Goods and Services Tax

Goods and Services Tax – GST – Dated:- 26-12-2016 – Finance Minister: There is a need for move towards a mindset of voluntary compliance and payment of legitimate taxes should be considered as part of the process and nobody should think that tax evasion is acceptable; Payment of due tax is a responsibility of every citizen; Coordination between the Central and the State administration is important for smooth transition of GST regime so that the taxpayer of the country does not suffer. The Union Finance Minister Shri Arun Jaitley said that there is an urgent need for change in mindset and India has to move towards a mindset of voluntary compliance. He said that the payment of legitimate taxes should be considered as part of the process and

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e. Goods and Services Tax (GST). Shri Jaitley impressed upon the gathering the importance of coordination between the Central and the State administrations in smooth transition from the old to the new Indirect Tax regime so that the taxpayer of the country does not suffer. The Finance Minister also reminded the officers that the economy of the country is undergoing major changes and that shall continue to challenge them to be capable officers at every stage of their career. The Finance Minster stressed on the Culture of Correctness and Fairness that every officer should follow in their work as Revenue Officers. He also wished NACEN well in the construction of the new Training Campus and Academy in Palasamudram, Hindupur, Andhra Pradesh. He

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oke about the history of NACEN and introduced the 68th Batch to the gathering. The strength of 68th Batch of IRS(C&CE) is 186 officer trainees, consisting of 32 female officers and 154 male officers, including 5 Bhutanese Officers. The average age of the batch is 28, with the youngest probationer being 23 years old. The batch consists of 50 per cent engineers, 16 per cent Doctors, 11 per cent MBAs, 3 per cent Law graduates, 2.2 per cent PhD awardees, 11 per cent Masters and 4.9 per cent Bachelors degree holders. The Director General also thanked the Finance Minister for backing NACEN s efforts to develop a new state-of-the-art world class academy at Palasamudram, Andhra Pradesh. The Chairman, CBEC, Mr. Najib Shah in his address talked a

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 26-12-2016 Last Replied Date:- 26-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN SECTION 16 ZERO RATED SUPPLY (IGST ACT):- A new Chapter VIII has been introduced in the IGST Act wherein the concept of zero rated supply has been framed. The provisions contained in the section 16 are discussed as follows:- Zero rated supply means any of the following taxable supply of goods and/or services, namely- Export of goods and/or services; or Supply of goods and/or services to a SEZ developer or an SEZ unit. It is also provided that the credit of input tax may be availed for making zero rated supplies notwithstanding that such supply may be an exempt supply. It is further provided tha

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zero rated supply shall be entitled to claim refund of IGST paid by registered taxable person on such supply. On studying the above provisions, following implications may be drawn:- The meaning of zero rated supply is very restricted and limited to normal exports and supply to SEZ or SEZ developer. The supplies made to EOUs, EHTP, STP etc are not covered under the concept of zero rated supply. The input tax credit is available for zero rated supplies. This means that export without payment of duty and supply to SEZ will be considered as zero rated supply and credit will be available. Consequently, there will not be requirement to reverse credit even when the supplies are made without payment of duty in cases of exports and supply made to S

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SEZ are to be considered as export. It appears that the present policy is carried forward in the GST regime too. It appears that the concept of deemed exports will also be introduced in GST laws. This is evident from the definition of deemed exports given under section 2(37) of the GST Act, 2016. It states that deemed exports as notified by the Central/State Government on the recommendation of the Council, refer to those transactions in which the goods supplied do not leave India and payment for such supplies is received either in Indian rupees or in convertible foreign exchange. At present, as per DGFT Laws, supplies to EOU is considered as deemed export and it may be possible that it is specified as deemed exports in GST Law also if the s

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 25-12-2016 Last Replied Date:- 26-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN SECTION 12 PERTAINING TO TIME OF SUPPLY OF GOODS UNDER REVISED GST LAW:- The provisions relating to determination of time for supply of goods has been significantly amended and is discussed in detail as follows:- The time of supply of goods shall be earliest of the following:- The date of issue of invoice by the supplier or the last date on which he is required under section 28, to issue invoice with respect to the supply; or The date on which the supplier receives the payment with respect to the supply. Provided that where the supplier of taxable goods receives an amount upto one thousand rupe

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It was represented that the date on which recipient shows receipt of goods in his books of accounts is a parameter that is practically impossible to comply with and we are delighted that the said provision has been deleted. But the tax payment on advance receipt of payment in case of goods has been prescribed which is not applicable in current Excise regime. The Central Excise duty is to be paid on removal of goods only and invoice is to be issued at the time of removal. The old draft of GST Law also provided specific provision for continuous supply of goods but there is no such provision in the revised GST Law. This means that the general provision given under section 12(2) would apply. A new concept of payment of tax under reverse charge

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ime of supply in case of sale on approval basis was date of approval or six months from date of removal, whichever is earlier. However, as per revised law, it is date of issue of invoice/last date for issue of invoice or date of receipt of payment, whichever is earlier. The new provision seeks to take away the prolonged period of 6 months for making payment of tax. A new provision specifying time of supply in case of vouchers has been introduced. The time of supply of voucher shall be the date of issue of voucher, if supply is identifiable at that time or date of redemption of voucher, in all other cases. This provision has been incorporated keeping in mind the increasing trend of vouchers given on online purchasing. If the vouchers are val

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Goods and Services Tax – GST – Dated:- 24-12-2016 – New Delhi, Dec 23 (PTI) Telangana Finance Minister Etela Rajender said he received much clarity about GST law and the compensation that the Centre has promised for the state. After taking part in the two-day GST council meet, Rajender said, The central government has assured to compensate for the revenue loss once in every two months and make necessary adjustments to disburse a grant in case of a rise in compensation. Seeking Telangana's t

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Goods and Services Tax – GST – Dated:- 24-12-2016 – New Delhi, Dec 23 (PTI) The all-powerful GST Council today made a 'reasonable headway' on supporting legislations for the new indirect tax regime but its rollout from April 1 looked virtually impossible as it postponed discussion on the critical issue of administration and control of tax payers. The panel, which met for the seventh time since the Constitutional Amendment to replace central and state taxes with a Goods and Service Tax was approved in mid-September, tweaked the periodicity of payment of compensation for loss of revenue to states for implementation of GST to bi-monthly instead of previously decided quarterly payment. Also, the Council decided to create the kitty for

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ate assemblies respectively, neared finality with most clauses agreed upon. Finance Minister Arun Jaitley said the law to provide for compensation to the states for loss of revenue was also approved by the GST Council at its two-day meeting which ended today but a final draft with legal language would be approved at the next meeting. I am trying my best, he said, when asked about the April 1 rollout schedule. I am not going to bind myself with anything. Our effort is to do it as quickly as possible and I think we are making a reasonable headway. Three consecutive meetings of the GST Council have not been able to take up the issue of dual control. Some states like West Bengal and Kerala want a minimum turnover criteria be fixed to decide who

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 23-12-2016 Last Replied Date:- 24-12-2016 – Revised GST Law under Section -9 provides that small taxpayer can opt for the scheme of composition tax instead of opting for paying tax under the regular supply of goods. Here this should be noted that this option is not available to registered taxable person who is providing only service . By opting the composition tax scheme , one can save himself from all the hassle of exhaustive provision of GST Law. Before we switch over to related provision of this section it is mandatory to understand the definition of Aggregate Turnover. As per Section 2(6) , Aggregate Turnover means the aggregate value of all taxable supplies, exempt supplie

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f percent in case of manufacturer and one percent in other case, of the turnover in the state during the year . Composition scheme can not be allowed to the following taxable person; Who is engaged in the supply of services Person who make supply of goods those are not leviable to tax. Who make interstate outward supply of goods Who make supply of any goods through electronic commerce operator who is required to collect tax at source u/s 56 Who is manufacturer of such goods notified by the council. This provision will be allowed to RTP only when all registered taxable person under the same PAN opt to follow the same scheme. Permission granted to RTP shall be withdrawn on the day when his turnover exceeds ₹ 50 lacs during financial yea

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Goods and Services Tax – GST – By: – CA.Tarun Agarwalla – Dated:- 23-12-2016 – A. Introduction: The New Model GST Law ( hence forth MGL ) as made available on public domain as on 26th November 2016 have bring out many changes with respect to the provisons with respect to composition levy. Composition Levy have been present in indirect taxes to address the small business units or specific business units having complexity in valuation of taxable amount.MGL section 9 talks about payment of taxes in lieu of normal tax liability under section 8 of MGL , talks about Levy in general. Composition scheme also bring a lesser compliance requirements, however composition scheme normally successful in B to C segment rather than B to B segment. At present almost all the state VAT laws normally have provisions for taxpayers to opt for composition scheme. Broadly two type of taxpayers are having option to avail the composition scheme subject to restrictions and conditions. I e. works contractor (incl

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e scheme. Once on a particular day the aggregate turnover exceeds ₹ 50 lakhs , the scheme deemed to be withdrawn from such date. If the proper officer has reasons to believe that a taxable person was not eligible for the scheme , the taxable person shall pay tax under normal provisions and penalty. Restriction for the scheme:- under provision to section 9(1) of MGL, Composition semen could not be allowed in the following class of taxable persons:- who is engaged in the supply of services; or who makes any supply of goods which are not liveable to tax under this Act; or who makes any inter-State outward supplies of goods; or who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under section 56; or Who a manufacturer of such goods is as may be notified on the recommendation of the Council. Rate of Taxes and Input Tax credit: – Composition levy in lieu of tax is to be paid at a rate not less than 2.5 % in case of manufacturer

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dealer may not be eligible under MGL. Works contractor normally be under composition scheme of Sate VAT and service tax normally be paid under abatement forging the CENVAT on inputs. In this case the Cenvat Credit on stocks, semi fished and finished stocks may not be available under section 172 of MGL. However section 169 related to general availability of credit may come for rescue. However it is subject matter of further analysis. What would be regarded as composition scheme under earlier law gave not been provided in the MGL. For instance, there are cases in excise where special rate of duty have been allowed without taking any CENVAT credit. In the MGL it is given that, Persons Manufacturing, specified items may not opt for composition scheme. Hence in such cases whether section 172 or section 169 of MGL would come to rescue is subject to further analysis. Some definitions which is very relevant for the subject on composition are enumerated as follows:- aggregate turnover means the

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he impact may not be much. However majority of them may not covered due to enhancement of taxable limit of ₹ 20 lakhs from the exiting ₹ 10 lakhs. The parsons present in more than one state with the same PAN may face a new difficulty to track the turnover limit of ₹ 50lkh, collectively. Input tax credit as per section 18(3) of MGL, the carry forward credit and compliance there off may discourage to the scheme. A majority of works contract cases were availing the composition scheme as there was no turnover limit earlier. However at present the segment were regarded as service and hence not eligible at all for the composition scheme. In case of work contractor, builder , the credit available with respect to ITC in VAT Laws and CENVAT as far as excuse and service tax is concerned need to be reviewed in light of transitional provisions contained in section 169 and section 172. D. Conclusion A basic study of the provisons and the principles of GST, the law related to GST i

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JOB WORK UNDER REVISED GST LAW:- Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 23-12-2016 Last Replied Date:- 4-7-2017 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN JOB WORK UNDER REVISED GST LAW:- The amendments made in the provisions pertaining to job work and their comparision with respect to earlier GST law and in present scenario is summarised as follows:- Earlier GST law provided that Commissioner may be special order and subject to conditions, permit a registered taxable person to send taxable goods without payment of tax to a job worker for job work. This indicated that every time, permission of Commissioner was required to be taken for sending goods for job work. This anomaly has been removed in the revised GST law wh

