Definitions, levy
and exemptions –
clause by clause
analysis
CA Dayananda K
Actionable
claim –
Section 2(1)
As defined in Section 3 of the Transfer of Property Act, 1882.
actionable claim" means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent;
Examples:
Unsecured loans
Unsecured retention amount
Unsecured deposits
Personal unsecured loans
Actionable claim
– Section 2(1)
Impact Points:
Definition of goods under Section 2(52) includes
actionable claim.
Schedule III – actionable claim is neither goods
nor service.
Address of Delivery (AOD) – 2(2) and
Address on Record (AOR) – 2(3)
AOD Means the address of the recipient
of goods or services or both indicated on
the tax invoice issued by the registered
person for delivery.
AOR means the address of the recipient as
available in the records of the supplier.
Recipient of
supply of
goods or
services or
both – 2 (93)
A. Where a consideration is payable – the
person who is liable to pay that
consideration
B. Where no consideration is payable – the
person to whom the goods are delivered or
made available or to whom possession or
use of the goods is given or made available;
or
C. If no consideration is payable for service –
the person to whom the service is rendered
Relevance of the
definition
For the proper determination of the place
of supply
Situation like “bill to” “ship to” case
Where HO wants all the bills to be
addressed centrally but goods to be
delivered throughout branches located in
more than one state, who will be the
recipient of goods?
For determination of export of service
Aggregate Turnover – 2
(6)
Means the aggregate value of all
taxable supplies (excluding inward
supplies on which tax is payable on
RCM basis), exempt supplies, exports
of goods or services or both and
inter-state supplies of persons having
the same PAN to be computed on all
India basis but excluding Central tax,
State tax, Union Territory tax,
integrated tax and cess
Relevance and
issue in
aggregate
turnover
For the purpose of determination of
turnover limit for registration
Composition supplier
Value of supply made by job worker to
principal who do not follow job work
procedure should be added to aggregate
turnover
Requirement for Annual audit- uses the
word turnover and not aggregate turnover
Assessment
2(11)
Meaning – determination of tax liability under
CGST Act and includes:
Self assessment
Re assessment
Provisional assessment
Summary assessment; and
Best judgment assessment
Questions:
- What is the period of assessment? Is it monthly or
yearly ?
- What is the type of determination of tax by the
appellate authority?
Associated
Enterprises 2(12)
List of associated
enterprises as per Section
92A of the IT Act
Applicability:
If supplied to associated
enterprises – apply
valuation rules
Audit 2(13)
Means the examination of records, returns and
other documents maintained or furnished by the
registered person under this Act or the rules made
thereunder or under any other law for time being in
force to verify the correctness of turnover declared,
taxes paid, refund claimed and input tax credit
availed, and to assess his compliance with the
provisions of this Act or the rules made thereunder
Authorised
Representative
2(15)
Means as defined in Section 116:
a) Relative or regular employee
b) Advocate
c) CA, cost accountant and company secretary
d) Retired officer of the commercial tax department
of any state government or union territory or of
the Board and worked not below the rank of
Group B Gazetted officer for not less than 2 years
e) Authorized to practice as GST practitioner
Restriction: If a person is declared as guilty of misconduct by the prescribed
authority, he cannot appear under CGST or SGST or UTGST before any
authority in any State for “life time”.
Business
2(17) –
Includes
Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity whether or not for a pecuniary benefit;
Any transaction or activity in connection with or incidental or ancillary to above;
One time activity of the nature specified above
Supply or acquisition of goods including capital goods and service in connection with commencement or closure of business
Provision by a club, association, society or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
Admission for a consideration of persons to any premises
Services supplied by a person as the holder of any office which has been accepted by him in the course or furtherance of his trade, profession or vocation
Services provided by a race club by way of totalisator or a license to book maker in such club; and
Any activity or transaction undertaken by the Central/ State govt, local authority in which they are engaged as public authorities
Business – Issues
Conversion of personal asset into business
asset?
