to issue bill of
80
Composition Levy Scheme in GST
supply as he is not eligible to issue taxable invoice under
GST. He has to mention the words “composition taxable
person, not eligible to collect tax on supplies” at the top of
every bill of supply issued by him.
8.
Conditions & Restrictions under the scheme
A person opting for the scheme has to adhere to the
following conditions
Issue bill of supply in the prescribed manner
Pay all taxes on purchases including taxes to be
paid on reverse charge basis
Don't claim input tax credit of purchases
Mention the words “composition taxable person”
on every notice board or signboard displayed at the
prominent place at his every place of business.
Where ever a person, registered under any of the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
made thereafter and he
shall also file an intimation for withdrawal from the scheme.
10.
Conditions which may render a person in-eligible
for the scheme
A person is in-eligible for the scheme, if
11.
he wrongly opts for the scheme.
his turnover exceeds Rs. One crore (In the case of
9 North East and special category states, namely
Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, Tripura and
Himachal Pradesh, the limit of turnover is Rs. 75
Lakhs in the preceding financial year)
he contravenes eligibility criteria or any of the
conditions of the scheme
Withdrawal from the composition levy scheme and
procedure thereafter.
A registered person who intends to withdraw from the
scheme has to file an intimation for withdrawal from the
82
Composition Levy Scheme in GST
scheme in the FORM GST CMP-04, before the date of
such withdrawal. A registered person who ceases to satisfy
any provision of the scheme has to file an intimation for
withdrawal f
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
proper officer has reason to believe
that the registered person has wrongly opted for the scheme
or he has contravened the provisions of the scheme, then
he will seek a reply by issuing a show cause notice to such
person in the FORM GST CMP-05. This notice is to be
replied within 15 days of receipt of the same. Thereafter
within 30 days of receipt of reply, officer has to issue an
order in FORM GST CMP-07, either accepting the reply
or denying the option to pay tax under the scheme.
83
GST FLYERS
Subsequently the registered person who has been denied
the option to pay tax under the scheme has to forward a
statement in FORM GST ITC-01 containing details
of the stock of the inputs and inputs contained in semi-
finished or finished goods held in stock by him on the date
on which the option is denied. The said statement has to be
submitted on the common portal within 30 days from the
date of denial order passed in the FORM GST CMP-07.
The delinquent taxpayer will be lia
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tered
person to a registered person is covered.
As
per the provisions of section 9(3) of CGST / SGST
(UTGST) Act, 2017 / section 5(3) of IGST Act, 2017, the
Government may, on the recommendations of the Council,
by notification, specify categories of supply of goods or
services or both, the tax on which shall be paid on reverse
85
GST FLYERS
charge basis by the recipient of such goods or services or
both and all the provisions of this Act shall apply to such
recipient as if he is the person liable for paying the tax in
relation to the supply of such goods or services or both.
Similarly, section 9(4) of CGST / SGST (UTGST) Act,
2017 / section 5(4) of IGST Act, 2017 provides that the tax
in respect of the supply of taxable goods or services or both
by a supplier, who is not registered, to a registered person
shall be paid by such person on reverse charge basis as the
recipient and all the provisions of this Act shall apply to
such recipient as if he is the person liab
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e to a TDS
deductor in terms of notification no.9/2017-Central Tax
(Rate) dated 28.06.2017. Thus, Government entities
86
Reverse Charge Mechanism in GST
who are TDS Deductors under Section 51 of CGST Act,
2015, need not pay GST under reverse charge in case of
procurements from unregistered suppliers.
Registration: A person who is required to pay tax under
reverse charge has to compulsorily register under GST
and the threshold limit of Rs. 20 lakh (Rs. 10 lakh for
special category states except J & K) is not applicable to
them.
ITC:
A supplier cannot take ITC of GST paid on goods or
services used to make supplies on which recipient is liable
to pay tax.
Time of Supply
The Time of supply is the point when the supply is liable
to GST. One of the factor relevant for determining time
of supply is the person who is liable to pay tax. In reverse
charge, recipient is liable to pay GST. Thus time of supply
for supplies under reverse charge is different from the
supplies w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
he tax in respect of supply
in the invoice is payable on reverse charge. Similarly,
this also needs to be mentioned in receipt voucher
as well as refund voucher, if tax is payable on reverse
charge.
Maintenance of accounts by registered persons:
Every registered person is required to keep and
maintain records of all supplies attracting payment
of tax on reverse charge
Any amount payable under reverse charge shall be
paid by debiting the electronic cash ledger. In other
words, reverse charge liability cannot be discharged
by using input tax credit. However, after discharging
reverse charge liability, credit of the same can be
taken by the recipient, if he is otherwise eligible.
88
4.
5.
Reverse Charge Mechanism in GST
Invoice level information in respect of all supplies
attracting reverse charge, rate wise, are to be furnished
separately in the table 4B of GSTR-1.
Advance paid for reverse charge supplies is also
leviable to GST. The person making advance payment
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ption
No.
of supply of
Supplier of
service
Recipient of
service
Service
90
90
1
Any service
Any person
supplied by any
person who
located in a
Reverse Charge Mechanism in GST
Any person
located in
the taxable
non-taxable
is located in
a non-taxable
territory to any
person other
than non-
taxable online
recipient.
territory
territory other
than non-
taxable online
recipient.
2
GTA Services
Goods
Transport
Agency (GTA)
who has not
paid integrated
tax at the rate
of 12%
Any factory,
society, co-
operative
society,
registered
person, body
corporate,
partnership
firm, casual
taxable person;
located in
the taxable
territory
91
GST FLYERS
3
Legal Services An individual Any business
by advocate
advocate
entity located
including a
in the taxable
territory
senior advocate
or firm of
advocates
Any business
4
Services
An arbitral
supplied by an
tribunal
entity located
arbitral tribunal
to a business
in the taxable
territ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ST FLYERS
7
Services
supplied by a
director of a
company or a
body corporate
to the said
company or the
A director of a The
The company
company or a
or a body
corporate
located in
body corporate
the taxable
territory
body corporate
8
Services
An insurance
Any person
supplied by
agent
an insurance
agent to any
person carrying
on insurance
business
9
Services
A recovery
supplied by a
agent
recovery agent
to a banking
company or
a financial
institution or
a non-banking
financial
company
carrying on
insurance
business,
located in
the taxable
territory
A banking
company or
a financial
institution or
a non-banking
financial
company,
located in
the taxable
territory
94
24
Reverse Charge Mechanism in GST
located in
10
Services
A person
supplied by a
person located
in non- taxable
territory
by way of
transportation
of goods by a
vessel from a
place outside
India up to the
customs station
of clearance in
India
non-tax
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ice is a commercial instrument
issued by a seller to a buyer. It identifies both the trading
parties and lists, describes, and quantifies the items sold,
shows the date of shipment and mode of transport, prices
and discounts, if any, and delivery and
payment terms.
In certain cases, (especially when it is signed by the seller
or seller's agent), an invoice serves as a demand for payment
and becomes a document of title when paid in full. Types
of invoice include commercial invoice, consular invoice,
customs invoice, and proforma invoice. It is also called a bill
of sale or contract of sale.
Invoice under GST
Under the GST regime, an “invoice” or “tax invoice” means
the tax invoice referred to in section 31 of the CGST
Act, 2017. This section mandates issuance of invoice or
a bill of supply for every supply of goods or services. It
is not necessary that only a person supplying goods or
97
GST FLYERS
services need to issue invoice. The GST law m
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ce of tax invoice under GST
Under GST a tax invoice is an important document. It
not only evidences supply of goods or services, but is also
an essential document for the recipient to avail Input Tax
Credit (ITC). A registered person cannot avail input tax
credit unless he is in possession of a tax invoice or a debit
note.
GST is chargeable at the time of supply. Invoice is
an important indicator of the time of supply. Broadly
speaking, the time of supply of goods or services is the date
of issuance of invoice or receipt of payment whichever is
98
Tax Invoice and other such instruments in GST
earlier. However, a special procedure for payment of tax
has been prescribed for registered persons (other than
composition dealers) supplying goods. Such category of
persons (suppliers of goods other than composition dealers)
need to pay GST only at the time of issue of invoice
irrespective of when they receive payment.
Thus the importance of invoice under GST cannot be over-
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t prescribed for an invoice, however,
Invoice rules makes it mandatory for an invoice to have
following fields (only applicable field are to be filled):
a) name, address and GSTIN of the supplier;
b) a consecutive serial number, in one or multiple series,
containing alphabets or numerals or special characters
hyphen or dash and slash symbolised as “-” and “/” re-
spectively, and any combination thereof, unique for a
financial year;
c) date of its issue;
d) name, address and GSTIN or UIN, if registered, of the
recipient;
e) name and address of the recipient and the address of
delivery, along with the name of State and its code, if
such recipient is un-registered and where the value of
taxable supply is fifty thousand rupees or more;
f) HSN code of goods or Accounting Code of services;
g) description of goods or services;
h) quantity in case of goods and unit or Unique Quantity
Code thereof;
total value of supply of goods or services or both;
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
characters
-hyphen or dash and slash symbolised as “-” and “/”re-
spectively, and any combination thereof, unique for a
financial year;
c) date of its issue
d) name,
address and GSTIN or UIN, if registered, of the
recipient;
e) HSN Code of goods or Accounting Code for services;
f) description of goods or services or both;
101
GST FLYERS
g) value of supply of goods or services or both taking into
account discount or abatement, if any; and
h) signature or digital signature of the supplier or his au-
thorized representative
Services
A registered person supplying taxable services shall, before
or after the provision of service but within a prescribed
period, issue a tax invoice, showing the description, value,
tax charged thereon and such other particulars as has been
prescribed in the Invoice Rules.
The Government may, on the recommendations of the
Council, by notification and subject to such conditions as
may be mentioned therein, specify the categories of service
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
erson who becomes liable for
registration has to apply for registration within 30 days of
becoming liable for registration. When such an application is
made within the time period and registration is granted, the
effective date of registration is the date on which the
became liable for registration. Thus there would be a time
lag between the date of grant of certificate of registration
and the effective date of registration. For supplies made by
such person during this intervening period, the law enables
issuance of a revised invoice, so that ITC can be availed by
the recipient on such supplies.
person
Receipt Voucher/ Refund voucher on receipt of advance
payment
Whenever a registered person receives an advance payment
with respect to any supply of goods or services or both,
he has to issue a receipt voucher or any other document,
containing such particulars as has been prescribed in the
Invoice Rules, evidencing receipt of such payment.
Where any such receipt vouche
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
he course of inter-State
trade or commerce;
j) whether the tax is payable on reverse charge basis; and
k) signature or digital signature of the supplier or his au-
thorized representative.
It has also been provided in the Invoice Rules that if at the
time of receipt of advance,
i.
the rate of tax is not determinable; the tax may be
paid @18%;
104
Tax Invoice and other such instruments in GST
ii.
the nature of supply is not determinable, the same
shall be treated as inter-State supply.
Invoice and payment voucher by a person liable to pay
tax under reverse charge
A registered person liable to pay tax under reverse charge
(both for supplies on which tax is payable under reverse
charge mechanism and supplies received from unregistered
persons) has to issue an invoice in respect of goods or service
or both received by him. Such a registered person in respect
of such supplies also has to issue a payment voucher at the
time of making payment to the supplier.
Invoice i
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ceases under a contract
before the completion of the supply, the invoice shall be
issued at the time when the supply ceases and such invoice
shall be issued to the extent of the supply made before such
cessation.
Sale on approval basis
Where the goods being sent or taken on approval for sale or
return are removed before the supply takes place, the invoice
shall be issued before or at the time of supply or six months
from the date of removal, whichever is earlier.
Amount of tax to be indicated in invoice
Where any supply is made for a consideration, every person
who is liable to pay tax for such supply has to prominently
indicate in all documents relating to assessment, tax invoice
and other like documents, the amount of tax which shall
form part
of the price at which such supply is made.
Credit and Debit Notes
In cases where tax invoice has been issued for a supply and
subsequently it is found that the value or tax charged in that
invoice is more than what is actual
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r can issue a debit note to the recipient.
Any registered person who issues a debit note in relation to
a supply of goods or services or both shall declare the details
of such debit note in the return for the month during which
such debit note has been issued and the tax liability shall be
adjusted in such manner as may be prescribed.
A revised tax invoice and credit or debit note has to contain
the following particulars –
a) the word “Revised Invoice”, wherever applicable, indi-
cated prominently;
b) name, address and GSTIN of the supplier;
c) nature of the document;
107
GST FLYERS
d) a consecutive serial number containing alphabets or nu-
merals or special characters -hyphen or dash and slash
symbolised as “-” and “/”respectively, and any combina-
tion thereof, unique for a financial
e) date of issue of the document;
year;
f) name, address and GSTIN or UIN, if registered, of the
recipient;
g) name and address of the recipient and the address of
delivery,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
g marked as DUPLICATE
FOR SUPPLIER.
The serial number of invoices issued during a tax period
shall be furnished electronically through the Common
Portal in FORM GSTR-1.
Tax invoice in Special Cases
An ISD invoice or, as the case may be, an ISD credit note
issued by an Input Service Distributor shall contain the
following details:
a) name, address and GSTIN of the Input Service Dis-
tributor;
b) a consecutive serial number containing alphabets or
numerals or special characters hyphen or dash and
slash symbolised as, “-“,”/”, respectively, and any com-
bination thereof, unique for a financial year;
c) date of its issue;
d) name,
address and GSTIN of the recipient to whom
the credit is distributed;
e) amount of the credit distributed; and
109
GST FLYERS
f) signature or digital signature of the Input Service Dis-
tributor or his authorized representative.
Tax Invoice in special cases
Where the Input Service Distributor is an office of a
banking company or a financ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
consignor and the consignee,
registration number of goods carriage in which the goods
are transported, details of goods transported, details of
place of origin and destination, GSTIN of the person liable
for paying tax whether as consignor, consignee or goods
transport agency, and also containing other information as
prescribed under rule 1 of Invoice Rules.
110
Tax Invoice and other such instruments in GST
Where the supplier of taxable service is supplying passenger
transportation service, a tax invoice shall include ticket in
any form, by whatever name called, whether or not serially
numbered, and whether or not containing the address of
the recipient of service but containing other information as
prescribed under rule 1 of Invoice Rules.
Transportation of goods without an invoice
In the following cases it is permissible for the consignor
to issue a delivery challan in lieu of invoice at the time of
removal of goods:
a) supply of liquid gas where the quantity at t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
be prepared in triplicate, in case
of supply of goods, in the following manner:-
a) the original copy being marked as ORIGINAL FOR
CONSIGNEE;
b) the duplicate copy being marked as DUPLICATE
FOR TRANSPORTER; and
c) the triplicate copy being marked as TRIPLICATE
FOR CONSIGNER.
Where goods are being transported on a delivery challan
in lieu of invoice, the same shall be declared in FORM
[WAYBILL].
Where the goods being transported are for the purpose
of supply to the recipient but the tax invoice could not be
issued at the time of removal of goods for the purpose of
supply, the supplier shall issue a tax invoice after delivery of
goods.
112
Tax Invoice and other such instruments in GST
Where the goods are being transported in a semi knocked
down or completely knocked down condition,
a) the supplier shall issue the complete invoice before dis-
patch of the first consignment;
b) the supplier shall issue a delivery challan for each of
the subsequent consignments, givin
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
referred
to as rules) provide that every registered person shall
keep and maintain all records at his principal place
of business. It also cast, responsibility on owner or
operator of warehouse or godown or any
other place
used for storage of goods and on every transporter,
irrespective of whether he is a registered person
or not, to maintain specified records. The section
also empowers the Commissioner to notify a class
114
Accounts and Records in GST
3.
of taxable persons to maintain additional accounts
or documents for specified purpose or to maintain
accounts in other prescribed manner. It also provides
that every registered person whose turnover during
a financial year exceeds the prescribed limit shall get
his accounts audited by a chartered accountant or a
cost accountant.
Section 35 of the CGST Act, 2017 provides that
every registered person shall keep and maintain, at
his principal place of business, as mentioned in the
certificate of registration, a tr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ollowing accounts and records will have to be
maintained by every registered person:
a) accounts of stock in respect of goods received and sup-
plied; and such account shall contain particulars of the
opening balance, receipt, supply, goods lost, stolen, de-
stroyed, written off or disposed of by way of gift or free
samples and balance of stock including raw materials,
finished goods, scrap and wastage thereof;
b)
c)
d)
a separate account of advances received, paid and ad-
justments made thereto;
an account, containing the details of tax payable, tax
collected and paid, input tax, input tax credit claimed,
together with a register of tax invoice, credit note, debit
note, delivery challan issued or received during any tax
period [not required for person paying tax under sec-
tion 10];
names and complete addresses of suppliers from whom
goods or services, chargeable to tax under the Act, have
been received;
e) names and complete addresses of the persons to whom
sup
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
he details of payment received in respect of each
works contract; and
the names and addresses of suppliers from whom
he has received goods or services.
The books of account shall be kept at the principal
place of business and at every related place(s) of
business mentioned in the certificate of registration
and such books of account shall include any
117
GST FLYERS
7.
8.
electronic form of data stored on any electronic
devices. The data so stored shall be authenticated by
way of digital signature. Unless proved otherwise, if
any documents, registers, or any books of account
belonging to a registered person are found at
any premises other than those mentioned in the
certificate of registration, they shall be presumed to
be maintained by the said registered person. If any
taxable goods are found to be stored at any place(s)
other than those declared without the cover of any
valid documents, the proper officer shall determine
the amount of tax payable on such goods
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
s,
bills of supply, credit and debit notes,
and delivery
challans relating to stocks, deliveries, inward supply
and outward supply shall be preserved for seventy-
two months (six years) from the due date of
furnishing of annual return for the year pertaining
to such accounts and records and shall be kept at
every related place of business mentioned in the
certificate of registration.
A registered person, who is a party to an appeal
or revision or any other proceedings whether
filed by him or by the Commissioner, or is under
investigation for an offence, has to retain the
records pertaining to the subject matter of such
appeal or revision or proceedings or investigation
for a period of one year after final disposal of such
appeal or revision or proceedings or investigation,
or for the period specified above (seventy-two
months), whichever is later.
Electronic Records: The following requirements
have been prescribed for maintenance of records
in electronic form.
Pr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
mon Portal in FORM GST ENR-01. A unique
enrolment number shall be generated and communicated
to them. A person enrolled in any other State or Union
territory shall be deemed to be enrolled in the State or
Union Territory.
12. Every person engaged in the business of transporting
goods shall maintain records of goods transported,
delivered and goods stored in transit by him and
for each of his branches. Every owner or operator
of a warehouse or godown shall maintain books
of accounts, with respect to the period for which
particular goods remain in the warehouse, including
120
Accounts and Records in GST
the particulars relating to dispatch, movement,
receipt, and disposal of such goods. The goods shall
be stored in such manner that they can be identified
item wise and owner wise and shall facilitate any
physical verification or inspection, if required at any
time.
******
121
Chapter Fifteen
Credit Note in GST
Introduction:
A supplier of goods or services or both
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e has been issued for supply of any goods
or services or both and the taxable value or tax charged
in that tax invoice is found to exceed the taxable value or
tax payable in respect of such supply, or where the goods
supplied are returned by the recipient, or where goods or
services or both supplied are found to be deficient, the
registered person, who has supplied such goods or services
or both, may issue to the recipient what is called as a credit
note containing the prescribed particulars.
Format
There is no prescribed format but credit note issued by a
supplier must contain the following particulars, namely: –
a)
name, address and Goods and Services Tax Identifica-
tion Number of the supplier;
b) nature of the document;
c) a consecutive serial number not exceeding sixteen char-
acters, in one or multiple series, containing alphabets or
numerals or special characters hyphen or dash and slash
symbolised as “-” and “/” respectively, and any combina-
tion thereof, u
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e date of furnishing of the relevant annual
return, whichever is earlier. In other words, the output tax
liability cannot be reduced in cases where credit note has
been issued after September.
The output tax liability of the supplier gets reduced once
the credit note is issued and it is matched. The details of
the credit note relating to outward supply furnished by the
supplier for a tax period shall, be matched-
a) with the corresponding reduction in the claim for
124
Credit Note in GST
input tax credit by the recipient in his valid return
for the same tax period or any subsequent tax peri-
od; and
b) for duplication of claims for reduction in output tax
liability.
The claim for reduction in output tax liability by the supplier
that matches with the corresponding reduction in the claim
for input tax credit by the recipient shall be finally accepted
and communicated to the supplier. The reduction in output
tax liability of the supplier shall not be permitted, if the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
f the supplier
125
GST FLYERS
in his return for the month in which such duplication is
communicated.
Records
The records of the credit notes have to be retained until
the expiry of seventy-two months from the due date of
furnishing of annual return for the year pertaining to such
accounts and records. Where such accounts and documents
are maintained manually, it should be kept at every related
place of business mentioned in the certificate of registration
and shall be accessible at every related place of business where
such accounts and documents are maintained digitally.
Conclusion
The credit note is therefore a convenient and legal method
by which the value of the goods or services in the original
tax invoice can be amended or revised. The issuance of the
credit note will easily allow the supplier to decrease his tax
liability in his returns without requiring him to undertake
any tedious
process of refunds.
******
126
Chapter Sixteen
Debit Note in GST
Introd
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r
tax payable in respect of such supply, the registered person,
who has supplied such goods or services or both, shall issue
to the recipient a debit note containing the prescribed
particulars.
Format:
There is no prescribed format but debit note issued by a
supplier must contain the following particulars, namely: –
a) name,
address and Goods and Services Tax Identifica-
tion Number of the supplier;
b) nature of the document;
c) a consecutive serial number not exceeding sixteen char-
acters, in one or multiple series, containing alphabets or
numerals or special characters hyphen or dash and slash
symbolised as “-” and “/” respectively, and any combina-
tion thereof, unique for a financial year;
d) date of issue;
e) name, address and Goods and Services Tax Identifica-
tion Number or Unique Identity Number, if registered,
of the recipient;
f) name and address of the recipient and the address of
delivery, along with the name of State and its code, if
such recipient
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
stration and shall be accessible at
every related place of business where such accounts and
documents are maintained digitally.
Conclusion:
The debit note or a supplementary invoice is therefore a
convenient and legal method by which the value of the
goods or services in the original tax invoice can be enhanced.
The issuance of the debit note will easily allow the supplier
129
GST FLYERS
to pay his enhanced tax liability in his returns without
requiring him to undertake any other tedious process.
******
130
Chapter Seventeen
Electronic Cash/Credit
Ledgers and Liability Register
in GST
Introduction:
On the common portal each registered taxpayer will have
one electronic register called the Electronic liability register
and two electronic ledgers namely Electronic Cash Ledger
and Electronic Credit Ledger. These register and ledgers will
reflect the amount of tax payable, the amount available to
settle the tax liability online, and input credit balance. This
is a h
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
electronic liability register is maintained in FORM
GST PMT-01 for each person liable to pay tax, interest,
penalty, late fee or any other amount on the common portal
and all amounts payable by him shall be debited to the said
register. The electronic liability register will be maintained
in two parts at the common portal.
Part I will be for maintaining the return related liabilities.
All liabilities accruing due to return and payments made
against the same will be recorded in this part of the register.
Liabilities due to opting for composition and cancellation of
registration will also be covered in this part. Such liabilities
shall be populated in the liability register of the tax period
in which the date of application or order falls, as the case
may be.