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ied for inputs has been increased from 180 days to one year and that for capital goods has been increased from two years to three years. This increase in the time limit for job work is appreciated by trade and industry particularly for the capital goods. However, it is pointed that the definition of capital goods has undergone a substantial change and now goods that are capitalised in the books of accounts are to be treated as capital goods and consequently the enhanced time limit will be available only to those goods which are capitalised in the books of accounts. There is drastic change in the provision regarding non-receipt of job-worked goods within the stipulated time period. As per old GST Law, where the inputs or capital goods were n

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ut/capital goods will be deemed to be supply for principal. It implies that principal has to pay GST after two years for inputs and after three years for capital goods but this duty payment will be considered on the date of supplying goods for job work. However, there is no express provision whether the job-worker will be able to claim credit of tax paid by the principal. Moreover, there might be practical difficulty in availing credit. Although, the invoice is to be raised in the current date and hence the time restriction for availing credit will not apply in such cases. But the department might not adhere to such analogy and there is bound to be litigation on such points. Also, it appears that the principal will be required to pay intere

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7th GST Council Meeting Dated:- 23-12-2016 GST Council – Minutes – Circulars – GST – Minutes of the 7th GST Council Meeting held on 22-23 December 2016 The seventh meeting of the GST Council (hereinafter referred to as 'the Council') was held on 22 and 23 December 2016 in the Parliament House Annexe, New Delhi under the Chairpersonship of the Hon'ble Union Finance Minister, Shri Arun Jaitley. The list of the Hon'ble Members of the Council who attended the meeting is at Annexure 1. The list of officers of the Centre, the States, the GST Council and the Goods and Services Tax Network (GSTN) who attended the meeting is at Annexure 2 . 2. The following agenda items werelisted for discussion in the seventh meeting of the Council 1. Confirmation of the Minutes of the 6th GST Council meeting held on 11th December 2016. 2. Approval of the Draft GST Law, Draft IGST Law and Draft GST Compensation Law 2A. GST Treatment of Land and Building (Real Estate

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ber suggested the following amendment to the draft Minutes of the 6th meeting of the Council (hereinafter referred to as 'the Minutes') – i. Para 6 (xiv) of the Minutes: The Secretary to the Council informed that a letter had been received from the Government of Rajasthan to replace the version of the Hon'ble Minister of Rajasthan recorded in this paragraph with the following version: 'The Hon 'ble Minister from Rajasthan stated that penalty should not be considered as a source of revenue, rather it should be used as deterrent.' The Council agreed to the suggestion to replace the version of the Hon' ble Minister from Rajasthan. 5. In view of the above discussion, for Agenda item l, the Council decided to adopt the draft Minutes of the 6th meeting of the Council with the following change – i. To replace the version of the Hon'ble Minister of Rajasthan recorded in paragraph 6(iv) of the draft Minutes with the following – 'The Hon'ble Mini

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tion (Section 81 and 92) as well as the Section 100 to 197 and Schedules I to V are as follows – i. Section 81 (Power to arrest) and Section 92 (Prosecution): Shri M.K. Sinha, Commissioner, GST Council explained the changes made in these two provisions. He stated that arrest was proposed in only three instances, and out of these, two related to cases where either only invoice had been issued without any supply of goods or services or where goods or services had been supplied without issue of invoice and the third related to collecting tax but not depositing it with the Government. He also informed that the provision regarding gross mis-declaration in the description of the supply on invoices had been deleted keeping in view the guideline agreed upon in the last meeting that no arrest should be made in a case relating to any grey area in assessment. He also pointed out that the threshold for arrest was tax evasion of ₹ 2 Crore or more and arrests relating to tax evasion up t

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r the ease of doing business. The Hon'ble Minister from Bihar observed that there would be administrative check and control over misuse of arrest provision as was the case with the police department. He further observed that the Commissioner could also be punished for misusing this provision. The Hon 'ble Minister from Assam also supported this view. iii. The Hon'ble Chief Minister of Puducherry observed that proportionality should be maintained for large and small tax evaders and punishment should be in proportion to the amount of tax evasion involved. The Hon'ble Minister from Madhya Pradesh also observed that the big and small crime should not have the same punishment. The Hon'ble Minister from West Bengal observed that economic offences were not the same as offences under the Indian Penal Code (IPC). He further observed that arrest was a serious issue and its provisions were to be used as a last resort. He supported the principle of making a distinction betw

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nto account the statement of the Hon'ble Minister from Bihar that the States and the Central tax laws were being merged and that though VAT laws did not have arrest provision, the Central laws, namely Central Excise and Service Tax had provisions of arrest. He further added that grounds of arrest had been whittled down under Service Tax and a similar approach was being followed in the GST regime and the circumstances of arrest were being limited to those violations which were similar to those in criminal law, namely for forgery (fake invoices), breach of trust (failing in the duty to act as agent of the Government to collect and deposit tax into government account) and cheating (moving goods without paying tax). He pointed out that in the new text, no arrest could be made where non-payment of tax was due to dispute in interpretation and that there were sufficient safeguards against harassment, namely that arrest could be only authorized by the Commissioner and tax evasion threshold

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yers. v. The Hon 'ble Deputy Chief Minister of Delhi raised another issue in relation to the proviso to the explanation contained in revised Section 92(1). He pointed out that this required prosecution to be instituted after the previous sanction of the Central Government which was not desirable in a case where action was initiated by the State tax administration. The Hon'ble Chairperson observed that sanction of the Central Government would be required if action was initiated under the CGST Act and if action was initiated under the SGST Act, sanction of the State Government would be required. vi The Hon'ble Deputy Chief Minister of Puducherry observed that for sanctioning prosecution, a prosecution wing would be needed to decide whether prosecution was legally justified. The Hon'ble Chairperson observed that the States would need to set up internal mechanisms for sanctioning prosecution and could also take the help of legal advisors. The Secretary to the Counci

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could be waived if the evaded amount, as determined by the competent authority, was paid by the accused person as the compounding amount but this facility could be used only once. vii. The Hon'ble Minister from Andhra Pradesh observed that there was no arrest provision under the VAT law and incorporating arrest provision under SGST Act, even with the prescribed threshold, would adversely affect the ease of doing business and could create a fear psychosis amongst the traders. He added that this could also cause political problems. The Hon'ble Minister from Karnataka stated that in the last meeting, it was decided to make the arrest provisions more restrictive, and the revised formulation was acceptable, as also was the original formulation. He added that in the proviso to the explanation in the revised Section 92(1), the expression 'Central Government' should be replaced by the expression 'designated authority.' The Council agreed to this proposal. viii.

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cern. After the discussion, the revised formulation presented during the meeting in respect of Section 81 (power to arrest) and Section 92 (prosecution) was approved by the Council with two amendments, namely, (a) arrest could be made for repeat offences; and (b) in Section 92(1), the expression 'Central Government' to be replaced by the expression 'designated authority.' ix. Section 100 (Constitution of the National Appellate Tribunal), Section 101 (Appeals to the Appellate Tribunal), Section 102 (Orders of Appellate Tribunal) and Section 103 (Procedure of Appellate Tribunal): The Secretary to the Council explained that these provisions related to the Appellate Tribunal (hereinafter called the 'Tribunal') and that the Union Law Ministry had suggested some changes to the existing draft. He invited Shri Upender Gupta, Commissioner (GST), CBEC to explain the proposed changes. The Commissioner (GST), CBEC explained that the changes suggested by the Union Law

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appeal against it could lie before the Supreme Court. The Hon'ble Minister from Haryana suggested that disputes relating to subject matters of Union Territories could also be handled by the National Tribunal. x. The Hon'ble Minister from West Bengal stated that under the existing provision of Section 100 and Section 103 of the GST Law, each State Tribunal was to be headed by a President and that he was to be appointed by the State Government under the SGST Law. Commissioner (GST), CBEC informed that the Union Law Ministry had observed that there could not be a National President and a State President and it had suggested to rename the heads of State Tribunals as Vice President but they would be appointed by the State Government and the State Tribunals could have as many benches as required. The Deputy Chief Minister of Delhi suggested that the head of the State Tribunal should also be called President as otherwise, the structure appeared to be hierarchical with a National

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observed that instead of creating work for a National Tribunal, it could be removed altogether and all disputes could go to the State Tribunals. The Commissioner (GST), CBEC explained that if Tribunals were created under SGST Acts, the CGST Act would need to adopt thirty-one State Tribunals under the CGST Act and instead, it was proposed to create one Tribunal under the CGST Act which could be adopted the by States to create State Tribunals under the respective SGST Acts. The Hon'ble Chairperson observed that the option of incorporating State Tribunals under the CGST Act should also be explored and cautioned against creating superfluous Tribunal causing a drain on the public exchequer. The Hon'ble Minister from Haryana pointed out that a National Tribunal would also be needed for disputes relating to Union Territories. The Hon'ble Minister from Bihar suggested that the expression President of the Tribunal should be replaced by the term Chairperson . The Hon'ble Depu

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irperson observed that the Tribunals created under the State VAT Acts as well as the Customs Excise and Service Tax Appellate Tribunal (CESTAT) could deal with the old cases. xiv. The Hon'ble Minister from West Bengal suggested to give the State Tribunals in law the power of a single bench of the High Court in order to avoid the matters from Tribunals being heard by a single bench of the High Court and then being subjected to an appeal before the Division bench of the same High Court. He therefore suggested to create Tribunal under Article 323 B of the Constitution. Shri Ritvik Pandey, the Commissioner Commercial Tax (hereinafter referred as CCT), Karnataka pointed out that under Section 106 (9) of the GST Act, it was provided that appeal in the High Court shall be heard by a bench of not less than two Judges of the High Court. xv. The Commissioner (GST), CBEC raised the issue that the quantum of pre- deposit for filing appeal in Tribunals could be the same as agreed in the

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at presently, under their VAT Act, it was 25%. The Hon'ble Minister from Karnataka suggested to keep pre-deposit at 20% of the disputed tax amount for appeal before the First Appellate Authority and 10% for appeal before the Tribunal. He observed that for filing appeal in Tribunal, pre-deposit would be effectively 30%. The Hon'ble Chairperson observed that taking pre-deposit of 20% at both levels of appeals made the pre-deposit amount too high. The Hon'ble Minister from West Bengal stated that this would deter frivolous appeals. The Hon'ble Chairperson observed that another option could be to keep pre-deposit at 20% each at the level of the First Appellate Authority and the Tribunal respectively but the Tribunal could be given the power to waive pre-deposit in deserving cases. The Secretary to the Council cautioned that if the Tribunal was given such a discretion, a lot of time would be spent in deciding stay applications before the Tribunal. The Hon 'ble Minister f

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tion order might suffer from revenue bias but the order at the second level was expected to be more balanced and therefore, for the next appeal, the amount of pre-deposit should be higher. The Hon'ble Minister from Punjab observed that keeping 10% pre-deposit at both the levels would give a big relief to the VAT assessees and he suggested to keep the pre- deposit as 10% for appeal before the First Appellate Authority and 20% for appeal before the Tribunal. The Hon'ble Deputy Chief Minister of Gujarat suggested to keep the pre-deposit at 10% at both the levels. The Hon'ble Chief Minister of Puducherry and the Hon 'ble Ministers from Andhra Pradesh, Bihar and Chhattisgarh supported pre-deposit of 10% for appeal before the First Appellate Authority and 20% for appeal before the Tribunal. The Council agreed that pre-deposit for appeal before the First Appellate Authority shall be 10% of the disputed amount and that for the Tribunal it shall be 20% of the disputed amount.