Introduction of capital asset by an
individual to a firm
Amount payable by a person towards
goodwill of a firm.
Business Vertical
2(18)
A distinguishable component
of an enterprise that is
engaged in the supply of
individual goods or services
or a group of related goods
or services which is
subjected to risks and returns
that are different from those
of other business verticals
Basis of
classification
Nature of goods or services – Eg.
consumer goods and industrial goods
Nature of production process
Type of class of customers – wholesale
and retail
Methods used to distribute goods or
supply services – own show room or
distributor channel
Nature of regulatory environment –
Insurance, banking, etc.
Capital Goods 2(19)
The value of which is capitalized in the
books of account of the person claiming
input credit and which are used or
intended to be used in the course or
furtherance of business
Applicability and Issue:
Any asset can be classified as capital goods
Examine the input credit restrictions given in
Section 17(5) to avail the credit on capital goods
If a capital asset is charged off fully, whether input
credit will be allowed?
Casual
Taxable
Person 2(20)
A person who occasionally undertakes transactions
involving supply of goods or services or both in the
course or furtherance of business, whether as principal,
agent or in any other capacity in a state or a Union
territory where he has no fixed place of business
Implications:
Compulsory registrations for casual taxable person.
Persons participate in exhibition cum sale
Conducting events, entertainments, etc.
Issues
Whether registration in particular State is
required when a person of different State
sources and supplies in the same State?
In case of just in supply concepts, where
suppliers keep goods in transporters
warehouse for a short period would
require registration in such state?
Composite supply
2 (30)
A supply made by a taxable person to
a recipient consisting of two or more
taxable supplies of goods or services
or both, or any combinations 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
Examples Supply of goods with additional charge
for transportation, insurance, packing,
loading etc.
Supply and installation of machinery
Medical consultancy and dispensary
(provided both are taxable)
Residential school
Issues
Accounting by the receiver based on line
item
Classification/ accounting code of the
ancillary goods or services may be
different and hence there could be
mismatch
Works contract Vs composite supply
Consideration
2(31) –
Includes
Any payment made or to be made, whether in money or
otherwise, in respect of, in response to, or for the
inducement of, the supply of goods and or services,
whether by the said person or by any other person;
The monetary value of any act or forbearance, whether
or not voluntary, in respect of, in response to, or for the
inducement of, the supply of goods and or services
whether by the said person or by any other person;
Provided that a deposit whether refundable or not, given
in respect of the supply of goods and or services shall
not be considered as payment made unless the supplier
applies the deposit as consideration for the supply.
Exclusion: Subsidy by the Government
Money 2 (75)
The Indian legal tender or any foreign
currency, cheque, promissory note, bill of
exchange, letter of credit, draft, pay order,
traveller cheque, money order, postal or
electronic remittance or any other instrument
recognized by the RBI when used as a
consideration to settle an obligation or
exchange with Indian legal tender of another
denomination but shall not include any
currency that is held for its numismatic value
Issues
Whether incentive by the Government to
set up the industry is a consideration?
Whether MEIS/ SEIS and duty drawbacks
are consideration for inducing export and
hence liable for GST?
Whether exchange between two foreign
currency is not money?
Continuous supply of
goods 2(32)- Means
A supply of goods which is provided or agreed to
be provided continuously or on recurrent basis,
under a contract, whether or not by means of wire,
cable, pipeline or other conduit and for which the
supplier invoices the recipient on a regular or
periodic basis and includes supply of such goods as
the Govt may subject to such condition, as it may,
by notifications specify
Example and
Issues
Where contract is for the supply of 1000 bags of cement per month for a period of one year to be supplied 30 bags daily, whether this would fall under CSG?
Whether stock transfer to the C & F location can be billed once a month?
Whether goods to the job worker (without following provisions of Section 143) can be billed periodically?
Whether provisions of Section 31(1) is not applicable (invoice to be prepared either before or at the time of removal)?