Part II will be for maintaining the complete description of
the transactions of all liabilities accruing, other than return
related liabilities. Such other liabilities may include the
following:
Liabilities due to
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
x credit
or any amount of interest that may accrue from
time to time;
the amount deducted by the Government
authorities from the payment made or credited
to the supplier of taxable goods or services or
both, where the total value of such supply, under
a contract, exceeds two lakhs and fifty thousand
133
GST FLYERS
rupees;
the amount required to be collected by every
electronic commerce operator on the net value of
taxable supplies made through it by other suppliers
where the consideration with respect to such
supplies is to be collected by the operator;
the amount payable on reverse charge basis;
the amount payable under the Composition levy
scheme;
amount payable towards interest, penalty, fee;
Any other amount under the GST Act.
Any amount of demand debited in the electronic liability
register shall stand reduced to the extent of relief given by
the appellate authority or Appellate Tribunal or court and
the electronic liability register shall be credited accor
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
the amount deposited and debiting
the payment therefrom towards tax, interest, penalty, fee
or any other amount. The payment required to be made
by an unregistered person, can be made on the basis of a
temporary identification number generated through the
common portal.
A challan in FORM GST PMT-06 can be generated on
the common portal in which the details of the amount to
be deposited towards tax, interest, penalty, fees or any other
amount is to be entered. This challan will be valid for a
period of fifteen days.
The deposit can be made through any of the following
modes, namely: –
i. Internet Banking through authorised banks;
ii. Credit card or Debit card through the authorised
bank;
iii.
iv.
NEFT or RTGS from any bank; or
Over the Counter payment through authorised
banks for deposits up to Rs 10,000/-
per challan
tax period, by cash, cheque or demand draft.
per
135
GST FLYERS
When the payment is made by way of NEFT or RTGS
mode from any bank, the mandate
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
hich the deposit was initiated.
The amount deducted under section 51 or collected under
section 52 and claimed in FORM GSTR-2 by the registered
person from whom the said amount was deducted or, as the
case may be, collected will be credited to his electronic cash
ledger.
Refund from cash ledger can only be claimed only when all
the return related liabilities for that tax period have been
136
Electronic Cash/Credit Ledgers and Liability Register in GST
discharged. A registered person, claiming refund of any
balance in the electronic cash ledger can claim such refund
in Part B of the return in FORM GSTR-3 and such return
shall be deemed to be an application filed under section 54
of the CGST Act, 2017.
Electronic credit ledger:
The electronic credit ledger shall be maintained in FORM
GST PMT-02 for each registered person eligible for input
tax credit on the common portal and every claim of input tax
credit will be credited to this ledger. The amount available
in the e
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
and route.
Electronic Way Bill (E-Way Bill) is basically a compliance
mechanism wherein by way of a digital interface the person
causing the movement of goods uploads the relevant
information prior to the commencement of movement of
goods and generates e-way bill on the GST portal.
Rule 138 of the CGST Rules, 2017 provides for the e-way
bill mechanism and in this context it is important to note
that “information is to be furnished prior to the commencement
of movement of goods” and “is to be issued whether the movement
is in relation to a supply or for reasons other than supply”.
E-Way Bill under GST
E-way bill is an electronic document generated on the
GST portal evidencing movement of goods. It has two
138
Electronic Way Bill in GST
Components Part A comprising of details of GSTIN of
recipient, place of delivery (PIN Code), invoice or challan
number and date, value of goods, HSN code, transport
document number (Goods Receipt Number or Railway
Receipt Number or Ai
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rate it.
Further, it has been provided that where goods are sent by
a principal located in one State to a job-worker located in
any other State, the e-way bill shall be generated by the
principal irrespective of the value of the consignment.
Also, where handicraft goods are transported from one State
to another by a person who has been exempted from the
139
GST FLYERS
requirement of obtaining registration, the e-way bill shall
be generated by the said person irrespective of the value of
the consignment.
How is it generated?
in
Ane-way bill contains two parts- Part A to be furnished by the
person who is causing movement of goods of consignment
value exceeding Rs. 50,000/- and part B (transport details)
to be furnished by the person who is transporting the goods.
Where the goods are transported by a registered person-
whether as consignor or recipient, the said person shall
have to generate the e-way bill by furnishing information
part B on the GST common portal. Whe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
by the common portal on the basis of the
information furnished in FORM GST INV-1.
Upon generation of the e-way bill on the common portal, a
unique e-way bill number (EBN) generated by the common
portal, shall be made available to the supplier, the recipient
and the transporter on the common portal.
The details of e-way bill generated shall be made available
to the recipient, if registered, on the common portal, who
shall communicate his acceptance or rejection of the
consignment covered by the e-way bill. In case, the recipient
does not communicate his acceptance or rejection within
seventy-two hours of the details being made available to
him on the common portal, it shall be deemed that he has
accepted the said details.
Purpose of E-Way Bill
E-way bill is a mechanism to ensure that goods being
transported comply with the GST Law and is an effective
tool to track movement of goods and check tax evasion.
Validity of E-Way Bill
The validity of e-way bill depends on th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
an e-way bill has been generated under this rule, but
goods are either not transported or are not transported as
per the details furnished in the e-way bill, the e-way bill may
be cancelled electronically on the common portal, either
directly or through a Facilitation Centre notified by the
Commissioner, within 24 hours of generation of the e-way
bill. However, an e-way bill cannot be cancelled if it has
been verified in transit in accordance with the provisions of
rule 138B of the CGST Rules, 2017.
The facility of generation and cancellation of e-way bill will
also be made available through SMS.
Finer Points
An e-way bill has to be prepared for every consignment where
the value of the consignment exceeds Rs. 50,000/-. Where
multiple consignments of varying values (per consignment)
142
Electronic Way Bill in GST
are carried in a single vehicle, e-way bill needs to be
mandatorily generated only for those consignments whose
value exceeds Rs. 50,000/-. This does not ho
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ply or delivery challan, as the case may be; and
bill or the
e-way
a copy of the
e-way bill number, either
physically or mapped to a Radio Frequency Identification
Device embedded on to the conveyance in such manner
as may be notified by the Commissioner. However, where
circumstances so warrant, the Commissioner may, by
notification, require the person-in-charge of the conveyance
to carry the following documents instead of the e-way bill-
143
GST FLYERS
a) tax invoice or bill of supply or bill of entry; or
b) a delivery challan, where the goods are transported for
reasons other than by way of supply.
It is also be noted that the Commissioner may, by notification,
require a class of transporters to obtain a unique Radio
Frequency Identification Device and get the said device
embedded on to the conveyance and map the e-way bill
to the Radio Frequency Identification Device prior to the
movement of goods.
E-Way bill to be issued whether for supply or otherwise
E-way
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
than Rs. 50,000/-
Consequences of non-conformance to E-way bill rules
If e-way bills, wherever required, are not issued in accordance
with the provisions contained in Rule 138 of the CGST
Rules, 2017, the same will be considered as contravention of
rules. As per Section 122 of the CGST Act, 2017, a taxable
person who transports any taxable goods without the cover
of specified documents (e-way bill is one of the specified
documents) shall be liable to a penalty of Rs. 10,000/- or
tax sought to be evaded (wherever applicable) whichever is
greater. As per Section 129 of CGST Act, 2017, where any
person transports any goods or stores any goods while they
are in transit in contravention of the provisions of this Act
or the rules made thereunder, all such goods and conveyance
used as a means of transport for carrying the said goods and
documents relating to such goods and conveyance shall be
liable to detention or seizure.
Enforcement
The Commissioner or an officer empower
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
yance has been done during transit at one place
within the State or in any other State, no further physical
verification of the said conveyance shall be carried out again
in the State, unless a specific information relating to evasion
of tax is made available subsequently.
Where a vehicle has been intercepted and detained for
a period exceeding thirty minutes, the transporter may
upload the said information in FORM GST EWB-04 on
the common portal.
Recent Developments in respect of the E-Way Bill
mechanism under GST.
Decision of GST Council: Inter-State e-way Bill to be
146
Electronic Way Bill in GST
made compulsory from 1 st of February, 2018; system to
be ready by 16th of January, 2018.
The 24th meeting of the GST Council held on 16.12.2017
discussed about the implementation of e-way Bill system in
the country. Till such time as National e-way Bill is ready,
the States were authorized to continue their own separate
e-way Bill systems. However, it was represented by
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ruary, 2018 from which E-Way Bill Rules will come
into force.
While the system for both inter-State and in-
147
GST FLYERS
tra-State e-way Bill generation will be ready by 16th
January, 2018, the States may choose their own tim-
ings for implementation of e-way Bill for intra-State
movement of goods on any date before 1st June,
2018. There are certain States which are already hav-
ing system of e-way Bill for intra-State as well as
inter-State movement and some of those States can
be early adopters of national e-way Bill system for
intra-State movement also. But in any case uniform
system of e-way Bill for inter-State as well as in-
tra-State movement will be implemented across the
country by 1st June, 2018.
Conclusion
The e-way bill provisions aim to remove the ills of the
erstwhile way bill system prevailing under VAT in different
states, which was a major contributor to the bottlenecks
at the check posts. Moreover, different states prescribed
different e-way bi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
res of the
GST system is that the entire supply chain would be subject
to GST to be levied by Central and State Government
concurrently. As the tax charged by the Central or the State
Governments would be part of the same tax regime, credit
of tax paid at every stage would be available as set-off for
payment of tax at every subsequent stage.
Let us understand how 'cascading' of taxes takes place in the
present regime. Central excise duty charged on inputs used
for manufacture of final product can be availed as credit
for payment of Central Excise Duty on the final product.
For example, to manufacture a pen, the manufacturer
requires, plastic granules, refill tube, metal clip, etc. All
149
GST FLYERS
these 'inputs' are chargeable to central excise duty. Once a
'pen' is manufactured by using these inputs, the pen is also
chargeable to central excise duty. Let us assume that the
cost of all the above mentioned inputs is say, Rs.10/- on
which central excise duty @10% is
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tune of Rs.2/-. This is cascading of
taxes or tax on tax as now VAT is not only paid on the value
of pen i.e. Rs.20/- but also on tax i.e. Rs.2/-.
Goods and Services Tax (GST) would mitigate such
cascading of taxes. Under this new system most of the
indirect taxes levied by Central and the State Governments
on supply of goods or services or both would be combined
together under a single levy. The major taxes/levies which
are going to be clubbed together or subsumed in the GST
150
regime are as under:
•
•
•
Central Taxes
Input Tax Credit Mechanism in GST
Central Excise duty
Additional duties of
excise
Excise duty levied
under Medicinal &
Toilets Preparation
Act
Additional duties of
customs (CVD &
SAD)
State Taxes
.
State VAT / Sales
Tax
.
•
.
.
.
Service Tax
•
Surcharges &Cesses
•
Central Sales Tax
Purchase Tax
Entertainment Tax
(other than those
levied by local bod-
ies)
Luxury Tax
Entry Tax (All
forms)
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ST
May be utilised fur-
ther for payment of
IGST
IGST
CGST, then SGST/
IGST
IGST
UTGST
Credit of CGST cannot be used for payment of SGST/
UTGST and credit of SGST / UTGST cannot be
utilised for payment of CGST.
Some of the technical aspects of the scheme of Input Tax
Credit are as under:
a) Any registered person can avail credit of tax paid on
the inward supply of goods or services or both which
is used or intended to be used in the course or further-
ance of business.
b) The pre-requisites for availing credit by registered per-
son are:
152
Input Tax Credit Mechanism in GST
a) He is in possession of tax invoice or any other
specified tax paying document.
b) He has received the goods or services. “Bill to ship”
scenarios also included.
c) Tax is actually paid by the supplier.
d) He has furnished the return.
e) If the inputs are received in lots, he will be eligible
to avail the credit only when the last lot of the in-
puts is received.
f) He should
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or (ISD) may distribute the
credit available for distribution in the same month in
which it is availed. The credit of CGST, SGST, UTGST
and IGST shall be distributed as per the provisions of
Rule 4(1)(d) of ITC Rules. ISD shall issue invoice in
accordance with the provisions made under Rule 9(1)
of Invoice Rules.
c) ITC is not available in some cases as mentioned in sec-
tion 17(5) of CGST Act, 2017. Some of them are as
follows:
a) motor vehicles and other conveyances except
under specified circumstances.
b) goods and/or services provided in relation to
i.
ii.
iii.
food and beverages, outdoor catering,
beauty treatment, health services, cosmet-
ic and plastic surgery, except under speci-
fied circumstances;
membership of a club, health and fitness
center;
Rent-a-cab, life insurance, health insur-
154
iv.
Input Tax Credit Mechanism in GST
ance except where it is obligatory for an
employer under any law;
travel benefits extended to employees on
vacation such
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
f goods held
in stock (inputs as such and inputs contained in
155
GST FLYERS
semi-finished or finished goods) on the day imme-
diately preceding the date from which he becomes
liable to pay tax.
b) A
person who has taken voluntary registration un-
der section 23(3) of the CGST Act, 2017 is enti-
tled to ITC of input tax in respect of goods held
in stock(inputs as such and inputs contained in
semi-finished or finished goods) on the day imme-
diately preceding the date of registration.
c) A person switching over to normal scheme from
composition scheme under section10 is entitled
to ITC in respect of goods held in stock(inputs as
such and inputs contained in semi-finished or fin-
ished goods) and capital goods on the day imme-
diately preceding the date from which he becomes
liable to pay tax as normal taxpayer.
d) Where an exempt supply of goods or services or
both become taxable, the person making such
supplies shall be entitled to take ITC in respect
of goods h
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y, on which ITC is taken, an amount
equivalent to ITC availed minus the reduction as
prescribed in rules (5% for every quarter or part
thereof shall have to be paid. In case the tax on
transaction value of the supply is more, the same
would have to be paid.
******
157
Chapter Twenty
Transition Provisions under
GST
GST is a significant reform in the field of indirect taxes
in our country. Multiple taxes levied and collected by the
Centre and States have been 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.
As GST sought to consolidate multiple taxes into one it
was very essential to have transitional provisions to ensure
that the transition to the GST regime is very smooth and
hassle free and no ITC (input tax credit) / benefits earned
in the existing regime are lost. The transition provisions can
be categorized under three heads:
a) relating to input tax credit
b) Continuanc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
existing law. In order to claim this
credit, declaration in form GST TRAN 1 is required to be
furnished on the common portal within ninety days from
the appointed day i.e. 1st July, 2017 or within such extended
time.
b) Un-availed credit on capital goods:
The balance instalment of un-availed credit on capital goods
credit can also be taken by filing the requisite declaration in
the GST TRAN 1.
c) Credit on duty paid stock:
A registered taxable person, other than manufacturer or
service provider, may have a duty paid goods in his stock
on 1st July, 2017. GST would be payable on all supplies of
goods or services made after the appointed day. It is not the
intention of the Government to collect tax twice on the
159
GST FLYERS
same goods. Hence, in such cases, it has been provided that
the credit of the duty/tax paid earlier would be admissible
as credit. Such credit can be taken as under:
i.
credit shall be taken on the basis of invoice evidenc-
ing payment of duty o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
it shall be allowed at @ 30% and 20%
respectively of the said tax.
160
Transition Provisions under GST
iii.
iv.
V.
Credit would be allowed after the GST is paid on
such goods subject to the condition that the benefit
of such credit is passed on to the customer by way
reduced prices.
of
A statement of supply of such goods in each of six
tax period has to be submitted
Stocks stored should be easily identifiable.
e) Credit relating to exempted goods under the existing
law which are now taxable.
/
Input Tax Credit of CENVAT VAT in respect of input,
semi-finished and finished goods in stock attributable to
such exempted goods or services which are now taxable can
also be taken in the same manner.
f) Input/input services in transit:
There might be a scenario where input or input services are
received on or after the appointed day but the duty or tax
on the same was paid by the supplier under the existing law.
Registered person (RP) may take credit of eligible duties
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
day.
h) ITC in case of Centralized Registration under ser-
vice tax:
Such registered person can take credit of the amount of
CENVAT carry forwarded in return furnished under the
existing law, if the original / revised return under the existing
law has been filed within three months. Such credit may be
transferred to any of the registered persons having the same
PAN for which the centralized registration was obtained.
i) Reclaim the reversed Input Service credit:
CENVAT credit reversed on account of non-payment of
consideration within three months can be reclaimed if
payment is made to the supplier of service within 3 months
162
Transition Provisions under GST
from 1st July, 2017
j) Where any goods or capital goods belonging to the
principal are lying at the premises of the agent on the
Appointed Day:
This provision is specific to SGST law. In such cases, agent
shall be entitled to take credit subject to the following
conditions:
i.
ii.
iii.
iv.
the agent is a
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
a registered person without payment of
tax within the prescribed period. In case of finished goods,
the manufacturer may transfer the goods on payment of tax
or clear for export within the prescribed period.
b) Goods removed before 6 months of the appointed
day i.e. 1st July, 2017 but returned within 6 months
from 1st July, 2017:
If such goods are returned by an unregistered person, then
refund of the duty/VAT paid under existing law can be
claimed
If returned by a registered person, then return of goods shall
be treated as supply of goods (ITC can be claimed)
c) Goods sent on approval basis before 6 months of the
appointed day i.e. 1st July, 2017 but returned within 6
months from 1st July, 2017:
No tax is payable by the person returning the goods.
Commissioner may extend the period by 2 months. If
returned after that, tax is payable if the supply is taxable
under GST (by the recipient. If not returned, tax is payable
by the
person who sent the goods on approval ba
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
come operational w.e.f. 1st July, 2017 and
existing laws have been repealed. Elaborate provisions have
been made to save the pending as well future claims relating
to existing law made before, on or after the appointed day
i.e. 1st July, 2017. Such proceedings may pertain to refund
claims of CENVAT credit/VAT or export related rebate or
service tax, such proceedings may either result in recovery
of tax or refund.
All such cases would be disposed of under the existing
law. If any claim for refund of CENVAT credit is fully or
partially rejected, the amount so rejected shall lapse. Refund
of CENVAT credit shall be paid in cash. There will be
165
GST FLYERS
no refund of CENVAT if already carry forwarded. If any
amount becomes recoverable, the same shall be recovered as
arrear of tax under GST Act.
Statutory provisions relating to transition are contained in
chapter XX (section 139 to 142) of the CGST Act, 2017,
SGST Act(s), 2017 and Rule 117 to 121 of the CGST
Rules, 20
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
i.
Before discussing the IGST Model and its features it
is important to understand how inter-state trade or
commerce is being regulated in the present indirect
tax system. It is significant to note that presently the
Central Sales Tax Act, 1956 regulates the inter-state
trade or commerce (hereinafter referred to as “CST”)
the authority for which is constitutionally derived
from Article 269 of the Constitution. Further as per
article 286 of the Constitution of India, no State
can levy sales tax on any sales or purchase of goods
that takes place outside the State or in the course of
the import of the goods into, or export of the goods
out of, the territory of India Only Parliament can
levy tax on such transaction. The Central Sales Tax
Act was enacted in 1956 to formulate principles for
determining when a sale or purchase of goods takes
place in the course of interstate trade or commerce.
The Act also provides for the levy and collection of
taxes on sale of goods in th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ve all these deficiencies.
IGST is a mechanism to monitor the inter-state
trade of Goods and services and further to ensure
that the SGST component accrues to the consumer
state. It would maintain the integrity of Input Tax
Credit (hereinafter referred to as “ITC”) chain in
inter-state supplies. The IGST rate would broadly
be equal to CGST rate plus SGST rate. I G ST
would be levied by the Central Government on all
inter-State transactions of taxable goods or services.
IGST rate= CGST rate + SGST rate (more or less)
******
169
GST FLYERS
Sale Within
Same State
GST
Inter State
Sale
CGST
SGST
IGST
6.
7.
Cross-utilization of credit requires transfer of funds
between respective accounts. The utilization of credit
of CGST & SGST for payment of IGST by “B”
would require transfer of funds to IGST accounts.
Similarly, the utilization of IGST credit for
payment
of CGST & SGST by “C” would necessitate transfer
of funds from IGST account. As a result, CG
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r 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
supply. Further supply of goods imported into territory
of India till they cross the customs frontiers of India or
supply of services imported into the territory of India shall
be treated as supplies in the course of inter-State trade or
commerce. Even supplies to international tourists are to be
treated as inter-state supplies.
ii.
Intra-State supply:
It has been defined as any supply where the location of the
supplier and the place of supply are in the same State or
Union territory.
171
GST FLYERS
Intra state supply
Supply of goods
within the state
or union terri-
tory.
Supply of ser-
vices within the
state or union
territory
Interstate supply
Supply of goods from one state
or union territory to other state
or union territory.
Supply of ser
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ources.
172
10. Place of supply
Integrated Goods and Services Tax Act
10.1 Place of supply provisions have been framed for goods &
services keeping in mind the destination/consumption prin-
ciple. In other words, place of supply is based on the place
of consumption of goods or services. As goods are tangi-
ble, the determination of their place of supply based on the
consumption principle is not difficult. Generally the place
of delivery of goods becomes the place of supply. However,
the services being intangible in nature, it is not easy to de-
termine the exact place where services are acquired, enjoyed
and consumed. In respect of certain categories of services,
the place of supply is determined with reference to a proxy.
10.2A distinction has been made between B2B (Business to
Business) & B2C(Business to Consumer) transactions as
B2B transactions are wash transactions as ITC is availed
by such registered person (recipient) and no real revenue
accrues to the Govt.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
n
Location of such
goods at the time of
delivery to recipient
The place where the
goods are assembled or
installed
174
Integrated Goods and Services Tax Act
5
where the goods are
supplied on board
The place where such
goods are taken on
a conveyance, like
vessel, aircraft, train or
motor vehicle
6
Where the place
of supply of goods
cannot be determined
in terms of sub-
section (2), (3), (4)
and (5)
board the
conveyance
It shall be determined
in such manner as may
be prescribed
B. Place of supply of goods in case of import & Export [
Section -11]
S.No. Nature of supply of
Place of Supply
goods
1
Import
location of importer
2
Export
location outside
India
C. Place of supply of services in case of domestic supplies:
(section12)
(Where the location of supplier of services and the location
of the recipient of services is in India.)
i.
In respect of following 12category of services, the
175
GST FLYERS
1
2
S.No
place of supply is determined
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
f event is held outside
India Location of the re-
cipient
of B2B: Location of such
goods including registered person;
mails
B2C Location at which
such goods are
hand-
ed over for their transpor-
tation
7
Passenger transpor- B2B:
Location of such
tation.
registered person;
8
B2C : Place where the
passenger embarks on
the conveyance for a con-
tinuous journey
Services on board a Location of the first sched-
conveyance
uled point of departure of
that conveyance for the
journey.
177
GST FLYERS
9
Telecommunication Services involving fixed
services.
10
Banking and other
financial services,
line, circuits, dish etc.,
place of supply is location
of such fixed equipment.
In case of mobile/ inter-
net post-paid services, it is
location of billing address
of the recipient. In case of
sale of pre-paid voucher,
place of supply is place of
sale of such vouchers. In
other cases it is address of
the recipient in records.
Location of the recipient
of servi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ies
🙁 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.
179
GST FLYERS
Rest of the services are governed by a default pro-
vision.
S.No
Nature of service
Place of supply
1
Services supplied in re-
spect of goods that are
the location where the
services are actually
required to be made performed,
physically available
from a remote location
by way of electronic
means,
the
location where
(Not Applicable in case
goods are situated
of goods that are tem-
porarily imported into
India for repairs and ex-
2
3
4
ported.)
services supplied to an the location where the
individual which require services
the physical presence of performed.
the receiver
are actually
Immovable property re- Location at which the
lated services including
hotel accommodation.