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icult to establish deliberate delay. The Commissioner (GST), CBEC further pointed out that there was already a provision of not granting more than three adjournments during an appeal. xvii. Section 105 (Appearance by authorised representative): The Hon'ble Minister from Tamil Nadu suggested to replace the expression 'Tax Return Preparer' in Section 105 (2)(e) with the expression 'GST Practitioner' as agreed in the 6th GST Council meeting held on 11 December 2016. The Council agreed to the suggestion. xviii. Sections 113 – 124 (Advance Ruling): The Hon'ble Chairperson introducing this provision, explained that the provision of Advance Ruling was often used by those making new investment, say in a manufacturing activity, to determine the rate of duty on the new product with certainty and it helps them in their financial planning. The Secretary to the Council further explained that it was not to be headed by a Judge but to consist of a Committee of tax

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subject decisions of Advance Ruling Authority to appeal before a Tribunal and that after one level of appeal before the Appellate Authority for Advance Ruling, if there was no agreement between the two members of the Appellate Authority, then it would be deemed that no Advance Ruling could be given. The Secretary to the Council observed that such cases would be rare and it would be prudent for such matters to go for regular assessment. xix. The Hon'ble Minister from Tamil Nadu said that under Section 121, Advance Ruling should also apply to other similar cases within the jurisdiction of the Commissioner of Commercial Tax and suggested to make a suitable amendment in this regard in Section 157. The Hon'ble Chairperson explained that the rulings were given in personem and not in rem , that is, not to the whole world and therefore, rulings could not apply to other similar cases. The Secretary to the Council further clarified that each ruling was based on the facts of a part

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in the Goods sector, a taxpayer operating in multiple States was registered in every State. He added that it was not advisable to create an artificial distinction between goods and services, particularly when audit was envisaged for only 5% of taxpayers. He cautioned that providing special treatment to a certain category of taxpayers could lead to litigation by those who were denied such special treatment. In this view, he suggested to delete this provision. The Secretary to the Council explained that sectors like Telecommunication, Financial Services (Banking and Insurance), Airlines, Railways, IT and ITeS had raised several issues relating to registration in individual States. He explained that their main concern was that under GST law, they should be allowed to pool their Input Tax Credit (ITC) so that surplus ITC in one State could be used for payment of tax in another State. He added that as no unanimity could be reached on this issue, it was proposed to have an enabling power for

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cials of the Central Government and a few State Governments. He added that no agreement could be reached regarding cross-utilization of input tax credit of SGST between States. The Hon 'ble Minister from Tamil Nadu observed that if pooling of ITC was the only issue, a separate provision could be made for this and not for other processes like registration, etc. mentioned in Section 137 of the GST Law. The Hon'ble Chairperson stated that the Indian Bank Association (IBA) had made a strong representation for permitting centralized registration. He stated that such a provision could be considered for those sectors whose nature of business was such as to make it a necessity, but no special dispensation was desirable only for certain categories of big taxpayers. The Hon'ble Minister from Jammu Kashmir observed that the nature of service provided by banks made centralised registration a necessity for them as a credit card could be swiped in one city, the IT Centre could be locat

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ed in the Council. The Hon 'ble Chairperson stated that the Council could hear the stakeholders from Banking, Insurance, Information Technology (IT and ITeS), Telecom, Airlines and Railways for one hour in the next Council meeting. The Hon'ble Minister from Kerala stated that the proposal to have a separate special treatment for a class of taxpayers was discriminatory. The Hon'ble Chairperson observed that for a distinct class of persons, a separate procedure was possible but there could be no discrimination between Ovo equally placed persons. The Hon'ble Minister from West Bcngal posed a query whether they could be considered as a separate class and the Hon'ble Chairperson observed that if they were unable to show that they were a separate class, then, no separate procedure could be allowed. xxiii. The Hon'ble Minister from Tamil Nadu suggested that keeping in view the need not to make a distinction between goods and services, this issue presented an opportu

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s from Banking, Insurance, Information Technology (IT ITeS), Telecom, Airlines and Railways could be heard in the next Council meeting. The Council agreed to this suggestion. xxiv. Section 138 (GST compliance rating): The Secretary to the Council explained the rationale of GST compliance rating for taxpayers provided for in this Section. He pointed out that in the GST Law, there was a provision of reversal of ITC in the hands of the recipients where suppliers did not upload invoices within a fixed period of time. He explained that it would help traders if defaulters were identified in advance to alert prospective customers, and keeping this in view, every GST-registered taxpayer would be given a compliance rating. He suggested to replace the word 'shall' with the word 'may' in Section 138(1). The Hon'ble Minister from Tamil Nadu suggested to retain the word 'shall' and pointed out that this provision would be a powerful selling point for GST. The Sec

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uncil agreed to this suggestion and it was agreed to amend Section 138(2) by adding the phrase 'by the GST Council' at the end of the sentence. xxv. Section 142 (Disclosure of information required under section 141): The Secretary to the Council pointed out that in Section 142(3), the maximum limit set for imposing fine was only Rupees One Thousand which was too low and suggested to enhance it to Rupees Twenty-Five Thousand. The Council agreed to this suggestion. The Hon'ble Minister from Tamil Nadu observed that the State Government should have equal power to call for information and collect statistics. The Commissioner (GST), CBEC clarified that the law was common for both CGST and SGST and that reference to Commissioner in Section 141 of the SGST Law would mean Commissioner of SGST. xxvi Section 145 (Burden of Proof) : Shri Vivek Kumar, Additional Commissioner, Commercial Taxes, Uttar Pradesh observed that in the original text, the burden of proof was on

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r any Regulation that might be made in respect of the Tribunal and the Advance Ruling Authority and that the relevance of this Section would be determined after the GST Law was finalized. xxviii Section 163 (Anti-profiteering Measure): Introducing this section, the Secretary to the Council explained that while implementing GST, some taxpayers could indulge in profiteering in two different ways. One situation was that a retailer might not pass on the benefit of ITC of the embedded Central Excise duty component on a good allowed under the transitional provision of the GST Law and charge the customer the cumulative tax of CGST and SGST claiming that both taxes had been imposed under the new GST Law. Second situation could be a ease where tax rate on a commodity was lowered in GST as compared to the existing combined rate of tax of Central Excise and VAT but the benefit of lower tax was not passed on to the customer by a commensurate reduction in the price of the commodity. He pointe

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nd this helped to check inflation and price-rise. He warned that without implementing this provision, GST could be a failure and suggested that in Section 163(1), the word 'may' should be replaced by the word 'shall'. He also stated that it was desirable to create a body like ACCC with a proper database. The Hon'ble Chairperson observed that if the anti-profiteering authority was not to be created under the GST Law, then the phrase 'by law' used in Section 163(1) could be replaced by the expression 'on the recommendation of the Council by a notification'. The Council agreed to this suggestion. The Hon'ble Minister from Tamil Nadu observed that it would be laudable to create this institution and suggested to replace the word 'may' in Section 163(1) with the word 'shall'. The Hon'ble Chairperson observed that the word 'may' coupled with the exercise of a duty would be read as 'shall' and that the authority could

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cipal Secretary (Finance), Odisha observed that the objective was laudable but its implementation could be challenging as the authority could be swamped with representations in a situation of rising price which could be on account of various reasons and it would be a challenge to determine whether it was due to non-passing of the benefit of ITC. The Hon'ble Minister from Punjab stated that the provision could also create a fear amongst the traders that the government was monitoring the price situation. The Hon'ble Minister from Karnataka observed that there was an agreement in the Council about the need to pass the benefit of lower tax to the consumers and any challenge relating to verification could not be a reason to remove this provision altogether. He further added that the law was very specific that this provision would apply only when the rate of tax was altered and not in other circumstances. The Hon'ble Chairperson observed that difficulty in implementation could no

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es. He further observed that in Australia, such a body could be successful as Australia has a formal market economy whereas India faced various challenges like a large segment of informal economy as also presence of a large number of small and medium enterprises, unregistered units and exempt farming sector and that if such a provision was to be adopted, it must be implemented with seriousness. The Hon'ble Minister from Kerala stated that there must be a mechanism for monitoring prices and it should be transparent. The Hon 'ble Chairperson stated that at this stage, it was only an enabling provision and that the exact formulation of words would be done in the relevant Regulation. The Hon'ble Chief Minister of Puducherry observed that the Regulation should be brought back to the Council for approval. Shri P. Marapandiyan, Additional Chief Secretary, Kerala informed that during the introduction of VAT, the Empowered Committee (EC) had several meetings with traders who promise

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ed out that Section gave the enabling power for audit. The Hon'ble Minister from Haryana suggested to add the words 'or after' following the word 'before' in Section The Consultant (GST), CBEC pointed out that such a provision was already contained in Section 182. The Hon'ble Minister from Hawana suggested to harmonise the provisions of Section and Section 182. The Council agreed to this suggestion. xxx Section 167 (Amount of CENVAT credit carried forward in a return to he allowed as input tax credit): The Principal Secretary (Finance), Odisha pointedout that in Section 167 as also in Section 169 and 171, carry-forward of credit under VAT was allowed but they had no provision of carry forward of entry tax and therefore, rationale for keeping it under the SGST Law was not clear. The CCT, Karnataka explained that credit of entry tax was available in some States like Gujarat and therefore, it was indicated in brackets and it would be included in the SGST Laws

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in the original text of the Model GST Law. He gave an example that the building of bus body on a chassis was also a Works Contract. The Council agreed that the Law Committee of officers would look into it. xxxiii. Section 4 (Classes of officers under the Central/State Goods and Services Tax Act) and Section 5 (Appointment of officers under the CentraVState Goods and Services Tax Act) : The Hon'ble Minister from West Bengal pointed out that Section 4(2) relating to SGST provided that jurisdiction of officers other than Commissioner shall be specified by the Commissioner whereas in Section 5(2), it was provided that the jurisdiction of officers other than Commissioner shall be specified by the State and that this contradiction needed to be addressed. The Council agreed to this suggestion. xxxiv. Sections 165 – 197 (Transitional Provisions): The Hon'ble Chairperson observed that these were technical provisions relating to transition from the existing Central and State t

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hedule-Il) shall be treated as composite supply on which all provisions relating to services shall apply. He therefore suggested to revisit the need for Clauses 5(f) and 5(h) of Schedule Il. The Council agreed to the suggestion and approved the rest of the Schedule. xxxvii. Schedule Ill (Activities or transactions which shall be treated neither as a supply of goods nor a supply of services) : The Secretary to the Council explained that this Schedule treated certain transactions neither as a supply of goods 'nor as supply of services. The Commissioner, GST Council suggested an addition to Clause 4 of the Schedule namely, 'or any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947.' However, he later added that this could also be exempted by way of notification and the Council agreed to this suggestion. xxxviii. Schedule IV (Activities