Continuous
Supply of
Service -
2(33)
A supply of services which is provided or agreed to be
provided continuously or on recurrent basis, under a contract,
for a period exceeding 3 months with a periodic payment
obligations and includes supply of such services as the Govt.
may subject to such conditions, as it may, by notifications
specify
Examples:
Works contract services
Retainer services
Consultancy services
Renting of commercial
properties
Relevance:
For the purpose of raising
invoice
Follow the provision given in
Section 31(5) to raise invoice
If due date for invoice is not
ascertainable, then invoice should
be raised for the payment
received.
Credit Note
2(37)and
Debit Note
2(38)
A document issued by a registered person
under section 34(1) and 34(3) respectively
Conditions:
Should be issued by the supplier only
Should contain the particulars as notified
Difference in value
Sales return
Deficiency in the service or goods supplied
Difference in rate of tax
Issues
How to remove the goods without invoice from the premises of purchaser in case of purchase return (section 31)?
If credit note to be issued for sales return, who will issue the E way bill if buyer has rejected without recording in his books of account?
Can the advance be returned by way of debit note? (Please refer Section 54(8)(c)
Exception to credit note for purchase return- Proviso to Section 142(1)
Electronic Commerce 2(44) and E commerce operator 2(45)
The supply of goods or services or
both including digital products over
digital or electronic network. S- 2(44)
Means any person who owns, operates
or manages digital or electronic facility
or platform for electronic commerce.
S-2(45)
Relevance
Compulsory registration.
TDS compliance
Books of account – special requirements
Persons not having place of business in particular state – appoint agents
Read provisions of Section 9(5) of CGST Act and Section 5(5) of the
IGST Act
Exempt supply 2(47)
Supply of any goods or services or both which attracts NIL rate of tax or which may be wholly exempt from tax under Section 11 or under Section 6 of the IGST Act and includes non taxable supply – CGST Act
Supply of any goods or services or both which attracts NIL rate of tax or which may be wholly exempt from tax under Section 8 or under Section 6 of the IGST Act and includes non taxable supply – UTGST Act
No definition under IGST Act
Non taxable
supply 2(78)
A supply of goods or services or both which is not
leviable to tax under this Act or under the IGST Act.
Relevance and Issue:
Composite dealer should not deal in goods not leviable to tax under
this Act
Aggregate turnover as well as turnover in State includes non taxable
supply
Should petroleum and liquor be added to the turnover and reported
in monthly report?
Existing law
2(48)
Any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having power to make such law, notification, order, rule or regulation
Relevance:
Determination of quantum of transition credit
Point of taxation of advances received in the current
regime
Transition issues such as sales return, purchase return,
refunds, litigation, demand etc.
Read Section 143
Issue
When service tax on advance is already paid
under existing law and VAT was not paid, how to
pay VAT portion alone under GST?
Fixed Establishment 2(50)
A place (other than the registered place
of business) which is characterised by a
sufficient degree of permanence and
suitable structure in terms of human and
technical resources to supply services, or
to receive and use services for it’s own
needs
Relevance
To determine the place of supply.
Requires to decide the registration
in the particular State
Site office for a period say 9
months/ one year would be held as
fixed establishment.
Working in third party premises for
a long period- will it be a fixed
establishment?
Goods 2(52)
Every kind of movable property other
other than money and securities but
includes actionable claim, growing
grass and things attached to or
forming part of the land which are to
be severed before supply or under a
contract of supply
Service 2(102)
Anything other than goods, money
and securities but includes activities
relating to the use of money or its
conversion by cash or by any other
mode, from one form, currency or
denomination, to another form,
currency or denomination for which a
separate consideration is charged
Relevance
To determine the point of taxation
Classification and Rate of tax
To determine the correct place of supply
of goods / service
To fulfill other compliances such as
maintenance of books, invoices etc.