Admission to or organ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
GST FLYERS
9
Services on board a con- The first scheduled
veyance.
that conveyance for the
10
point of departure of
journey.
online information The location of recipi-
and database access ent of service.
ΟΙ retrieval services”
ii.
For the rest of the services other than those speci-
fied 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 Place of supply
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 State or Union territory where
the nearest point of the appropriate baseline is located.
12. Export/Im
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
on which no tax is payable.
183
GST FLYERS
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.
ii.
14.
supply made without payment of IGST under Bond
and claim refund of unutilised ITC or
supply made on payment of IGST and claim refund
of the same.
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 f
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
exporter will be eligible
for refund of input tax credit of Compensation Cess relating
to goods exported. In case goods have been exported on
the payment of Compensation Cess the exporter will be
185
GST FLYERS
eligible for refund of Compensation Cess paid on goods
exported by him. Compensation cess shall not be leviable
on supplies made by a taxable person who has decided to
for composition levy.
opt
Input Tax Credit:
The input tax credit in respect of compensation cess on
supply of goods or services can be utilised only towards
payment of the compensation cess on supply of goods or
services.
Valuation if Cess to be levied on value:
In case the compensation cess is chargeable on any supply
of goods or services or both with reference to their value,
then for each such supply, the value has to be determined
under section 15 of the Central Goods and Services Tax
Act, 2017.
Laws and Rules applicable:
The provisions of the Central Goods and Services Tax Act,
2017 an
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
T regime, Article 269A constitutionally
mandates that supply of goods, or of services, or both in the
course of import into the territory of India shall be deemed
to be supply of goods, or of services, or both in the course
of inter-State trade or commerce. So import of goods or
services will be treated as deemed inter-State supplies
and would be subject to Integrated tax. While IGST on
import of services would be leviable under the IGST
Act, the levy of the IGST on import of goods would be
levied under the Customs Act, 1962 read with the Custom
Tariff Act, 1975. The importer of services will have to pay
tax on reverse charge basis. However, in respect of import
of online information and database access or retrieval
services (OIDAR) by unregistered, non-taxable recipients,
the supplier located outside India shall be responsible for
payment of taxes (IGST). Either the supplier will have to
take registration or will have to appoint a person in India
for payment of taxes.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
75 on the value as determined
under the said Act at the point when duties of customs
are levied on the said goods under the Customs Act, 1962.
The integrated tax on goods shall be in addition to the
applicable Basic Customs Duty (BCD) which is levied as
per the Customs Tariff Act. In addition, GST compensation
cess, may also be leviable on certain luxury and de-merit
goods under the Goods and Services Tax (Compensation
to States) Cess Act, 2017.
The Customs Tariff Act, 1975 has accordingly been amended
to provide for levy of integrated tax and the compensation
cess on imported goods. Accordingly, any goods which are
imported into India shall, in addition to the Basic Customs
duty, be liable to integrated tax at such rate as is leviable
189
GST FLYERS
Sr. Date of Details of registered
Jurisdictional
No. prior in-person
GST officer
Invoice no. and Details of supplies
|date of regis-received
Amount of GST paid by
Date of
supplier
sending
timation
details of regi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
sable value plus
Customs Duty levied under the Act, and any other duty
chargeable on the said goods under any law for the time
being in force as an addition to, and in the same manner as,
a duty of customs.
The value of the imported article for the purpose of levying
cess shall be assessable value plus Basic Customs Duty levied
under the Act, and any sum chargeable on that goods under
any law for the time being in force as an addition to, and
in the same manner as, a duty of customs. The integrated
tax paid shall not be added to the value for the purpose of
calculating cess.
Let's take an example:
Suppose the assessable value of an article imported into
India is Rs. 100/-. Basic Customs Duty is 10% ad-valorem.
Education Cess is 3%; Integrated tax rate is 18% and
Compensation Cess is 15%
The taxes will be calculated as under:
Particulars
(A)
Assessable Value
Duty
Rs. 100/-
(B)
Basic Customs
Rs.10/-
Duty@10%
(C)
Education Cess @3%
Rs.0.30
(D)
Value for Inte
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Tax Treatment of Goods imported into India and
deposited in a warehouse and sold while in warehouse
before clearance from Customs (Circular No. 46/2017
dated 24th November, 2017):
The Customs Act, 1962 provides for removal of goods from
192
Imports in GST Regime
a customs station to a warehouse without payment of duty.
The said Act has been amended to include 'warehouse' in
the definition of “customs area” in order to ensure that an
importer would not be required to pay the Integrated tax at
the time of removal of goods from a customs station to a
warehouse.
However, the transaction of sale / transfer etc. of the
warehoused goods between the importer and any other
person may be at a price higher than the assessable value
of such goods. Such a transaction squarely falls within the
definition of “supply” and shall be taxable under the IGST
Act, 2017. It may be noted that as per sub-section (2) of
section 7 of the IGST Act, any supply of imported goods
which ta
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ter during the said sale. IGST on high
sea sale (s) transactions of imported goods, whether one
or multiple, shall be levied and collected only at the time
of importation i.e. when the import declarations are filed
before the Customs authorities for the customs clearance
purposes for the first time. Further, value addition accruing
in each such high sea sale shall form part of the value on
which IGST is collected at the time of clearance.
Import of goods by 100% EOU's and SEZs:
Import of goods by 100% EOU's would be governed
by Notification no. 52/2003-Customs as amended by
Notification no. 78/2017-Customs dated 13.10.2017.
EOUS are allowed duty free import of goods (exempt from
Customs duties, IGST & Compensation Cess) under the
said notifications. However, exemption from IGST is only
available till 31.03.2018.
Goods imported by a unit or a developer in the Special
Economic Zone for authorised operations are exempted
from the whole of integrated tax under section 3 (
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
er the
GST regime.
As per section 11 of the IGST Act, 2017 the place of supply
of goods, imported into India shall be the location of the
importer. Thus, if an importer say is located in Rajasthan,
the state tax component of the integrated tax shall accrue to
the State of Rajasthan.
Import of services
Import of services has specifically been defined under
IGST Act, 2017 and refers to supply of any service where
the supplier is located outside India, the recipient is located
in India and the place of supply of service is in India.
As
per the provisions contained in Section 7(1) (b) of the
CGST Act, 2017, import of services for a consideration
whether or not in the course or furtherance of business
shall be considered as a supply. Thus, in general, import of
services without consideration shall not be considered as
195
GST FLYERS
supply. However, business test is not required to be fulfilled
for import of service to be considered as supply.
Furthermore, in view of t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
erance of business.
The same has been explained in the table below:
Business Test
Nature of Service
Consideration
Import of services
Necessarily
Required
Not required
196
Imports in GST Regime
Import of services
by a taxable person
Not required
Necessarily
Required
from a related
person or from a
distinct person
As per the provisions contained in Section 21 of the IGST
Act, 2017, all import of services made on or after the
appointed day i.e 1st July, 2017 will be liable to integrated
tax regardless of whether the transactions for such import
of services had been initiated before the appointed day.
However, if the tax on such import of services had been
paid in full under the existing law, no tax shall be payable on
such import under the IGST Act. In case the tax on such
import of services had been paid in part under the existing
law, the balance amount of tax shall be payable on such
import under the IGST Act, 2017. For instance, suppose a
supply of servic
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cation of
the supplier of services.
supplied Location where the services
in respect of goods are actually performed
which are required
to be made physical-
ly available
Services which re-
quire the physical
presence of the re-
cipient or the person
acting on his behalf
with the supplier of
services
Services are provided Location where goods are
on goods but from situated at the time of sup-
a remote location ply of services
by way of electronic
means
Above provisions is not applicable in respect of goods
which are temporarily imported into India for repairs
and are exported after repairs
Services supplied di-
rectly in relation to
an immovable prop-
erty
Place where the immovable
property is located or in-
tended to be located
Admission to, or Place where the event is ac-
organisation of an tually held
event
198
4.1 Above Services pro- India
4,2
5
5.1
5.2
6
vided in more than
one country includ-
ing India
Imports in GST Regime
Above Services p
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t, 2017, a supply is
said to be exempt, when it attracts nil rate of duty or is
specifically exempted by a notification or kept out of the
purview of tax (i.e. a non-GST supply). But if a good or
service is exempted from payment of tax, it cannot be said
that it is zero rated. The reason is not hard to find. The
inputs and input services which go into the making of the
good or provision of service has already suffered tax and only
the final product is exempted. Moreover, when the output
is exempted, tax laws do not allow availment/utilisation of
credit on the inputs and input services used for supply of the
exempted output. Thus, in a true sense the entire supply is
not zero rated. Though the output suffers no tax, the inputs
and input services have suffered tax and since availment of
tax credit on input side is not permitted, it becomes a cost
for the supplier. The concept of zero rating of supplies aims
to correct this anomaly.
200
What is Zero Rating?
Zero Rating
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
uires the supplies as well as the inputs or input services
used in supplying the supplies to be free of GST. This is
done by employing the following means:
a) The taxes paid on the supplies which are zero rated are
refunded;
b) The credit of inputs/input services is allowed;
c) Wherever the supplies are exempted, or the supplies
201
GST FLYERS
are made without payment of tax, the taxes paid on
the inputs or input services i.e. the unutilised input tax
credit is refunded.
The provisions for the refund of unutilised input credit are
contained in the explanation to Section 54 of the CGST
Act, 2017, which defines refund as below:
“refund” includes refund of tax paid on zero-rated supplies of
goods or services or both or on inputs or input services used in
making such zero-rated supplies, or refund of tax on the supply
of goods regarded as deemed exports, or refund of unutilised
input tax credit as provided under sub-section (3).
Thus, even if a supply is exempted, the c
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
between zero rated supplies and
exempted supplies is tabulated as below:
Exempted Supplies
“exempt supply” means supply of
any goods or services or both which
attracts nil rate of tax or which
may be wholly exempt from tax
under section 11 of CGST Act or
under section 6 of the IGST Act,
and includes non-taxable supply
Zero rated Supplies
“zero-rated supply”
shall have the meaning
assigned to it in section
16
No tax on the outward exempted No tax on the outward
supplies, however,
the input supplies; Input supplies
supplies used for making exempt also to be tax free
supplies to be taxed
Credit of input tax needs to be Credit of input tax may
reversed, if taken;
be availed for making
zero-rated supplies,
even if such supply is an
No ITC on the exempted supplies exempt supply
ITC allowed on zero-
rated supplies
203
GST FLYERS
Value of exempt supplies, for Value of zero rated supplies
apportionment of ITC, shall shall be added along with
include supplies on w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nal basis. The remaining ten percent can be refunded
later after due verification of documents furnished by the
applicant.
Non-applicability of Principle of Unjust Enrichment:
The principle of unjust enrichment shall not be applicable
204
Zero Rating of Supplies in GST
in case of refund of taxes paid wherever such refund is on
accounts of zero rated supplies. As per section 54 (8) of the
CGST Act, 2017, the refundable amount, if such amount
is relatable to refund of tax paid on zero-rated supplies of
goods or services or both or on inputs or input services used
in making such zero-rated supplies, shall instead of being
credited to the Fund, be paid to the applicant.
******
205
Chapter Twenty Five
Deemed Exports in GST
Introduction
“Deemed Exports” refers to supplies of goods manufactured
in India (and not services) which are notified as deemed
exports under Section 147 of the CGST/SGST Act, 2017.
The supplies do not leave India. The payment for such
supplies is r
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Supply of goods by a registered person against Advance
Authorisation
Supply of capital goods by a registered person against
Export Promotion Capital Goods Authorisation.
Supply of goods by a registered person to Export Oriented
Unit
Supply of gold by a bank or Public Sector Undertaking
specified in the notification No. 50/2017-Customs,
dated the 30th June, 2017 (as amended) against Advance
Authorisation
For the purposes of the above notification, –
1.
2.
“Advance Authorisation” means an authorisation
issued by the Director General of Foreign Trade
under Chapter 4 of the Foreign Trade Policy 2015-
20 for import or domestic procurement of inputs on
pre-import basis for physical exports.
Export Promotion Capital Goods Authorisation
means an authorisation issued by the Director
General of Foreign Trade under Chapter 5 of the
Foreign Trade Policy 2015-20 for import of capital
goods for physical exports.
3. “Export Oriented Unit” means an Export Oriented
207
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
–
i. The recipient EOU/EHTP/STP/BTP unit shall
give prior intimation in a prescribed
proforma in “Form-A” (appended herewith) bearing a
running serial number containing the goods to be procured,
as pre-approved by the Development Commissioner and
the details of the supplier before such deemed export
208
Deemed Exports in GST
supplies are made. The said intimation shall be given to
a) the registered supplier;
b) the jurisdictional GST officer in charge of such regis-
tered supplier; and
c) its jurisdictional GST officer.
i.
ii.
The registered supplier thereafter will supply goods
under tax invoice to the recipient EOU / EHTP /
STP/BTP unit.
On receipt of such supplies, the EOU / EHTP /
STP/BTP unit shall endorse the tax invoice and
send a copy of the endorsed tax invoice to –
a) the registered supplier;
b) the jurisdictional GST officer in charge of such regis-
tered supplier; and
c) its jurisdictional GST officer.
iv.
V.
The endorsed tax invoice will be cons
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
provided to the
jurisdictional GST officer, each month (by the 10th
of month) in a CD or Pen drive, as convenient to the
said unit.
–
The above procedure and safeguards are in addition to
the terms and conditions to be adhered to by a EOU
/ EHTP / STP / BTP unit in terms of the Foreign
Trade Policy, 2015-20 and the duty exemption
notification being availed by such unit.
Form – A
(Intimation for procurement of supplies from the registered
person by Export Oriented Unit (EOU)/Electronic
Hardware Technology Park (EHTP) Unit/ Software
Technology Park (STP) unit/ Bio-Technology Parks (BTP)
Unit under deemed export benefits under section 147 of
CGST Act, 2017 read with Notification No.48/2017-
Central Tax dated 18.10.2017)
(as
per
Circular
dated
Running Sr. No. of intimation and Date
210
Deemed Exports in GST
LOP No.
and valid up to
GSTIN
We the, M/s
(Name of EOU/EHTP/
STP/BTP unit and address) wish to procure the Goods
namely (Tariff description, Quantity and
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
EHTP/STP/BTP unit and address
GSTIN No.
Address of Jurisdiction GST Officer
Who can file refund application in case of Deemed
Exports supplies
As per 3rd proviso to Rule 89(1) of CGST Rules, 2017,
application for refund in case of deemed exports can
either be filed by the recipient of deemed export supplies.
Alternatively, the supplier of such deemed exports supplies
can also file the refund application, in cases where the
recipient does not avail of input tax credit on such supplies
and furnishes an undertaking to the effect that the supplier
claim the refund.
may
It may be noted that rule 89(4A) of the CGST Rules,
2017 as amended vide Notification no. 75/2017-Central
Tax dated 29.12.2017 (w.e.f 23.10.2017), the recipient of
deemed export supplies can claim refund of input tax credit
availed in respect of other inputs or input services used in
making zero-rated supply of goods or services or both, in
212
Deemed Exports in GST
case of deemed export supplies on whi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in this behalf.
Manual filing and processing of refund claims on
account of deemed export supplies
Due to the non-availability of the refund module on the
common portal, it has been decided by the competent
authority, that the applications/documents/forms pertaining
to refund claims on account of deemed export supplies shall
be filed and processed manually till further orders. Circular
213
GST FLYERS
No. 17/17/2017-GST dated 15.11.2017 and Circular
no. 24/24/2017-GST dated 21.12.2017 prescribing the
detailed procedure have been issued in this regard.
******
214
Chapter Twenty Six
Pure Agent Concept in GST
Introduction
The GST Act defines an Agent as a person including a
factor, broker, commission agent, arhatia, del credere agent,
an auctioneer or any other mercantile agent, by whatever
name called, who carries on the business of supply or receipt
of goods or services or both on behalf of another.
So, who is a pure agent and why is a pure agent relevant
under G
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
agrees to reimburse B for the transportation cost at actuals.
In the given illustration, B is providing Customs Brokers
service to A, which would be on a principal to principal
basis. The ancillary service of transportation is procured by
B on behalf of A as a pure agent and expenses incurred
by B on transportation should not form part of value of
Customs Broker service provided by B to A. This, in sum
and substance is the relevance of the pure agent concept in
GST.
RELEVANCE OF PURE AGENT UNDER GST
The concept is borrowed from the erstwhile Service Tax
Determination of Value Rules, 2006 and carried forward
under GST. Under the GST Valuation Rules 2017 pure
agent is given the following meaning.
“pure agent” means a person who –
a) enters into a contractual agreement with the recipient
of supply to act as his pure agent to incur expenditure
or costs in the course of supply of goods or services or
both;
b) neither intends to hold nor holds any title to the goods.
or
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
other important fact is that, the person who provides
any service as a pure agent receives only the actual amount
for the services provided. Coming back to our example
of Importer and Customs Broker, the agreement provides
reimbursement of transport services utilised at actuals. In
this case, let's say the value of transport service was Rs.10,
000/-. If the Customs Broker charges any amount more
than Rs.10,000/-, then he will not be considered as a pure
agent for the services of transport and the value of transport
service will be included in the value of his Customs Broker
service.
EXCLUSION FROM VALUE
Expenditure incurred as pure agent becomes relevant, when
it comes to determining the value of a supply for levy of
217
GST FLYERS
GST. The preceding para explains who will be considered as
a pure agent. The valuation rules provide that expenditure
incurred as pure agent, will be excluded from the value of
supply, and thus also from aggregate turnover. However,
such
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
red shall be included in the value of supply under GST.
The following illustration will make the concept clearer.
218
Pure Agent Concept in GST
➤ Corporate services firm A is engaged to handle the legal
work pertaining to the incorporation of Company B.
Other than its service fees, A also recovers from B, regis-
tration fee and approval fee for the name of the company
paid to Registrar of the Companies.
➤ The fees charged by the Registrar of the companies, reg-
istration and approval of the name are compulsorily lev-
ied on B.
➤ A is merely acting as a pure agent in the payment of
those fees.
➤ Therefore, A's recovery of such expenses is a reimburse-
ment and not part of the value of supply made by A to B.
Some examples of pure agent are:
1. Port fees, Port charges, Custom duty, dock dues,
transport charges etc. paid by Customs Broker on
behalf of owner of goods.
2. Expenses incurred by C& F agent and reimbursed
by principal such as freight, god
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
refore on calculating the
threshold limit for registration. Whenever the intention is
to act as a pure agent, care should be taken to ensure that
the conditions specified for such pure agents and further
conditions given in the valuation rules are also met so that
only the real value of the service provided is subjected to
GST.
******
220
Chapter Twenty Seven
Job Work under GST
Introduction
Job-work sector constitutes a significant industry in Indian
economy. It includes outsourced activities that may or may
not culminate into manufacture. The term Job-work itself
explains the meaning. It is processing of goods supplied
by the principal. The concept of job work already exists
in Central Excise, wherein a principal manufacturer can
send inputs or semi-finished goods to a job worker for
further processing. Many facilities, procedural concessions
have been given to the job workers as well as the principal
supplier who sends goods for job work. The whole idea is
to ma
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
al
aspects:
Certain facilities with certain conditions are offered in
relation to job work, some of which are as under:
a) A registered person (Principal) can send inputs/
capital goods under intimation and subject to
certain conditions without payment of tax to a job
worker and from there to another job worker and
after completion of job work bring back such goods
without payment of tax. The principal is not required
to reverse the ITC availed on inputs or capital
goodsdispatched to job-worker.
b) Principal can send inputsor capital goods directly
to the job worker without bringing them to his
premises, still the principal can avail the credit of tax
paid on such inputs or capital goods.
c) However, inputs and/or capital goods sent to a job
worker are required to be returned to the principal
within 1 year and 3 years, respectively, from the date
of sending such goods to the job worker.
222
d)
Job Work under GST
After processing of goods, the job-worker may clear
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
carried out
by the job-worker. The said intimation shall also contain the
details of another job-worker, if any.
The inputs or capital goods shall be sent to the job worker
under the cover of a challan issued by the principal. The
challan shall be issued even for the inputs or capital goods
sent directly to the job worker. The challan shall contain the
details specified in rule 10of the Invoice Rules.
223
GST FLYERS
The responsibility for keeping proper accounts for the inputs
or capital goods shall lie with the principal.
Input Tax credit on goods supplied to jobworker
Section 19 of the CGST Act, 2017 provides that the
principal (a person supplying taxable goods to the job-
worker) shall be entitled to take the credit of input tax paid
on inputs sent to the job- worker for the job work. Further,
the proviso also provides that the principal can take the
credit even when the goods have been directly supplied to
the job-worker without bringing into the premise of the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rovisions
Pursuant to section 143 (5) of the CGST Act, 2017,
waste generated at the premises of the job-worker may be
supplied directly by the registered jobworker fromhis place
of business on payment of tax or s such waste may be cleared
by the principal, in case the job-worker is not registered.
Transitional provisions: Inputs as such or partially
processed inputs which are sent to a job worker prior to
introduction of GST under the provisions of existing law
[Central Excise] and if such goods are returned within 6
months from the appointed day i.e. 1st July, 2017 no tax
would be payable. If such goods are not returned within
prescribed time, the input tax credit availed on such goods
will be liable to be recovered.
If manufactured goods are removed, prior to the appointed
day, without payment of duty for testing or any other
process which does not amount to manufacture, and such
goods are returned within 6 months from the appointed
day, then no tax will be payable.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
acts etc. is undertaken, the same would come within
the ambit of the broad definition of a works contract.
Works Contract – the position in VAT & Service Tax
A works contract has elements of both provision of services
and sale of goods, and was therefore taxable under both
laws.
226
Works Contract in GST
VAT
In the case of Gannon Dunkerly, the Hon'ble Apex Court
had held that in case of a works contract, the dominant
intention of the contract is the execution of works, which
is a service and there is no element of sale of goods (as per
Sale of Goods Act). The contract being one indivisible
contract, it cannot be broken up to levy VAT on sale of goods
involved in the execution of works contract. This decision
led the Government to amend the Constitution of India
and insert Article 366(29A) (b) which enabled the State
Governments to levy tax (VAT) on transfer of property in
goods (whether as goods or in some other form) involved in
the execution of a works contract.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ed to any work undertaken for an “Immovable
Property” unlike the existing VAT and Service Tax
provisions where works contracts for movable properties
were also considered.
The Works Contracts has been defined in Section 2(119) of
the CGST Act, 2017 as
“works contract” means a contract for building, construction,
fabrication, completion, erection, installation, fitting out,
improvement, modification, repair, maintenance, renovation,
alteration or commissioning of any immovable property
wherein transfer of property in goods (whether as goods or in
some other form) is involved in the execution of such contract.”
Thus, from the above it can be seen that the term works
contract has been restricted to contract for building
construction, fabrication etc of any immovable property
only. Any such composite supply undertaken on goods say
for example a fabrication or paint job done in automotive
body shop will not fall within the definition of term works
contract per se under GST
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of the whole work. The sub-
contractor will charge GST in the tax invoice raised on the
main contractor. The main contractor will be entitled to
take ITC on the tax invoice raised by his sub-contractor as
his output is works contract service. However if the main
contractor provides works contract service (other than for
plant and machinery) to a company say in the IT business,
the ITC of GST paid on the invoice raised by the works
contractor will not be available to the IT Company.