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f companies like Gas Authority of India Limited (GAIL), Oil and Natural Gas Corporation (ONGC), etc. were permitted to be laid on Government land without charging any rent or charge. The Hon' ble Deputy Chief Minister of Delhi observed that the same principle was followed for laying fibre optic cables. The Secretary to the Council explained that exemption to Government activities/services through a Schedule in the Act was very inflexible and it would be desirable to operate these exemptions through a notification so that greater flexibility could be exercised in bringing certain services in the tax net at a future date without making an amendment to the GST Law. He, therefore, suggested to delete Schedule IV except the entry at Clause 4 (relating to exemption to Government Services for diplomatic or consular activities, citizenship, etc.) and to take a decision in the Council that all the Government services listed in Schedule IV shall be exempted through a notification. The Hon&#3

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at the clause suggested by the Hon'ble Minister from West Bengal, with suitable modification, could also be added in the exemption list under the proposed notification. The Hon'ble Minister from Tamil Nadu stated that there were certain services which should be legitimately attracting service tax like spectrum sale on which the Central Government had removed service tax only a few months back knowing fully well that GST was around the corner and this would lead to loss of Service Tax to the tune of about ₹ 10,000 Crore. He suggested to bring such services back in the Service Tax net. The Secretary to the Council clarified that spectrum sale had been subject to Service Tax from the current year and that the TRU Circular dated 13 April 2016 circulated in this meeting only clarified certain exemptions and clarifications given by the Central Government. The Hon'ble Chairperson observed that there would be greater flexibility to control the entire universe of Governmental

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hat using this formulation might lead to an interpretation in which license fees for spectrum could become non-taxable and therefore, the formulation suggested by the Hon'ble Minister from West Bengal needed some redrafting. The Hon'ble Minister for Karnataka stated that while he agreed with the flexibility principle by bringing Schedule IV in a notification, one advantage of keeping these items as neither supply of goods nor of services was that the suppliers of Government services would not be required to take registration if they were also making small quantum of taxable supply. The Commissioner(GST), CBEC amplified that in the GST law, registration had to be taken if aggregate turnover of a supplier, including the exempt supplies, crossed ₹ 20 lakh and that if a government hospital, whose value of supply of exempted health services was say ₹ 50 lakhs and it also rented out a shop for an annual rent of Rs. S lakh, the government hospital would require to be regis

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the Council would notify a list of services provided by the Government for which there would be no requirement of registration. The Hon'ble Minister from Tamil Nadu observed that the way Schedule IV was presently worded seemed to be a denial of reality. He suggested that instead of stating that Services under Schedule IV were not service, it would be more appropriate to state that such services were 'excluded' from GST. He also pointed that there was already a provision for exemption of services through a notification in Section 3(4)(c) of the GST Law. The Hon'ble Minister from Andhra Pradesh observed that the issue was whether exemption for Government services should be in a Schedule or in a notification and he expressed his agreement to provide for exemption through a notification. The Hon'ble Chairperson suggested that the Officers' Committee might examine Schedule IV and to suggest a draft formulation that the services mentioned in Schedule IV (except those

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uty Chief Minister of Gujarat had requested to revisit this definition as the new definition would lead to substantial loss of revenue. Stalting the discussion, the Hon'ble Deputy Chief Minister of Gujarat stated that the definition of 'agriculture' should not be kept as wide as in the revised formulation. He added that 'agriculturist' should not cover manufacturers of processed agricultural products. The Hon'ble Minister from Punjab suggested to define 'agriculture' as only primary produce from the land and the processed products should be subject to tax. The Hon 'ble Minister from Maharashtra stated that his concern was similar to that expressed by the Hon 'ble Deputy Chief Minister of Gujarat. He pointed out that by keeping the definition of 'agriculture' very wide, industrialists operating in 'agriculture' sector, like big centres of horse breeding and chicken processing would get the benefit of tax exemption. He suggested tha

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re' narrow and then adopt the exemption route. The Hon 'ble Minister from Maharashtra stated that exemption limit of ₹ 20 lakh of annual turnover would help actual producers to be out of the tax net but bigger industrialists should not be given the benefit of tax exemption. The Hon'ble Minister from Andhra Pradesh suggested to include fish farming in the exempted category. The Hon'ble Minister from Tamil Nadu suggested to define agriculture product which could be exempt and not to define agriculture. He informed that in Tamil Nadu, there was tax on sugar cane and this would go out of the tax net if a wide definition of 'agriculture' was adopted. The Hon'ble Minister from Kerala expressed agreement with the wider definition of 'agriculture' and suggested that conservation of soil and water shed management should also be added to the definition of 'agriculture' as these formed the basis of agriculture. The CCT, Gujarat informed that the i

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specific products were exempt. He stated that in his State, paddy was charged to VAT under reverse charge. He suggested not to define the terms 'agriculture' and 'agriculturist'. The Hon'ble Minister from Maharashtra pointed out that in Article 366 of the Constitution, 'agricultural income' was defined as for the purposes of the enactments relating to Indian income-tax and that the GST law should adopt the definition of agriculture from Income Tax Act. The Hon'ble Chairperson observed that States like Tamil Nadu and Odisha had argued for specific exemption for products rather than a generic exemption. He elaborated that all the produce that came out of land like paddy, wheat and pulses could be exempted as also other products like poultry, egg or milk but the Council might not want to exempt high-end products like prawn and salmon. He further observed that if the definition of 'agriculture' was to be based on process, then like Income Tax, it wo

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ant (GST), CBEC explained that exemption for agricultural products could be handled through the classification of products under the Harmonized System of Nomenclature (HSN). He pointed out that internationally, as per the WTO definition of 'agriculture', products covered under Chapters 1-24 of HSN were normally treated as 'agricultural product' with certain exceptions like fish and fish products and with certain additions like raw silk, wool and raw cotton falling in chapters other than Chapter 1-24. He explained that exemption could be given product-wise as for instance, wheat could be exempted but its product like biscuit could be charged to tax. The Secretary to the Council sought the view of the House as to whether the definitions of the terms 'agriculture' and 'agriculturist' could be removed from the GST Law. The CCT, Karnataka explained that Schedule V of the GST Law exempted agriculturists from taking registration under the GST Law and that if th

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e Secretary to the Council suggested that Officers of the Law Committee should examine whether or not the definition of 'agriculture' and 'agriculturist' was needed in the GST Law and to revert to the Council. The Council agreed to this suggestion. ii. Section 87A (Power to waive penalty): The Secretary to the Council stated that there was a suggestion from the Central Board of Excise and Customs (CBEC) to add a new Section 87A which read as follows: Power to waive Penalty: Notwithstanding anything contained in the provisions of section 85 or 86 of this Act, no penalty may be imposed on an assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure or that he had made a reasonable attempt to comply with the provisions of this act to avoid such failure. The Commissioner, GST Council explained that this provision was meant to give discretion of not imposing penalty and that the officers o

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'penalties' and 'general penalty'. The Hon'ble Minister from Uttar Pradesh suggested an alternative approach to reduce the penalty limit for certain class of taxpayers or to provide that for one year after implementation of GST, no penalty to be imposed on taxpayers up to a turnover of say ₹ 50 lakh. The Hon 'ble Minister from Andhra Pradesh observed that discretionary powers created problems at the ground level. The Hon'ble Deputy Chief Minister of Delhi also observed that discretionary powers would be difficult to control. The Secretary to the Council stated that the proposed provision just gave an enabling power to exempt certain categories of taxpayers from penalty and that the Law Committee could redraft the proposed Section 87A on the basis of these discussions and present it before the Council. The Hon'ble Minister from West Bengal and the Hon'ble Deputy Chief Minister of Delhi stated that the provision should be drafted in a manner tha

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pital goods till data on the total quantum of ITC availed on capital goods was received. The Additional Secretary to the Council stated that based on figures gathered from the GAIL and the Department of Telecommunication, the approximate incidence of input tax credit on account of pipelines and telecom towers could be between ₹ 3,600 Crore and ₹ 4,500 Crore per year for the next four to five years. The Hon 'ble Minister from Karnataka observed that if ITC was given for pipelines and telecom towers, this would place the existing investors at a disadvantage visvis new investors whose capital investment per connection would be lower. The Hon'ble Deputy Chief Minister of Gujarat expressed that credit on pipelines might be allowed for the first five years of implementation of GST only for which compensation was going to be paid to the States. He added that the entire credit might be allowed in the first year for these five years and that no credit should be allowed there

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might be accounting for 80% of the pipeline business but in future, this could change and the beneficiaries could be other companies such as pipelines laid for transmission of coal-bed methane. He further observed that, in principle, there might not be objection to extending ITC for pipelines. The Hon 'ble Deputy Chief Minister of Gujarat suggested that ITC could be allowed for government entities like Gujarat State Petroleum Corporation Limited (GSPCL). The Council felt that the law should not result in competitive advantage to new players. After further discussion, it was agreed not to extend the benefit of ITC for pipelines and telecom towers. 9. For agenda item 2, the Council approved the GST Law subject to the relevant decisions/observations as recorded in the Minutes of the 5th and 6th Council meeting on this agenda and as recorded below. It was also agreed that a revised draft incorporating the changes agreed upon in the Council and the suggestions of the Union Law Mini

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s. v. Revised Section 81 (power to arrest) and 92 (prosecution): The revised formulation in respect of Section 81 and Section 92 approved with the following changes: (a) arrest to be provided for repeat offences; (b) to replace the expression 'Central Government' in the proviso to the explanation in the revised Section 92(1) by the expression 'designated authority.' vi. Section 87 A (Power to waive penalty): Officers of the Law Committee to redraft Section 87A and it is to be drafted in a manner so as not to give discretion to officers for levying penalty. vii. Section 95(2) (Relevancy of statements under certain circumstances): To delete the sub-section (2) of Section 95. vii. Section 100 (Constitution of the National Appellate Tribunal), Section 101 (Appeals to the Appellate Tribunal), Section 102 (Orders of Appellate Tribunal) and Section 103 (Procedure of Appellate Tribunal): The revised draft to be shared with the States in advance. In the revis

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(2) by adding the phrase 'by the GST Council' at the end of the sentence. xii. Section 142 (Disclosure of information required under section 141): To amend Section 142(3) by changing the maximum limit set for imposing fine from Rupees One Thousand to Rupees Twenty-Five Thousand. xiii. Section 163 (Anti-profiteering Measure): To amend Section 163(1) by replacing the phrase 'by law' by the phrase 'on the recommendation of the Council by a notification'. Additionally, the requirement of passing the benefit of duty reduction to the consumers should be incorporated in the relevant provisions of the GST Law in addition to that contained in Section xiv. Section 164 (Repeal and saving): To harmonise the provisions of Section and Section 182. xv. Section 169 (Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations): The Rules Committee of Officers to provide for allowing ITC of embedded VAT through Ru

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e issued on the recommendation of the Council. Agenda Item 2A – GST Treatment of Land and Building (Real Estate) 10. The Secretary to the Council introduced this agenda and explained that in Section 2(49), the definition of 'goods' included only movable property. He pointed out that under the Constitution, States had power to charge stamp duty on transactions in land and building and that the rate of this duty ranged between 5% and 6%. He emphasized that under this agenda item, no change in the scheme of stamp duty was proposed as entry 63 of the State List of Schedule 7 of the Constitution empowering States to charge stamp duty remained intact. He pointed out that today, there existed a dichotomy in rates of Service Tax on property depending upon the fact whether it was bought as an under construction property (which attracted' Service Tax) or as a ready-built property after obtaining completion certificate (which did not attract Service Tax). He explained that