Read the list of goods and services
notified in Schedule II and neither goods
nor service in Schedule III
Issue
Whether sale of land is service?
Whether sale of office building with
interiors and furniture would need a split?
India 2(56)
The territory of India as referred to in
article 1 of the Constitution, its territorial
waters, seabed and sub soil underlying
such waters, continental shelf, exclusive
economic zone or any other maritime
zone as referred to in the Territorial
Waters, Continental Shelf, Exclusive
Economic Zone and other Maritime
Zones, Act and the air space above its
territory and territorial waters
Relevance
To determine the export and import of
goods or services or both.
Supply of goods to and from territorial
waters.
Cloud services
Input- 2(59)
and Input
service 2(60)
Any goods other than the capital goods used or
intended to be used by a supplier in the course or
furtherance of business – 2(59)
Any service used or intended to be used by a
supplier in the course or furtherance of business -
2(60)
Supplier
2(105)
In relation to any goods or services or both, shall
mean the person supplying the said goods or
services or both and shall include an agent acting as
such on behalf of such supplier in relation to the
goods or services or both supplied
Relevance:
For transition purposes- refer section 139 to 142
Refer Section 16, 17, 18 and 19
Input service
distributor -
2(61) means
An office of the supplier of goods or
services or both which receives tax invoices
issued under Section 31 towards the receipt
of input services and issues a prescribed
document for the purposes of distributing
the credit of central tax, state tax, integrated
tax or union territory tax paid on the said
services to a supplier of taxable goods or
services or both having the same PAN as
that of the said office
Relevance
Whether for the same address, ISD and supplier registration can be taken?
When supplier is registered in multiple states, whether the credit should be transferred to multiple States?
Instead of ISD, can the full credit be taken by one supplier and raise invoice on other distinct persons?
Whether payment criteria (within 180 days) is applicable either to the ISD or to the recipient?
Who has to report the payment details in GSTR-2?
Input Tax
2(62)
In relation to a registered person means the central tax,
state tax, integrated tax or union territory tax charged on
any supply of goods or services or both made to him and
includes-
The integrated GST charged on import of goods
Tax payable under the provisions of Section 9(3) and 9(4)
of CGST
The tax payable under the provisions of Section 5(3) and
5(4) of the IGST Act
The tax payable under the provisions of Section 9(3) and
9(4) of the respective State GST
Tax payable under Section 7(3) and 7(4) of the UTGST
Exclusion: Tax paid under composition
Input tax
continued -
2(g) of GST
(Compensatio
n to States)
Bill
Cess charged on any supply of goods or
services or both made to him;
Cess charged on import of goods and
includes cess payable on reverse charge basis
Inward Supply
2(67)
In relation to a person
shall mean receipt of
goods or services or both
whether by purchase,
acquisition or any other
means with or without
consideration
Outward
Supply 2(83)
In relation to a taxable person means supply of
goods or services or both , whether by sale, transfer,
barter, exchange, license, rental, lease or disposal or
any other mode, made or agreed to be made by
such person in the course or furtherance of business
Issues
The meaning of inward supply is much wider than outward supply
Whether goods received for repair or testing should be reported as inward supply under Section 38?
Outward supply is restricted to taxable person and for inward supply, it is person
Contentious issue: Movement of goods between URDs for job work and other purposes and job worker to registered person without complying with the job work procedure
Whether relinquishment of asset is outward supply?
Any other mode is not included in Section 7 (meaning and scope of supply)
Job Work
2(68)
Any treatment or process undertaken by a person on
goods belonging to another registered person and the
expression “job worker” shall be construed accordingly
Interpretation:
If a registered person undertakes job work to un
registered person, is it not job work?
Whether repair, testing etc., will fall within the meaning
of job work?
Whether an unregistered job worker can provide job
work to a registered person located in another State
who complies with the procedure under Section 143?
Whether job worker can add his own material?
