Goods and Services Tax

Question 1 – Draft-Bills-Reports – Place of Supply of Goods and Service – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 1 – 22. Place of Supply of Goods and Service Q 1. What is the need for the Place of Supply of Goods and Services under GST? Ans. The basic principle of GST is that it should effectively tax the consumption of such supplies at the destination thereof or as the case may at the point of consumption. So place of supply provision determines the place i.e. taxable jurisdiction

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Question 10 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 10 – Q 10. Are business processes and compliance requirement same in the IGST and CGST Acts? Ans: The procedure and compliance requirement are same for processes likes registration, return filing and payment of tax. Further, the IGST act borrows the provisions from the CGST Act as relating to assessment, audit, valuation, time of supply, invoice, accounts, records, adjudication, ap

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Question 9 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 9 – Q 9. What treatment is given to supplies made to SEZ units or developer? Ans: Supplies to SEZ units or developer shall be zero rated in the same manner as done for the physical exports. Supplier shall have option to make supplies to SEZ without payment of taxes and claim refunds of input taxes on such supplies (section 16 of the IGST Act). – Statutory Provisions, Acts, Rules, Re

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Question 8 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 8 – Q 8. How will the settlement between Centre, exporting state and importing state be done? Ans. There would be settlement of account between the Centre and the states on two counts, which are as follows- • Centre and the exporting state: The exporting state shall pay the amount equal to the ITC of SGST used by the supplier in the exporting state to the Centre. • Centre

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Question 7 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 7 – Q 7. How will the IGST be paid? Ans. The IGST payment can be done utilizing ITC or by cash. However, the use of ITC for payment of IGST will be done using the following hierarchy, – • First available ITC of IGST shall be used for payment of IGST; • Once ITC of IGST is exhausted, the ITC of CGST shall be used for payment of IGST; • If both ITC of IGST and ITC of CG

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Question 6 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 6 – Q 6. How will imports/exports be taxed under GST? Ans. All imports/exports will be deemed as inter-state supplies for the purposes of levy of GST (IGST). The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available as ITC of t

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Question 5 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 5 – Q 5. What are the advantages of IGST Model? Ans. The major advantages of IGST Model are: a. Maintenance of uninterrupted ITC chain on inter-State transactions; b. No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer; c. No refund claim in exporting State, as ITC is used up while paying the tax; d. Self-monitoring model; e. Ensures tax ne

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Question 4 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 4 – Q 4. What are the salient features of the draft IGST Law? Ans. The draft IGST law contains 25 sections divided into9 Chapters. The law, inter alia, sets out the rules for determination of the place of supply of goods. Where the supply involves movement of goods, the place of supply shall be the location of goods at the time at which the movement of goods terminates for delivery to the recipient. Where the supply does not involve movement of goods, the place of supply shall be the location of such goods at the time of delivery to the recipient. In the case of goods assembled or installed at site, the place of supply shall be

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Question 3 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 3 – Q 3. How will the Inter-State supplies of Goods and Services be taxed under GST? Ans. IGST shall be levied and collected by Centre on interstate supplies. IGST would be broadly CGST plus SGST and shall be levied on all inter-State taxable supplies of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGS

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Question 2 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 2 – Q 2. What are inter-state supplies? Ans. A supply of goods and/or services in the course of inter-State trade or commerce means any supply where the location of the supplier and the place of supply are in different States, two different union territory or in a state and union territory Further import of goods and services, supplies to SEZ units or developer, or any supply that i

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What is IGST? – Question 1 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 1 – 21. Overview of the IGST Act Q 1. What is IGST? Ans. Integrated Go

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Question 23 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 23 – Q 23. What is the consequence of compounding of an offe

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Question 22 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 22 – Q 22. Are there any monetary limits prescribed for compounding of offence? Ans. Yes. The lower limit for compounding amount is to be the greater of the following amounts: – • 50% of tax involved, or • ₹ 10,000. The upper limit for compounding amount is to be greater of the following amounts: – • 150% of tax involved or • &#8377

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Question 21 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 21 – Q 21. Can offences under CGST/SGST Act be compounded? Ans. Yes. As per section 138 of the CGST/SGST Act, any offence, other than the following, may upon payment of the prescribed (compounding) amount be compounded and such compounding is permissible either before or after the institution of prosecution: • Offences numbered 1 to 6 of the 12 major of

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What is meant by compounding of offences? – Question 20 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 20 – Q 20. What i

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Question 19 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 19 – Q 19. Can a company be proceeded against or prosecuted for any offence under the CGST/SGST Act? Ans. Yes. Section 137 of the CGST/SGST ACT provides that every person who was in-charge of or responsible to a company for the conduct of its business shall, along-with the company itself, be liable to be proceeded against and punished for an offence committe

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Question 18 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 18 – Q 18. What is a culpable state of mind? Ans. While committing an act, a culpable mental state is a state of mind wherein- • the act is intentional; • the act and its implications are understood and controllable; • the person committing the act was not coerced and even overcomes hurdles to the act committed; • the person believes or h

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Question 17 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 17 – Q 17. Is mensrea or culpable mental state necessary for

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Is prior sanction of competent authority mandatory for initiating prosecution? – Question 16 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 3

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Question 15 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 15 – Q 15. What are cognizable and non-cognizable offences under CGST/SGST Act? Ans. In terms of Section 132(4) and 132(5) of CGST/SGST Act • all offences where the evasion of tax is less than ₹ 5 crores shall be non-cognizable and bailable, • all offences where the evasion of tax exceeds ₹ 5 crores shall be cognizable and non- bailable

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Question 17 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 17 – Q 17. What is the punishment prescribed on conviction of any offence under the CGST/SGST Act? Ans. The scheme of punishment provided in section 132(1) is as follows: Offence involving- Punishment (Imprisonment extending to-) Tax evaded exceeding ₹ 5 crore or repeat offender250 lakh 5 years and fine Tax evaded between ₹ 2 crore and ₹ 5

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Question 14 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 14 – Q 14. Which are the offences which warrant prosecution under the CGST/SGST Act? Ans. Section 73 of the CGST/SGST Act codifies the major offences under the Act which warrant institution of criminal proceedings and prosecution. 12 such major offences have been listed as follows: a) Making a supply without issuing an invoice or upon issuance of a false/incorrect invoice; b) Issuing an invoice without making supply; c) Not paying any amount collected as tax for a period exceeding 3 months; d) Availing or utilizing credit of input tax without actual receipt of goods and/or services; e) Obtaining any fra

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Question 13 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 13 – Q 13. What is Prosecution? Ans. Prosecution is the institution or commencement of legal proceeding; the process of exhibiting formal charges against the offender. Section 198 of the Criminal Procedure Code defines prosecution as the institution and carrying on of the legal proceedings against a person. – Statutory Provisions, Acts, Rules, Regulations, T

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Question 12 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 12 – Q 12. Can any conveyance carrying goods without cover of prescribed documents be subject to confiscation? Ans. Yes. Section 130 provides that any conveyance carrying goods without the cover of any documents or declaration prescribed under the Act shall be liable to confiscation. However, if the owner of the conveyance proves that the goods were being tr

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Question 11 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 11 – Q 11. After confiscation, is it required to give option to the person to redeem the goods? Ans. Yes. In terms of section 130(2), the Owner or the person in-charge of the goods liable to confiscation is to be given the option for fine (not exceeding market price of confiscated goods) in lieu of confiscation. This fine shall be in addition to the tax and

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