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n as to what percentage of sale of property was fully-constructed vis vis those under construction. The Secretary to the Council stated that such data was not readily available. The Hon'ble Minister from Uttar Pradesh observed that most property sales would be of under-construction property as it would be difficult for developers to fully fund by themselves the development of a property. The Hon'ble Minister from Uttarakhand stated that the hill States should have special exemption. The Hon'ble Chairperson observed that this would be decided once the main issue was settled. The Hon'ble Minister from Punjab observed that if a developer constructed the property on his own, then the completed project's cost would be higher as the developer would also recover the cost of capital investment. The Hon'ble Deputy Chief Minister of Gujarat did not support the proposal under this agenda item. He observed that in almost 90% cases, an under-construction flat was booked by c

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ed on re-sale of property, say, a hotel, this would help in claiming ITC and lowering the cost of business for the buyer of the hotel. He also stated that charging GST on re-sale of property would also capture the value addition over a period of time. The Hon'ble Deputy Chief Minister of Gujarat pointed out that there was stamp duty on re-sale. The Hon'ble Minister from West Bengal stated that he supported the views expressed by the Hon 'ble Deputy Chief Minister of Gujarat and the Hon'ble Ministers from Uttar Pradesh and Telangana. He observed that all fittings and raw materials used in buildings would largely be tax-paid and this was presently an additional tax gain for the State as no ITC was available on them. He expressed that the proportion of evaded inputs like steel, cement, etc. might not be very high. He further stated that there were much larger transactions in smaller and medium houses and these should not be taxed in addition to the levy of stamp duty. He c

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tates. The Hon'ble Minister from Tamil Nadu stated that the proposal under this agenda item appeared to be unconstitutional as stamp duty was constitutionally retained. He also added that the definition of goods in the Constitution did not include land and building. The Hon'ble Chairperson summed up the two broad viewpoints namely that incidence of tax was likely to go up and the other that the tax amount would remain the same due to availability of ITC on inputs used as construction material. The Hon 'ble Minister from Punjab observed that if GST was imposed on land and building, the cost for the customer would go up. The Chief Economic Advisor stated that if GST was extended to land and building, it would be a transformational GST and would also have a strong anti-corruption, anti-black money signalling. He reminded the House that internationally, GST was charged on supply of property. The Hon'ble Chairperson observed that this idea was transformational but instead of

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amil Nadu suggested to inselt after Section 2(3) of the Compensation Law, a definition of 'compensation fund' as follows: Compensation fund means, a non-lapsable fund in the Public Account, for the purpose of compensation to the States for loss of revenue arising on account of implementation of the Goods and Services Tax for a period of five years as per section 18 of the Constitution (101st Amendment) Act 2016. He further suggested to add the following in the Compensation Law: The Goods and Services Tax Compensation Fund shall comprise of the Compensation Cess and such other revenues that the Central Government may transfer to it. He also suggested to add in Section 2(8), the words 'under this Act' after the words 'taxable person'. Similarly, he suggested that in Section 2(12), the words 'under this Act' be added after the word 'State'. He further pointed out that in Section 5(1), there was no reference to ITC adjustment and ITC reversal but

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ces Tax. The Hon'ble Minister from Telangana supported these proposals. 13. The Hon'ble Minister from Odisha stated that as he had stated in the 3rd meeting of the Council, the rate of royalty on coal fixed at 14% ad valorem had had not been received for more than four years. He added that even though the Ministry of Coal had constituted a Committee to revise the rate of royalty on 21 July 2014, the rate of royalty had remained unrevised. He added that while the Central Government had enhanced the Clean Environment Cess to ₹ 400 per tonne in 2016-17, this cess was not being shared with the coal-bearing States. He further suggested that the Clean Environment Cess should be renamed as 'Environment and Rehabilitation Cess' and at least 60% of its proceeds should be shared with the coal-bearing States to meet the negative externalities and remaining 40% of the cess may go to the GST Compensation Fund. He further added that during the 3rd and 4th meetings of the Co

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und fell short of the amount claimed as compensation by the States. He therefore suggested to add that in case the amount in the Compensation Fund fell short of the total claim made by the States in a year, the balance shall be paid by the Government of India from its Consolidated Fund. He also suggested to re-number the paragraphs relating to 'Base Year', 'Base Year Revenue', 'Projected Growth Rate' and 'Projected Revenue for Any Year' as Section 3, 4, 5 and 6 respectively for the sake of clarity and simplicity. 14. The Hon'ble Minister from Andhra Pradesh observed that collection of cess for giving compensation was not correct and instead, compensation for GST should be borne by the Central Government. He recalled that when VAT was introduced, compensation was paid from the Consolidated Fund of India. The Hon'ble Minister from Maharashtra suggested giving compensation every month. He further suggested and that in view of abolition of the Loc

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was not sufficient to pay compensation, the States must be paid compensation within the five-year period and that levy of cess might be extended beyond five years to recover the shortfall. 15. The Hon'ble Minister from Punjab observed that quarterly payment of cess would, in actual effect, lead to payment after 4 months and suggested to make the period of payment as monthly or bimonthly. He further suggested that if the amount in the Compensation Fund was insufficient, the Government of India should commit to make payment from any other source. He also suggested to add the word 'fee' in Section 5(1)(g). 16. The Hon'ble Minister from Telangana stated that the experience of States for compensation during VAT was not good. He suggested that there should be a provision that if the cess amount was not sufficient for payment of compensation, it would be paid through the Consolidated Fund of India. He also highlighted the need to compensate for Rural Development (RD) Ce

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ction 5(2) of the IGST Act needed more discussion. He further added that the collection of taxes had fallen during the third quarter and the situation was likely to worsen in the fourth quarter and that there was a likely shortfall of revenue in his State of ₹ 5000 to ₹ 7000 Crore. He observed that the projected collection of compensation amount of about ₹ 55000 Crore might not be sufficient and there was a need to provide in the Act that if there was a shortfall in collection of cess, compensation shall be paid from the Consolidated Fund of India or from some other source. The Hon 'ble Minister from Meghalaya stated that North Eastern States had less resources and compensation should be given on monthly or bi monthly basis. He added that it had been agreed by the Council earlier that tax exempted under the Industrial Policy of Special Category States shall be added to their base year revenue. He observed that this would give them only limited benefit and he urged

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same at the end of the month after getting certified accounts. He suggested that compensation should not be linked on the basis of past collection but be paid on a projection basis. He also suggested to amend Section 5(4) in reference to Jammu Kashmir to indicate that 'the base year revenue shall include the amount of sales tax collected on services.' He further suggested to amend Section 5(5) by adding the word 'remission' along with the word 'exemption'. 19. The Hon 'ble Minister from Chhattisgarh suggested that the Entry Tax collection should not be added as revenue in the year it was collected. The Hon'ble Minister from West Bengal also supported the stand of the Hon'ble Ministers from Odisha, Haryana and Chhattisgarh of either adding the collection of Entry Tax arising out of the judgement of the Supreme Court in the base year 2015-16 or not to add it in the subsequent year when it was actually collected. The Hon 'ble Minister from Kera

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e 7 of the Constitution. With regard to the suggestion from the Hon'ble Minister from West Bengal, he informed that Section 8 had already been revised and that the revised version had been circulated in the meeting. He stated that as regards the suggestion from the Hon'ble Minister from Odisha and a few other Hon'ble Members, regarding non-inclusion of Entry Tax in the revenue collection of the relevant year, the Council had already agreed earlier that whatever revenue was actually collected by the States would be considered as revenue collected except to the extent that had already been agreed for the Special Category States and that this decision would stand unless the Council agreed to change it. As regards the suggestion of the Hon'ble Deputy Chief Minister from Gujarat regarding refund of cess on exported goods, he pointed out that Section 9 of the Compensation Law provided that all provisions of furnishing return and claiming refund of CGST and IGST shall apply to

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of inclusion of Entry Tax in the revenue base, the Secretary to the Council stated that the issue of Entry Tax litigation was earlier discussed in the Council extensively and then it was decided that only actual revenue earned by a State in a year shall be counted towards the revenue collected during a year and as a part of the overall package, it was agreed that an assured growth rate of 14% shall be considered for compensation to States. He added that the suggestion of subtracting the collection of Entry Tax from the revenue collection of States in a year would be unfair to the Central Government. He further added that if an earlier tax dispute pending in a Court was decided in favour of a taxpayer leading to a large amount of refund in a subsequent year, the calculation of tax collected would be net of this refund. The Hon'ble Minister from Assam informed that the disputed amount of Entry Tax for his State was about ₹ 1200 Crore which was for years 2011-12, 2012-13 and 201

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sation was discussed like through taxation or through the Consolidated Fund of India and finally the formulation that was agreed upon was the one which was least burdensome for consumers, namely to collect cess on certain luxury and demerit goods in excess of 28% tax, and that after five years, this cess could be merged with the tax. He added that revenue for the base year 2014-15 was to be based on actual tax collection figure and not on some hypothetical basis of collection. He added that the projected growth rate of 14% on the base year collection was linked to the overall agreement reached regarding compensation and it was not possible at this stage to open only one limb of the agreement. He mentioned that the demand for payment of compensation from the Consolidated Fund of India essentially meant funding compensation from Income Tax or non-tax revenues of the Central Government, which would be a challenge as the Central Government also had its own committed expenditure. He said th

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and this figure was arrived at after considering various other imponderables. The Hon'ble Minister from Haryana referred to a history of mistrust because CST compensation was not given to the States as per the agreed formula. The Hon'ble Chairperson observed that the Council would now decide upon compensation and the States had also been empowered in the Council. The Hon'ble Minister from Telangana pointed out that the Council had not decided as to how compensation would be paid if there was a shortfall in cess collection. The Hon'ble Chairperson stated that in such an eventuality, the Council could decide to raise the rate of tax or cess. The Hon'ble Minister from Telangana observed that as only four to five Sates were likely to require compensation, it could be provided that in case of a shortfall in cess amount, the compensation could be funded from the Consolidated Fund of the Central Government. The Hon'ble Minister from Tamil Nadu observed that cess shoul

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December, 2016 showed increase in income tax collection by 13.5% and of Central Excise collection by 23%. He added that there was fall in revenue in Service Tax but this was also the trend in the last year and was possibly due to the effect of post-Diwali festival. The Hon'ble Minister from Kerala observed that there should be clear provision in the Compensation Law as to how 100% compensation shall be ensured and shall be paid within the month. The Hon'ble Minister from Jammu Kashmir stated that the formulation earlier agreed for compensation was actually an insurance at 14% and there would be compensation even if a State suffered from a calamity. The Hon'ble Minister from West Bengal stated that it should be clearly recorded that there shall be 100% compensation at the projected growth rate of 14%. The Secretary to the Council stated that this was already a commitment but the Council would need to provide for means of raising resources for compensation. The Hon'ble

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the next meeting. i. To incorporate the definition of 'Compensation Fund' in Section 2 to denote a Fund consisting of GST compensation cess revenue and such other revenue as the Council may decide. ii. To add the word 'fee' in Section 5(1)(g) and this would apply only in case the fee being collected under Entry 66 of the State List (in Schedule 7 of the Constitution) was imposed in respect of those entries of the State List (like Entry 54) which had been omitted under the Constitution (One Hundred and First Amendment) Act, 2016. iii. To add in Section 2(8), the words funder this Act' after the words 'taxable person.' iv. To amend Section 5(4) to indicate that 'the base year revenue shall include the amount of sales tax collected on services.' v. To amend Section 5(5) by adding the word 'remission' along with the word ' exemption'. vi. To give compensation on bi-monthly basis and to this extent the decision taken