Location of
the recipient
of services
2(70)
Where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;
Where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such establishment
Where a supply is received in more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and
In the absence of such places, the location of the usual place of residence of the recipient
Relevance and
Issue
Decides the type of taxes (IGST or
CSGST/SGST) to be charged
Read Section 7(3) and 12 of the IGST Act
Same definition given in Section 2(14) of
the IGST Act
If a person opens a branch but not
included in the certificate within the
stipulated time, the input credit may not be
available for the supply made up to the
date of amendment under Section 28
Issues
Whether fixed establishment means the
establishment of recipient or may also
include third party?
Location of
the supplier
of service
2(71)
Where a supply is made from a place of business for which the registration has been obtained, the location of such place of business;
Where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment
Where supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and
In the absence of such places, the location of the usual place of residence of the supplier
Issues
When Section 25(2) states that a single
registration will be granted per State for a
person, whether it will really matters if
supply is made from a place not added as
additional place under Section 28?
Manufacture 2(72)
Processing of raw material or
inputs in any manner that results
in emergence of a new product
having a distinct name, character
and use and the term
“manufacturer” shall be
construed accordingly
Relevance
Job work Vs Manufacture
If the activity undertaken does not
amount to manufacture, whether the
department will demand a complete
reconciliation of inputs and outputs?
May end up classification and rate of
tax dispute
Composition levy Vs Manufacture
Market value
2(73)
Shall mean the full amount which a recipient of a
supply is required to pay in order to obtain the goods
or services or both of like kind and quality at or
about the same time and at the same commercial
level where the recipient and the supplier are not
related.
Relevance and Issues:
The same is applicable only when consideration cannot be ascertainable or
transaction between related parties or distinct persons
Valuation rules uses the word “open market value”
In case of high sea sale, whether the GST officers can dispute the value?
Whether the market value includes the GST taxes payable on like goods?
Mixed Supply 2(74)
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
Examples:
Various marketing schemes – bundled unrelated products
Sale of school bag, water bottle and stationery for one
price
Relevance
Definition is applicable only for taxable
person.
It relates to rate of tax and not valuation-
Read Section 8(b)
If different price is shown for each
product but bundled, revenue may demand
highest rate of tax for all the products
Non resident
Taxable
Person 2(77)
Any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India.
Legal requirement: Compulsory registration under Section 24
Examples:
Providers of online data base and retrieval services
Companies undertaking turnkey projects in India but executing through
agents
Arranging supply within India but without having place of business
Supply of manpower through other agencies in India for a project in
India
Non resident participating in exhibition cum sale
Non taxable
supply 2(78)
A supply of goods or services or both which is not
leviable to tax under this Act or under the IGST Act.
Importance:
It means there will be common list of goods for IGST and
CGST
If goods are exempt under CGST or IGST, will it be
exempt under IGST or CGST respectively?
Exempt supplies include non taxable supply
Eg: Petroleum products, liquor, transaction in immovable
property
Non Taxable
Territory
2(79) and
Taxable
Territory
2(109)
Means the territory which is outside the taxable
territory 2(79)
Means the territory to which provisions of this Act
apply 2(109)
Issues:
What tax should be charged when invoice raised on J
& K?
Is high sea sale to a buyer in J & K liable for IGST
(Section 7(2)?
Notification
2(80)
A notification published in the Official
Gazette and the expression “notify” and
“notified” shall be construed accordingly
Issue: Refer Section 11- Exemptions-
discussed separately
Output tax
2(82)
In relation to a taxable person means the tax
chargeable under this Act on taxable supply of
goods or services or both made by him or by his
agent but excludes tax payable by him on reverse
charge basis.
Same definition under UTGST- 2(7)
Similar definition under IGST
Points to Note:
An output tax paid by a supplier will not be an automatic input tax to
buyer.
Tax will be output tax when it is payable by a registered taxable person
as well as liable to be registered person
Inclusive tax concept is not available.