Plant and Machinery in certain cases when affixed
permanently to the earth would constitute immovable
property. When a works contract is for the construction of
plant and machinery, the ITC of the tax paid to the works
contractor would be available to the recipient, whatever is the
business of the recipient. This is because works contract in
respect of plant and machinery comes within the exclusion
clause of the negative list and ITC would be available when
229
GST FLYERS
used in the cour
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
)
dated 21.09.2017 and is as under:
230
Works Contract in GST
(i)
Construction of a complex,building, 9% CGST +
civil structure or a part thereof, 9% SGST
including a complex or building
intended for sale to a buyer, wholly
or partly, except where the entire
consideration has been received
after issuance of completion
certificate, where required, by
the competent authority or after
its first occupation, whichever is
earlier. (Provisions of paragraph 2
of this notification shall apply for
valuation of this service)
(ii) composite supply of works contract 9% CGST +
as defined in clause 119 of section 9% SGST
2 of Central Goods and Services
Tax Act, 2017
(iii) Composite supply of works 6% CGST +
contract as defined in clause 6% SGST
(119) of section 2 of the Central
Goods and Services Tax Act, 2017,
supplied to the Government, a
local authority or a Governmental
authority by way of construction,
erection,
commissioning,
installation, completion, fitting out,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ssion
or Rajiv Awaas Yojana;
232
Works Contract in GST
(c) a civil structure or any other
original works pertaining to
the “In-situ rehabilitation of
existing slum dwellers using land
as a resource through private
participation” under the Housing
for All (Urban) Mission/Pradhan
Mantri Awas Yojana, only for
existing slum dwellers;
(d) a civil structure or any other
original works pertaining to the
“Beneficiary led individual house
construction / enhancement”
under the Housing for All (Urban)
Mission/Pradhan Mantri Awas
Yojana;
(e) a pollution control or effluent
treatment plant, except located as a
part of a factory; or
(f) a structure meant for funeral,
burial or cremation of deceased
(v) Composite supply of works 6% CGST +
contract as defined in clause (119) of 6% SGST
section 2 of the Central Goods and
Services Tax Act, 2017, supplied
by way of construction, erection,
commissioning, or installation of
original works pertaining to,-
233
GST FLYERS
(a)
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
34
Works Contract in GST
(vi) Services provided to the Central 6% CGST +
Government, State Government, 6% SGST
Union Territory, a local authority
or
or a governmental authority by
way of construction, erection,
commissioning,
installation,
completion, fitting out, repair,
maintenance,
renovation,
alteration of – (a) a civil structure
or any other original works meant
predominantly for use other than
for commerce, industry, or any
other business or profession; (b)
a structure meant predominantly
for use as (i) an educational, (ii)
a clinical, or(iii) an art or cultural
establishment; or (c) a residential
complex predominantly meant
for self-use or the use of their
employees or other persons
specified in paragraph 3 of the
Schedule III of the Central Goods
and Services Tax Act, 2017.
(vii) Construction services other than 9% CGST +
(i), (ii), (iii), (iv), (v) & (vi) above
Valuation
9% SGST
Valuation of a works contract service is dependent upon
whether th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e governed by Section 12(3) of the IGST Act, 2017,
where both the supplier and recipient are located in India.
The place of supply would be where the immovable property
is located.
In case the immovable property is located outside India,
and the supplier as well as recipient both are located in
India, the place of supply would be the location of recipient
as per proviso to Section 12(3) of the IGST Act, 2017.
per
As Section 13(4) of the IGST Act, 2017, in cases where
either the Supplier or the Recipient are located outside
India, the place of supply shall be the place where the
immovable property is located or intended to be located.
Conclusion
236
Works Contract in GST
A works contract is treated as supply of services under GST.
Under the previous indirect taxes dispensation, there were
issues in tax treatment of works contract. Both the Central
Government (on the services component of a works
contract) & the State Governments (on the sale of goods
portion involve
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
s
made in different circumstances and to different persons.
Transaction Value
Under GST law, taxable value is the transaction value i.e.
price actually paid or payable, provided the supplier & the
recipient are not related and price is the sole consideration.
In most of the cases of regular normal trade, invoice value
will be the taxable value. However, to determine value of
certain specific transactions, Determination of Value of
Supply rules have been prescribed in CGST Rules, 2017.
Compulsory Inclusions
Any taxes, fees, charges levied under any law other than
238
Valuation in GST
GST law, expenses incurred by the recipient on behalf of
the supplier, incidental expenses like commission & packing
incurred by the supplier, interest or late fees or penalty for
delayed payment and direct subsidies (except government
subsidies) are required to be added to the price (if not
already added) to arrive at the taxable value.
Exclusion of discounts
Discounts like trade disco
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
value of the non-monetary
consideration.
239
GST FLYERS
iii.
Value of supply of like kind and quality.
iv.
Value of supply based on cost i.e. cost of supply plus
10% mark-up.
V. Value of supply determined by using reasonable
means consistent with principles & general provi-
sions of GST law. (Best Judgement method)
Open Market Value means the full value in money
excluding taxes under GST laws, payable by a person to
obtain such supply at the time when supply being valued is
made, provided such supply is between unrelated persons
and price is the sole consideration for such supply.
Supply of like kind & quality means any other supply
made under similar circumstances that is same or closely
resembles in respect of characteristics, quality, quantity,
functionality, reputation to the supply being valued.
Illustration:
(1) Where a new phone is supplied for Rs. 20000/- along
with the exchange of an old phone and if the price of
the new phone without exchange is Rs.240
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
lue of supply of like kind and quality.
iii.
iv.
Value of supply based on cost i.e. cost of supply plus
10% mark-up.
Value of supply determined by using reasonable
means consistent with principles & general provi-
sions of GST law. (Best Judgement method)
However if the recipient is eligible for full input tax credit,
the invoice value will be deemed to be the open market
value. It has also been provided that where the goods being
supplied are intended for further supply as such by the
recipient, the value shall, at the option of the supplier, be
an amount equivalent to 90% of the price charged for the
supply of goods of like kind and quality by the recipient to
his unrelated customer.
241
GST FLYERS
Value of supply of goods made or received through an
agent
a) Open market value of goods being supplied, or, at the
option of the supplier, 90% of the price charged for the
supply of goods of like kind and quality by the recipient
to his unrelated customer.
Illustra
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ure
242
Valuation in GST
and costs incurred by the supplier as a pure agent of the
recipient of supply of service has to be excluded from the
value of supply.
Illustration
Corporate services firm A is engaged to handle the legal
work pertaining to the incorporation of Company B. Other
than its service fees, A also recovers from B, registration
fee and approval fee for the name of the company paid
to Registrar of the Companies. The fees charged by the
Registrar of the companies registration and approval of the
name are compulsorily levied on B. A is merely acting as
a pure agent in the payment of those fees. Therefore, A's
recovery of such expenses is a disbursement and not part of
the value of supply made by A to B.
Determination of value in respect of few specific supplies
Methods to determine Taxable value of following five
specific supplies have also been prescribed under valuation
Rules. These can be used by the supplier if he so desires.
a) Purchase or sale of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
es
Taxable value will be 1% of the lesser of the two amounts
the person changing the money would have received by
converting (at RBI reference rate) any of the two currencies
in Indian Rupees.
Option-2
The person supplying the service may also exercise the
following option to ascertain the taxable value, however once
opted then he cannot withdraw the during the remaining
part of the financial year: –
244
Valuation in GST
One percent of the gross amount of currency
exchanged for an amount up to one lakh rupees,
subject to minimum amount of two hundred and
fifty rupees.
One thousand rupees and half of a percent of
the gross amount of currency exchanged for an
amount exceeding one lakh rupees and up to ten
lakh rupees.
Five thousand rupees and one tenth of a percent
of the gross amount of currency exchanged for an
amount exceeding ten lakhs rupees subject to a
maximum amount of sixty thousand rupees.
Special provision related to determination of value of
service o
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
licy holder taxable value is ten percent of the
single premium charged from the policy holder.
–
Other cases- Twenty five percent of premium
charged from the policy holder in the first year and
twelve and a half percent of premium charged for
subsequent years.
However, where insurance policy has benefit of risk coverage
only, then taxable value is entire premium charged from the
policy holder.
Special provision related to determination of value of
second hand goods
The taxable value of supply of second hand goods i.e. used
goods as such or after such minor processing which does
not change the nature of goods shall be the difference
between the purchase price and the selling price, provided
no input tax credit has been availed on purchase of such
goods. However, if the selling price is less than purchase
price, that negative value will be ignored.
Persons who purchase second hand goods after payment
of tax to supplier of such goods will be governed by this
246
Valu
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
l to the
money value of the goods or services or both redeemable
against such token, voucher, coupon, or stamp.
Value of taxable services provided by a notified class of
service providers as referred to in para 2 of schedule 1
between the distinct persons
The taxable value is deemed to be Nil wherever input tax
credit is available.
247
GST FLYERS
Valuation of certain works contract services
(i) Construction of a complex, building, civil structure or
a part thereof, including a complex or building intended
for sale to a buyer, wholly or partly, except where the entire
consideration has been received after issuance of completion
certificate, where required, by the competent authority or
after its first occupation, whichever is earlier.
In case of supply of service mentioned above, involving
transfer of property in land or undivided share of land, as
the case may be, the value of supply of service and goods.
portion in such supply shall be equivalent to the total
amou
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
for determination of value of taxable
goods or services or both shall be the applicable RBI
reference rate for that currency on the date of time of supply
as determined in terms of section 12 or section 13 of the
CGST Act.
Value of supply inclusive of integrated tax, central tax,
State tax, Union territory tax
Where the value of supply is inclusive of GST, the tax
amount shall be determined in the following manner,
Tax amount (Value inclusive of taxes X GST tax rate in %
)/(100+ sum of GST tax rates in %)
For example –
If the value inclusive of tax is Rs. 100/- and applicable GST
tax rate is 18% then
Tax amount = (100×18)/ (100+18) = 1800/118=Rs. 15.25
******
249
Chapter Thirty
Margin Scheme in GST
Normally GST is charged on the transaction value of the
goods. However, in respect of second hand goods, a person
dealing is such goods may be allowed to pay tax on the
margin i.e. the difference between the value at which the
goods are supplied and the price at which
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
price
250
Margin Scheme in GST
of such goods by the defaulting borrower reduced by five
percentage points for every quarter or part thereof, between
the date of purchase and the date of disposal by the person
making such repossession.
In this regard, Notification No.10/2017-Central Tax (Rate)
New Delhi, dated 28th June, 2017 exempts intra-State
supplies of second hand goods received by a registered
person, dealing in buying and selling of second hand goods
and who
pays the central tax on the value of outward supply
of such second hand goods as determined under sub-rule (5)
of rule 32 of the CGST Rules, 2017, from any unregistered
supplier, from the whole of the central tax levied under
the CGST Act, 2017. Similar exemptions are also there in
respective SGST Acts.
Illustration: For instance, a company say M/s First Source
Ltd, which deals in buying and selling of second hand cars,
purchases a second hand Maruti Celerio Car of March,
2014 make (Original price Rs. 5 l
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
harged on a continuous and
regular basis only after assessment. Assessment means
determination of tax liability and includes self-assessment,
re-assessment, provisional assessment, summary assessment
and best judgment assessment. The major determinants of
the tax liability are generally the applicable tax rate and the
value. There might be situations when these determinants
might not be readily ascertainable and may be subject to the
outcome of a process that requires deliberation and time.
Hence like under the previous laws, when due to various
circumstances it might not be always possible, at that point
of time, to carry out an assessment and determine the exact
duty liability, the GST law also provides for provisional
assessment.
The Asst. Commissioner/Dy. Commissioner of Central Tax
provisionally determines the amount of tax payable by the
supplier and is subject to final determination. On provisional
assessment, the supplier can pay tax on provisional basis but
2
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
M GST ASMT-01 on the
common portal, either directly or through a Facilitation
Centre notified by the Commissioner.
The Asst. Commissioner/Dy. Commissioner of Central Tax
will scrutinize the application in FORM GST ASMT-01.
In case, additional information or documents in support
is required by the Asst. Commissioner/Dy. Commissioner
of Central Tax to decide the case, notice in FORM GST
ASMT-02 will be issued to the supplier requesting for
submission of the same.
The supplier has to file a reply to the notice in FORM GST
254
–
Provisional Assessment in GST
ASMT 03, and if he desires can also appear in person
before the Asst. Commissioner/Dy. Commissioner of
Central Tax to explain his case.
The Asst. Commissioner/Dy. Commissioner of Central Tax
will then issue an order in FORM GST ASMT-04 within
a period not later than ninety days from the date of receipt
of the request, allowing the payment of tax on a provisional
basis. The order will indicate the value or the rate
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
order in FORM
GST ASMT-04.
Finalization of provisional assessment:
255
GST FLYERS
The provisional assessment will be finalized, within a
period not exceeding six months from the date of issuance
of FORM GST ASMT-04.The Asst. Commissioner/Dy.
Commissioner of Central Tax will issue a notice in FORM
GST ASMT-06, calling for information and records
required for finalization of assessment and shall issue a
final assessment order, specifying the amount payable by
the registered person or the amount refundable, if any, in
FORM GST ASMT-07.
On sufficient cause beingshown and for reasons to be
recorded in writing, the time limit for finalization of
provisional assessment can be, extended by the Joint
Commissioner orAdditional Commissioner for a further
period not exceeding six months and by the Commissioner
for such further period not exceeding four years.
Interest liability:
In case any tax amount becomes payable subsequent to
finalization of the provisional assessment, t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
able if any as specified in FORM GST ASMT-
07 has been paid.
Conclusion:
Provisional assessment provides a method for determining
the tax liability in case the correct tax liability cannot
be determined at the time of supply. The payment of
provisional tax is allowed only against a bond and security.
The provisional assessment has to be finalized within six
months unless extended. On finalization, the tax liability
can either be more or less as compared to the provisionally
paid tax. In case of increase in the tax liability, the difference
is payable along with interest and in case of decrease in the
tax liability the amount will be refunded with interest.
******
257
Chapter Thirty Two
Returns in GST
The basic features of the return mechanism in GST
includes electronic filing of returns, uploading of invoice
level information, auto-population of information relating
to input tax credit from returns of supplier to that of
recipient, invoice level information matchin
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
over greater than
258
Returns in GST
Rs. 1.5 Crore. Further, GST Council has recommended to
postpone the date of filing of Forms GSTR-2 and GSTR-3
for all normal tax payers, irrespective of turnover, till further
announcements are made in this regard.
All the returns are to be filed online. Returns can be filed
using any of the following methods:
1.
GSTN portal (www.gst.gov.in )
2. Offline utilities provided by GSTN
23
3.
GST Suvidha Providers (GSPs). If a tax payer is
already using the services of an ERP providers such
as Tally, SAP, Oracle etc, there is a high likelihood
that these ERP providers would provide inbuilt
solutions in the existing ERP systems.
Following table lists the various types of returns under GST
Law.
Return Description Who Files?
Standard
Date for fil-
ing
–
GSTR Statement of Normal Reg- 10th of the
1*
GSTR
2*
–
Outward sup- istered Person next month
plies of Goods
or Services
Statement of Normal Reg- 15th of the
Inward supistere
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cting tax at
next month
source
GSTR-8 Monthly E-Commerce 10th of the
statement for Operator
E-Commerce
Operator de-
next month
picting sup-
plies effecting
through it.
261
GST FLYERS
GSTR-9 Annual
turn
9A
Re- Registered 31st Decem-
Person other ber of next
than an ISD, Financial Year
TDS/TCS
Taxpayer, ca-
sual taxable
person and
Non-resident
taxpayer.
GSTR- Simplified Taxable Per- 31st Decem-
Annual Re-son opting for ber of next
turn under Composition Financial Year
Composition Levy
Scheme
GSTR Final Return
10
–
Taxable per- Within three
son whose months of the
registration date of can-
has been sur-cellation or
rendered or date of order
cancelled.
of cancella-
tion, which-
ever is later.
262
Returns in GST
GSTR-Details of in- Persons
11
ward supplies have
to be fur-issued
who 28th of the
been next month
a
nished by a Unique Iden-
person having tity Num-
ber(UIN)
UIN
*
Registered persons having aggregate turnover of up to
1.5 Cro
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
with July – Oct 10 th
Jan
annual aggre- 2017
2018
gate turnover Nov 2017
10th
Jan
of more than
2018
GSTR-1
Rs 1.5 Crore to Dec 2017
10th
Feb
file on Monthly
2018
basis
Jan 2018
10th
Mar
2018
Feb 2018
10th
April
2018
Mar 2018
10th
May
2018
GSTR-4 Taxpayers who Jul-Sep 2017 | 24th
Dec
2017
have opted for
Composition
scheme to file
every quarter
264
GSTR-5
Returns in GST
Non Resident Jul-Dec 2017| 31st Jan 2018
Taxable Per-
son to file every
month
GSTR-Taxpayers sup- Jul-Dec 2017 | 31st Jan 2018
5A
plying OIDAR
services
from
a place out-
side India to
a non-taxable
online recipient
GSTR-6 Input Service Jul 2017 31st
Distributor
Dec
2017
Note: Due dates have not been notified for GSTR-2 and
GSTR-3 for any of the months. That is, a taxpayer need not
file GSTR-2 and GSTR-3 for any of the months from July
2017 until a notification is issued in this regard mentioning
the due dates. Till such time, Form GSTR-3B is required
to be filed
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
when the returns are actually filed.
Note: In case of GSTR-3B,
For the months July to September, 2017, the late
fee payable for failure to furnish the return has
been waived completely.
From the month of October 2017 onwards, the
GST Council has recommended that the amount
of late fee payable by a taxpayer whose tax liability
for that month is 'NIL' is Rs. 20/- per day (Rs.
10/- per day each under CGST & SGST Acts).
However, if the tax liability for that month is not
'NIL', the amount of late fee is Rs 50/- per day (Rs.
25/- per day each under CGST & SGST Acts)
266
Returns in GST
An overview of GSTR-1, GSTR-2 and GSTR-3
The population of these returns is explained by the following
graphic:
Supplier1
GSTR1
Supplier2
GSTR1
Supplier3
GSTR1
Supplier4
GSTR1
Tax Payer
GSTR1
(Signifies Tax Liability)
Tax Payer
GSTR2
(Signifies ITC Availability)
Tax Payer
GSTR3
Cash to be paid
=
Tax Liability – ITC Available
NOTE:
1.
2.
Taxpayer's GSTR2 is auto-populat
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
the recipient in his valid returns shall be considered
as finally accepted and such acceptance shall be
communicated to the recipient. Failure to file valid
return by the supplier may lead to denial of ITC in
the hands of the recipient.
In case the ITC claimed by the recipient is in
excess of the tax declared by the supplier or where
the details of outward supply are not declared by
the supplier in his valid returns, the discrepancy
shall be communicated to both the supplier and the
recipient. Similarly, in case, there is duplication of
claim of ITC, the same shall be communicated to
the recipient.
The recipient will be asked to rectify the discrepancy
of excess claim of ITC and in case the Supplier has
not rectified the discrepancy communicated in his
valid returns for the month in which discrepancy is
268
Returns in GST
7.
8.
9.
communicated then such excess ITC as claimed by
the recipient shall be added to the output tax liability
of the recipient in the suc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
inalised so far.
******
269
Chapter Thirty Three
Statement of Outward
Supplies (GSTR-1) in GST
Introduction:
FORM GSTR-1 is a statement of the details of outward
supplies (i.e. sales of goods or provision of services) of goods
or services or both. The details filed in table of this statement
are to be communicated to the respective recipients of the
said supplies. The details of outward supplies shall include
details of invoices, debit notes, credit notes, advances
received, advances adjusted and revised invoices issued in
relation to outward supplies made during any tax period.
Persons liable to file:
GSTR-1 has to be filed electronically by every registered
person other than Suppliers of online information and
database access or retrieval (OIDAR) services or an Input
Service Distributor or a non-resident taxable person or a
person paying tax under composition levy or persons liable
to collect TCS or persons liable to deduct TDS. Casual
taxable person also has to
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
for a specified class
of registered persons. These dates have been extended for
the financial year 2017-18 as per Notification No. 71/2017
– Central Tax and 72/2017 – Central Tax dated 29/12/2017.
Rectification
process:
GSTR 1 once filed cannot be revised. Any mistake made in
the return can be revised in the next month's return.
Information to be provided:
The details of outward supplies of goods or services or both
furnished in FORM GSTR-1 shall include the –
(a) invoice wise details of all –
271
GST FLYERS
(i) inter-State and intra-State supplies made to the
registered persons; and
(ii) inter-State supplies with invoice value more than
two and a half lakh rupees made to the unregistered
persons;
(b) consolidated details of all –
(i) intra-State supplies made to unregistered persons
for each rate of tax; and
(ii) State wise inter-State supplies with invoice value up
to two and a half lakh rupees made to unregistered
persons for each rate of tax;
(c) debit and
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
supplies made to registered persons
(including UIN-holders) other than supplies covered by Table 6.
In this Table the Invoice-level information pertaining to B
(Business) to B (Business) supplies for the tax period has to
be filled. In this table the specific details like the GSTIN/
UIN (of the recipient), Invoice No & date, invoice value,
rate of tax, taxable value, the amount of Central tax, State
tax/Union territory tax, Integrated tax and Cess, the place
of Supply has to be entered by the taxpayer. Place of Supply
(POS) has to be entered only if the same is different from
the location of the recipient.
Sub Table 4A is meant for invoice details of all supplies (rate
wise) other than reverse charge/ made through e-commerce
operator.
Sub Table 4B is meant for invoice details of registered
supplies (rate wise) attracting reverse charge under sub-
section (3) of section 9. Any supply made by SEZ to DTA,
is required to be reported by SEZ unit in this table.
Sub Table 4C
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ies
(operator wise and rate-wise) effected through e-commerce
operator attracting collection of tax at source under section
52 of the CGST Act, 2017.
Table 6: Zero rated supplies and Deemed Exports:
In this Table the Invoice-level information pertaining to
the following has to be entered:
Sub Table 6A Exports out of India
Sub Table 6B Supplies to SEZ unit/ and SEZ developer
Sub Table 6C Deemed Exports
In this table the specific details like the GSTIN (of the
recipient) Invoice No & date, invoice value, Shipping bill/
Bill of export number and date, rate of tax, taxable value and
the amount of Integrated tax.
274
Statement of Outward Supplies (GSTR-1) in GST
This Table needs to capture information about shipping
bill and its date. However, if the shipping bill details are
not available, Table 6 will still accept the information. The
same can be updated through submission of information in
relation to amendment Table 9 in the tax period in which
the details are avail
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
s to be filled. There is no need for details like the
Invoice No & date, invoice value, rate of tax, taxable value.
Negative value can be mentioned in this table, if required.
The following details has to be provided against the sub
table number mentioned.
7A. Intra-State supplies
7A (1). Consolidated rate wise outward supplies [including
275
GST FLYERS
supplies made through e-commerce operator attracting TCS].
Here gross intra-State supplies, rate-wise, includingsupplies
made through e-commerce operator attracting collection of
tax atsource
7A (2). Out of supplies mentioned at 7A (1), value of supplies
made through e-Commerce Operators attracting TCS (operator
wise, rate wise). Here details of supplies (operator wise,
rate wise) made through e-commerce operator attracting
collection of tax at source out of gross supplies reported in
Table 7A (1) has to be entered. The GSTIN of e-commerce
operator will also have to be entered.
7B. Inter-State Supplies where invoice
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
es.