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Goods and Services Tax – Started By: – SANDESH SHINDE – Dated:- 22-12-2016 Last Replied Date:- 22-12-2016 – Dear Sir,Please advise the implications as per revised GST law. Will Tax adjustments stop after GST or will they continue as this effects operating prices?? Stocks Maintenance Criteria Regards,Sandesh Shinde. – Reply By MARIAPPAN GOVINDARAJAN – The Reply = In my view it will be stopped. – Reply By Ganeshan Kalyani – The Reply = What is tax adjustment? – Discussion-Forum – Knowledge Sharin

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Goods and Services Tax – GST – By: – Ravi Kumar Somani – Dated:- 22-12-2016 – One of the most complex areas of the tax levied by the Centre and the States is works contract and sale of property. Currently, such transactions are broken into three parts – the value of goods and materials, value of services and value of land. The States apply VAT to the goods portion and the Centre taxes the services portion, with no explicit tax on the transaction value of land. The State also collects stamp duty and registration charges for the registration of property. Each authority taxes on aspects and valuation independent of the others. More than 200% of the value is being taxed in some States which is no fair. Real estate transactions unfortunately are subject to manipulation and undervaluation in most parts of India. This area has seen extensive litigation and many borderline, illogical reasoning has bene accepted by the tax authorities on the logic that some tax is being collected. Construction

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nufacture, sale or service etc. There will be only one concept i.e. Supply . All the supplies will be categorized as Supply of goods or Supply of Services or composite supplies (multiple supplies). Construction activities will be works contract which is being categorized as Services . All builders and developers in India will be collecting and paying CGST and SGST (i.e. Central GST and State GST. The place of supply of the service is the location of the immovable property. Recently, CBEC has issued a revised updated Model GST Law – Nov 2016 wherein the older version of the draft issued in June 2016 has been partially revised. This article discusses the nuances of revised GST from the point of view of the Real-Estate sector also bringing out the impact that will be caused in this sector. Presently builders/developers are paying following indirect taxes: Service tax (ST) on services either to provider or on reverse/ joint charge (sub contractors, manpower supply etc); Value added tax (VA

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rought under the tax net in the GST regime. Therefore, if any long term contract is entered in the current tax regime now but if GST is implemented, then the same would be taxable under the strictures of the GST law therefore, It is important to factor the GST impact while arriving at the price of the contract and the burden of the taxes must be clearly reflected in the contract to avoid any complications at a later date. Expected Rate of Tax: Recently, the GST council has agreed upon the 5 rate structure for levying tax on various goods and services i.e. 1%, 5%, 12%, 18% and 28%. It is expected that the rate of GST that may be applicable on this sector would be mostly 12%. There may not be any further abatement/ composition on this rate. Although this rate will be little on the higher side as compared to current tax rates which is between 6% to 10%. Although such high rate could have an adverse impact on this sector, however this impact could largely get reduced due to ease in credits

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ed by way of issuing a notification during the GST regime. Unclear provisions in this context could lead to large scale disputes. Requirement of completion certificate: Similar to provisions in service tax, GST is said to be levied if amount is received prior to completion certificate and there would be no GST if the entire amount is received after the completion certificate. Further, it is also stated that even if completion certificate is not received, GST may not be levied after the first occupancy of the premises. This would provide relief to builders who for various reasons were unable to obtain the completion certificate from the authorities and as a consequence were denied the exemption from service tax. Treatment in case of SEZ/ EOU s: There is no clarity in the model GST law as to continuity of the exemptions in respect of EOU s. However, as far as units operating in the Special Economic Zone are concerned, it is explicitly stated that same will be on par with the exports and

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n though the project is for a very small period or for a small value. Although, this scenario is in existent in the current law for the state taxes but the same will now be done even for the central taxes. High Compliance burden: Compliance burden will be very high in the GST regime as one has to file 37 Returns in one financial year for each registration. Further, returns filed will be matched online with the support of the IT infrastructure with the returns of the vendors/ customers. In case taxes are not paid by the vendors or if the returns are not filed by the vendors, then the credit of such taxes is denied to the customers. Therefore, timely payment of taxes, filing of returns needs to be ensured in the GST regime. Transitional Credits: To transfer the existing credits in the GST regime, condition has been kept that such credit must have been admissible in the GST regime. Therefore, builders should be able to transfer the following credits to the GST regime: Credit of Service Ta

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ence of duty/ tax paying documents Credit of CST: The same cannot be availed based on the stock availability as on the appointed day. Entry Tax: Credit of same can be availed subject to possession of appropriate documents for the same in states where such set off is permissible. Anti-Profiteering Measures: Since a builder will be able to take the credit of goods lying in stock, the tax cost would decrease. This additional benefit accruing to the builders is expected to be passed on to the end consumer by way of reduction in prices etc. A separate authority will be formed in the GST regime to monitor the non-compliance of the anti-profiteering matters which could have an adverse impact on the entire construction industry whose pricing is more market dependent than other factors. Therefore, it is imperative for the builders to establish passing of the GST benefit to its consumers. In these times of falling prices this may not be challenge though. Time of Supply in GST: Currently, many bu

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ial rate if applicable could be a cause of concern. Valuation complexities: Valuation of the services would be at the transaction value. However, valuation with the related parties/ between the group companies needs to be properly dealt with and must be kept at the arms length price to avoid unnecessary departmental intrusion. Good IT Infrastructure: In GST regime, businesses have to move from the manual environment to computerized environment. Only an efficient IT infrastructure and its best usage can help businesses meet the high compliance needs of the GST. If IT infrastructure is not optimally utilized, then it would be challenging for any business including real-estate sector to function efficiently in the GST regime. Further, in the computerized environment, physical interaction with the department officials would reduce substantially. ERP must be customized to make it capable to meet needs of the business as well as comply with GST. Conclusion: The implementation of GST is possi

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 22-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN DEFINITION OF CAPITAL GOODS UNDER REVISED GST LAW:- The definition of capital goods has undergone a substantial change in the revised GST Law. The definition of capital goods under revised GST Law is given under section 2(19) which states that capital goods means goods, the value of which is capitalised in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business. As contrast to the above definition, the definition of capital goods under earlier GST law was similar to that given under Cenvat Credit Rules, 2004. The earlier definition was very sp

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situations:- The provisions regarding payment of amount on supply of used capital goods will not apply for such goods. In case of supply of capital goods or plant and machinery on which input tax credit has been taken, the registered taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by percentage points as prescribed or transaction value of capital goods whichever is higher. There is different time period specified for job work of inputs and capital goods. In case of job work of inputs, the time limit for receipt of goods by the principal is specified as one year while in case of job work of capital goods, the time limit for receipt of capital goods by the princi

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Goods and Services Tax – GST – By: – CA Akash Phophalia – Dated:- 21-12-2016 Last Replied Date:- 22-12-2016 – Introduction Tax credit is the mechanism which ensured avoidance of cascading effect. Principally cascading means paying tax on tax. Presently an assessee pays excise duty and thereafter pays sales tax in the form of vat on the said excise duty. This is an example of cascading effect. However, when it is required to pay sales tax then assessee is eligible to avail of set off of the tax already paid by it in the form of sales tax while procuring raw materials or inputs or goods in trade. Same concept is applicable with the excise duty and service tax. But inter-credit of sales tax and excise duty is not available presently. However, inter set off of credit between excise duty and service tax is available to certain extent. GST aims at bringing all the taxes viz service tax, excise duty and sales tax at par and ensure that the set off taxes is available to assesses at all the ti

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received, (b) two-third of the total input tax, including the credit availed in the first financial year, in the financial year immediately succeeding the year referred to in clause (a) in which the said goods are received, and (c) the balance of the amount of credit in any subsequent financial year. (2) Notwithstanding anything contained in this section, but subject to the provisions of section 36, no registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying document(s) as may be prescribed; (b) he has received the goods and/or services; (c) the tax charged in respect of such supply has been actually paid to the account of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the

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goods or otherwise. (3) Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961(43 of 1961), the input tax credit shall not be allowed on the said tax component. (4) A taxable person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services after furnishing of the return under section 34 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. Analysis of the Section 16 1. Every registered taxable person shall be entitled to take input tax credit here in after referred to as ITC. It means in order to avail of input tax credit following are essentialities:- A person should be taxable person or in other words he should not be exempted under GST . Secondly the person should be a registe

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t on such goods shall be allowed as follows: Year Cumulative credit that can be claimed 2017-18 Upto 30,000/- 2018-19 Upto 60,000/- 2019-20 Upto 90,000/- 4.Further, in order to claim input tax credit following conditions are required to be fulfilled cumulatively:- The registered taxable person should be in possession of tax invoice, debit note, other tax-paying document. He should have received goods and/or services. This condition is to ensure that ITC shall not be allowed on the basis of bogus invoice or documents. Further, for this condition it shall be deemed that the taxable person has received goods when goods are sent to any other person on his direction, whether as an agent or otherwise, before or during the movement of goods, either by way of transfer of documents of title to goods or otherwise. Let us understand this with the help of an illustration. Mr. X purchased goods from Mr.Y and paid tax of ₹ 10,000. But Mr. X directs Mr. Y to send goods to Mr.Z ,ultimate consume

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on 7th April 2017 in respect to the entire lot. He will not be eligible to avail of input tax credit proportionately on partial receipt of goods. Condition applicable to services – There is a special provision in respect of services. This is not applicable to goods. The provision states that if the recipient of services fails to pay to the supplier of services the value of service and tax thereon within a period of 3 months from the date of invoice then ITC availed of by the recipient in respect to the said extent of value and tax thereon shall be added to his output tax liability and recovered along with interest. Where depreciation is claimed on the tax component under the provisions of the Income Tax Act 1961, then input tax credit shall not be allowed on the said tax component. This is to avoid double benefit of the single amount. Lastly, input tax credit shall not be allowed in respect of any invoice or debit note for supply of goods or services after furnishing of the return for

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 21-12-2016 – NEW CONCEPTS OF SUPPLY IN REVISED GST LAW:- The revised GST Law introduces three new concepts of supply which are discussed in this update. COMPOSITE SUPPLY:- Section 2(27) defines this term as 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. Illustration given in Revised GST Law: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and

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e supply in GST regime is similar to the concept of bundled services under Service Tax Laws. MIXED SUPPLY:- Section 2(66) defines this term as 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 price where such supply does not constitute a composite supply. Illustration given in Revised GST Law: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately. This is e

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shall be treated as supply of that particular supply which attracts the highest rate of tax. The above provisions will definitely create disputes and litigation as whether the supply is composite or mixed will be dependent on facts and circumstances of a particular case. Moreover, the revenue department will consider a supply as composite or mixed according to the highest tax criteria. It was hoped that the GST regime would dispense with the classification disputes and lead to lesser litigation but introduction of above concepts will definitely ignite litigation. PRINCIPAL SUPPLY:- Section 2(78) defines this term as principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 20-12-2016 – Scope of aggregate turnover [Section 2(6)] As per section 2(6) of the Model GST Act, 'aggregate turnover' shall be total of the following amounts or sums in relation to a person carrying on business, i.e., aggregate of the following- Value of all taxable supplies of goods and services Value of exempt supplies of goods and services Value of all goods and services exported Value of inter-State supplies However, aforementioned value of aggregate turnover would exclude taxes, if any, charged under the CGST Act, IGST Act and SGST Act. It will also not include the value of inward supply on which tax is charged on reverse charge basis and value of inward suppli