Person 2(84)
Includes an individual,
HUF,
a company,
a firm,
a LLP,
an AOP or a BOI, whether incorporated or not, in India or outside India,
any corporation established by or under any Central Act or Provincial Act or a Government Company as defined in Section 2(45) of the Companies Act,
any body corporate incorporated by or under the laws of a country outside India,
a co-operative society registered under the law relating to co-operative societies,
local authority,
Central or a State Govt, society, trust and every artificial judicial person not falling within any of the above
Relevance
An inclusive definition.
Receiver may be liable to pay GST when
supply received from some of the persons
Please refer Section 7 as well as Schedule
III
Issue
Whether firm and partner would be held
as two different persons to tax the salary
received as well as share of profit?
Place of
business 2(85)
includes
A place from where the business is ordinarily
carried on, and includes a warehouse, a
godown or any other place where a taxable
person stores his goods, supplies or receives
goods or services or both; or
A place where a taxable person maintains his
books of account; or
A place where a taxable person is engaged in
business through an agent, by whatever name
called
Issues
Whether the BPO office would be held as
place of business?
Whether work site is a place of business?
Whether a transporter godown would be
held as place of business?
Whether customs bonded warehouse
could be held as place of business?
Place of
supply 2(86)
As per Chapter V of the IGST Act
Principal
Supply 2(90)
The supply of goods or services which
constitutes the predominant element of a
composite supply and to which any other
supply forming part of that composite
supply is ancillary
Issue:
Whether principal supply provision will help
industry in overcoming the issues under job work
or repair?
Registered
person 2(94)
Means a person who is registered under
Section 25 but does not include a person
having a Unique Identity Number
Regulations –
2(95)
The regulations made by the Board under
this Act on the recommendations of the
Council
Removal
2(96)
In relation to goods-
Dispatch of the goods for delivery by the
supplier thereof or by any other person
acting on behalf of such supplier; or
Collection of goods by the recipient thereof
or by any other person acting on behalf of
such supplier.
Relevance: Time of supply, place of supply,
invoicing etc.
Reverse
charge 2(98)
The liability to pay tax by the recipient
of supply of goods or services or both
under sub section (3) or sub section (4)
of section 9, or under sub section (3)
or sub section (4) of section 5 of the
IGST Act.
Issues
When a person cannot undertake inter-state supply without registration, how such transaction should be taxed under RCM?
Is it necessary to pay the supplier within 180 days to get the credit?
In case of purchase return, whether tax to be reversed?
IGST payable on import falls outside the meaning of RCM and hence Time of supply is not applicable for advance payment to import
Revisional
authority
2(99)
An authority appointed or authorised
for revision of decision or orders as
referred to in section 108
State 2(103) –
includes
“a Union territory with Legislature”.
Telecommuni
cation service
2(110)
Service of any description (including
electronic mail, voice mail, data services,
audio text services, video text services, radio
paging and cellular mobile telephone
services) which is made available to users by
means of any transmission or reception of
signs, signals, writing, images and sounds or
intelligence of any nature, by wire, radio,
visual or other electromagnetic means
Turnover in a
State or UT
2(112)
The aggregate value of all taxable supplies
(excluding the value of inward supplies on
which tax is payable by a person on reverse
charge basis) and exempt supplies made
within a State or UT by a taxable person,
exports of goods or services or both and
inter-state supplies of goods or services or
both made from the State or UT by the said
taxable person but excludes Central tax, State
tax, UT tax, integrated tax and cess
Usual place
of residence
2(113)
In case of an individual, the place
where he ordinarily resides;
In other cases, the place where the
person is incorporated or otherwise
legally constituted
Voucher
2(118)
An instrument where there is an obligation
to accept it as consideration or part
consideration for a supply of goods or
services or both and where the goods or
services or both to be supplied or the
identities of their potential suppliers are
either indicated on the instrument itself or in
related documentation, including the terms
and conditions of use of such instrument
Issues
Stock transfer of voucher to HO-
identifiable goods?