8A. Inter-State supplies to registered persons
8B. Intra- State supplies to registered persons
8C. Inter-State supplies to unregistered persons
8D. Intra-State supplies to unregistered persons
Table 9.Amendments to taxable outward supply details
furnished in returns for earlier tax periods in Table 4, 5 and
6 [including debit notes, credit notes, refund vouchers issued
during current period and amendments thereof]
This table is meant for entering the amendments of B to
B supplies (reported in Table 4), B to C Large supplies
(reported in Table 5) and Supplies involving exports / SEZ
unit or SEZ developer / deemed exports (reported in Table
6)
The information is to be entered rate-wise;
The original information of debit / credit note
issued and amendment to it reported in earlier tax
periods; While furnishing information the original
debit note / credit note, the details of invoice shall
be mentioned in the first three columns, while
furnishing revision of a debit
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
for both inter-
state and intra-state supplies and for which invoice has not
been issued. The information regarding the tax amount to
be paid on account of the advances being added to the tax
liability has to be also entered. The Place of Supply has
to be mentioned. The details of information relating to
advances would be submitted only if the invoice has not
been issued in the same tax period in which the advance was
received. It may however be noted that vide Notification no.
278
Statement of Outward Supplies (GSTR-1) in GST
66/2017-Central Tax dated 15.11.2017, tax is not required
to be paid on advances received in relation to supply of
goods only (tax would be payable on advances received in
respect of services).
Table 11B is for the advance amount received in earlier tax
period but the invoices have been received in the current
tax period and adjusted against the supplies being shown in
this tax period in Table Nos. 4, 5, 6 and 7. The information
is to be separa
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ssued during the tax period
Details of the documents like invoices, Debit note, Credit
Note, Receipt Voucher, Payment Voucher, Refund Voucher
and Deliver Challan issued and/or cancelled during the
Tax period has to be entered here. The number of invoices
reported in table 4, 5 and 6 should be matched with the
information provided in table 13.
GSTR 1A
The details of inward supplies added, corrected or deleted
by the recipient in his FORM GSTR-2 under section 38
or FORM GSTR-4 or FORM GSTR-6 under section
39 shall be made available to the supplier electronically
in FORM GSTR-1A through the common portal and
such supplier may either accept or reject the modifications
made by the recipient and FORM GSTR-1 furnished
earlier by the supplier shall stand amended to the extent of
modifications accepted by him.
******
280
Chapter Thirty Four
Refunds under GST
INTRODUCTION
Timely refund mechanism is essential in tax administration,
as it facilitates trade through release of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
bmission
of relevant documents as listed in Rule 89(2) of CGST
Rules, 2017 is an indicator of the various situations that
may necessitate a refund claim. A claim for refund may
arise on account of-
1.
2.
तं तं लं वं
3.
4.
5.
6.
Export of Goods or services
Supplies to SEZs units and developers
Deemed Export supplies
Refund of taxes on purchase made by UN or
embassies etc
Refund arising on account of judgment, decree, order
or direction of the Appellate Authority, Appellate
Tribunal or any court
Refund of accumulated Input Tax Credit on account
of inverted duty structure
Finalisation of provisional assessment
7.
8.
Refund of pre-deposit
9.
10.
11.
12.
Excess payment due to mistake
Refunds to International tourists of GST paid on
goods in India and carried abroad at the time of their
departure from India
Refund on account of issuance of refund vouchers
for taxes paid on advances against which goods or
services
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
017 provides
for procedure for reduction in output liability on account of
issuance of such credit notes. This is another form of refund
by adjustments in the output tax liability. Such refund is not
governed under the general refund provisions contained in
Section 54 of the CGST Act, 2017.
TREATMENT FOR ZERO RATED SUPPLIES
One of the major categories under which claim for refund
may arise would be, on account of exports. All exports
(whether of goods or services) as well as supplies to SEZs
have been categorised as Zero Rated Supplies in the IGST
283
GST FLYERS
Act, 2017. “Zero rated supply” under Section 16 of the
IGST Act, 2017 means any of the following supplies of
goods or services or both, namely:
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic
Zone developer or a Special Economic Zone unit.
On account of zero rating of supplies, the supplier will be
entitled to claim input tax credit in respect of good
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t of zero rated supplies. The
provisional refund would be paid within 7 days after giving
284
Refunds under GST
the acknowledgement. The acknowledgement of refund
application is normally issued within a period of 15 days.
The provisional refund would not be granted to such supplier
who was, during any period of five years immediately
preceding the refund period, was prosecuted.
PAYMENT OF WRONG TAX
Under GST it might happen that the taxable person may
pay integrated tax instead of central tax plus state tax and
vice versa because of incorrect application of the place
of supply provisions. In such cases, while making the
appropriate payment of tax, interest will not be charged
and the refund claim of the wrong tax paid earlier will be
entertained without subjecting it to the provision of unjust
enrichment.
CLAIM BY A PERSON WHO HAS BORNE THE
INCIDENCE OF TAX
Any tax collected by the taxable person more than the tax
due on such supplies must be credited to the Govern
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
from payment of GST as per international obligations.
However, this exemption is being operationalized by way of
a refund mechanism. So a taxable person making supplies
to such bodies would charge the tax due and remit the
same to government account. However, the UN bodies and
other entities notified under Section 55 of the CGST Act,
2017 can claim refund of the taxes paid by them on their
purchases. The claim has to be made before the expiry of
six months from the last day of the quarter in which such
supply was received. It may be noted that refund would be
granted by Central Government as facility of a single UIN
has been made available to such agencies.
REFUND TO INTERNATIONAL TOURIST
An enabling mechanism has been introduced in Section
15 of the IGST Act, 2017 whereby an international tourist
procuring goods in India, may while leaving the country seek
286
Refunds under GST
refund of integrated tax paid by them. The term, “tourist” has
been defined and refers t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
her
person. In all other cases the test of unjust enrichment needs
to be satisfied for the claim to be paid to the applicant. For
crossing the bar of unjust enrichment, if the refund claim is
less than Rs.2 Lakhs, then a self-declaration of the applicant
to the effect that the incidence of tax has not been passed
other person will suffice to process the refund claim.
For refund claims exceeding Rs. 2 Lakhs, a certificate from
a Chartered Accountant/Cost Accountant will have to be
to any
given.
287
GST FLYERS
STANDARDISATION OF PROCEDURE
The GST laws makes standardised provisions for making
a refund claim. Every claim has to be filed online in a
standardised form. The applicationshall be forwarded to
the proper officer who shall, within a period of fifteen days
of filing of the said application, scrutinize the application
for its completeness and where the application is found
to be complete in all terms, an acknowledgement shall be
made available to the applicant t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ate of payment of refund. However, if the
refund claim is on account of pre-deposit made before any
appellate authority, the interest becomes payable from the
date of making such payment.
288
Refunds under GST
DOCUMENTATION
The applicant need not file elaborate documents along with
the refund claim. Standardised and easy to understand
documents have been prescribed. Thus, for every claim
the main document prescribed is a statement of relevant
invoices (NOT THE INVOICES ITSELF) pertaining
to the claim. In case refund is on account of export of
services, apart from the statement of invoices, the relevant
bank realisation certificates or FIRC evidencing receipt
of payment in foreign currency is also required to be
submitted. If it is a claim made by the supplier to the SEZ
unit, an endorsement from the proper officer evidencing
receipt of such goods/services in the SEZ also needs to be
submitted. Further a declaration is also required from the
SEZ unit to the effect th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
the refund is sought to be
rejected. The applicant needs to respond online within 15
days from the receipt of such notice. Thus no claim can be
rejected without putting the applicant to notice.
PAYMENT TO BE CREDITED ONLINE
The refund claim, wherever due, will be directly credited to
the bank account of the applicant. The applicant need not
come to the authorities to collect the cheques or for any
other issues relating to the refund claim.
PROCEDURE FOR CLAIMING REFUND OF
IGST PAID ON EXPORT OF GOODS
The shipping bill filed by an exporter shall be deemed to
be an application for refund of integrated tax paid on the
goods exported out of India and such application shall be
deemed to have been filed only when:-
(a) the person in charge of the conveyance carrying the
export goods duly files an export manifest or an export
report covering the number and the date of shipping
bills or bills of export; and
(b) the applicant has furnished a valid return in FORM
GSTR-3 or F
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
bank account of the
applicant mentioned in his registration particulars and as
intimated to the Customs authorities.
As per Rule 96, the refund of IGST paid on export of goods
is processed and disbursed by Customs. For processing such
refund, GST system transmits invoice level data of Table
6A in GSTR 1 subject to the following validations”
1.
2.
3.
GSTR-3B is filed for the corresponding period, with
admitted tax liability under Table 3.1(b);
Export invoices are submitted in GSTR-1/Table
6A thereof and have correct shipping bill number,
shipping bill date and port code;
The admitted tax liability of IGST under table 3.1(b)
of GSTR-3B, is equal to, or greater than, the IGST
291
GST FLYERS
It
amount claimed to have been paid under Table 6A
of GSTR-1 of the corresponding period.
may be noted that Rule 96(9) has been inserted, w.e.f
23.10.2017, in CGST Rules, 2017 vide Notification no.
75/2017-Central Tax dated 29.12.2017 so as to provide
that the refund of integr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
7/17/2017-GST dated 15.11.2017 and
Circular no. 24/24/2017-GST dated 21.12.2017 has been
issued clarifying the procedure for filing of manual refund
claims. The circular mandates that due to the non-availability
of the refund module on the common portal, it has been
292
Refunds under GST
decided that the applications/documents/forms pertaining
to refund claims on account of zero-rated supplies shall be
filed and processed manually till further orders.
Procedure for filing refund claims (other than refund
under Rule 96 on account of export of goods and refund
of unutilised ITC on account of zero rated supply)
The application for refund of integrated tax paid on zero-
rated supply of goods to a Special Economic Zone developer
or a Special Economic Zone unit or in case of zero-rated
supply of services is required to be filed in FORM GST
RFD-01A (as notified in the CGST Rules, 2017 vide
Notification no. 55/2017 – Central Tax dated 15.11.2017)
by the supplier on the commo
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
out of
FORM GST RFD-01A to the jurisdictional proper officer,
and with all necessary documentary evidences as applicable
(as per
details in statement 3 or 5 of Annexure to FORM
GST RFD-01), within the time stipulated for filing of such
refund under the CGST Act, 2017.
Where to file the refund claims
The registered person needs to file the refund claim with
the jurisdictional tax authority to which the taxpayer has
been assigned as per the administrative order issued in this
regard by the Chief Commissioner of Central Tax and the
Commissioner of State Tax. In case such an order has not
been issued in the State, the registered person is at liberty
to apply for refund before the Central Tax Authority or
State Tax Authority till the administrative mechanism for
assigning of taxpayers to respective authority is implemented.
However, in the latter case, an undertaking is required to be
submitted stating that the claim for sanction of refund has
been made to only one of the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ns/documents/forms
pertaining to refund claims on account of inverted duty
structure (including supplies in terms of notification Nos.
40/2017-Central Tax (Rate) and 41/2017-Integrated Tax
(Rate) both dated 23.10.2017), deemed exports and excess
balance in electronic cash ledger shall be filed and processed
manually till further orders. The procedure to be followed
for manual filing of following type of refund claims and
processing thereof shall be in accordance with Circular no.
24/24/2017-GST dated 21.12.2017 read with Circular no.
17/17/2017-GST dated 15.11.2017 :-
(i) refund of unutilized input tax credit where 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) of goods
or services or both except those supplies which are
notified by the Government on the recommendations
of the Council (section 54(3) of the CGST Act, 2017
refers);
295
GST FLYERS
(ii)
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
een extended while the dates of furnishing of FORM
GSTR 2 and FORM GSTR 3 for such period are yet to be
notified, it has been decided by the competent authority to
sanction refund of provisionally accepted input tax credit at
this juncture. However, the registered persons applying for
refund is required to give an undertaking to the effect that
the amount of refund sanctioned would be paid back to the
Government with interest in case it is found subsequently
that the requirements of clause (c) of sub-section (2) of
section 16 read with sub-section (2) of sections 42 of the
CGST Act, 2017 have not been complied with in respect
296
Refunds under GST
of the amount refunded. This undertaking should be
submitted manually along with the refund claim till the
same is available in FORM RFD-01A on the common
portal. Further the prescribed statements – Statement 1 and
Statement 1A of FORM GST RFD-01A are also required
to be filled.
It may be noted that Rule 89(4B) has been ins
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
2017-Central Tax dated 18.10.2017 are
also required to be furnished which includes an undertaking
by the recipient of deemed export supplies that he shall not
claim the refund in respect of such supplies and that no
input tax credit on such supplies has been availed of by him.
297
GST FLYERS
The undertaking from the recipient should be submitted
manually by the supplier along with his application for
refund claim. Similarly, in case the refund is filed by the
recipient of deemed export supplies, an undertaking by the
supplier of deemed export supplies that he shall not claim
the refund in respect of such supplies is also required to be
furnished manually. The procedure regarding procurement
of supplies of goods from DTA by Export Oriented Unit
(EOU) / Electronic Hardware Technology Park (EHTP)
Unit / Software Technology Park (STP) Unit / Bio-
Technology Parks (BTP) Unit under deemed export as laid
down in Circular no. 14/14/2017-GST dated 06.11.2017
needs to be compl
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
refund
is rejected under rule 92 of the CGST Rules, 2017, either
fully or partly, the amount debited, to the extent of rejection,
shall be re-credited to the electronic credit ledger by an
order made in FORM GST RFD-1B until the FORM
GST PMT-03 is available on the common portal. Further,
the payment of the sanctioned refund amount shall be
made only by the respective tax authority of the Central or
State Government. Thus, the refund order issued either by
the Central tax authority or the State tax/UT tax authority
shall be communicated to the concerned counter-part
tax authority within seven working days for the purpose
of payment of the relevant sanctioned refund amount of
tax or cess, as the case may be. This time limit of seven
working days is also applicable to refund claims in respect
of zero-rated supplies being processed as per Circular No.
17/17/2017-GST dated 15.11.2017. It must be ensured
that the timelines specified under section 54(7) and rule
91(2) of the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
D-04 and FORM GST RFD-06], the
application for refund in FORM GST RFD-01A and the
Acknowledgement Receipt Number (ARN). Accordingly,
the jurisdictional proper officer of Central or State Tax,
as the case may be, shall issue FORM GST RFD-05 and
send it to the DDO for onward transmission for release of
payment. After release of payment by the respective PAO to
the applicant's bank account, the nodal officer of Central tax
and State tax authority shall inform each other. The manner
of communication as referred earlier shall be followed at the
time of final sanctioning of the refund also.
In case of refund claim for the balance amount in the
electronic cash ledger, upon filing of FORM GST RFD-
01A, the amount of refund claimed shall get debited in the
electronic cash ledger.
Drawback of all taxes under GST (Central Tax, Integrated
Tax, State/Union Territory Tax) should not have been
availed while claiming refund of accumulated ITC under
section 54(3)(ii) of the CGST Act,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ed
as per section 16 of the IGST Act, 2017. By zero rating
it is meant that the entire supply chain of a particular zero
rated supply is tax free i.e. there is no burden of tax either
on the input side or on output side. This is in contrast with
exempted supplies, where only output is exempted from
tax but tax is levied on the input side. The essence of zero
rating is to make Indian goods and services competitive in
the international market by ensuring that taxes do not get
added to the cost of exports.
The objective of zero rating of exports and supplies to SEZ
is sought to be achieved through the provision contained in
Section 16(3) of the IGST Act, 2017, which mandates that
a registered person making a zero rated supply is eligible to
claim refund in accordance with the provisions of section
54 of the CGST Act, 2017, under either of the following
options, namely: –
he may supply goods or services or both under
302
Refund of Integrated Tax paid on account of zero r
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
eed for filing a separate
refund claim as the shipping bill filed by the exporter is itself
treated as a refund claim. As per rule 96 of the CGST Rules,
2017, the shipping bill filed by an exporter shall be deemed
to be an application for refund of integrated tax paid on the
goods exported out of India and such application shall be
303
GST FLYERS
deemed to have been filed only when:-
(a) the person in charge of the conveyance carrying the
export goods duly files an export manifest or an export
report covering the number and the date of shipping
bills or bills of export; and
(b) the applicant has furnished a valid return in FORM
GSTR-3 or FORM GSTR3B, as the case may be.
Thus, once the shipping bill and export general manifest
(EGM) is filed and a valid return is filed, the application
for refund shall be considered to have been filed and refund
shall be processed by the department.
Since the system of filing of return in FORM GSTR-
3 has not started so far, the refu
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ars and as intimated to the Customs authorities.
As
per Rule 96, the refund of IGST paid on export
of goods is processed and disbursed by Customs. For
processing such refund, GST system transmits invoice
level data of Table 6A in GSTR 1 subject to the following
validations:
1. GSTR-3B is filed for the corresponding period, with
admitted tax liability under Table 3.1(b);
2. Export invoices are submitted in GSTR-1/Table 6A
and have correct shipping bill number, shipping bill
date and port code;
3. The admitted tax liability of IGST under table 3.1(b)
of GSTR-3B, is equal to, or greater than, the IGST
amount claimed to have been paid under Table 6A of
GSTR-1 of the corresponding period.
It
may be noted that Rule 96(9) has been inserted, w.e.f
23.10.2017, in CGST Rules, 2017 vide Notification no.
75/2017-Central Tax dated 29.12.2017 so as to provide
that the refund of integrated tax paid on export of goods or
services is not permitted to such persons who have received
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of supplies to a Special Economic Zone unit or a
Special Economic Zone developer, the application for
refund shall be filed by the –
(a) supplier of goods after such goods have been admitted
in full in the Special Economic Zone for authorised
operations, as endorsed by the specified officer of the
Zone;
(b) supplier of services along with such evidence regard-
ing receipt of services for authorised operations as en-
dorsed by the specified officer of the Zone.
Thus, proof of receipt of goods or services as evidenced by
the specified officer of the zone is a pre-requisite for filing
of refund claim by the DTA supplier.
The claim for refund when made for supplies made to SEZ
306
Refund of Integrated Tax paid on account of zero rated supplies
unit/Developer has to be filed along with the following
documents:
1.
2.
3.
a statement containing the number and date of invoices
as provided in rule 46 along with the evidence regarding
the endorsement specified in the secon
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
full-fledged refund module is operationalised
by GSTN, manual filing of claims has been prescribed vide
Circular no.17/17/2017-GST dated 15.11.2017 & Circular
307
GST FLYERS
no. 24/24/2017-GST dated 21.12.2017. The application
for refund of IGST paid on zero-rated supply of goods to
a Special Economic Zone developer or a Special Economic
Zone unit or in case of zero-rated supply of services is
required to be filed in FORM GST RFD-01A (as notified
in the CGST Rules, 2017 vide Notification no. 55/2017
Central Tax dated 15.11.2017) by the supplier on the
common portal and a print out of the said form shall be
submitted before the jurisdictional proper officer along
with all necessary documentary evidences as applicable (as
per the details in statement 2 or 4 of Annexure to FORM
GST RFD-01), within the time stipulated for filing of
such refund under the CGST Act, 2017.
Refund amount to be sanctioned by respective authorities
Para 2.5 of Circular no. 17/17/2017-GST dated
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
even working days
is also applicable to refund claims in respect of zero-rated
supplies being processed as per Circular no. 17/17/2017-
GST dated 15.11.2017 as against the time limit of three
days prescribed in para 4 of the said Circular. It must be
ensured that the timelines specified under section 54(7) of
the CGST Act, 2017 and rule 91(2) of the CGST Rules,
2017 for the sanction of refund are adhered to.
Special Procedure to facilitate smooth refund of Central
Tax and State Tax
In order to facilitate sanction of refund amount of central
tax and State tax by the respective tax authorities, it has
been decided that both the Central and State Tax authority
shall nominate nodal officer(s) for the purpose of liasioning
through a dedicated e-mail id. Where the amount of
central tax and State tax refund is ordered to be sanctioned
provisionally by the Central tax authority and a sanction
order is passed in accordance with the provisions of rule
91(2) of the CGST Rules, 2
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
gistered person needs to file the refund claim with
the jurisdictional tax authority to which the taxpayer has
been assigned as per the administrative order issued in this
regard by the Chief Commissioner of Central Tax and the
Commissioner of State Tax. In case such an order has not
been issued in the State, the registered person is at liberty
to apply for refund before the Central Tax Authority or
State Tax Authority till the administrative mechanism for
assigning of taxpayers to respective authority is implemented.
However, in the latter case, an undertaking is required to be
submitted stating that the claim for sanction of refund has
been made to only one of the authorities. It is reiterated
that the Central Tax officers shall facilitate the processing
of the refund claims of all registered persons whether or not
such
person was registered with the Central Government in
the earlier regime
Modalities/Records in respect of manual refund claims
The Circular No.17/17/
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Rule 91 also
prescribe that the provisional refund will not be granted if
the person claiming refund has, during any period of five
years immediately preceding the tax period to which the
claim for refund relates, been prosecuted for any offence
under the Act or under an earlier law where the amount of
tax evaded exceeds two hundred and fifty lakh rupees.
******
311
Chapter Thirty Six
Refund of unutilised Input
Tax Credit (ITC)
Accumulation of Input Tax Credit happens when the tax
paid on inputs is more than the output tax liability. Such
accumulation will have to be carried over to the next financial
year till such time as it can be utilised by the registered person
for payment of output tax liability. However, the GST Law
permits refund of unutilised ITC in two scenarios, namely
if such credit accumulation is on account of zero rated
supplies or on account of inverted duty structure, subject to
certain exceptions.
As
per Section 54(3) of the CGST Act, 2017, a r
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ry pertains to refund of unutilised ITC
for which the registered person has to supply under
Bond/LUT (as prescribed in Rule 96A of CGST Rules,
2017) and in the second category supply has been made
after payment of Tax (IGST). In both the cases, refund
can be applied under Section 54 of the CGST Act, 2017
read with Rule 89 or Rule 96, as the case may be, of the
CGST Rules, 2017.
b) Inverted duty structure: Where the credit has ac-
cumulated 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), except supplies
of goods or services or both as may be notified by the
Government on the recommendations of the Council.
This would include even those cases where supply has
been made to merchant exporters under Notification
no. 40/2017- Central Tax (Rate) dated 23.10.2017 or
notification No. 41/2017-Integrated Tax (Rate) dated
23.10.2017 or both.
313
GST FLYERS
In such cases also, refund can b
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
paid in relation to which such refund
is claimed was collected from, or paid by, him and the in-
cidence of such tax and interest had not been passed on to
any other
person.
Rule 89(2) of the CGST Rules, 2017, specifies documents
to be attached with the refund application in case of differ-
ent types of Refund applicants.
However, it has been provided under section 54(4) of the
314
Refund of unutilised Input Tax Credit (ITC)
CGST Act, 2017, that where the amount claimed as refund
is less than two lakh rupees, then, for certifying that the in-
cidence of such tax and interest had not been passed on to
any other
other
person, it shall not be necessary for the applicant
to furnish any documentary and other evidences but he may
file a declaration, based on the documentary or other evi-
dences available with him.
It has also been provided under section 54(6) of the CGST
Act, 2017, that in cases where the claim for refund on ac-
count of zero-rated supply of goods or se
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
years imme-
diately preceding the tax period to which the claim for re-
315
GST FLYERS
fund relates, been prosecuted for any offence under the Act
or under an earlier law where the amount of tax evaded
exceeds two hundred and fifty lakh rupees;
It may also be noted that by default, the refund is to be
credited to the Consumer Welfare Fund, except in the cases
below:-
(a) refund of tax paid on zero-rated supplies of goods or
services or both or on inputs or input services used in
making such zero-rated supplies;
(b) refund of unutilised input tax credit under section 54(3)
of the CGST Act, 2017.