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; 0.60 lakhs IGST/CGST/SGST paid ₹ 0.20 lakhs Aggregate turnover ₹ 4.00+5.00+0.7+0.6 = ₹ 10.30 lakhs. As per revised model law, value of non-taxable supply shall not be considered while calculating aggregate turnover as it is not provided in definition of aggregate turnover. Relevance of person having the same PAN Person having the same PAN means all the business entities of a person across India having the same Permanent Account Number (PAN) in Income Tax. For example, if a person is having, say 10 branch offices in different parts of a country under a same PAN filing single income tax return, his turnover for all such offices shall be aggregated for the purpose of aggregate turnover under GST. Exclusion from aggregate tu

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; in terms of section 55 (i.e., Special Procedure for Removal of goods for Certain Purposes) of model GST Law. The value of such goods shall not be included in the aggregate turnover of the registered job worker. Aggregate turnover under GST v. service taxation Aggregate turnover under GST regime includes value of all taxable supplies, exempt supplies, export of goods and inter-State supplies excluding taxes and turnover under reverse charge and inward supplies. While, in service tax, aggregate value means the sum total of value of taxable services charged in the first consecutive invoices issued during a financial year but does not include value charged in invoices issued towards such services which are exempt from whole of service tax lev

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 20-12-2016 – It is important to understand provision of GST law that when the registration is required like at what value of turnover , kind of person covered for registration, what are the situation where registration is required without the threshold limit means after the occurring of particular transaction or transaction by particular person. How the amendment in the registration could be effected and cancellation of the same. For applying of limit of ₹ 20 lacs or 10 lacs as per Schedule -V , one need to understand the definition of Aggregate Turnover provided in Section -2[6] of Revised MGL. Aggregate Turnover means aggregate value of all taxable supplies, exempt supplies, export of goods and or services and interstate supplies of a person having the same PAN , to be computed on all India basis and exclude taxes , if any, charged under CGST Act, SGST Act and IGST Act, as the case may be. Provision related to regi

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necessary. Person who does not fall under Schedule -V , may apply for registration voluntarily. Person having Permanent Account Number in Income Tax Act,1961 shall be eligible for registration as aforesaid. Person who is required to deduct tax u/s 46 will required to have TAN for the registration. Non resident taxable person can take registration under the law on the basis of other documents as may be prescribed. Any specialized agency like United Nation Organization and Multilateral Financial Institution, Organization notified under the United Nations ( Privilege and Immunity ) Act ,1947, Consulate or embassy of Foreign countries or any other person or class of person as notified shall obtain Unique Identification Number instead of regular number as may be prescribed including refund of taxes for the good and services received by them. Certificate of registration shall be issued in prescribed form with effective date. Registration or UIN shall be deemed to be granted with in such per

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rovision for Casual Taxable Person and Non Resident Taxable Person [ Sec. 24] Certificate issue to above both category shall be valid for days mentioned in the application or 90 days from the effective date of registration. which ever is earlier. But on request this period may be further extended for 90 days. Such taxable person at the time of seeking registration u/s 23 , make advance deposit of tax equivalent to the estimated liability of such person for the period of registration or extended registration. Amount deposited in 2 above shall be credited to his electronic cash ledger and shall be utilized in the manner specified in Section- 44. Amendment of Registration [ Sec.25] Every RTP shall inform the proper officer of any changes for information furnished at the time of registration or later on within the prescribed time. Proper Officer may approve or reject the information as submitted within the prescribed time. Proper officer will not reject the application unless reasonable op

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pression of fact, the PO may cancel the registration with retrospective effect subject to the provision of Section 37. The liability to pay tax of RTP in situation of such cancellation shall not be effected Every RTP whose registration is cancelled, pay liability by way of debit in electronic cash ledger, equivalent to the credit of input tax in respect of input held in stock of raw material, semi finished or finished goods on the day immediately proceeding to such cancellation or the output tax payable which ever is higher , as may be prescribed. In case of capital goods, taxable person shall pay an amount equal to the input taken on such goods reduced by the percentage point as prescribed or the tax transaction value of such goods which ever is higher. Revocation of Cancellation [ Sec. 27 ] In case of cancellation of registration by PO at his own motion, RTP may apply for revocation of cancellation within 30 days from the date of service of cancellation order. The PO after looking at

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registration like centralized registration. Ans; No , there is no concept of centralized registration in GST. In each State where the business is operating , person has to take registration in each State as per Sec.23[1]. Q-4 Weather the registration granted to one person is permanent? Ans; yes, unless surrendered or cancelled. Q-5 What is responsibility of taxable person while supplying to UN bodies? Ans; Taxable person shall write UIN on invoice and supply as registered taxable person.[ B2B] and the invoice will be uploaded by supplier. Q-6 Is it necessary for Govt. organization to get registration? Ans; UIN will be given by each State to Govt. Organization / PSU. Not making any outward supply of GST goods but making interstate purchases. Thus not liable to obtain GST registration . Q-7 Who is casual person? Ans; Casual taxable person has been defined under section 2[20] of Revised MGL. It means person occasionally undertake transaction involving supplies of goods or services in the

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Report on the Revenue Neutral Rate and Structure of Rates for the Goods and Services Tax (GST) – Goods and Services Tax – GST – Dated:- 19-12-2016 – Download Pdf File – News – Press release

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COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-II:- Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 19-12-2016 Last Replied Date:- 20-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN:- COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-II:- We discuss some other provisions pertaining to refund of tax in revised GST Law as follows:- A new sub-section 13 has been added in section 48 which states that refund of advance tax deposited by casual or non-resident taxable person shall not be allowed unless they have furnished all returns during their period of registration. Hence, refund of advance tax will be admissible only on filing of returns. New clauses have been inserted in the meaning of relevant da

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refund mechanism for return of goods in factory premises for repairing or reconditioning purpose but the old GST Law specifically mentioned relevant date for filing refund claim in such cases. However, it appears that the government realised the redundancy of the provision and has deleted the same. A new section 49 has been added for refund of taxes to any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and organisation notified under the United Nations (Privileges and Immunities) Act, 1947.It is possible that the conditions and restrictions may be specified separately for granting refund in such cases. Presently, there is You may visit us at www.capradeepjain.com https://www.facebook.com/GSTT

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COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-I:- Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 19-12-2016 – DAILY DOSE OF GST UPDATE BY CA PRADEEP JAIN COMPARATIVE ANALYSIS OF REFUND OF TAX IN REVISED GST LAW-PART-I:- Earlier old GST Law, the limitation of two years for filing refund claim was not applicable for amount paid under protest. This provision has been deleted in the revised GST Law thereby meaning that there will be no mechanism for paying tax under protest. A new provision for refund of tax by specialised agency of United Nations Organisation or any Multilateral Financial Institution or Embassy of foreign countries has been inserted which provides that such persons shall be entitled to refund of ta

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t. But, in revised GST Law, refund of unutilised input tax credit shall be allowed in cases of exports including zero rated supplies, in case of inverted duty structure but not in case of nil rated of fully exempt supplies. A new proviso has also been inserted to clarify that the refund of unutilised input tax credit shall not be allowed if the supplier of goods or services claims refund of output tax paid under IGST Act, 2016. This implies that the refund of unutilised credit will be allowed only in cases where the export is done under bond. If the export is done under rebate claim then the refund of unutilised credit will not be allowed. There is also change in provision regarding grant of refund claim on provisional basis. As per old GST

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if it is proved that the incidence of duty has not been passed on to other person. The concept of unjust enrichment is not applicable in certain situations like refund of tax on goods or services exported, refund of unutilised input tax credit etc. Now, a new clause has been added wherein refund of tax paid on a supply which is not provided, either wholly or partially and for which invoice has not been issued will also be sanctioned to the supplier and the principle of unjust enrichment would not apply in such cases. This provision is also beneficial to the assessees claiming refund of tax paid on supply which is cancelled or partially provided. We will discuss some other amendments made in the provisions relating to refund of tax in revis

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 17-12-2016 Last Replied Date:- 18-12-2016 – DAILY DOSE OF UPDATE BY CA PRADEEP JAIN COMPARATIVE ANALYSIS OF CHANGES MADE IN INPUT TAX CREDIT- PART-II:- This update seeks to highlight the changes made in the Revised GST Law as compared to the old GST Draft with respect to provisions relating to input tax credit as follows:- A list of exclusions has been provided wherein it is specified that the credit shall not be available for motor vehicles and other conveyances except when used for making taxable supplies like supply of such conveyances, transportation of passengers, imparting training or driving or for transportation of goods. There is no change in the above provision with the

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n term supply of similar nature . Suppose, a hotel take service of outward catering for marriage function of a client (Mandap Keeper service). Whether it will be treated as outward taxable supply of similar nature. Same will be the case of event management company. The credit of rent-a cab, life insurance, health insurance will also not be available unless Government notifies that such services are obligatory for an employer to provide to its employees under any law for the time being in force. The admissibility of credit when such services are availed under obligation is a welcome step and was not there in earlier law. With respect to availability of credit in special circumstances, where a registered person ceases to pay tax under composi

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an amount equal to input tax credit on capital goods reduced by the percentage points or tax on transaction value whichever is higher, in case of supply of capital goods or plant or machinery on which input tax credit has been taken. A new proviso has been added to provide that in case of refractory bricks, moulds and dies, jigs and fixtures supplied as scrap, taxable person may pay tax on transaction value of such goods. But the current Cenvat credit Rules provided for duty payment on value of scrap of all capital goods. But as per these new proposed provisions in revised draft GST Law, the duty is to be paid on such capital goods only even if they are scrap only. You may visit us at www.capradeepjain.com – Reply By Ganeshan Kalyani – The

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Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 17-12-2016 Last Replied Date:- 20-12-2016 – Tax Invoice by Input Service Distributor (ISD) Under section 17 of the model GST law, an Input Service Distributor (ISD) has to issue a prescribed document to distribute the credit. As per explanation to section 23 of model GST law dealing with tax invoice, it has been clarified that the expression tax invoice shall be deemed to include a document issued by an Input Service Distributor under section 17. Thus, an ISD will issue a document which will deemed to be a tax invoice. According to Rule 5(1) of draft GST Invoice Rules, tax invoice issued by an Input Service Distributor(ISD) shall contain the following details: name, address and GSTIN of the Input Service Distributor(ISD), a consecutive serial number containing only alphabets and/or numerals, unique for a financial year, date of its issue, following details: name, address, GSTIN of the supplier of services, the credit in

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red as tax invoice for supplies made by taxable person. Tax Invoice by Banking Company / Financial Institution / Non-banking Financial Company (NBFC) According to Rule 5(2) of draft GST Invoice Rules, where supplier of taxable service is a banking company or a financial institution including a non-banking financial company, such supplier shall issue a tax invoice or any other document in lieu thereof, by whatever name called, whether or not serially numbered, and whether or not containing the address of the recipient of taxable service but containing other information as prescribed under Rule 1 of draft GST Invoice Rules. Therefore, where the taxable person is banking company or a financial institution including a NBFC, issues documents containing prescribed particulars in lieu of tax invoice, then such documents shall be considered as tax invoice for supplies made by taxable person. Tax Invoice by Goods Transport Agency (GTA) According to Rule 5(3) of draft GST Invoice Rules, where su