Misplacement of above vouchers during
transportation?
Whether the purchase of voucher from
individuals would be held as URD
purchase?
Whether stock to be maintained for the
vouchers?
Works
contract
2(119)
A contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alternation or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract
Also read: Declared service- entry number 6(a) in Schedule II
Issues
Works contract Vs Construction service
Whether pure labour contract for the works contract is a works contract?
Whether electrical contract of a building- Works contract?
Construction contract with detailed break up for material and labour would be held as composite supply or mixed supply or works contract?
Supply and installation of air conditioning would be classified as composite supply or works contract?
Relevance
There is no classification rule between
composite supply Vs works contract and
hence may lead to litigation
When the works contractor ends up with
refund due to rate difference (majority of
input GST @ 28% and output GST @
18%), whether the department will classify
the whole activity as composite supply and
deny refund and claim additional tax?
Levy –
Section 9 of
CGST
All intra state supplies of goods or services
or both
Exception – alcoholic liquor for human
consumption
On the value as determined under Section 15
of the CGST
At such rate not exceeding 20%
Power of notification of rate of tax has been
given to Govt on the recommendation of
Council
Temporary
break
Petroleum crude
High speed diesel
Motor spirit
Natural gas
Aviation turbine fuel
Note: IGST Act also has excluded the
above products from the levy
Issues
Whether entry tax and excise duties will
continue on the excluded products?
What type of tax to be charged on inter-
state sale of excluded goods?
Reverse levy-
specified goods
or services
Government may notify the list of goods or services or both based on the recommendation of Council – 9(3)
On such recommended supplies- recipient shall pay
All the provisions of the Act in respect of levy, collection, invoicing etc., shall apply to the recipient
Similar provisions under IGST Act- Section 5(3)
Reverse Charge-
Supply of goods and services or
both by an un registered to a
registered supplier – shall be paid by
the registered supplier on RCM-
Section 9(4).
Similar provisions under Section 5(4)
of IGST Act
Issues
Whether Section 9(3) is applicable
for URD’s also?
The invoice of URD in the
prescribed manner has to be
prepared by the recipient.
Classification issue.
Whether additional input credit will
be denied if department disputes the
classification?
Levy-supply of
service through e
com
The Govt may notify on the recommendation of the Council, the list of services supplied intra state through e commerce operator- E commerce operator will be liable to pay GST.
If the e commerce operator does not have any presence in the state, then the person representing such e commerce operator for any purpose in the taxable territory shall be liable to pay tax.
Similar provisions under Section 5(5) of the IGST Act and 7(5) of UTGST
Relevance
Applicable for certain services only.
Who operates within the state without physical presence
As per the second proviso to Section 9(5), if they do not have physical presence, they have to appoint the agent in “taxable territory”.
Issue
A courier person acting for the e
commerce for supply of goods can
be held responsible for supply of
services
Whether an e commerce operator
belong to a foreign country should
appoint agents in each State if they
want to operate within that state?
Exemptions-
Section 11
The Central Govt can grant the exemption on the recommendation of the Council by way of notification
Exemption may be absolute or subject to certain conditions
Specified description of goods or services or both
Exemption may be wholly or partly from the levy of CGST
Notification will specify the effective date of exemption
Exemption-
section 11
Exemption can also be granted
on special situation by way of
order
Special situation must be an
exceptional nature
The order should specify such
exceptional nature
Effect of
exemption
notification
To explain the scope of exemption either
issued generally or under exceptional
circumstances- an explanation can be
inserted within a period of one year by
way of notification.
Effect of such explanation- retrospective
If any exemption from the CGST is given
absolutely, the supplier shall not collect tax
in excess of effective rate.
Similar provision exists under Section 6 of
the IGST Act
Issues
Whether goods exempt under
CGST Act also exempt under
IGST Act?
When it is not exempt under
IGST Act, whether the input
credits can be availed?