(c) refund of tax paid on a supply which is not provided,
either wholly or partially, and for which invoice has not
been issued, or where a refund voucher has been issued;
(d) refund of tax in pursuance of section 77;
(e) the tax and interest, if any, or any other amount paid by
the applicant, if he had not passed on the incidence of
such tax and interest to any other pers
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of
supplies in respect of which refund is claimed under
rule 89(4A) or rule 89(4B) or both;
(D) “Turnover of zero-rated supply of services” means the
value of zero-rated supply of services made without
payment of tax under bond or letter of undertaking,
calculated in the following manner, namely:-
Zero-rated supply of services is the aggregate of the
payments received during the relevant period for zero-
rated supply of services and zero-rated supply of services
where supply has been completed for which payment
had been received in advance in any period prior to the
relevant period reduced by advances received for zero-
rated supply of services for which the supply of services
has not been completed during the relevant period;
317
GST FLYERS
(E) “Adjusted Total turnover” means the turnover in a State
or a Union territory, as defined under clause (112) of
section 2, excluding –
(a)
(b)
the value of exempt supplies other than ze-
ro-rated su
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
clude even those
cases where supply has been made to merchant exporters
318
Refund of unutilised Input Tax Credit (ITC)
under Notification no. 40/2017- Central Tax (Rate) dated
23.10.2017 or notification No. 41/2017-Integrated Tax
(Rate) dated 23.10.2017 or both. However, the Government
also has the power to notify supplies where refund of ITC
will not be admissible even if such credit accumulation
is on account of an inverted duty structure. In exercise of
the powers conferred by this section, the government has
issued Notification no. 15/2017-Central Tax (Rate) dated
28.06.2017 wherein it has been notified that refund of
unutilised input tax credit shall not be allowed under sub-
section (3) of section 54 of the said CGST Act, 2017, in case
of supply of services specified in sub-item (b) of item 5 of
Schedule II of the CGST Act, 2017. The supplies specified
under item 5(b) of Schedule II are construction services.
In respect of goods, the central government has issu
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rp without weft assem-
bled by means of an adhesive
(bolducs)”
Knitted or crocheted fabrics
[All goods]
Rail
locomotives powered
from an external source of
electricity or by electric accu-
mulators
Other rail locomotives; lo-
comotive tenders; such as
Diesel-electric locomotives,
Steam locomotives and ten-
ders thereof
320
10
8603
11
8604
12
8605
13
14
8606
8607
Refund of unutilised Input Tax Credit (ITC)
Self-propelled
railway
or
tramway coaches, vans and
trucks, other than those of
heading 8604
Railway or tramway main-
tenance or service vehicles,
whether or not self-propelled
(for example, workshops,
cranes, ballast tampers, track
liners, testing coaches and
track inspection vehicles)
Railway or tramway passen-
ger coaches, not self-pro-
pelled; luggage vans, post of-
fice coaches and other special
purpose railway or tramway
coaches, not self-propelled
(excluding those of heading
8604)
Railway or tramway goods.
vans and wagons, not se
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
port of fabrics, it has been
clarified that subject to provisions of Section 54(10) of the
CGST Act, 2017, a manufacturer of such fabrics will be
eligible for refund of unutilised input tax credit of GST
paid on inputs (other than input tax credit of GST paid
on capital goods) in respect of fabrics manufactured and
exported by him.
Further, Rule 89(2) (h) of CGST Rules, 2017 stipulate that
refund claim on account of accumulated ITC (where such
accumulation is on account of inverted duty structure) has
to be accompanied by a statement containing the number
322
Refund of unutilised Input Tax Credit (ITC)
and date of invoices received and issued during a tax period.
Rule 89(3) of CGST Rules, 2017 also provide that where
the application relates to refund of input tax credit, the
electronic credit ledger shall be debited by the applicant in
an amount equal to the refund so claimed.
Provisions similar for refund of accumulated ITC for
both types of Refund Applicants (suppl
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
(3) of rule 86
of the CGST Rules, 2017 from the amount in the electronic
323
GST FLYERS
credit ledger to the extent of the claim. The common portal
shall generate a proof of debit (ARN- Acknowledgement
Receipt Number) which would be mentioned in the FORM
GST RFD-01A submitted manually, along with the print
out of FORM GST RFD-01A to the jurisdictional proper
officer, and with all necessary documentary evidences as
applicable (as per details in statement 3 or 5 of Annexure
to FORM GST RFD-01), within the time stipulated for
filing of such refund under the CGST Act, 2017. It has
been further clarified vide Circular no. 24/24/2017-GST
dated 21.12.2017, that the same procedure as prescribed in
Circular no. 17/17/2017-GST dated 15.11.2017 shall be
applicable to the refund of unutilized input tax credit where
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) of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nsured that a valid return in FORM GSTR-
3B has been filed for the last tax period before the one in
which the refund application is being filed. Since the date
of furnishing of FORM GSTR 1 from July, 2017 onwards
has been extended while the dates of furnishing of FORM
GSTR 2 and FORM GSTR 3 for such period are yet to
be notified, it has been decided by the competent authority
to sanction refund of provisionally accepted input tax credit
at this juncture. However, the registered persons applying
for refund must give an undertaking to the effect that the
amount of refund sanctioned would be paid back to the
Government with interest in case it is found subsequently
that the requirements of clause (c) of sub-section (2) of
section 16 read with sub-section (2) of sections 42 of the
CGST Act, 2017 have not been complied with in respect
of
the amount refunded. This undertaking should be submitted
manually along with the refund claim till the same is
available in FORM RFD-01
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ng of taxpayers to respective authority is implemented.
However, in the latter case, an undertaking is required to be
submitted stating that the claim for sanction of refund has
been made to only one of the authorities. It is reiterated
that the Central Tax officers shall facilitate the processing
of the refund claims of all registered persons whether or not
such person was registered with the Central Government in
the earlier regime.
Modalities/Records in respect of manual refund claims
The Circular no.17/17/2017-GST dated 15.11.2017 &
Circular no. 24/24/2017-GST dated 21.12.2017 lays down
the modalities for maintenance of records in respect of
such manual refund claims, which needs to be adhered to
scrupulously. The time limits laid down in the Act need to
be followed and the prescribed forms need to be generated
manually for processing of such refund claims.
Refund amount to be sanctioned by respective authorities
Para 2.5 of Circular No. 17/17/2017-GST dated 15.11.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ed under section 54(7) of the CGST Act, 2017and
rule 91(2) of the CGST Rules, 2017 for the sanction of
refund are adhered to.
Conclusion
The GST Law provides for multiple options to the suppliers
of zero rated supplies to claim refund of taxes paid on the
input side. One of the options is export under bond or LUT
and claim refund of unutilised ITC. The law also provides
for refund of unutilised ITC where credit accumulation
is on account of inverted duty structure, subject to certain
riders. It also includes cases where supply has been made
to merchant exporters under Notification no. 40/2017-
Central Tax (Rate) dated 23.10.2017 or notification No.
327
GST FLYERS
41/2017-Integrated Tax (Rate) dated 23.10.2017 or both.
Time lines have been set for processing of refund claims
and claims not settled within 60 days will be paid with
interest @6%. Moreover, 90% of the claim would be paid
within 7 days of acknowledgement of claim on provisional
basis in case of claims on
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
uthority for Advance Ruling (AAR) can give
a binding ruling to an applicant who is a registered person
or is desirous of obtaining registration. The advance ruling
given by the Authority can be appealed before an Appellate
authority for Advance Ruling (AAAR). There are time lines
prescribed for passing an order by AAR and by AAAR.
Objectives of Advance Ruling
329
GST FLYERS
The broad objectives for setting up a mechanism of Ad-
vance Ruling include:
i.
ii.
iii.
iv.
provide certainty in tax liability in advance, in rela-
tion to an activity proposed to be undertaken by the
applicant;
attract Foreign Direct Investment (FDI);
reduce litigation;
pronounce ruling expeditiously in transparent and
inexpensive manner;
What is an Advance Ruling?
“Advance ruling” means a decision provided by the Authority
or the Appellate Authority to an applicant on matters or
on questions specified in sub-section (2) of section 97 or
sub-section (1) of section 100 of the CGST Act, 201
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
to pay tax on any goods or
services or both;
(f) whether applicant is required to be registered;
(g) whether any particular thing done by the applicant with
respect to any goods or services or both amounts to or
results in a supply of goods or services or both, within
the meaning of that term.
Section 100(1) of the CGST Act, 2017 provides that con-
cerned officer, the jurisdictional officer or an applicant ag-
grieved by any advance ruling pronounced by the Authority
for Advance Ruling, may appeal to the Appellate Authority.
Thus it can be seen that a decision of the Appellate authority
is also treated as an advance ruling.
'Authority for advance ruling' (AAR) and Appellate
authority for advance ruling' (AAAR)
The Authority for Advance Ruling (AAR) and the Appellate
Authority for Advance Ruling (AAAR) constituted under
331
GST FLYERS
the provisions of a State Goods and Services Tax Act or
Union Territory Goods and Services Tax Act shall be
deemed to be the Authori
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
State. It is only limited to the
who has applied for an advance ruling.
Time period for applicability of Advance Ruling
person
The law does not provide for a fixed time period for which
the ruling shall apply. Instead, it has been provided that
advance ruling shall be binding till the period when the
332
Advance Ruling Mechanism in GST
law, facts or circumstances supporting the original advance
ruling have not changed.
However, an advance ruling shall, by an order passed by the
AAR/AAAR, be declared to be ab initio void if the AAR
or AAAR finds that the advance ruling was obtained by the
applicant by fraud or suppression of material facts or mis-
representation of facts. In such a situation, all the provisions
of the CGST/SGST Act shall apply to the applicant as if
such advance ruling had never been made (but excluding
the period when advance ruling was given and up to the
period when the order declaring it to be void is issued). An
order declaring advance ruling t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
provides for the
manner of authenticating documents through Digital
Signature Certificate (DSC) or e-signature as specified in
the Information Technology Act.
Upon receipt of an application, 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 the AAR will pass an
order either admitting or rejecting the application.
Application for advance ruling shall not be admitted in
cases where the question raised in the application is already
pending or decided in any proceedings in the case of an
applicant under any of the provisions of CGST Act.
If the application is rejected, it should be only after an
opportunity of being heard is provided to the applicant and
of a speaking order giving the reasons for rejection.
by way
If the application is admitted, the AAR shall
pronounce
its ruling w
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of the CGST
Rules, 2017. An appeal against the advance ruling shall
be made by an applicant on the common portal in FORM
GST ARA-02 and shall be accompanied by a fee of ten
thousand rupees to be deposited in the manner specified
in section 49. Similarly, if the prescribed or jurisdictional
officer of CGST/SGST does not agree with the finding
of AAR, he can also file an appeal with AAAR. The word
prescribed 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. An appeal
against the advance ruling shall be made by the concerned
officer or the jurisdictional officer referred to in section 100
on the common portal in FORM GST ARA-03 and no
fee shall be payable by the said officer for filing the appeal.
The appeal (by the applicant or jurisdictional officer), the
verificat
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ing shall be made by the
applicant on the common portal. However, due to the
unavailability of the requisite forms on the common portal,
a new rule 107A has been inserted vide notification No.
55/2017-Central Tax, dated 15.11.2017, which states that
in respect of any process or procedure prescribed in Chapter
XII, any reference to electronic filing of an application,
intimation, reply, declaration, statement or electronic
issuance of a notice, order or certificate on the common
portal shall, in respect of that process or procedure, include
the manual filing of the said application, intimation, reply,
336
Advance Ruling Mechanism in GST
declaration, statement or issuance of the said notice, order or
certificate in such Forms as appended to the CGST Rules.
Circular no. 25/25/2017-GST dated 21.12.2017 prescribing
the detailed procedure for manual filing of applications for
Advance Ruling and appeals before Appellate Authority
for Advance Ruling has been issued.
Therefor
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
plication
for Advance Ruling on the common portal, the applicant
has to fill his details using “Generate User ID for Advance
Ruling” under “User Services”. After entering the email id
337
GST FLYERS
and mobile number, a One Time Password (OTP) shall
be sent to the email id. Upon submission of OTP, Systems
shall generate a temporary ID and send it to the declared
email and mobile number of the applicant.
On the basis of this ID, the applicant can make the payment
of the fee of Rs. 5,000/- each under the CGST and the
respective SGST Act. The applicant is then required
to download and take a print of the challan and file the
application with the Authority for Advance Ruling.
The application, the verification contained therein and all
the relevant documents accompanying such application
shall be signed-
(a) in the case of an individual, by the individual himself
or where he is absent from India, by some other person
duly authorised by him in this behal
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or
(h) in the case of any other person, by some person
competent to act on his behalf, or by a person authorised
in accordance with the provisions of section 48 of the
CGST Act.
Form and Manner of Appeal to the Appellate Authority
for Advance Ruling
An appeal against the advance ruling issued under sub-
section (6) of section 98 of the CGST Act and the rules made
thereunder shall be made by an applicant in quadruplicate,
in FORM GST ARA-02 and shall be accompanied by a
fee of ten thousand rupees to be deposited online, in the
manner specified in section 49 of the CGST Act. It may be
noted that though the application shall be filed manually
till the advance ruling module is made available on the
common portal, the fee is required to be deposited online in
terms of section 49 of the CGST Act. The payment of fee
shall be made as per the procedure detailed earlier.
An appeal made by the concerned officer or the jurisdictional
339
GST FLYERS
officer referred to in secti
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
respectively.
If the space provided for answering any item in the Forms
is found to be insufficient, separate sheets may be used.
Further, the application, the verification appended thereto,
the Annexures to the application and the statements and
documents accompanying the Annexures must be self-attested.
The contact details of all the AARs for all States are available
at http://www.gstcouncil.gov.in/sites/default/files/Details-
of-AAR-as-on_22-11-2017.pdf
340
Rectification of Mistakes
Advance Ruling Mechanism in GST
The law gives power to AAR and AAAR to amend their
order to rectify any mistake apparent from the record
within a period of six months from the date of the order.
Such mistake may be noticed by the authority on its own
accord or may be brought to its notice by the applicant or
the prescribed 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
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e certainty to the taxpayer with respect
to his obligations under the GST Act and an expeditious
ruling, so that the relationship between the taxpayer and
administration is smooth and transparent and helps to
avoid unnecessary litigation.
******
342
Chapter Thirty Eight
Goods Transport Agency in
GST
Background of levying tax on the services of Goods
Transport Agency
The levy of Service Tax on Road Transportation Service has
always been a contentious issue. The Finance Act, 1997 had
levied Service Tax on Goods Transport Operators w.e.f. 16-
11-1997 which was subsequently withdrawn after nation-
wide strike. Thereafter by the Finance (No. 2) Act, 2004
Service Tax was imposed on Transport of Goods by Road
service rendered by a goods transport agency with effect from
10-09-2004. However, the levy was deferred until further
notice again in view of transporters' strike. The Government
thereafter constituted a Committee to deal with the issue
and after taking into accoun
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
i) a courier
agency;
(b) by inland waterways.
Thus, it is to be seen that mere transportation of goods by
road, unless it is a service rendered by a goods transportation
agency, is exempt from GST.
Who is a GTA – Goods Transport Agency? As per Section
65B (26) of the Finance Act, 1994; “Goods Transport
Agency means any person who provides service in relation
to transport of goods by road and issues consignment note,
by whatever name called”. Therefore, in the Service Tax
regime, issuance of Consignment Note (C/N) was integral
and mandatory requirement before any road transporter
could be brought within the ambit of GTA.
344
Goods Transport Agency in GST
Position under GST
Under GST laws, the definition of Goods Transport Agency
is provided in clause (ze) of notification no. 12/2017-Central
Tax (Rate) dated 28.06.2017.
(ze) “goods transport agency” means any person who
provides service in relation to transport of goods by road
and issues consignment note, by
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
signment note?
Consignment Note is neither defined in the Act nor in the
notification no.12/2017-Central Tax (Rate). Guidance can
be taken from the meaning ascribed to the term under the
345
GST FLYERS
Explanation to Rule 4B of Service Tax Rules, 1994. In
terms of the said rule, consignment note means a document,
issued by a goods transport agency against the receipt of
goods for the purpose of transport of goods by road in a
goods carriage, which is serially numbered, and contains the
name of the consignor and consignee, registration number
of the goods carriage in which the goods are transported,
details of the goods transported, details of the place of origin
and destination, person liable for paying service tax whether
consignor, consignee or the goods transport agency.
Charge of GST on services provided by GTA
In terms of notification no. 11/2017-Central Tax (Rate)
dated 28.06.2017 as amended by notification no. 20/2017-
Central tax (Rate) dated 22.08.2017, sr.n
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of the Central
Goods and Services Tax Act, 2017 and the rules made
thereunder.
GST @ 6% CGST (12% cumulative) is subject to the
condition that the goods transport agency opting to pay
central tax @ 6% under this entry shall, thenceforth, be
liable to pay central tax @ 6% on all the services of GTA
supplied by it. Further, there is no restriction on the GTA
from taking ITC if this option is availed.
Thus, where the GTA is not eligible to take ITC for the
supplies effected by it and the liability under GST is
discharged under reverse charge basis, the recipient of GTA
service discharging the tax liability is entitled to take Input
Tax Credit (ITC) of the amount of tax paid under reverse
charge, provided it is used in the course or furtherance of
business at his end. Further the recipient would be eligible
for ITC of the GST paid by GTA on forward charge basis.
Notification no. 11/2017-Central Tax (Rate), sr.no.11, (ii)
also provides that supporting services in transpor
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
) or under any other law for the
time being in force in any part of India; or
(c) any co-operative society established by or under any
law; or
(d) any person registered under the Central Goods and
Services Tax Act or the Integrated Goods and Services
Tax Act or the State Goods and Services Tax Act or
the Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under
any law including association of persons; or
(g) any casual taxable
person.
Thus in cases where services of GTA are availed by the
above categories of persons in the taxable territory the
GTA supplier has the option to pay tax (and avail ITC)
@12% (6% CGST + 6% SGST); and if the GTA does not
avail this option, the liability to pay GST will fall on the
recipients. In all other cases where the recipients do not fall
348
Goods Transport Agency in GST
in the categories mentioned above, the liability will be
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or military equipments.
Similarly, the following services received by the GTA
(Heading 9966 or 9973) is also exempt in terms of
notification no.12/2017-Central Tax (Rate) dated
28.06.2017 (sr.no.22)
Services by way of giving on hire –
(b) to a goods transport agency, a means of transportation
of goods.
Thus, if the GTA hires a means of transportation of goods,
no GST is payable on such transactions.
Significance of the term 'in relation to' in the definition
of GTA
The use of the phrase 'in relation to' has extended the scope
of the definition of GTA. It includes not only the actual
transportation of goods, but any intermediate/ancillary
service provided in relation to such transportation, like
loading/unloading, packing/unpacking, trans-shipment,
temporary warehousing, etc. If these services are not
provided as independent activities but are the means for
successful provision of GTA Service, then they are also
covered under GTA.
Conclusion
The above discus
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t
service, no GST is payable on such inputs.
In a nutshell, the GST law continues the provisions prevailing
under the Service Tax regime. The law recognises that pure
transportation of goods services are mostly provided by
persons in the unorganised sector and hence has specifically
excluded such operators from the tax net. In respect of those
who provide agency services in transport, the liability is cast
on the recipients in most of the cases or unless option to pay
under forward charge has been exercised by the GTA.
******
351
Chapter Thirty Nine
GST on Charitable and
Religious Trusts
The provisions relating to taxation of activities of charitable
institutions and religious trusts have been borrowed and
carried over from the erstwhile service tax provisions.
All services provided by such entities are not exempt. In
fact, there are many services that are provided by such
entitieswhich would be within the ambit of GST.
Notification No.12/2017-Central Tax (Rate) da
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or persons with
severe physical or mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a depen-
dence-forming substance such as narcotics
drugs or alcohol; or
(B) public awareness of preventive health, fami-
ly planning or prevention of HIV infection;
(ii) advancement of religion, spirituality or yoga;
(iii) advancement of educational programmes or skill
development relating to,
(A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and trauma-
tized persons;
353
GST FLYERS
(C) prisoners; or
(D) persons over the age of 65 years residing in
a rural area;
α
(iv) preservation of environment including watershed,
forests and wildlife.
This notification makes the exemption to charitable trusts
available for charitable activities more specific. While the
income from only those activities listed above is exempt
from GST, income from the activities other than those
mentioned above is taxable. Thus, there co
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r religious trust under section 12AA of the
Income-tax Act, 1961 (hereinafter referred to as the
Income-tax Act) or a trust or an institution registered
under sub clause (v) of clause (23C) of section 10 of the
Income-tax Act or a body or an authority covered under
clause (23BBA) of section 10 of the said Income-tax Act:
Provided that nothing contained in entry (b) of this exemption
shall apply to,-
(i) renting of rooms where charges are one thousand rupees or
more per day;
(ii) renting of premises, community halls, kalyanmandapam
or open area, and the like where charges are ten thousand
rupees or more per day;
(iii) renting of shops or other spaces for business or commerce
where charges are ten thousand rupees or more per month.
Thus, the law gives a limited exemption to renting of only
religious precincts or a religious place meant for general
public by the entity registered under Section 12AA of the
Income Tax Act. As per clause (zc) of the said notification,
the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
premises/kalyanamandapam
etc exceed 10,000 per day or renting of shops/premises for
business purposes exceed 10,000 per month. So also, if such
properties are not situated in the precincts of a religious
place meaning thereby not within walls or boundary walls
of the religious place, income from such letting out will lose
this exemption and income from it will be liable to GST.
Income from a religious ceremony organised by a charitable
trust is exempt as per the above notification. So the income
from Navratri functions, other religious functions, and
religious poojas conducted on special occasions like religious
festivals by persons so authorised for this purpose by the
charitable or religious trust are exempt from GST.
But a careful perusal of this exemption shows that all income
from such a religious ceremony is not exempt (services
other than by way of conduct of religious ceremony are
not exempt). Therefore, the nature of income is an essential
factor for ascertai
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e entities registered under section
12AA of the Income-tax Act.
Thus, services provided by way of training or coaching in
recreational activities relating to arts or culture or sports by
a charitable entity will be exempt from GST.
GST on management of educational institutions by
charitable trusts: If trusts are running schools, colleges or
any other educational institutions specifically for abandoned,
orphans, homeless children, physically or mentally abused
persons, prisoners or persons over age of 65 years or above
residing in a rural area, such activities will be considered as
357
GST FLYERS
charitable activities and income from such supplies will be
wholly exempt fromGST.
Meaning of the word rural area defined in said notification
is rural area means the area comprised in a village as
defined in land revenue records excluding the area under
any municipal committee, municipal corporation, town area
committee, cantonment board or notified area committee
or any ar
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nd
to educational institutions andonly the following services
received by eligible educational institution are exempt:
(1) Transportation of students, faculty and staff of the eli-
358
GST on Charitable and Religious Trusts
gible educational institution.
(2) Catering service including any mid-day meals scheme
sponsored by the Government.
(3) Security or cleaning or house-keeping services in such
educational institution.
(4) Services relating to admission to such institution or
conduct of examination.
If such school or other educational institution gives property
owned by such institution on rent to others, no exemption
will be available for such services. Therefore, all services
received by educational institutions managed by charitable
trusts (for other than charitable activities, as defined) except
those services mentioned above are taxable.
GST on arranging yoga and meditation camp by
charitable trusts: Charitable trusts organise yoga camps
or other fitness camp
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ries.
This activity is specifically excluded by way of entry No.