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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 other prescribed information. It should also contain other information as prescribed under Rule 1. Tax Invoice by Passenger Transportation Service Provider According to Rule 5(4) of draft GST Invoice Rules, where supplier of taxable service is supplying passenger transportation service, a tax invoice shall include ticket in any form, by whatever name called, and whether or not containing the address of the recipient of service, but containing other information as prescribed under Rule 1. Thus, passengers tickets can also be considered as a tax invoice. – Reply By Ganeshan Kalyani – The Reply = Nice article sir. Even in the current tax regime the ingredient that an invoice should contain in enumerated in the Act/Rules. But due to lack of knowledge or any other reason some dealers do not incorporate the basic details that

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credit of CGST as IGST and IGST as IGST, by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed or being reduced thereafter, where the Distributor and the recipient of credit are located in different States. (CGST ACT) (1) The Input Service Distributor may distribute, in such manner as may be prescribed, the credit of SGST as IGST, by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed or being reduced thereafter, where the Distributor and the recipient of credit are located in different States. (SGST ACT) Further, at the time of writing this article, old model GST law was in force. As per revised model GST law, section 28 deals with provision related to tax invoice. Thanks and Regards, Sanjay Kumawat – Reply By Sanjeev Swain – The Reply = Respected Sir,As the date of your article is mentioned as 17/12/2016 aganist the new law release date of 25th November, I have writ

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 16-12-2016 Last Replied Date:- 19-12-2016 – First of all, one need to understand the definition of Job work under Revised GST law. After that it will be easier to understand the provision relating to supply of goods to job worker. Goods either input or capital goods can be directly send to Job worker and supply of input can be directly make from job worker place subject to the following provisions provided in Section- 55 of the Revised GST Law. Definition as per Section – 2[61] of Revised MGL. job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person and the expression job worker shall be construed accordingly It mea

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. Supply directly from there on payment of taxes within India or with or without payment of taxes for export as the case may be within the period stipulated above. Supply of goods from place of business of job worker within India with payment of taxes, with or without payment of taxes for export, as the may be. Provided the Principal declared the place of business of job worker his additional place of business. In the following cases the said provision shall not be applicable i] where the job worker is registered under Sec.23. ii] where the principal is supplying such goods as may be notified by commissioner in this behalf. The onus of prove for accountability of input and or capital goods shall be of Principal. Where the inputs sent for jo

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rker treated as supply of goods and liable to tax? No. supply of goods from RTP to job worker shall not be treated as supply of goods as per Sec. 43A. Whether the goods of principal directly supplied from Job worker s premises will be included in the turnover of Job worker? No. That will be added in the turnover of principal. What are the provision of taking ITC in respect of input/ capital goods sent to job worker? As per Section 20 of Revised MGL, Principal shall be entitled to take credit of input or capital goods. If the input or capital goods has not been received back within stipulated time of one year and three year respectively, ITC shall be paid. ITC can be claimed again as when the goods have been received. Are the provision of jo

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Goods and Services Tax – GST – By: – Sanjeev Singhal – Dated:- 16-12-2016 Last Replied Date:- 17-12-2016 – There is drastic change in the Capital Goods definition under Revised GST Law from GST Law. Under the GST law definition was very exhaustive though under the Revised GST law It is quite simple. Under GST law, Capital goods was defined under Section- 2(20) and Under CCR, 2004 the same was provided under Rule 2(a) and both the definition were almost same except some words here and there. But new definition under section 2(19) of Revised GST law is simple and rational. Now, We can go through all definition related to Input tax Credit under Revised GST Law to understand the input tax credit in detail. Definition of Capital Goods, Input and Input Services under revised GST Law Capital Goods -Sec. 2(19) Capital good means goods , the value of which is capitalized in the books of accounts of person claiming the credit which are used or intended to be used in the course or furtherance of

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penalty] and the said amount shall be credited to his ECL [electronic credit ledger]. Input tax credit for pipe line and telephone tower fixed to earth by foundation and structural support shall be available as follows: 1/3 in the first year when goods received 1/3 in the next year The balance in subsequent financial year No person can claim credit but subject to provision of sec. 36, except the following in possession:; Invoice or debit note Received the goods or services Tax charged on such supply has been paid to Government Person has filed the return u/s 34 Where the goods are received in installment or lots, ITC shall be available at the time receiving of final installment or lot. Recipient shall make the payment to supplier within three months from the date of invoice otherwise the ITC taken shall be added to the output tax liability with interest. Where the RTP has claimed depreciation as per Income Tax Act on cost of capital goods, ITC shall be denied. ITC shall not be allowed

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ove or take 50 of the eligible credit on input, capital goods and input services. E] Despite the provision of Sec. 16[1] and Section 18 [1][2][3][4] ITC shall not be available on the following; a] motor vehicle other conveyance except the following i] for making the following taxable supplies further supply of such vehicle or conveyance transporting of passenger imparting training on driving , flying ,navigating such vehicle or conveyance. ii] for transportation of goods b] supply of goods or service, namely Food and beverage, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, except when such inward supply of goods and services is used for output taxable supply of the same category of goods and services. Membership of club, health and fitness services Rent a cab, life insurance, health insurance Travel benefit extended to employee on vocation such as leave or home travel concession. C] work contract service when supply for construction of immovable prop

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under sec.9 , will be entitle to claim ITC on input, semi finished and finished goods and capital goods on immediately proceeding the day on which he is liable to pay tax. Provided that credit on capital goods shall be reduced by percentage point as prescribed. Where an exempt supply of goods and services by RTP becomes taxable, will be entitle to claim ITC on input, semi finished and finished goods and capital goods on immediately proceeding the day on which he is liable to pay tax. Provided that credit on capital goods shall be reduced by percentage point as prescribed RTP can not claim input tax credit under the above said sub sections after the expiry of one year from the date of invoice. Where there is change in the constitution of RTP on account of sale, merger, demerger, amalgamation , lease or transfer of the business, in such cases RTP shall be allowed to transfer the unutilized input to the sale, merger, demerger, amalgamation , lease or transferred business. RTP if switches

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year from the date of sent out. ITC can be claimed even if the goods directly sent to job worker. One year shall be computed from the date of receipt of material by Job worker. If the goods have not been returned within the stipulated period the same shall be treated as supply to job worker from the date of goods sent out. Principal subject to such condition as prescribed, entitled to take credit of ITC on capital goods sent to job worker. Credit shall be valid if such goods have been received back within three years of being sent out. ITC can be taken even if the capital goods directly received by job worker. If the capital goods have not been returned within the stipulated period the same shall be treated as supply to job worker from the date of capital goods sent out. The aforesaid period of one year or three year shall not be applied in case of moulds, dies, jigs and fixture, or tools sent out to job worker for job work. Manner of distribution of credit by Input Service Distributo

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n distribute the ITC subject to the following : only on prescribed document containing the details as prescribed. The amount of credit distributed can not exceed the amount of credit ITC can be distributed only to that recipient eligible. Can be distributed to attributable recipient. If more than one recipient, it shall be on pro rata based on the turnover of the state, of the relevant period. Recipient should be operational in that relevant period. Manner of recovery of credit Distributed in excess [Sec-22] Where the ISD distribute any credit without following the provisions of Sec. 21 resulting in excess distribution of credit , the same shall be recovered from such recipient along with interest, and the provision of sec. 66 or 67 [demand and recovery] shall apply mutatis mutandis for such recovery. FAQ ON INPUT TAX CREDIT Q. Can GST paid on reverse charge be considered as input tax A. Yes. The definition of input tax include tax payable under Sec. 8(3) which is reverse charge. The c

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ately proceeding the date from which he becomes liable to pay tax. Q. Weather the principal is eligible to take input on input sent to job worker? A. Yes. As prescribed in sec. 20[1]. Q. What is the recovery mechanism for wrongly availed credit. A. As per Sec.19 , the same shall be recovered from RTP as per the provision. – Reply By JAIPRAKASH RUIA – The Reply = ONE Recipient shall make the payment to supplier within three months from the date of invoice otherwise the ITC taken shall be added to the output tax liability with interest. Payment of tax part of invoice or full invoice amount ? If full Invoice amount, than what about part payment or 10% retention/PBG is kept. TWO Is it not contradictory that again the Definition of Capital Goods made very vide by saying used or intended to be used in the course or furtherance of business . and restricted as under in other portion by saying Despite the provision of Sec. 16[1] and Section 18 [1][2][3][4] ITC shall not be available on the foll

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Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 16-12-2016 Last Replied Date:- 19-12-2016 – COMPARATIVE ANALYSIS OF CHANGES MADE IN INPUT TAX CREDIT- PART-I:- This update seeks to highlight the changes made in the Revised GST Law as compared to the old GST Draft with respect to provisions relating to input tax credit as follows:- A new proviso in section 16(1) specifying the manner of credit availment in case of pipelines and telecommunication tower fixed to Earth has been inserted which states that the input tax credit shall not exceed one third in the financial year in which said goods are received. The assessee can further avail upto two third of the total credit in the year succeeding the year of receipt and the balance cre

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tion 17(2) which pertains to credit availment provision for persons effecting taxable supplies and exempt supplies. The provision states that the registered taxable person shall be eligible for availing input tax credit as is attributable to taxable supplies including zero rated supplies made by him. The explanation further clarifies that exempt supplies shall include supplies on which recipient is liable to pay tax under reverse charge mechanism. This has the effect that credit will not be available for supplies for which tax is payable by recipient under reverse charge mechanism. A special provision for banking company or financial institution has been proposed which is in line with the present provisions of Rule 6 of the Cenvat Credit Ru

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n capital goods is denied only if they are exclusively used in exempted goods/services but in the proposed GST law, there are provisions for credit reversal even in case of capital goods partly used for taxable and exempt supplies. We will draw your attention on the remaining changes made in input tax credit provisions in the revised GST Law in our next update. – Reply By Ganeshan Kalyani – The Reply = The clause discussed in point 2 states that credit would be allowed only if the payment to the service provider. Does this indirectly implies that only if receiver of service does the payment of the value of service render to the service provider, the service provider shall deposit the tax so charged on the invoice . What if he has collected

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Goods and Services Tax – GST – Dated:- 15-12-2016 – New Delhi, Dec 15 (PTI) As the Narendra Modi government wages its biggest war on black money yet, Chief Economic Advisor Arvind Subramanian on Thursday pitched for including land and real estate under the GST regime to check money laundering and corruption. Subramanian, who for the finance ministry had authored a report on possible tax rates under the Goods and Services Tax (GST), suggested that the new indirect tax set-up should be clean with simple low rates and should include land and property as well as electricity. GST, which the government intends to roll out from April 1, 2017, is to subsume central excise, service tax and state VAT among other indirect levies on manufactured goods

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cing of black money. So, it is terribly important that land and real estate being part of the GST, he added. Subramanian said there is need to bring electricity charges that are not done by the states under GST. I think they should be part of GST and then the input credit can flow and make power more competitive. So, in terms of GST, clean, simple low rates, land, property part of it, power part of it also, will actually be not just important in itself but as a complement to bigger fight against black money and corruption that we embark on, he said. Subramanian had recommended a three-tier rate structure for GST, under which some essential goods were to be taxed at a lower rate of 12 per cent and so-called demerit goods such as luxury cars,

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