50 of Notification No. 12/2017- Central Tax Rate (and is
applicable for everyone, including charitable trusts); which
means services by private libraries are not exempt. Thus, if
donors of public library remain open to all and if it caters
to educational, informational and recreational needs of its
users and finance for such libraries can be provided from
donation, subscription, from special fund created for this
purpose or from combination of all such sources, it will be
called public library and no GST will be applicable on such
services.
GST on hospital managed by charitable trusts: Entry no.
74 of Notification No. 12/2017-Central Tax Rate (applicable
to all persons including charitable trusts) exempts healthcare
services at clinical establishment, an authorised medical
professional or paramedics. As per clause (zg), health care
services means any service by way of diagnosis or treatment
or care for i
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
name called, that offers services or facilities
requiring diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy in any recognised
system of medicines in India, or a place established as an
independent entity or a part of an establishment to carry
out diagnostic or investigative services of diseases.
So, if charitable trusts run a hospital and appoint specialist
doctors, nurses and provide medical services to patients at
a concessional rate, such services are not liable to GST. If
hospitals hire visiting doctors/specialists and these deduct
from consultation/visit fees payable to doctors
and the agreement between hospital and consultant doctors
is such that some money is charged for providing services to
doctors, there may be GST on such amount deducted from
fees paid to doctors.
some money
GST on services provided to charitable trusts: Services
provided to charitable trusts are not out of ambit of GST.
All services other than those sp
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ommercialisation of education is also a
reality. The distinction between core and ancillary education
is blurring and education is now an organised industry
with huge revenues. The GST Act tries to maintain a fine
balancewhereby core educational services provided and
received by educational institutions are exempt and other
services are sought to be taxed at the standard rate of 18%.
Classification of Education Services: Education Services
are classified in heading 9992 (as per Notification No.
11/2017-Central Tax (Rate)) and are further sub-divided
into six groups (as per the Annexure to the same notification)
comprising of Pre-primary, primary, secondary, higher,
363
GST FLYERS
specialised and other educational & support services as
below:
Head-
Service
Service Description
ing and
Code
Group
(Tariff)
Heading
Education services
no. 9992
Group
Pre-primary education services
99921
999210
Pre-primary education services
Group
Primary education services
999
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
education services (as per
Notification No. 11/2017-Central Tax (Rate),
Notification No. 11/2017-Central Tax (Rate) and
Notification No. 12/2017-Central Tax (Rate) all dated
28.06.2017 as amended) are as below:
365
GST FLYERS
tion
Chapter/
Section/
Description of Ser-
Rate/Notifica-
vice
Heading
9992
Education Services
9992
Services provided –
(a) by an educational
institution to its stu-
dents, faculty and staff:
(b) to an educational
institution, by way of, –
(i) transportation of
students, faculty and
staff;
(ii) catering, includ-
ing any mid-day meals
scheme sponsored by
the Central Govern-
ment, State Govern-
ment or Union terri-
tory;
(iii) security or clean-
ing or housekeeping
services performed in
such educational insti-
tution;
18% (9% Central
Tax+9% State
Tax)/ Serial No. 30
of Notification No.
11/2017-Central
Tax (Rate) dated
28th June, 2017
NIL/Serial No. 66
of Notification No.
12/2017 Central
Tax (Rate) dated
28th June, 201
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
me in
Management; (c) five
year integrated pro-
gramme in Manage-
ment.
90 or any
chapter
Technical aids for ed- 5%/ Serial No. 257
ucation, rehabilitation, of Schedule I of
vocational training and the Notification
employment of the No.1/2017-Cen-
blind such as Braille tral Tax (Rate) dat-
typewriters, braille ed 28th June, 2017
watches, teaching and
learning aids, games
and other instruments
and vocational aids
specifically adapted for
use of the blindBraille
instruments, paper etc.
368
GST on Education Services
9023
Instruments, apparatus 28 %/ Serial No.
and models, designed 191 of Schedule IV
for demonstrational
purposes (for example,
in education or exhi-
bitions), unsuitable for
other
of the Notification
No.1/2017-Cen-
tral Tax (Rate) dat-
ed 28th June, 2017
uses
Thus, services provided by an educational institution
to students, faculty and staff are exempt. Educational
Institution means an institution providing services by way
of:
i. pre-sc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ognized by law'?
It means that only such educational services are in the negative
list as are related to delivery of education as a part' of the
curriculum that has been prescribed for obtaining a qualification
prescribed by law. It is important to understand that to be in the
negative list the service should be delivered as part of curriculum.
Conduct of degree courses by colleges, universities or institutions
which lead grant of qualifications recognized by law would be
covered. Training given by private coaching institutes would not
be covered as such training does not lead to grant of a recognized
qualification.
Are services provided by way of education as a part of a prescribed
curriculum for obtaining a qualification recognized by a law of
a foreign country covered in the negative list entry?
No. To be covered in the negative list a course should be recognized
by an Indian law.
Within the term “educational institution”, sub-clause (iii)
covers institutions
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ecifics given in the definition
of the term “Educational Institution”, would be treated as
one and entitled to avail exemptions provided by the law.
This would mean that private coaching centres or other
unrecognized institutions, though self-styled as educational
institutions, would not be treated as educational institutions
under GST and thus cannot avail exemptions available to
an educational institution.
371
GST FLYERS
Thus, educational institutions up to Higher Secondary
School level do not suffer GST on output services and also
on most of the important input services. Some of the input
services like canteen, repairs and maintenance etc. provided
by private players to educational institutions were subject to
service tax in pre-GST era and the same tax treatment has
been continued in GST regime.
Thusoutput services of lodging/boarding in hostels provided
by such educational institutions which are providing pre-
school education and education up to higher secondar
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y education
services other than what is specified above would not be
entitled to any exemption. The exemption also comes
with a rider. Such services are exempt only for educational
institutions providing services by way of education up to
higher secondary or equivalent. (from pre-school to HSC).
Thus if such auxiliary education services are provided
to educational institutions providing degree or higher
education, the same would not be exempt. For instance,
the services of conducting admission tests for admission
to colleges in case of educational institutions are providing
qualification recognized by law for the time being in force
shall not be liable to GST.
Who will
pay GST?
Education Services are under forward charge. Therefore,
GST shall be paid by the supplier of services.
What will be the Place of Supply of Educational Services
where the location of supplier of services and the location
of the recipient of services is in India?
As per section 12(6) of the IGS
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ace of supply of Educational Services
where the location of the supplier of services or the
location of the recipient of services is outside India?
As per section 13(5) of the IGST Act, 2017, the place
of supply of services supplied by way of admission to, or
organisation of a cultural, artistic, sporting, scientific,
educational or entertainment event, or a celebration,
conference, fair, exhibition or similar events, and of services
ancillary to such admission or organisation, shall be the
place where the event is actually held.
374
GST on Education Services
Educational Institution run by charitable organizations.
Charitable Trusts running institutions conforming to the
definition of Educational Institution as specified in the
notification would be entitled to the exemptions discussed
above. Apart from the general exemption available to all
educational institutions, charitable activities of entities
registered under Section 12AA of the Income Tax Act is
also exempt.
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
n 8 of the CGST
Act, 2017. Such services in the case of boarding schools are
375
GST FLYERS
naturally bundled and supplied in the ordinary course of
business. Therefore, the bundle of services will be treated
as consisting entirely of the principal supply, which means
theservice which formsthe predominant element of such
a bundle. In this case since the predominant nature is
determined by the service of education, the other service of
providing residential dwelling will not be considered for the
purpose of determining the tax liability and in this case the
entire consideration for the supply will be exempt.
Let's take another example where a course in a college
leads to dual qualification only one of which is recognized
by law. Would service provided by the college by way of
such education be covered by the exemption notification?
Provision of dual qualifications is in the nature of two
separate services as the curriculum and fees for each of such
qualifications are
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
recognized course. If extra billing is being
done, it may be a case of artificial bundling of two different
supplies, not supplied together in the ordinary course of
business, and therefore will be treated as a mixed supply,
attracting the rate of the higher taxed component for the
entire consideration.
The Education guide of 2012 for the purpose of service tax
has given the following important clarifications in respect
of educational services. The same can be gainfully referred
to, for the purpose of clarity under the GST regime:
“The supply of placement services provided to educational
institutions for securing job placements for the students shall
be liable to service tax. Similarly, educational institutes such as
IITS, IIMs charge a fee from prospective employers like corporate
houses/ MNCs, who come to the institutes for recruiting
candidates through campus interviews in relation to campus
recruitments. Such services shall also be liable to service tax.
Conclusio
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ng to Section 2(16) of the Maharashtra Co-
operative Society Act, 1960, “housing society” means a
society, the object of which is to provide its members with
open plots for housing, dwelling houses or flats; or if open
plots, the dwelling houses or flats are already acquired, to
provide its members common amenities and services.
Simply put these are a collective body of persons, who stay
in a residential society. As a collective body, they would be
supplying certain services to its members, be it collecting
statutory dues from its members and remitting to statutory
authorities, maintenance of the building, security etc.
Co-operative Housing Societies – whether amenable to
levy of GST
A Society is akin to a club, which is composed of its
members. So, can a service provided by a Housing Society
379
GST FLYERS
to its members be treated as service provided by one person
to another. The answer is yes. The following extracts of the
GST law will make the positio
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or any other similar activity, whether
or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or
incidental or ancillary to sub-clause (a);
380
GST on Co-operative Housing Societies
(c) any activity or transaction in the nature of sub-clause (a),
whether or not there is volume, frequency, continuity or
regularity of such transaction;
(d) supply or acquisition of goods including capital goods
and services in connection with commencement or
closure of business;
(e) provision by a club, association, society, or any such
body (for a subscription or any other consideration) of
the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any
premises;
(g) services supplied by a person as the holder of an office
which has been accepted by him in the course or
furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or
a licence to book maker in such club;
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
7 at sr.no.77 provides for the following
exemption to housing societies:
Service by an unincorporated body or a non- profit entity
registered under any law for the time being in force, to its
own members by way of reimbursement of charges or share of
contribution-
(a) as a trade union;
(b) for the provision of carrying out any activity which is
exempt from the levy of Goods and service Tax; or
(c) up to an amount of five thousand rupees per month per
member for sourcing of goods or services from a third
person for the common use of its members in a housing
society or a residential complex
In view of the provision contained at (c) above, a society
may be registered under GST, however if the monthly
contribution received from members is less than Rs.5,000/-
(and the amount is for the purpose of sourcing of goods
and services from a third person for the common use of its
382
GST on Co-operative Housing Societies
members), no GST is to be charged by the housing society
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
er, the question would then arise that if the monthly
bill is say Rs. 6,000/- (and the same is on account of services
for common use of its members), will GST be applicable
on Rs. 6,000/- or Rs.1,000/-. In such cases, exemption is
available up to an amount of Rs.5,000/ and GST would be
applicable on the amount in excess of Rs.5,000/-
TRU videF.No.332/04/2017-TRU released FAQs on levy
of GST on supply of services to the Co-operative society
and has clarified as under.
383
GST FLYERS
S.No Question
1 The society collects
the following charges
from the members
on quarterly basis as
follows:
1.Property Tax-actual
as per Municipal
Corporation of
Greater Mumbai
(MCGM)
2.Water Tax- Munic-
ipal Corporation
of Greater Mumbai
(MCGM)
3.Non- Agricultural
Tax- Maharashtra
State Government
4.Electricity charges
5.Sinking Fund-man-
datory under the
Bye-laws of the
Co-operative Soci-
eties
6.Repairs & mainte-
nance fund
Answer
1. Services provided
by the Central G
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cy charges or
simple interest for late
payment, attract GST,
as these charges are
collected by the RWA/
Co-operative Society
for supply of services.
meant for its members.
per Section 23 (1) of the CGST Act, 2017, the following
persons shall not be liable to registration, namely:—
(a) any person engaged exclusively in the business of
supplying goods or services or both that are not liable
to tax or wholly exempt from tax under this Act or
under the Integrated Goods and Services Tax Act;
(b) an agriculturist, to the extent of supply of produce out
of cultivation of land.
Thus, if the turnover of the society is less than Rs.20
Lakh or even if the turnover is beyond Rs. 20 lakhs but
the monthly contribution of individual members towards
maintenance is less than Rs.5000/- (such services being
exempt) and the society is providing no other taxable service
385
GST FLYERS
to its members or outsiders, then the society (essentially
exclusively providing
wholly exe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d to pay GST on monthly subscription/
contribution charged from its members if such subscription is
more than Rs. 5000 per member and the annual turnover of
RWA by way of supplying of services and goods is also Rs. 20
lakhs or more. Under GST, the tax burden on RWAs will be
386
GST on Co-operative Housing Societies
lower for the reason that they would now be entitled to ITC in
respect of taxes paid by them on capital goods (generators, water
pumps, lawn furniture etc.), goods (taps, pipes, other sanitary/
hardware fillings etc.) and input services such as repair and
maintenance services. ITC of Central Excise and VAT paid
on goods and capital goods was not available in the pre-GST
period and these were a cost to the RWA.
Thus, there is no change made to services provided by the Housing
Society (RWA) to its members in the GST era.
Conclusion
In so far as tax implications on housing societies are
concerned, the position prevailing under Service Tax is
sought to be cont
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
defines OIDAR to mean services whose
delivery is mediated by information technology over the
internet or an electronic network and the nature of which
renders their supply essentially automated and involving
minimal human intervention and impossible to ensure
in the absence of information technology and includes
electronic services such as, —
388
Online Information Data Base Access and Retrieval Services in GST
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and
other intangibles through telecommunication
networks or internet;
(iv) providing data or information, retrievable or
otherwise, to any person in electronic form through
a computer network;
(v) online supplies of digital content (movies, television
shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;
WHY OIDAR ISREQUIRES A TREATMENT
DIFFERENT FROM OTHER SERVICES?
The nature of OIDAR services are such that
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ier of OIDAR Service and the recipient of
such service is in India, the place of supply would be the
location of the recipient of service i.e. it would be governed
by the default place of supply rules.
What happens in cases where the supplier of service is
located outside India and the recipient is located in India.
In such cases also the place of supply would be India and
the transaction would be amenable to tax.
WHO WILL BE RESPONSIBLE FOR PAYING THE
TAX?
In cases where the supplier of such service is located outside
India and the recipient is a business entity (registered person)
located in India, the reverse charge mechanism would get
triggered and the recipient in India who is a registered
entity under GST will be liable to pay GST under reverse
charge and undertake necessary compliances.
So far so good. Now what happens if the supplier is
located outside India and the recipient in India is an
390
Online Information Data Base Access and Retrieval Services in GST
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e or customer's bill or receipt issued or
made available by such intermediary taking part in
the supply clearly identifies the service in question
and its supplier in non-taxable territory;
(b) the intermediary involved in the supply does not
authorise the charge to the customer or take part
in its charge which is that the intermediary neither
collects or processes payment in any manner nor
391
GST FLYERS
is responsible for the payment between the non-
taxable online recipient and the supplier of such
services;
(c) the intermediary involved in the supply does not
authorise delivery; and
(d) the general terms and conditions of the supply are
not set by the intermediary involved in the supply
but by the supplier of services.
HOWWOULDTHEENTITYLOCATED OUTSIDE
INDIA COMPLY WITH THE RESPONSIBILITIES
ENTRUSTED UNDER GST?
The supplier (or intermediary) of online information and
database access or retrieval services shall, for payment of
integrated tax, take a single regi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
dual
or any other person not registered and receiving online
information and database access or retrieval services in
relation to any purpose other than commerce, industry
or any other business or profession, located in taxable
territory.
The expression “governmental authority” means an authority
or a board or any other body, –
–
i) set up by an Act of Parliament or a State Legislature;
or
ii) established by any
Government,
with ninety per cent or more participation by way of
equity or control, to carry out any function entrusted to a
municipality under article 243W of the Constitution
Examples of what could be or could not be OIDAR
services
The inclusive part of the definition of OIDAR services
are only indicative and not exhaustive. To determine if a
particular service is an OIDAR service, the following test
can be applied.
393
GST FLYERS
Service
Whether
Provision
of service
mediated by
information
technology
over the
internet or
an electronic
Whethe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e of
programmes;
395
GST FLYERS
(c) remote systems administration;
(d) online data warehousing where specific data is
stored and retrieved electronically;
(e) online supply of on-demand disc space.
2. Supply of software and updating thereof;
(a) Accessing or downloading software (including
procurement/accountancy programmes and anti-
virus software) plus updates;
(b) software to block banner adverts showing,
otherwise known as Banner blockers;
download drivers, such as software that interfaces
computers with peripheral equipment (such as
printers);
(d) online automated installation of filters on websites;
online automated installation of firewalls.
3. Supply of images, text and information and making
available of databases;
(a) Accessing or downloading desktop themes;
(b) accessing or downloading photographic or pictorial
images or screensavers;
(c) the digitised content of books and other electronic
publications;
(d) subscription to online newspapers and jour
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
online games which are
dependent on the Internet, or other similar electronic
397
GST FLYERS
networks, where players are geographically remote
from one another.
(5) Supply of distance teaching.
(a) Automated distance teaching dependent on the
Internet or similar electronic network to function
and the supply of which requires limited or no
human intervention, including virtual classrooms,
except where the Internet or similar electronic
network is used as a tool simply for communication
between the teacher and student;
(b) workbooks completed by pupils online and marked
automatically, without human intervention,
The place of supply of online information and
database access or retrieval services shall be the
location of the recipient of services.
Filing of Returns by a person providing OIDAR service
to a non-taxable online recipient in India.
In terms of Rule 64 of CGST Rules, 2017, every registered
person providing online information and data base access
or retrie
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
iding
OIDAR services from outside India to a non-taxable online
recipient in India. Other categories of OIDAR service
providers (like those supplying OIDAR services from
India) will have to file regular returns (GSTR 1, 2, 3/3B)
prescribed for general categories of registered persons.
******
399
Chapter Forty Three
GST Practitioners
Section 48 of the CGST Act provides for authorisation of
an eligible person to act as approved GST practitioners.
A registered person may authorise an approved GST
practitioner to furnish information, on his behalf, to the
government. The manner of approval of goods and services
tax practitioners, their eligibility conditions, duties and
obligations, manner of removal and other conditions
relevant for their functioning have been prescribed
in rule 24 and 25 of the Return Rules. Standardised
formats from GST PCT- 1 to GST PCT-5 have been
prescribed for making application for enrolment as GST
practitioner, certificate of enrolment, show c
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
minimum period of two
years; or
(b) he has been enrolled as a sales tax practitioner or tax
return preparer under the existing law for a period of
not less than five years;
(c) he has passed:
(i) a graduate or postgraduate degree or its equivalent
examination having a degree in Commerce, Law,
Banking including Higher Auditing, or Business
Administration or Business Management from
any Indian University established by any law for
the time being in force; or
(ii) a degree examination of any Foreign University
recognized by any Indian University as equivalent
to the degree examination mentioned in sub clause
401
GST FLYERS
(i); or
(iii) any other examination notified by the Government,
on the recommendation of the Council, for this
purpose; or
(iv) any degree examination of an Indian University or
of any Foreign University recognized by any Indian
University as equivalent of the degree examination
or
(v) has passed any of the following examinations,
namely. –
(
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
a sales tax practitioner or tax return
preparer under the existing law shall remain enrolled only
for a period of one year from the appointed date i.e. 1st July,
2017 unless he passes the said examination within the said
period of one year.
Activities by GST practitioner:
A goods and services tax practitioner can undertake any
or all of the following activities on behalf of a registered
person:
(a) furnish details of outward and inward supplies;
(b) furnish monthly, quarterly, annual or final return;
(c) make deposit for credit into the electronic cash ledger;
(d) file a claim for refund; and
(e) file an application for amendment or cancellation of
registration.
But it has been provided that a confirmation form registered
person shall be sought where an application relating to
a claim for refund or an application for amendment or
cancellation of registration has been submitted by the
goods and services tax practitioner. In addition, a GST
practitioner shall also be
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ars furnished in
the return or other details filed by the GST practitioners
shall continue to rest with the registered person on whose
behalf such return and details are furnished.
Any statement furnished by the GST practitioner shall
be made available to the registered person on the GST
Common Portal. For every statement furnished by the
GST practitioner, a confirmation shall be sought from the
registered person over email or SMS. The registered person
before confirming, should ensure that the facts mentioned
in the return are true and correct before signature. However,
failure to respond to request for confirmation shall be treated
as deemed confirmation.
404
GST Practitioners
The GST practitioner shall prepare all statements with due
diligence and affix his digital signature on the statements
prepared by him or electronically verify using his credentials.
If the GST practitioner is found guilty of misconduct, his
enrolment will be liable to be cancelled. A show ca
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nd the prices of the
commodities. This happened in spite of the availability of
the tax credit right from the production stage to the final
consumption stage which should have actually reduced
the final prices. This was obviously happening because the
supplier was not passing on the benefit to the consumer
and thereby indulging in illegal profiteering. National Anti-
profiteering Authority is therefore being constituted by the
central 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, this is to ensure that the consumer is protected from
arbitrary price increase in the name of GST.
406
National Anti-Profiteering Authority in GST
Constitution of the Authority:
The National Anti-Profiteering Authority shall be a five-
member committee consisting of a Chairman who holds
or has held a post equival
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ces or the benefit of
input tax credit has been passed on to the recipient by
of commensurate reduction in prices;
way
407
GST FLYERS
(ii) to identify the registered person who has not passed
on the benefit of reduction in the rate of tax on supply
of goods or services or the benefit of input tax credit
to the recipient by way of commensurate reduction in
prices;
(iii) to order,
(a) reduction in prices;
(b) return to the recipient, an amount equivalent to
the amount not passed on by way of commensurate
reduction in prices along with interest at the rate
of eighteen per cent. from the date of collection
of the higher amount till the date of the return
of such amount or recovery of the amount not
returned, as the case may be, in case the eligible
person does not claim return of the amount or is
not identifiable, and depositing the same in the
Consumer Welfare Fund;
(c) imposition of penalty; and
(d) cancellation of registration.
Application to the Authority:
All
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
upplier has not passed on
the benefit of reduction in the rate of tax on the supply of
goods or services or the benefit of input tax credit to the
recipient by way of commensurate reduction in prices, it
shall refer the matter to the Director General of Safeguards
for a detailed investigation.
Investigation:
The Director General of Safeguards shall conduct
investigation and collect evidence necessary to determine
undue profiteering and before initiation of the investigation,
issue a notice to the interested parties (and to such other
persons as deemed fit for a fair enquiry into the matter)
containing, inter alia, information on the following,
namely: –
(a) the description of the goods or services in respect of
which the proceedings have been initiated;
409
GST FLYERS
(b) summary of the statement of facts on which the
allegations are based; and
(c) the time limit allowed to the interested parties and
other persons who may have information related to the
proceeding
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
of three months or within
such extended period not exceeding a further period
of three months for reasons to be recorded in writing as
allowed by the Standing Committee and, upon completion
of the investigation, furnish to the Authority, a report of its
findings along with the relevant records.
410
National Anti-Profiteering Authority in GST
Order of the Authority:
The Authority shall (after granting an opportunity of
hearing to the interested parties if so requested) within a
period of three months from the date of the receipt of the
report from the Director General of Safeguards determine
whether a registered person has passed on the benefit of
the reduction in the rate of tax on the supply of goods or
services or the benefit of input tax credit to the recipient by
way of commensurate reduction in prices.
If the Members of the Authority differ in opinion on any
point, the point shall be decided according to the opinion
of the majority.
Where the Authority determi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y authority of central tax, State
tax or Union territory tax to monitor the implementation of
the order passed by it.
Conclusion:
National Anti-Profiteering Authority is a mechanism
devised to ensure that prices remain under check and to
ensure that businesses do not pocket all the gains from
GST because profit is fine, but undue profiteering at the
expense of the common man is not.
******
412
Chapter Forty Five
Benefits of Goods and
Services Tax (GST)
GST stands for Goods and Services Tax which is levied
on the supply of goods or services or both in India. GST
subsumes a number of existing indirect taxes which were
earlier levied by the Centre and State Governments
including Central Excise duty, Service Tax, VAT, Purchase
Tax, Central Sales Tax, Entry Tax, Local Body Taxes, Octroi,
Luxury Tax, etc.
It brings benefits to all the stakeholders' viz. industry,
government and the citizens. It is expected to lower the
cost of goods and services, boost the economy and
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
give a major boost to the 'Make in India'
initiative of the Government by making goods or services
produced or provided in India competitive in the national
and international markets. Further, all imported goods will
be charged with integrated tax (IGST) which will be more
or less equivalent to Central GST + State GST. This brings
parity in taxation on local and imported products.
Under the GST regime, exports are zero rated in entirety
unlike the earlier system where refund of some taxes was
not allowed due to fragmented nature of indirect taxes
between the Centre and the States. All taxes paid on the
goods or services exported or on the inputs or input services
used in the supply of such export goods or services shall
be refunded. The principle of exporting only the cost of
goods or services and not taxes would be followed. This
will boost Indian exports thereby improving the balance of
payments position. Exporters are being facilitated by grant
of provisional refun
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ere are common
definitions, common forms/ formats, common interface
through GST portal resulting in efficiencies and synergies
across the board. This will also remove multiple taxation of
same transactions and inter-State disputes like the ones on
entry tax and e-commerce taxation existing today. All this
will also help in reduction in compliance costs, alleviate
the need for multiple record keeping for a variety of taxes
leading to lesser investment of resources and manpower in
maintaining records.
Common procedures for registration of taxpayers, refund
of taxes, uniform formats of tax return, common tax base,
common system of classification of goods or services along
415
GST FLYERS
with timelines for every activity will lend greater certainty
to taxation system.
GST is largely technology driven. The interface of the
taxpayer with the tax authorities is through the common
portal (GSTN). There are simplified and automated
procedures for various processes such as reg
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d drive job creation. GST might not be the panacea for
all the ills of indirect tax system but is also not far from that.
One Nation, One Market, One Tax
******
416
Chapter Forty Six
Special Audit in GST
Introduction:
GST is a trust based taxation regime wherein the assessee is
required to self-assess his returns and determine tax liability
without any intervention by the tax official. Therefore, a tax
regime that relies on self-assessment has to put in place a
robust audit mechanism to measure and ensure compliance
of the provisions of law by the taxable person.
“Audit” has been defined in section 2(13) of the CGST Act,
2017 and it means the examination of records, returns and
other documents maintained or furnished by the registered
person under the GST Acts or the rules made thereunder or
under any other law for the time being in force to verify the
correctness of turnover declared, taxes paid, refund claimed
and input tax credit availed, and to assess his compli
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
gation or any other proceedings;
depending upon the complexity of the case.
Procedure:
During the scrutiny, inquiry, investigation or any
other proceedings of a registered person, the Assistant
Commissioner or any officer senior to him, having
regard to the nature and complexity of the case and
the interest of revenue, might be of the opinion that
the value has not been correctly declared or the credit
availed is not within the normal limits.
In such cases, with the prior approval of the
Commissioner, the Assistant Commissioner or
any officer senior to him can direct the registered
person in FORM GST ADT-03 to get his records
including books of account examined and audited by
418
Special Audit in GST
a specified chartered accountant or a cost accountant
.The chartered accountant or a cost accountant will
be nominated by the Commissioner.
· The chartered accountant or cost accountant so
nominated has to submit a report of such audit
within the period of ninety d
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
shall be informed of the findings of the
419
GST FLYERS
·
special audit in FORM GST ADT-04.
Where the special audit results in detection of tax not
paid or short paid or erroneously refunded, or input
tax credit wrongly availed or utilised, the process of
demand and recovery will be initiated against the
registered person.
Conclusion:
Special audit provides a lawful and legal way for the GST
officers to take the assistance of a chartered accountant or
cost accountant to determine tax liabilities in complex cases.
The professional expertise of a chartered accountant or cost
accountant will be of great significance in ensuring that the
interest of revenue is safeguarded at all times.
******
420
Chapter Forty Seven
TDS Mechanism under GST
Under the GST regime, section 51 of the CGST Act, 2017
prescribes the authority and procedure for 'Tax Deduction at
Source'. The Government may order the following persons
(the deductor) to deduct tax at source:
(a) a departme
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e explained in the following situations.
a) Supplier, place of supply and recipient are in the
same state. It would be intra-state supply and TDS
(Central plus State tax) shall be deducted. It would
be possible for the supplier (i.e. the deductee) to
take credit of TDS in his electronic cash ledger.
b) Supplier as well as place of supply are in different
states. In such cases, integrated tax would be levied.
TDS to be deducted would be TDS (Integrated
tax) and it would be possible for the supplier (i.e.
the deductee) to take credit of TDS in his electronic
cash ledger.
c) Supplier as well as place of supply are in State
A and recipient is located in State B. The supply
would be intra-State supply and Central tax and
State tax would be levied. In such case, transfer of
TDS (Central tax + State tax State B) to the cash
ledger of the supplier (Central tax + State tax of
State A) would be difficult. So in such cases, TDS
would not be deducted.
Thus, when both the suppli
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ount to the Government, failing which the deductor
would be liable to pay a late fee of Rs. 100/- per day from
the expiry of the 5th day till the certificate is issued. This late
fee would not be more than Rs. 5000/-. For the purpose of
deduction of tax specified above, the value of supply shall
be taken as the amount excluding the central tax, State tax,
Union territory tax, integrated tax and cess indicated in the
invoice.
For instance, suppose a supplier makes a supply worth Rs.
1000/- to a recipient and the GST @ rate of 18% is required
to be paid. The recipient, while making the payment of Rs.
1000/- to the supplier, shall deduct 1% viz Rs. 10/- as TDS.
423
GST FLYERS
The value for TDS purpose shall not include 18% GST.
The TDS, so deducted, shall be deposited in the account
of government by 10th of the succeeding month. The TDS
so deposited in the government account shall be reflected
in the electronic cash ledger of the supplier (i.e. deductee)
who would be ab
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
sequence
Interest to be paid along
with the TDS amount; else
the amount shall be deter
424
TDS Mechanism under GST
2
TDS certificate not
3
4
mined and recovered as per
the law.
Late fee of Rs. 100/- per
issued or delayed day subject to a maximum
beyond the pre- of Rs. 5000/-
scribed period of
five days
TDS deducted but
not paid to the gov-
ernment or paid lat-
er than 10th of the
succeeding month
Late filing of TDS
returns
Interest to be paid along
with the TDS amount; else
the amount shall be deter-
mined and recovered as per
the law.
Late fee of Rs. 100/- for ev-
ery day during which such
failure continues subject to
a maximum amount of five
thousand rupees.
Any excess or erroneous amount deducted and paid to the
government account shall be dealt for refund under section
54 of the CGST Act, 2017. However, if the deducted
amount is already credited to the electronic cash ledger of
the supplier, the same shall not be refunded.
The GST Council in t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
The goods or services
belonging to other suppliers are displayed on the portals
of the operators and consumers buy such goods/services
through these portals. On placing the order for a particular
product/ services the actual supplier supplies the selected
product/services to the consumer. The price/consideration
for the product/services is collected by the Operator from
the consumer and passed on to the actual supplier after
deducting his commission by the Operator. The Government
426
TCS Mechanism under GST
has placed the responsibility on the Operator to collect the
‘tax' at a rate of 1% from the supplier. This shall be done by
the Operator by paying the supplier the price of the product
/services, less the tax, calculated at the rate of 1%. The said
amount will be calculated on the net value of the goods/
services supplied through the portal of the operator.
Suppose a certain product is sold at Rs. 1000/- through an
Operator by a seller. The Operator would de
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
S
operator is required to be deposited by the 10th of the
following month, during which such collection is made. The
operator is also required to furnish a monthly statement in
Form GSTR-8 by the 10th of the following month. The
Operator is also required to file an Annual statement in
prescribed form by the 31st of December following the end
of every financial year. The Operator can rectify errors in
statements filed, if any, latest by the return to be filed for the
month of September, following the end of every financial
year.
The details furnished by the operator in GSTR-8 shall be
made available electronically to each of the suppliers in Part
C of FORM GSTR-2A on the Common Portal after the
due date of filing of FORM GSTR-8.
Credit of tax collected: The tax collected by the operator
shall be credited to the cash ledger of the supplier who
has supplied the goods/services through the Operator. The
supplier can claim credit of tax collected and reflected in
the retur
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
an Operator fails
to furnish the information, besides being liable for penal
action under section 122 shall also be liable for penalty up
to Rs. 25,000/-
The GST Council in their 22nd meeting held on 6th October,
2017 at New Delhi decided that operationalization of TDS/
TCS provisions shall be postponed till 31.03.2018.
******
429
Chapter Forty Nine
Inspection, Search, Seizure
and Arrest
In any tax administration the provisions for Inspection,
Search, Seizure and Arrest are provided to protect the
interest of genuine tax payers (as the Tax evaders, by evading
the tax, get an unfair advantage over the genuine tax payers)
and as a deterrent for tax evasion. These provisions are also
required to safeguard Government's legitimate dues. Thus,
these provisions acts as a deterrent and by checking evasion
provide a level playing field to genuine tax payers.
2. It may be mentioned that the options of Inspection,
Search, Seizure and Arrest are exercised, only in
exceptional
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ion than search which
enables officers to access any place of business or of
a person engaged in transporting goods or who is
an owner or an operator of a warehouse or godown.
As discussed above the inspection can be carried out
by an officer of CGST/SGST only upon a written
authorization given by an officer of the rank of Joint
Commissioner or above a Joint Commissioner or an
officer higher in rank can give such authorization only
if he has reasons to believe that the
person concerned
has done one of the following actions:
(a) Suppression of any transaction relating to
supply of goods or services or stock in hand;
(b) Claimed excess input tax credit;
(c) Contravention of any provisions of the Act or
the Rules to evade tax;
(d) Transporting or keeping goods which escaped
431
GST FLYERS
payment of tax or manipulating accounts or
stocks which may cause evasion of tax;
Inspection can also be done of the conveyance, carrying a
consignment of value exceeding specified
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
all such
432
Inspection, Search, Seizure and Arrest
verifications. Moreover, for verification during
movement of consignment will also be done
through Digital interface and therefore the
physical intervention will be minimum and as
has already been mentioned that in case of a
delay beyond 30 minutes the transporter can
feed the details on the portal.
(iii) Search& Seizure
The provisions of search and seizure also provides
enough safeguards and the GST Law stipulates that
search of any place of business etc. can be carried out
only under authorisation from an officer of the rank of
Joint Commissioner and if he has a reason to believe
that the person concerned has done at least one of the
following:-
(a) Goods liable to confiscation or any
documents
/books/record/things, which may be useful for
or relevant to any proceedings, are secreted in
any place then all such places can be searched;
(b) All such
such goods/documents/books/record/
things may be seized, howe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ade by the officer
and the person, from whom the same are
seized, shall be given a copy of the same.
(g) To ensure that the provisions for search and
seizure are implemented in a proper and
transparent manner, the Act stipulates that
the searches and seizures shall be carried
out in accordance with the provisions of
Criminal Procedure Code, 1973. It ensures
that any search or seizure should be made
in the presence of two or more independent
witnesses, a record of entire proceedings is
434
Inspection, Search, Seizure and Arrest
made and forwarded to the Commissioner
forthwith.
(iv) Arrests
In the administration of taxation the provisions for
arrests are created to tackle the situations created by
some unscrupulous tax evaders. To some these may
appear very harsh but these are necessary for efficient
tax administration and also act as a deterrent and
instil a sense of discipline. The provisions for arrests
under GST Law have sufficient inbuilt safeguards to
ensure
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
arrested irrespective
of the tax amount involved in the case.
(c) Further, even though a person can be arrested
for specified offences involving tax amount
exceeding Rs.200 lakhs, however, where the tax
involved is less than Rs. 500 lakhs, the offences
are classified as non-cognizable and bailable
and all such arrested persons shall be released
on Bail by Deputy/Assistant Commissioner.
But in case of arrests for specified offences
where the tax amount involved is more than
Rs. 500 lakhs, the offence is classified as
cognizable and non-bailable and in such cases
the bail can be considered by a Magistrate
only.
******
436
Chapter Fifty
Appeals and Review
Mechanism under GST
Introduction
Tax laws (or any laws, for that matter) impose obligations.
Such obligations are broadly of two kinds: tax-related
and procedure-related. The taxpayer's compliance with
these obligations is verified by the tax officer (by various
instruments such as scrutiny, audit, anti-evasion,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
the statutory right.
GST being implemented in our country is a dual GST i.e.
to say every supply attracting the levy will be leviable to
both central tax and state tax. So does this mean that if a
taxpayer is aggrieved by any such transaction, he will have
to approach both the authorities for exercising his right of
appeal? The answer is a plain NO. The Act makes provisions
for cross empowerment between CGST and SGST/
UTGST officers so as to ensure that if a proper officer
of one Act (say CGST) passes an order with respect to a
transaction, he will also act as the proper officer of SGST
for the same transaction and issue the order with
respect to
the CGST as well as the SGST/UTGST component of the
same transaction. The Act also provides that where a proper
officer under one Act(say CGST) has passed an order, any
appeal/review/revision/rectification against the said order
will lie only with the proper officers of that Act only (CGST
Act) So also if any order is passed
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e party to file an appeal before the
AA is 3 months from the date of communication of the
impugned order. But the AA may condone a delay of up to
one month, if he is satisfied that there was sufficient cause
for such delay.
The AA has to follow the principles of natural justice – such
as hearing the appellant, allowing reasonable adjournments
(not more than 3), permitting additional grounds (if found
reasonable), etc. The AA can also make such further inquiry
as may be necessary.
On conclusion of the appeal process, the AA will pass his
order (Order-in-Appeal) which may confirm, modify or
annul the decision or order appealed against but shall not
refer the case back to the authority that passed the said
decision or order. The AA can also increase the “rigour”
439
GST FLYERS
of the order appealed against by enhancing any fee or
penalty or fine in lieu of confiscation or confiscating goods
of greater value or reducing the amount of refund or input
tax credit, but this
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
by the AA
or order in revision passed by revisional authority, by any
person aggrieved by such an order-in-appeal/Order in
revision.
The law envisages constitution of a two tier Tribunal i.e.
National Bench/Regional Benches and the State Bench/
Area Benches. Jurisdiction of the two constituents of
the GST Tribunal is also defined. If place of supply is
440
Appeals and Review Mechanism under GST
one of the issues in dispute, then the National Bench/
Regional benches of the Tribunal will have jurisdiction
to hear the appeal. If the dispute relates to issues other
than the place of supply, then the State/Area Benches will
have the jurisdiction to hear the appeal. An appeal from
the decision of the National Bench will lie directly to the
Supreme Court and an appeal from the decision of the
State Bench will lie to the jurisdictional High Court on
substantial questions of law.
Appeal to the Tribunal by the aggrieved person is to be
filed within 3 months from the communica
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
peal
presented within the time specified for the initial appeal.
441
GST FLYERS
Condonation of delay (on sufficient cause) applies here also,
but only to the extent of further 45 days from the date of
expiry of the period for filing cross objections. The form,
fees, etc. for the appeals to Tribunal shall be as prescribed
by Rules.
The Tribunal after hearing both sides may pass such orders
thereon as it thinks fit, confirming, modifying or annulling
the decision or order appealed against or may refer the case
back to the AA or to the revisional authority, or to the
original adjudicating authority, with such directions as it
may think fit, for a fresh adjudication or decision, as the
case may be, after taking additional evidence, if necessary.
For reasons of natural justice (reasonable opportunity) it
is also provided that the Tribunal may, if sufficient cause is
shown, grant up to 3 adjournments to either side.
Concept of pre-deposit
As mentioned earlier, the right t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ppellant has
deposited in full, such part of the amount of tax, interest,
fine, fee and penalty arising from the impugned order, as is
admitted by him, and a sum equal to 20% of the remaining
amount of tax in dispute, in addition to the amount
deposited before the AA, arising from the said order, in
relation to which appeal has been filed.
If the pre-deposit made by the appellant before the AA or
Tribunal is required to be refunded consequent to any order
of the AA or of the Tribunal, as the case may be, interest
at the rate specified in Section 56 shall be payable from the
date of payment of the amount (and not from the date of
order of AA or of the Tribunal) till the date of refund of
such amount.
Appeals by the Department (CGST/SGST) before the
AA/Tribunal
At times, the Department itself is not in agreement with
the decision or order passed by the (initial) adjudicating
authority or the appellate authority. The GST Law
provides that in such cases, the Department c
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
resultant review application is required to be dealt with
by the AA or the Tribunal as if it were an appeal made
against the decision or order of the adjudicating authority
and the statutory provisions relating to appeals shall, so far
as may be, apply to such application.
Revision by Commissioner (CGST/SGST)
The GST Act also provides for the mechanism of revision,
by the Revisional Authority, of the orders passed by his
subordinate officers. If the Revisional Authority on
examination of the case records is of the view that the
decision or order passed by any officer subordinate to him is
erroneous in so far as it is prejudicial to the interest of the
revenue, and is illegal or improper or has not taken into account
material facts, he may, if necessary, stay the operation of such
decision or order for such period as he deems fit and after
giving the
person concerned an opportunity of being heard
444
Appeals and Review Mechanism under GST
necessary,
and after making
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
sion of the Appellate Tribunal or the High Court
is pending, the period spent between the date of the
decision of the Appellate Tribunal and the date of the
decision of the High Court or the date of the decision
445
GST FLYERS
of the High Court and the date of the decision of the
Supreme Court shall be excluded in computing the
period of limitation of 3 years where proceedings for
revision have been initiated by way of issue of a notice
under section 108 of the CGST Act, 2017.
However, the Revisional Authority may pass an order on
any point which has not been raised and decided in an
appeal before AA/Tribunal/HC/SC, before the expiry of a
period of one year from the date of the order in such appeal
or before the expiry of a period of three years from the date
of initial order, whichever is later.
Concept of authorised representative
Any person who is entitled or required to appear before
a GST Officer or the AA or the Tribunal in connection
with any proceedings unde
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
party) if
aggrieved by any order passed by the State Bench or Area
Bench of the Tribunal may file an appeal to the High Court
and the High Court may admit such appeal if it is satisfied
that the case involves a substantial question of law. It is to be
noted that on facts, the tribunal is the final authority.
Appeals to the High Court are to be filed within 180 days,
but the HC has the power to condone delay on being
satisfied of sufficient cause for the same.
On being satisfied that a substantial question of law is
involved, the High Court shall formulate that question,
and the appeal shall be heard only on the question so
formulated. However, the High Court has the power to
hear the appeal on any other substantial question of law if
it is satisfied that the case involves such question. The High
Court shall decide the questions of law so formulated and
deliver such judgment thereon containing the grounds on
which such decision is founded and may award such cost
as it
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tuation where the tax dues are not paid correctly by the
tax payers, most of the times inadvertently and sometimes
deliberately. To minimise the inadvertent short payment
of taxes the concept of 'Matching' of details of 'Outward
supplies' of supplier with the details of 'Inward supplies' of
recipient has been introduced in the GST Act. Moreover,
the self-assessed tax has to be paid by due date prescribed
under the GST Act and in case of any failure to pay the same
by due date the Input Tax Credit will not be available to his
customers and also the tax payer will not be able to file any
return for further period. Effectually these provisions works
as a Self-Policing system and takes care of any mis-match
in the payment of taxes. However, despite these provisions
there may arise some instances where the tax was not paid
correctly. To deal with all such situations the provisions for
Recovery are incorporated in any tax law. Accordingly, the
GST Act contains elaborate provi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
sions for voluntary
compliance:-
Sr. Action by Tax
Payer
No.
Amount
of Penalty
Amount
of Penalty
payable
payableۥ
Re-
marks
Normal
Cases
Fraud
Cases
1.
Tax amount,
No Penalty
15% of the
along with
and no
Tax amount
interest, paid
Notice shall
and no
before issuance be issued.
of Notice.
Notice shall
be issued.
450
The penalty
shall also
be not
chargeable
Recovery of Tax
2.
Tax amount,
along with
No
interest, paid
25% of
Penalty. All the Tax
proceedings amount. All
in cases
where
the self-
within 30 days
deemed
of issuance of
to be
proceedings
deemed
assessed
tax or any
Notice.
concluded. to be
concluded.
3.
Tax amount,
along with
10% of the 50% of
amount
collected
as tax is
Tax amount the Tax
paid (with
interest,
paid within
30 days of
communication is higher
or Rs.
amount. All
interest)
10,000/-,
proceedings
within 30
whichever
deemed
days from
to be
the due
of Order.
4.
Tax amount,
along with
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
all proceedings in respect of the said
Notice shall be deemed to be concluded. If it becomes
inevitable to issue a show cause notice and thereafter pass
an Order, the GST Act ensures a timely completion of all
these procedures by providing a fixed timeline for issuance
of notice and order-as follows:-
Sr. No.
Nature of
Case
1.
Normal
Cases
Time for issuance of
Notice
Time for
issuance of
Order
Within 2 2 years and
Within 3 years
from the due
9 months from the
due date of filing of
Annual Return for
the Financial Year to
which the demand
pertains or from date
of erroneous refund.
date of filing
of Annual
Return for
the Financial
Year to which
the demand
pertains or
from date of
erroneous
refund.
452
Recovery of Tax
2.
Fraud
Cases
3.
Any
amount
collected
as tax but
not paid
4.
Non-
Within 4 years
and
6 months from the
due date of filing of
Annual Return for
the Financial Year
to which the demand
pertains or from date
of erroneous
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in case of these two the only
opportunity for paying the same without incurring any
penalty is if it is paid, with interest, within 30 days from the
due date of payment.
4. All these provisions make it clear that there are sufficient
opportunities to make amend and discharge the tax
liability with nil or nominal penalties. However, there are
disincentives also for the person who fails to utilise these
beneficial provisions. Besides that, the law also provides
that the Board may fix certain monetary limits for not filing
an Appeal against any order. It means if any order is passed
in favour of the assessee the department will not pursue
the case further by filing Appeals if the amount involved is
less than the specified limit. At present, under the existing
laws, the monetary limits for not filing an appeal to various
judicial forums are follows: –
i. Tribunal- Rs. 10 Lakhs
ii. High Courts- Rs. 20 Lakhs and
iii. Supreme Court- Rs. 25 Lakhs
5. The recovery proceedings
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
hs then recovery
proceedings shall be initiated and various actions
may be taken by the recovery officer, for realisation
of Government dues. These options for recovery
of government dues includes deduction of money
from any amount payable to such tax payer, by
detaining and selling any goods, by directing any
other person from whom the money is due to
such person, attaching any moveable (Including
Negotiable Instruments and Shares) and/or
immovable property belonging to the defaulter etc.
iii. However, considering various business aspects the
provisions for payment of all such amounts, other
than self-assessed tax, in instalments have also been
made in the Act. A person can avail this benefit
of payment in instalments, by making application
to the Commissioner by specifying reasons for
455
GST FLYERS
such request. On receipt of such application the
Commissioner may allow payment of amount
in instalments, subject to maximum 24 monthly
instalments and on payment of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =