GST Fully Ammended Book For CA Final Nov 19 PDF

First fully amended book
of Goods & Services Tax
AMENDED ON THE BASIS OF ICAI STATUTORY

AMENDMENTS FOR NOVEMBER 2019 EXAM
Complete Syllabus in
378 pages
238 EXAMPLES
&
404 QUESTIONS &
ANSWERS
CA Amit Jain's
C A final idt Part I
Goods & services
ta x
UPDATED FOR NOVEMBER 2019
CA Amit Jain is renowned faculty of Narayan Commerce Academy.
He is rank holder CA and 2nd Global Rank Holder in Professional
Gateway Exam of CIMA, UK.
He is also qualified Diploma in IFRS (ACCA, UK), Diploma in Business
Finance, Certificate in Derivatives.
He is ex Top Management personnel of Multinational and Indian
companies with practical experience of GST implementation in Big
Corporate. He is ex-member of IMA CFO forum.
GST Bare Act Pages 120

V/s
Direct Tax Bare Act Pages 1065
Direct Tax Faculty coaching hours ~ 200 hours then
How can IDT coaching takes ~220 hours?
Do you know, you can complete entire CA Final
IDT in ~ 180 to 200 hours including self-study!
S. ABC Page
Theme No. Particulars Example Q&A
Analysis No.
1 GST in India - An Introduction A 0 10 1
Door of 2 Supply under GST A 30 18 22
GST 3 Charge of GST A 2 32 38
4 Exemptions from GST B 0 22 61
5 Place of Supply A 68 11 93
Core of 6 Time of Supply A 8 20 113
GST 7 Value of Supply A 25 26 126
8 Input Tax Credit A 47 38 147
9 Registration A 11 19 192
10 Tax Invoice, Credit & Debit Notes B 7 10 211
11 Accounts & Records; E-way Bill B 3 26 225
Compli- 12 Payment of Tax B 8 6 243
ances, 13 Returns B 0 10 258
14 Import & Export under GST A 4 10 270
Proce-
15 Refunds A 3 15 280
dures
16 Job Work B 0 13 296
Aspects
17 Assessment & Audit A 2 17 300
18 Inspection, Search, Seizure and Arrest B 1 10 309
&
19 Demands & Recovery A 6 33 315
Miscellan 20 Liability to pay tax in certain cases B 2 7 330
eous 21 Offences & Penalties A 7 8 334
22 Appeals & Revisions A 3 32 344
23 Advance Ruling A 1 7 363
24 Miscellaneous Provisions C 0 4 367
Total 238 404 378
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All the sections & rules mentioned in this study notes, are CGST Act 2017 & CGST Rules 2017 until specified
as IGST Act or IGST Rules.
For sub-section ‘( )’ is being used. In some of the sections, sub-sections had not been mentioned since it will
be difficult for students to memorize all the sub-sections.
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Study Notes
1
Overall Structure of GST

Deficiency in the earlier Indirect Tax Regime
Benefits of GST
Framework of GST in India
Constitutional Provision
Selected Definitions Under Section 2 of CGST Act, 2017
Selected Definitions Under Section 2 of IGST Act, 2017
The implementation of Goods & Services Tax (GST) in India was historical move, as it marked a significant
indirect tax reform in the country.
World has moved towards Goods & Services Tax long ago. After 16 years of its opposition, India has moved
into GST on 1st July 2017 (in J & K, it was made applicable from 8th July 2017).
Earlier in India, with its federal structure, there were parallel systems of indirect taxation at the central and state
levels. The assignment in the Constitution, of power to tax, provided the framework for evolution of the taxation
system in India.
GST is a consumption-based tax. Origin based tax is one which is levied where goods/services are produced.
Conversely, a consumption-based tax is one which is levied where goods/services are consumed. Tax will
accrue to State where goods/services are ultimately consumed.
GST is based on value added tax concepts of allowing input tax credit of tax paid on inputs, inputs services and
capital goods, for payment of output tax. This will avoid cascading effect of taxes.
CA Amit Jain {CA, CIMA (UK), DIFRS (ACCA, UK), DBF, Cert. in Der.}
Ex-Top Management (CFO/FC) of Multi National & Indian Companies
2
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CA Final
Overall structure of GST Syllabus
CGST &
• Broadly there is 2 forms of GST in India: - IGST Act
➢ For supplies within the State or Union Territory –
a) Central Tax (Central GST i.e. CGST) is payable to Central Government and
b) State Tax (State GST i.e. SGST) or Union Territory Tax (Union Territory GST i.e. UTGST) is
payable to State Government or Union Territory. Area upto 12 nautical miles inside sea is part
of State or Union Territory which is nearest. Delhi & Puducherry have their own legislatures and
they have passed their own SGST Act.
CGST Act, 2017 is the main Act which covers all important provisions relating to GST,
like tax liability, input tax credit, valuation for payment of tax, procedures, appeals
penalties, offences, transitory provisions etc.
SGST ACT of each State is mainly copy of CGST Act passed by Central Government,
except changing reference from Central Tax to State Tax, Central Authorities to State
Authorities etc.
➢ For inter-State supplies (supply from one State or Union Territory to another State or Union Territory),
Integrated Tax (Integrated GST i.e. IGST) is payable to Central Government. IGST is to basically
ensure seamless movement of goods across the country as taxes will move along with goods.
IGST is imposed under IGST Act. IGST is intermediary tax and revenue from IGST will be apportioned
among Union and States by Parliament on basis of recommendation of Goods & Service Tax Council.
IGST is unique concept nowhere else been tried in the world.
• In addition, GST compensation Cess will be payable on pan masala, tobacco products, coal, aerated
waters, motor cars etc.
• The rates of IGST – NIL, 0.1%, 0.25%, 3%, 5%, 12%, 18% & 28%. In case of supply within State, CGST
will be 50% of IGST Rates and SGST/UTGST for supply within the State or Union Territory will be 50% of
IGST rates.
• Though tax is payable to both Central Government and State Government/Union Territory Administration,
control will be exercised either by State Government/Union Territory Authorities or Central Government
Authorities. This will avoid dual control.
• Central Excise duty will continue on petroleum products i.e. petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural gas and aviation turbine fuel. These products are out of GST
at present and may be brought under GST later.
• Alcoholic liquor for human consumption is subject to State duty. This product is outside the GST.
• Tobacco products will be subject to excise duty plus GST.
• Distinction between goods and services will be considerably reduced except in cases relating to place of
supply and time of supply. This will considerably reduce ambiguities and litigations.
• Check posts at State borders have been abolished, however road checks to check e-way bills have been
introduced.
• Under GST, a taxable person can establish hub and spoke approach for distribution of his final products.
He can maintain depots at few strategic locations in country and from those locations, he can distribute
goods to nearby States. This will be very cost-effective distribution network.
GST Bare Act Pages 120 V/s Direct Tax Bare Act Pages 1065
Direct Tax Faculty coaching hours ~ 200 hours why IDT classes takes at least ~220 hours?
Call 93249 33998 to order pendrive available separately in English & Hindi
Study Notes
3
Deficiency in the earlier Indirect tax regime

1. Non-inclusion of several levies in state VAT such as luxury tax, entertainment tax etc.;
2. Cascading effect of taxes on account of
(i) levy of Non-Vatable CST and
(ii) inclusion of CENVAT in the value for imposing VAT;
3. No Cenvat available after manufacturing stage;
4. Non-integration of VAT & Service Tax;
5. Certain items were subject to double taxation i.e. both goods & services.
Benefits of GST
1. Creation of Unified National Market;
2. Mitigating Cascading Effects;
3. Elimination of multiple taxes & double taxation;
4. Boost to Make in India initiative;
5. Increase in Revenue.
How GST Works (‘No Tax on Tax’ in GST)

Particulars Manufacturer Wholesaler Retailer
Purchase 100.00 110.00 120.00
Profit 10.00 10.00 10.00
Consideration 110.00 120.00 130.00
Add
CGST@ 9% 9.90 (110*9%) 10.80 (120*9%) 11.70 (130*9%)
SGST@ 9% 9.90 (110*9%) 10.80 (120*9%) 11.70 (130*9%)
Invoice Value 129.80 141.60 153.40
Output Tax Payable {A} 19.80 21.60 23.40
Input Tax {B} 0.00 19.80 21.60
Net Tax Payable {A-B} 19.80 1.80 1.80
Net Tax Payable = Value Addition * Tax Rate
For Wholesaler = 10 {Profit/Value Addition} * 18% = 1.80
For Retailer = 10 {Profit/Value Addition} * 18% = 1.80
Framework of GST in India

➢ Dual GST: - India has adopted a Dual GST model in view of the federal structure of the country. Centre &
States will simultaneously levy GST on taxable supply of goods or services or both, which takes place within
a State or Union Territory.
4
➢ CGST/SGST/UTGST/IGST:-
Central Goods & State Goods & Service Union Territory Goods Integrated Goods &
Service Tax Act, 2017 Tax Act, 2017 & Service Tax Act, Service Tax Act, 2017
2017**
CGST SGST UTGST IGST
Levied on Inter-State
Levied on Intra-State Supply Supply
**Andaman & Nicobar Islands, Lakshadweep, Dadra & Nagar Haveli, Daman & Diu and
Chandigarh are Governed by UTGST. Delhi & Puducherry have their own legislative so had
passed respective SGST Act.
Though there are multiple SGST legislations, the basic features of law, such as chargeability,
definition of taxable event and taxable person, classification & valuation of goods & services,
procedure for collection and valuation of goods and services, procedure for collection & levy of
tax and the like are uniform in all the SGST legislations, as far as feasible. This is necessary to
preserve the essence of dual GST.
➢ HSN (Harmonized system of nomenclature) code is used for classifying the goods, under the GST. New
Service Accounting codes has been devised to take care of services.
➢ Registration: - Threshold limit of aggregate turnover for exemption from registration and payment of GST
for suppliers of services would be Rs. 20 lakhs and Rs. 10 lakhs (for States of Manipur, Mizoram, Nagaland
and Tripura). Threshold limits of aggregate turnover for exemption from registration and payment of GST
for the suppliers of goods (exclusive) is increased to Rs. 40 lakhs (not applicable on all States) with effect
from 01.04.2019. Please refer to registration chapter for details.
➢ Composition Scheme: -To provide relief to small businesses, composition scheme had been prescribed.
➢ Seamless flow of credit: - Since GST is destination-based consumption tax, revenue of SGST ordinarily
accrues to the consuming states. The revenue of inter-State sales doesn’t accrue to the exporting State.
➢ GST Common Portal (www.gst.gov.in managed by GSTN)
Facilitating Forwarding Computation Matching of Providing Providing

Registration the returns to & settlement tax payment various MIS analysis of
Central & of GST details with reports to the taxpayers’ profile;
State banking Central & the and running the
Authorities network State matching engine
Government for matching,
based on the reversal and
taxpayer reclaim of input
return tax credit
information
There is separate portal for generating e-way bill.
Study Notes
5
➢ Compensation Cess: - A GST Compensation Cess at specified rate has been imposed under the Goods
& Services Tax (Compensation to States) Cess Act, 2017 on the specified luxury items or demerit goods,
like pan masala, tobacco, aerated waters, motor cars etc., computed on value of taxable supply.
Compensation Cess is leviable on intra-State & inter-State supplies
➢ GST-A Tax on goods & Services: - GST will be levied on all supply of goods & services except: -
➢ Taxes subsumed in GST: -

Central levies to be subsumed State levies to subsumed
• Central Excise Duty & Additional Excise Duties • State surcharges and cesses in so far as they
• Service Tax relate to supply of goods & services
• Excise Duty under Medicinal & Toilet • Entertainment Tax (except those levied by
Preparation Act local bodies)
• CVD & Special CVD • Tax on lottery, betting and gambling
• Central Sales Tax • Entry Tax (All Forms) & Purchase Tax
• Central surcharges and Cesses in so far as • VAT/ Sales tax
they relate to supply of goods & services • Luxury Tax
• Taxes on advertisements
6
Constitutional Provision
Article 246A – Newly Inserted
Special provision w.r.t GST

► Grants power to Parliament and State Legislatures to make laws w.r.t GST.
► Exclusive power conferred on Parliament for making laws w.r.t GST, where the supply of goods, or of
services, or both takes place in the course of inter-State trade or commerce.
► Provisions of this Article shall apply with respect to GST on petroleum crude, high speed diesel (‘HSD’),
motor spirit, natural gas and aviation turbine fuel (‘ATF’) from the date recommended by GST Council.
► Parliament’s exclusive power to make laws on any matter not enumerated in Concurrent / State List shall
be subject to Article 246A.
Article 246 – It gives the respective authority to Union & State Governments for levying tax. Whereas
Parliament may make laws for the whole of India or any part of the territory of India, the State Legislature may
make laws for whole or part of State. Seventh Schedule to Article 246 contain 3 lists which enumerate the
matters under which the Union and the State Governments have the authority to make laws.
List I Union List List II State List List III Concurrent List
It contains the matters in respect It contains the matters in It contains the matters in
of which the Parliament (Central respect of which the State respect of which both the
Government) has the Government has the Central & State Governments
exclusive right to make laws. exclusive right to make laws. have power to make laws.
Entries 82 to 91 of List I
enumerate the subjects where the Entries 45 to 63 of List II
Central Government has power to enumerate the subjects where the
levy taxes. State Governments have the
Income tax is levied by virtue of power to levy taxes. Parliament
Entry 82 - Taxes on income other has a further power to make any
than agricultural income and law for any part of India not
Customs duty vide Entry 83 - comprised in a State even if such
Duties of customs including matter is included in the State
export duties of the Union List. List.
Article 249 – Power of Parliament to legislate with respect to a matter in the State List in the national interest.
Study Notes
7
Article 250 – Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of
Emergency is in operation.
Levy and collection of GST in course of inter-State trade or commerce

► GST on supplies in the course of inter-State trade or commerce shall be levied and collected by the
Government of India and apportioned between the Union and the States in the manner as may be
provided by Parliament by law on the recommendations of the GST Council.
► Supply of goods and/or services in the course of import shall be deemed to be supply in the course of
inter-State trade or commerce.
► Amount apportioned to a State shall not form part of Consolidated Fund of India.
► Where an amount collected as tax under this Article has been used for payment of the tax levied by a
State, such amount shall not form part of the Consolidated Fund of India.
► Where an amount collected as tax levied by a State has been used for payment of the tax levied
under this Article, such amount shall not form part of the Consolidated Fund of the State.
► Parliament may, by law, formulate the principles for determining the place of supply, and when a
supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
Article 270 – Amendment
► Article 270 is amended to provide for distribution of the goods and service tax between the Centre
and the States, by order of the President after considering recommendations of the Finance
Commission.

► Surcharge can be levied on certain duties and taxes for purposes of the Union except on GST under
Article 246A.
Goods and Service Tax Council

► President shall, within 60 days from the date of commencement of the Constitution (101st Amendment)
Act, 2016, by order, constitute a Council to be called the GST Council.
► GST Council shall consist of the following members:
Union Finance Minister (Chairperson);
Union Minister of State in charge of Revenue or Finance (Member);
Minister in charge of Finance or Taxation or any other Minister nominated by each State Government
(Members)
Members of the GST Council shall, as soon as may be, choose one amongst themselves to be the
Vice-Chairperson of the Council.
GST Council shall make recommendations to the Union and the States on the following:
✓ Taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be
subsumed in GST;
✓ Goods and services that may be subjected to, or exempted from GST;
✓ Model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-
State trade or commerce under article 269A and the principles that govern the place of supply;
✓ Threshold limit of turnover below which goods and services may be exempted from GST;
✓ Rates including floor rates with bands of GST;
✓ Any special rate or rates for a specified period, to raise additional resources during any natural calamity
or disaster;
✓ Special provision with respect to the States of Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand and Jammu and Kashmir; and
✓ Any other matter relating to GST, as the Council may decide;
GST Council shall recommend the date on which GST be levied on petroleum crude, HSD, motor spirit
(commonly known as petrol), natural gas and ATF.
While discharging the functions conferred by this Article, GST Council shall be guided by the need
8
for a harmonized structure of GST and for the development of a harmonized national market for
goods and services.
1/2 of the total number of members of GST Council shall constitute the quorum at its meetings.
GST Council shall determine the procedure in the performance of its functions.
Every decision of GST Council shall be taken at a meeting, by a majority of not less than 3/4th of the
weighted votes of the members present and voting, in accordance with the following principles,
namely:
✓ Vote of the Central Government shall have a weightage of 1/3rd (33.33%) of the total votes cast,
✓ Votes of all the State Governments taken together shall have a weightage of 2/3rd (66.67%) of the total
votes cast, in that meeting.
Thus, practically, Central Government has veto powers. Any decision in GST council cannot be taken
without consent of Central Government.
No act or proceedings of GST Council shall be invalid merely by reason of—

✓ Any vacancy in, or any defect in, the constitution of the Council; or
✓ Any defect in the appointment of a person as a member of the Council; or
✓ Any procedural irregularity of the Council not affecting the merits of the case.
GST Council shall establish a mechanism to adjudicate any dispute—

✓ Between the Government of India and one or more States; or
✓ Between the Government and any State or States on one side and one or more other States on the
other side; or
✓ Between two or more States,
arising out of the recommendations of the Council or implementation thereof.
Restrictions as to imposition of tax on the sale or purchase of goods

► The words “sale or purchase of goods where such sale or purchase takes place” are substituted with
“supply of goods or of services or both, where such supply takes place”

Following new clauses to be inserted:
► Clause 12A – “goods and service tax” defined to mean any tax on supply of goods, or services or both
except taxes on the supply of the alcoholic liquor for human consumption;
► Clause 26A – “Services” to mean anything other goods;
► Clause 26B – “State” with reference to Articles 246A, 268, 269, 269A and Article 279A includes a
Union territory with Legislature.
Powers of Parliament to amend the Constitution and procedure thereof

► If amendment (2/3rd of majority in each house) seeks to make any change in Article 279A (relates to
GST Council) then it shall also require ratification by the Legislatures of not less than one-half of the
States by resolutions to that effect passed by those Legislatures before the Bill making provision for
such amendment is presented to the President for assent.
Seventh Schedule [Article 246] – Amendment
List I – Union List

► Entry No 84 to be substituted as under: -
Duties of excise on the following goods manufactured or produced in India, namely
✓ Petroleum crude;
✓ High Speed Diesel;
Study Notes
9
✓ Motor Spirit (Commonly known as petrol)

✓ Natural Gas
✓ Aviation Turbine Fuel; and
✓ Tobacco and tobacco products
► Earlier entry no 84 included duties of excise on tobacco and other goods manufactured or produced in
India excluding alcoholic liquor for human consumption, opium, Indian hemp and other narcotic drugs
and narcotics but including medicinal and toilet preparations containing alcohol or opium.
► Following entries shall be deleted:
Entry No 92 – Taxes on the sale or purchase of newspapers and on advertisements published therein
Entry No 92C – Taxes on services
List II – State List

► Entry No 54 to be substituted as under:
Taxes on the sale of petroleum crude, HSD, motor spirit (commonly known as petrol), natural gas,
ATF and alcoholic liquor for human consumption, but not including sale in the course of inter-State
trade or commerce or sale in the course of international trade or commerce of such goods.
Earlier it included taxes on the sale or purchase of goods other than newspapers, subject to the
provisions of entry 92A of List I.
► Entry No 62 to be substituted as under:
Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a
Municipality or a Regional Council or a District Council.
Earlier it included taxes on luxuries, including taxes on entertainments, amusements, betting and
gambling.
► Following entries shall be deleted:
Entry No 52 – Taxes on the entry of goods into a local area for consumption, use or sale therein.
Entry No 55 – Taxes on advertisements other than advertisements published in the newspapers and
advertisements broadcast by radio or television.
Clause 18 - Compensation to States for loss of revenue on account of implementation of GST

Parliament shall, by law, on the recommendation of GST Council, provide for compensation to the States for
loss of revenue arising on account of implementation of GST for a period of 5 years.
Clause 20 - Power of President to remove difficulties

If any difficulty arises in giving effect to the provisions of the Constitution, the President may make such
amendments, as necessary or expedient for the purpose of removing the difficulty. However, no such order
shall be made after the expiry of 3 years from the date of such assent.
Section 2 of CGST Act, 2017 – Definitions under GST (below

number in ‘( )’ are sub-section of Section 2)
(1) “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property
Act, 1882;
It must be noted that ‘Actionable claims’ is specifically included in the definition of goods. Transactions of
actionable claims, other than lottery, betting & gambling shall be treated neither as a supply of goods nor a
supply of services as per Para 6 of Schedule III of CGST Act, 2017.
(2) “address of delivery” means the address of the recipient of goods or services or both indicated on
the tax invoice issued by a registered person for delivery of such goods or services or both;
“address of delivery’ is relevant to determine place of supply of goods (other than imports/exports).
(3) “address on record” means the address of the recipient as available in the records of the supplier;
This is relevant to determine place of supply. In case of supplies made by a registered person to an un-
registered person (except in relation to those services where the place of supply has been specifically
provided under the law) shall be the address on record available in the records of the supplier.
(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision
10
under this Act, but does not include the Central Board of Excise Indirect Taxes and Customs, the Revisional
Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate
Authority and the Appellate Tribunal and the Authority referred to in sub section (2) of section 171;
(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent,
an auctioneer or any other mercantile agent, by whatever name called, who carries on the business
of supply or receipt of goods or services or both on behalf of another;
Agent can work purely on commission basis. Even e-commerce companies like Flipkart, Amazon and Uber
may be covered in some situations. But the relevance of being an agent is more pronounced while
examining whether a transaction between a principal and agent is itself a supply under para 3, schedule I
(Chapter 2 of this book). Very often, the word agent or agency is used without necessarily implying that the
transaction is one of agency as understood under Indian Contract Act such as, recruitment agency, travel
agency etc. Care must be taken to identify whether the parties intended to constitute an agency as
understood in law and nothing less.
(6) “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of
inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies,
exports of goods or services or both and inter-State supplies of persons having the same
Permanent Account Number, to be computed on all India basis but excludes central tax, State tax,
Union territory tax, integrated tax and cess;
The phrase “aggregate turnover” is widely used under the GST laws. Aggregate Turnover is an all-
encompassing term covering all the supplies effected by a person having the same PAN. It specifically
excludes:
• Inward supplies effected by a person which are liable to tax under reverse charge mechanism; and
• Various taxes under the GST law, Compensation cess.
(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of
land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or
the personal supervision of any member of the family;
An individual/HUF undertaking cultivation of land which is not owned by him would be regarded
as an agriculturist. Agriculturist providing taxable supplies need to confirm that the aggregate turnover is
not exceeded when taking a decision not to register. Everyone who owns agricultural property will not
ipso facto be eligible for exemption from registration because other taxable supplies may necessitate
registration.
(8) “Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section
107;
(9) “Appellate Tribunal” means the Goods and Services Tax Appellate Tribunal constituted under section 109;
(11) “assessment” means determination of tax liability under this Act and includes self-assessment, re-
assessment, provisional assessment, summary assessment and best judgment assessment;
(12) “associated enterprises” shall have the same meaning as assigned to it in section 92A of the
Income-tax Act, 1961;
‘Associated enterprise’ is referred to only in the context of time of supply of services where the supplier is
an associated enterprise (located outside India) of the recipient ( reverse charge attracted under sec 9(3)).
It may be noted that in addition to associated enterprise, the Act also defines ‘related person’, the reference
to which is made in the context of deemed supply (Schedule I) and valuation.
(16) “Board” means the Central Board of Excise and Customs constituted under the Central Boards of Revenue
Act, 1963;
(17) “Business” includes––

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit;
Study Notes
11
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the
course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club;
activities of a race club including by way of totalisator or a license to book maker or activities of a
licensed book maker in such club; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities;
The term business has been defined in an inclusive manner. This definition is very wide and
covers all the transactions that were previously subjected to various taxes that are being subsumed
in the GST Laws.
This definition of business is important since levy is on supplies undertaken in the course or
furtherance of business.
Profit motive is irrelevant. Thus, occasional transactions are subject to GST.
Incidental or ancillary activities taxable i.e. sale of used car, sale of scrap, sale of old machinery,
sale of old furniture etc. is subject to GST, though normally the taxable person may not be in
business of selling cars, furniture or machinery.
‘Wager’ is also included in the definition of business to impose GST on betting transactions;
Government activities excluding sovereign functions are also subject to GST.
Clause (g) deals with services supplied by a holder of an office. Hence, if a practicing CA is
appointed as an independent director of a company, it means that he accepts this office of
directorship in the course or furtherance of his professional practice. Any service provided by
him as an independent director to the company appointing him shall be regarded as business.
(18) “business vertical” means 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 subject to
risks and returns that are different from those of the other business verticals.
Explanation. –For the purposes of this clause, factors that should be considered in determining
whether goods or services are related include––
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking, insurance,
or public utilities;
(19) “capital goods” means goods, the value of which is capitalised in the books of account of the
person claiming the input tax credit and which are used or intended to be used in the course or
furtherance of business;
An attempt has been made to align the meaning of capital goods to the generally accepted standards of
accounting of what is considered as revenue and what as capital.
(20) “casual taxable person” means 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;
Example, Mumbai registered taxable person participate in exhibition in ‘Delhi’.
The threshold limits for registration would not apply to casual taxable person and he would be
required to obtain registration irrespective of his turnover.
(31) “consideration” in relation to the supply of goods or services or both includes––

(a) 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 or services or both, whether by the recipient
12
or by any other person but shall not include any subsidy given by the Central Government or
a State Government;
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient or by any
other person but shall not include any subsidy given by the Central Government or a State
Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not
be considered as payment made for such supply unless the supplier applies such deposit as
consideration for the said supply;
Non-refundable deposit will be part of consideration. Consideration is not the amount that the
recipient pays but the amount that the supplier collects whether from the recipient or third Party.
Clause (b) example:- (a) An amount paid as contractual penalty for non-supply of goods on timely basis
could be treated as “monetary value of forbearance” and therefore, may be considered as consideration
for applicability of GST. (b) Penalty charges on early termination of an agreement could be treated as
“monetary value of any act” and therefore, may be considered as consideration.
(32) “continuous supply of goods” 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 a 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 Government may, subject to such
conditions, as it may, by notification, specify;
Example: Open purchase orders with daily delivery schedule (Just In Time Approach) subject to
acceptance tests only at the time of issue-for-production and understanding of fortnightly billing.
(33) “continuous supply of services” means a supply of services which is provided, or agreed to be
provided, continuously or on recurrent basis, under a contract, for a period exceeding three months
with periodic payment obligations and includes supply of such services as the Government may,
subject to such conditions, as it may, by notification, specify;
Example: Licensing of software or brand names, renting of immovable property etc.
(34) “conveyance” includes a vessel, an aircraft and a vehicle;
(39) “deemed exports” means such supplies of goods as may be notified under section 147;
(42) “drawback” in relation to any goods manufactured in India and exported, means the rebate of duty,
tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in
the manufacture of such goods;
The definition of Drawback is relevant when refund of Input Tax Credit is claimed. The law provides
that refund of unutilized input tax credit will not be allowed if the supplier has availed drawback of
such tax.
.
(44) “electronic commerce” means the supply of goods or services or both, including digital products
over digital or electronic network;
(45) “electronic commerce operator” means any person who owns, operates or manages digital or
electronic facility or platform for electronic commerce;
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or
which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods
and Services Tax Act, and includes non-taxable supply;
(48) “existing law” means 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 the power to make such law, notification, order, rule or
regulation;
This covers all the existing Central & State Laws, relating to levy of tax on goods or services like
Central Excise Law, Service tax law, State VAT Laws etc. Therefore, laws that don’t levy tax or duty
on goods or services i.e. the Indian Stamp Act, 1899 would not be covered here.
Study Notes
13
(49) “family” means, ––

(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person;
(50) “fixed establishment” means a place (other than the registered place of business) which is
characterized 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 its own needs;
Temporary presence of staff in a place by way of a short visit to a place or so doesn’t make that
place a fixed establishment. The definition is relevant to determine where the taxable person should
obtain GST registration in particular State.
(52) “goods” means every kind of movable property other than money and securities but includes
actionable claim, growing crops, grass and things attached to or forming part of the land which are
agreed to be severed before supply or under a contract of supply;
Actionable claims are goods under GST. Intangibles like copyright and carbon credit would continue
to be covered under ‘goods.
The item must be such that it is capable of being bought or sold. This is the test of ‘Marketability’. The
goods must be known in the market. Unless this test of marketability is satisfied, these will not be goods.
This view, expressed in judgements. It was held that to become ‘goods’ an article must be something
which can ordinarily come to market to be bought and sold.
(56) “India” means 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, 1976, and the air space above its territory and territorial waters;
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the
course or furtherance of business;
(60) “input service” means any service used or intended to be used by a supplier in the course or
furtherance of business;
(61) “Input Service Distributor” 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 Permanent Account Number as that of the said office;
The law doesn’t provide any limit of offices to be registered as ISD.
(62) “input tax” 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—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated
Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective
State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union
Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
Input tax also includes reverse charge.
Input credit of cess can only be utilised for discharging the liability on such cess.
(63) “input tax credit” means the credit of input tax;
(67) “inward supply” 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;
(68) “job work” means any treatment or process undertaken by a person on goods belonging to another
14
registered person and the expression “job worker” shall be construed accordingly;
(69) “local authority” means––

(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to,
or entrusted by the Central Government or any State Government with the control or management of
a municipal or local fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
(f) a Development Board constituted under article 371 and article 371J of the Constitution; or
(g) a Regional Council constituted under article 371A of the Constitution;
(70) “location of the recipient of services” means, -

(a) where a supply is received at a place of business for which the registration has been obtained,
the location of such place of business;
(b) 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 fixed establishment;
(c) where a supply is received at 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; &
(d) in absence of such places, the location of the usual place of residence of the recipient;
(71) “location of the supplier of services” means, -

(a) where a supply is made from a place of business for which the registration has been obtained,
(b) where a supply is made from a place other than the place of business for which registration has
(c) where a 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
(d) in absence of such places, the location of the usual place of residence of the supplier;
(72) “manufacture” means 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;
It is important for composition levy and maintenance of accounts. For deemed exports, one pre-
condition is that the goods in question must be manufactured in India.
(73) “market value” 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;
(75) “money” means 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 recognised by the Reserve Bank of India 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;
Money is out of the scope of taxation under GST. Supply of currency held for its numismatic values
will be liable to GST.
(77) “non-resident taxable person” means any person who occasionally undertakes transactions
involving supply of goods or services or both, whether as principal or agent or in any other capacity,
but who has no fixed place of business or residence in India;
The law had not defined the word ‘occasionally’.
(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax
under this Act or under the Integrated Goods and Services Tax Act;
It includes petroleum products, alcoholic liquor for human consumptions.
Study Notes
15
(79) “non-taxable territory” means the territory which is outside the taxable territory;
(80) “notification” means a notification published in the Official Gazette and the expressions “notify” and
“notified” shall be construed accordingly;
(81) “other territory” includes territories other than those comprising in a State and those referred to in
sub-clauses (a) to (e) of clause (114);
(82) “output tax” 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;
(83) “outward supply” in relation to a taxable person, means supply of goods or services or both,
whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode,
made or agreed to be made by such person in the course or furtherance of business;
The phrase ‘outward supply’ can be applied to a supply only when such supply is made in the course
or furtherance of business i.e. business assets are put to personal use. In such a case, even the
transaction is deemed to be a supply (made without consideration), it can’t be treated as an ‘outward
supply’, since the application of the business asset for personal use was neither in the course nor
Supplies not qualifying as outward supplies would also be included for the purpose of computing the
‘aggregate turnover’.
Details of supplies on which tax is payable, but which do not amount to ‘outward supplier’ would also
have to be declared in the return for outward supplies (GSTR-1)
(84) “person” includes—

(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or
outside India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a
Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
(h) anybody corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
(85) “place of business” includes––

(a) 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
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name
called;
(86) “place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods
and Services Tax Act;
(88) “principal” means a person on whose behalf an agent carries on the business of supply or receipt
of goods or services or both;
(89) “principal place of business” means the place of business specified as the principal place of
business in the certificate of registration;
16
(92) “Quarter” shall mean a period comprising three consecutive calendar months, ending on the last
day of March, June, September and December of a calendar year.
(93) “recipient” of supply of goods or services or both, means—

(a) where a consideration is payable for the supply of goods or services or both, the person who is
liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, 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; and
(c) where no consideration is payable for the supply of a service, the person to whom the service is
rendered, and
any reference to a person to whom a supply is made shall be construed as a reference to the recipient
of the supply and shall include an agent acting as such on behalf of the recipient in relation to the
goods or services or both supplied;
(94) “registered person” means a person who is registered under section 25 but does not include a
person having a Unique Identity Number;
(96) “removal’’ in relation to goods, means—

(a) despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf
of such supplier; or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such
recipient;
(98) “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or
both instead of the supplier of such goods or services or both under sub-section (3) or sub-section
(4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and
Services Tax Act;
(101) “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956;
Securities such as shares, scrips, stocks, bonds, debentures, debenture stock are neither treated
as goods nor as services, by way of a specific exclusion in the respective definitions. ITC is not
available for transactions in securities.
(102) “services” means anything other than goods, money & 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;
Explanation.––For the removal of doubts, it is hereby clarified that the expression “services”
includes facilitating or arranging transactions in securities;
Though definition of ‘service’ can cover even immovable property, sale of land and sale of completed
building has been excluded from definition of goods or services.
The definition of ‘service’ is so broad that practically sky is the limit for imposing any tax by Union or
State Governments.
Securities were excluded from the definition of both goods and services. But it is to clarify that though
securities are excluded from definition of services but transaction in securities will be included.
Although industry is already charging GST on these transaction.
Whether Whether
Particulars
Goods? Services?
Every kind of movable property ✓ 
Growing crops, grass & things attached to or forming part of the land ✓ 
which are agreed to be severed before supply or under a contract of supply
Anything other than goods  ✓
Money  
Transaction in money {for conversion separate consideration is charged}  ✓
Actionable Claim {lottery, betting & gambling} ✓ 
Securities  
Facilitating or arranging transaction in securities  ✓
Study Notes
17
(103) “State” includes a Union territory with Legislature;

Delhi & Puducherry are states since they have legislature although they are Union Territory.
(105) “supplier” 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;
(107) “taxable person” means a person who is registered or liable to be registered under section 22 or
section 24;
(108) “taxable supply” means a supply of goods or services or both which is leviable to tax under this
Act;
(109) “taxable territory” means the territory to which the provisions of this Act apply;
(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable
supplies (excluding the value of inward supplies on which tax is payable by a person on reverse
charge basis) and exempt supplies made within a State or Union territory by a taxable person,
exports of goods or services or both and inter-State supplies of goods or services or both made
from the State or Union territory by the said taxable person but excludes central tax, State tax,
Union territory tax, integrated tax and cess;
The ‘turnover in state’ (including UT) is a reproduction of the expression ‘aggregate turnover’, but
for the fact that ‘turnover in state’ is restricted to the turnover of a taxable person, whereas
aggregate turnover is PAN-based (i.e., turnover of all taxable persons having the same PAN,
across States). It is important term for ‘composition scheme’ & for ‘ISD’.
(113) “usual place of residence” means––

(a) in case of an individual, the place where he ordinarily resides;
(b) in other cases, the place where the person is incorporated or otherwise legally constituted;
(114) “Union territory” means the territory of—

(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli;
(d) Daman and Diu;
(e) Chandigarh; and
(f) other territory.
Explanation. -For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f)
shall be considered to be a separate Union territory;
(117) “valid return” means a return furnished under sub-section (1) of section 39 on which self- assessed
tax has been paid in full;
(118) “voucher” means 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;
Loyalty points credited to digital wallet is not supply of vouchers as no consideration is paid for the same.
It is only a form of discount which can be availed in future transaction. It is the form of actionable claim.
(119) “works contract” means a contract for building, construction, fabrication, completion, erection,
installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or
commissioning of any immovable property wherein transfers of property in goods (whether as
goods or in some other form) is involved in the execution of such contract;
This is limited to immovable property but contract must include transfer of property. A contract in
relation to movable property, however would be treated as a ‘composite supply’ of goods or
services depending on the principal supply.
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Section 2 of IGST Act, 2017 – Definitions under GST (below

number in ‘( )’ are sub section of Section 2)
(3) “continuous journey” means a journey for which a single or more than one ticket or invoice is
issued at the same time, either by a single supplier of service or through an agent acting on behalf of
more than one supplier of service, and which involves no stopover between any of the legs of the
journey for which one or more separate tickets or invoices are issued.
Explanation. - For the purposes of this clause, the term “stopover” means a place where a passenger
can disembark either to transfer to another conveyance or break his journey for a certain period in
order to resume it at a later point of time;
(5) “export of goods” with its grammatical variations and cognate expressions, means taking goods out
of India to a place outside India;
Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India.
(6) “export of services” means the supply of any service when, -

(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign
exchange or in Indian Rupees wherever permitted by the Reserve Bank of India; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct
Person in accordance with Explanation 1 in section 8;
This amendment allows receipt of payment in Indian Rupees in case of export of services wherever
permitted by the RBI. This is obviously a taxpayer-friendly measure.
(7) “fixed establishment” means 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 its own needs;
(10) ‘‘import of goods” with its grammatical variations and cognate expressions, means bringing goods
into India from a place outside India;
(11) ‘‘import of services” means the supply of any service, where––

(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India;
(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who
arranges or facilitates the supply of goods or services or both, or securities, between two or more
persons, but does not include a person who supplies such goods or services or both or securities
on his own account;
(14) “location of the recipient of services” means, ––

(a) where a supply is received at a place of business for which the registration has been obtained,
(b) where a supply is received at a place other than the place of business for which registration has
(c) where a supply is received at 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
(d) in absence of such places, the location of the usual place of residence of the recipient;
(15) “location of the supplier of services” means, ––

(a) where a supply is made from a place of business for which the registration has been obtained,
(b) where a supply is made from a place other than the place of business for which registration has
(c) where a supply is made from more than one establishment, whether the place of business or
Study Notes
19
fixed establishment, the location of the establishment most directly concerned with the provision
of the supply; and
(d) in absence of such places, the location of the usual place of residence of the supplier;
(16) “non-taxable online recipient” means any Government, local authority, governmental authority, an
individual or any other person not registered and receiving online information and database access
or retrieval services in relation to any purpose other than commerce, industry or any other business
or profession, located in taxable territory.
Explanation. –For the purposes of this clause, the expression “governmental authority” means an
authority or a board or any other body, –
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with ninety per cent. or more participation by way of equity or
control, to carry out any function entrusted to a Panchayat under article 243 G or a municipality under
article 243W of the Constitution;
(17) “online information and database access or retrieval services” means services whose delivery
is mediated by information technology over the internet or an electronic network and the nature of
which renders their supply essentially automated and involving minimal human intervention and
impossible to ensure in the absence of information technology and includes electronic services
such as, –
(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles through telecommunication
networks or internet;
(iv) providing data or information, retrievable or otherwise, to any person in electronic form through
a computer network;
(v) online supplies of digital content (movies, television shows, music and the like);
(vi) digital data storage; and
(vii) online gaming;
Question & Answer

Q1. Enumerate the places that may be covered or included under the scope of ‘place of business’?
A. Place of business would include the following places: -
a. place from where business is ordinarily carried on,
b. warehouse,
c. godown,
d. any other place used for storing goods or place to provide or receive goods or services by taxable
person,
e. place where books of accounts are maintained by taxable person (it may be place of business of
agency or professional)
f. place from where a taxable person is engaged in business through agent by whatever name called (like
commission agent, C & F agent, consignment agent etc.)
It will include any one or more or all of the aforementioned place.
Q2. Whether ‘securities’ are goods or services?

A. It may be noted that in terms of Section 2(52) of CGST Act, 2017, securities are not considered as goods.
According to Section 2(102), they are also not covered under services.
Q3. What is agricultural produce?

A. As per Notification No. 12/2017 – Central Tax (Rate), ‘agricultural produce’ means any produce out of
cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fiber, fuel, raw
material or other similar products, on which either no further processing is done or such processing is done as
20
is usually done by a cultivator or producer which does not alter its essential characteristics but makes it
marketable for primary market.
Q4. Discuss how GST resolved the double taxation dichotomy under previous indirect tax laws.
A.
• A comprehensive tax structure covering both goods and services viz. Goods and Service Tax (GST)
addresses these problems. Simultaneous introduction of GST at both Centre and State levels has
integrated taxes on goods and services for the purpose of set-off relief and ensures that both the
cascading effects of CENVAT and service tax are removed and a continuous chain of set-off from the
original producer’s point/ service provider’s point upto the retailer’s level/ consumer’s level is
established.
• In the GST regime, the major indirect taxes have been subsumed in the ambit of GST. The erstwhile
concepts of manufacture or sale of goods or rendering of services are no longer applicable since the
tax is now levied on “Supply of Goods and/or services”.
Q5. What is the difference in between ‘Nil rated’, ‘Zero rated’ supply of goods and services?
Ans. There exist a difference between a ‘Nil rated” and a ‘Zero rated’ supply as per GST law.
‘Nil rated supply’ means a supply of goods or services which has Nil rate in tariff or exempt by notification.
‘Zero rated supply’ means a supply of goods or services for export or to SEZ units {Section 16 of IGST}.
Q6. List the class of officers that the Government can appoint, by notification, under the CGST Act, 2017.
Ans. The Government shall, by notification, appoint the following classes of officers for the purposes of this
Act, namely:–
(a) Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax,
(b) Chief Commissioners of Central Tax or Directors General of Central Tax,
(c) Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax, (d)
Commissioners of Central Tax or Additional Directors General of Central Tax,
(d) Additional Commissioners of Central Tax or Additional Directors of Central Tax,
(e) Joint Commissioners of Central Tax or Joint Directors of Central Tax,
(f) Deputy Commissioners of Central Tax or Deputy Directors of Central Tax,
(g) Assistant Commissioners of Central Tax or Assistant Directors of Central Tax, and
(h) any other class of officers as it may deem fit:
Provided that the officers appointed under the Central Excise Act, 1944 shall be deemed to be the officers
appointed under the provisions of this Act
In this regard, Government has issued following notifications-
i. Notification No. 2/2017-Central Tax, Dated 19-Jun-2017 to appoint Central Tax officers and assign
their jurisdiction.
ii. Notification No. 14/ 2017-Central Tax, Dated 1-Jul-2017 to appoint the officers in the Directorate
General of Goods and Services Tax Intelligence, Directorate General of Goods and Services Tax and
Directorate General of Audit.
Q7. Is there any provision for cross empowerment of officers of State and Central Government under GST?
Ans. Yes. As per Section 6 (1) of CGST Act, 2017, the officers appointed under the SGST / UTGST Act are
authorised to be the proper officers for the purposes of CGST/IGST Act, subject to such conditions as the
Government shall, on the recommendations of the Council, by notification, specify. Similar provisions in the
SGST/UTGST Act empower the central government officials to be the proper officers under the SGST/UTGST
Act.
Study Notes
21
Q8. ABC Furnisher, registered under GST, has been served a demand order under GST by Central GST
Officer. Does ABC Furnishers need to approach both the Central and State Appellate Authorities for
exercising its right of appeal?
Ans. GST law makes provisions for cross empowerment between CGST and SGST/UTGST officers so as to
ensure that if a proper officer of one Act (say CGST) passes an order with respect to a transaction, he will
also act as the proper officer of SGST for the same transaction and issue the order with respect to the CGST
as well as the SGST/UTGST component of the same transaction. The law further provides that where a
proper officer under one Act (say CGST) has passed an order, any appeal/review/ revision/rectification
against the said order will lie only with the proper officers of that Act only (CGST Act). Similarly, if any order is
passed by the proper officer of SGST, any appeal/review/revision/rectification will lie with the proper officer of
SGST only. Thus, ABC Furnishers is required to file an appeal only with the Central Tax Appellate Authority
[Section 6 of CGST Act].
Q9. What is GSTN and its role in the GST regime? Discuss functions of GSTN.
A. GSTN stands for Goods and Services Tax Network (GSTN). It is not-for profit company incorporated under
provisions of Sec 8 of Companies Act, 2013. GSTN has been set up to cater to the needs of GST. GSTN has
made up site/ portal which has been notified as common GST electronic portal (U/s 146 of CGST Act)
Thus, GSTN has provided IT infrastructure under GST law. GST portal developed by it is used by Central
Government as well as by the State Governments. GST portal is referred as ‘common portal’. This portal is
the taxpayer interface with the Government.
GSTN is providing facilities to taxpayers as well as Government. Following are some important functions
which are performed by GSTN :-
i. Facilitation of registration;
ii. Payment of GST;
iii. Returns filing;
iv. Maintenance of ledgers of taxpayers;
v. Running the matching engine for matching, reversal and reclaim of input tax credit;
vi. Providing analysis of tax payers’ profile;
vii. Sharing of information in taxpayers returns with Centre and State Governments / tax authorities;
viii. Providing various MIS reports to the Central and the State Governments based on the tax payer
return information;
ix. Computation and settlement of IGST (transfer of funds in between Central Tax Account, State Tax
Accounts and Integrated Tax Account);
Q10. Which are the commodities proposed to be kept outside the purview of GST?
A. Article 366(12A) of the Constitution as amended by 101st Constitutional Amendment Act, 2016 defines the
Goods and Services tax (GST) as a tax on supply of goods or services or both, except supply of alcoholic
liquor for human consumption. So, alcoholic liquor for human consumption is kept out of GST by way of
definition of GST in constitution.
Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation
turbine fuel have temporarily been kept out and GST Council shall decide the date from which they shall be
included in GST.
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Section 7 Scope of Supply

Schedule I Activities to be treated as supply even if made without consideration
Schedule II Activities or Transactions to be treated as supply of goods or services
Schedule III Activities or Transactions which shall be treated neither supply of
goods nor a supply of services
Section 8 Tax Liability on Composite [Sec. 2 (30)] & Mixed Supply [Sec. 2 (74)]
Section 7: Scope of supply

Broad Category Section Particulars
7 (1) For the purposes of this Act, the expression “supply” includes –
all forms of supply of goods or services or both such as sale, transfer,
Normal Supply
barter, exchange, licence, rental, lease or disposal made or agreed to be
of goods & 7 (1) (a)
made for a consideration by a person in the course or furtherance of
services
business;
Import of import of services, for a consideration whether or not in the course or
7 (1) (b)
Service furtherance of business, and
Supply without the activities specified in Schedule I, made or agreed to be made without a
7 (1) (c)
consideration consideration.
Supply of goods where certain activities or transactions constitute a supply in accordance
v/s Supply of 7 (1A) with the provisions of sub-section (1), they shall be treated either as supply
services of goods or supply of services as referred to in Schedule II.
Activities or 7 (2) Notwithstanding anything contained in sub-section (1),-
transactions 7 (2) (a) activities or transactions specified in Schedule III; or
treated neither such activities or transactions undertaken by the Central Government, a
as supply of State Government or any local authority in which they are engaged as
7 (2) (b)
goods nor public authorities, as may be notified by the Government on the
supply of recommendations of the Council,
services shall be treated neither as a supply of goods nor a supply of services.
Subject to the provisions of sub-sections (1), (1A) & (2), the Government
may, on the recommendations of the Council, specify, by notification, the
Power(s) of the transactions that are to be treated as —
7 (3)
Government
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
In exercise of the powers conferred U/s 7 (2), the Central Government, on the recommendations of the
Council hereby notifies that the following activities or transactions undertaken by the Central Government or
State Government or Union Territories or any local authority in which they are engaged as public authority,
shall be treated neither as a supply of goods nor a supply of service, namely:-
“Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G of the
Constitution or to a Municipality under article 243W of the Constitution.”
First check sub-section (1) to see whether particular transaction is supply or not then Schedule II
to finalize classification between goods or services
When word ‘includes’ or ‘such as’ is being used, it implies that the term doesn’t restrict itself to
those items that are being mentioned in there, and that those items mentioned, are just
indicative to much broader concepts of similar standing.
Study Notes
23
Transferring the property in goods from one to another, upon valuable

Sales
consideration i.e. buying laptop.
Any transfer of goods or right in goods or undivided share in goods without
Transfer transfer of title thereof i.e. Head office sends the goods to its branch. It may be
noticed that title is not transferred by Head Office.
To exchange one commodity/service for another without use of money i.e. CA
Barter
provides tax consultancy service in exchange of saloon services.
To swap, to part with, give or transfer for an equivalent with the use of money
Exchange i.e. Mobile worth Rs. 25,000 in exchange of an old mobile Rs. 10,000. Balance
paid in cash.
Permission granted by competent authority to exercise certain privileges,
License without such authorization the activity would have constituted as an illegal act
i.e. license of software.
Rental Periodical payment for the use of another’s property i.e. office on rent.
Contractual agreement by which one party conveys an estate in property to
another party, for a limited period, subject to various conditions, in exchange for
Lease
something of value, but still remain owner i.e. Government agency lease of
industrial plot.
To pass or into the control of someone else; to alienate, bestow, or part with i.e.
ABC Ltd., a company engaged in manufacturing furniture, removes wooden
Disposal scrap generated in process of manufacturing furniture to another company
where it is used for feeding the furnace, for a very nominal value. It shall be
treated as supply by XYZ Ltd., to attract GST.
Example 1: Mr. A buy a car for his personal use and after a year sells it to a car dealer. Sale of car by Mr.
A to car dealer is not a supply under CGST Act because supply is not made by Mr. A in the course or
Example 2: Mrs. A sold her old gold bangles and earrings to ‘ABC Jewellers’. Sale of old gold jewellery by
an individual to a jeweller will not constitute supply as the same cannot be said to be in the course or
furtherance of business of the individual.
Example 3: Salman, a famous actor, paints some paintings and sells them. The consideration from such
sale is to be donated to a Charitable Trust – ‘Kind Human’. The sale of paintings by the actor qualifies as
supply even though it is a one-time occurrence.
Example 4: ABC Ltd. Is engaged in the business of transmission of power across the Maharashtra.
Transmission of power is carried out through the networks of transmission lines and sub-stations
constructed by ABC Ltd. It has a market share of 50% transmission network in India. This is example of ‘in
course of business’.
ABC Ltd. appointed consultants to increase market share from 50% to 60%. It can be organic or un-organic
route. This is example of ‘in furtherance of business’.
Example 5: . Import of free services from Google and Facebook, without any consideration, are not
considered as supply. It is important to note that downloading ‘Hollywood Movie’ from foreign website for
consideration for personal use would be a supply of service, even though same is not in the course or
Schedule I:- Activities to be treated as supply even if made without consideration
1. Permanent transfer or disposal of business assets where ITC has been availed on such assets.
(transfer of entire business as going concern is not subject to GST).
Example 6: A Ltd. (retail stores dealing in food items), gives food items to the poor children on the festival
24
of Diwali. In this case, transfer of business stock would amount to ‘supply’ if it had claimed input tax credit
on its purchase of the business assets.
Example 7: A laptop dealer permanently transfers furniture from his stock in trade, at his house. The
transactions will constitute a supply as it is a permanent transfer/disposal of business assets. If input tax
credit is availed for such assets, then only such transfer amounts to supply.
2. Supply between related persons or distinct persons, when made in the course or furtherance of business.
Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to employee shall not be treated
as supply of goods or services or both. However reversal of ITC will be required.
Section 25 (4) & (5) of CGST Act categorize following as distinct person in GST:-
(a) Each registration of a person in one or more State/UT
(b) Each registration of a person in respect of establishments in or more State/UT.
Applicability of GST on intra-State branch/stock

transfers Applicability of GST on
Scenario Branches/Units with Single registration for inter-State
separate registration all branches/units in a branch/stock transfers
State/UT
Stock transfer under
GST ✓  ✓
Relevant Document Tax Invoice Delivery Challan Tax Invoice
Example 8: A Ltd. transfers 100 ACs & 100 Televisions from his factory located at Maharashtra to his retail
showroom in Delhi so that the same can be sold there. The factory and retail showroom are registered in
the states where they are located. Although no consideration is charged, supply of goods from factory at
Maharashtra to retail showroom at Delhi constitutes supply.
3. Supply of goods between principal & agents (whether principal supply to agents or agents supply to
principal).
Example 9: A Ltd. appoints B Ltd. as an agent. B Ltd. receives spare parts supplied by A Ltd. as and when
an order is received by A Ltd. from it dealers, an instruction will be sent to B Ltd. to supply the parts. Supply
of spare parts by A Ltd. to B Ltd. will qualify as supply even though B Ltd. has not paid any consideration.
Invoice in the name of agent:- Where the invoice for further supply is being issued by the agent in his name
then, any provision of goods from the principal to the agent would fall within the fold of Para. 3 above.
Invoice in the name of principal:- However, it may be noted that in cases where the invoice is issued by
the agent to the customer in the name of the principal, such agent shall not fall within the ambit of Para 3.
above.
Similarly, where the goods being procured by the agent on behalf of the principal are invoiced in the name of
the agent then further provision of the said goods by the agent to the principal would be covered by Para. 3
above.
[Circular No. 57/31/2018 GST Dated 04.09.2018].
Example 10: Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various suppliers
who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to send the goods
and issue the invoice directly to Mr. A.
Study Notes
25
In this scenario, Mr. B is only acting as the procurement agent, and has in no way involved himself in the
supply or receipt of the goods. Hence, in accordance with the provisions of this Act, Mr. B is not an agent of
Mr. A for supply of goods in terms of Para 3 of Schedule I.
Example 11: M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The
auctioneer arranges for the auction and identifies the potential bidders.
The highest bid is accepted and the goods are sold to the highest bidder by M/s XYZ. The invoice for the
supply of the goods is issued by M/s XYZ to the successful bidder. In this scenario, the auctioneer is merely
providing the auctioneering services with no role played in the supply of the goods. Even in this scenario,
Mr. B is not an agent of M/s XYZ for the supply of goods in terms of Para 3 of Schedule I.
Example 12: Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B arranges for the
auction and identifies the potential bidders. The highest bid is accepted and the painting is
sold to the highest bidder. The invoice for the supply of the painting is issued by M/s B on the behalf of Mr.
A but in his own name and the painting is delivered to the successful bidder.
In this scenario, M/s B is not merely providing auctioneering services, but is also supplying the painting on
behalf of Mr. A to the bidder, and has the authority to transfer the title of the painting on behalf of Mr. A. This
scenario is covered under Para 3 of Schedule I.
Example 13: A C&F agent or commission agent takes possession of the goods from the principal and issues
the invoice in his own name. In such cases, the C&F commission agent is an agent of the principal for the
supply of goods in terms of Para 3 of Schedule I. The disclosure or non-disclosure of the name of the principal
is immaterial in such situations.
Example 14: Mr. A sells agricultural produce by utilizing the services of Mr. B who is a commission agent as
per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr. B identifies the buyers
and sells the agricultural produce on behalf of Mr. A for which he charges a commission from Mr. A.
As per the APMC Act, the commission agent is a person who buys or sells the agricultural produce on behalf
of his principal, or facilitates buying and selling of agricultural produce on behalf of his principal and receives,
by way of remuneration, a commission or percentage upon the amount involved in such transaction.
In cases where the invoice is issued by Mr. B to the buyer, the former is an agent covered under Para 3 of
Schedule I. However, in cases where the invoice is issued directly by Mr. A to the buyer, the commission
agent (Mr. B) doesn’t fall under the category of agent covered under Para 3.
Circular No. 73/47/2018-GST Dated 5-11-2018
Whether a DCA falls under the ambit of agent As already clarified vide circular No. 57/31/2018-GST
under Para 3 of Schedule I of the CGST Act? Dated 4th September, 2018, whether or not the DCA will
fall under the ambit of agent under Para 3 of Schedule I of
the CGST Act depends on the following possible
scenarios:
• In case where the invoice for supply of goods is
issued by the supplier to the customer, either
himself or through DCA, the DCA does not fall
under the ambit of agent.
• In case where the invoice for supply of goods is
issued by the DCA in his own name, the DCA
would fall under the ambit of agent.
Whether the temporary short-term transaction In such a scenario following activities are taking place:
based loan extended by the DCA to the 1. Supply of goods from supplier (principal) to
recipient (buyer), for which interest is charged recipient;
by the DCA, is to be included in the value of 2. Supply of agency services from DCA to the
goods being supplied by the supplier supplier or the recipient or both;
26
(principal) where DCA is not an agent under 3. Supply of extension of loan services by the DCA
Para 3 of Schedule I of the CGST Act? to the recipient.
It is clarified that in cases where the DCA is not an agent
under Para 3 of Schedule I of the CGST Act, the
temporary short-term transaction based loan being
provided by DCA to the buyer is a supply of service by the
DCA to the recipient on Principal to Principal basis and is
an independent supply.
Therefore, the interest being charged by the DCA would
not form part of the value of supply of goods supplied (to
the buyer) by the supplier. It may be noted that vide
notification No. 12/2017-Central Tax (Rate) Dated 28th
June, 2017 (S. No. 27), services by way of extending
deposits, loans or advances in so far as the consideration
is represented by way of interest or discount (other than
interest involved in credit card services) has been
exempted.
Where DCA is an agent under Para 3 of In such a scenario following activities are taking place:
Schedule I of the CGST Act and makes 1. Supply of goods by the supplier (principal) to the
payment to the principal on behalf of the buyer DCA;
and charges interest to the buyer for delayed 2. Further supply of goods by the DCA to the
payment along with the value of goods being recipient;
supplied, whether the interest will form a part 3. Supply of agency services by the DCA to the
of the value of supply of goods also or not? supplier or the recipient or both;
4. Extension of credit by the DCA to the recipient.
It is clarified that in cases where the DCA is an agent
under Para 3 of Schedule I of the CGST Act, the
temporary short-term transaction based credit being
provided by DCA to the buyer no longer retains its
character of an independent supply and is subsumed in
the supply of the goods by the DCA to the recipient. It is
emphasized that the activity of extension of credit by the
DCA to the recipient would not be considered as a
separate supply as it is in the context of the supply of
goods made by the DCA to the recipient.
It is further clarified that the value of the interest charged
for such credit would be required to be included in the
value of supply of goods by DCA to the recipient as per
clause (d) of sub-section (2) of section 15 of the CGST
Act.
4. Import of services by a taxable person from a related person or from any of his other establishments
outside India, in the course or furtherance of business.
Now, because of above amendment, import of services by entities which are not registered under GST (let
take example, say they are only making exempted supplies) but are otherwise engaged in business
activities shall be liable to tax when received from a related person or from any of their establishments
outside India.
Services supplied by establishment of person in India to own establishments out of India is exempt, if place
of supply is out of India.
{Sr. No. 10E of Notification No. 9/2017-IT (Rate) both Dated 28-6-2017 as inserted w.e.f. 27-7-2018.}
Study Notes
27
Taxability of import of services in GST – Snapshot {considering Section 7 (1) (b) & Schedule I Para 4}
Particulars From Related Person/Establishment outside From any other person

India
Consideration
✓  ✓
Purpose Personal or Business Business Personal or Business
Example 15: A Ltd. received software services from Holding company located in USA. The Holding
Company rendered the software services without any charge to its subsidiary. Since A Ltd. and its holding
company are related persons, software services received by A Ltd. will be considered as supply even
though the holding has not charged anything from it.
Example 16: A has taken legal advice with regard to his family dispute for free, from his brother who is
settled in USA. This would not constitute supply since this is not for furtherance of business. If suppose A
has taken this advice for his business dispute then it would constitute supply since this would be for
Schedule II :- Activities or transactions to be treated as supply of goods or services
To be To be
treated treated
Transaction Particulars
as as
goods service
1 Transfer (a) Transfer of the title of goods ✓
(b) Transfer of right in goods or of undivided share in ✓
goods without transfer of title thereof
This covers renting or operating lease of goods.
‘Undivided share’ means that exclusive possession
is not required to be transferred e.g. renting of locker
by bank, share taxi.
(c) Transfer of title in goods under an agreement which
stipulates that property in goods shall pass at a ✓
future date upon payment of full consideration as
agreed
This covers financial lease and hire purchase.
2 Land & (a) Lease, tenancy, easement, license to occupy land ✓
Building Let say, a company, giving its vacant land for
specified period to set up an IT park.
(b) Lease or letting out, either wholly or partly, of the ✓
building including a commercial, industrial or
residential complex for business or commerce
This covers renting or leasing of building. Even
renting of part of residential complex for business or
commerce will be subject to GST.
3 Treatment Treatment or process which is applied to another person’s ✓
or process goods e.g. job work, testing etc.
4 Transfer of (a) Business assets are transferred/disposed of by the ✓
Business owner whether or not for consideration
Assets This clause need to be co-related with clause 1 of
Schedule I. Such transfer will be subject to GST if ITC
was availed on such goods. This clause also has to be
read with clause 4 (c) of Schedule II. Further, services
by way of transfer of a going concern as a whole or an
independent part thereof is exempt from GST –
Notification No. 12/2017-CT Rate & 9/2017-IT (Rate)
both Dated 28-6-2017.
28
(b) The owner (person carrying on business) uses or allows ✓
to use business assets for personal use, whether or not
for consideration
This covers use of property of taxable person like motor
vehicles, residential premises, guest house, telephone,
laptop etc. for private use of Director, Employees,
Partners etc.
(c) Where any person ceases to be a taxable person, any ✓
goods forming part of the assets of any business carried
on by him shall be deemed to be supplied by him in the
course or furtherance of his business immediately
before he ceases to be a taxable person, unless –
i. The business is transferred as a going
concern to another person; or
ii. The business is carried on by a personal
representative who is deemed to be a
taxable person
Transfer of entire business is not subject to GST. Only
goods transferred are subject to GST.
5 (a) Renting of immovable property ✓
Since lease of building and land is already covered in clause 2 (a)
and (b) above, this can cover other immovable property i.e. plant
and machinery etc.
(b) Construction of complex, building, civil structure or a part thereof, ✓
including a complex or building intended for sale to a buyer, wholly
or partly, except where the entire consideration has been received
after issuance of completion certificate, where required, by the
competent authority or after its final occupation, whichever is earlier
This covers sale of flat in a residential complex before it is occupied.
If builder is selling, he will be exempt from GST only If he sales after
completion certificate is obtained (Schedule III). If first occupancy of
immovable property is proved before receiving any consideration,
then it would not be considered as supply of services and GST
would not be payable even if CC is not yet received. But,
determining first occupancy is a contentious issue.
(c) Temporary transfer or permitting the use or enjoyment of any ✓
intellectual property right
This covers allowing use of trade mark, copyright, design, patents.
(d) Development, design, programming, customization, adaptation, ✓
upgradation, enhancement, implementation of information
technology software
This covers development of software but not software itself in
physical forms. CBIC in their sectoral FAQs on IT/ITES has clarified
if a pre-developed or pre-designed software is supplied in any
medium/storage (commonly bought off-the-shelf) or made available
through the use of encryption keys, the same is treated as a supply
of goods.
(e) Agreeing to the obligation to refrain from an act, or to tolerate an act ✓
or a situation, or to do an act
Penalty on early termination of agreement, late delivery charges,
prepayment charges on early payment of loan installment,
demurrage charges paid to the port authorities etc.
(f) Transfer of the right to use any goods for any purpose (whether or ✓
not for a specified period) for cash, deferred payment or other
valuable consideration
This is renting, where possession and control of goods is transferred
to recipient.
6 Following composite supplies –
(a) Works contract as defined in Section 2 (119) ✓
(b) Supply, by way of or as part of any service or in any other manner
whatsoever of goods, being good or any other article for human ✓
consumption or any drink (other than alcoholic liquor for human
Study Notes
29
consumption), where such supply or service is for cash, deferred

payment or other valuable consideration.
This clause doesn’t say ‘in restaurant’. So, even home delivery of
cooked food will be covered, as it includes service. However, sale of
tinned food items is sale of goods as no ‘service’ element is
involved.
Sale of packed farsan or pre-prepared sweets or samosa/pakoda
across the counter is not ‘supply of service’. However, same item
supplied in restaurant or eating joint is ‘supply of service’.
7 Supply of goods by any unincorporated AOP or body of persons to a ✓
member there for cash, deferred payment or other valuable consideration
Interestingly, this doesn’t cover supply of services.
Schedule III :- Activities or transactions which shall be treated neither as a supply of goods nor a
supply of services
1.Services by an employee to the employer in the course of or in relation to his employment.
(If it is part of employment letter. Fringe benefits are not subject to GST, clarified by the Government in press
release)
2. Services by any court (District/High/Supreme Court) or Tribunal established under any law for the
time being in force.
Fee paid by litigants in the Consumer Disputes Redressal Commission (National/ State/ District) are not
leviable to GST. Any penalty in cash imposed by or amount paid to these Commissions will also not attract
GST. {Circular No. 32/06/2018 GST Dated 12.02.2018}
3.
(a) the functions performed by the Members of Parliament, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
(c) the duties performed by any person as a Chairperson or a Member or a Director in a body established
by the Central Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
Remember, construction of a new building is subject to GST before completion certificate. Please also refer to
below Q & A for more clarity. Also note that sale of TDR (Transferable Development Right) is not sale of land.
It allows its owner additional construction area (FSI). Such sale of TDR shall be subject to GST.
6. Actionable claims other than lottery, betting and gambling
Example 17: Lottery ticket, Insurance policy, Claim for arrears of rent, Unsecured loans, Reward points
earned by customer on purchases made by him under loyalty programme.
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory
without such goods entering into India. Merchant trading.
Example 18: Mr. A purchased goods from China and sold it to Mr. John in Canada without bringing the goods
in India. This transaction is neither supply of goods nor supply of services.
8. (a) Supply of warehoused goods to any person before clearance for home consumption; In-bond sale.
Example 19: Mr. X imported some goods in India, but kept the goods in custom bonded warehouse without
clearing it for home consumption. In the meantime, Mr. X sold these goods to Mr. Y while they were in
warehouse. This transaction between Mr. X and Mr. Y is neither supply of goods nor supply of services.
30
(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods,
after the goods have been dispatched from the port of origin located outside India but before clearance for
home consumption. High Seas Sales.
For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as
assigned to it in the Customs Act, 1962.
Example 20: Mr. P of India imported some goods from Japan. While the goods were in high seas, Mr. P sold
the goods to Mr. Q in India by way of endorsement of documents of title of goods. This transaction between
Mr. P and Mr. Q is neither supply of goods nor supply of services.
Section 8: Composite & Mixed supply

Composite Supply [Sec. 2 (30)] Mixed Supply [Sec. 2 (74)]
Consist of 2 or more supplies Consist of 2 or more supplies
Naturally Bundled Not Naturally Bundled
In conjunction with each other Independent of each other
One is principal supply Single Price
Tax liability shall be rate of principal supply Tax liability will be the rate applicable to the supply
attracts highest rate of tax
Example: Example:
21. Meals free with Rajdhani ticket. 25. Bucket free with detergent.
22. Charger & Warranty with mobile. 26. Gift pack of dry fruits, sweets etc.
23. A 5-star hotel booked for conference & 27. Car check-up camps organized by Car
includes accommodation, breakfast, access Workshop wherein along with standard
to business centre, tea & coffee during check-up, oil and filter are being charged at
conference, access to fitness room. a single price.
24. Goods are packed and transported with 28. A house is given on rent, one floor of which
insurance, packing materials etc. is to be used as residence and the other for
housing a printing press. Such renting for
. two different purposes is not naturally
bundled in the ordinary course of business.
Particulars Composite Supply Mixed Supply

Naturally bundled Yes No
Supplied together Yes Yes
One is predominant supply for recipient Yes No
Other supply(ies) are ancillary or they are received Yes No
because of predominant supply
Each supply priced separately No No
All supplies can be goods Yes Yes
All supplies can be services Yes Yes
Some supplies can be goods and others can be services Yes Yes
Some important circulars
Trade practice is also relevant. A vehicle repair shop also supplies spare parts. However, the long practice
is to treat these two supplies separately. Hence, such activity is not ‘composite supply’. It is also not ‘mixed
supply’ as single price is not charged.
[Circular No. 47/21/2018 GST Dated 08.06.2018]
Artists give their work of art to galleries where it is exhibited for supply. However, no consideration flows from
the gallery to the artist when the art works are sent to the gallery for exhibition and therefore, the same is not
Study Notes
31
a supply. It is only when a buyer selects a particular art work displayed at the gallery, that the actual supply
takes place and applicable GST would be payable at the time of such supply.
As per the Production Sharing Contract (PSC) between the Government and the oil exploration & production
contractors, in case of a commercial discovery of petroleum, the contractors are entitled to recover from the
sale proceeds all expenses incurred in exploration, development, production and payment of royalty. Portion
of the value of petroleum which the contractor is entitled to take in a year for recovery of these contract costs
is called “Cost Petroleum”. Cost petroleum is not a consideration for services to Government and is not
taxable.
Moulds and dies owned by Original Equipment Manufacturers (OEM) that are sent free of cost (FOC) to a
component manufacturer (the two not being related persons or distinct persons) does not constitute a supply
as there is no consideration involved.
Transfer of tenancy rights to a new tenant against consideration in the form of tenancy premium is taxable.
Further, services provided by outgoing tenant by way of surrendering the tenancy rights against
consideration in the form of a portion of tenancy premium is liable to GST. Grant of tenancy rights in a
residential dwelling for use as residence dwelling against tenancy premium or periodic rent or both is exempt.
[Circular No.44/18/2018 CGST Dated 02.05.2018]
JV being an unincorporated temporary association constituted for the limited purpose of carrying out a
specified project within a time frame, a comprehensive examination of the various JV agreements (at times,
there could be number of inter se agreements between members of the JV) holds the key to understanding
of the taxation of transactions involving taxable services between the JV and its members or inter-se between
the members of a JV.
Thus, whether a cash call is merely a transaction in money and hence not in the nature of consideration for
taxable service, would depend on the terms of the Joint Venture Agreement, which may vary from case to
case. ‘Cash calls’ are raised by an operating member of the joint venture on other members in proportion to
their participating interests in the joint venture (unincorporated) to meet the expenditure on the operations to
be carried out as per the approved work programmes and budget. Let us understand the taxability of cash
calls with the help of following examples:
Example 29: There are 4 members in the JV including the operating member and each one contributes Rs.
100 as part of their share. A total amount of Rs. 400 is collected. The operating member purchases machinery
for Rs. 400 for the JV to be used in oil production.
In above case, cash calls will not be subject to GST since the operating member is not carrying out an activity
for another for consideration. Here, the money paid for purchase of machinery is merely in the nature of
capital contribution and is therefore a transaction in money.
Example 30: There are 4 members in the JV including the operating member and each one contributes Rs.
100 as part of their share. A total amount of Rs. 400 is collected. The operating member thereafter uses its
own machine and performs exploration and production activities on behalf of the JV.
In above case, the operating member uses its own machinery and is therefore providing ‘service’ within the
scope of ‘supply’ because here operating member is recovering the cost appropriated towards machinery &
services from other JV members in their participating interest ratio.
Priority Sector Lending Certificates (PSLCs) are taxable as goods. GST payable on the certificates would be
available as ITC to the bank buying the certificates. It is further clarified that nature of supply of PSLC between
banks may be treated as a supply of goods in the course of inter-State trade or commerce. Accordingly, IGST
shall be payable on the supply of PSLC traded over e-Kuber portal of RBI.
32
Renewable Energy Certificates (RECs) and Priority Sector Lending Certificates (PSLCs) and other similar
documents are classifiable under heading 4907 and attract 12% GST. The duty credit scrips attract Nil GST
under S. No. 122A of Notification No. 2/2017- Central Tax (Rate).
Inter-State movement of various modes of conveyance, between distinct persons as specified in section 25(4)
of the CGST Act, including Trains, Buses, Trucks, Tankers, Trailers, Vessels, Containers, Aircrafts,
(a) carrying goods or passengers or both; or
(b) for repairs and maintenance,
[except in cases where such movement is for further supply of the same conveyance] was discussed in GST
Council’s meeting held on 11th June, 2017 and the Council recommended that such inter-State movement
shall be treated ‘neither as a supply of goods or supply of service’ and therefore not be leviable to IGST.
Thus, above activity may not be treated as supply and consequently IGST will not be payable on such
supply. However, applicable CGST/SGST/IGST, as the case may be, shall be leviable on repairs and
maintenance done for such conveyance.
[Circular No. 1/1/2017 IGST Dated 07.07.2017**]
**Above circular shall mutatis mutandis apply to inter-State movement of rigs, tools and spares, and all goods
on wheels [like cranes], [except in cases where movement of such goods is for further supply of the same
goods], such inter-State movement shall be treated ‘neither as a supply of goods or supply of service,’ and
consequently no IGST would be applicable on such movements. In this context, it is also reiterated that
applicable CGST/SGST/IGST, as the case may be, is leviable on repairs and maintenance done for such
goods.
[Circular No. 21/21/2017-GST Dated 22.11.2017]
In the case of printing of books, pamphlets, brochures, annual reports, and the like, where only content is
supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical
inputs including paper used for printing belong to the printer, supply of printing is the principal supply and
therefore such supplies would constitute supply of service falling under heading 9989 of the scheme of
classification of services.
In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. falling
under Chapter 48 or 49, printed with design, logo etc. supplied by the recipient of goods but made using
physical inputs including paper belonging to the printer, predominant supply is that of goods. Supply of
printing of the content supplied by the recipient of supply is ancillary to the principal supply of goods and
therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or
49 of the Customs Tariff. [Circular No. 11/11/2017-GST Dated 20.10.2017]
The supply of books shall be treated as supply of goods as long as the supplier owns the books and has the
legal rights to sell those books on his own account. [Circular No. 27/01/2018-GST Dated 04.01.2018]
In the case of bus body building there is supply of goods and services. Thus, classification of this composite
supply, as goods or service would depend on which supply is the principal supply which may be determined
on the basis of facts and circumstances of each case. [Circular No. 34/8/2018-GST Dated 01.03.2018
In retreading of tyres, which is a composite supply, the pre-dominant element is the process of retreading
which is a supply of service. Rubber used for retreading is an ancillary supply. Supply of retreaded tyres,
where the old tyres belong to the supplier of retreaded tyres, is a supply of goods.
Mere cutting and packing of fabrics into pieces of different lengths from bundles or than, will not change the
nature of these goods and such pieces of fabrics would continue to be classifiable under the heading as the
fabric.
Study Notes
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34
Question & Answer

Q1. What is meant by Taxable event in a Law?
A. A taxable event in the law is the event, happening of which triggers applicability of provisions of the law. For
e.g. under Income Tax Act, taxable event is earning of income. Thus, earning of income is the triggering point
and once a person earns any income, he is covered by the provisions of Income-tax Act, unless otherwise
excluded from the purview of the law or exempted from the levy of tax.
Take another example, under VAT Act, taxable event was sales. Sales was the triggering point and once a
transaction was covered under sale, provision of VAT used to apply unless the transaction was excluded from
the purview of the law or exempted from the levy of tax.
Similarly, under GST, supply is the triggering point and once any activity is covered under supply, all provisions
of the law are applicable unless the activity is excluded from purview of law i.e. alcohol for human consumption
or activity is exempted from levy of GST.
Q2. Mr. A buys a laptop for his personal use and after a year sells it to a laptop dealer. Will it constitute
supply?
Ans. As per section 7 (1) (a), when any sale, transfer, barter etc. is made for a consideration in the course or
furtherance of business then it would be treated as supply & liable to GST. In the given case, sale of laptop by
Mr. A to a laptop dealer shall not be considered as supply, as such sale is not in course or furtherance of
business of Mr. A. Thus it is not supply & not subject to GST.
Q3. State whether the following activities will be considered as a supply in relation to ‘Money’ in accordance
with GST Act.
i. Mr. A borrows an amount of Rs. 1 Lakh from one of his relative and agrees to repay the entire
amount after a year.
ii. Mr. A applied for loan from ICICI Bank against which a processing fees and interest is charged by
the bank.
iii. iii. Mr. A exchanged Indian Rupees against purchase of US $ for which authorized dealer charged
commission.
A.
i. No, the activity of borrowing from a relative is without any charge of interest and hence it will be
considered as merely a transaction in money.
ii. Yes, the activity of borrowing loan amount for which a consideration in form of processing fee has been
charged by ICICI Bank shall be considered as a supply of service, as consideration in relation to use
of money. Interest is also supply but it is exempt (refer to Chapter 4 exemption list).
iii. Yes, the activity of exchange of currency for which a commission is charge will be considered as supply
of service.
Q4. A bank takes charge of the property of the borrower as per loan agreement. It then goes on to sell the
movable goods so taken over (inventory), How will this transaction be dealt in GST?
A. The transactions of sale of movable goods taken over by bank would be considered as taxable supply. The
loan taker must pay GST on such transaction treating it as supply of goods.
Q5. Whether stipend paid to article will be covered as supply?

A. No, Government has clarified through FAQ that stipend paid to article/interns will be considered as salary,
so it will be employer-employee transaction and thus will not be subject to GST.
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35
Q6. Give example of distinct person as per the GST Act?

A. ABC Limited has 2 factories in Rajasthan, 1 in Delhi & 1 in Maharashtra. As per GST Act, ABC may have 1
registration for 2 factories in Rajasthan (ABC discretion), 1 for Delhi & 1 for Maharashtra. The factories at
Rajasthan, Delhi & Maharashtra will be treated as distinct person for any transactions since they have separate
registration but 2 factories in Rajasthan will not be treated as distinct person since they have 1 registration.
Q7. How to treat transaction of sale of land & building under the GST Act?
A. Sale of land and, subject to para 5 (b) of Schedule II, sale of building is neither supply of goods nor a supply
service as per para 5 of Schedule III of CGST Act.
Para 5 (b) of Schedule II of CGST Act covers supply of building before completion or before occupancy. Thus,
sale of completed building after completion certificate will not be subject to GST.
Q8. What will be tax treatment of salary to partners under the GST Act?
A. Working partners are entitled to draw salary from the firm. On the basis of provisions of Partnership Act, it is
settled that a partner is not ‘employee’ of the firm and salary is only share of profit. It has been clarified vide S.
Nos. 58 & 71 of Tweet FAQ released by CBIC on 26th June 2017 that GST is not payable on salary to partners.
Q9. ABC Ltd. was amalgamated with DEF Ltd. On account of amalgamation Mr. A, shareholder received 10,000
shares of DEF Ltd. in exchange of 5000 shares of ABC Ltd. Can it be considered as supply?
A. Shares (Securities) are excluded from the definition of both goods as well as services. Hence, this transaction
can’t be considered as supply.
Q10. ABC Ltd. a banking company transfers bad loan (unsecured) to ARC Ltd. Can it be considered as supply?
A. Actionable claims are covered in definition of goods. However, schedule III excludes claims other than lottery,
gambling and betting from the scope of supply. So, above transfer can’t be considered as supply.
Q11. A Charitable trust, engaged in providing medical relief free of cost, donates books and stationary to
children living in slum area? Can it be considered as supply?
A. Section 7 of the CGST Act, provides that supply must be made for a consideration except the activities
specified in Schedule I and in course or furtherance of business. Since, both these elements are missing,
donation of books and stationary to children living in slum are would not amount to supply.
Q12. A Taxable person, ceases to be a taxable person. What will be treatment for any goods forming part of
the assets?
A. Where any person ceases to be a taxable person, any goods forming part of the assets of any business
carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately
before he ceases to be a taxable person, unless – (a) the business is transferred as going concern to another
person; or (b) the business is carried on by a personal representative who is deemed to be a taxable person
{Transfer of entire business is not subject to GST. Only goods transferred are subject to GST}.
Q13. Decide whether following activities are supply or not: -

i. Free seminar to educate people for mutual fund.
ii. An individual buy a car for personal purpose and after a year, sells it to a car dealer.
iii. ABC Ltd. donated old office furniture to Charitable Hospital. ABC Ltd. has taken ITC on such office
furniture.
iv. Mr. A gift Rs. 75,000 to his son on his birthday.
v. Mr. A gave his flat on leave & license agreement to Mr. B.
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vi. Employer has paid notice period amount to employee on termination.
vii. A local club supplies snacks to its members during AGM for a nominal amount.
viii. Mr. A gives computer (claimed ITC) brought for office use, to his friend on his birthday.
ix. ABC Ltd. give gift voucher of Rs. 1,00,000 to it employee Mr. A. If let say amount is Rs. 45,000 then
what will be your answer.
x. Mr. A has taken voluntarily registration. He sells computers.
A.
i. No, as per Section 7 (1) (a) of CGST Act, 2017, supply includes supply of goods and services for a
consideration in the course or furtherance of business. In this case, there is no consideration, so it
cannot constitute a supply.
ii. No, as per Section 7 (1) (a) of CGST Act, 2017, this is not in the course or furtherance of business. So,
it cannot constitute a supply.
iii. Yes, as per Section 7 (1) (c) read with Schedule I of CGST Act, 2017 permanent transfer or disposal of
business assets where ITC has been availed shall be treated as supply even if made without
consideration. So, in current case even though ABC Ltd. donated old furniture to Charitable Hospital, it
shall be treated as supply.
iv. No, as per Section 7 (1) (c) read with Schedule I of CGST Act, 2017 supply of goods or services between
related person is treated as supply even it is without consideration when made in course or furtherance
of business. Gift to son Rs. 75,000 will not qualify as supply since it is not made in course or furtherance
of business.
v. Yes, as per Section 7 (1) (a) of CGST Act, 2017, leasing or renting out building including commercial,
industrial or residential complex for business or commerce would be treated as supply. In given case
Mr. A gave his residential house on leave & license agreement so it would constitute supply of service.
But, leasing for residential purpose is exempt under Entry 12 of Notification No. 12/2017- CT (Rate).
vi. No, as per Section 7 (2) read with Schedule III of CGST Act 2017, services by an employee to employer
during his employment would not be regarded as supply. So, notice period amount are treated as
amount paid during the employment, so would not constitute supply.
vii. Yes, as per para 7 of Schedule II of CGST Act, 2017 supply of goods by any unincorporated association
or body of persons to a member thereof for cash, deferred payment or other valuable consideration
shall be treated a supply of goods. So, if a local club supplies snacks during AGM to its members for a
nominal payment would constitute supply of goods.
viii. Yes, as per section 7 (1) (c) read with Schedule I, permanent transfer or disposal of business assets
where ITC credit has been availed on such assets qualifies as a supply even though made without
consideration. Such transaction will be treated as supply as ITC has been availed on computer.
ix. Yes, as per Section 7 (1) (c) read with Schedule I if CGST Act, 2017, supply of goods or services
between related person is treated as supply even it its without consideration. Employer & employee are
related person as per Section 15 of CGST Act, 2017. Thus, gift voucher of Rs. 1,00,000 will qualify as
supply.
Gifts not exceeding Rs. 50,000 in value in a financial year by an employer to employee shall not be
treated as supply so if amount is Rs. 45,000 then it will not be treated as supply.
x. Yes, a taxable person is a person who is registered or liable to be registered U/s 22 or 24. Therefore,
even a person not liable to be registered but has taken voluntary registration, is also a taxable person.
Thus, selling of computer would be liable to GST.
Q14. ABC Ltd. is an authorized dealer of motor vehicles and is having registered office in Delhi. It is also running
authorized service station of motor vehicles registered in UP. Certain motor vehicles are taken from Delhi (show-
room) to UP (service-station) for repairs. Whether this inter-state movement of vehicles would amount to supply
of goods under GST?
A. As per given facts, registered supplier of motor vehicle has taken his motor vehicle for repairs at its other
registered premises (authorized service station in UP). Post-repair, he will bring back goods to his registered
Study Notes
37
show-room in Delhi. This transaction of inter-state movement of vehicles for repairs will not amount to supply
within the meaning of Section 7 of CGST Act. [Circular No. 1/1/2017-IGST Dated 7-7-2017.]
Q15. State whether the following activities will be considered as a ‘Consideration’ in accordance with GST
Act.
i. Reliance Jio offers free mobile handset on payment of security deposit of Rs. 5,000. It is refundable after
3 years.
ii. ABC football club gift worth Rs. 3 Lakhs to Mr. A for joining ABC football club.
iii. ABC ltd. is manufacturing fertilizers used for agriculture purpose. State Government has given 30%
subsidy on sale of such fertilizer. iv. ABC ltd. a trading concern, has supplied the product to Mr. A at
subsidize rate of Rs. 1,00,000 (open market value Rs. 1,25,000). Subsidy is given by XYZ organization.
A.
i. No, as the amount of deposit in the given case is not applied by the supplier towards the mobile handset
provided. It is not subject to GST.
ii. Yes, such gift is in response to an offer to join the football club, is subject to GST.
iii. As per section 2 (31) of CGST Act, pertaining to ‘consideration’ clearly excludes the value of subsidy
received from the Central or State Government. Thus in the given case the amount of subsidy shall be
excluded from the value of consideration. iv. As per section 2 (31) of CGST Act, pertaining to
‘consideration’ clearly excludes the value of subsidy received from the Central or State Government. But
in given case subsidy is given by person other than the Central or State Government. Thus subsidy is
treated as consideration.
Q16. Tips music company charged a late fee as a penalty for late return of a DVD to its customer. Will the late
fee charged to its customer be considered as a part of consideration?
Ans. As per Section 2 (102), service means anything other than goods, money & securities. Thus, late, fee, fine,
penalty charged by the supplier for any reason would be treated as supply for consideration & liable to GST.
Q17. Mr. A is the owner of a truck valued at Rs. 10,00,000. He transfers the right to operate the truck to Mr. B
for a consideration but the ownership of the truck is not transferred. Determine whether it will be considered as
a supply?
Ans. It is supply as per Section 7 (1) as it is a transfer which involve consideration. It is transfer of rights in goods
without transfer of title, so it will be classified as supply of service according to Schedule II of CGST Act, 2017.
Q18. In respect of exchange of goods, let say gold chain for restaurant services, will the transaction be taxable
as two different supplies or will it be taxable only in the hands of the main supplier?
Ans. Yes, the transaction of exchange is specifically included in the scope of supply U/s 7. So, exchange could
be taxable both ways. (A different view can also be possible depending upon the facts of the case)
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Section 7 of IGST Inter State supply

Section 8 of IGST Intra State supply
Section 9 of IGST Supplies in Territorial Water
Section 9 of the
Levy & Collection of CGST
CGST
Section 5 of IGST Levy & Collection of IGST
Section 10 of CGST Composition Scheme
Notification No. 2/2019-Central Tax (Rate) Dated 7th May 2019
Section 7 Inter-State supply (IGST Act)
7 (1) – Goods 7 (3) Services

7 (5)
7 (2) – Goods 7 (4) Services
Supply of Goods is
subject to Section
10 & Services is
subject to 12 of IGST
Act
Study Notes
39
Other Points: -
✓ As per section 7(2), supply of goods imported into the territory of till they cross the customs frontiers
of India, shall be treated as supply of goods in the course of inter-State trade or commerce,
✓ In case of import of services, keep in mind that as per section 2 (11) of the IGST Act: -
• the supplier of service is located outside India;
• the recipient of service is location in India;
• the place of supply of service is in India.
Section 8 Intra-State supply (IGST Act)
These supply of
goods or services are
not Intra-State
These supply of
goods are not Intra-
State
Other Points: -
✓ Where a person has,

1. an establishment in India & any other establishment outside India;
2. an establishment in a State/UT and any other establishment outside that State/UT; or
3. an establishment in a State/UT and any other establishment being a business vertical
registered within that State/UT
then such establishments shall be treated as establishments of distinct person.
A person carrying on a business through a branch or an agency or a representational office in any territory
shall be treated as having an establishment in that territory.
40
Section 9 Supplies in Territorial Waters (IGST Act)

Notwithstanding anything contained in this Act-
(a) where the location of the supplier is in the territorial waters, the location of such supplier; or
(b) where the place of supply is in the territorial waters, the place of supply,
shall, for the purposes of this Act, be deemed to be in the coastal State or Union Territory where the nearest
point of the appropriate baseline is located.
Section 9 Levy & Collection of CGST
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Section 5 Levy & Collection of IGST (IGST Act)
42
Categories of goods subject to Reverse Charge {U/s 9 (3)}

Goods like cashew nuts [not shelled/peeled], bidi wrapper leaves, tobacco leaves, supply of lottery, silk yarn,
used vehicles, seized and confiscated goods, old and used goods, waste and scrap, raw cotton, etc. are
taxable under reverse charge, i.e. recipient is liable to pay tax.
CBIC Circular No. 76/50/2018-GST Dated 31.12.2018
The circular clarifies GST position in respect of supply of used vehicles, seized and confiscated goods, old
and used goods, and waste and scrap by Government departments.
The above supplies, when provided to a registered person, is covered under reverse charge mechanism
(RCM) and the tax is payable by the registered recipient.
However, if the supplies are made to an unregistered recipient, the government department shall be liable to
register and pay GST.
Categories of Services subject to Reverse Charge {U/s 9 (3)}
Sr. Category of supply of services Recipient of services

No.
Reverse Charge applicable under CGST / IGST
1 Goods Transport Agency (GTA) Factory, society, co-operative society, taxable
If GTA charges GST in his invoice and pays 6% person, body corporate {defined under 2(11)
CGST & 6% SGST/UTGST (12% IGST), the of the Companies Act and includes a
recipient is not liable to pay GST under reverse company incorporated outside India},
charge. There is no restriction on availing ITC partnership firm whether registered or not
on goods and services used in supplying GTA under any law including AOP, casual taxable
service by GTA. person located in taxable territory.
If GTA is unregistered or doesn’t charge GST in The person who pays or is liable to pay
invoice, recipient is liable to pay reverse charge. freight for the transportation of goods, shall
pay reverse charge.
Provided that nothing contained in this entry shall Reverse Charge @ CGST 2.5%+ SGST
apply to services provided by a goods transport 2.5% = IGST 5%
agency, by way of transport of goods in a goods
carriage by road, to, - Reverse charge not applicable:-
(a) a Department or Establishment of the Central • Supply of services to non-specified
Government or State Government or Union person (see specified person above)
territory; or or unregistered person
(b) local authority; or • When GTA opts to pay tax under
(c) Governmental agencies, forward charge
which has taken registration under the Central • When GTA services supplied to
Goods and Services Tax Act, 2017 only for the Government department or agencies
purpose of deducting tax under section 51 and not or local authority, which has taken
for making a taxable supply of goods or services. registration only for the purpose of
deducting TDS
2 Services supplied by an individual advocate Any business entity located in the taxable
including a senior advocate or firm of advocates territory.
by way of legal services, directly or indirectly. The business entity located in the taxable
“Legal service” means any service provided in territory who is litigant, applicant or petitioner,
relation to advice, consultancy or assistance in as the case may be, shall be treated as the
any branch of law, in any manner and includes person who receives the legal services.
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43
representational services before any court,

tribunal or authority.
3 Services by an Arbitral tribunal Any business entity located in the taxable
territory.
4 Services of Sponsorship (Note that it is not the Any body corporate or partnership located in
advertisement, it is sponsorship) taxable territory
5 Services supplied by the Central Government, Any business entity located in the taxable
State Government, UT or local authority to a territory.
business entity excluding: -
1. Renting of immovable property
2. (i) services by the Departments of posts by way
of speed post, express parcel post, life insurance,
and agency services provided to a person other
than Central, State, Union or Local authority
(ii) services in relation to an aircraft or a vessel,
inside or outside the precincts of a port or an
airport
(iii) transport of goods or passengers
5A Services supplied by the Central, State, Union or Any person registered under the CGST Act,
local authority by way of renting of immovable 2017
property to a person registered under the CGST
Act, 2017
“renting of immovable property” means allowing,
permitting or granting access, entry, occupation, In case of unregistered person, then
use or any such facility, wholly or partly, in an CG,SG, UT or local authority have to pay
immovable property, with or without the transfer of GST as forward charge
possession or control of the said immovable
property and includes letting, leasing, licensing or
other similar arrangements in respect of
immovable property.
5B Services supplied by any person by way of Promoter
transfer of development rights or Floor Space
Index (FSI) (including additional FSI) for
construction of a project by a promoter.
5C Long term lease of land (30 years or more) by any Promoter
person against consideration in the form of upfront
amount (called as premium, salami, cost, price,
development charges or by any other name)
and/or periodic rent for construction of a project by
a promoter.
• The term “apartment” shall have the same meaning as assigned to it in clause (e) under section 2 of
the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).
• the term “promoter” shall have the same meaning as assigned to it in clause (zk) under section 2 of
the Real Estate (Regulation and Development) Act, 2016 (16 of 2017).
• the term “project” shall mean a Real Estate Project (REP) or a Residential Real Estate Project
(RREP);
• “the term “Real Estate Project (REP)” shall have the same meaning as assigned to it in in clause (zn)
of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016).
• The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the
commercial apartments is not more than 15 per cent. of the total carpet area of all the apartments in
the REP.
44
• “floor space index (FSI)” shall mean the ratio of a building’s total floor area (gross floor area) to the
size of the piece of land upon which it is built.
6 Services supplied by a director of a company or a The company or a body Corporate, located in
body corporate to the said company or the the taxable territory
body corporate.
7 Services supplied by an insurance agent to any Any person carrying on insurance business,
person carrying on insurance business located in the taxable territory
8 Services supplied by a recovery agent to a A banking company or a FI or a NBFC,
banking company or FI or NBFC located in the taxable territory
9 Supply of services by an author, music composer, Publisher, music company, producer or the
photographer, artist or the like by way of transfer like, located in the taxable territory
or permitting the use or enjoyment of a copyright
covered under section 13(1)(a) of the Copyright
Act, 1957 relating to original literary, dramatic,
musical or artistic works to a publisher, music
company, producer or the like.
10 Supply of Services by the members of overseeing RBI
committee to RBI
11 Supply of services by individual Direct Selling Banking company or NBFC located in the
Agent (DSAs) other than a body corporate taxable territory [inserted w.e.f. 27-7-2018]
partnership or LLP to bank or NBFC
12 Services provided by business facilitator (BF) to a A banking company, located in the taxable
banking company territory
13 Services provided by an agent of business A business correspondent, located in the
correspondent (BC) to business correspondent taxable territory
(BC)
14 Security services (services provided by way of A registered person located in the taxable
supply of security personnel) provided to a territory
registered person:
Provided that nothing contained in this entry shall
A registered person receiving security
apply to, -
services from any person other than a
(i)(a) a Department or Establishment of the
body corporate (like individual, firm,
Central Government or State Government or AOP etc.) is required to pay GST on
Union territory; or reverse charge basis
(b) local authority; or
(c) Governmental agencies;
which has taken registration under the Central
Goods and Services Tax Act, 2017 (12 of 2017)
only for the purpose of deducting tax under
section 51 of the said Act and not for making a
taxable supply of goods or services; or
(ii) a registered person paying tax under section
10 (composition scheme) of the said Act.
Provision of reverse charge notification, in so far as they apply to Central & State Governments, shall also
apply to the Parliament and State Legislatures.
Reverse Charge applicable under IGST Act
12 Any service supplied by any person who is Any person located in the taxable territory
located in a non-taxable territory to any person other than non-taxable online recipient
other than non-taxable online recipient.
13 Services supplied by a person located in non- Importer, in relation to any goods at any time
taxable territory by way of transportation of goods between their importation and the time when
by a vessel from a place outside India up to the they are cleared for home consumption,
customs station of clearance in India includes any owner, beneficial owner or any
Study Notes
45
person holding himself out to be the importer

[Section 2(26) of the Customs Act, 1962].
If the value of ocean freight not available, it
shall be 10% of CIF Value.
IGST is payable by importer under reverse
charge even if customs duty and IGST paid
on CIF value {Bahi Paper Mills Ltd. – AAR
(Uttarakhand}
Amendments in GST in real estate sector including RCM U/s 9 (4)

Earlier, the effective rate of GST on real estate sector was 8%/12% with ITC. With effect from
01.04.2019, the effective rates of GST for the new projects have been brought down to a large extent.
However, the promoters/builders have been given a one-time option to continue to pay tax at the old
rates on ongoing projects (buildings where construction and actual booking both have started before
01.04.2019) which have not been completed by 31.03.2019.
Highlighted in grey,
is out of syllabus
New effective rates of GST for the new projects by promoters are as follows:
(i) New rate of 1% without ITC on construction of affordable houses (area 60 sqm in metros/ 90 sqm
in non-metros and value upto Rs. 45 lakh).
(ii) New rate of 5% without ITC shall be applicable on construction of:
(a) all houses other than affordable houses, and
(b) commercial apartments such as shops, offices etc. in a residential real estate project (RREP)
in which the carpet area of commercial apartments is not more than 15% of total carpet area
of all apartments.
Conditions: Above tax rates shall be available subject to following conditions:
(a) Input tax credit shall not be available.

(b) 80% of inputs and input services [other than services by way of grant of development rights, long
term lease of land (against upfront payment in the form of premium, salami, development charges
etc.) or FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas], used
in supplying the service shall be purchased from registered persons.
However, if value of inputs and input services purchased from registered supplier is less than 80%, promoter
has to pay GST on reverse charge basis, under section 9(4) of the CGST Act, at the rate of 18% on all such
inward supplies** (to the extent short of 80% of the inward supplies from registered supplier).
Further, where cement is received from an unregistered person, the promoter shall pay tax on supply of such
cement on reverse charge basis, under section 9(4) of the CGST Act, at the applicable rate which is 28%
(CGST 14% + SGST 14%) at present.
Moreover, GST on capital goods shall be paid by the promoter on reverse charge basis, under section 9(4) of
the CGST Act at the applicable rates.
[Notification No. 07/2019 CT (R) Dated 29.03.2019/ Notification No. 07/2019 IT (R) Dated 29.03.2019]
46
Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer exempt from
GST
Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer have been exempted
subject to the condition that the constructed flats are sold before issuance of completion certificate and tax is
paid on them.
Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats sold after issue of
completion certificate, but such withdrawal shall be limited to 1% of value in case of affordable houses and 5%
of value in case of other than affordable houses. This will achieve a fair degree of taxation parity between
under construction and ready to move property.
The liability to pay tax on TDR, FSI, long term lease (premium) has been shifted from land owner to builder
under the reverse charge mechanism {U/s 9 (3) prescribed services).
Provision related to E-Commerce Operator

Proviso to
Section 9 (5) of
CGST Act/ 5 (5)
of IGST Act
For e-commerce aggregators providing services which are notified under section 9(5) under CGST
Act, 2017 & section 5 (5) IGST Act, 2017
Such persons are required to pay GST as if such services are supplied through it. As the e-commerce
operator himself is liable for collection and deposit of GST, there is no question of TCS U/s 52.
Services notified in section 9(5) under CGST Act & Section 5(5) IGST Act, 2017 are:-
(i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor
cycle for example – Ola, Uber;
(ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or
other commercial places meant for residential or lodging purposes, except where the person
supplying such service through electronic commerce operator is liable for registration under
section 22 (1) of CGST Act, 2017 {it includes homestay or guest house services};
(iii) services by way of house-keeping, such as plumbing, carpentering etc., except where the
person supplying such service through ECO is liable for registration under section 22 (1) of the
said CGST Act, 2017.
Study Notes
47
It means that except above (i), if person is liable to register then he/she is responsible for payment of tax
otherwise ECO is responsible for payment of tax.
Section 10 Composition Scheme (CGST Act)

Topic CGST Act Section CGST Rules
Entry
-Qualification 10 (1)
-Disqualification 10 (2)
-Conditions & Restrictions Rule 5
Life Zone
Validity period of composition Scheme Rule 6 (1)
No collection of tax + No ITC 10 (4)
Wrongly availed the scheme 10 (5) Rule 6 (7)
Exit Door
-Crossing the limit of Turnover 10 (3)
-Violation of eligibilities of Sec. 10 (1) Rule 6 (2), 6 (5), 6 (6), 6 (7)
-Self Exit Rule 6 (3), 6 (7)
1. Objective of Scheme: To bring Simplicity and reduce the compliance
cost for the small tax payers
2. Eligibility:- As per Section 10(1), A registered person whose aggregate turnover in the
previous financial year did not exceed 1.5 crore (as amended by the Notification
Notification No. 14/2019 – Central Tax, Dated 07.03.2019) The limits for
special category states (i) Arunachal Pradesh (ii) Uttarakhand (iii) Manipur (iv)
Meghalaya (v) Mizoram (vi) Nagaland (vii) Sikkim (viii) Tripura, remains 75 lakhs.
As per second proviso of Section 10, a person who opts to pay tax as a Manufacturers,
Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II [e.g.
Restaurant service], in case of Other Suppliers (e.g. Traders) may supply services
(other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not
exceeding ten percent of turnover in a State or Union territory in the preceding
financial year or five lakh rupees, whichever is higher.
Example 1:- Mr. A has opted for composition scheme in the financial year 2019-2020.
Intro His aggregate turnover in FY 2018-19 is Rs. 60 lakh. In FY 2019-2020, he can supply
duction services [other than restaurant services] upto a value of not exceeding:
(a) 10% of Rs. 60 lakh, i.e. Rs. 6 lakh. or
(b) Rs. 5 lakh,
whichever is higher.
Thus, he can supply services upto a value of Rs. 6 lakh in FY 2019-2020.
3. Rates of Tax:
Person % of the turnover State/UT

Manufacturers, other than manufacturers of CGST 0.50% + SGST/UTGST
such goods as may be notified by the 0.50%
Government, i.e. ice cream, pan masala and {Tax is payable even on
tobacco exempted supply}
Suppliers making supplies referred to in clause CGST 2.50% + SGST/UTGST
(b) of paragraph 6 of Schedule II [e.g. Restaurant 2.50%
service]
48
{Tax is payable even on
exempted supply}
In case of other suppliers (e.g. Traders) CGST 0.50% + SGST/UTGST
0.50% (on turnover of taxable
supplies of goods and
services)
Note: Along with CGST, equivalent amount of SGST/UTGST is also payable by the
taxable person.
4. Aggregate Turnover
(a) “Aggregate Turnover” means, the aggregate value of –
• All taxable supplies, having the same
• Exempt supplies, PAN, to be
• Exports of goods or services or both & computed on all
• Inter-State supplies India basis
(b) It excludes –
• Central tax, State tax, Union Territory tax, Integrated Tax & cess,
• The value of inward supplies which is subject to tax on reverse charge
basis,
• The value of supply of exempt services by way of extending deposits,
loans or advances in so far as the consideration is represented by way of
interest or discount.
The registered person shall be eligible to opt under sub-section (1), if:—
(a) save as provided in sub-section (1), he is not engaged in the supply of services;
(b) he is not engaged in making any supply of goods which are not leviable to tax
under this Act;
Eligibility to opt (c) he is not engaged in making any inter-State outward supplies of goods;
(d) he is not engaged in making any supply of goods through an electronic commerce
for composition
operator who is required to collect tax at source under section 52; and
scheme {As per (e) he is not a manufacturer of such goods as may be notified by the Government on
Section 10 (2)} the recommendations of the Council:
Provided that where more than one registered persons are having the same Permanent
Account Number (issued under the Income-tax Act, 1961), the registered person shall not
be eligible to opt for the scheme under sub-section (1) unless all such registered persons
opt to pay tax under that sub-section.
• As per Section 10 (3), the option availed of by a registered person under sub-
section (1) shall lapse with effect from the day on which his aggregate turnover
Other during a financial year exceeds the limit specified U/s 10 (1);
conditions • As per Section 10 (4), A taxable person to whom the provisions of Section 10 (1)
apply shall not collect any tax from the recipient on supplies made by him nor
shall he be entitled to any credit of input tax.
Supplier opting for composition scheme, shall-
1. Not to be engaged in manufacturer of Specified goods {Ice cream, pan
Conditions and Masala and Tobacco}
2. Not to be a casual taxable person/non-resident taxable person
restrictions for
3. Not eligible for Input Tax Credit
Composition 4. Not to issue a Tax Invoice & collect GST (Bill of Supply need to be
levy issued)
5. Mention the details and status of Composition Dealer on Bills &
Boards
Intimation for 1. Option to pay composite tax along with application for registration –
Composition Intimation for composition scheme [Rule 3 (2)]: - Any person who applies for
Study Notes
49
Levy (Rule 3 & registration may give an option to pay tax under composition scheme in
4) Part B of Form GST REG – 01, which shall be considered as an intimation
to pay tax under this scheme.
Effective Date: -From the date of Registration as per Rule 4 of CGST Rules, 2017
2. Filing of intimation before the beginning of financial year [Rule 3(3)]: -
Registered person shall electronically file an intimation in Form GST
CMP – 02. Duly signed or verified through EVC, on the common portal, prior
to commencement of the FY.
He shall furnish the statement in prescribed form within a period of 60 days
from the commencement of the relevant FY.
Effective Date: -From the beginning of FY as per Rule 4 of CGST Rules, 2017
3. One intimation applicable for all places in case of same PAN [Rule 3 (5)]
1. The person opting for the scheme must neither be a casual taxable person nor a non-
resident taxable person.
2. The goods held in stock by him have not been purchased from an unregistered
supplier and where purchased, he pays the tax under section 9 (4).
3. He shall pay tax U/s 9 (3)/(9 (4) on inward supply of goods or services or both.
Conditions and 4. He shall mention the words “composition taxable person, not eligible to collect tax on
supplies” at the top of the bill of supply issued by him.
restrictions form
5. Mandatory display of the words “Composition Taxable Person” on every notice and
composition signboard displayed at a prominent place.
levy (Rule 5) 6. Not to be engaged in manufacturer of specified goods during the preceding FY
{Ice cream and other edible ice whether or not containing cocoa, Pan Masala,
Tobacco and manufactured tobacco substitutes}
The registered person paying tax under section 10 may not file a fresh intimation every
year and he may continue to pay tax under the said section subject to the provisions of
the Act and these rules.
1. Validity of Scheme: As long as the prescribed conditions are met, the option exercised
by a Registered Person to pay tax U/s 10 shall remain valid.
2. Duties of the Person when Scheme becomes invalid or mandatory cessation of
composition levy on violation of conditions:
(a) Liable to pay tax under normal scheme
(b) Shall issue tax invoice for every taxable supply
(c) within 7 days of occurrence of such even, shall file an intimation for withdrawal in
Form GST CMP – 04
3. The registered person who intends to withdraw from the composition scheme shall,
before the date of such withdrawal, file an application in Form GST CMP-04.
4. Show Cause Notice shall be given by the Proper office if he believes that the
registered person was not eligible to pay tax u/s 10 or has contravened the provisions
Validity of
of the Act. Response to this notice should be furnished by taxable person within 15
Composition
days.
levy (Rule 6) 5. Acceptance/Refusal by the Proper Officer: Upon receipt of reply to the show cause
notice from the registered person, the Proper Officer shall issue an order within 30
days of receipt of such reply, either accepting the reply, or denying the option to pay
tax u/s 10.
6. Details of Stocks to be furnished by: Person who has furnished an intimation, or filed
an application for withdrawal, or order of withdrawal of option has been passed by the
proper officer shall file a statement containing details of stock within 30 days, from the
date from which the option is withdrawn or from the date of order passed. He shall be
entitled to avail input tax credit in respect of the stock of inputs and inputs contained in
semi-finished or finished goods held in stock by him and on capital goods held by him
on the date of withdrawal.
7. In case of wrongly availing the composition scheme, taxable person shall, in addition to
50
any tax that may be payable by him under any other provisions of this Act, be liable to
a penalty and the provisions of section 73 or section 74, shall, mutatis mutandis, apply
for determination of tax and penalty.
8. Withdrawal applies to all units.
Central Goods For the removal of difficulties, it is hereby clarified that the value of supply of exempt
and Services services by way of extending deposits, loans or advances in so far as the consideration is
Tax (Removal represented by way of interest or discount, shall not be taken into account –
of Difficulties) (i) for determining the eligibility for composition scheme under second proviso to
sub-section (1) of section 10;
Order, 2019
(ii) in computing aggregate turnover in order to determine eligibility for composition
No. 01/2019-CT
scheme.
01-02-2019
➢ Composition taxable person can import goods or services.
Other Points
➢ Composition taxable person is not entitled to export goods.
It is clarified that in a case where the taxpayer has sought withdrawal from the composition
scheme, the effective date shall be the date indicated by him in his intimation/application
filed in FORM GST CMP-04 but such date may not be prior to the commencement of the
financial year in which such intimation/application for withdrawal is being filed. If at any
stage it is found that he has contravened any of the provisions of the CGST Act or the
CGST Rules, action may be initiated for recovery of tax, interest and penalty.
In case of denial of option by the tax authorities, the effective date of such denial shall be
Circular No. from a date, including any retrospective date as may be determined by tax authorities, but
77/51/2018 shall not be prior to the date of contravention of the provisions of the CGST Act or the
Dated CGST Rules. In such cases, as provided under sub-section (5) of section 10 of the CGST
31.12.2018 Act, the proceedings would have to be initiated under the provisions of section 73 or section
74 of the CGST Act for determination of tax, interest and penalty for the period starting
from the date of contravention of provisions till the date of issue of order in FORM GST
CMP-07. It is also clarified that the registered person shall be liable to pay tax under section
9 of the CGST Act from the date of issue of the order in FORM GST CMP-07.
Provisions of section 18(1)(c) of the CGST Act shall apply for claiming credit on inputs held
in stock, inputs contained in semi-finished or finished goods held in stock and on capital
goods on the date immediately preceding the date of issue of the order.
Notification No. 2/2019-Central Tax (Rate) Dated 7th March 2019

{w.e.f. 1st April 2019}
Description of Supply:- First supplies of goods or services or both upto an aggregate turnover of fifty lakh
rupees made on or after the 1st day of April in any financial year, by a registered person.
Explanation.-For the purposes of this notification, the expression “first supplies of goods or services or both”
shall, for the purposes of determining eligibility of a person to pay tax under this notification, include the supplies
from the first day of April of a financial year to the date from which he becomes liable for registration under the
said Act but for the purpose of determination of tax payable under this notification shall not include the supplies
from the first day of April of a financial year to the date from which he becomes liable for registration under the
Act.
In computing aggregate turnover in order to determine eligibility of a registered person to pay central tax at the
rate of three percent under this notification, value of supply of exempt services by way of extending deposits,
loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken
into account.
Study Notes
51
Tax Rate:- CGST 3% + SGST/UTGST 3%
Conditions:-
1. Supplies are made by a registered person,-

(i) whose aggregate turnover in the preceding financial year was fifty lakh rupees or below;
(ii) who is not eligible to pay tax under sub-section (1) of section 10 of the said Act;
(iii) who is not engaged in making any supply which is not leviable to tax under the said Act;
(iv) who is not engaged in making any inter-State outward supply;
(v) who is neither a casual taxable person nor a non-resident taxable person;
(vi) who is not engaged in making any supply through an electronic commerce operator who is required to
collect tax at source under section 52; and
(vii) who is not engaged in making supplies of the goods, {Ice cream and other edible ice whether or not
containing cocoa, Pan Masala, Tobacco and manufactured tobacco substitutes}
2. Where more than one registered persons are having the same Permanent Account Number, central tax on
supplies by all such registered persons is paid at the rate specified above.
3. The registered person shall not collect any tax from the recipient on supplies made by him nor shall he be
entitled to any credit of input tax.
4. The registered person shall issue, instead of tax invoice, a bill of supply as referred to in clause (c) of sub-
section (3) of section 31 of the said Act with particulars as prescribed in rule 49 of Central Goods and
Services Tax Rules.
5. The registered person shall mention the following words at the top of the bill of supply, namely: - ‘taxable
person paying tax in terms of notification No. 2/2019-Central Tax (Rate) Dated 07.03.2019, not eligible to
collect tax on supplies’.
6. The registered person opting to pay central tax at the rate of three percent under this notification shall be
liable to pay central tax at the rate of three percent on all outward supplies specified in above topic
“Description of supply” notwithstanding any other notification issued under sub-section (1) of section 9 or
under section 11 of said Act.
7. The registered person opting to pay central tax at the rate of three percent under this notification shall be
liable to pay central tax on inward supplies on which he is liable to pay tax under sub-section (3) or, as the
case may be, under sub-section (4) of section 9 of said Act at the applicable rates.
8. Where any registered person who has availed of input tax credit opts to pay tax under this notification, he
shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to
the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished
goods held in stock and on capital goods as if the supply made under this notification attracts the provisions
of section 18(4) of the said Act and the rules made there-under and after payment of such amount, the
balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.
Notification No.21 /2019 – Central Tax Dated 23rd April, 2019
Registered persons paying tax under the provisions of section 10 of the CGST Act or by availing the benefit
of notification No. 02/2019– Central Tax (Rate), Dated 07.03.2019 as the class of registered persons who shall
follow the special procedure as mentioned below for furnishing of return and payment of tax:-
• The said persons shall furnish a statement, every quarter or, as the case may be, part thereof containing
the details of payment of self-assessed tax in FORM GST CMP-08 of the Central Goods and Services
Tax Rules, 2017, till the 18th day of the month succeeding such quarter.
52
• The said persons shall furnish a return for every financial year or, as the case may be, part thereof in
FORM GSTR-4 of the Central Goods and Services Tax Rules, 2017, on or before the 30th day of April
following the end of such financial year.
• The registered persons paying tax by availing the benefit of the said notification, in respect of the period
for which he has availed the said benefit, shall be deemed to have complied with the provisions of
section 37 and section 39 of the said Act if they have furnished FORM GST CMP-08 and FORM GSTR-
4 as provided in para 1 and para 2 above.
Circular No. 97/16/2019-GST Dated the 5th April 2019
(i) a registered person who wants to opt for payment of central tax @ 3% by availing the benefit of the said
notification, may do so by filing intimation in the manner specified in sub-rule 3 of rule 3 of the said rules
in FORM GST CMP-02 by selecting the category of registered person as “Any other supplier eligible for
composition levy” as listed at Sl. No. 5(iii) of the said form, latest by 30th April, 2019. Such person shall
also furnish a statement in FORM GST ITC 03 in accordance with the provisions of sub-rule (3) of rule
3 of the said rules.
(ii) any person who applies for registration and who wants to opt for payment of central tax @ 3% by
availing the benefit of the said notification, if eligible, may do so by indicating the option at serial no. 5
and 6.1(iii) of FORM GST REG-01 at the time of filing of application for registration.
(iii) the option of payment of tax by availing the benefit of the said notification in respect of any place of
business in any State or Union territory shall be deemed to be applicable in respect of all other places
of business registered on the same Permanent Account Number.
(iv) the option to pay tax by availing the benefit of the said notification would be effective from the beginning
of the financial year or from the date of registration in cases where new registration has been obtained
during the financial year.
It may be noted that the provisions contained in Chapter II Composition Rules (CGST) shall mutatis mutandis
apply to persons paying tax by availing the benefit of the said notification, except to the extent specified in para
above.
Example 2:- Mr. A is not a registered person during Financial Year 2018-19. From 1st April 2019, new
financial year commences. Upto September 2019, he achieves the aggregate turnover of Rs. 20 Lakhs and is
liable for registration under GST Laws w.e.f. 1st October 2019. From October 2019 to December 2019, he
made outward supply of Rs. 30 Lakhs. And, from Jan 2020 to March 2020, he made outward supply of Rs. 15
lakh.
His turnover of Rs 50. Lakh for recognising his benefit under this scheme {Notification No. 2/2019-Central Tax
(Rate) Dated 7th March 2019} will be counted from 1st April 2019. However, tax under this scheme shall be
payable only for the supplies made during October 2019 to December 2019 (i.e. on Rs. 30 lakhs).
As the limit of Rs. 50 Lakhs under this scheme exhausted till 31st December 2019 (i.e. Rs. 20 Lakhs before
registration and Rs. 30 Lakhs after registration), hence, from 1st January 2019 onwards, tax shall be payable
under normal provisions of GST as applicable for regular dealers.
Study Notes
53
Question & Answer

Q1. XYZ Ltd. is a manufacturing concern in Mumbai. In FY 19-20 total value of supplies including inward
supplies taxed under reverse charge basis are Rs. 1,55,00,000, please see below break up?
Particulars Amount
Intra State Supplies 60,00,000
Intra State Supplies made which are subject to 0% CGST 60,00,000
Intra State Supplies which are wholly exempt 30,00,000
Value of inward supplies which is payable under RCM 5,00,000
Explain whether XYZ Ltd. is eligible to opt for composition scheme in FY 18-19?
A. As per Section 2(6) of the CGST Act, 2017, “aggregate turnover” doesn’t include value of inward supplies
on which reverse charge is applicable so aggregate turnover is computed as under: -
Particulars Amount
Intra State Supplies 60,00,000
Value of inward supplies which is payable under RCM NIL
Total 1,50,00,000
Since, aggregate turnover doesn’t exceed Rs. 1,50,00,000 during the FY 19-20, so XYZ Ltd. is entitled for
composition scheme.
Q2. XYZ Ltd. is a manufacturing concern in Mumbai. It opted for composition in FY 18-19. Total value of
supplies including inward supplies taxed under reverse charge basis are Rs. 90,00,000, please see below
break up?
Particulars Amount
Intra State Supplies @ 5% 40,00,000
Value of inward supplies which is payable under RCM @ 5% 10,00,000
Compute composition tax liability and total tax liability?
A.
Particulars Amount
Value of inward supplies which is payable under RCM @ 5% NIL
Aggregate Turnover 80,00,000
Rate of Tax @ 1% (CGST+SGST) 80,000
XYZ Ltd. has to pay tax under reverse charge section 9 (3) of CGST Act, 2017 Rs. 50,000 (10,00,000*5%).
Total Tax Liability is Rs. 80,000+Rs. 50,000 = Rs. 1,30,000
Q3. XYZ Ltd. had opted for payment of tax under composition scheme during 2017-18. Its turnover during 17-
18 was as follows: -
(a) Supply of manufactured goods Rs. 20 Lacs
(b) Supply of traded goods Rs. 10 Lacs
(c) Supply of service Rs. 10 Lacs
(d) Export of goods Rs. 15 Lacs
54
On all these supplies SGST @ 6% & CGST rate is 6%. Calculate the tax liability.
A. Composition Scheme is not available if a taxable person is exporting goods. Hence, he is liable to pay tax on
Rs. 40 Lacs (20+10+10) as follows – SGST @ 6% = Rs. 2,40,000 and CGST @ 6% = Rs. 2,40,000.
He can make export of goods without payment of tax.
Q4. Please discuss provision related to alcoholic liquor for human consumption & for industrial consumptions.
A. The constitutional amendment put alcoholic liquor for human consumption out of the purview of GST i.e. this
product will continue to fall under the ambit of State Excise Duty. It should be noted that alcoholic liquor for
industrial consumption and non-alcoholic beverages are covered within the gamut of GST.
Q5. What happens if a taxable person who has opted to pay taxes under the composition scheme crosses the
threshold limit of Rs. 75 lakhs/1.5 crore during the year?
A. In such case, from the day the taxable person crosses the threshold, the permission granted earlier is deemed
to stand withdrawn, and he shall be liable to pay taxes under the regular scheme i.e. section 9, from such day.
Q6. A hotel provided accommodation in Himachal Pradesh, through an electronic commerce operator –
Makemyyatra.com. The hotel is not liable to get registered as per the provisions of Section 22 (1) of the CGST
Act. Who is the person liable to pay GST in this case? Will your answer be different if the Electronic
Commerce operator Makemyyatra.com does not have a physical presence in India?
A. As per Section 9 (5) of the CGST Act, 2017, person liable to pay GST in this case is the Electronic Commerce
Operator (ECO) i.e. Makemyyatra.com. All the provisions of the GST Law shall apply to such ECO as if he is
the supplier liable for paying the tax in relation to the supply of such services. If Makemyyatra.com does not
have a physical presence in India, person liable to pay tax is the person representing Makemyyatra.com.
Q7. Who is responsible to pay taxes?

A. The persons responsible for payment of taxes are as under –
1. Supplier: The person effecting taxable supplies is liable to pay taxes.
2. Recipient – Reverse Charge: Section 9 (3) of the CGST Act, 2017 inter alia provides that, the
Government may, on the recommendations of the council, by notification specify categories of supply
of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of
such goods or services or both.
In terms of Section 9 (4), all registered recipient of goods or services or both is liable to pay tax under
reverse charge in the event supplier of goods is not registered. It must be noted that Central
Government vide Notification No. 22/2018-CT (Rate) Dated 06-08-2018 & No. 23/2018 – IT (Rate)
Dated 06-08-2018, has exempted intra-State & inter-State supplies of goods or services or both
received by a registered person from any supplier, who is not registered, from the whole of the central
tax leviable thereon under Section 9 (4) of the CGST Act 2017/ under Section 5(4) of the IGST Act,
2017 till 30-09-2019.
3. E-Commerce Operator: U/s 9 (5) of CGST Act, 2017, categories of services have been notified by the
Government on the recommendation of the Council, the tax on which is paid by the electronic commerce
operator as if such services are supplied through it.
Q8. ABC Ltd., a manufacturing concern is affecting intra-State taxable supply and inter-State supply. The
company wants to opt for composition scheme. Please advise ABC Ltd. whether they can opt for composition
scheme or not?
A. As per provisions of Section 10 of CGST Act, 2017, a manufacturer can opt for composition scheme if he is
not engaged in making any inter-State outward supplies of goods. In this case, since ABC Ltd. has affected
interstate taxable supply of goods, hence it cannot opt for composition scheme.
Study Notes
55
Q9. What are the consequences, if a taxable person violates the conditions prescribed for composition scheme?
A. Following are the consequences for non-compliance with the conditions specified for composition scheme:
a. Shall be liable to pay additional taxes at the rates applicable to regular taxable person;
b. Shall be liable to pay penalty; and
c. The amount of tax and penalty shall be recovered in terms of Section 73 or 74 of the CGST Act, 2017.
Q10. ABC Ltd. a trading concern in Rajasthan has opted for composition scheme furnishes you with the
following information for Financial Year 2019-20. It required you to determine its tax liability. The details are: -
Particulars Amount
Intra State Supplies of Goods ‘A’ (Tax Rate @ 5%) 10,00,000
Intra State Supplies of Goods ‘B’ (Tax Rate @ 12%) 35,00,000
Intra State Supplies of Services ‘A’ (Tax Rate @ 18%) 10,00,000
Value of inward supplies on which tax payable under RCM (Tax Rate 18%) 10,00,000
A.
Particulars Amount
Intra State Supplies of Goods ‘A’ (Tax Rate @ 5%) 10,00,000
Intra State Supplies of Goods ‘B’ (Tax Rate @ 12%) 35,00,000
Intra State Supplies which are wholly exempt (No tax for composition trader) NIL
Intra State Supplies of Services ‘A’ (Tax Rate @ 18%) 10,00,000
CGST @ 0.5% & SGST @ 0.5% = 1% [A] 55,000
Tax payable as reverse Charge (Rs. 10,00,000*18%) [B] 1,80,000
Total Tax Liability [A+B] 2,35,000
Q11. Comment on chargeability of following transaction: -

i. ABC Ltd. availed service of XYZ Ltd. (Goods Transport Agency) for transportation of goods by road
from Pune to Mumbai.
ii. ABC Ltd. paid Rs. 1,00,000 towards legal services provided by partnership advocate firm AZB.
iii. ABC Ltd. paid Rs. 1,00,000 to independent director.
iv. Government has provided Business support services to ABC Ltd. for Rs. 1,00,000.
v. ABC Ltd. paid Rs. 1,00,000 towards sponsorship of exhibition. If Mr. A has paid Rs. 1,00,000 towards
sponsorship of exhibition then whether your comment will differ.
vi. Government has given commercial property on monthly rent for Rs. 1,00,000.
vii. ABC Insurance company pay Rs. 1,00,000 commission to Mr. A whose turnover is lesser than threshold
limit for registration.
viii. ABC Ltd. has availed Manpower services from XYZ Ltd. Will your answer differ if service provider is Mr.
A.
ix. Works contract services provided by ABC Ltd. to XYZ Ltd.
x. Security services by Mr. A to ABC Ltd (registered in GST).
xi. Insurance company selling insurance policies through an ECO and paying commission to ECO.
A.
i. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3) since it is liable to pay freight
for transportation of goods so ABC Ltd. shall be treated as recipient of service. If GTA has paid GST
under forward charge @ 12% then it is not subject to reverse charge.
ii. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3). Services provided by an
individual advocate including a senior advocate or firm of advocates by way of legal services, directly
56
or indirectly, are subject to reverse charge except where legal services provided to business entity
whose aggregate turnover is upto Rs. 20 Lacs are exempt, vide Entry No. 45 Notification No. 12/2017-
CT (Rate) and Entry no. 47 of Notification No. 9/2017-IT (Rate).
iii. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3). Services supplied by a
director of a company or a body corporate to the said company or the body corporate, are subject to
reverse charge.
iv. In this case GST shall be paid by ABC Ltd. under reverse charge U/s 9 (3). Services supplied by the
Central Government, State Government, Union Territory or local authority to a business entity, are
subject to reverse charge.
v. In this case sponsorship is received by ABC Ltd. so they are subject to reverse charge U/s 9 (3). If it is
provided to Mr. A then GST will be payable by supplier of service. Service provided by way of
sponsorship to anybody corporate or partnership firm are subject to reverse charge.
vi. It is subject to reverse charge U/s 9 (3).
vii. In this case ABC Insurance company will be liable to pay GST under reverse charge basis U/s 9 (3). It
cannot claim exemption since it is recipient of service.
viii. XYZ Ltd. is liable to pay GST. Even if it is provided by Mr. A, treatment remain same i.e. service provider
Mr. A, is liable to pay GST.
ix. ABC Ltd. is liable to pay GST as service provider.
x. ABC Ltd. is liable to pay GST as a reverse charge.
xi. ‘ECO’ shall not be termed as ‘insurance agent’ unless such ‘ECO’ is licensed under Section 42 of
Insurance Act. Unless ‘ECO’ can be termed as ‘insurance agent’, RCM shall not be applicable.
Q12. Whether a Restaurant is supplying liquor/alcohol is eligible for Composition Scheme?

A. A Restaurant is supplying liquor/alcohol is not eligible for Composition Scheme because according to the
provisions of the Act, composition scheme cannot be availed on those goods and services on which GST is not
levied and liquor/alcohol are out of the scope of GST. Person has no choice to go to Composition Scheme;
rather he has an only window of regular scheme which is mandatory if he falls under the criteria of aggregate
turnover.
Q13. Mr. A, a retailer who keeps on inventories, presents the following expected information for the year –
Purchase of goods: Rs. 60 Lacs (GST @ 5%)
Sales (at fixed selling price inclusive of all taxes): Rs. 72 Lacs (GST @ 5%)
Discuss whether he should opt for composition scheme if composite tax is 1% of turnover.
Expenses of keeping detailed statutory records required under the GST Laws will be Rs. 1,44,000 p.a., which
shall get reduced to Rs. 60,000 if composition scheme is opted for. Other expenses are Rs. 3,60,000 p.a.
A: The cost to the ultimate consumer under two schemes is as under –
Normal GST Composition

Scheme Scheme*
Cost of goods sold (*No credit under compositions scheme, 60,00,000 63,00,000
hence, cost of goods sold will be higher)
Add: Costs of Maintaining records 1,44,000 60,000
Add Normal Expenses 3,60,000 3,60,000
Total Costs 65,04,000 67,20,000
Sales (inclusive of taxes) 72,00,000 72,00,000
Less Tax (GST = 72,00,000* 5/105); Composition Tax = 3,42,857 72,000
(72,00,000*1%)
Sales (Net of Taxes) 68,57,143 71,28,000
Study Notes
57
Profit 3,53,143 4,08,000

Since profit under composition scheme is higher so dealer should opt for composition scheme.
Q14. Will a taxable person be eligible to opt for composition scheme only for one out of 3 business verticals?
A. No. Composition scheme would become applicable for all the business verticals / registrations which are
separately held by the person with same PAN.
Q15. Can composition scheme be availed if the taxable person has inter-State inward supplies?
A. Yes. Composition scheme is applicable subject to the condition that the taxable person does not engage in
making inter-state outward supplies, while there is no restriction on making any inter-State inward supplies.
Q16. How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?
A. The methodology to compute aggregate turnover is given in Section 2(6). However, since composition
scheme is applicable only to suppliers making intra-state supplies, ‘aggregate turnover’ means ‘Value of all
taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge
basis), exempt supplies (except interest income as discussed above), exports of goods or services or both or
inter-state supplies of a person having the same PAN (i.e., across India) excluding CGST, IGST, SGST, UGST
and cess.
Q17. Can a person paying tax under composition scheme make supplies of goods to SEZ?
A. No. Supplies to SEZ from domestic tariff area (DTA) will be treated as inter-State supply. A person paying
tax under composition scheme cannot make inter-State outward supply of goods. Thus, for making supplies to
an SEZ unit, a person needs to take registration as a regular taxpayer. The supplies to SEZ will be zero rated
and the supplier will be entitled to make supplies without payment of tax or if he pays tax, he will be entitled to
refund of tax so paid.
Q18. Mr. A is a whole-time director of ABC Ltd. Salary is Rs. 5,00,000 per month. Besides he gets sitting fees
for Board’s meetings. During Dec’17 and Mar’18, sitting fees is Rs. 1,00,000 for five meetings. Find out GST
liability if any.
A. Mr. A being whole time director is an employee of company. The remuneration received by him (including
sitting fees for Board’s meeting) is in the course of employment contract. Supply of such services is out of scope
of supply in view of provisions laid down in Sec 7(2) of CGST Act read with Schedule III of CGST Act. Thus,
GST is not applicable to the transaction.
Q19. Mr. A has written a book which is published by ABC Ltd. of Mumbai. You are required to find the following:
(a) who is liable to pay GST? (b) Rework, if publisher is located in Paris, then who is liable to pay GST?
A. (a) ABC Ltd. of Mumbai being recipient of service is liable to pay GST under RCM.
(b) RCM shall not be applicable in this case as recipient is not located in taxable territory. Thus, Mr. A shall be
liable to pay GST. However, such supply will qualify as ‘export of service’ provided payment received in
convertible foreign currency. Such supply of service shall be zero-rated (as per provisions of Sec 16 of IGST
Act, 2017). In that event, Mr. A shall be entitled to supply such service without payment of IGST.
58
Q20. A tourist from USA visits India and purchases a handicraft wooden item in Mumbai. How it is going to be
taxed under GST?
A. In terms of proviso to section 8(1), supplies made to a foreign tourist shall not be treated as intra-state supply
even when location of the supplier and the place of supply of goods are in the same State or same Union
territory.
In terms of sec 7(5)(c) of IGST Act, 2017, where supply of goods or services or both is in the taxable territory,
not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of
goods or services or both in the course of inter-State trade or commerce.
In this case, even though the place of supply and location of supplier are in the same State, it will be treated as
inter-State transaction and will be liable to IGST.
Q21. What happens if the receiver of goods and/or services is required to pay tax under Reverse Charge but is
not a registered dealer?
A. All taxpayers required to pay tax under reverse charge have to register for GST and the threshold of Rs 20
Lakhs is not applicable to them.
Q22. Is Input Tax Credit allowed under Reverse Charge?

A. Tax paid on reverse charge basis will be available for input tax credit if such goods and/or services are used,
or will be used, for business. The recipient (i.e., who pays reverse tax) can avail input tax credit.
Q23. AB & Co. is a firm of advocates (partners are A and B), having equal profit sharing ratio. Find out the GST
liability
a) Legal professional services provided to X, an advocate of Bombay High Court (gross receipts of X is
always more than Rs. 50,00,000 per annum): Rs. 8,00,000
b) Legal professional services provided to B & Co. (a firm of 10 advocates) : Rs. 32,00,000.
c) Legal professional services provided to C (an Employee) (this service is provided to C in a personal
legal matter) : Rs. 6,00,000.
d) Legal professional services provided to D Ltd., Delhi based company (turnover of D Ltd. of the preceding
financial year is Rs. 6,00,000) : Rs. 11,00,000.
e) Legal professional services provided to E Ltd., Delhi based company (turnover of E Ltd. of the preceding
financial year is Rs. 50,00,000) : Rs. 5,00,000.
Above figures are exclusive of GST. Please analyze each case and give your answer mentioning forward charge
or reverse charge.
A.
a) Services provided to X, shall be exempt as provided to individual advocate via entry no. 45.
b) Services provided to B & Co., shall be exempt via entry no. 45
c) Services provided to C, shall be exempt since provided to non-business entity
d) Services provided to D Ltd., shall be exempt as provided to business entity having turnover not
exceeding Rs 20,00,000
e) This will be subject to reverse charge & E Ltd. has to pay reverse charge @ 18% i.e. Rs. 90,000.
Q24. Would GST be payable on goods not intended to be sold, taken out for participation in overseas exhibitions
and trade fairs and brought back into India as these goods are meant for exhibition only ?
A. GST is not payable in such cases. Exporters will need exhibition participation letter and no foreign exchange
involved letter from the concerned bank for the purpose of exchange control requirements. At the time of re-
import, identity of goods imported with export goods needs to be established to seek exemption from import
Study Notes
59
duty in accordance with Customs provisions. IGST will be exempted at the time of re-import in view of
exemptions granted under Customs.
Q25. Whether IGST on import of goods would be levied under IGST Act or under Customs Act?
A. As per Section 7(2) of IGST Act, import of goods is Inter-State Supply. Thus, IGST will be levied on import
of goods also. However as per Section 5:
✓ IGST on goods imported into India shall be levied and collected in accordance with the provisions of
section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act
✓ Value shall be ‘Value determined as per Sec 14 of Customs Act, 1962 (please refer Valuation chapter
in Custom Book)
Q26. Exploration site is at 150 nautical miles from base line. Some minerals explored (not petroleum etc.) and
sent to refinery in Maharashtra, the nearest State. Whether this will attract IGST or CGST and SGST?
A. Exploration site is location of supplier. Location of site in 150 NM is beyond territorial waters but still within
Indian territory (as for purposes of GST law, definition of India covers area upto exclusive economic zone). Such
site shall be treated as located in ‘other territory’ which is also ‘a union territory’ as defined under Sec 2(114) of
CGST Act. Exploration Site is supplying goods to refinery in Maharashtra. Thus, place of supply of goods is
falling into Maharashtra State.
Since location of supplier is union territory and place of supply is Maharashtra, it is inter-state supply in terms
of Sec 7(1) of IGST Act. Thus, aforesaid supply shall attract charge of IGST under section 5 of IGST Act.
Q27. Whether CGST & SGST/UTGST is applicable on import of goods or service or both?
A. In terms of Section 7 of the IGST Act, 2017, import of goods or services or both is shall be treated to be a
supply in the course of inter-State trade or commerce. Accordingly, tax under the provisions of IGST Act, 2017
(i.e. IGST) shall apply on import of goods or services or both.
• Import of Goods: IGST leviable U/s 5 of IGST Act. However, it is collected in the manner specified under
Customs Tariff Act, 1975. Valuation of such transaction is also as per provisions of Customs Tariff Act.
• Import of Services: IGST leviable U/s 5 of IGST Act. However, it is collected as per provisions of GST
law (i.e. as per time of supply of such transaction). Valuation of such transaction is also as per provisions
of GST law.
Q28. Will withdrawal intimation in any one place be applicable to all places of business?
A. Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union
territory, shall be deemed to be an intimation in respect of all other places of business registered on the same
Permanent Account Number.
Q29. ABC Associates a recovery agent taken on board by XYZ Bank, Mumbai. The following service supplied
by ABC Associates in the month of January 2018:
i. Fee of Rs 10,00,000 for supply of services in relation to recovery of dues from the defaulting
Borrowers.
ii. Supply of services with regard to demand for recovery or taking possession of the security from
defaulting Borrowers, for which separate fee charged from the bank Rs. 5,00,000.
Answer the following:
(a) Is it supply of service?
(b) If so, who is liable to pay GST?
(c) What is the GST liability if tax rate is 18%?
60
Ans. (a) Yes. It is taxable supply of service.
(b) XYZ Bank being recipient of service is liable to pay GST under RCM.
(c) GST liability = Rs. 2,70,000 [(Rs. 10,00,000 + 5,00,000) x 18%]
Q30. Salim Khan a renowned writer and author of novels transferred the copyright of his one published novel
to Yashraj Films for a consideration. Examine the tax implications as per GST Act?
Ans. As per section 9(3) of CGST Act read with relevant notifications, services supplied by an author by way of
transfer or permitting the use or enjoyment of copyright covered under sec. 13(1)(a) of the Copyright Act, 1957
relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the
like reverse charge shall be applicable. Thus in the given case the liability to pay GST shall be upon Yashraj
Films as it is the recipient of service.
Q31. A hotel owner is providing following services:

i. Room renting for lodging purposes;
ii. Banquet renting for business seminars;
iii. Restaurant services;
His aggregate turnover from all the above services is 90 lakhs. Hotel owner has now started providing above
services through makemyyatra.com (Australia based website). Whether in such case in respect of any of
service provided through ECO, ECO shall be liable to pay GST in terms of Sec 9(5) of CGST Act?
Ans. As per section 9(5) of CGST Act, ECO is liable to pay GST only in respect of notified services supplied
through ECO. One of the notified service is service by way of providing accommodation in hotels, inns, guest
houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where
the person supplying such service through electronic commerce operator is liable for registration U/s 22(1) of
the CGST Act. So, in above mentioned cases:-
i. ECO shall not be liable to pay GST. Since aggregate turnover of hotel is more than threshold exemption
and it is liable to take GST registration U/s 22 (1) of CGST Act. Thus, GST shall be payable by hotel
under forward charge.
ii. Banquet renting service has not been notified, thus ECO shall not be liable to pay GST. Thus, GST
shall be payable by hotel under forward charge.
iii. Restaurant service has not been notified, thus ECO shall not be liable to pay GST. Thus, GST shall be
payable by hotel under forward charge.
Q32. Mr. A is a senior advocate in Calcutta High Court. During October 2018, he provides legal service to ABC
associates (a firm of advocates in Mumbai) for a fee of Rs. 5,00,000. Turnover of ABC associates for preceding
financial year is Rs. 36 lakh.
Ans. Legal services provided by senior advocate to a business entity is exempt if aggregate turnover in previous
year of such business entity is upto Rs. 20 lakhs. In aforementioned case, the recipient advocate firm is a
business entity with aggregate turnover exceeding Rs. 20 lakhs. Thus, services to such advocate firm is not
exempt. GST shall be payable in given situation.
However, such service are subject to reverse charge where client of advocate firm shall be deemed to be the
recipient of such service (he being the actual litigant/applicant/ petitioner) and hence, shall be liable to pay GST
on services of senior advocate.
Study Notes
61
Sec. 11 of CGST/Sec. 6 of IGST Power to Grant Exemption from Tax

Notification No. 12/2017 – CT/ List of Services Exempt Under CGST & IGST
Notification No. 9/2017-IT
Section 11 Power to Grant Exemption from Tax (Section 6 of IGST Act)
62
List of services exempt from CGST (Notification No. 12/2017 – CT

(R) Dated 28-06-2017 / Notification No. 9/2017-IT (R) Dated 28-06-
2017 {Sr. No. is of CGST Notification}
Sr.
No.
Description of Services Important points
1 Services by an entity registered under section 12AA of the Income-tax Act, 1961 If such entity provides any
(43 of 1961) by way of charitable activities. other services other than
charitable activity then it
1. Any services provided by entity registered under Section 12AA of the is subject to GST i.e.
Income Tax Act, 1961 by way of advancement of religion, spirituality or yoga renting of commercial
are exempt. property owned by such
2. Any fee or consideration charged in any other form from the participants for entity/trust.
participating in a religious, Yoga or meditation programme or camp meant The term ‘charitable
for advancement of religion, spirituality or yoga shall be exempt. activities’ mean activities
3. Any Residential programmes or camps where the fee charged includes cost relating to 1) Public health
of lodging and boarding shall also be exempt. However, if charitable or e.g. care or counselling of
religious trusts merely or primarily provide accommodation or serve food terminally ill, people
and drinks against consideration in any form including donation, such afflicted with HIV or AIDS
activities will be taxable. etc., public awareness of
4. Similarly, activities such as holding of fitness camps or classes such as preventive health etc. 2)
those in aerobics, dance, music etc. will be taxable. Advance of Religion,
{Circular No. 66/40/2018 Dated 26th October 2018} spirituality or yoga 3)
Hostel accommodation services provided by trusts to students do not fall within Advancement of
the ambit of charitable activities. However, accommodation service in hostels Educational
including such services provided by trusts having value of supply below Rs. Programmes/Skill,
1,000 per day is exempt under Entry 14 of the Notification. relating to
{Circular No. 32/06/2018-GST Dated 12.02.2018] abandoned/orphaned
children, prisoners,
physically or mentally
abused and traumatized
persons, persons over
the age of 65 years
residing in a rural area
4) Preservation of
environment including
watershed, forests &
wildlife.
2 Services by way of transfer of a going concern, as a whole or an
independent part thereof.
3 Pure services (excluding works contract service or other composite supplies
involving supply of any goods) provided to the Central Government, State
Government or Union territory or local authority or a Governmental authority or
a Government entity by way of any activity in relation to any function entrusted
to a panchayat under article 243G of the Constitution or in relation to any
function entrusted to a municipality under article 243W of the Constitution.
3A Composite supply of goods and services in which the value of supply of goods
constitutes not more than 25 per cent of the value of the said composite supply Important term
provided to the Central Government, State Government or Union territory or is
local authority or a Governmental authority or a Government Entity by way of Municipality/
any activity in relation to any function entrusted to a panchayat under article Panchayat
243G of the Constitution or in relation to any function entrusted to a municipality
under article 243W of the Constitution.
Study Notes
63
4 Services by Central Government, State Government, Union territory, local

authority or governmental authority by way of any activity in relation to any
function entrusted to a municipality under article 243 W of the Constitution.
5 Services by Central Government, State Government, Union territory, local
authority or governmental authority by way of any activity in relation to any
function entrusted to a panchayat under article 243 G of the Constitution.
6 Services by the Central Government, State Government, Union territory or Let take example of post
local authority excluding the following services— office services which are
(a) services by the Department of Posts by way of speed post, subject to GST: -
express parcel post, life insurance, and agency services provided to a 1. Rural postal life
person other than the Central Government, State Government, Union insurance services
territory; 2. Speed post & Express
(b) services in relation to an aircraft or a vessel, inside or outside the precincts post parcel
of a port or an airport; 3. Collection of telephone
(c) transport of goods or passengers; or and electricity bill
(d) any service, other than services covered under entries (a) to (c) above, 4. Distribution of mutual
provided to business entities. funds, bonds and
passport application etc.
Services provided by State Government by way of general insurance (managed
by government) to employees of the State government/Police personnel,
employees of Electricity Department or students of colleges/private schools etc.
wherein the total premium for insurance policy is paid by employees, students
etc. are exempt.
7 Services provided by the Central Government, State Government, Union
territory or local authority to a business entity with an aggregate turnover of up
to twenty lakh rupees (ten lakh rupees in case of a special category state) in
the preceding financial year.
Explanation.- For the purposes of this entry, it is hereby clarified that the
provisions of this entry shall not be applicable to- Co-relate with reverse
(a) services,- charge specified U/s 9 (3)
(i) by the Department of Posts by way of speed post, express parcel post, life
insurance, and agency services provided to a person other than the Central
Government, State Government, Union territory;
(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a
port or an airport;
(iii) of transport of goods or passengers; and
(b) services by way of renting of immovable property.
territory or local authority to another Central Government, State Government,
Union territory or local authority:
Provided that nothing contained in this entry shall apply to services-
(i) by the Department of Posts by way of speed post, express parcel
post, life insurance, and agency services provided to a person other than
the Central Government, State Government, Union territory;
(ii) in relation to an aircraft or a vessel, inside or outside the precincts of a
port or an airport;
(iii) of transport of goods or passengers.
9 Services provided by Central Government, State Government, Union
territory or a local authority where the consideration for such services
does not exceed five thousand rupees:
Provided that nothing contained in this entry shall apply to-
(i) services by the Department of Posts by way of speed post, express parcel
post, life insurance, and agency services provided to a person other than the
Central Government, State Government, Union territory;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts
of a port or an airport;
(iii) transport of goods or passengers:
64
Provided further that in case where continuous supply of service, as defined in
sub-section (33) of section 2 of the Central Goods and Services Tax Act, 2017,
is provided by the Central Government, State Government, Union territory or a
local authority, the exemption shall apply only where the consideration
charged for such service does not exceed five thousand rupees in a financial
year.
9A Services provided by and to FIFA and its subsidiaries directly or indirectly Director (Sports), Ministry
related to any of the events under FIFA U 17 World Cup 2017 to be hosted in of Youth Affairs and
India are exempt. Sports certifies that the
services are
directly/indirectly related
to any of the events under
FIFA U-17 world cup
2017.
9B Supply of services associated with transit cargo to Nepal and Bhutan
(landlocked countries) are exempt
9C Supply of service by Government Entity to Central Government, State
Government, Union Territory, local authority or any person specified by Central
Government, State Government, Union Territory or local authority against
consideration received from Central Government, State Government, Union
Territory or local authority, in the form of grants is exempt
9D Services by an old age home run by Central Government, State Government or
by an entity registered under section 12AA of the Income-tax Act, 1961 (43 of
1961) to its residents (aged 60 years or more) against consideration upto twenty
five thousand rupees per month per member, provided that the consideration
charged is inclusive of charges for boarding, lodging and maintenance.
10 Services provided by way of pure labour contracts of construction, erection,
commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of a civil structure or any other original works
pertaining to the beneficiary-led individual house construction or enhancement
under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana.
10A Services supplied by electricity distribution utilities by way of construction,
erection, commissioning, or installation of infrastructure for extending electricity
distribution network upto the tube well of the farmer or agriculturalist for
agricultural use.
11 Services by way of pure labour contracts of construction, erection,
commissioning, or installation of original works pertaining to a single residential
unit otherwise than as a part of a residential complex.
11A Service provided by Fair Price Shops to Central Government, State

Government or Union territory by way of sale of food grains, kerosene, sugar,
edible oil, etc. under Public Distribution System against consideration in the
form of commission or margin.
12 Services by way of renting of residential dwelling for use as residence. Giving for entertainment,
hotel, religious body or
Grant of tenancy rights in a residential dwelling for use as residence dwelling any other commercial
against tenancy premium or periodic rent or both is exempt activity etc. is subject to
[Circular No.44/18/2018 CGST Dated 02.05.2018] GST.
13 Services by a person by way of-
(a) conduct of any religious ceremony;
(b) renting of precincts of a religious place meant for general public, owned
or managed by an entity registered as a charitable or religious trust under
section12AA of the Income-tax Act, 1961 (hereinafter referred to as the
Income-tax Act) or a trust or an institution registered under sub clause (v) of
clause (23C) of section 10 of the Income-tax Act or a body or an
authority covered under clause (23BBA) of section 10 of the said
Income-tax Act:
Study Notes
65
Provided that nothing contained in entry (b) of this exemption shall apply to,-
(i) renting of rooms where charges are one thousand rupees or more per day;
(ii) renting of premises, community halls, kalyanmandapam or
open area, and the like where charges are Rs. 10,000 or more per day;
(iii) renting of shops or other spaces for business or commerce where charges
are ten thousand rupees or more per month.
14 Services by a hotel, inn, guest house, club or campsite, by whatever name
called, for residential or lodging purposes, having value of supply of a unit
of accommodation below one thousand rupees per day or equivalent.
15 Transport of passengers, with or without accompanied belongings, by –
(a) air, embarking from or terminating in an airport located in the state of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, or Tripura or at Bagdogra located in West Bengal;
(b) non-airconditioned contract carriage other than radio taxi, for transportation
of passengers, excluding tourism, conducted tour, charter or hire; or
(c) stage carriage other than airconditioned stage carriage.
Elephant/camel joy rides are not classified as transportation services and will
attract GST @ 18% with threshold exemption being available to small service
providers. (Circular No. 32/06/2018-GST dt. 12-2-2018)
16 Services provided to the Central Government, by way of transport of
passengers with or without accompanied belongings, by air, embarking from or
terminating at a regional connectivity scheme airport, against consideration in
the form of viability gap funding:
Provided that nothing contained in this entry shall apply on or after the
expiry of a period of three years from the date of commencement of operations
of the regional connectivity scheme airport as notified by the Ministry of Civil
Aviation.
17 Service of transportation of passengers, with or without accompanied AC carriage is taxable
belongings, by—
(a) railways in a class other than—
(i) first class; or
(ii) an air-conditioned coach;
(b) metro, monorail or tramway;
(c) inland waterways;
(d) public transport, other than predominantly for tourism purpose, in a
vessel between places located in India; and
(e) metered cabs or auto rickshaws (including e-rickshaws).
18 Services by way of transportation of goods-
(a) by road except the services of—
(i) a goods transportation agency; (ii) a courier agency;
(b) by inland waterways.
19 Services by way of transportation of goods by an aircraft from a place outside
India upto the customs station of clearance in India.
19A Services by way of transportation of goods by an aircraft from customs station Nothing contained in this
of clearance in India to a place outside India. serial number shall apply
after the 30th day of
September, 2018 2019
19B Services by way of transportation of goods by a vessel from customs station of Nothing contained in this
clearance in India to a place outside India. serial number shall apply
after the 30th day of
September, 2018 2019
20 Services by way of transportation by rail or a vessel from one place in India to All the transportation are
another of the following goods – not exempt i.e. transport
(a) relief materials meant for victims of natural or man-made disasters, of postal mails and bags,
calamities, accidents or mishap; household items,
(b) defence or military equipments; petroleum product,
(c) newspaper or magazines registered with the Registrar of Newspapers; alcoholic beverages etc.
(d) railway equipments or materials;
(e) agricultural produce;
(f) milk, salt and food grain including flours, pulses and rice; and
66
(g) organic manure.
21 Services provided by a goods transport agency, by way of transport in a Entry No. 20 & 21 are
goods carriage of – identical.
(a) agricultural produce;
(b) goods, where consideration charged for the transportation of goods on a In case of Entry No. 21 –
consignment transported in a single carriage does not exceed one GTA, (b) & (c) are extra
thousand five hundred rupees; exempt.
(c) goods, where consideration charged for transportation of all such goods
for a single consignee does not exceed rupees seven hundred and fifty; In case of Entry No. 20 –
(d) milk, salt and food grain including flour, pulses and rice; Rail or Vessel, (d) is extra
(e) organic manure; exempt.
(f) newspaper or magazines registered with the Registrar of Newspapers;
(g) relief materials meant for victims of natural or man-made disasters,
calamities, accidents or mishap; or
(h) defence or military equipments.
21A Services provided by a goods transport agency to an unregistered person, Co-relate with reverse
including an unregistered casual taxable person, other than the following charge specified U/s 9(3).
recipients, namely:- Key word is “unregistered
(a) any factory registered under or governed by the Factories Act, 1948; or person & unregistered
(b) any Society registered under the Societies Registration Act, 1860 or under casual taxable person”.
any other law for the time being in force in any part of India; or
(c) any Cooperative Society established by or under any law for the time being
in force; or
(d) anybody corporate established, by or under any law for the time being in
force; or
(e) any partnership firm whether registered or not under any law including
association of persons;
(f) any casual taxable person registered under the CGST Act or the IGST Act or
the SGST Act or the UTGST Act.
21B Services provided by a goods transport agency, by way of transport of goods in Co-relate with Reverse
a goods carriage, to, - Charge list
(a) a Department or Establishment of the Central Government or State
Government or Union territory; or
(c) Governmental agencies,
which has taken registration under the Central Goods and Services Tax Act,
2017 only for the purpose of deducting tax under Section 51 and not for making
a taxable supply of goods or services.
22 Services by way of giving on hire –
(a) to a state transport undertaking, a motor vehicle meant to carry more
than twelve passengers; or
(b) to a goods transport agency, a means of transportation of goods.
(c) motor vehicle for transport of students, faculty and staff, to a person
providing services of transportation of students, faculty and staff to an
educational institution providing services by way of pre-school education and
education upto higher secondary school or equivalent.
23 Service by way of access to a road or a bridge on payment of toll charges. Commission earned on
toll receipt is taxable
23A Service by way of access to a road or a bridge on payment of annuity is exempt.
24 Services by way of loading, unloading, packing, storage or warehousing of rice.
24A Services by way of warehousing of minor forest produce.
25 Transmission or distribution of electricity by an electricity transmission or
distribution utility.
The services provided by DISCOMS against recovery of charges from
consumers are taxable in GST e.g. application fee for releasing connection of
electricity, rental charges against metering equipment, testing fee for
meters/transformers, capacitors etc., labour charges from customers for shifting
of meters or shifting of service lines, charges for duplicate bill etc.
26 Services by the Reserve Bank of India.
Study Notes
67
27 Services by way of— Since going by “Service”

(a) extending deposits, loans or advances in so far as the consideration is definition sky is limit.
represented by way of interest or discount (other than interest involved in Government has
credit card services); exempted interest in this
(b) inter se sale or purchase of foreign currency amongst banks or authorised clause.
dealers of foreign exchange or amongst banks and such dealers. Any processing fees or
service fees will be
The service provided by CG/SG to any business entity by way of guaranteeing subject to GST
the loans taken by them from financial institutions against consideration in any
form including Guarantee Commission is taxable.
The services provided by Asian Development Bank (ADB) and International
Finance Corporation (IFC) are exempt from GST. The exemption will be
available only to the services provided by ADB and IFC and not to any entity
appointed by or working on behalf of ADB or IFC.
[Circular No. 83/02/2019- GST Dated 01.03.2019]
27A Services provided by a banking company to Basic Saving Bank Deposit (BSBD)
account holders under Pradhan Mantri Jan Dhan Yojana (PMJDY)
28 Services of life insurance business provided by way of annuity under the
National Pension System regulated by the Pension Fund Regulatory and
Development Authority of India under the Pension Fund Regulatory and
Development Authority Act, 2013 (23 of2013).
29 Services of life insurance business provided or agreed to be provided by
the Army, Naval and Air Force Group Insurance Funds to members of the Army,
Navy and Air Force, respectively, under the Group Insurance Schemes of the
Central Government.
29A Services of life insurance provided or agreed to be provided by the Naval Group
Insurance Fund to the personnel of Coast Guard under the Group Insurance
Schemes of the Central Government.
30 Services by the Employees’ State Insurance Corporation to persons
governed under the Employees’ State Insurance Act, 1948 (34 of 1948).
31 Services provided by the Employees Provident Fund Organisation to the
persons governed under the Employees Provident Funds and the
Miscellaneous Provisions Act, 1952 (19 of 1952).
31A Services by Coal Mines Provident Fund Organisation to persons governed by
the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of
1948).
31B Services by National Pension System (NPS) Trust to its members against
consideration in the form of administrative fee.
32 Services provided by the Insurance Regulatory and Development Authority
of India to insurers under the Insurance Regulatory and Development Authority
of India Act, 1999 (41 of 1999).
33 Services provided by the Securities and Exchange Board of India set up under
the Securities and Exchange Board of India Act, 1992 (15 of 1992) by way of
protecting the interests of investors in securities and to promote the
development of, and to regulate, the securities market.
34 Services by an acquiring bank, to any person in relation to settlement of an
amount upto two thousand rupees in a single transaction transacted through
credit card, debit card, charge card or other payment card service.
Explanation.— For the purposes of this entry, “acquiring bank” means any
banking company, financial institution including non-banking financial company
or any other person, who makes the payment to any person who accepts such
card.
34A Services supplied by Central Government, State Government, Union territory to
their undertakings or Public Sector Undertakings(PSUs) by way of guaranteeing
the loans taken by such undertakings or PSUs from the banking companies and
financial institutions.
35 Services of general insurance business provided under following schemes –
(a) Hut Insurance Scheme;
68
(b) Cattle Insurance under Swaranjayanti Gram Swarozgar Yojana (earlier
known
as Integrated Rural Development Programme);
(c) Scheme for Insurance of Tribals;
(d) Janata Personal Accident Policy and Gramin Accident Policy;
(e) Group Personal Accident Policy for Self-Employed Women;
(f) Agricultural Pumpset and Failed Well Insurance;
(g) premia collected on export credit insurance;
(h) Weather Based Crop Insurance Scheme or the Modified National
Agricultural Insurance Scheme, approved by the Government of India and
implemented by the Ministry of Agriculture;
(i) Jan Arogya Bima Policy;
(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);
(k) Pilot Scheme on Seed Crop Insurance;
(l) Central Sector Scheme on Cattle Insurance;
(m) Universal Health Insurance Scheme;
(n) Rashtriya Swasthya Bima Yojana;
(o) Coconut Palm Insurance Scheme;
(p) Pradhan Mantri Suraksha Bima Yojna;
(q) Niramaya Health Insurance Scheme implemented by the Trust constituted
under the provisions of the National Trust for the Welfare of Persons with
Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,
1999 (44 of 1999).
36 Services of life insurance business provided under following schemes- The Key is Social welfare.
(a) Janashree Bima Yojana;
(b) Aam Aadmi Bima Yojana;
(c) Life micro-insurance product as approved by the Insurance Regulatory and
Development Authority, having maximum amount of cover of two lakhs
rupees;
(d) Varishtha Pension BimaYojana;
(e) Pradhan Mantri Jeevan Jyoti Bima Yojana;
(f) Pradhan Mantri Jan Dhan Yogana;
(g) Pradhan Mantri Vaya Vandan Yojana.
36A Services by way of reinsurance of the insurance schemes specified in serial
number 35 or 36 or 40.
37 Services by way of collection of contribution under the Atal Pension
Yojana.
38 Services by way of collection of contribution under any pension
scheme of the State Governments.
39 Services by the following persons in respective capacities – “Business facilitator or
(a) business facilitator or a business correspondent to a banking company with Business Correspondent”
respect to accounts in its rural area branch; means an intermediary
(b) any person as an intermediary to a business facilitator or a business appointed under the
correspondent with respect to services mentioned in entry (a); or business facilitator model
(c) business facilitator or a business correspondent to an insurance company in or the business
a rural area. correspondent model by a
company or an insurance
As per CBIC Circular No. 86/05/2019- GST, Dated 1st January, 2019, the company under the
services provided by a BF/BC to a banking company in their respective guidelines issued by the
individual capacities should fall under the Heading 9971 (Financial and related RBI. Rural area is
services) and such services should be with respect to accounts in a branch normally village which is
located in the rural area of the banking company. not notified as urban area
The criteria for classification of branch of a bank as located in rural area and the and also doesn’t come
services which can be provided by BF/BC, is governed by the RBI guidelines. under any municipality.
Therefore, classification adopted by the bank in terms of RBI guidelines in this
regard should be accepted.
39A Services by an intermediary of financial services located in a multi services SEZ
with International Financial Services Centre (IFSC) status to a customer located
outside India for international financial services in currencies other than Indian
rupees (INR).
Study Notes
69
Explanation.- For the purposes of this entry, the intermediary of financial

services in IFSC is a person,-
(i) who is permitted or recognised as such by the Government of India or any
Regulator appointed for regulation of IFSC; or
(ii) who is treated as a person resident outside India under the Foreign
Exchange Management (International Financial Services Centre)
Regulations, 2015; or
(iii) who is registered under the Insurance Regulatory and Development
Authority of India (International Financial Service Centre) Guidelines, 2015
as IFSC Insurance Office; or
(iv) who is permitted as such by Securities and Exchange Board of India (SEBI)
under the Securities and Exchange Board of India (International Financial
Services Centres) Guidelines, 2015.
40 Services provided to the Central Government, State Government, Union
territory under any insurance scheme for which total premium is paid by the
Central Government, State Government, Union territory.
General Insurance policies provided to employees of the State Government/

Police personnel, employees of Electricity Department or students of
colleges/private schools etc. wherein the total premium for insurance policy is
paid by the Central Government, State Government, Union territory are exempt
41 Upfront amount (called as premium, salami, cost, price, development charges or
by any other name) payable in respect of service by way of granting of long
term lease of 30 years, or more of industrial plots or plots for development of
infrastructure for financial business, provided by the State Government
Industrial Development Corporations or Undertakings or by any other entity
having 50% or more ownership of Central Government, State Government,
Union territory to the industrial units or the developers in any industrial or
financial business area.
Explanation.- For the purpose of this exemption, the Central Government, State
Government or Union territory shall have 50% or more ownership in the entity
directly or through an entity which is wholly owned by the Central Government,
State Government or Union territory.
It is hereby clarified that GST exemption on the upfront amount (called as

premium, salami, cost, price, development charges or by any other name)
payable for long term lease (of thirty years, or more) of industrial plots or plots
for development of infrastructure for financial business, is admissible
irrespective of whether such upfront amount is payable or paid in one or more
installments, provided the amount is determined upfront.
{Circular No. 101/20/2019-GST Dated 30-04-2019}
41A Supply of TDR, FSI, long term lease (premium) of land by a landowner to a
& developer have been exempted subject to the condition that the constructed
41B flats are sold before issuance of completion certificate and tax is paid on them.
Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case
of flats sold after issue of completion certificate, but such withdrawal shall be
limited to 1% of value in case of affordable houses and 5% of value in case of
other than affordable houses. This will achieve a fair degree of taxation parity
between under construction and ready to move property
territory or local authority by way of allowing a business entity to operate as a
telecom service provider or use radio frequency spectrum during the period
prior to the 1st April, 2016, on payment of licence fee or spectrum user
charges, as the case may be.
43 Services of leasing of assets (rolling stock assets including wagons, coaches,
locos) by the Indian Railways Finance Corporation to Indian Railways.
44 Services provided by an incubatee up to a total turnover of fifty lakh
70
rupees in a financial year subject to the following conditions, namely:-
(a) the total turnover had not exceeded fifty lakh rupees during the
preceding financial year; and
(b) a period of three years has not elapsed from the date of entering into an
agreement as an incubatee.
45 Services provided by- “Legal Services” means
(a) an arbitral tribunal to – any service provided in
(i) any person other than a business entity; or relation to advice,
(ii) a business entity with an aggregate turnover up to twenty lakh rupees consultancy or assistance
(ten lakh rupees in the case of special category states) in the in any branch of law, in
preceding financial year; any manner and includes
(iii) the Central Government, State Government, Union territory, local authority, representational services
Governmental Authority or Government Entity; before any court, tribunal
or authority.
(b) a partnership firm of advocates or an individual as an advocate
other than a senior advocate, by way of legal services to- This need to be co-related
(i) an advocate or partnership firm of advocates providing legal services; with services notified
(ii) any person other than a business entity; or under Reverse Charge
(iii) a business entity with an aggregate turnover up to twenty lakh rupees (ten under section 9 (3) of
lakh rupees in the case of special category states) in the preceding CGST Act, 2017. Please
financial year; refer to Chapter 3 for this.
(iv) the Central Government, State Government, Union territory, local authority,
Governmental Authority or Government Entity;
(c) a senior advocate by way of legal services to-

(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to twenty lakh rupees (ten
lakh rupees in the case of special
category states) in the preceding financial year.
(iii) the Central Government, State Government, Union territory, local authority,
Governmental Authority or Government Entity.
46 Services by a veterinary clinic in relation to health care of animals or birds.
territory or local authority by way of-
(a) registration required under any law for the time being in force;
(b) testing, calibration, safety check or certification relating to protection or
safety of workers, consumers or public at large, including fire
license, required under any law for the time being in force.
Seed testing and certification is a multi-stage process, the charges for which are
collected from the seed producers at different stages. Supply of seed tags to the
seed producer is nothing but an element of the one integrated supply of seed
testing and certification. All the above charges, including those for issue of seed
certificates/tags by the Seed Certification Agency of Tamil Nadu and
Uttarakhand to the seed producing organization/ companies are collected for
the composite supply of seed testing and certification, which is exempt under
Notification No. 12/2017-Central Tax (Rate) Sl. No. 47 (services by
Central/State Governments by way of testing/certification relating to safety of
consumers and public at large, required under any law). This clarification would
apply to supply of seed tags by seed testing and certification agencies of other
states also following similar seed testing and certification procedure.
However, the State Governments/Seed Certification Agencies may get the tags
used in seed certification printed from other departments/ manufacturers
outside. Supply of seed tags by the other departments/manufacturers to the
State Government/Seed Certification Agencies is a supply of goods liable to tax.
Whether such tags would be classified under Chapter 49 as tags made of paper
or in Textile chapters as tags made of textile would depend upon the
predominant material used in the tags.
{ Circular No. 100/19/2019-GST Dated 30-04-2019}
Study Notes
71
47A Services by way of licensing, registration and analysis or testing of food

samples supplied by the Food Safety and Standards Authority of India (FSSAI)
to Food Business Operators.
48 Taxable services, provided or to be provided, by a Technology Business
Incubator or a Science and Technology Entrepreneurship Park
recognised by the National Science and Technology
Entrepreneurship Development Board of the Department of Science
and Technology, Government of India or bio- incubators recognised by
the Biotechnology Industry Research Assistance Council, under the
Department of Biotechnology, Government of India.
49 Services by way of collecting or providing news by an independent
journalist, Press Trust of India or United News of India.
50 Services of public libraries by way of lending of books, publications or
any other knowledge-enhancing content or material.
51 Services provided by the Goods and Services Tax Network to the Central
Government or State Governments or Union territories for implementation of
Goods and Services Tax.
52 Services by an organiser to any person in respect of a business exhibition held
outside India.
53 Services by way of sponsorship of sporting events organised –
(a) by a national sports federation, or its affiliated federations, where the
participating teams or individuals represent any district, State, zone or
Country;
(b) by Association of Indian Universities, Inter-University Sports Board, School
Games Federation of India, All India Sports Council for the Deaf,
Paralympic Committee of India or Special Olympics Bharat;
(c) by the Central Civil Services Cultural and Sports Board;
(d) as part of national games, by the Indian Olympic Association; or
(e) under the Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.
53A Services by way of fumigation in a warehouse of agricultural produce.
54 Services relating to cultivation of plants and rearing of all life forms of “Agricultural extension”
animals, except the rearing of horses, for food, fibre, fuel, raw material means application of
or other similar products or agricultural produce by way of— scientific research and
(a) agricultural operations directly related to production of any agricultural knowledge to agricultural
produce including cultivation, harvesting, threshing, plant protection or practices through farmer
testing; education or training
(b) supply of farm labour;
(c) processes carried out at an agricultural farm including tending, pruning, “Agricultural produce
cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, marketing committee or
curing, sorting, grading, cooling or bulk packaging and such like operations Board” means any
which do not alter the essential characteristics of agricultural produce but committee or board
make it only marketable for the primary market; constituted under a state
(d) renting or leasing of agro machinery or vacant land with or without a law for regulating the
structure incidental to its use; marketing of agricultural
(e) loading, unloading, packing, storage or warehousing of agricultural produce; produce
(f) agricultural extension services;
(g) services by any Agricultural Produce Marketing Committee or Board or “Agricultural produce”
services provided by a commission agent for sale or purchase of agricultural means any produce out of
produce. cultivation of plants and
(h) services by way of fumigation in a warehouse of agricultural produce. rearing of all life forms of
animals, except the
GST rate on loading, unloading, packing, storage or warehousing of agricultural rearing of horses, for
produce is Nil. So, processed products such as tea (i.e. black tea, white tea food, fibre, fuel, raw
etc.), processed coffee beans or powder, pulses (dehusked or split), jaggery, material or other similar
processed spices, processed dry fruits, processed cashew nuts etc. fall outside products, on which either
the definition of agricultural produce and thus exemption from GST is not no further processing is
available to their loading, packing, warehousing etc. done or such processing
(Circular No. 16/16/2017-GST Dated 15-11-2017) is done as is usually done
by a cultivator or producer
72
Fertilizers supplied for direct use as fertilizers or supplied for use in the which does not alter its
manufacturing of other complex fertilizers for agricultural use will attract GST. essential characteristics
(Circular No. 54/28/2018-GST Dated 09-08-2018) but makes it marketable
for primary market.
Remember warehousing
other than agriculture
produce is subject to tax
i.e. Cadbury chocolate,
cotton fabrics etc.
55 Carrying out an intermediate production process as job work in relation to
cultivation of plants and rearing of all life forms of animals, except the rearing
of horses, for food, fibre, fuel, raw material or other similar products or
agricultural produce.
Milling of paddy into rice is not eligible for exemption
(Circular No. 19/19/2017-GST Dated 20-11-2017)
55A Services by way of artificial insemination of livestock (other than horses).
56 Services by way of slaughtering of animals.
57 Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail
packing, labelling of fruits and vegetables which do not change or alter
the essential characteristics of the said fruits or vegetables.
58 Services provided by the National Centre for Cold Chain Development under
the Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold
chain knowledge dissemination.
59 Services by a foreign diplomatic mission located in India.
60 Services by a specified organisation in respect of a religious pilgrimage
facilitated by the Government of India, under bilateral arrangement.
territory or local authority by way of issuance of passport, visa, driving licence,
birth certificate or death certificate.
territory or local authority by way of tolerating non-performance of a contract for
which consideration in the form of fines or liquidated damages is payable to the
Central Government, State Government, Union territory or local authority under
such contract.
territory or local authority by way of assignment of right to use natural
resources to an individual farmer for cultivation of plants and rearing of all life
forms of animals, except the rearing of horses, for food, fibre, fuel, raw
material or other similar products.
territory or local authority by way of assignment of right to use any natural
resource where such right to use was assigned by the Central Government,
State Government, Union territory or local authority before the 1st April,
2016:
Provided that the exemption shall apply only to tax payable on one time
charge payable, in full upfront or in installments, for assignment of right to
use such natural resource.
territory by way of deputing officers after office hours or on holidays for
inspection or container stuffing or such other duties in relation to import export
cargo on payment of Merchant Overtime charges.
65A Services by way of providing information under the Right to Information Act,
2005 (22 of 2005).
65B Services supplied by a State Government to Excess Royalty Collection
Contractor (ERCC) by way of assigning the right to collect royalty on behalf of
the State Government on the mineral dispatched by the mining lease holders.
However, at the end of the contract period, ERCC shall submit an account to
the State Government and certify that amount of GST deposited by mining
Study Notes
73
lease holders on royalty is more than GST exempted on the service provided by
State Government to the ERCC of assignment of right to collect royalty and
where such amount of GST paid by mining lease holders is less than the
amount of GST exempted, the exemption shall be restricted to such amount as
is equal to the amount of GST paid by the mining lease holders and the ERCC
shall pay the difference between GST exempted on the service provided by
State Government to the ERCC of assignment of right to collect royalty and
GST paid by the mining lease holders on royalty.
Explanation- Mining lease holder means a person who has been granted mining
lease, quarry lease or license or other mineral concession under the Mines and
Minerals (Development and Regulation) Act, 1957, the rules made thereunder
or the rules made by a State Government under section 15(1) of the Act.
66 Services provided – College Hostel Mess
(a) by an educational institution to its students, faculty and staff; Services
(aa) by an educational institution by way of conduct of entrance examination
against consideration in the form of entrance fee; If Catering services are
provided by an eligible
(b) to an educational institution, by way of,- educational institution to its
(i) transportation of students, faculty and staff; students, faculty and staff
(ii) catering, including any mid-day meals scheme sponsored by the Central then the same is exempt.
Government, State Government or Union territory;
(iii) security or cleaning or housekeeping services performed in such If the catering services, i.e.,
educational institution; supply of food or drink in a
(iv) services relating to admission to, or conduct of examination by, such mess or canteen, is provided
institution; by anyone other than the
(v) supply of online educational journals or periodicals (this service is exempt educational institution, i.e.
the institution outsources the
from IGST on import also): activity to an outside
Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall contractor, then it is a supply
apply to an educational institution other than an institution providing services by of service to the concerned
way of pre-school education and education up to higher secondary school or educational institution and
equivalent. attracts GST**.
Provided further that nothing contained in sub-item (v) of item (b) shall apply to
an institution providing services by way of,- (i) pre-school education and **Note: It may be noted that
education up to higher secondary school or equivalent; or (ii) education as a said services when provided
part of an approved vocational education course. to an educational institution
providing pre-school
“Educational Institution” means an institution providing services by way of,- education or education up to
(i) Pre-school education and education up to higher secondary school or higher secondary school or
equivalent; equivalent are exempt from
(ii) Education as a part of a curriculum for obtaining a qualification tax.
recognized by any law for the time being in force;
(iii) Education as a part of an approved vocational education course (a Educational Institute
course run by an industrial training institute or an industrial training includes conduct of degree
centre affiliated to the National/State Council for Vocational Training; or courses by colleges,
a modular employable skill course, approved by the National Council of universities or institutions
which lead grant of
Vocational Training, run by a person registered with the Directorate qualifications recognized by
General of Employment & Training, Ministry of Skill Development and law would be covered.
Entrepreneurship). Boarding Schools (entire
The Central and State Educational Boards shall be treated as Educational lodging, boarding, food etc.)
Institution for the limited purpose of providing services by way of conduct of are exempt considering
examination to the students. composite supply U/s 8.
Since principal supply is
Vocational training provided by private ITIs in designated trades (notified under education & renting for
Apprenticeship Act, 1961) are exempt from GST whereas vocational training residence (which are not
taxable), hence entire
provided by private ITIs in respect of other than designated trade would be package would be exempt.
liable to pay GST. GST is payable on:-
Services provided by a private ITI by way of conduct of entrance examination ➢ Private tuition
against consideration in the form of entrance fee in case of designated trades ➢ Obtaining a
will be exempt from GST whereas in case of other than designated trades in qualification
private ITIs, GST shall be payable. recognized by law
of a foreign country
74
Vocational training and examinations conducted by Government ITIs is exempt ➢ Fees form
as these are in the nature of services provided by the Central Government or prospective
State Government to individuals {Entry 6}. Such exemption in relation to employers for
services provided by Government ITI would cover both - vocational training and campus interview
➢ Renting of flats for
examinations conducted by these Government ITls. temporary stay to
(Circular No. 55/29/2018-GST Dated 10-8-2018) different persons
As per CBIC Circular No. 82/01/2019-GST Dated 1 January 2019, With effect from 31 January 2018 i.e., the date
from which the IIM Act, 2018 came into effect, all the Indian Institutes of Management (IIMs) will qualify as
‘educational institutions’ as defined under Notification No. 12/2017-Central Tax (Rate).
With effect from 31 January 2018, all IIMs are eligible for exemption benefit under GST. Thus, the courses which are
offered on or after 31 January 2018 are eligible for exemption under Sl. No. 66 of the said notification.
However, so far as short duration courses are concerned, where IIMs issue participation certificate to executives/
professionals (participants), the same are not exempt and attract GST @ 18%.
All long duration programs (one year or more) conferring degree/ diploma as recommended by Board of Governors
as per the power vested in them under the IIM Act, 2017 including one- year Post Graduate Programs for Executives
– Exempt
All short duration executive development programs or need based specially designed programs (less than one year)
which are not a qualification recognized by law - Not exempt from GST
67 Services provided by the Indian Institutes of Management, as per the guidelines
of the Central Government, to their students, by way of the following educational
programmes, except Executive Development Programme: –
(a) two year full time Post Graduate Programmes in Management for the Post
Graduate Diploma in Management, to which admissions are made on the
basis of Common Admission Test (CAT) conducted by the Indian Institute of
Management;
(b) fellow programme in Management;
(c) five year integrated programme in Management.
68 Services provided to a recognised sport body by- Receipts from IPL are
(a) an individual as a player, referee, umpire, coach or team manager for subject to GST.
participation in a sporting event organised by a recognized sports body; Receipts from acting as
(b) another recognised sports body. brand ambassador for
corporate client, is subject
to GST.
69 Any services provided by, _
(a) the National Skill Development Corporation set up by the Government of
India;
(b) a Sector Skill Council approved by the National Skill Development
Corporation;
(c) an assessment agency approved by the Sector Skill Council or the
National Skill Development Corporation;
(d) a training partner approved by the National Skill Development Corporation or
the Sector Skill Council, in relation to-
(i) the National Skill Development Programme implemented by the National
Skill Development Corporation; or
(ii) a vocational skill development course under the National Skill Certification
and Monetary Reward Scheme; or
(iii) any other Scheme implemented by the National Skill Development
Corporation.
70 Services of assessing bodies empanelled centrally by the Directorate General of
Training, Ministry of Skill Development and Entrepreneurship by way of
assessments under the Skill Development Initiative Scheme.
71 Services provided by training providers (Project implementation agencies)
under Deen Dayal Upadhyaya Grameen Kaushalya Yojana implemented by the
Ministry of Rural Development, Government of India by way of offering
skill or vocational training courses certified by the National Council for
Vocational Training.
72 Services provided to the Central Government, State Government, Union
territory administration under any training programme for which total
Study Notes
75
expenditure is borne by the Central Government, State Government, Union

territory administration.
73 Services provided by the cord blood banks by way of
preservation of stem cells or any other service in relation to such preservation.
74 Services by way of- Healthcare services
(a) health care services by a clinical establishment, an authorised medical doesn’t include hair
practitioner or para-medics; transplant or cosmetic or
(b) services provided by way of transportation of a patient in an ambulance, plastic surgery except
other than those specified in (a) above. when undertaken to
restore or to reconstruct
Room rent in hospitals provided to in-patients is exempt. anatomy or functions of
(Circular No. 27/01/2018-GST dt 4-1-2018) body affected due to
congenital defects,,
Healthcare services provided by senior doctors/consultants/technicians hired by developmental
the hospitals, whether employees or not are exempt. The entire amount abnormalities, injury or
charged by hospitals from patients including the retention money and the trauma. Healthcare
fees/payments made to the doctors are exempt. Food supplied to the patients is services can be provided
a part of composite supply and not separately taxable whereas other supplies of at patient’s home.
food by a hospital to patients (not admitted) or their visitors are taxable. ITC not Naturopathy, ayurvedic
available to Hospital since it is exempt. treatment is allowable.
(Circular No. 32/06/2018-GST dt 12-2-2018) Pranic healing services is
not recognized service so
Services provided by PSPs to the State Governments by way of transportation subject to GST.
of patients on behalf of the State Governments against consideration in the form
of fee or otherwise charged from the State Government would be exempt under
Notification No. 12/2017- Central Tax (Rate) Dated 28.06.2017
SI No.3 if it is a pure service and not a composite supply involving supply of any
goods
SI No. 3A if it is a composite supply of goods and services in which the value of
supply of goods constitutes not more than 25 per cent of the value of the said
composite supply.
(Circular No. 51/25/2018-GST dt 31-7-2018)
74A Services provided by rehabilitation professionals recognised under the
Rehabilitation Council of India Act, 1992 (34 of 1992) by way of rehabilitation,
therapy or counselling and such other activity as covered by the said Act at
medical establishments, educational institutions, rehabilitation centers
established by Central Government, State Government or Union territory or an
entity registered under section 12AA of the Income tax Act, 1961.
75 Services provided by operators of the common bio-medical waste treatment
facility to a clinical establishment by way of treatment or disposal of bio-medical
waste or the processes incidental thereto.
76 Services by way of public conveniences such as provision of facilities of
bathroom, washrooms, lavatories, urinal or toilets.
77 Service by an unincorporated body or a non- profit entity registered under any Please refer to Q & A for
law for the time being in force, to its own members by way of reimbursement of this.
charges or share of contribution –
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of
Goods and service Tax; or
(c) up to an amount of seven thousand five hundred rupees per month
per member for sourcing of goods or services from a third
person for the common use of its members in a housing society or a
residential complex.
77A Services provided by an unincorporated body or a non-profit entity registered
under any law for the time being in force, engaged in,-
(i) activities relating to the welfare of industrial or agricultural labour or farmers;
or
(ii) promotion of trade, commerce, industry, agriculture, art, science, literature,
culture, sports, education, social welfare, charitable activities and protection of
environment,
76
to its own members against consideration in the form of membership fee upto
an amount of one thousand rupees (Rs 1,000/-) per member per year.
78 Services by an artist by way of a performance in folk or classical art
forms of-
(a) music, or (b) dance, or (c) theatre,
if the consideration charged for such performance is not more than one lakh
and fifty thousand rupees:
Provided that the exemption shall not apply to service provided by such
artist as a brand ambassador.
79 Services by way of admission to a museum, national park, wildlife
sanctuary, tiger reserve or zoo.
79A Services by way of admission to a protected monument so declared under the
Ancient Monuments and Archaeological Sites and Remains Act 1958 (24 of
1958) or any of the State Acts, for the time being in force.
80 Services by way of training or coaching in recreational activities relating to-
(a) arts or culture, or
(b) sports by charitable entities registered under section 12AA of the Income-tax
Act.
81 Services by way of right to admission to-
(a) circus, dance, or theatrical performance including drama or ballet;
(b) award function, concert, pageant, musical performance or any sporting event
other than a recognised sporting event;
(c) recognised sporting event;
(d) planetarium,
where the consideration for right to admission to the events or places as
referred to in items (a), (b), (c) or (d) above is not more than Rs. 500 per
person.
82 Services by way of right to admission to the events organized under FIFA U-17
World Cup 2017 are exempt.
Study Notes
77
Exemption under IGST

1 Services received from a provider of service located in a non-taxable territory by
(a) the Central Government, State Government, Union territory, a local
authority, a governmental authority or an individual in relation to any
purpose other than commerce, industry or any other business or profession
(b) an entity registered under section 12 AA of the Income-Tax Act, 1961 for
the purpose of providing charitable activities
(ba) way of supply of online educational journals or periodicals to an
educational institution other than an institution providing services by way of-
(i) pre-school education and education up to higher secondary school or Co-relate with provisions
equivalent; or of reverse charge U/s 5
(ii) education as a part of an approved vocational education course; (3) of IGST Act, 2017.
(c) a person located in a non-taxable territory are exempt.
However the exemption shall not apply to:-
(i) online information and database access or retrieval services received by
persons specified in entry (a) or entry (b); or
(ii) Services by way of transportation of goods by a vessel from a place outside
India up to the customs station of clearance in India received by persons
specified in the entry.
2 Services received by RBI from outside India in relation to management of
Foreign Exchange Reserves.
3 Services provided by a tour operator to a foreign tourist in relation to a tour
conducted wholly outside India are exempt.
4 Supply of Services having place of supply in Nepal or Bhutan, against payment
in Indian rupees.
5 Services supplied by an establishment of a person in India to any establishment Provided the place of
of that person outside India, which are treated as establishments of distinct supply of the service is
persons in accordance with Explanation 1 in section 8 of the Integrated Goods outside India in
and Services Tax Act, 2017. accordance with section
13 of Integrated Goods
and Services Tax Act,
2017.
6 Import of services by United Nations or a specified international organisation for
official use of the United Nations or the specified international organisation.
Explanation. - For the purposes of this entry, unless the context otherwise
requires, “specified international organisation” means an international
organisation declared by the Central Government in pursuance of section 3 of
the United Nations (Privileges and Immunities Act) 1947 (46 of 1947), to which
the provisions of the Schedule to the said Act apply.
7 Import of services by Foreign diplomatic mission or consular post in India, or
diplomatic agents or career consular officers posted therein shall be exempt
from IGST, subject to the conditions, -
(i) that the foreign diplomatic mission or consular post in India, or
diplomatic agents or career consular officers posted therein, are
entitled to exemption from integrated tax, as stipulated in the certificate
issued by the Protocol Division of the Ministry of External Affairs,
based on the principle of reciprocity;
(ii) that the services imported are for official purpose of the said foreign
diplomatic mission or consular post; or for personal use of the said
diplomatic agent or career consular officer or members of his or her
family.
(iii) that in case the Protocol Division of the Ministry of External Affairs, after
having issued a certificate to any foreign diplomatic mission or consular
post in India, decides to withdraw the same subsequently, it shall
communicate the withdrawal of such certificate to the foreign diplomatic
mission or consular post;
(iv) that the exemption from the whole of the integrated tax granted to the
foreign diplomatic mission or consular post in India for official purpose
or for the personal use or use of their family members shall not be
available from the date of withdrawal of such certificate.
78
Other Exemptions
1 Intra-State supplies of goods or services or both received by a deductor under
section 51, from any unregistered supplier, is exempt from the whole of the
central tax leviable thereon under Section 9 (4), subject to the condition that the
deductor is not liable to be registered otherwise than under section 24 (vi)
2 All services imported by a unit/developer in the SEZ for authorized operations
are exempt from the whole of the integrated tax leviable thereon U/S 3 (7) of the
Customs Tariff Act, 1975 read with section 5 of the IGST Act, 2017
3 Central Government’s share of profit petroleum exempted from CGST
Intra-State supply of services by way of grant of license or lease to explore or
mine petroleum crude or natural gas or both, has been exempted from so
much of CGST as is leviable on the consideration paid to the Central
Government in the form of Central Government’s share of profit petroleum as
defined in the contract entered into by the Central Government in this behalf.
[Notification No. 5/2018 CT (R) Dated 25.01.2018]
Parallel exemption from IGST has been extended to inter-State supply of such
services vide Notification No. 5/2018 IT (R) Dated 25.01.2018.
4 IGST exempted to the extent it is paid on the consideration attributable to
royalty and license fee included in transaction value under rule 10(1)(c) of
Customs Valuation (Determination of value of imported Goods) Rules, 2007
IGST leviable on import of services in relation to temporary transfer or
permitting the use or enjoyment of any intellectual property right has been
exempted to the extent of the aggregate of the duties of customs leviable under
section 3(7) of the Customs Tariff Act, 1975, on the consideration declared
under section 14(1) of the Customs Act, 1962 towards royalties and license
fees included in the transaction value as specified under rule 10(1)(c) of the
Customs Valuation (Determination of Value of Imported Goods) Rules, 2007
on which the appropriate duties of customs have been paid [Notification No.
6/2018 IT (R) Dated 25.01.2018].
Question & Answer

Q1. With reference to the CGST Act, 2017, discuss the following activities relating to a bank?
a. Bank Extended housing loan of Rs. 50 Lacs to Mr. Namit.
b. Bank received processing fees of Rs. 50,000 from Mr. Namit.
c. Bank received Rs. 2 Lacs interest from Mr. Namit.
A. In accordance with the provisions of CGST Act, 2017 the taxability of activities is: -
a. The same is transaction in money, therefore not regarded as service as per Sec 2(102) of CGST
Act, 2017.
b. The loan processing fees received by bank will be liable for GST.
c. Rs. 2 Lacs received as interest on loan won’t be liable for GST as the same is exempt vide Sr. No.
27 of Notification No. 12/2017- CT (Rate).
Q2. State with reasons whether the following are liable to GST?
a. Services by way of training or coaching in recreational activities relating to arts, culture or sports.
b. Services provided by a player to a franchisee which is not a recognized sports body.
c. Pre-school education and education up to higher secondary school or equivalent.
d. Services by a veterinary clinic in relation to health care of animals or birds.
e. Services by way of public conveniences such as provision of facilities of washrooms.
A. The liability as well as reason: -
a. Services by way of training or coaching in recreational activities relating to arts, culture or sports
are exempt as it is specifically exempt vide Sr. No. 80 of Notification No. 12/2017-CT (Rate)..
Study Notes
79
b. Service of a player to a franchisee which is not a recognized sports body is taxable as it

doesn’t get covered under Sr. No. 68 of Notification No. 12/2017-CT (Rate).
c. Pre-School education and education up to higher secondary school or equivalent is not liable to
GST as it is specifically exempt under Sr. No. 66 of Notification No. 12/2017-CT (Rate).
d. Services by a veterinary clinic in relation to health care of animals or birds is not liable to GST as
it is specifically exempt vide Sr. No. 46 of Notification No. 12/2017- CT (Rate).
e. Services by way of public conveniences such as provision of facilities of washrooms are not liable
to GST as it is specifically exempt vide Sr. No. 76 of Notification No. 12/2017-CT (Rate).
Q3. Please comment whether below instances are subject to tax or no?
a. Services of transportation of passenger by vessels in National waterways.
b. Services of transportation of passenger by AC Stage carrier.
c. Services of transportation of non AC Stage carrier.
d. Services of transportation of passengers by contract carriage for tourism.
e. Services of transportation of passenger Kolkata to Chennai in a vessel and such service is not for
tourism purpose.
f. Services of transportation of passengers in Non-AC contract carriages.
g. Services of transportation of passengers in AC contract Carriages.
A. Our comments: -
a. This is exempt under Sr. No. 17 of Notification No. 12/2017-CT (Rate).
b. This is liable to GST.
c. This is exempt under Sr. No. 15 of Notification No. 12/2017-CT (Rate).
d. This is liable to GST.
e. This is exempt under Sr. No. 17 of Notification No. 12/2017-CT (Rate).
f. This is exempt under Sr. No. 15 of Notification No. 12/2017-CT (Rate).
g. This is liable to GST.
a. Transportation of postal mails and postal bags via rail.
b. Transportation of household effects via rail.
c. Transportation of petroleum products via rail.
d. Transportation of relief material to flood affected areas, transport of defense & military equipment
& transport of organic manure via rail.
e. Transportation of newspapers and milk via rail.
f. Transportation of tea & sugar via rail.
g. Transportation of fruits via Goods Transport Agency.
i. Freight charges collected for transporting small consignment for persons who paid less than
Rs. 750 for each consignment.
j. Freight charges collected for transporting goods in small vehicle for persons who paid less than
Rs. 1500 for each trip.
A. Our comments: -
a. This is liable to GST.
b. This is liable to GST.
c. This is liable to GST.
d. This is exempt under Sr. No. 20 of Notification No. 12/2017-CT (Rate).
e. This is exempt under Sr. No. 20 of Notification No. 12/2017-CT (Rate).
f. This is liable to GST.
g. This is exempt under Sr. No. 21 of Notification No. 12/2017-CT (Rate).
i. This is exempt under Sr. No. 21 of Notification No. 12/2017-CT (Rate).
80
j. This is exempt under Sr. No. 21 of Notification No. 12/2017-CT (Rate).
a. Renting of immovable property to higher secondary school.
b. Transportation services provided to students of higher secondary school.
c. Outdoor catering services provided to educational institutions running approved vocational
courses.
d. Security services provided to Pre-Nursery School.
e. Housekeeping and cleaning services in college providing recognized graduation degree.
f. Conducting of examination of ICAI.
g. Development of course content of ICAI.
h. Training of Staff of Higher Secondary School.
A. Our comments: -
a. This is liable to GST.
b. This is exempt under Sr. No. 66 of Notification No. 12/2017-CT (Rate).
c. This is liable to GST.
d. This is exempt under Sr. No. 66 of Notification No. 12/2017-CT (Rate).
e. This is liable to GST.
f. This is exempt under Sr. No. 66 of Notification No. 12/2017-CT (Rate).
g. This is liable to GST.
h. This is liable to GST.
a. Monthly subscription Rs. 7,501 collected by Resident Welfare Association from member families.
b. Electricity charges levied by State Electricity Board collected by Resident Welfare Association
and deposited with Electricity Board.
c. Common area electricity charges collected by Resident Welfare Association..
d. Rs. 100 collected for entertainment program organized by Resident Welfare Association
e. Other Services to non-members.
A. Our comments: -
a. If per month per member contribution of any or some members of Resident Welfare Associations
is higher than Rs. 7,500, then such excess amount is subject to GST (>7,500, paying
members).
b. This is pure agency services so not subject to GST.
c. This isn’t pure agency contract since common are charges would be in the name of Resident
Welfare Association so it is subject to tax.
d. This is exempt under Sr. No. 81 of Notification No. 12/2017-CT (Rate) -Lesser then Rs. 500.
e. This is liable to GST.
Q7. With reference to the provisions of CGST Act, 2017 examine whether GST is leviable in the
following situations?
a. Government of Rajasthan has provided services to ABC Ltd. of Rajasthan in the month of
Nov’17 for a consideration of Rs. 1,00,000. The Turnover of ABC Ltd. in FY 16-17 is 11 Lacs.
b. Government of Rajasthan has provided services to ABC Ltd. in the month of Oct’17 for a
consideration of Rs. 5,000. The turnover of ABC Ltd in FY 16-17 was Rs. 25 Lacs.
c. Jaipur Municipal corporation has awarded a contract for construction of road to ABC Ltd. failed
to perform the contract and paid liquidated damages amounting Rs. 50 Lacs in accordance with
the terms of contract.
d. ABC Ltd. has applied for registration under Companies Act, 2013 to ROC, Rajasthan and has
Study Notes
81
paid registration charge of Rs. 10 Lacs.

e. Delhi Government has charged Rs. 40 Lacs from ABC Ltd. for allocation of natural resources for
agricultural purposes in the month of Nov’17.
f. ABC Ltd. has paid to customs department Rs. 1 Lac on account Merchant Overtime Charges for
deputing officers after office hours or on holidays for inspection or container stuffing or such other
duties in relation to import export cargo.
g. ABC Ltd. has made an upfront payment of Rs. 1 crore to Rajasthan Government on account of
assignment of right to use minerals in the State of Bihar.
A. Our comments: -
a. Services provided by the Central Government, State Government, Union Territory or local
authority to a business entity with an aggregate turnover of upto Rs. 20 Lacs in the preceding
financial year are exempt vide Sr. No. 7 Notification No. 12/2017-CT (Rate).
b. Services provided by Central Government, State Government, Union Territory or a local authority
where the consideration for such services doesn’t exceed Rs. 5,000 are exempt vide Sr. No. 9 of
Notification No. 12/2017 CT (Rate).
c. Services provided by the Central Government, State Government, Union Territory or local
authority of tolerating non-performance of a contract for which consideration in the form of fines
or liquidated damages is payable to the Central Government, State Government, Union Territory
or local authority under such contract are exempt vide Sr. No. 62 of Notification No. 12/2017-CT
(Rate).
d. It is exempt vide Sr. No. 47 of Notification No. 12/2017.
e. Services by way of allocation of natural resources to an individual farmer for the purposes of
agriculture have been exempted vide Sr. No. 63 of Notification No. 12/2017-CT (Rate). Such
allocations/auctions to categories of persons other than individual farmers would be leviable to
GST. Hence, ABC Ltd. will be liable to pay GST.
f. Services provided by the Central Government, State Government, Union Territory by way of
deputing officers after office hours or on holiday for inspection or container stuffing or such other
duties in relation to import export cargo on payment of Merchant Overtime charges are exempt
from GST vide Sr. No. 65 of Notification No.. 12/2017 CT (Rate).
g. ABC Ltd. will be liable to pay GST on assignment of rights to use minerals in the State of Bihar.
Q8. State the difference between General & Special Exemption.

A.
General Exemption Special Exemption
• It is given by Government in public interest • It is given by Government in public interest
by notification in official gazette by special order
• It is applicable to all members of a • It is applicable in each case i.e. applicable
particular section to that person to whom the order is given
• It is generally in public interest • It is given in exceptional nature i.e.
charitable purpose, goods of strategic
nature etc. It is also generally in public
interest.
• Covered U/s 11 (1) • Covered U/s 11 (2)
82
Q9. Jain hostel trust registered U/s 12 AA of Income Tax Act 1961, provides hostel accommodation facility to
students and charges Rs. 900 per day. Determine whether such service of accommodation is covered under
the ambit of charitable activity and also its taxability in GST Act?
A. This is exempt. As per Circular No. 32/06/2018-GST, the aforesaid service doesn’t fall within the ambit of
charitable activities (Sr. No. 1 of Notification No. 12-2017-CT (R) Dated 28-06-2017). However,
accommodation service in hostels including such services provided by trusts having “Value of Supply” below
Rs. 1,000 per day is exempt under Sr. No. 14 of Notification No. 12-2017-CT (R) Dated 28-06-2017.
Q10. Siddhivinayak Charitable trust is a registered religious trust U/s 12 AA of Income Tax Act 1961. Discuss
the treatment of following transaction under GST law:-
i. Deluxe room rent Rs. 900 per day & Super Deluxe room rent Rs. 1,000;
ii. Renting of small community hall for Rs. 9,000 per day & Renting of large community hall for Rs.
12,000
iii. Trust has rented shop for Rs. 15,000 p.m. to sell goods required for performing various religious
ceremonies.
iv. Meditation Hall provided on rent for Rs. 100 per day.
v. Amount received for yoga camps organized for elderly people - Rs. 1,00,000.
vi. Amount received for activities relating to preservation of forests and wildlife – Rs. 50,000
vii. Payment made for services received from a service provider located in USA, for the purposes of
providing ‘charitable activities’ – Rs. 5,00,000
viii. Amount received for advancement of educational programmes relating to abandoned, orphaned or
homeless children – Rs. 1,00,000
ix. Renting of residential dwelling for use as a residence – Rent Rs. 25,000 p.m.
x. Renting of residential dwelling for commercial activity – Rent Rs. 50,000 p.m.
xi. Grant of tenancy rights in a residential dwelling for use as residential dwelling against tenancy
premium of Rs. 10,00,000. What will be your answer if it is commercial dwelling?
A.
i. Deluxe room rent is exempt. Exemption is available for renting of rooms wherein the rent charged is
less than Rs. 1,000 per day (Sr. No. 13 of Notification No. 12-2017-CT (R) Dated 28-06-2017).
Since Super Deluxe room rent is Rs. 1,000 per day, it is not exempt.
ii. Renting of small community hall for Rs. 9,000 per day is exempt. Exemption is available for renting of
community halls wherein the rent charged is less than Rs. 10,000 per day (Sr. No. 13 of Notification
No. 12-2017-CT (R) Dated 28-06-2017).
Since Renting of large community hall is more than Rs. 10,000 per day, it is not exempt.
iii. It is not exempt. Exemption is available to renting of shops wherein the rent charged is less than Rs.
10,000 p.m. (Sr. No. 13 of Notification No. 12-2017-CT (R) Dated 28-06-2017).
iv. It is exempt. Meditation hall falls under the purview of precincts of the religious place.
v. It is exempt vide Sr. No. 1 of Notification No. 12-2017-CT (R) Dated 28-06-2017
vi. It is exempt Sr. No. 1 of Notification No. 12-2017-CT (R) Dated 28-06-2017
vii. This is exempt. Service recipient is liable to pay GST in case of a taxable service provided by any
person located in a non-taxable territory and received by any person located in the taxable territory.
However, services received from a provider of service located in a non-taxable territory by an entity
registered U/s 12 AA of the Income-Tax Act, 1961 for the purposes of providing charitable activities
are exempt from vide Sr. No. 10 of Notification No. 9/2017-IT (R) Dated 28-06-2017.
viii. It is exempt Sr. No. 1 of Notification No. 12-2017-CT (R) Dated 28-06-2017
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83
ix. It is exempt. Exemption is available for renting of residential dwelling for use as a residence vide Sr.
No. 12 of Notification No. 12-2017-CT (R) Dated 28-06-2017).
x. It is not exempt since it is used for commercial activity. Only residential use is exempt.
xi. It is exempt vide Circular No. 44/18/2018 CGST Dated 02.05.2018. If it is commercial dwelling then it
is not exempt.
Q11. Orchid Hotel provides the following information relating to their services for the month of January 2019:
The hotel has 50 rooms, out of which 30 rooms are Super Deluxe rooms with a declared tariff of Rs. 2,000 per
day, 10 rooms are Deluxe rooms with a declared tariff of Rs. 1,200 per day, rest is Semi Deluxe with a
declared tariff of Rs. 800 per day.
The hotel has practice of giving 25% discount on Super Deluxe & Deluxe room.
In January 2019 occupancy was 80%.
Please calculate value of taxable supply.
A.
Particulars Amount (in

INR)
Renting of Super Deluxe rooms {30 rooms * 31 days * Rs. 1,500 (after considering 11,16,000
discount of 25% on Rs. 2,000)*80%}
Renting of Deluxe rooms. After discount room rent per day is Rs. 900. NIL
This is exempt vide Sr. No. 14 of Notification No. 12-2017-CT (R) Dated 28-06-2017.
Services by a hotel, inn, guest house, club or campsite, by whatever name called, for
residential or lodging purposes, having value of supply of a unit of accommodation
below one thousand rupees per day or equivalent
Renting of Semi Deluxe rooms. The per day Room rent is Rs. 800 per day so it is NIL
exempt vide Sr. No. 14 of Notification No. 12-2017-CT (R) Dated 28-06-2017
Value of Taxable Supply for the month of January 2019 11,16,000
Q12. Discuss the treatment of following transaction under GST law:-

i. Mr. A, a sole proprietor has transferred all assets and liabilities of his business carried on under the
name and style of ABC Interiors as a going concern to XYZ Limited.
ii. Mr. A, has provided labour services for construction of a community park to a Panchayat.
iii. The State Government has built a burial ground in a village from the funds received by Government
from public.
iv. ABC Enterprise had turnover of Rs. 15 lakhs during FY 2017-2018. ABC enterprise has taken testing
service from Central Government department.
v. ABC transit provides services of loading, unloading and transporting cargo which is imported by M/s
XYZ Enterprises of Kathmandu to be shipped to Nepal.
vi. ABC Ltd. provides training for improvement of procedures in government companies and government
bodies for which it receives grants for its functioning.
vii. ABC Enterprises provided labour services for construction of housing flats, under the Housing for All
(Urban) Mission or Pradhan Mantri Awas Yojana.
viii. Mr. A gets his house constructed on a vacant land & Mr. Y gets modifications in a house.
ix. Amit runs a fair price shop and earns Rs. 1,00,000 as consideration received from government for
sale of food grains during the month of January 2019.
x. Mr. A, a priest, charged Rs. 11,000 for services provided to Mr. B for conducting his marriage
ceremony at Temple.
84
xi. ABC Pvt. Ltd. providing services of air transportation has received Rs. 1 crore as viability funding
under regional connectivity scheme from Central government for operation of air travel services.
xii. Amit has transported wheat to APMC by road to another city.
xiii. George has a business in Germany and sent goods by aircraft to India. Goods are being cleared at
customs stations in India. What is your view on transportation of goods by aircraft.
xiv. Vandana an owner of a motor vehicle gives his vehicle to a goods transport agency for hiring and
transportation of goods.
xv. NHAI pays annuity to ABC Ltd, a concessionaire who constructed the road.
xvi. IRDA Charged Rs. 1,00,000/- from ICICI General Insurance (Insurer) in lieu of grant of registration
certificate.
xvii. SEBI Charged Rs. 5,00,000/- as a regulatory fee from ABC Co. (Stock Exchange).
xviii. Rohit an organizer has provided services related to business exhibition in Australia.
xix. Krishna a farmer provides services relating to cultivation of seeds.
xx. Vijay deals in services by way of pre-conditioning and pre-cooling of fruits and vegetables for
refrigerated transport.
xxi. Government of India recovers Rs. 25 Crores as damages for not completing construction of a flyover
within the time specified in the contract from the Jaguar Limited.
xxii. Central Government has provided services in relation to import export cargo on payment of Merchant
Overtime charges.
xxiii. PVR cinemas charges Rs. 200. per person as admission charges for exhibition of cinematographic
films. What will be your answer if ABC circus charges Rs. 200 per person as admission charges for
circus show.
xxiv. Columbia Hospital charged Mr. A who availed in-patients service Rs. 1,00,000 towards treatment
including room rent and in patient food. They paid Rs. 40,000 to Doctor towards his professional fees.
Whether both are subject to GST?
xxv. Columbia Hospital has outsourced catering to Sodexo. Sodexo provides catering service to patient
who admitted in Columbia Hospital according to Dietician suggestion and also serve food to visitor
and patient’s relative. Sodexo bill Columbia Hospital for in-patient food services & collect directly from
others.
A.
i. This sale is exempt vide S. No. 2 of Exemption Notification No. 12/2017-Central Tax (Rate).
ii. This service is exempt vide S. No. 3 of Exemption Notification No. 12/2017-Central Tax (Rate).
iii. This service is exempt vide S. No. 4 of Exemption Notification No. 12/2017-Central Tax (Rate).
iv. The supply of services by government are exempt vide S. No. 7 of Exemption Notification No.
12/2017-Central Tax (Rate) and no GST is payable on such services by ABC Enterprise on reverse
charge.
v. This is exempt vide S. No. 9B of Exemption Notification No. 12/2017-Central Tax (Rate).
vi. This is exempt vide S. No. 9C of Exemption Notification No. 12/2017-Central Tax (Rate).
vii. It is exempt vide S. No. 10 of Exemption Notification No. 12/2017-Central Tax (Rate).
viii. This is exempt. Mr. A gets his house constructed on a vacant land, such construction would qualify as
Original work vide S. No. 11 of Exemption Notification No. 12/2017-Central Tax (Rate).
However, Mr. Y modifications would not qualify as Original works. So it is taxable.
ix. Such consideration is exempt from GST vide S. No. 11A of Exemption Notification No. 12/2017-
Central Tax (Rate) as amended by Notification No. 21/2017-Central Tax (Rate) and 47/2017-Central
Tax (Rate).
Study Notes
85
x. Service by any person by way of conduct of any religious ceremony would be exempt from GST vide
S. No. 13 of Exemption Notification No. 12/2017-Central Tax (Rate).
xi. This is exempt vide S. No. 16 of Exemption Notification No. 12/2017-Central Tax (Rate).
xii. It is exempt from tax vide S. No. 18 of Exemption Notification No. 12/2017-Central Tax (Rate).
xiii. Such transportation services shall be exempt vide S. No. 19 of Exemption Notification No. 12/2017-
Central Tax (Rate).
xiv. Such services shall be considered as exempt services vide S. No. 22 of Exemption Notification No.
12/2017-Central Tax (Rate).
xv. This would be exempt from GST vide S. No. 23A of Exemption Notification No. 12/2017-Central Tax
(Rate), amended by Notification No. 32/2017-Central Tax (Rate) Dated 13.10.2017.
xvi. This would be exempt from GST vide S. No. 32 of Exemption Notification No. 12/2017-Central Tax
(Rate).
xvii. This would be exempt from GST vide S. No. 33 of Exemption Notification No. 12/2017-Central Tax
(Rate).
xviii. Such services shall be exempt vide S. No. 52 of Exemption Notification No. 12/2017-Central Tax
(Rate).
xix. This is exempt vide S. No. 54 of Exemption Notification No. 12/2017-Central Tax (Rate).
xx. This would be exempt from tax vide S. No. 57 of Exemption Notification No. 12/2017-Central Tax
(Rate).
xxi. In this case as the tolerating of a non-performance of an act is specifically covered under the S. No.
62 of Exemption Notification No. 12/2017-Central Tax (Rate), no GST would be leviable on such
damage recovered from the erring party.
xxii. These services would be exempt from GST vide S. No. 65 of Exemption Notification No. 12/2017-
Central Tax (Rate).
xxiii. GST would be leviable on the same even though admission charges are less than Rs. 500 since
exhibition of cinematographic films is not covered in the exemptions under GST Act.
In case of Circus, it is exempt vide S. No. 81 of Exemption Notification No. 12/2017-Central Tax
(Rate).
xxiv. Columbia charges to Mr. A is exempt vide S. No. 74 of Exemption Notification No. 12/2017-Central
Tax (Rate). Even services provided by Doctor to Hospital is also exempt. It is immaterial whether
Doctor work as employees of hospital or not. It is clarified by Circular No. 32/06/2018-GST.
xxv. Sodexo catering services to in-patients is taxable since Sodexo is billing Columbia Hospital. Columbia
Hospital billing to in-patients is although exempt.
Sodexo catering services to visitor & patient’s relative is also subject to GST.
Q13. Mr. A, the owner of a residential building in a commercial locality, furnishes the following information
relating to his residential building for the month of January 2019:-
Floor No. Usage
Ground Floor 5 Shops & 1 godown for goods storage for monthly rent of INR
5,00,000
1st Floor Residential dwelling for monthly rent of INR 50,000
2nd Floor Self-Occupied by Mr. A for residential purpose
Vacant land in the backyard Given to nearby restaurant for parking for monthly rent of INR
1,00,000
Terrace Given to XYZ mobile company for maintaining tower for monthly
rent of INR 1,00,000
Compute the value of taxable supply.
86
A.

INR)
Rent received for 5 Shops & 1 godown for goods storage 5,00,000
Residential dwelling for monthly rent of INR 50,000 is exempt vide Sr. No. 12 of NIL
Notification No. 12-2017-CT (R) Dated 28-06-2017)
Self-Occupied property. Firstly no consideration and it is also used for residence NIL
Given to nearby restaurant for parking 1,00,000
Given to XYZ mobile company for maintaining tower 1,00,000
Value of Taxable Supply for the month January 2019 7,00,000
Q14. Columbia Hospital has received the following amounts in the month of January 2019 in lieu of various
services rendered by it in the same month. You are required to determine its taxable value for January 2019
from the details furnished below:-
INR)
Services provided by cord blood bank unit of the nursing home by way of preservation 30,00,000
of stem cells
Hair transplant services 15,00,000
Naturopathy treatments 20,00,000
Plastic surgery to restore anatomy of a child affected due to an accident 30,00,000
Pranic healing treatments 15,00,000
Mortuary Services 10,00,000
A.

INR)
Services provided by cord blood bank unit of the nursing home by way of preservation NIL
of stem cells is exempt vide S. No. 73 of Exemption Notification No. 12/2017-Central
Tax (Rate)
Hair transplant services. It is excluded from exemption vide S. No. 74 of Exemption 15,00,000
Notification No. 12/2017-Central Tax (Rate)
Naturopathy treatment is exempt vide S. No. 74 of Exemption Notification No. NIL
12/2017-Central Tax (Rate)
Plastic surgery to restore anatomy of a child affected due to an accident is exempt NIL
vide S. No. 74 of Exemption Notification No. 12/2017-Central Tax (Rate)
Pranic healing treatments. It is excluded from exemption vide S. No. 74 of Exemption 15,00,000
Mortuary Services is neither supply of goods nor supply of services under Schedule III NIL
Q15. ‘ABC Farmers Association’ is engaged in providing services relating to agriculture. You are required to
determine its taxable value for January 2019 from the details furnished below:-
INR)
Study Notes
87
Cultivation of ornamental flowers 30,00,000

Packing of tomato & chili ketchup 15,00,000
Warehousing of potato chips 20,00,000
Sale of tea on commission basis 30,00,000
Packaging of pulses in 1 KG retail packing 15,00,000
Training of farmers on use of scientific tools and agro machinery 10,00,000
Leasing of vacant land to a stud farm (rearing of horses) 30,00,000
Grading of wheat according to its quality 15,00,000
Testing of samples from plants for pest detection 20,00,000
Rearing of silk worms 30,00,000
Breeding of fish 15,00,000
Supply of farm labour 10,00,000
Leasing of vacant land to a poultry farm 5,00,000
Renting of Agro-machinery 4,00,000
A.

INR)
Cultivation of ornamental flowers is exempt vide S. No. 54 of Exemption Notification NIL
No. 12/2017-Central Tax (Rate)
Packing of tomato & chili ketchup (Not an agriculture produce) 15,00,000
Warehousing of potato chips (Not an agriculture produce) 20,00,000
Sale of tea on commission basis 30,00,000
Packaging of pulses in 1 KG packing (it is not necessary to pack pulses for making it 15,00,000
marketable)
Training of farmers on use of scientific tools and agro machinery is exempt. Agriculture NIL
extension services are exempt vide S. No. 54 of Exemption Notification No. 12/2017-
Central Tax (Rate)
Leasing of vacant land to a stud farm (rearing of horses) – Rearing of horses is 30,00,000
specifically kept out from exemption
Grading of wheat according to its quality is exempt. Grading which doesn’t alter the NIL
essential characteristics of the agriculture produce but makes it only marketable for
the primary market is exempt vide S. No. 54 of Exemption Notification No. 12/2017-
Central Tax (Rate)
Testing of samples from plants for pest detection is exempt. Agricultural operations NIL
directly related to production of any agriculture produce is exempt vide S. No. 54 of
Exemption Notification No. 12/2017-Central Tax (Rate)
Rearing of silk worms is exempt vide S. No. 54 of Exemption Notification No. 12/2017- NIL
Central Tax (Rate)
Breeding of fish is exempt vide S. No. 54 of Exemption Notification No. 12/2017- NIL
Central Tax (Rate)
Supply of farm labour is exempt vide S. No. 54 of Exemption Notification No. 12/2017- NIL
Central Tax (Rate)
Leasing of vacant land to a poultry farm is exempt. Agriculture means the rearing of all NIL
forms of animals other than rearing of horses. Renting of vacant land is exempt when
used for agriculture purpose vide S. No. 54 of Exemption Notification No. 12/2017-
Central Tax (Rate)
Renting of Agro-machinery vide S. No. 54 of Exemption Notification No. 12/2017- NIL
Central Tax (Rate)
Value of Taxable Supply for the month January 2019 1,10,00,000
88
Q16. You are required to determine value of taxable supply for January 2019 from the details furnished
below:-
INR)
Transportation of passengers by inland waterways 15,00,000
Transportation of goods by in inland waterways 20,00,000
Transportation of passengers by air terminating in Mizoram and Meghalaya 30,00,000
Passenger travelling by air from Assam to Kolkata 15,00,000
Passenger travelling by air from Kolkata to Pune 10,00,000
Air Freight related to goods imported into India 16,00,000
Freight relating to domestic transport of goods in India by Air 45,00,000
Vessels Freight relating to goods imported into India 20,00,000
GTA Freight charges for transport of food grain and pulses 30,00,000
GTA Freight charges for transporting small consignment for persons who paid less 15,00,000
than Rs. 750 for each consignment
GTA Freight charges for transporting goods in small vehicles for person who paid less 10,00,000
than Rs. 1,500 per trip
Charges for Elephant/camel joy rides 25,00,000
A.

INR)
Transportation of passengers by inland waterways is exempt vide S. No. 17 of NIL
Transportation of goods by in inland waterways is exempt vide S. No. 18 of Exemption NIL
Transportation of passengers by air terminating in Mizoram and Meghalaya is exempt NIL
Passenger travelling by air from Assam to Kolkata is exempt vide S. No. 15 of NIL
Passenger travelling by air from Kolkata to Pune 10,00,000
Air Freight related to goods imported into India is exempt vide S. No. 19 of Exemption NIL
Freight relating to domestic transport of goods in India by Air 45,00,000
Vessels Freight relating to goods imported into India 20,00,000
GTA Freight charges for transport of food grain and pulses is exempt vide S. No. 21 of NIL
GTA Freight charges for transporting small consignment for persons who paid less NIL
than Rs. 750 for each consignment is exempt vide S. No. 21 of Exemption Notification
GTA Freight charges for transporting goods in small vehicles for person who paid less NIL
than Rs. 1,500 per trip is exempt vide S. No. 21 of Exemption Notification No. 12/2017-
Central Tax (Rate)
Charges for Elephant/camel joy rides (Elephant/camel joy rides are not classified as 25,00,000
transportation services and will attract GST @ 18% -Circular No. 32/06/2018-GST)
Value of Taxable Supply for the month January 2019 1,00,00,000
Study Notes
89
Q17. ABC Ltd. Is engage in providing various service to educational institutional and furnishes you with the
following information for the month of January 2019. You are required to determine the value of taxable supply
and GST payable thereon if all charges are exclusive of GST.

INR)
Renting of immovable property to higher secondary school 12,00,000
Renting of immovable property to commercial coaching center 2,00,000
Transportation service provided to students of higher secondary school 30,00,000
Outdoor catering service provided to educational institutions running approved 5,00,000
vocational courses
Security services provided to pre-nursery school 10,00,000
Housekeeping and cleaning service in college providing recognized graduation degree 6,00,000
Conduct of examination of ICSI 5,00,000
Placement service provided to ICAI 12,00,000
Development of course contain of ICMA 2,00,000
Training of staff of higher Secondary School 1,50,000
A.

INR)
Renting of immovable property to higher secondary school 12,00,000
Renting of immovable property to commercial coaching center 2,00,000
Transportation service provided to students of higher secondary school is exempt vide NIL
S. No. 66 of Exemption Notification No. 12/2017-Central Tax (Rate)
Outdoor catering service provided to educational institutions running approved 5,00,000
vocational courses
Security services provided to pre-nursery school is exempt vide S. No. 66 of Exemption NIL
Housekeeping and cleaning service in college providing recognized graduation degree 6,00,000
Conduct of examination of ICSI is exempt vide S. No. 66 of Exemption Notification No. NIL
12/2017-Central Tax (Rate)
Placement service provided to ICAI 12,00,000
Development of course contain of ICMA 2,00,000
Training of staff of higher Secondary School 1,50,000
Q18. XYZ Ltd., providing educational services, furnishes you with the following information for the various
service provided by it. It has collected an aggregate sum of Rs. 30 lakhs during the month January 2019 as
under:
INR)
Receipts of ‘Gyan Vijay’ an industrial training institute (ITI) affiliated to the National 1,20,000
council for vocational Training (NCVT)
Receipts for running a Boarding School 1,00,000
Receipts of ‘GE Educare’ a vocational educational provider affiliated to sector Skill 1,80,000
Council formed under National Skill Development Corporation (NSDC)
90
Receipts of ‘Kalyan Skill Centre’ an industrial training centre (ITC) affiliated to the state 2,00,000
Council for vocational Training, Rajasthan
Receipts of ‘Scintech a Commercial Coaching institute providing commercial coaching 80,000
in the field of arts and science (no certificate was issued on completion of the training)
Receipts of ‘Commerce concepts’ a Commercial coaching institute providing coaching in 1,20,000

the field of commerce (a certificate was awarded to each trainee after completion of the
training)
Receipts of Gurukul school providing education upto higher secondary 6,00,000
Receipts of ‘Play Kids’ school providing educational upto primary level (such receipts 11,00,000
includes receipts from renting of premises to commercial coaching centre: Rs. 3 lakhs)
A.

INR)
Total Receipt 30,00,000
Less:-
Receipts of ‘Gyan Vijay’ an industrial training institute (ITI) affiliated to the National (-) 1,20,000
council for vocational Training (NCVT) is exempt vide S. No. 66 of Exemption
Receipts for running a Boarding School is exempt vide S. No. 66 of Exemption (-) 1,00,000
Receipts of ‘GE Educare’ a vocational educational provider affiliated to sector Skill (-) 1,80,000
Council formed under National Skill Development Corporation (NSDC) is exempt vide S.
No. 69 of Exemption Notification No. 12/2017-Central Tax (Rate)
Receipts of ‘Kalyan Skill Centre’ an industrial training centre (ITC) affiliated to the state (-) 2,00,000
Council for vocational Training, Rajasthan is exempt vide S. No. 66 of Exemption
Receipts of Gurukul school providing education upto higher secondary is exempt vide S. (-) 6,00,000
No. 66 of Exemption Notification No. 12/2017-Central Tax (Rate)
Receipts of ‘Play Kids’ school providing educational upto primary level is exempt vide S. (-) 8,00,000
No. 66 of Exemption Notification No. 12/2017-Central Tax (Rate). However, receipts
from renting of premises by the school to commercial coaching center shall be liable for
GST
Q19. Axis IDFC Bank Ltd. furnishes following information relating to services provided during the month of
January 2019. Compute the value of taxable supply from following information :
INR)
Amount of commission received for debt collection service 10,00,000
Discount earned on LC discounted 7,00,000
Dealing in sale and purchase of forward contract 20,00,000
Charges received on credit card and debit card facilities extended 4,00,000
Penal interest recovered from the customers for the delay in repayment of loan 11,00,000
Commission received for service rendered to Government for GST collection 7,00,000
Margin earned on reverse repo transactions 4,00,000
Interest on credit card 1,00,000
Administrative charges & Folio charges collected 10,000
Study Notes
91
Charges for ATM card transactions 5,00,000

Commission received for DD, pay order and cheque collection 4,00,000
A.

INR)
Amount of commission received for debt collection service Banking services are 10,00,000
provided by way of extending deposits, loans or advances in so far as represented by
interest are exempt. Commission received in not covered in exemption
Discount earned on LC discounted is exempt vide S. No. 27 of Exemption Notification NIL
Dealing in sale and purchase of forward contract. Forward contract comes under the NIL
purview of “Securities” as per Section 2 (101) of CGST Act, 2017. Securities is excluded
from the definition of Goods U/s 2 (52) & Services U/s 2 (102) respectively. Thus, the
same would not be liable to GST
Charges received on credit card and debit card facilities extended 4,00,000
Penal interest recovered from the customers for the delay in repayment of loan 11,00,000
Commission received for service rendered to Government for GST collection 7,00,000
Margin earned on reverse repo transactions. These are financial instruments of short NIL
term call money market that are normally used by banks to borrow from or lend money to
RBI. The margins, called the repo rate or reverse repo rate in such transactions are
nothing but interest charged for lending or borrowing money. Also interest earned on
reverse repo transactions are exempt from GST
Interest on credit card 1,00,000
Administrative charges & Folio charges collected 10,000
Charges for ATM card transactions 5,00,000
Commission received for DD, pay order and cheque collection 4,00,000
Q20. Please comment, whether the following services are exempt under GST or not:
INR)
Services provided to a recognized sports body by an individual as a player 10,00,000
Services provided to a recognized sports body by an individual as a referee 5,00,000
Services provided to a recognized sports body by an individual as a umpire 2,00,000
Services provided to a recognized sports body by an individual as a coach 1,00,000
Services of a player to IPL Franchisee 7,00,000
Services by a recognized sports body to another recognized sports body 5,00,000
Services provided to a recognized sports body by an individual as a selector 2,00,000
Services provided to a recognized sports body by an individual as a commentators 1,00,000
Services provided to a charitable body by an individual as a player in subsidized fees 50,000
A.
Particulars Taxable
Amount (in
INR)
Services provided to a recognized sports body by an individual as a player is exempt vide NIL
Services provided to a recognized sports body by an individual as a referee is exempt NIL
92
Services provided to a recognized sports body by an individual as a umpire is exempt NIL
Services provided to a recognized sports body by an individual as a coach is exempt vide NIL
Services of a player to IPL Franchisee. It is not recognized sports body 7,00,000
Services by a recognized sports body to another recognized sports body is exempt vide NIL
Services provided to a recognized sports body by an individual as a selector 2,00,000
Services provided to a recognized sports body by an individual as a commentators 1,00,000
Services provided to a charitable body by an individual as a player in subsidized fees. It 50,000
is not recognized sports body
Q21. An individual acts as a referee in a football match organized by Sports Authority of India. He has also
acted as a referee in another charity football match organized by a local sports club, in lieu of a lump sum
payment. Discuss whether he is required to pay any GST? (ICAI Module)
Ans. Services provided to a recognized sports body by an individual inter alia as a referee in a sporting event
organized by a recognized sports body is exempt from GST.
Since in the first case, the football match is organized by Sports Authority of India, which is a recognized sports
body, services provided by the individual as a referee in such football match will be exempt.
However, when he acts as a referee in a charity football match organized by a local sports club, he would not
be entitled to afore-mentioned exemption as a local sports club is not a recognized sports body and thus, GST
will be payable in this case.
Q22. RXL Pvt. Ltd. manufactures beauty soap with the brand name ‘Forever Young’. RXL Pvt. Ltd. has
organized a concert to promote its brand. Ms. Ahana Kapoor, its brand ambassador, who is a leading film
actress, has given a classical dance performance in the said concert. The proceeds of the concert worth Rs.
1,20,000 will be donated to a charitable organization. Whether Ms. Ahana Kapoor will be required to pay any
GST? (ICAI Module)
Ans. Services by an artist by way of a performance in folk or classical art forms of (i) music, or (ii) dance, or (iii)
theatre are exempt from GST, if the consideration charged for such performance is not more than Rs. 1,50,000.
However, such exemption is not available in respect of service provided by such artist as a brand ambassador.
Since Ms. Ahana Kapoor is the brand ambassador of ‘Forever Young’ soap manufactured by RXL Pvt. Ltd., the
services rendered by her by way of a classical dance performance in the concert organized by RXL Pvt. Ltd. to
promote its brand will not be eligible for the above-mentioned exemption and thus, be liable to GST. The fact
that the proceeds of the concert will be donated to a charitable organization will not have any bearing on the
eligibility or otherwise to the above-mentioned exemption.
Study Notes
93
Section 10 of Place of Supply of Goods other than Supply of Goods Imported into, or
IGST Act, 2017 Exported from India
Section 11 of Place of Supply of Goods Imported into, or Exported from India
IGST Act, 2017
Section 12 of Place of Supply of Services where location of supplier of service and
IGST Act, 2017 the location of the recipient of service is in India
Section 13 of Place of Supply of Services where location of supplier or location of
IGST Act, 2017 recipient is outside India
Section 10 (IGST Act, 2017) Place of Supply of Goods other than

Supply of Goods Imported into, or Exported from India
Provision of Section 10 override provision of Section 7 (1) of IGST Act, 2017 {supply of
goods}.
Provision Place of Supply Remarks
Sec. 10 (1) (a) Location of goods The location of the goods is a question of
Movement of goods is involved where delivery fact to be ascertained by observing the
Whether by – terminates to the journey which the goods supplied make
- Supplier recipient from their origin from supplier and
- Recipient terminate with recipient.
- Any other person
Example 1: A Ltd., Mumbai (supplier) supply to B Ltd, Delhi (recipient). The place of supply will be Delhi
whether supplier supply to recipient or recipient take delivery from supplier’s place or recipient engaged
transporter to take delivery on his behalf.
Example 2: Mr. A working in Mumbai, while his official visit to Delhi purchased a laptop from electronic
showroom in Delhi. He immediately took delivery of laptop in showroom. The POS may be considered as
‘Delhi’ (CGST & SGST) where supplier mention address for delivery in his invoice as ‘Delhi’. The POS may
be also considered as ‘Mumbai’ (IGST) where supplier mention address for delivery in his invoice as
‘Mumbai’.
In terms of clause (e) of rule 46 of CGST Rules, a tax invoice issued by registered person is required to
contain, name and address of the recipient and the address of delivery, along with the name of the State
and its code, if such recipient is unregistered and where the value of the taxable supply is Rs. 50,000 or
more.
Sec. 10 (1) (b) Principal place of It is important to identify the two supplies
If the goods are delivered to – business of such – by supplier to third party and by third
- Any person, on the direction of a third person party to recipient
third person, before or during This provision deals only with the first
movement of goods, it shall be limb of supply (Second limb defined in
deemed that the said person ‘c’), that is, supply by supplier to third
has received the goods. party.
Irrespective of: - This is also called “Bill to Ship to” model.
- Whether such person acting as
an agent or otherwise, **Let say supplier raise invoice on
15.05.2019 on third person and remove
94
- Whether transfer made by way the goods for delivery. The third person
of transfer of documents of title also need to raise invoice on same day
of the goods or otherwise according to provisions of Section 31 (1)
(a).
Supplier & his Buyer & his Recipient & his Place of supply Place of supply
Location Location location (first limb) (second limb)
A Ltd., Mumbai B Ltd. Mumbai C Ltd. Delhi Mumbai Delhi
A Ltd., Mumbai B Ltd. Chennai B Ltd. Mumbai Chennai Mumbai
A Ltd., Mumbai B Ltd. Kolkata C Ltd. Delhi Kolkata Delhi
A Ltd., Mumbai B Ltd. Chennai C Ltd. Delhi Chennai Delhi
Sec. 10 (1) (c) Location of goods It is not a case where there is difficulty in
Movement of goods is not involved at the time of the movement of the goods, but this is goods
delivery to the ought not to move and when their
recipient delivery to the recipient will stand
complete
Example 4: A Ltd., Mumbai bought office in Delhi with pre-installed office furniture & fixtures. The purchase
of office is outside the purview of GST (Schedule III) but office furniture & fixtures will be liable to GST.
Since there is no movement of furniture & fixtures, the place of supply is their location i.e. Delhi.
Sec. 10 (1) (d) Place of such Please note that in the case of assembly
Goods are assembled or installed installation or or installation, it is a supply that is not
assembly ‘works contract’. This is because works
contracts, in GST, are treated as supply
of service and that too only if the resultant
is an immovable property. The provisions
of this section does not apply to works
contracts.
Supplier & his Recipient & his Place of Place of Supply Tax Leviable
location location installation/assembly
A Ltd., Mumbai B Ltd. Mumbai Delhi Delhi IGST
A Ltd., Mumbai B Ltd. Chennai Indore Indore IGST
A Ltd., Mumbai B Ltd. Kolkata Guwahati Guwahati IGST
A Ltd., Mumbai B Ltd. Chennai Mumbai Mumbai CGST/SGST
Sec. 10 (1) (e) Location as which The place of supply appointed under this
Goods supplies on board a conveyance such goods are sub-section is the supply by the operator
i.e. vessel, an aircraft, a train or a motor taken on board of the conveyance during its journey to
vehicle the passenger
Example 6: A Ltd. Mumbai entered into contract with the ABC airlines for the supply of food to the
passenger on Mumbai – Delhi route. The goods were loaded in Kolkata (previous journey leg), so in this
case place of supply is Kolkata.
Example 7: A boarded Rajdhani train from Mumbai along with food items. He sold all the food items
between Mumbai to Delhi journey. The place of supply is Mumbai where food items loaded.
Example 8: A is travelling from Delhi to Guwahati via train. He ordered dinner to pantry person. Food items
were loaded in Kanpur and delivered to him in Allahabad. The place of supply is Kanpur.
Sec. 10 (2) As determined in However, as of now no such peculiar
Where place of supply cannot be the manner circumstances has come for which
determined prescribed separate provisions for POS has been
prescribed.
Study Notes
95
Section 11 (IGST Act, 2017) Place of Supply of Goods Imported

into, or Exported from India
Type Place of Supply
Sec. 11 (a) Goods imported in India Location of the importer
Sec. 11 (b) Goods exported from India Location outside India
IGST will be payable, at the time of import of goods from custom.
IGST will be payable on value determined under section 3 of Customs Tariff Act on value determined under
said Act at the point where duties of customs are levied on the said goods under section 12 of Customs Act,
1962 – proviso to section 5 (1) of IGST Act.
CBE&C vide circular No. 50/2017-Cus Dated 18-12-2017 has clarified as follows –
a. Price of goods in duty free shops should be displayed in rupees only

b. In case of incoming passenger, the limit is Rs. 25,000 and payment can be made in rupees by
debit/credit card in duty free shop in arrival hall
c. There is no restriction on amount in case of outgoing passenger and he can pay any amount in
rupees by debit/credit card in departure hall.
Example 9: A Ltd., Delhi imported goods from B Ltd., China. Location of supplier is China. Place of supply is
Delhi (taxable territory). It will be subject to IGST.
Example 10: A Ltd., Delhi exported goods to B Ltd., China. Location of supplier is Delhi (taxable territory).
Place of supply is China (outside India). It will be treated as exported.
Example 11: A Ltd., Delhi received order from B Ltd., to deliver goods in USA. A Ltd. sourced this goods from
UK & delivered this in USA. The transactions will not be considered as import as the goods being sold have
not been brought into India (not crossed custom barrier) even though both the supplier & recipient are in India
(Para 7 of Schedule III).
Example 12: A Ltd., Delhi received order from B Ltd., China to deliver goods at Maharashtra. As per section 2
(5), export of goods means taking goods out of India to a place outside India. A Ltd., Delhi is in India &
delivering goods in India i.e. Maharashtra. This will be considered as Inter-State supply and will be subject to
IGST. Goods has not been taken out as per section 2 (5), so will not be considered as export.
Example 13: ABC Ltd. of Madhya Pradesh imported 100 kg of goods from XYZ Pte. ltd. of Singapore. The
goods are received at JNPT, Mumbai. If
✓ Goods are cleared from customs and brought back to place of business at Madhya Pradesh of ABC
Ltd., POS shall be the location of importer i.e. Madhya Pradesh;
✓ Goods are cleared from customs and directly supplied to customer in Maharashtra. This transaction
for supply of goods of ABC Ltd. of Madhya Pradesh to customer in Maharashtra will be treated as
inter-State supply of goods & IGST shall be levied.
✓ Good are cleared from customs but are stored in ABC Ltd.’s warehouse in Maharashtra for supply to
made later. According to definition of ‘place of business’ U/s 2 (85) of the CGST Act, includes ‘a
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warehouse’. Thus ABC Ltd. will be required to take registration in Maharashtra. Later while supplying
goods from Maharashtra warehouse to customer in Maharashtra, the transaction will be treated as
intra-State supply of goods.
✓ Goods are cleared from customs and sent to job-worker in Tamil Nadu. This is not supply so will be
delivered with delivery challan and e-way bill.
Section 12 (IGST Act, 2017) Place of Supply of Services where

location of supplier & recipient is in India
Provision of Section 12 override provision of Section 7 (3) of IGST Act, 2017 {supply of
services}.
Sec. 12 (1) It looks like sub-section (2) is a
This section deals with the situation residual sub-section. Sub Section
where supplier of services and location (3) to sub section (14) is a
of the recipient of service, both are in specific section which determines
India. place of supply on specific
Sec. 12 (2) transactions. Hence, it may be
This sub-section applies except the If person is registered then concluded that, to determine
services specified in Sec. 12 (3) to Sec. Place of supply will be Place of Supply, we need to first
12 (14). location of such person. refer to sub-section (3) to sub
Person is other than a section (14) first, then if the
registered person then if transaction doesn’t fall in any of
address on record exists sub-section, then place of supply
then location of recipient shall be decided by sub-section
otherwise location of (2)
supplier
Example 14: ABC & Co., a tax professional firm based in Ahmedabad rendering professional services to
XYZ Ltd. a company registered in GST for their office in Mumbai. The POS shall be Mumbai.
Let say in above example, if tax manager of XYZ Ltd., visit Ahmedabad to discuss tax matter, still POS
shall be Mumbai.
Sec. 12 (3) (a)
Directly in relation to an immovable ➢ General – Location
property, including services provided by at which it is located
architects, interior decorators, or intended to be
surveyors, engineers and other related located
experts or estate agents, any service ➢ If located outside
provided by way of grant of rights to use India, Place of
immovable property or for carrying out supply = Location of
or co-ordination of construction work. recipient
This includes any services ancillary as ➢ If located in more *Proportion to the value for
per section 12 (3) (d). than one services separately collected or
State/Union determined in terms of the
Sec. 12 (3) (b) Territory then place contract or agreement entered
By way of lodging accommodation by a of supply will be into in this regard or, in the
hotel, inn, guest house, home stay, club proportionate* absence of such contract or
or campsite, by whatever name called, agreement, on such other basis
an including a house boat or any other as may be prescribed.
vessel. This includes any services
ancillary as per section 12 (3) (d).
Study Notes
97

Sec. 12 (3) (c) As per Section 7 (5) (b) of IGST
By way of accommodation in any Act, supply of goods or services
immovable property for organizing any or both to SEZ unit or SEZ
marriage or reception or matters related developer is inter-State supply.
thereto, official, social, cultural, religious This is specific provision and
or business function including services hence will prevail over general
provided in relation to such function at provision as contained in section
such property. This includes any 12 (3) (c) of IGST Act. Hence, in
services ancillary as per section 12 (3) case of supply of such services,
(d). IGST will be payable and not
CGST and SGST/UTGST. If such
supply is for authorized
operations, IGST will be refunded
if paid or ITC refund can be
obtained if supplied under
LUT/Bond subject to
endorsement of specified officer
of SEZ.
[Circular No. 48/22/2018 Dated
14.06.2018]
Example 15: A company in Kolkata contracts with a Delhi based architect to design a structure in Mumbai.
POS is place of immovable property i.e. Mumbai.
Example 16: A from Mumbai, goes on official trip to Bangalore and stay in hotel for one night. POS is
Bangalore.
Example 17: A from Jaipur, arranged his son wedding in Resort at Ooty, Tamil Nadu. The POS is Ooty,
Tamil Nadu.
Example 18: A Mumbai based builder provides construction services to Chennai based company in respect
of construction of its factory in South Africa. POS will be Chennai.
Example 19: Let say an interior decorator is engaged by a retail chain to design a common décor for all its
store in India, this service would not be land-related. The default provision i.e. Section 12 (2) of the IGST
Act will apply in this case.
Rule 4 of IGST Rules
Where such immovable property or boat or vessel is located in more than one State or Union territory, shall
be taken as being in each of the respective States or Union territories, and in the absence of any contract
or agreement between the supplier of service and recipient of services for separately collecting or
determining the value of the services in each such State or Union territory, as the case maybe, shall be
determined in the following manner namely:-
(i) in case of services provided by way of lodging accommodation by a hotel, inn, guest house, club or
campsite, by whatever name called (except cases where such property is a single property located
in two or more contiguous States or Union territories or both) and services ancillary to such
services, the supply of services shall be treated as made in each of the respective States or Union
territories, in proportion to the number of nights stayed in such property;
(ii) in case of all other services in relation to immovable property including services by way of
accommodation in any immovable property for organising any marriage or reception etc., and in
cases of supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever
name called where such property is a single property located in two or more contiguous States or
Union territories or both, and services ancillary to such services, the supply of services shall be
treated as made in each of the respective States or Union territories, in proportion to the area of the
immovable property lying in each State or Union territory;
(iii) in case of services provided by way of lodging accommodation by a house boat or any other vessel
and services ancillary to such services, the supply of services shall be treated as made in each of
the respective States or Union territories, in proportion to the time spent by the boat or vessel in
98
each such State or Union territory, which shall be determined on the basis of a declaration made to
the effect by the service provider.
Example 20: A hotel chain X charges a consolidated sum of Rs. 30,000/- for stay in its two establishments
in Delhi and Agra, where the stay in Delhi is for 2 nights and the stay in Agra is for 1 night. The place of
supply in this case is both in the Union territory of Delhi and in the State of Uttar Pradesh and the service
shall be deemed to have been provided in the Union territory of Delhi and in the State of Uttar Pradesh in
the ratio 2:1 respectively. The value of services provided will thus be apportioned as Rs. 20,000/- in the
Union territory of Delhi and Rs. 10,000/- in the State of Uttar Pradesh .
Example 21: There is a piece of land of area 20,000 square feet which is partly in State S1 say 12,000
square feet and partly in State S2, say 8000 square feet. Site preparation work has been entrusted to T.
The ratio of land in the two states works out to 12:8 or 3:2 (simplified). The place of supply is in both S1 and
S2. The service shall be deemed to have been provided in the ratio of 12:8 or 3:2 (simplified) in the States
S1 and S2 respectively. The value of the service shall be accordingly apportioned between the States.
Example 22: A company C provides the service of 24 hours accommodation in a houseboat, which is
situated both in Kerala and Karnataka in as much as the guests board the house boat in Kerala and stay
there for 22 hours but it also moves into Karnataka for 2 hours (as declared by the service provider). The
place of supply of this service is in the States of Kerala and Karnataka. The service shall be deemed to
have been provided in the ratio of 22:2 or 11:1 (simplified) in the states of Kerala and Karnataka,
respectively. The value of the service shall be accordingly apportioned between the States.
Sec. 12 (4)
Restaurant & catering services, Location where the services Only listed are covered here. Let
personal grooming, fitness, beauty are actually performed say if photography services, then
treatment, health service including it is not covered here.
cosmetic and plastic surgery
Example 23: Mrs. A from Mumbai, went to Udaipur and availed Beauty Parlour services. The POS is
Udaipur.
Sec. 12 (5)
Services in relation to Training and
performance appraisal to –
➢ A registered person ➢ Location of such
person
➢ A person other than registered ➢ Location where the
person services are
actually performed
Example 24: ABC Ltd., Delhi has entered into a contract with XYZ Ltd., Chennai for training and
performance appraisal of their employees. Training was conducted at Pune, Maharashtra. In case ABC
Ltd. is registered then POS will be Delhi. In case ABC Ltd. is not registered then services where it is
actually performed i.e. Pune, Maharashtra.
Sec. 12 (6)
Services provided by way of admission Place where the event is
to a cultural, artistic, sporting, scientific, actually held or where the
educational, entertainment event or park or such other place is
amusement park or any other place and located
services ancillary thereto
Example 25: Mr. A from Mumbai, did online booking for Kaziranga National Park, Assam and hired a cab to
be taken around. The place of supply is Kaziranga National Park, Assam and hiring a cab is ancillary
service since it is being taken to make trip more convenient. The POS remain same.
Sec. 12 (7)
Services provided by way of, -
Study Notes
99

(a) organization of a cultural, artistic,
sporting, educational or entertainment
event including supply of services in
relation to a conference, fair, exhibition,
celebration or similar events; or
(b) services ancillary to organization of

any of the events or services referred to
in clause (a), or assigning of
sponsorship to such events, -
➢ A registered person ➢ Location of such
person
➢ A person other than registered

person
-If event is held in India ➢ Place where event
is actually held
*Proportion to the value for
-If event is held outside India ➢ Location of the services separately collected or
recipient determined in terms of the
If located in more than one contract or agreement entered
State/Union Territory then into in this regard or, in the
place of supply will be absence of such contract or
proportionate* agreement, on such other basis
as may be prescribed
Example 26: ABC Ltd., Mumbai held exhibition event in USA. ABC Ltd. hires these services from XYZ Ltd.,
Delhi. The POS is Mumbai assuming that ABC Ltd. is registered. If ABC Ltd. is unregistered then POS is
again Mumbai. If let say this exhibition had been held at Ahmedabad, Gujarat then POS is place of
exhibition i.e. Ahmedabad (considering ABC Ltd. unregistered).
Where the services are supplied to a person other than a registered person, the event is held in India in
more than one State or Union territory and a consolidated amount is charged for supply of such services,
shall be taken as being in each of the respective States or Union territories, and in the absence of any
contract or agreement between the supplier of service and recipient of services for separately collecting or
determining the value of the services in each such State or Union territory, as the case maybe, shall be
determined by application of the generally accepted accounting principles.
Example 27: An event management company E has to organise some promotional events in States S1
and S2 for a recipient R. 3 events are to be organised i.e. one in S1 and 2 events in S2. They charge a
consolidated amount of Rs.10,00,000 from R. The place of supply of this service is in both the States S1
and S2. Say the proportion arrived at by the application of generally accepted accounting principles is 3:2.
The service shall be deemed to have been provided in the ratio 3:2 in S1 and S2 respectively. The value of
services provided will thus be apportioned as Rs. 6,00,000/- in S1 and Rs. 4,00,000/- in S2 .
Sec. 12 (8)
Services by way of transportation of POS shall be decided on the
goods, including by mail or courier to, - basis of who is paying freight i.e.
➢ A registered person ➢ Location of such supplier or recipient.
person
➢ A person other than registered ➢ Location at which
person such goods are
Provided that where the transportation handed over for
of goods is to a place outside India, the their transportation
100
place of supply shall be the place of
destination of such goods.
Example 28: ABC Ltd., Mumbai is a registered company. It sends courier to Delhi through XYZ courier
company. Since ABC Ltd. is registered the place of supply is Mumbai. If suppose ABC Ltd. is unregistered
and his representative sends courier from Bangalore to Chennai then POS is Bangalore.
Example 29: The registered person (‘XYZ’) in India has to export certain goods to China. The contract to
transport goods by road (‘GTA service’) has been entered with the goods transport agency (‘supplier’)
located in India. In light of the amended provision, the place of supply of service provided by the supplier
shall be the destination of goods i.e. China. The place of supply shall neither be the location of XYZ nor the
location of the supplier in India.
Sec. 12 (9)
Passenger transportation service to,
➢ A registered person ➢ Location of such The return journey shall be
person treated as a separate journey,
➢ A person other than registered ➢ Place where the even if the right to passage for
person passenger embarks onward and return journey is
on the conveyance issued at the same time.
for a continuous
journey
Where the right to passage is given for
future use and the point of embarkation
is not known at the time of issue of right
to passage, the POS of such service
shall be determined in the manner
specified in sub-section (2), i.e. the
default provision.
Example 30: Mr. A, Mumbai (registered person) travels from Bangalore to Chennai by Jet Airways. He
bought this ticket from Jet Airways, Kolkata. The POS is Mumbai.
Example 31: Mr. A, Mumbai (unregistered person) travels from Bangalore to Chennai to Kochi (continuous
journey) by Jet Airways. He bought this ticket from Jet Airways, Bangalore. The POS is Bangalore (CGST).
If suppose, Mr. A also booked return flight along with this then this will be separate journey & the POS is
Kochi & it will be subject to IGST.
Sec. 12 (10)
Services on board a conveyance, Location of the first
including a vessel, an aircraft, a train or scheduled point of
a motor vehicle, departure of that
conveyance for the journey
Example 32: Mr. A, Mumbai travels from Nepal-Kolkata-Mumbai. During Kolkata-Mumbai leg, he has
ordered movie on demand. Since his first scheduled point of departure is Nepal which is outside the taxable
territory, so it is not liable to tax.
Sec. 12 (11)
Telecommunication services including Where the leased circuit is
data transfer, broadcasting, cable and installed in more than one State
direct to home television services to any or UT and a consolidated amount
person shall- is charged for supply of services
(a) Fixed telecommunication line, ➢ Place of installation relating to such circuit, the POS
leased circuits, internet leased circuit, of such services shall be taken as
cable or dish antenna, being in each of the respective
(b) Mobile connection and Internet on ➢ Billing Address on States or UT in proportion to the
post-paid basis the record of value for services separately
supplier of services collected or determined in terms
of the contract or agreement
Study Notes
101

(c) Mobile connection, Internet entered into in this regard or, in
connection, DTH provided on pre- the absence of such contract or
payment basis through a voucher or agreement, on such other basis
any other means – as may be prescribed.
(i) through a selling agent or a re-seller ➢ Address of the
or a distributor of subscriber identity selling agent/re-
module card or re-charge voucher seller/distributor as
per the record of the
supplier at the time
of supply
(ii) by any person to the final subscriber, ➢ Location where pre-
payment received
or such vouchers
are sold
If such pre-paid service is availed or the
recharge is made through internet ➢ Location of the
banking or other electronic mode of recipient of services
payment on the record of the
supplier of services
(d) in other cases, ➢ Address of the

(i) if address of the recipient as per the recipient as per the
records of the supplier of services is records of the
available supplier of services
(ii) where such address is not available ➢ Location of supplier

of services
Example 33: Mr. A, Mumbai has connection of fixed line in Mumbai with billing address Kolkata. The POS is
Mumbai.
Example 34: Mr. A, Mumbai has postpaid mobile connection with billing address Kolkata. The POS is
Kolkata.
Example 35: Mr. A, Mumbai has prepaid mobile connection and he has bought prepaid voucher online. His
address in mobile company is Kolkata. The POS is Kolkata.
Example 36: Mr. A, Mumbai has bought prepaid card from seller in Delhi. The POS is Delhi.
In the absence of any contract or agreement between the supplier of service and recipient of services for
separately collecting or determining the value of the services in each such State or Union territory, as the
case maybe, shall be determined in the following manner, namely:-
(a) The number of points in a circuit shall be determined in the following manner:
(i) in the case of a circuit between two points or places, the starting point or place of the circuit and the
end point or place of the circuit will invariably constitute two points;
(ii) any intermediate point or place in the circuit will also constitute a point provided that the benefit of
the leased circuit is also available at that intermediate point;
(b) the supply of services shall be treated as made in each of the respective States or Union territories, in
proportion to the number of points lying in the State or Union territory.
Example 37: A company T installs a leased circuit between the Delhi and Mumbai offices of a company C.
The starting point of this circuit is in Delhi and the end point of the circuit is in Mumbai. Hence one point of
this circuit is in Delhi and another in Maharashtra. The place of supply of this service is in the Union territory
of Delhi and the State of Maharashtra. The service shall be deemed to have been provided in the ratio of
1:1 in the Union territory of Delhi and the State of Maharashtra, respectively.
102
Example 38: A company T installs a leased circuit between the Chennai, Bengaluru and Mysuru offices of
a company C. The starting point of this circuit is in Chennai and the end point of the circuit is in Mysuru.
The circuit also connects Bengaluru. Hence one point of this circuit is in Tamil Nadu and two points in
Karnataka. The place of supply of this service is in the States of Tamil Nadu and Karnataka. The service
shall be deemed to have been provided in the ratio of 1:2 in the States of Tamil Nadu and Karnataka,
respectively.
Example 39:: A company T installs a leased circuit between the Kolkata, Patna and Guwahati offices of a
company C. There are 3 points in this circuit in Kolkata, Patna and Guwahati. One point each of this circuit
is, therefore, in West Bengal, Bihar and Assam. The place of supply of this service is in the States of West
Bengal, Bihar and Assam. The service shall be deemed to have been provided in the ratio of 1:1:1 in the
States of West Bengal, Bihar and Assam, respectively.
Sec. 12 (12)
Banking and other financial services, ➢ Location of the
including stock broking services to any recipient of services
person as per the records
of the supplier
If the location of recipient of services is ➢ Location of the
not on the records of the supplier supplier of services
Example 40: Mr. A, Mumbai registered person buys shares from a broker in Delhi on NSE (Mumbai). The
POS is Mumbai (location of recipient of services as per record of supplier of services).
Example 41: Mr. A, Mumbai avail some services from SBI, Chennai. If the service is linked with account
then the POS is location of recipient of supplier i.e. Mumbai. If it is not available in record then Chennai.
Sec. 12 (13)
Insurance services, -
(a) to a registered person ➢ Location of such
person
(b) to a person other than a registered ➢ Location of the
person recipient of services
on the records of
the supplier of
services.
Example 42: Mr. A, Mumbai is an unregistered person, take travel insurance policy from Delhi to Kolkata
flight. The POS is Mumbai.
Sec. 12 (14)
Advertisement services to the Central Place of supply shall be Value of such supplies specific to
Government, a State Government, a taken as being in each of each State or UT shall be in
statutory body or a local authority meant such States or Union proportion to :
for the States or Union territories Territories • Amount attributable to
identified in the contract or agreement services provided by way
of dissemination in the
respective States or UT
as may be determined in
terms of the contract or
agreement entered into in
this regard or,
• In the absence of such
contract or agreement,
on such other basis as
may be prescribed.
Study Notes
103

Example 43: Gujarat Government gives an advertisement contract to an advertising agency (registered in
Ahmedabad) to promote Gujarat tourism throughout the country. The place of supply is in all the States and
Union Territories of India.
Example 44: Delhi Government gives an advertisement contract to an advertising agency registered in
Delhi to promote its ‘Every Child Can Read’ campaign in Delhi. The place of supply is Delhi.
If both supplier & recipient of service are in India, GST may be payable even if service is provided outside
India, if the services falls under residual category i.e. tour operator in India providing service to Indian tourist
outside India will be liable to pay GST {Para 5.8-2 of CBE&C ‘Taxation of Services : An Education Guide’
published on 20-6-2012 had given this illustration}
Rule 3 (IGST Rules 2017) Supply of advertisement services to the Central Government, a State
Government, a statutory body or a local authority (Notification No. 12/2017 Integrated (Rate) Dated 15-
11-2017)
Under section 12 (14) of the IGST Act, 2017 in the absence of any contract between the supplier of service
and recipient of services, valuation shall be determined in following manner:-
Rule In case of Value of supply will be

3 (a) Newspaper and On the basis of number of editions in each State/UT
publications
Example 45: ABC Government agency, release order to a DEF newspaper (Head office is in Delhi) for an
advertisement ‘Beti Bachao Beti Padhao’ to be published in the edition of Delhi, Pune, Mumbai, Lucknow
and Jaipur. So place of supply will be Delhi, Maharashtra, UP & Rajasthan and invoice needs to be raised
on the basis of ratio of editions in above State.
3 (b) Printed material like On the basis of number of such material in each State/UT
pamphlets, leaflets,
diaries, calendars, T-
Shirts etc.
3 (c) (i) Hoardings other than Hoardings located in each State/UT
those on trains
3 (c) (ii) Advertisements placed on Ratio of the length of the railway track in each State/UT for that
trains train
Example 46: ABC places an order on KL for advertisements to be placed on a train with regard to the
‘Janani Suraksha Yojana’. The length of a track in a State will vary from train to train. Thus, for
advertisements to be placed on the Hazrat Nizamuddin Vasco Da Gama Goa Express which runs
through Delhi, Haryana, Uttar Pradesh, Madhya Pradesh, Maharashtra, Karnataka and Goa, KL may
ascertain the total length of the track from Hazrat Nizamuddin to Vasco Da Gama as well as the length of
the track in each of these States and Union territory from the website www.indianrail.gov.in.
The place of supply of this service is in the Union territory of Delhi and States of Haryana, Uttar Pradesh,
Madhya Pradesh, Maharashtra Karnataka and Goa. The value of the supply in each of these States and
Union territory attributable to the dissemination in these States will be in the ratio of the length of the track
in each of these States and Union territory. If this ratio works out to say 0.5:0.5:2:2:3:3:1, and the amount
to be paid to KL is Rs. 1,20,000, then KL will have to calculate the State-wise and Union territory-wise
breakup of the value of the service, which will be in the ratio of the length of the track in each State and
Union territory.
In the given example, the State-wise and Union territory-wise breakup works out to Delhi (Rs. 5,000),
Haryana (Rs. 5,000), Uttar Pradesh (Rs. 20,000), Madhya Pradesh (Rs. 20,000), Maharashtra
(Rs. 30,000), Karnataka (Rs. 30,000) and Goa (Rs. 10,000). Separate invoices will have to be issued
State-wise and Union territory-wise by KL to ABC indicating the value pertaining to that State or Union
territory.
104
3 (d) (i) Advertisements on the Bills pertaining to consumers having billing addresses in each
back of utility bills of oil State/UT
and gas companies etc.
3 (d) (ii) Advertisements on railway Ratio of the number of railway stations in each State/UT
tickets
Example 47: ABC has issued a Purchase order to MN for display of advertisements relating to the “Ujjwala
scheme” on the railway tickets that are sold from all the stations in the States of MP & Chhattisgarh.
• The place of this service is in MP and Chhattisgarh.
• The value of advertisement service attributable to these 2 States will be in the ratio of the number
of railway stations in each State as ascertained from the Railways or from the website
www.indianrail.gov.in.
• Let us assume that this ratio is 713:251 and the total bill is Rs. 9,640. The breakup of amount
between MP and Chhattisgarh in this ratio works out to Rs. 7130 and 2510 respectively.
• Separate invoice will have to be issued State wise by MN to ABC indicating the value pertaining to
that State.
3 (e) Advertisements over radio The amount payable to such radio station, which by virtue of its
stations name is part of a State/UT
Example 48: For an advertisement on ‘Pradhan Mantri Ujjwala Yojana’, to be broadcast on a FM radio
station OP, for the radio stations of OP Kolkata, OP Bhubaneswar, OP Patna, OP Ranchi and OP Delhi,
the release order issued by ABC will show the breakup of the amount which is to be paid to each of these
radio stations.
The place of supply of this service is in West Bengal, Odisha, Bihar, Jharkhand and Delhi. The place of
supply of OP Delhi is in Delhi even though the studio may be physically located in another State. Separate
invoices will have to be issued State-wise and Union territory-wise by MN to ABC based on the value
pertaining to each State or Union territory.
3 (f) Advertisements on TV Value of service in each State/UT = Total Amount payable for
Channels such service * Ratio of viewership of such channel in concerned
State/UT.
Viewership shall be calculated in the following manner:-
i. State/UT-wise figure for that channel published by
Broadcast Audience Research Council;
ii. Figures published in last week of preceding quarter shall
be used for succeeding quarter;
iii. If channel viewership figures relate to a region comprising
of more than one State/UT, then, viewership figures for a
State/UT = Viewership figure for region * Ratio of
populations of that State/UT, as determined in the latest
census.
Example 49: ABC issues a release order with QR channel for telecasting an advertisement relating to the
‘Pradhan Mantri Kaushal Vikas Yojana’ in the month of November, 2017. In the first phase, this will be
telecast in the Union territory of Delhi, States of Uttar Pradesh, Uttarakhand, Bihar and Jharkhand.
The place of supply of this service is in Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand. In order
to calculate the value of supply attributable to Delhi, Uttar Pradesh, Uttarakhand, Bihar and Jharkhand,
QR has to proceed as under —
I. QR will ascertain the viewership figures for their channel in the last week of September 2017 from
the Broadcast Audience Research Council. Let us assume it is 1,00,000 for Delhi and 2,00,000 for
the region comprising of Uttar Pradesh and Uttarakhand and 1,00,000 for the region comprising of
Bihar and Jharkhand.
II. Since the Broadcast Audience Research Council clubs Uttar Pradesh and Uttarakhand into one
region and Bihar and Jharkhand into another region, QR will ascertain the population figures for
Uttar Pradesh, Uttarakhand, Bihar and Jharkhand from the latest census.
III. By applying the ratio of the populations of Uttar Pradesh and Uttarakhand, as so ascertained, to
the Broadcast Audience Research Council viewership figures for their channel for this region, the
Study Notes
105
viewership figures for Uttar Pradesh and Uttarakhand can be calculated. Let us assume that the
ratio of the populations of Uttar Pradesh and Uttarakhand works out to 9:1. When this ratio is
applied to the viewership figures of 2,00,000 for this region, the viewership figures for Uttar
Pradesh and Uttarakhand work out to 1,80,000 and 20,000 respectively.
IV. In a similar manner, the breakup of the viewership figures for Bihar and Jharkhand can be
calculated. Let us assume that the ratio of populations is 4:1 and when this is applied to the
viewership figure of 1,00,000 for this region, the viewership figure for Bihar and Jharkhand works
out to 80,000 and 20,000 respectively.
V. The viewership figure for each State works out to Delhi (1,00,000), Uttar Pradesh (1,80,000),
Uttarakhand (20,000), Bihar (80,000) and Jharkhand (20,000). The ratio is thus 10:18:2:8:2 or
5:9:1:4:1 (simplification).
VI. This ratio has to be applied when indicating the breakup of the amount pertaining to each State.
Thus, if the total amount payable to QR by ABC is Rs. 20,00,000, the State-wise breakup is Rs.
5,00,000 (Delhi), Rs. 9,00,000 (Uttar Pradesh), Rs. 1,00,000 (Uttarakhand), Rs. 4,00,000 (Bihar)
and Rs. 1,00,000 (Jharkhand). Separate invoices will have to be issued State-wise and Union
territory-wise by QR to ABC indicating the value pertaining to that State or Union territory.
3 (g) Advertisements at cinema The amount payable to a cinema hall or screens in a multiplex, in
halls a State/UT
3 (h) Advertisements over Value of service in each State/UT = Total amount payable for
internet the service shall such service * Ratio of No. of internet subscribers in concerned
be deemed to have been State/UT.
provided all over India. No. of internet subscribers shall be calculated in the following
Thus, the value of such manner:-
service will be apportioned i. State/UT-wise figures published by TRAI;
amongst all States and ii. Figures published for last quarter of preceding FY shall be
UTs, of India in the used for succeeding FY;
manner prescribed. iii. If figure of No. of internet subscribers relates to a region
comprising of more than one State or UT, then, No. of
internet subscribers in a State or UT = No. of subscribers
for region * Ratio of populations of that State or UT, as
determined in the latest Census;
Example 50: ABC issues a Purchase order to WX for a campaign over internet regarding linking Aadhar
with one’s bank account and mobile number. WX runs this campaign over certain websites.
• In order to ascertain the State wise breakup of the value of this service which is to be reflected in
the invoice issued by WX to ABC, WX has to first refer to the TRAI figures for quarter ending
March 2017, as indicated on their website www.trai.gov.in. These figures show the service area
wise internet subscribers. There are twenty two service areas. Some relate to individual States
some to 2 or more States and some to part of one State and another complete State. Some of
these areas are metropolitan areas.
• In order to calculate the State wise breakup, first the State wise breakup of the number of internet
subscribers is arrived at. (In case figures of internet subscribers of one or more States are
clubbed, the subscribers in each State is to be arrived at by applying the ratio of the respective
populations of these States as per the latest census). Once the actual number of subscribers for
each State has been determined.
• The second step for WX involves calculating the State wise ratio of internet subscribers. Let us
assume that this works out to 8:1:2…and so on for Andhra Pradesh, Arunachal Pradesh,
Assam…and so on.
• The third step for WX will be to apply these ratio to the total amount payable to WX so as to arrive
at the value attributable to each State.
• Separate invoices will have to be issued State wise and Union territory wise by WX to ABC
indicating the value pertaining to that State or Union territory.
106
3 (i) Advertisements through Value of service in each State/UT = Total amount payable for
SMS such service * Ratio of No. of telecom subscribers in concerned
States or UTs.
No. of telecom subscribers shall be calculated in the following
manner, namely:-
i. State/UT-wise figures published by TRAI;
ii. Figures published for preceding quarter shall be used for
succeeding quarter;
iii. If figure of No. of telecom subscribers relates to a telecom
circle comprising of more than one State or UT, then, No.
of telecom subscribers in a State or UT = No. of
subscribers for telecom circle * Ratio of populations of
State or UT, as determined in the latest Census;
Section 13 (IGST Act, 2017) Place of Supply of Services where

location of supplier or location of recipient is outside India
The place of supply of services provisions do not make any mention about receipt or payment in foreign
exchange or in Rupees. Thus, payment or receipt in foreign exchange or rupees is not at all relevant to
determine, place of supply of services. That is relevant to determine whether the service is ‘export of service’
or ‘export of goods’. Often, provisions of place of supply of service and export of service provisions are mixed
up, which causes confusion.

Sec. 13 (1)
This section deals with the situation
where supplier of services or location of
the recipient of services, is outside India.
Sec. 13 (2)
Sub-section 13 (2) applies except the
services specified in Sec. 13 (3) to Sec.
13 (13)
Location of the recipient available in the Location of the recipient

ordinary course of business
Location of the recipient is not available Location of the supplier of

in the ordinary course of business services
Sec. 13 (3)
(a) Services supplied in respect of Location where the services
goods which are required to be made are actually performed
physically available by the recipient of
services to the supplier of services, or to
a person acting on behalf of the supplier
of services in order to provide the
services.
Study Notes
107

From remote location through electronic Location where goods are
means. situated at the time of supply
of services.
Goods temporarily imported into India Provisions of section 13 (3) (a)
for repairs or for any other treatment or will not be applicable and
process and are exported back after place of supply shall be
such repairs or treatment or process determined as per section 13
without being put to any other use in (2)
India, other than that which is required
for such repairs or treatment or process.
(b) Services supplied to an individual Location where the services

either as recipient or acting on behalf of are actually performed.
others, where his physical presence is
required with supplier
Example 51: ABC Ltd., Mumbai imports a machine from China for being installed in its factory at Pune. To
install such machine, respective engineer came from China. The POS is Pune.
Example 52: ABC Ltd., Mumbai provide service to XYZ Ltd., USA through electronic means i.e. fixing bugs
in software. The POS is USA.
Example 53: ABC Ltd., Mumbai exported a machine to China. It came back for repairing. ABC Ltd., fixed
the issue under warranty terms and sent machine back to China. The POS is China.
Example 54: Mr. A singer, Mumbai singer travel to Singapore for Music concert. The POS is Singapore.
Example 55: ABC Ltd., got gold & diamond from XYZ, USA for certain treatment and it exported back after
such treatment. The POS shall be USA.
Example 56: A modelling agency (Chennai) contracts with a beauty parlor from USA for beauty treatment of
20 models. Here is a situation where the modelling agency is the receiver of the service, but the service is
rendered to the models. This transaction will also quality to be covered U/s 13 (3) (b) of the IGST Act and
POS shall be the location where the services are actually performed.
Sec. 13 (4)
Services relating to immovable property Place where the immovable Includes, hotel, right to use
property is location or intended immovable property,
to be located construction work including
architects or interior
decorations, estate agents
etc.
Example 57: Mr. A, Mumbai provides services to Mr. Z, Singapore for the property located in Chennai. The
POS is Chennai.
Example 58: A US based company has been awarded mineral exploration contract in respect of specific
sites in South Africa by Mumbai based company. The POS will be South Africa.
Example 59: A company in Singapore contracts with a Delhi based tax professional to provide his general
opinion with respect to capital gains tax liability arising from the commercial property in Delhi. Here, the
service of tax professional is basically an advice on taxation in general even though it is related to
immovable property. Thus, POS is Singapore according to default provision i.e. Section 13 (2) of the IGST
Act.
Sec. 13 (5)
Services relating to events Place where the event is Conference, sporting, cultural,
actually held fair, exhibition etc.
Example 60: ABC pte., Singapore organizes circus in Mumbai. The POS is Mumbai.
Sec. 13 (6)
Services provided at more than one Location in the taxable territory
location including location in taxable
108
territory for services referred in Sec. 13
(3), 13 (4) & 13 (5)
Example 61: ABC Ltd., Mumbai organizes a training event for XYZ pte., Singapore in Sri Lanka, Singapore
& Mumbai India. The POS is Mumbai.
Sec. 13 (7)
Services provided at more than one Place of supply shall be taken Value of such supplies
State/UT for services referred in Sec. 13 as being in each of such specific to each State or Union
(3), 13 (4) & 13 (5) States or Union territories territory shall be in proportion
to:
➢ Value of services
separately collected
or determined in terms
of the contract or
agreement entered
into in this regard
➢ In the absence of
such contract or
agreement, on such
other basis as may be
prescribed
The supply of services attributable to different States or Union territories, under subsection (7) of section 13
of the said Act, in the case of services supplied in respect of goods which are required to be made
physically available by the recipient of services to the supplier of services, or to a person acting on behalf of
the supplier of services, or in the case of services supplied to an individual, represented either as the
recipient of services or a person acting on behalf of the recipient, which require the physical presence of the
recipient or the person acting on his behalf, where the location of the supplier of services or the location of
the recipient of services is outside India, and where such services are supplied in more than one State or
Union territory, shall be taken as being in each of the respective States or Union territories, and the
proportion of value attributable to each such State and Union territory in the absence of any contract or
agreement between the supplier of service and recipient of services for separately collecting or determining
the value of the services in each such State or Union territory, as the case maybe, shall be determined in
the following manner, namely:-
(i) in the case of services supplied on the same goods, by equally dividing the value of the service
in each of the States and Union territories where the service is performed;
(ii) in the case of services supplied on different goods, by taking the ratio of the invoice value of goods
in each of the States and Union territories, on which service is performed, as the ratio of the value
of the service performed in each State or Union territory;
(iii) in the case of services supplied to individuals, by applying the generally accepted accounting
principles.
Example 62: A company C which is located in Kolkata is providing the services of testing of a dredging
machine and the testing service on the machine is carried out in Orissa and Andhra Pradesh. The place of
supply is in Orissa and Andhra Pradesh and the value of the service in Orissa and Andhra Pradesh will be
ascertained by dividing the value of the service equally between these two States.
Example 63: A company C which is located in Delhi is providing the service of servicing of two cars
belonging to Mr. X. One car is of manufacturer J and is located in Delhi and is serviced by its Delhi
workshop. The other car is of manufacturer A and is located in Gurugram and is serviced by its Gurugram
workshop . The value of service attributable to the Union Territory of Delhi and the State of Haryana
Study Notes
109

respectively shall be calculated by applying the ratio of the invoice value of car J and the invoice value of
car A, to the total value of the service.
Example 64: A makeup artist M has to provide make up services to an actor A. A is shooting some scenes
in Mumbai and some scenes in Goa. M provides the makeup services in Mumbai and Goa. The services
are provided in Maharashtra and Goa and the value of the service in Maharashtra and Goa will be
ascertained by applying the generally accepted accounting principles.

The proportion of value attributable to different States or Union territories, under sub-section (7) of section
13 of the said Act, in the case of supply of services directly in relation to an immovable property, including
services supplied in this regard by experts and estate agents, supply of accommodation by a hotel, inn,
guest house, club or campsite, by whatever name called, grant of rights to use immovable property,
services for carrying out or co-ordination of construction work, including that of architects or interior
decorators, where the location of the supplier of services or the location of the recipient of services is
outside India, and where such services are supplied in more than one State or Union territory, in the
absence of any contract or agreement between the supplier of service and recipient of services for
separately collecting or determining the value of the services in each such State or Union territory, as the
case maybe, shall be determined by applying the provisions of rule 4, mutatis mutandis.

The proportion of value attributable to different States or Union territories, under subsection (7) of section
13 of the said Act, in the case of supply of services by way of admission to, or organisation of a cultural,
artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition
or similar events, and of services ancillary to such admission or organisation, where the location of the
supplier of services or the location of the recipient of services is outside India, and where such services are
provided in more than one State or Union territory, in the absence of any contract or agreement between
the supplier of service and recipient of services for separately collecting or determining the value of the
services in each such State or Union territory, as the case maybe, shall be determined by applying the
provisions of rule 5, mutatis mutandis.
Sec. 13 (8)
(a) Services supplied by a banking Location of the supplier of
company, or a financial institution or a services
NBFC, to account holders
(b) Intermediary services Location of the supplier of

services
(c) Services consisting of hiring of
means of transport, including yachts but Location of the supplier of
excluding aircrafts and vessels, up to a services
period of one month
Example 65: Mr. A, Mumbai books a tour of famous cultural cities in India for a Singapore resident. The
POS is Mumbai.
Example 66: ABC contractors provide a service of hiring of a fleet of cars to a company on an annual
contract. If suppose fixed establishments of ABC contractors is located in New Delhi & the company is
located in Singapore, then Section 13 (8) of the IGST Act, covers situations where the hiring is for a period
of upto one month. Then in this case, POS shall be determined in terms of Section 13 (2) of the IGST Act
i.e. receiver’s location which in this case is Singapore.
Sec. 13 (9)
Services of transportation of goods, Place of destination of goods
other than by way of mail or courier
110
Example 67: A shipping line, Mumbai, Maharashtra transports a shipment of flowers from Mumbai to Paris,
for an event management company based in Paris. The POS is Paris.
Sec. 13 (10)
Passenger transportation services Place where the passenger
embarks on the conveyance
for a continuous journey
Example 68: Mr. A, a foreign tourist, has booked a ticket for New Delhi-Sri Lanka flight from an airline
registered in New Delhi for a continuous journey without any stopover. The POS is New Delhi.
Sec. 13 (11)
Services provided on board a First scheduled point of
conveyance during the course of a departure of that conveyance
passenger transport operation, including for the journey
services intended to be wholly or
substantially consumed while on board
Sec. 13 (12)
The place of supply of online information Location of the recipient of It is difficult to determine the
and database access or retrieval services location of the recipient in
services case of OIDAR as such
recipients normally access the
services online and not
required to disclose the
location. On satisfying any two
(2) non-contradictory
conditions out of such seven
(7) conditions, the service
recipient is deemed to be
located in the taxable territory
i.e. India: -
1. the recipient gives an Indian
address through internet.
2. the payment is settled by an
Indian credit card/debit
card/other card.
3. the recipient has an Indian
billing address.
4. the computer used by the
recipient has an Indian IP
address.
5. the recipient uses an Indian
bank account for payment.
6. the country code of the
subscriber identity module
card used by the recipient of
services is of India
7. the recipient receives the
service through an Indian
fixed line.
Sec. 13 (13)
In order to prevent double taxation or non-taxation of the supply of a service, or for the uniform application
of rules, the Government shall have the power to notify any description of services or circumstances in
which the place of supply shall be the place of effective use and enjoyment of a service.
Study Notes
111
• No GST on transhipment of goods at customs station in India for further transport out of India
{clarification in respect of service tax law but applies to GST also}
• Agency fees paid to foreign banks for arranging finance is liable to GST – according to
judgement under service tax law Tata Steel v. CST (2015)
Clarification on supply of satellite launch services by Antrix Corporation Ltd. [Circular No. 2/1/2017
IGST Dated 27.09.2017]
Place of supply of satellite launch services supplied by ANTRIX Corporation Limited to international
customers would be outside India in terms of section 13(9) of IGST Act, 2017 and such supply which meets
the requirements of section 2(6) of IGST Act, thus constitutes export of service and shall be zero rated in
accordance with section 16 of the IGST Act. Where satellite launch service is provided by ANTRIX
Corporation Limited to a person located in India, the place of supply of satellite launch service would be
governed by section 12 (8) of the IGST Act and would be taxable under CGST Act, UTGST Act or IGST Act,
as the case may be.
Question & Answer

Q1. A person in Agra buys shares from a broker in Delhi on NSE (in Mumbai). What will be the POS?
A. The POS shall be the location of recipient of services on the records of the supplier of services i.e. Agra.
Q2. A person from Kolkata travels by Air India flight from Mumbai to Delhi and gets his travel insurance done
in Mumbai. What will be the place of supply?
A. The location of the recipient of services on the records of the supplier of insurance service shall be the
place of supply. So, Kolkata shall be the place of supply.
Q3. Software Ltd., a company based out of Pune, awards online maintenance contract of its servers located in
Hyderabad office to ABC, a company based out of France, and as per the terms of the online maintenance
ABC shall be required to perform regular maintenance from France using Internet. What will be POS?
A. The place of supply of maintenance services shall be Hyderabad.
Q4. Software Ltd., gets an order from a French Bank, based out of Paris, to monitor transactions on the
servers located in Paris using internet facilities. What will be POS?
A. The place of supply of such monitoring services shall be at Paris.
Q5. Bookmyticket.com, a company based out at Pune providing online ticketing services for admission to
various events, sells online tickets for IPL tournament to be held across India. What will be POS?
A. The place of supply of services for admission to each cricket match shall be the location where the match is
actually played.
Q6. Mr. A of Mumbai, orders a mobile from Flipkart to be delivered to his mother in Kolkata. ABC Ltd.
(registered online seller in Indore) processes the order and Mr. A is billed by Flipkart. What will be POS?
A. It will be assumed that the buyer in Mumbai has received the goods & IGST will be charged.
112
Q7. In case of ambiguity, how is place of supply of goods determined U/s 10?
A. In case of any ambiguity where place of supply cannot be determined as provided in Section 10(1) (a) to
10(1) (e) of the IGST Act, 2017, the place of supply of goods will be determined in the manner as will be
prescribed.
Q8. In case of import of goods into India what is the place of supply of goods?
A. The location of the importer is the place of supply of goods in case of import of goods into India. It may be
noted that importer has not been defined in the IGST Act, 2017. Therefore, the meaning given under Customs
Act, 1962 will have to be taken. As per Section 2(26) of the Customs Act, 1962 "importer", in relation to any
goods at any time between their importation and the time when they are cleared for home consumption,
includes any owner or any person holding himself out to be the importer.
Q9. In case of export of goods from India, what is the location of supply of goods?
A. The location of supply of goods exported from India shall be the location outside India.
Q10. What is the place of supply of services by way of transportation of goods (Section 12 & 13)?
A. Section 12(8) of the IGST Act, 207 provides that services by way of transportation of goods provided to a
registered person shall be the location of registered person. Such services if provided to a person other than a
registered person, shall have place of supply and the location at which such goods are handed over for their
transportation. Example, if Express limited, a goods transport company based out of Chennai, provides
transportation services to Cars Limited, an automobile company based out of Bangalore, for movement of
their cars from the warehouse of Cars Limited at Silvassa to Delhi, then the place of supply of transportation
services shall be Bangalore if Cars Limited is a registered person. If Cars Limited is not a registered person,
then the place of supply of transportation services shall be Silvassa (location at which such goods are handed
over).
As per Section 13(9) of the IGST Act, 2017 the place of supply of services of transportation of goods, other
than by way of mail or courier will be the place of destination of the goods. Example: If PQ shipping Co.
located in India charges ocean freight charges for transport of goods to Germany for a customer located in
India, the place of supply of service will be Germany.
Q11. XZ Ltd. (Mumbai, Maharashtra) opens a new branch office at Gurugram, Haryana. It purchases a
building for office from KTS Builders (Gurugram). It also enters into a separate contract with KTS Builders for
purchase of pre-installed office furniture and fixtures in the building. Determine Place of Supply. (ICAI
Example).
Ans. As per Section 10 (1) (c), If the supply does not involve movement of goods, the place of supply is the
location of goods at the time of delivery to the recipient. Though there will be no GST liability on purchase of
building, office furniture and fixtures will be liable to GST. Since there is no movement of office furniture and
fixtures, the place of supply of such goods is their location at the time of delivery to the recipient (XZ Ltd.) i.e.,
Gurugram.
Study Notes
113
Section 31 Issue of Tax invoice under GST (Extract)

Section 12 Time of Supply of Goods
Section 13 Time of Supply of Services
Section 14 Change in rate of tax in respect of supply of goods or services
Section 31 Extract of Issue of Tax Invoice under GST

Goods Services
Section 31 (1) Section 31 (2)
A registered taxable person shall issue a tax invoice A registered person supplying taxable services
showing descriptions, quantity and value of goods, shall, before or after the provision of service but
tax charged thereon and other prescribed particulars, within a prescribed period, issue a tax invoice,
before or at the time of showing the description, value, tax charged
a. Removal of goods for supply to thereon and such other particulars as may be
the recipient, where supply prescribed.
involves movement of goods or In case of Insurance, Banks or Financial Institution
b. Delivery of goods or making & NBFC’s the above limit is extended to 45 days.
available thereof to the recipient in An insurer or a banking company or a financial
other cases. institution, including a NBFC, or a telecom
operator, making taxable supplies of services
between distinct persons as specified in section 25,
may issue the invoice before or at the time such
supplier records the same in his books of account
or before the expiry of the quarter during which the
supply was made.

In case of continuous supply of goods, where In case of continuous supply of services
successive statements of accounts or successive (a) if due date is ascertainable from the
payment are involved, the invoice shall be issued contract, invoice shall be issued on or
before or at the time each such statement is issued before such due date of payment;
or, as the case may be, each such payment is (b) where the due date is not ascertainable,
received. the invoice shall be issued before or at the
time of receiving payment
(c) where the payment is linked to the
completion of an event, the invoice shall be
issued on or before the date of completion
of that event.

The goods being sent or taken on approval for sale In a case where the supply of services ceases
or return are removed before the supply takes place, under a contract before the completion of the
the invoice shall be issued before or at the time of supply, the invoice shall be issued at the time when
supply or six months from the date of removal, the supply ceases and such invoice shall be issued
whichever is earlier. to the extent of the supply made before such
cessation.
114
Section 12 must be read with section 31, which Section 13 must be read with section 31 and rule
prescribes in detail the date on which tax invoice 47, which prescribes in detail the date on which tax
must be issued in various situations. invoice must be issued in various situations.
Section 12 Time of Supply of Goods & Section 13 Time of Supply of

Services
Time of supply of Goods (Sec. 12) Time of supply of Services (Sec.13)
Time of supply of goods [Sec. 12 (2)] Time of supply of services [Sec. 13 (2)]
The time of supply of goods shall be the earlier of the The time of supply of services shall be the earlier
following – of-
(a) Date of issue of invoice by the supplier or the (a) Invoice issued U/s 31 (2) (within 30 days):
last date of which he is required U/s 31 (1) to issue Date of issue of invoice by the supplier, or
the Invoice with respect to the supply, the date of receipt of payment, whichever
Or is earlier, or
(b) Date of receipt of payment by the supplier (b) Invoice not issued U/s 31 (2) (not within 30
with respect to the supply** days): Date of provision of service or the
date of receipt or payment, whichever is
** Notification No. 66/2017-Central Tax, Dated earlier, or
15/11/2017 (a supplier of goods needs not to pay tax (c) Date of which recipient shows the receipt
on advances). So time of supply of goods shall be of services in his books of account, in
earlier of Date of issue of invoice or last date of issue case where the provision of (a) or (b) as
of invoice. above do not apply.
This notification is not applicable on registered person
who opted for composition levy U/s 10 of CGST Act,
2017. A composition supplier has to pay, in lieu of tax
payable by him, an amount calculated at the
prescribed rate applied on his ‘turnover in the
State/Union Territory’ for a quarter. Therefore, the
composition supplier is not required to pay any tax on
advance received as the same does not form part of
taxable supplies and, in turn, also does not form part of
the ‘turnover in a State/Union Territory’ at the end of
the quarter (tax period).
Example 1: Normal supply of goods:
Last date to invoice Date of Invoice Date of receipt of payment Time of Supply (TOS)
12.06.2018 12.06.2018 50% advance on 30.05.2018 & 12.06.2018
balance on 01.07.2018
12.06.2018 30.05.2018 50% advance on 30.05.2018 & 30.05.2018
12.06.2018 02.07.2018 50% advance on 30.05.2018 & 12.06.2018
Example 2: Continuous Supply of goods:

Date of issue of Last date to issue Date of Invoice Date of receipt of Time of Supply
statement of invoice payment (As per (TOS)
accounts (As per contract 5th of
contract 2nd of successive month)
successive month)
02.02.0219 02.02.0219 02.02.0219 05.02.0219 02.02.0219
02.02.0219 02.02.0219 31.01.2019 05.02.0219 31.01.2019
02.02.0219 02.02.0219 01.03.2019 05.02.0219 02.02.2019
Study Notes
115
02.02.0219 02.02.0219 02.02.0219 31.01.2019 02.02.0219

Date of receipt of payment shall be the date on which the payment is entered in his books of account or the
date on which the payment is credited to his bank account, whichever is earlier
Where amount received is in excess of invoice with amount upto Rs. 1,000, supplier has option to choose
time of supply as date of issue of fresh invoice for the said excess amount.
Example 3: ABC enterprises, raised Rs. 49,500 invoice on 14.02.2018. Recipient made round off payment
of Rs. 50,000 on 02.03.2018. In this case, time of supply for Rs. 49.500 will be 14.02.2018. But for balance
Rs. 500, time of supply shall at the option of supplier.
Reverse Charge [Sec. 12 (3)] Reverse Charge [Sec. 13 (3)]
The time of supply in case of reverse charge, shall be The time of supply shall be the earlier of the
the earliest of the following dates: following dates:
(a) the date of receipt of the goods, or (a) the date of payment, or
(b) the date of payment, or (b) the date immediately following sixty days (61st
(c) the date immediately following thirty days (31 st day) from the date of issue of invoice or any
day) from the date of issue of invoice or any other document, by whatever name called,
other document, by whatever name called, in lieu thereof by the supplier.
in lieu thereof by the supplier.
If it is not possible to determine the time of supply If it is not possible to determine the time of supply
under clause (a), (b) or (c) above, the time of supply under clause (a), or (b) above, the time of supply
shall be the date of entry in the books of account of shall be the date of entry in the books of account of
the recipient of supply. the recipient of supply.
This proviso will bear its impact on provisional entries In case of supply by ‘associated enterprises’,
passed on month end or year-end closing i.e. where the supplier of service is located outside
provision of expenses made for those vendors who India, the time of supply shall be the date of entry
do not submit their bills. in books of account of the recipient of supply or the
date of payment, whichever is earlier.
Date of self-invoicing by the recipient will not hold any importance in arriving at the TOS for reverse charge
cases. For determining TOS under reverse charge, date of invoice of supplier or any other document
issued by the supplier, by any name whatsoever (whether registered or unregistered) will be relevant.
Supply of Voucher [Sec. 12 (4)] Supply of Voucher [Sec. 13 (4)]
In case of supply of vouchers by a supplier, the time In case of supply of vouchers by a supplier, the
of supply shall be: time of supply shall be:
(a) the date of issue of voucher, if supply is (a) the date of issue of voucher, if supply is
Identifiable at that point; or Identifiable at that point; or
(b) the date of redemption of voucher, in all the (b) the date of redemption of voucher, in all the
other cases. other cases.
Residuary Supply [Sec. 12 (5)] Residuary Supply [Sec. 13 (5)]
Where it is not possible to determine the time of Where it is not possible to determine the time of
supply under the provisions of sub-section (2) or sub- supply under the provisions of sub-section (2) or
section (3) or sub-section (4), the time of supply shall: sub-section (3) or sub-section (4), the time of
(a) in a case where a periodical return has to supply shall:
be filed, be the date on which such return is (a) in a case where a periodical return has to
to be filed; or be filed, be the date on which such return is
(b) in any other case, be the date on which the to be filed; or
tax is paid. (b) in any other case, be the date on which the
tax is paid.
Example 4: Investigation reveals clandestine

(secretively) removal of goods by a supplier who is
not registered under GST. The evidence is in the form
116
of noting, often undated, and some corroborative
material. The supplier voluntarily pays tax during the
investigation, to close the case. The time of supply
will be the date on which the tax is paid, as being
unregistered, the supplier is not required to file
periodical returns.
Additional consideration like interest, fee & Additional consideration like interest, fee &
penalty [Sec. 12 (6)] penalty [Sec. 13 (6)]
Date on which supplier receives such additional Date on which supplier receives such additional
value. value.
Section 14 Change in rate of Tax in respect of supply of goods or

services
Section 12 & 13 has been over-ruled by this section i.e. in case of change in rate of tax, time of supply of
goods or service or both shall be determined under this section: -
Taxable goods or services or both has been Taxable goods or services or both has been
supplied before the change in rate of Tax supplied after the change in rate of Tax
Invoice issued – Before Change Invoice issued – Before Change
Receipt of payment – After Change Receipt of payment – After Change
Time of Supply – Date of Invoice Time of Supply – Date of payment
Invoice issued – After Change Invoice issued – Before Change
Receipt of payment – After Change Receipt of payment – Before Change
Time of Supply – Date of Invoice or payment, Time of Supply – Date of Invoice or payment,
Whichever is earlier Whichever is earlier
Invoice issued – After Change Invoice issued – After Change
Receipt of payment – Before Change Receipt of payment – Before Change
Time of Supply – Date of payment Time of Supply – Date of invoice
Date of receipt of payment shall be the date on which the payment is entered in his books of account or the
date on which the payment is credited to his bank account, whichever is earlier. However, the date of
receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after 4
working days from the date of change in the rate of tax.
Example 5: Date of change in rate of tax is 15th June 2017. Earlier rate of tax was 15% and the same has
been changed to 18%
Invoice issued – 10th June 2017 Invoice issued – 10th June 2017
Receipt of payment – 20th June 2017 Receipt of payment – 20th June 2017
Time of Supply – 10 June 2017 (15%)
th Time of Supply – 20th June 2017 (18%)
Invoice issued – 20 June 2017
th Invoice issued – 5th June 2017
Receipt of payment – 25 June 2017
th Receipt of payment – 25th May 2017
Time of Supply – 20th June 2017 (18%) Time of Supply – 25th May 2017 (15%)
Invoice issued – 20 June 2017
th Invoice issued – 20th June 2017
Receipt of payment – 10 June 2017
th Receipt of payment – 10th June 2017
Time of Supply – 10th June 2017 (15%) Time of Supply – 20th June 2017 (18%)
Example 6: Mr. A buys a motor car from a car dealer. Mr. A has made payment and car dealer has issued
an invoice on 25th December 2017. The car was to be delivered on new year i.e. 1st Jan’18. The applicable
rate of car is changed upward on 26th December 2017. As per section 14 (b) (ii), the time of supply is earlier
of the two events namely, issuance of invoice or receipt of payment, both of which are before the change in
rate of tax, and thus, the old rate of tax remains applicable.
Study Notes
117
Example 7: Payment is credited in books of accounts on 29th April. Payment is credited in the bank account
on 8th May. Date of change in tax rate is 1st May. In this scenario, date of payment shall be treated as 8th
May as the actual credit in the bank account has occurred after more than 4 working days. If suppose
payment is credited in bank account on 3rd May then date of payment shall be treated on 29th April (credited
in books of accounts)
Special procedure under section 148 for payment of tax in case of joint development agreements in
real estate sector
In a Joint Development Agreement (JDA), a landowner transfers the land/ development rights over the land
to a developer to develop and construct a real estate project and in return gets a certain percentage of
constructed area in the project, depending upon the terms and conditions agreed upon between them. The
developer receives consideration for the construction service provided by him, from
(i) landowner, in the form of land /development rights; and
(ii) from other buyers (of the constructed area), normally in the form of money.
In exercise of the powers conferred by section 148, the Central Government, on the recommendations of
the GST Council, has issued Notification Nos. 4/2018 CT (R) & 4/2018 IT (R) both Dated 25.01.2018 to
defer the liability to pay GST in case of
➢ supply of development rights against consideration in the form of construction service of complex,
building or civil structure;
➢ supply of construction service of complex, building or civil structure against consideration in the
form of transfer of development rights
to the time when the possession or right in the property is transferred to the land owner by entering into a
conveyance deed or similar instrument (e.g. allotment letter).
Example 8 (ICAI): Mr. X enters into a joint development agreement with SM Constructions Ltd. on 12th
January whereby the development right over the plot of land owned by Mr. X is transferred to SM
Constructions to build a residential complex. SM Constructions agrees to transfer 3 flats out of 20 flats to be
built in the residential complex to Mr. X as a consideration for transfer of development rights.
The other details are:
Land development rights are transferred on 31st January Construction begins on 1st April
Construction of 3 flats gets completed on 30th June
Construction of entire complex gets completed on 30th November Allotment letter for 3 flats issued to Mr. X
on 25th December
By virtue of the special procedure notified under section 148, payment of GST on transfer of development
rights by Mr. X and supply of construction service by SM Constructions to Mr. X is postponed to the date of
allotment letter i.e., 25th December.
Notification No. 06/2019-CT (Rate) & 06/2019-IT (Rate) Dated 29th March 2019
With effect from 01.04.2019, supply of services by a landowner to a developer by way of –

(i) transfer of transferable development rights (TDR) or floor space index (FSI);
(ii) granting of long term lease,
for construction of residential apartments have been exempted subject to the condition that the constructed
flats are sold before issuance of completion certificate or first occupation of the project, whichever is earlier,
and tax is paid on them.
Such exemption for TDR, FSI, long term lease (premium) shall not be available in case of flats which remain
un-booked on the date of issuance of completion certificate or first occupation of the project, whichever is
earlier. The promoter (developer) shall be liable to pay tax at the applicable rate, on reverse charge basis, on
such proportion of (i) value of development rights and/or FSI, or (ii) upfront amount paid for long term lease,
as is attributable to such un-booked residential apartments.
118
In view of the above change, with effect from 01.04.2019, a special procedure for payment of tax has been
laid down for following classes of registered persons, namely:-
(i) a promoter who receives development rights or Floor Space Index (FSI) (including additional FSI) on
or after 1st April, 2019 for construction of a project against consideration payable or paid by him,
wholly or partly, in the form of construction service of commercial or residential apartments in the
project or in any other form including in cash;
(ii) a promoter, who receives long term lease of land on or after 1st April, 2019 for construction of
residential apartments in a project against consideration payable or paid by him, in the form of
upfront amount (called as premium, salami, cost, price, development charges or by any other name),
as the registered persons in whose case the liability to pay central tax on, -
(a) the consideration paid by him in the form of construction service of commercial or residential
apartments in the project, for supply of development rights or FSI (including additional FSI);
(b) the monetary consideration paid by him, for supply of development rights or FSI (including
additional FSI) relatable to construction of residential apartments in project;
(c) the upfront amount (called as premium, salami, cost, price, development charges or by any
other name) paid by him for long term lease of land relatable to construction of residential
apartments in the project; and
(d) the supply of construction service by him against consideration in the form of development
rights or FSI(including additional FSI),
shall arise on the date of issuance of completion certificate for the project, where required, by the competent
authority or on its first occupation, whichever is earlier.
Study Notes
119
Question & Answer

Q1. A Machine has to be supplied at site. It is done by sourcing various components from vendors and
assembling the machine at site. The details of the various events are:
17th September Purchase order with advance of Rs. 50,000 is received for goods worth Rs. 12 Lacs
and entry duly made in the seller’s books of account
20th October The machine is assembled, tested at site, accepted by buyer
rd
23 October Invoice raised
4th November Balance payment of Rs. 11.50 Lacs received
Determine the time of supply(ies) in the above scenario?
A. The time of supply of goods is 20th October 2017 which is the date on which the goods were made
available to the recipient as per section 12 (2) (a) and the invoice should have been issued on this date
[Section 31 (1) (b)].
Q2. Determine the time of supply from the given information.
May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co. (30 days
from the date of issuance of invoice elapse on June 3)
May 12 Bridge & Co receives the goods
May 30 Bridge & Co makes the payment
A. Here, May 12 will be the time of supply, being the earliest of the three stipulated dates namely, receipt of
goods, date of payment and date immediately following 30 days of issuance of invoice [Section 12(3)]. (Here,
date of invoice is relevant only for calculating thirty days from that date.)

May 4 Supplier invoices goods taxable on reverse charge basis to Pillar & Co. (30 days
from the date of issuance of invoice elapse on June 3)
June 12 Pillar & Co receives the goods, which were held up in transit
July 3 Payment made for the goods
A. Here, June 4 will be the time of supply, being the earliest of the three stipulated dates namely, receipt of
goods, date of payment and date immediately following 30 days of issuance of invoice [Section 12(3)].
Q4. ABC Ltd. sells food coupons to a company, which gives these to its employees as part of the agreed
perquisites. The coupons can be redeemed for purchase of any item of food/provisions in the outlets that are
part of the program.
A. As the supply against which the coupon will be redeemed is not known on the date of the sale of the
coupon, the time of supply of the coupon will be on the date on which the employee redeems it against
food/provision items of his choice.
Q5. With each purchase of a large pizza during the Christmas week from Perfect Pizza, one can buy a
voucher for Rs. 20 which will be redeemable till 5 Jan for a small pizza.
A. As the supply against which the voucher will be redeemed is known on the date of the sale, the time of
supply is the date of issue of the voucher.
6th May Booking of convention hall, sum agreed Rs. 15,000, advance of Rs. 3,000 received
15th September Function held in conventional hall
27th October Invoice issued for Rs. 15,000, indicating balance of Rs. 12,000 payable
3rd November Balance payment of Rs. 12,000 received
120
A. As per Section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply
of service. In the given case, the invoice is not issued within the prescribed time limit. As per section 13 (2)
(b), in a case where the invoice is not issued within the prescribed time, the time of supply of service is the
date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of Rs. 3,000 is 6th May as the date of payment of Rs.
3,000 is earlier than the date of provision of service. The time of supply of service to the extent of the balance
Rs. 12.000 is 15th September which is the date of provision of service.
Q7. Investigation shows that ABC & Co carried out service of cleaning and repairs of tanks in an apartment
complex, for which the Apartment Owners’ Association showed a payment in cash on 4th April to them against
work of this description. The dates of the work are not clear from the records of ABC & Co. ABC & Co have not
issued invoice or entered the payment in their books of account.
A. The time of supply cannot be determined vide the provisions of clauses (a) and (b) of section 13 (2) as
neither the invoice has been issued nor the date of provision of service is available as also the date of receipt
of payment in the books of supplier is also not available. Therefore, the time of supply will be determined vide
clause (c) of section 13 (2) i.e., the date on which the recipient of service shows receipt of the service in his
books of account.
Thus, time of supply will be 4th April, the date on which the Apartment Owner’s Association records the receipt
of service in its books of account.
Q8. Determine the time of supply from the given information (assuming that service being supplied is taxable
under reverse charge).
May 4 The supplier of service issues invoice for service provided. There is as dispute
about amount payable, and payment is delayed.
August 21 Payment made to the supplier of service.
A. Here, July 4 will be the time of supply, being the earliest of the two stipulated dates namely, date of
payment and date immediately following 60 days since issue of invoice.
Q9. Determine the time of supply from the given information

May 4 A Germany company issues email informing its associated company ABC Ltd., of
the cost of technical services provided to it.
July 2 ABC Ltd. transfers the amount to the account of the German company.
A. As there is no prior entry of the amount in the books of account of ABC Ltd, July 2 will be the time of
supply, being the date of payment in terms of second proviso to section 13 (3).
Q10. A supplier of services received an advance when rate of tax on services was 18%. However, while
raising the invoice, tax rate on service was reduced to 5%. How will the invoice be raised?
A. As per provision of section 14 of CGST Act, 2017, in case wherein service has been supplied after change
in rate of tax and invoice has also been issued after change in rate of tax but payment is received before
change in rate of tax, time of supply shall be date of issue of invoice.
Therefore, in the instant cases assuming as service has been supplied after change in rate of tax and invoice
has also been issued after change in rate of tax, therefore tax rate applicable at the time of raising of invoice
for supply of service would be 5%. Excess tax collected at the time of receipt of advance can be adjusted
against future liabilities.
Q11. What is the time of supply in case of addition in value by way of Interest, late fees or penalty for delayed
payment of any consideration?
Study Notes
121
A. The time of supply in case of addition in value by way of Interest, late fees or penalty for delayed payment
of any consideration would be the date on which the supplier receives such addition in value.
Example: Mr. A had supplied services to Mr. B for Rs.1,00,000 on 1st March. Mr. B had to make the payment
to Mr. A within one month of the supply otherwise interest was chargeable at the rate of 15%. Mr. B fails to
make the payment within one month and makes the payment after a delay of one month i.e. by 30th April. Mr.
A raises a debit note against Mr. B for the interest on delayed payment of Rs. 1,250 on 10th May. Mr. B
makes the payment of the Interest of Rs. 1,250 on 15th June.
The time of supply in such case would not be the date of raising of debit note i.e. 10th May but it would be the
date when Mr. B makes the payment of the interest to Mr. A i.e. 15th June.
Q12. Time of supply of services under reverse charge mechanism where the supplier of service is
associated enterprises?
A. In case of associated enterprises located within India, the time of supply in terms of Section 13(3) shall be
the earliest of the following:
(a) Date of payment as per books of accounts of the recipient; or
(b) Date on which payment is debited in the bank account of the recipient; or
(c) Sixty days from the date of issuing invoice or any other document, by whatever name called, in lieu
thereof by the supplier; or
If it is not possible to determine the time of supply under the aforesaid clauses, the time of supply shall be the
date of entry in the books of account of the recipient of supply. Thus, the same provisions as applicable to a
supplier who is not associated enterprise will apply for services provided by associated enterprises located in
India.
Where associated enterprises is located outside India, the time of supply shall be the earliest of the following
dates:
(a) Date of entry in the books of accounts of the recipient; or
(b) Date of payment.
Particulars Non-associated Associated

enterprises Enterprises
Date on which payment is entered in September 14, 2018 September 14, 2018
books of accounts
Date on which payment is debited to September 17, 2018 September 17, 2018
bank account
Date of issuance of invoice September 10, 2018 September 10, 2018
Sixty days from the date of issuing November 10, 2018 November 10, 2018
invoice
Date of entry in the books of September 10, 2018 September 10, 2018
accounts of the recipient
Time of supply September 14, 2018 September 10, 2018
Q13. Time of supply where services are supplied online?

A. The CGST Act, 2017 does not provide separate provisions for ascertaining the time of supply of service
where such services are supplied online and hence the same provisions for services will apply for services
supplied online.
122
Q14. From the following information determine the time of supply of goods where supply involves movement
of goods:
Invoice Date Removal of goods Delivery of goods Receipt of payment Remarks
16-11-2018 10-11-2018 16-11-2018 16-11-2018
01-12-2018 01-12-2018 04-12-2018 20-11-2018 Rs. 5,00,000 is
10-12-2017 received as
advance and
balance payment
Rs. 6,20,000
received on 10-12-
2017
A.
Invoice Date Removal of Delivery of Receipt of Time of Supply Remarks
goods goods payment
16-11-2018 10-11-2018 16-11-2018 16-11-2018 10-11-2018
01-12-2018 01-12-2018 04-12-2018 20-11-2018 01-12-2018 Time of supply
10-12-2017 is date of issue
of invoice.
Advance
received is not
liable to be
taxed at the
time of receipt
vide notification
no. 66-2017
Dated 15-11-
2017
Q15. From the following information determine the time of supply if goods are supplied on approval basis:
Removal of goods Issue of Invoice Accepted by recipient Receipt of payment
01-12-2017 15-12-2017 05-12-2017 25-12-2017
01-12-2017 25-07-2018 25-07-2018 20-07-2018
A.
Removal of Issue of invoice Accepted by Receipt of Time of Supply Remarks
goods recipient payment
01-12-2017 15-12-2017 05-12-2017 25-12-2017 05-12-2017 Time of supply
shall be the
date of
acceptance by
the recipient as
invoice was
issued after that
date.
01-12-2017 25-07-2018 25-07-2018 20-07-2018 02-06-2018 Time of supply
shall be date
after expiry of 6
months from the
date of removal.
Study Notes
123
Q16. Determine the time of supply in each of the following independent cases in accordance with provisions
of CGST Act, 2017:
Date of Actual provision of Date of Invoice Date on which payment
services received
10-11-2017 30-11-2017 15-12-2017
10-11-2017 30-11-2017 15-11-2017
10-11-2017 30-11-2017 15-11-2017 and 10-12-2017
10-11-2017 30-11-2017 06-11-2017 and 09-11-2017
10-11-2017 30-11-2017 06-11-2017 and 16-11-2017
10-11-2017 12-12-2017 30-04-2018
10-11-2017 12-12-2017 05-11-2017 and 25-12-2017
10-11-2017 22-12-2017 12-12-2017
A.
Date of Actual provision Date of Invoice Date on which payment Time of Supply
of services received
10-11-2017 30-11-2017 15-12-2017 30-11-2017

10-11-2017 30-11-2017 15-11-2017 15-11-2017
10-11-2017 30-11-2017 15-11-2017 and 10-12- 15-11-2017 and 30-11-
2017 2017 for the respective
amounts
10-11-2017 30-11-2017 06-11-2017 and 09-11- 06-11-2017 and 09-11-

amounts
10-11-2017 30-11-2017 06-11-2017 and 16-11- 06-11-2017 and 16-11-
amounts
10-11-2017 12-12-2017 30-04-2018 10-11-2017
10-11-2017 12-12-2017 05-11-2017 and 25-12- 05-11-2017 and 10-11-
amounts
10-11-2017 22-12-2017 12-12-2017 10-11-2017
of CGST Act, 2017:
Date of Actual Date of Invoice Payment entry in Credit in bank Remarks
provision of supplier’s book account
services
20-10-2017 21-10-2017 26-10-2017 30-10-2017
20-10-2017 30-10-2017 24-10-2017 22-10-2017
16-11-2017 26-12-2017 28-01-2018 29-01-2018
01-12-2017 30-10-2017 30-10-2017 30-10-2017 Rs, 5,00,000 is
30-10-2017 06-12-2017 08-12-2017 received in
advance on 30-
10-2017 and
balance amount
Rs. 6,80,000 is
124
received on 06-
12-2017
A.
Date of Actual Date of Invoice DOP- earlier of the Time of Supply Remarks
provision of services date of payment is
entered in books
or credited in bank
account
20-10-2017 21-10-2017 26-10-2017 21-10-2017
20-10-2017 30-10-2017 22-10-2017 22-10-2017
16-11-2017 26-12-2017 28-01-2018 16-11-2017
01-12-2017 30-10-2017 30-10-2017 30-10-2017 Rs, 5,00,000 is
30-10-2017 06-12-2017 30-10-2017 received in
advance on 30-
10-2017 and
balance amount
Rs. 6,80,000 is
date of invoice
of CGST Act, 2017 if recipient is liable to pay tax on reverse charge basis:
Date of Invoice Date of receipt of goods Date of payment in Date when payment
Books debited in bank account
01-10-2017 05-10-2017 10-10-2017 12-10-2017
01-10-2017 15-10-2017 10-10-2017 12-10-2017
01-10-2017 15-10-2017 12-10-2017 10-10-2017
01-10-2017 15-11-2017 18-11-2017 20-11-2017
A.
Date of Invoice Date of receipt of Date of payment in Date when Time of Supply
goods Books payment debited in
bank account
01-10-2017 05-10-2017 10-10-2017 12-10-2017 05-10-2017

01-10-2017 15-10-2017 10-10-2017 12-10-2017 10-10-2017
01-10-2017 15-10-2017 12-10-2017 10-10-2017 10-10-2017
01-10-2017 15-11-2017 18-11-2017 20-11-2017 01-11-2017
Q19. Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
Date of payment by recipient of services Date of issue of invoice by

supplier of services
10-10-2017 29-08-2017
10-10-2017 01-08-2017
Part payment made on 30-08-2017 and balance amount paid on 01-11- 29-08-2017
2017
Payment is entered in the books of account on 28-08-2017 and debited in 01-08-2017
recipient’s bank account on 30-08-2017
Payment is entered in the books of account on 30-08-2017 and debited in 29-08-2017
recipient’s bank account on 26-08-2017
Study Notes
125
A.
Date of Invoice Date immediately Date of payment by Time of supply of services (earlier
issued by supplier following 60 days recipient of services of Date immediately following 60
of services from invoices days from invoice or Date of
payment by recipient of services)
29-08-2017 29-10-2017 10-10-2017 10-10-2017
01-08-2017 01-10-2017 10-10-2017 01-10-2017
29-08-2017 29-10-2017 Part payment made on 30-08-2017 for part payment and
30-08-2017 and balance 29-10-2017 for balance amount
amount paid on 01-11-
2017
01-08-2017 01-10-2017 Payment is entered in the 28-08-2017 (i.e. when payment is
books of account on 28- entered in the books of account of
08-2017 and debited in the recipient)
recipient’s bank account
on 30-08-2017
29-08-2017 29-10-2017 Payment is entered in the 26-08-2017 (i.e. when payment is
books of account on 30- debited in the recipient’s bank
08-2017 and debited in account)
recipient’s bank account
on 26-08-2017
Q20. Mehra Sons, a registered supplier, is a wholesale supplier of ready-made garments located in Bandra,
Mumbai. On 5th September, 20XX, Subhadra, owner of Aura Boutique located in Dadar, Mumbai, approached
Mehra Sons for supply of a consignment of customised dresses for ladies and kids.
Mehra Sons gets the consignment ready by 2nd December, 20XX and informs Subhadra about the same. The
invoice for the consignment was issued the next day, 3rd December, 20XX. Due to some reasons, Subhadra
could not collect the consignment immediately. So, she collects the consignment from the premises of Mehra
Sons on 18th December, 20XX and hands over the cheque for payment on the same date. The said payment
is entered in the accounts on 20th December, 20XX and amount is credited in the bank account on 21st
December, 20XX. You are required to determine the time of supply of the readymade garments supplied by
Mehra Sons to Subhadra elaborating the relevant provisions under the GST law.
(CA Inter – MTP- May 2018)
Ans. Given transaction is supply transaction involving movement of goods. Sec 31 requires supplier of goods
to issue invoice upto the time of removal of goods which includes even collection of goods by the recipient. In
given case, date of removal (collection by buyer) is 18.12.XX while invoicing has been done on 03.12.XX.
Thus, given case is one where the supplier has issued invoice upto time of removal of goods. For purposes
of determination of time of supply, the date of payment is considered to be earlier of the date of receipt of
payment in bank account (21.12.XX) or date of entry in books of accounts (20.12.XX). Thus, in instance case,
the date of receipt of payment is 20.12.XX.
As per Sec 12 read with Notification No. 66/2017 CT Dated 15.11.2017, Time of Supply for the supplier of the
goods shall be the date of invoice (03.12.XX) or the last date on which invoice is required to be issued
(18.12.XX). Thus, Time of Supply for the given supply transaction shall be 03.12.XX.
126
Section 15 Value of Taxable Supply

Rule 27 Value of supply of goods or services where the consideration is not
wholly in money
Rule 28 Value of supply of goods or services or both between distinct or related
persons, other than through an agent
Rule 29 Value of supply of goods made or received through an agent
Rule 30 Value of supply of goods or services or both based on cost
Rule 31 Residual method for determination of value of supply of goods or
services or both
Rule 31A Value of supply in case of lottery, betting, gambling and horse racing
Rule 32 Determination of value in respect of certain supplies
Rule 33 Value of supply of services in case of pure agent
Rule 34 Rate of exchange of currency, other than INR, for determination of
value
Rule 35 Value of supply inclusive of IGST, CGST, SGST & UTGST
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Section 15 Value of Taxable Supply

Meaning [Sec. 15 (1)]
1. The value of a supply of goods and/or services shall be the Transaction Value.
2. Transaction value applicable: -
• Where the supplier and the recipient of the supply The price actually paid or payable
are not related and for the said supply of goods and/or
• Price is sole consideration for the supply services.
3. Free Supply: - No GST: When no consideration is received (either in monetary or non-monetary form) for a
taxable supply, then there is no value, consequently no GST as well (except Schedule I activities)
4. Power of Government to notify manner of valuation [Sec. 15 (4) & (5)]: When the value of the supply of goods
or services or both cannot be determined U/S 15 (1), Government on the recommendation of the GST
Council, notify the manner of determination of value of such supplies.
Inclusions [Sec. 15 (2)]:

The value of supply includes –
(a) Any Taxes, Duties, Cesses, Fees and Charges separately charged by the supplier other than
GST Tax (CGST, IGST, SGST/UTGST, Cess).
The CBIC vide circular No. 76/50/2018-GST Dated 31.12.2018, has clarified that for the purpose of
determination of value of supply under GST, Tax collected at source (TCS) under the provisions of the
Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax.
Central excise duty continues to be levied on tobacco along with GST, then Central excise duty will be
included in the transaction value for supply of tobacco for the chargeability of GST.
(b) Any amount that the supplier is liable to pay in relation to such supply, but which has been
actually, incurred by the recipient and which is not included in the price.
Example 1: ABC contractor got supply contract at Rs. 10 Lacs + GST for constructing shed. However,
recipient supplied cement and paint (amounting to Rs. 1 Lac) on “Free of cost – FOC” basis to ABC
contractor. ABC Ltd. will raise invoice of Rs. 9 lacs + GST on Rs. 10 Lacs (Value of supply Rs. 9 Lacs +
Rs. 1 Lacs), so total invoice value shall be Rs. 9 Lacs + Rs. 1.80 Lacs (Rs. 10 Lacs * 18%) = Rs. 10.80
Lacs.
(c) Incidental expenses i.e. commission, packing etc. charged by the supplier. Thus expenses like weighment,
loading in factory, inspection, testing before supply will be includible in ‘value’. Design charges incurred
before supply will be also included. Any amount charged for anything done by the supplier in respect of
the supply of goods or services, at the time of, or before delivery of goods or supply of services.
(d) Interest or late fee or penalty for delayed payment of any consideration for supply.
(e) Subsidies directly linked to the price excluding subsidies provided by the Central Government
and State Government.
Exclusions [Sec. 15 (3)]:

(a) Before or at the time of the supply: Such discount has been duly recorded in the invoice issued in
respect of such supply.
(b) After the supply has been effected:
(i) Such discount is established in terms of an agreement entered into at or before the supply and
specifically linked to relevant invoices, and
(ii) Input tax credit has been reversed by the recipient of the supply as it is attributable to the
discount on the basis of document issued by the supplier.
Thus, discount after supply is permissible as deduction only if it was known before or at the time of supply.
In some cases, goods are packed in returnable packing, like gas cylinder, drums etc. In such case, tax is payable
only on consideration received for the supply. {S No. 61 of Tweet FAQ released by CBE&C on 26-6-2017}.
Thus, it is not required to add amortized cost of durable and returnable packing.
128
Where the Value of Supply cannot be determined by the u/s 15 (1), then the Value shall be determined as per
the CGST Rules. Such valuation may be required in following situations:-
• The consideration, whether paid or payable, is not in money, wholly or partly.
• The supplier and the recipient of the supply are related.
Circular No. 47/21/2018 GST Dated 08.06.2018 has clarified that while calculating the value of the supply
made by the component manufacturer using moulds and dies owned by Original Equipment Manufacturers
(OEM) sent free of cost (FOC) to him, the value of such moulds and dies shall not be added to the value of
supply made by him because the cost of moulds/dies was not to be incurred by the component
manufacturer and thus, does not merit inclusion in the value of supply in terms of section 15(2)(b).
However, if the contract between OEM and component manufacturer was for supply of components made
by using the moulds/dies belonging to the component manufacturer, but the same have been supplied by
the OEM to the component manufacturer on FOC basis, the amortised cost of such moulds/dies shall be
added to the value of the components.
Related Person, shall be: -

1. They are officers or directors of one another's businesses;
2. Legally recognized partners in business;
3. Employer and employee;
4. Any person directly or indirectly owns, controls or holds twenty five per cent or more of the outstanding
voting stock or shares of both of them;
5. One of them directly or indirectly controls the other; The term “person”
6. Both of them are directly or indirectly controlled by a third person; includes legal persons
7. Together they directly or indirectly control a third person; or
8. Members of the same family
9. Persons who are associated in the business of one another in that one is the sole agent or
sole distributor or sole concessionaire, however described, of the other, shall be deemed to be
related.
This has been copied from Rule 2 (2) of Customs Valuation (Determination of Value of Imported Goods) Rules,
2007 and Rule 2 (2) of Customs Valuation (Determination of Value of Export Goods) Rules, 2007, except that
in clause (4) mentioned above, the percentage shareholding has been increased from 5% to 25%.
In case of FOR basis contracts, the supplier arranges transport. In that case, he pays GST under reverse charge
on outward freight. He then charges outward freight in the tax invoice. In such case, the outward freight charged
is part of value of goods and GST is payable on value including outward freight. Similarly, packing charges,
weighment charges and other charges are includible in value of levy of GST. The GST rate is same as applicable
to goods, as this is a composite supply as per section 2 (30) of CGST Act. It is not correct to charge freight
separately and charge GST @ 5% as the service of supplier of goods is not GTA services at all.
Example 2: The selling price of a notebook is Rs. 50. For notebooks sold to students in Government Schools,
a company uses its CSR funds to pay the seller Rs. 30, so that the students pay only Rs. 20 per notebook. The
taxable value of the notebook will be Rs. 50, as this is a non-government subsidy. If the same subsidy is paid
by the Central Government or State Government, the taxable value of the notebook would be Rs. 20.
Example of discount deductible from value of supply
Example 3: ABC gives a discount of 30% on the list price to its distributors. Thus, for a carton of Krack bisk, in
the invoice in the list price is mentioned as Rs. 200, on which a discount of 30% is given to arrive at the final
Study Notes
129
price of Rs. 140. The taxable value is Rs. 140, as the discount is allowed at the time of supply and shown in the
invoice.
Example 4: The agreement of ABC with its dealers is that sale of rice cookers over 100 pieces in the Diwali
month will entitle them to discount of 5% per cooker sold in the next month. The next month’s stock has already
been dispatched when the sales figures for the Diwali month are worked out. However, as the agreement was
in existence at the time of supply, and the discount can be worked out for each invoice, the taxable value will
be billed price minus 5%. The dealer must reverse the proportionate input tax credit on the relevant stock to
bring it in line with the reduced tax.
Example of non- deductible discount
Example 5: A company announces turnover discounts after reviewing dealer performance during the year. The
discounts are based on performance slabs and are given as cash-back. As these discounts were not known at
the time of supply of the goods, they will not be deducted from taxable value of those goods.
Example of Related Parties
Example 6:
(i) Mr. A is holding shares having voting rights of 25% or more in ABC Ltd. and XYZ Ltd., then both ABC
Ltd. and XYZ Ltd. shall be deemed to be related persons in GST.
(ii) Mr. B is a major shareholder of ABC Ltd. and Mr. A is a major shareholder of XYZ Ltd. If Mr. A is
appointed as an officer/director in ABC Ltd., and Mr. B is appointed as officer/director in XYZ Ltd., then
ABC Ltd. & XYZ Ltd. will be treated as related persons in GST.
(iii) ABC Ltd. plays significant role in policy decisions, quality control, HR planning of XYZ Ltd. it may be
said that ABC Ltd. controls XYZ Ltd., and hence to be treated as related persons in GST.
(iv) If ABC Ltd. and MNO Ltd. together controls XYZ Ltd., then ABC Ltd. and MNO Ltd., shall be treated as
related persons in GST.
(v) If ABC enterprises is sole distributor of goods manufactured by XYZ Ltd., then ABC enterprises and
XYZ Ltd., shall be treated as related persons in GST.
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Rule 27 Value of supply of goods or services where the consideration is not wholly in money: -
A
•Open Market Value of such supply
Rule 27 (a) P
P
L
Y
•If Open Market Value is not available then sum of total consideration in money &
money equivalent to consideration not in money (if such amount is known at the time
Rule 27 (b) of supply) I
N
T
H
•If the value of supply is not determinable under clause (a) & (b) above then the value
of supply of goods or services or both of like kind and quality I
Rule 27 (c) S
O
•Residuary option if value not determinable under clause (a), (b) & (c) above then the R
sum of total of consideration in money and such further amount in money that is D
equiavalent to consideration not in money as determined by the applicable of rule 30
Rule 27 (d) or rule 31 in that order. E
R
Open Market Value, is the full value in money (excluding taxes) payable by an unrelated party as sole
consideration of such supply at the same time when supply being valued, is made.
“Supply of goods or services or both of like kind and quality” means:-

• Any other supply of goods or services or both;
• Made under similar circumstances i.e. value of a product in Delhi may be higher than the value of
the product in Salem (Tamilnadu) due to different circumstances prevailing. Therefore, it is provided
that supply under similar circumstances shall be prevailed;
• That, in respect of the characteristics, quality, quantity, functional components, materials, and the
reputation of the goods or services or both first mentioned, is the same as, or closely or substantially
resembles, that supply of goods or services or both i.e. hotel prices differ hugely due to their
reputation.
Example 7: Where a new phone is supplied for Rs. 20,000 along with exchange of an old phone and if the price
of the new phone without exchange is Rs. 24,000, the open market value of the new phone is Rs. 24,000.
Example 8: ABC Ltd. supplies a customised laptop for Rs. 1,00,000 along with exchange of old laptop to Mr. A.
Similar type of customised laptop in terms of configuration, quality, functional components etc., was supplied to
another customer Mr. B few days back (without exchange) for Rs. 1,25,000. Thus value of customized laptop
supplied to Mr. A shall also be Rs. 1,25,000.
Example 9: Where a laptop is supplied for Rs. 40,000 along with the barter of a printer that is manufactured by
the recipient and the value of the printer known at the time of supply is Rs. 4,000 but the open market value of
the laptop is not known, the value of the supply of the laptop is Rs. 44,000.
Example 10: Mr. A supplied goods to Mr. B for consideration of Rs. 5,00,000 (excluding taxes). Mr. B also gave
some material to Mr. A as consideration for supply whose value was Rs. 20,000 (excluding taxes). Mr. A has
supplied the same goods to another person at price of Rs. 5,10,000.
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In this case it will be open market value i.e. 5,10,000 as per Rule 27 (a)
If suppose above open market is not available then as per Rule 27 (b), it is Rs. 5,00,000+Rs. 20,000 = Rs.
5,20,000
If suppose even open market value is also not available but at the time of supply of goods, identical goods have
been supplied at value of Rs. 5,25,000 then as per Rule 27 (c), it is Rs. 5,25,000.
Rule 28 Value of supply of goods or services or both between distinct or related persons, other than
through an agent: - A
P
P
L
•Open Market Value of such supply
Rule 28(a) Y
I
N
•If Open Market Value is not available then the value of supply of goods or services
Rule 28 (b) or both of like kind and quality T
H
I
S
•If the value of supply is not determinable under clause (a) & (b) above then the value
as determined by the application of rule 30 or rule 31, in that order O
Rule 28 (c)
R
D
E
R
Note: -
• If goods are intended for further supply as such by the recipient, value shall, at the option of supplier be
equivalent to 90% of price charged for LIKE KIND AND QUALITY by the recipient to his customer (they
should not be related)
• Where recipient is eligible for ITC, value declared in invoice shall be deemed to be open market
value. This is very sensible provision as when the recipient can take entire ITC, there cannot be any
intention to evade tax.
Example 11: ABC Ltd. manufactures a customized product in Maharashtra and supplies it to its another
establishment, located in West Bengal (distinct person). The contracted sale price is Rs. 10,00,000. The cost
of production is Rs. 12,00,000. ABC Ltd. is the sole manufacturer of this product.
The value of supply is to be determined as per Rule 28 (c) read with Rule 30 or CGST Rules, 2017 i.e. 110%
of the cost of production (12,00,000*110%) = Rs. 13,20,000.
If suppose West Bengal unit is eligible for full ITC, then value declared in invoice i.e. Rs. 10,00,000, will be taken
as per Rule 28.
Example 12: ABC Ltd. was the only Indian company making and selling a customize product to companies.
However, the international prices of this product dropped and the companies began to import rather than buying
from ABC Ltd. The promoters of ABC Ltd. then set up another company, which had a manufacturing unit that
could use ‘A’ with common directors and senior management for better integration of functionality. ABC Ltd.
started suppling to this unit at low margins. This unit is not eligible for full ITC.
As per provision of Rule 28, the invoice value could not be the basis of valuation for a supply made to a related
person if the recipient is not eligible for full ITC. Under rule 28 (a), the open market value of this product should
be value of taxable supply i.e. imported price plus custom duties should be adopted for valuation after excluding
the component of IGST on import.
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Rule 29 Value of supply of goods made or received through an agent (this rule is applicable only for
supply of goods): -
•Open Market Value of such supply, or

•At the option of the supplier, be 90% of the price charged for the supply of
goods of like kind and quality by the recipient to his customer not being a
related person, where the goods are intended for further supply by the said
Rule 29 (a) recipient.
•If the value of supply is not determinable under clause (a) above then the
value as determined by the application of rule 30 or rule 31, in that order
Rule 29 (b)
Rule 28 is applicable wherever there is supply of goods or services or both between distinct or related persons.
But this rule is not applicable when such supplies are made through an agent. Meaning thereby reference to
Rule 29 has to be made for all cases of supply of goods made or received between principal & agent and vice
versa even if they are related person.
Example 13: P (principal) supplies groundnuts to A (agent). A in turn sells groundnuts at Rs. 5,000 per
quintal. Another independent supplier sells groundnuts at Rs. 4,550 per quintal.
Thus, the open market value of groundnut is Rs. 4,550 per quintal. 90% of A’s selling price in the normal course
of trade is Rs. 4,500 per quintal.
P has the option to adopt the open market price (Rs. 4,550) or 90% of A’s onward selling price (Rs. 4,500) as
the taxable value of the groundnuts supplied by him to A.
Rule 30 Value of supply of goods or services or both based on cost: -
Where the value of supply of goods or services or both is not determinable by any of the preceding rules of
this Chapter, the value shall be 110% of the
• cost of production or manufacture; or
• cost of acquisition of such goods; or
• cost of provision of such services.
Service providers have the option to directly move to rule 31 bypassing rule 30.
Rule 31 Residual method for determination of value of supply of goods or services or both: -
Where the value of supply of goods or services or both cannot be determined under rules 27 to 30, the same
shall be determined using reasonable means consistent with the principles and the general provisions of section
15 and the provisions of this Chapter.
Service providers have the option to directly move to rule 31 bypassing rule 30.
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133
Rule 31A Value of supply in case of lottery, betting, gambling and horse racing: -
•Lottery run by State Governments: 100/112 of the face value of ticket or of the
price notified in official gazette by organizing State, whichever is higher. "lottery
Rule 31A run by State Governments" means a lottery not allowed to be sold in any
State other than the organizing State.
(2)(a)
•Lottery authorized by State Governments: 100/128 of the face value of ticket or of

the price notified in official gazette by organizing State, whichever is higher.
Rules 31A "lottery authorized by State Governments" means a lottery which is
authorized to be sold in State(s) other than the organizing State also.
(2) (b)
•the value of supply of actionable claim in the form of chance to win in

betting, gambling or horse racing in a race club shall be 100% of the face
Rules 31A value of the bet or the amount paid into the totalisator.
(3)
Example 14: Government of Manipur has organized a lottery:

• The face value of the tickets issued in Manipur is Rs. 336 Lacs. Price notified in official gazette is Rs.
310 lacs. So higher of Face Value or Notified Price i.e. Rs. 336 Lacs. Value 100/112 of 336 Lacs = Rs.
300 Lacs
• The face value of the tickets authorized to be issued in other states is Rs. 250 Lacs. Prices notified in
official gazette is Rs. 256 Lacs. So higher of Face Value or Notified Price i.e. Rs. 256 Lacs. Value
100/128 of 256 Lacs = Rs. 200 Lacs
Example 15: Mr. A has placed an amount of Rs. 100 lacs into the totalisator on Horse No. 9. If he wins, he gets
10 times the amount. The value of such supply = 100% of the amount paid into the totalisator = Rs. 100 Lacs.
Rule 32 Determination of value in respect of certain supplies: -
Rule Provision
• This rule provides the valuation methods for five specific supplies.
• This rule overrides other rules of valuation. Thus, the supplies prescribed in this rule need not be
valued by sequentially following rule 27 to 31.
• The valuation methods prescribed under this rule are optional; the supplier can use them if he so
desires. He can also opt to value his supplies in accordance with other valuation rules.
32 (2) Value of Supply of services in relation to the purchase or sale of foreign currency, including
money changing, is determined by either of two methods: -
(a)
Case 1: Transaction where one of the currencies exchanged is INR
Where Currency exchanged from/to INR
The value of supply, shall be computed by the following method : -
Value= {Difference between Buying or Selling Rate and RBI Reference rate} *
Total units of currency
Where RBI reference rate is not available, value shall be 1% of Gross amount of INR
provided/received by the person changing the money.
134
Example 16: On 10th May, Mr. Doshi converted US $ 100 into Rs. 6,400 @ Rs. 64 per US $
through Eastern Money Changers. RBI reference rate on 10th May for US $ is 63. The value of
supply in this case is (Rs. 63-Rs. 64) * US $ 100 = Rs. 100 and GST will be levied on this amount.
If the RBI reference rate is not available, then 1% of Rs. 6,400 i.e. Rs. 64 will be the value of
supply of service.
Case 2: Transaction where neither of the currencies exchanged is INR

The value of supply is 1% of the lesser of the two amounts the person changing the money
would have received by converting (at RBI reference rate) any of the 2 currencies in INR
Example 17: US $ 9,000 are converted into UK pound 4,500. RBI reference rate at that time for
US $ is Rs. 63 per US $ and for UK pound is Rs. 82 per UK pound. In this case, neither of the
currencies exchanged is INR.
Hence in the given case, value of taxable service would be 1% of the lower of the following: -
(a) US dollar converted into INR = US $ 9,000* Rs. 63 = Rs. 5,67,000
(b) UK pound converted into INR = UK Pound 4,500 * Rs. 82 = Rs. 3,69,000
Value of taxable service = 1% of Rs. 3,69,000 = Rs. 3,690
(b) The person supplying the service may also exercise the following option (based on
slab rates) to ascertain the value of service, however, once opted he cannot
withdraw it during the remaining part of the financial year:
Currency Exchanged Value of Supply
Upto Rs 1 lacs 1% of Gross Amount of currency exchanged,
min Rs 250/-
Above 1 lacs and upto 10 Lacs Rs. 1,000 + 0.50% of the gross amount of
currency exchanged for an amount
exceeding 1 Lacs & upto 10 Lacs
Above 10 Lacs Rs 5,500 +0.1% of amount exceeding Rs 10
lac, subject to maximum amount or Rs.
60,000
Example 18: Mr. X, a money changer, has exchanged US $ 10,000 to INR @ Rs. 65 per US $.
Mr. X wants to value the supply in accordance with rule 32 (2) (b) of CGST Rules.
Determine the value of supply made by Mr. X.
Value of currency exchanged in INR [Rs. 65 * US $ 10,000] = Rs. 6,50,000
Upto 1,00,000 = Rs. 1,000
For Rs. 5,50,000 = Rs. 2,750
Value of Supply = Rs. 3,750
32 (3) Value of service provided by the air travel agent, in case of booking of air ticket shall be
calculate as follow: -
Nature of Travel Value
Domestic Travel 5% of Basic Fare
International Travel 10% of Basic Fare
Basic fare means that part of air fare on which commission is normally paid to air travel agent
by the airlines.
Example 19:
Particulars Basic Fare Other Charges & Taxes Total Value of
Fee tickets
Domestic Booking 1,00,900 10,000 5,000 1,15,900
International Booking 3,16,880 20,000 16,000 3,52,880
Value of Supply: -
Domestic Booking Rs. 1,00,900*5% = Rs. 5,045
International Booking Rs. 3,16,880*10%= Rs. 31,688
32 (4) Value of supply in relation to life insurance business shall be: -
(a) The gross premium charged from a policy holder reduced by the amount allocated
Study Notes
135
for investment, or savings on behalf of the policy holder, if such an amount is

intimated to the policy holder at the time of supply of service
(b) In case of single premium annuity policies, value shall be 10% of single premium
charged from the policy holder [other than covered in (a)]
(c) In all other case, 25% of premium charged from the policy holder for 1st year and
12.5% from subsequent year.
If policy with only risk cover then entire premium charged from the policy will be taxable value.
Example 20: ABC Life Insurance Company Ltd. (ALICL) has charged gross premium of Rs. 180
Lacs from policy holders with respect to life insurance policies in the 2017-18, out of which Rs.
100 Lacs have been allocated for investment on behalf of the policy holders.
Amount allocated for investment intimated to policy holder at the time of supply of service then
value of service = Rs. 180 Lacs – Rs. 100 Lacs = Rs. 80 Lacs
If it is Single Premium Annuity policy then taxable value Rs. 180 * 10% = Rs. 18 Lacs.
Amount allocated for investment not intimated to policy holder at the time of supply of service
then value of service = 25% of Rs. 180 Lacs = Rs. 45 Lacs.
If premium is only towards risk cover then value of service Rs. 180 Lacs.
32 (5) Value of supply in case of second hand goods shall be the difference in selling price and
purchase price, subject to ITC is not availed. If the value so arrived is negative, then it shall be
ignored (Intra- State supplies of second hand goods by an unregistered supplier to registered
second hand goods dealer exempt from GST)
Further, purchase value of goods repossessed from defaulting borrower (who is not registered),
shall be the purchase value as reduced by 5% points per quarter or part thereof, between the
date of purchase and date of disposal.
The provision applies to all taxable persons dealing in second hand goods, including old and
used empty bottles. {PIB press release, Dated 15-7-2017 15:35 IST – CBE&C press release No.
79/2017, Dated 15-7-2017}
Example 21: A company X Ltd, which deals in buying and selling of second hand cars, purchases
a second hand Maruti Alto Car of March, 2014 for Rs. 3 Lacs from an unregistered person and
sells the same after minor furbishing for Rs. 3.5 Lacs. The supply of the car to the company for
Rs. 3 Lacs shall be exempted and the supply of the same by the company to its customer shall
be taxed at (Rs. 3.5 Lacs – Rs. 3 Lacs) = Rs. 50,000 shall be taxed.
If margin scheme is opted for a transaction of second hand goods, the person selling the car to
the company shall not issue any taxable invoice and the company purchasing the car shall not
claim any ITC.
136
Example 22: Mr. A purchased a motor car on 1st October 2017 for Rs. 20,00,000. 80% of the
purchase price of car was finance by ABC Finance Ltd. The loan was payable in 60 monthly
installments beginning with 1st November 2017. Mr. X defaulted in repayment of loan and ABC
Finance Ltd. repossessed the car on 15th May 2018. The car was disposed on 10 th December
2018 for Rs. 15,50,000. So, number of quarter is 5 (total percentage 25%). So, purchase value
of car is Rs. 15,00,000. Sale price of car is Rs. 15,50,000 and Purchase value of car is Rs.
15,00,000 so value of taxable supply is Rs. 50,000.
32 (6) Value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is
redeemable against a supply of goods or services or both shall be equal to the money value of
the goods or services or both redeemable against such token, voucher, coupon or stamp.
Example 23: ABC Coupons Ltd. sells coupons that are redeemable against specified luxury food
products at retail outlets. Each coupon has a face value of Rs. 900 but it redeemable for supplies
worth Rs. 1,000. In terms of rule 32 (6) of the CGST rules relating to valuation, the value of a
coupon is the money value of goods redeemable against it. Therefore, though the coupon is
sold for Rs. 900, its value is Rs. 1,000.
32 (7) The value of taxable services provided by such class of service providers as may be notified by
the Government, on the recommendations of the Council, as referred to in paragraph 2 of
Schedule I of the said Act between distinct persons as referred to in Section 25, where ITC is
available, shall be deemed to be NIL.
Rule 33 Value of supply of services in case of pure agent: -
Value of supply in case of services provided by the pure agent shall exclude the expenditure or cost incurred
by the him, if: -
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to
the third party on authorization by such recipient.
(ii) Payment made by pure agent and the same has been shown separately on his invoice.
(iii) Supplies procured by the pure agent from the third party are in addition to the supplies on his
own account.
Who is a pure Agent?

A person who -
1. Enters into a contract to act as a pure agent to incur expenditure or cost in course of supply of goods
or services or both
2. Neither intends nor hold any title of goods or services or both
3. Doesn’t use his own interest on goods/service procured
4. Receives only the actual amount incurred (100% reimbursement)
Example 24: Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of
Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name
of the company paid to the Registrar of Companies. The fees charged by the registrar of Companies for the
registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the
payment of those fees. Therefore, A’s recovery of such expenses is a disbursement and not part of the value
of supply made by A to B.
Example given in Service Tax Law
Example 25: X contracts with Y, a real estate agent to sell his house and thereupon Y gives an advertisement
in television. Y billed X including charges for television advertisement and paid service tax on the total
consideration billed. In such a case, consideration for the service provided is what X pays to Y. Y does not act
as an agent on behalf of X when obtaining the television advertisement even if the cost of television
advertisement is mentioned separately in the invoice issued by X. Advertising service is an input service for the
estate agent in order to enable or facilitate him to perform his services as an estate agent.
This illustration clearly shows distinction between payments made as ‘pure agent’ and payment made as
‘Principal’.
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Rule 34 Rate of exchange of currency, other than Indian rupees, for determination of value: -
Applicable rate shall be: -
Rate of Exchange For Applicable Rate

Taxable Goods Rate notified by Board under Sec 14 of Customs Act, 1962 for the date of time
of supply of such goods in terms of section 12 of the Act.
Taxable Services Rate as per generally accepted accounting principles for the date of supply of
such services in terms of section 13 of the Act.
Rule 35 Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax: -
Where value of supply includes tax amount, i.e. Integrated tax, central tax, State tax or union territory tax, then
tax amount shall be calculated by following method :-
Tax Amount = (Value inclusive of Tax * Tax Rate in %) / (100+ sum of tax rate in %)
Note that the provision applies only the value of supply included GST. The rule doesn’t say that the value is
deemed to be inclusive of GST.
Circular No. 86/05/2019 GST Dated 01.01.2019
Issue: What is the value to be adopted for the purpose of computing GST on services provided by BF/BC to a
banking company?
Clarification: As per RBI’s Circular and subsequent instructions on the issue (referred to as ‘guidelines’
hereinafter), banks may pay reasonable commission/fee to the BC, the rate and quantum of which may be
reviewed periodically. The agreement of banks with the BC specifically prohibits them from directly charging
any fee to the customers for services rendered by them on behalf of the bank. On the other hand, banks (and
not BCs) are permitted to collect reasonable service charges from the customers for such service in a
transparent manner. The arrangements of banks with the BCs specify the requirement that the transactions
are accounted for and reflected in the bank's books by end of the day or the next working day, and all
agreements/contracts with the customer shall clearly specify that the bank is responsible to the customer for
acts of omission and commission of the BF/BC.
Hence, banking company is the service provider in the BF model or the BC model operated by a banking
company as per RBI guidelines. The banking company is liable to pay GST on the entire value of service
charge or fee charged to customers whether or not received via BF or BC.
Circular No. 92/11/2019-GST Dated 07/03/2019

Free samples and gifts
• It is a common practice among certain sections of trade and industry, to provide free samples and gifts.
For example, pharmaceutical companies often provide drug samples to their stockists, dealers, medical
practitioners, etc., without charging any consideration.
• Samples which are supplied free of cost, without any consideration, do not qualify as ‘supply’ under GST
(except where the activity falls within the ambit of Schedule I of the CGST Act).
• ITC shall not be available on the inputs, input services and capital goods to the extent they are used in
relation to the gifts or free samples distributed without any consideration.
138
• However, where the activity of distribution of gifts or free samples falls within the scope of supply in terms
of the provisions contained in Schedule I of the CGST Act, the supplier of gifts/ free samples would be
eligible to avail ITC.
Buy one, get one free offer (BOGO)
• Sometimes, companies announce offers like ‘Buy One, Get One free’. It may appear at first glance that in
case of offers like ‘Buy One, Get One Free’, one item is being supplied free of cost without any
consideration. Let say, “buy one soap and get one soap free”.
• In fact, it is not an individual supply of free goods but a case of two or more individual supplies where a
single price is being charged for the entire supply.
• Taxability of such supply will depend upon whether it is a composite or a mixed supply and the rate of
tax shall be determined accordingly.
• ITC shall be available with respect to inputs, input services and capital goods used in relation to supply
of goods or services as a part of such offers.
Discounts including ‘Buy more, save more’ offers
• Sometimes, the supplier offers staggered discount to the customers (i.e. increase in discount rate with
increase in purchase volume). Such discounts are shown on the invoice itself.
• Some suppliers also offer periodic/ year ending discounts to their stockists, etc. Such discounts are not
shown on the invoice as the actual quantum of such discount gets determined after the supply has been
effected, generally at the year end. However, such discounts are established in terms of an agreement
entered into at or before the time of supply. Further, the discount is passed on by supplier through credit
notes.
• Such discounts offered by the suppliers to customers (including staggered and post supply discounts)
shall be excluded to determine the value of supply provided they satisfy the parameters laid down in
Section 15(3) of the CGST Act.4
• Further, the supplier shall be entitled to avail the ITC on inputs, input services and capital goods used in
relation to such supply of goods or services at discount.
Get 10 % discount for purchases above Rs. 5,000/-, 20% discount for purchases above Rs. 10,000/- and 30%
discount for purchases above Rs. 20,000/-.
Secondary Discounts
• These are the discounts which are not known at the time of supply or are offered after the supply is already
over.
• In such cases, financial / commercial credit notes can be issued by the supplier for passing of discount,
even if the conditions mentioned in Section 15(3)(b) of the CGST Act are not satisfied.
• However, such discounts shall not be excluded while determining the value of supply as such discounts
are not known at the time of supply and the conditions laid down in Section 15(3)(b) of the CGST Act are
not satisfied.
• In this case, there will be no impact on availability of ITC in the hands of supplier.
Study Notes
139
Question & Answer

Q1. ABC suppliers Ltd. Mumbai has issued following invoices on 22th July 2017:
(a) XYZ Ltd. Ahmedabad, Value of goods Rs. 20,000. Packing charges Rs. 800, Outward Freight
Charges Rs. 1,200.
(b) CDE Ltd. Pune, Value of goods Rs. 50,000, weighment charges Rs. 1,600, discount for prompt
payment Rs. 1,200.
(c) Brain cert, USA – FOB value Rs. 40,000.
The tax rates were as follows: - CGST 9%, SGST 9%, IGST 18%. Calculate the tax liability in each case.
A. (a) Tax is payable on value plus packing plus outward freight i.e. Rs. 22,000. Since customer is
from out of state, IGST is payable @ 18%. Hence IGST payable is Rs. 3,960.
(b) Tax is payable on 50,000+1,600-1,200 = Rs. 50,400. The supply is within the State. Hence,
tax payable is as follows, SGST @ 9% = Rs. 4,536 & CGST @ 9% = Rs. 4,536
(c) Since the goods are exported, IGST is not payable assuming ABC has LUT.
Q2. A taxable person engaged in trading of second hand cars has given following information for Sept’17:
(a) Purchased second hand car at Rs. 4,00,000 and sold at Rs. 5,00,000.
(b) Purchased second hand car at Rs. 3,00,000 and sold at Rs. 2,90,000.
(c) Purchased second hand car at Rs. 7,00,000. He could not sale in that month.
The tax rates were as follows: - CGST 14%, SGST 14%, IGST 28%, Compensation Cess 3%.
A. The taxable person can pay under margin scheme as follows:
(a) Value Rs. 1,00,000 [5,00,000-4,00,000], CGST @ 14% Rs. 14,000, SGST @ 14% Rs. 14,000 &
Compensation Cess @ 3% 3,000. Total Rs. 31,000.
(b) No tax payable as value of supply is negative.
(c) No tax as the car is not sold.
Q3. A CA in Mumbai supplied service relating to incorporation of a company to Mr. Amit in Kolkata. He charged
fees as follows:
(a) Professional fees for incorporate of company Rs. 1,00,000.
(b) Filing fees and registration charges paid to ROC Rs. 90,000.
(c) Reimbursement of Travelling and out of pocket expenses Rs. 10,000.
A. Rs. 90,000 are received as pure agent. So, this is not includible in value. The travelling & out of pocket
expenses are part of value of supply and includible in value. Hence tax is payable on Rs. 1,10,000. Since the
recipient is out of State, IGST is payable @ 18% = Rs. 1,10,000*18% = Rs. 19,800.
Q4. A in Kolkata supplied machinery of Rs. 2,00,000 to B in Kolkata in July 2017. He charged Rs. 24,000 as
charges for erection and commissioning of the machinery and Rs. 20,000 as machine design charges. As per
payment terms, the payment was to be made within 30 days. However, B did not pay within 30 days. Hence A
recovered Rs. 6,000 as interest for late payment in Sept’17.
A. Tax is payable on Rs. 2,00,000+ Rs. 24,000+ Rs. 20,000 + Rs. 6,000 = Rs. 2,50,000. Tax payable CGST @
9% of Rs. 2,50,000 = Rs. 22,500. SGST @ 9% = Rs. 22,500.
Q5. A manufacturer of drugs from Ahmedabad sales the product @ Rs. 5,000 for a box of medicines to
wholesalers in Gujarat in Oct’17. He is sending to same goods to his consignment agent in Delhi in Oct’17.
140
The consignment agent is selling the box of medicines @ Rs. 5,300 per box. Calculate the GST payable.
The tax rates were as follows: - CGST 2.5%, SGST 2.5%, IGST 5%. Calculate the tax liability in each case.
A. (a) for sale to wholesales in Gujarat the tax is as follows –
CGST @ 2.5% of Rs 5,000 = Rs. 125. SGST @ 2.5% = Rs. 125.
(b) for supplies to consignment agent in Delhi he can charge tax on 90% of the sale price in Delhi i.e. 90% of
5,300 = Rs. 4,770. IGST @ 5% of Rs. 4,770 = Rs. 238.50
Q6. A manufacturer of refrigerators from Punjab sales the refrigerator Rs. 50,000 to wholesalers in Punjab. He
is sending to same refrigerators to his depot in Karnataka. He is selling the refrigerators in Karnataka
Rs. 46,000 due to heavy competition. The tax rates were as follows: - CGST 14%, SGST 14%, IGST 28%.
Calculate the tax liability for supply to Karnataka.
A. Since the entire tax paid in Punjab will be available as ITC in Karnataka, the tax can be paid on any value
while sending goods from Punjab.
Q7. An AC manufacturer in Chennai has made an exchange offer. As per terms of offer, if you return your old
AC of any make, you will get new AC of specified high capacity for Rs. 56,000, excluding taxes. The normal
price of the new air conditioner of that capacity is Rs. 68,000, excluding taxes. You made enquiry with dealers
of second hand AC and they are willing to purchase your AC for Rs. 7,000. You are staying at Chennai.
The tax rates were as follows: - CGST 14%, SGST 14%, IGST 28%. Calculate the tax payable.
A. Tax is payable on Rs. 68,000. Tax payable – CGST @ 14% - Rs. 9,520, SGST @ 14% Rs. 9,520.
Q8. How value of supply to be arrived at in case of supply of goods or services between related persons?
A. Let’s understand it with an example wherein Mr. A who is brother of Mr. B, comes to the shop of Mr. B. He
selects goods worth Rs. 50,000 from the shop. The following would be the steps to find out the value of supply
between Mr. A and Mr. B: -
(a) If the open market value of the goods or services supplied by the supplier is known then open market
value of the goods or services supplied would be the value of supply.
Example: Mr. A who is brother of Mr. B, comes to the shop of Mr. B. He selects goods worth Rs 50,000
on the shop and asks how much he has to pay for it. Mr. B asks Mr. A to pay Rs 40,000. In this
transaction, as Mr. B is brother of Mr. A, Mr. B has charged lesser price from Mr. A. Thus, the open
market price in the given case would be Rs. 50,000.
(b) If open market value is not available, it will be the value of supply of goods or services of like kind and
quality.
Example: Mr. A who is brother of Mr. B, comes to the shop of Mr. B. Supposedly, goods selected by
him have been imported for the first time from outside the country and no price has been specified on
such goods. Mr. B asks Mr. A to pay Rs. 40,000. In this transaction, as Mr. B is brother of Mr. A and the
open market value is not available, price of goods with similar features would be the value of supply of
the goods. Supposedly, similar goods are available for Rs. 45,000 in the market, therefore value of
supply would be Rs. 45,000.
(c) If value is not determinable under either of the two methods above, value of supply would be the value
as determined by application of Rule 30 or Rule 31 of Central Goods and Services Tax Rules, 2017, in
that order.
(d) Where the goods are intended for further supply as such by the recipient, the value at the option of the
supplier, be an amount equivalent to ninety per cent of the price charged for the supply of goods of like
kind and quality by the recipient to his customers not being his related person.
Study Notes
141
(e) If the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to
be open market value of the goods or services.
Q9. Is GST Leviable on Securities Transaction Tax and Stamp Duty?

A. The liability to pay STT and Stamp Duty on purchase or sale of share is that of either purchaser or seller and
not of stock broker. The stock broker collects and deposits the same on behalf of the purchaser or seller and in
the capacity of the pure agent. Thus, GST is not payable on STT and Stamp Duty as long as the sub – broker
satisfies the conditions of pure agent as specified in Rule 33 of the CGST Rules, 2017.
Q10. Admission to ABC Theater is Rs. 100 per ticket for a Kannada Movie as well as for a Hindi Movie plus
entertainment tax Rs. 10% on Kannada Movie and 20% on other languages. In the month of November, ABC
Theater sold 2000 tickets of Tamil Movie and 2000 tickets of Hindi Movie. Find the value of taxable supply of
service. Applicable rate of GST 18%. Find the GST liability if any?
A. For GST law add all other taxes (other than part of GST family i.e. CGST, SGST, IGST etc.) in value of
supply. So, entertainment tax shall be part of assessable value.
Kannada Movie total collection = 2000*110 {100+(100*10%)}= Rs. 2,20,000
Hindi Movie total collection = 2000*120 {100+(100*20%)}= Rs. 2,40,000
GST Tax Liability
CGST = Rs. 4,60,000*9%= Rs. 41,400
SGST = Rs. 4,60,000*9%= Rs. 41,400
Q11. ABC Gas sells cooking gas cylinders. Subsidy directly transferred to the account of the customer whose
account are linked with Aadhar card. Selling price per cylinder is Rs. 900. Customer received subsidy Rs. 300
directly from Government to his bank account. Net outflow of the buyer is Rs. 600. Find the value of supply of
goods (per cylinder) in the hands of ABC Gas. Calculate assessable value to levy tax.
A. Supplier is liable to pay GST on transaction value which shall be exclusive of subsidy received from
government. However, exclusion of subsidy is applicable if Government is paying that to the supplier for making
the supply.
In this case, Government has not paid subsidy to the supplier, rather it has been paid to the buyer directly.
Supplier is not impacted by such subsidy. He shall be liable to pay whatever transaction value he has charged
to buyer.
Hence, transaction value is Rs. 900 per cylinder.
Q12. ABC owns a coaching institute in Pune. The institute charges Rs. 18,000 per student for giving training in
international taxation. However, this training programmes is subsidized by different institutions as follows – State
Government of Maharashtra : Rs. 500 per student, XYZ Charitable Trust : Rs. 200 per student and Government
of USA: Rs. 200 per student. Calculate tax liability assuming CGST & SGST @ 9% each.
A. In this case, subsidies given by different institutions are directly linked to the price charged by ABC. State
Government subsidy can be excluded but subsidy paid by others will be included in taxable value.
Value of taxable supply = Rs. 18,000 – Rs. 500 (subsidy from Government of Maharashtra) = Rs. 17,500
GST Tax Liability
CGST = Rs. 17,500*9%= Rs. 1,575
SGST = Rs. 17,500*9%= Rs. 1,575
Q13. ABC has provided the following details relating to goods sold:-
Particulars Amount
List price of the goods (excluding of taxes, subsidy and discounts) 50,000
142
Tax levied by Municipal Authority 5,000
Packing charges (not included in the price above) 2,000
Subsidy received from NGO 2,500
Trade discount offered @ 2% on list price
Recipient pay 10% brokerage on list price at the request of supplier
Recipient pay freight & insurance charges on behalf of supplier 5,000
Calculate the value of taxable supply.
A.
Statement showing calculation of value of taxable supply
Particulars Amount
List price of the goods (excluding of taxes and discounts) 50,000
Add:-
Tax levied by Municipal Authority {included in the value as per section 15 (2) (a)} 5,000
Packing Charges {included in the value as per section 15 (2) (c)} 2,000
Subsidy received from NGO {since subsidy is received from a non-government body, 2,500
the same is included in the value of terms of section 15 (2) (e)}
Recipient pay 10% brokerage on the request of supplier {included in the value as per 5,000
section 15 (2) (b)}
Recipient pay freight & insurance charges on behalf of supplier {included in the value as 5,000
per section 15 (2) (b)}
Total 69,500
Less: Trade discount {since discount is known at the time of supply, it is deductible from 1,000
the value of terms of section 15 (3) (a)}
Value of Taxable Supply 68,500
Q14. ABC buys the ‘Super Motor’ in Rajasthan from XYZ. Both agreed for the below conditions:
Value of Motor (including GST @ 5%) Rs. 3,00,000
Taxes (other than GST) paid - Not included in above value Rs. 5,000
Below items are being paid by recipient though supplier is liable to pay
Freight Expenses Rs. 3,500
Consultancy charges for erection Rs. 2,000
Testing Charges Rs 500
Insurance Charges Rs 4,500
Other details:-
Subsidy received from Rajasthan Government (deducted from value) Rs. 10,000
Subsidy received from manufacturer for supply of power generator (deducted from
value) Rs. 25,000
Trade discount shown in Invoice Rs. 2,000
Cash discount due to instant payment Rs. 5,500
If such supply is inter-State supply, calculate the value of taxable supply and GST.
A.
Sr. Action Particulars Amount Remarks
No.
1 Value of Motor 3,00,000
2 Add Taxes (other than GST) paid 5,000 Section 15 (2) (a) – Value
of supply shall include any
taxes, duties, cesses, fees
Study Notes
143
and charges levied under

any law other than GST
3 Add Freight Expenses 3,500 Section 15 (2) (b) – Any
4 Add Consultancy charges for erection 2,000 amount that the supplier is
5 Add Testing Charges 500 liable to pay in relation to
6 Add Insurance Charges 4,500 such supply but which has
been incurred by the
recipient of supply.
7 Add Subsidy received from manufacturer 25,000 Section 15 (2) (e) – Value
shall include subsidies
directly linked to the price
excluding subsidies
provided by the CG/SG.
8 Less Trade Discount - 2,000 Section 15 (3) (a) – Value
of the supply shall not
include any discount which
is given before or at the
time of the supply if such
discount has been duly
recorded in the invoice
issued in respect of such
supply.
9 Less Cash Discount -5,500 Section 15 (3) (b) – Value
of the supply shall not
include any discount which
is given after the supply has
been effected, if such
discount is established in
terms of an agreement
entered into at or before the
time of such supply and
specifically linked to
relevant invoices.
10 Total Value (including GST Value) 3,33,000
11 Less IGST @ 5% {Rs. 3,33,000*5/105) 15,857 Inter-State supply
12 Net Taxable Value 3,17,143
Q15. ABC footwear, a registered supplier of Kanpur, has a non-moving stock worth Rs. 10,00,000 of a
particular variety of shoes that are out of fashion. It has not been able to find market inspite of huge discount
offered. It was able to sell this stock at a very low price of Rs. 2,00,000 to a retailer in Maharashtra with a
condition that the retailer would display hoardings of ABC footwear in all their retail outlets in the State.
Determine the taxable value of supply.
A. In this case the supplier and recipient are not related persons. Although a condition is imposed on the
recipient on effecting the sale, such a condition has no bearing on contract price. This is a case of distress
sale, and in such a case, it cannot be said that the supply is lacking ‘sole consideration’. Therefore, the price
of Rs. 2,00,000 will be accepted as value of supply.
Q16. ABC is facing serious liquidity problems and requests XYZ to pay within 2 days. It offers additional 1%
cash discount. XYZ agrees and pays.
A. As per section 15 (3) (b), this discount was not known at the time of supply, and so it cannot be claimed as
a deduction from the transaction value for GST calculation.
144
Q17. ABC Ltd. is a registered manufacturer of pendrive. It sells its pendrive exclusively through distributors
appointed across the country. The MRP printed on package of a pendrive is Rs. 1,000. ABC Ltd. sells the
pendrives to distributors at Rs. 700 per pendrive (exclusive of GST). The applicable rate of GST is 18%.
The stock is dispatched to the distributors on quarterly basis – stock for a quarter being dispatched in the second
week of the month preceding the relevant quarter. However, additional stock is dispatched at any point of the
year if the company receives a requisition of that effect from any of its distributors. The company charges Rs.
100 per pendrive from distributors (excluding all charges and taxes).
The company has a policy of offer a discount of 10% on pendrive supplied to the distributors for a quarter, if the
distributors sell 500 pendrives in the preceding quarter. The discount is offered on the price at which the pendrive
are sold to the distributors (excluding all charges and taxes).
The company appoints XYZ Ltd. as a distributor on 1st April and dispatches 750 pendrives on 8th April as stock
for the quarter April-June. XYZ Ltd. places a purchase order of 1000 pendrives with the company for the quarter
July-September. The order is dispatched by the company on 10th June and the same is received by the
distributor. The distributor reports sale of 700 pendrives for the quarter April-June and 850 pendrives for the
quarter July-September.
Compute the taxable value for the quarter July-September in respect of transaction between ABC & XYZ Ltd.
A. As per section 15 (3) (b), the value of supply shall not include any discount which is after the supply has been
affected, if
i. such discount is established in terms of an agreement entered into at or before the time of such supply
and specifically linked to relevant invoices, and
ii. ITC as is attributable to the discount on the basis of document issued by the supplier has been reversed
by the recipient of the supply.
XYZ Ltd. is entitled to 10% discount on pendrives supplied by ABC Ltd. for the quarter July-September as it has
sold more than 500 pendrives in the preceding quarter. However, since the entire stock for the quarter July-
September has already been dispatched by ABC Ltd. in the month of June, the discount on the pendrives
supplied to XYZ Ltd. for the quarter July-September will be post-supply discount. This discount shall be
allowable since the discount policy was known before the time of such supply and the discount can be
specifically linked to relevant invoices provided XYZ Ltd. reverses the ITC attributable to the discount on the
basis of credit note issued by ABC Ltd.
Value of Taxable Supply (Amount in INR):-

Price at which the pendrives are supplied to XYZ Ltd. 700
Add: Packing Charges {incidental expenses need to be added as per section 15 (2) 100
(c)}
Less: Discount {As explained above all the conditions specified in section 15 (3) (b) -70
have been satisfied, so the post-supply discount will be allowed, subject to reversal
of ITC by XYZ Ltd.}
Value of Taxable supply of one unit of pendrive 730
Value of Taxable supply of 1000 units supplied for the quarter July-September (Rs. 7,30,000
730*1000)
Note:-XYZ Ltd. need to reverse ITC = Rs. 70 discount * 1000 * 18% = Rs. 12,600.
Q18. ABC provides management consultancy to a group of companies for annual retainership fees of Rs. 22
Lakhs. It is given an office cabin in head office of the group for its exclusive use. ABC pays GST on the amount
of Rs. 22 Lakhs. Is the value for the service provided by ABC, correct under GST laws? Please explain.
Study Notes
145
A. The value of Rs. 22 Lakhs for the service provided by ABC, is not correct under GST laws. ABC gets an
office cabin free of cost, which is an additional non-monetary consideration for its services. The market value of
the rent of the room must be added to the fees (Rs. 22 Lakhs) in order to arrive at the value of the taxable
service provided by ABC, as per Rule 27 of CGST Rules 2017.
Q19. Mr. A located in Pune purchases 2,000 parker pen for Rs. 2,00,000 from ABC Ltd. (wholesaler) located in
Indore. Mr. A’s son is an employee in ABC Ltd. The price of each parker pen in the open market is Rs. 120. The
supplier additionally charges Rs. 5,000 for delivering the goods to the recipient’s place of business.
A. Mr. A and ABC Ltd. would not be treated as related persons merely because the son of the recipient is an
employee of the supplier, although such son and the supplier would be treated as related persons (employer
and employee relationship).
Therefore, the transaction value will be accepted as the value of the supply. Transaction value will be Rs.
2,00,000+Rs. 5,000 = Rs. 2,05,000. IGST will be leviable since it is inter-State transaction.
Q20. ABC Ltd. owned by XYZ Ltd. is popularly known for assembly of large machines. PQR Ltd. (also owned
by XYZ Ltd.) is engaged in fabrication of small machines. A factory contracts ABC Ltd. of its machinery, for a
fee of Rs. 6,00,000. ABC Ltd. sub-contracts the work to PQR Ltd. for Rs. 4,00,000 and ensures supervision of
the work performed by them. Generally, PQR Ltd. charges a fixed sum of Rs. 1,200 per man hour to its clients;
its spends 400 hours on this project. Determine taxable value of supply.
A. Since ABC Ltd. & PQR Ltd. is controlled by XYZ Ltd., the two companies will be treated as related persons.
Therefore, Rs. 4,00,000 being the sub-contract price will not be accepted as transaction value. The value of the
service shall be open market value being Rs. 4,80,000 (Rs. 1,200*400).
Q21. ABC Ltd. (Mumbai) has 10 agents located across Maharashtra (except Mumbai). The stock of water
purifier is dispatched on Just in time basis from ABC Ltd., to the location of the agents, based on receipt of
orders from various dealers, on a fortnightly basis. ABC Ltd. is also engaged in wholesale supply of water purifier
in Mumbai. An agent places an order for dispatch of 20 water purifier on 10-12-2017. ABC Ltd. had sold 20
water purifier to a retailer in Mumbai on 8-12-2017 for Rs. 1,30,000. The agent effects the sale of the 20 units
to a dealer who would affect the sale on MRP basis i.e. Rs. 7,000- per unit. Calculate taxable value of supply.
A. The law deems these supplies between the principal and agent to be supplies for the purpose of GST.
Therefore, the transfer of goods by the principal (ABC Ltd.) to its agent for him to effect sales on behalf of the
principal would be deemed to be a supply although made without consideration. The value would be either the
open market value, or 90% of the price charged by the recipient of the intended supply to its customers, at the
option of the supplier. Thus, the value of the supply by ABC Ltd. to its agent would be either Rs. 1,30,000 or
Rs. 1,26,000 (i.e. 90% * 7,000 * 20), based on the option chosen by ABC Ltd.
Q22. ABC Insurance provides you the following information for the month of September, 2018. You are required
to compute value of taxable supply of services under Rule 32 (4) of Determination of value of supply Rules,
2017.
1. General policies: Total premiums collected Rs. 12,000 Lakhs (out of which 1st year premium is Rs.
5,000 Lakhs)
2. Single premium annuity policies : Premium collected Rs. 850 Lakhs
3. Only risk cover policies : Premium collected Rs. 500 Lakhs
4. Life micro-insurance policies where insured amount does not exceed Rs. 2,00,000 : Premium collected
Rs. 10 Lakhs.
146
5. Variable Insurance Policies : Premium collected Rs. 8,000 Lakhs. (80% of the amount is allocated for
investments on behalf of policy holder for which policy holder is given separate break up in premium
receipts).
A. Computation of value of taxable supply of services (Rs. In Lakhs):
Particulars Amount Rate Taxable
Value
General policies:
(i) First year premium 5,000 25% 1,250
(ii) Subsequent years i.e. policies issued in earlier 7,000 12.5% 875
years 850 10% 85
Single premium annuity policies 500 100% 500
Only Risk cover policies since the entire premium is for
risk cover, hence, the option under Rule 32 (4) is not 10 Exempt -
available.
Life micro-insurance policies {Exempt vide Entry 36 of 8,000 - 1,600
Notification no. 12/2017-Ct (Rate)}
Variable Insurance Policies [Gross Premium – Amount
allocated towards investment]
Total Taxable Value 4,310
Q23. Will the Section 15 read with Chapter IV of the CGST Rules, 2017 apply to IGST payable on import of
goods? How valuation will be done in case of import of services?
A. No. As per Proviso to Sec. 5(1) of IGST Act, Customs Law will be applicable for valuation of imported
goods. U/s 15 read with Chapter IV of the CGST Rules, 2017 will apply for valuation of import of services.
Q24. Is reference to the CGST Rules required in all cases?

A. No. Reference to the CGST Rules, 2017 is required only when the supply is between related persons
(including different registrations of the same PAN and principal-agent supplies), or where the consideration
payable is not wholly in money. However, in specific cases where the categories of goods and services are
notified in this regard (such as money-changing), the CGST Rules,2017 must be referred to, irrespective of
the fact that the supplier and recipient are unrelated, and price is the sole consideration.
Q25. If related persons transact at arm’s length price, can the valuation still be questioned?
A. The law mandates a reference to the CGST Rules where the supply is between related persons. However,
since the supply is at “arm’s length price”, the fact that the price assigned to the transaction is an ‘open market
value’ should be established.
Q26. What is the meaning of the term “Price is not the sole consideration”?
A. Under the GST law, consideration can be in “money or otherwise”, and includes the monetary value of an
act or forbearance, in relation to a supply. Consideration may also flow from any person other than the recipient.
In cases, where the money received in respect of the supply is not the sole consideration, the “price is not the
sole consideration”. E.g. Buyer of capital goods discharges the loan of seller, goods purchased on exchange
offer, etc.
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Section 16 Eligibility and conditions for taking input tax credit

Rule 36 Documentary requirements and conditions for claiming input tax credit
Rule 37 Reversal of input tax credit in the case of non-payment of consideration
Section 17 Apportionment of credit and blocked credits
Rule 38 Claim of credit by a banking company or a financial institution
Rule 42 Manner of determination of ITC in respect of inputs or input services
and reversal thereof
Rule 43 Manner of determination of ITC in respect of capital goods and reversal
thereof in certain cases
Rule 88A Order of utilization of ITC
Section 18 Availability of credit in special circumstances
Rule 40 Manner of claiming credit in special circumstances
Rule 41 Transfer of credit on sale, merger, amalgamated, lease or transfer of a
business
Rules 41A Transfer of credit on obtaining separate registration for multiple places
of business within a State or Union territory
Rule 44 Manner of reversal of credit under special circumstances
Section 19 Taking ITC in respect of inputs & capital goods sent for job work
Rule 45 Conditions and restrictions in respect of inputs and capital goods sent
to the job worker
Section 20 Manner of distribution of credit by input service distributor
Section 21 Manner of recovery of credit distributed in excess
Rule 39 Procedure for distribution of ITC by Input Service Distributor
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Study Notes
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150
Section 16 Eligibility and conditions for taking input tax credit

Section 16(1)
Eligible Person: Every registered person shall be entitled to take credit of ITC, subject to section 49 (Section
49 prescribes provisions relating to payment of tax, interest, penalty & other amounts), on any supply of goods
or services or both to him.
Conditions: Goods or Services are used or intended to be used in the course or furtherance of his business.
Credited to Electronic Ledger: The said amount shall be credited to the electronic credit ledger of such person.
Note: Electronic Credit Ledger shall be maintained for each registered person eligible for ITC under the Act on
the Common Portal and every claim of ITC under the Act shall be credited to the said Ledger.
Section 16(2)
Registered person shall be entitled to the ITC, in respect of any supply of goods or services or both to him
unless: -
(a) He is in possession of a tax invoice or debit note or such other tax paying documents as may be
prescribed;
(b) He has received the goods or services or both
(i) it shall be deemed that the registered person has received the goods where the goods are delivered by
the supplier to a recipient or any other person on the direction of such registered person, whether acting
as an agent or otherwise, before or during movement of goods, either by way of transfer of title to goods
or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of
such registered person.
(c) subject to the provision of section 41, the tax charged in respect of such supply has been actually paid to
the Government, either in cash or through utilization of ITC admissible in respect of the said supply; and
(d) He has furnished the return under section 39:
• If goods against an invoice are received in lots or installments, the registered person shall be entitled
to take ITC upon receipt of the last lot of installment;
• If the recipient fails to make payment to the supplier against the invoice within a period of 180 days
from the date of issuance of invoice, then the recipient shall add back the amount of ITC claimed to
the output tax liability along with interest, in the manner as may be prescribed. This provision shall not
apply on tax paid on reverse charge basis {Section 9 (3) & 9 (4)}. If partial payment is made, the
reversal will be proportionate to the amount not paid to the supplier.
• If the recipient later makes payment to supplier, he can take ITC – third proviso to section 16 (2) of
CGST Act.
At present, ITC to be taken in GSTR 3B by taxable person on his own. Of course, supplier has to upload his
supplies in his GSTR-1. The recipient has to make sure that he can take ITC only on basis of details of invoices
as uploaded by supplier.
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151
Section 16(3)
Where the registered person has claimed depreciation on the tax component of the cost of capital goods and
plant and machinery under the provisions of the Income-Tax Act, 1961, the ITC on the said tax component shall
not be allowed.
Section 16(4)
A registered person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods
or services or both after the due date of furnishing of the return under section 39 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.
Rule 36 Documentary requirements and conditions for claiming

ITC
Rule 36 (1): ITC shall be availed by registered person including the Input service distributor on the basis of any
of the following documents, namely: -
• An invoice;
• An invoice for reverse charge, subject to payment of tax (reverse charge);
• A debit note;
• A bill of entry or any similar document prescribed under the Custom Act, 1962 or rules made thereunder
for the assessment of integrated tax on imports;
• An Input service distributor invoice or input service distributor credit note or any document issued by an
input service distributor in accordance with the provisions of sub-rule (1) of rule 54.
Rule 36 (2): ITC shall be availed by a registered person only if all the applicable particulars as specified in the
provisions of Chapter VI are contained in the said document, and the relevant information, as contained in the
said document, is furnished in Form GSTR-2 by such person.
Now, it is provided that if the said document doesn’t contain all the specified particulars but contains the details
of the amount of tax charged, description of goods or services, total value of supply of goods or services or
both, GSTN of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may
be availed by such registered person.
{Proviso inserted vide notification No. 39/2018-CT, Dated 04.09.2018}
Rule 36 (3): No ITC shall be availed by a registered person in respect of any tax that has been paid in pursuance
of any order where any demand has been confirmed on account of any fraud, willful misstatement or
suppression of facts.
As per CBIC tweet, ITC of RCM can be claimed in same month in which it is paid. Let say ITC of RCM of
July paid in August can be used for payment of liability of July
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Rule 37 Reversal of ITC in the case of non-payment of consideration

Rule 37 (1): After availing ITC, recipient fails to pay to the supplier the amount towards the value of supply
along with tax payable within 180 days from the date of issue of invoice. The amount of value not paid and the
amount of ITC availed or proportionate to such amount not paid to the supplier in Form GSTR-2 for the month
immediately following the period of 180 days from the date of the issue of the invoice.
Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall
be deemed to have been paid for the purpose of the second proviso to sub-section (2) of section 16.
Provided further that the value of supplies on account of any amount added in accordance with the provisions
of clause (b) of sub-section (2) of section 15 shall be deemed to have been paid for the purposes of the second
proviso to sub-section (2) of section 16.
{Inserted vide notification No. 26/2018-Central Tax, Dated 13.06.2018}
Any amount that the supplier is liable to pay in relation to supply but which has been incurred by the recipient
of the supply and not included in price actually paid or payable for the goods or services or both.
In case the supplier has issued invoice after the due date on which invoice should have been issued in terms
of Section 31 of the CGST Act, calculation of 180 days will commence from the date of issue of invoice by the
supplier and not from the due date by which invoice should have been issued.
Rule 37 (2): The amount of ITC referred in sub-section (1) will be added to output tax liability for the month in
which the details are furnished.
Rule 37 (3): The registered person shall be liable to pay interest [Sec. 50 (1)] from the date of availment of
credit till the date when the amount is added to the output tax liability.
Rule 37 (4): The time limit specified in Sec. 16 (4) shall not apply to a claim for re-availing of any credit, in
accordance with the provisions of the Act or the provisions of this chapter, that had been reversed earlier.
Example1: A is a trader who places order on B and instruct to deliver goods at C and in turn he raised invoice
on C. Though the goods are not physically received at the premises of A, the condition of section 16 (2) (b) is
satisfied and A is entitled to take ITC.
Example 2: XYZ makes an advance payment along with GST in August. The supplier raises a bill in the month
of August but delivered goods in installment till November. XYZ can take ITC only in November.
Example 3: Due to a quality dispute, ABC withheld payment on a machine supplied by a vendor till it could be
rectified. Over 180 days went by in this dispute. The credit taken by ABC and thus, it had to pay back the credit.
Only after the vendor rectified the machine and ABC released the payment, could ABC take the credit again.
Example 4: Hercules Machinery delivered a machine to XYZ in January 2018 under Invoice No. 49 Dated 28th
January 2018 for Rs. 4,15,000 plus GST and undertook trial runs and calibration of the machine as per the
requirements of XYZ. The amount chargeable for post-delivery activities was covered in a debit note raised in
April 2018 for Rs. 50,000 plus GST. XYZ did not file its annual return till October 2018. Though the debit note
was received in the next financial year, it relates to an invoice received in the financial year ending March 2018.
Therefore, the time limit for taking ITC available on Rs. 50,000 as well as on Rs. 4,15,000 is 20th October 2018;
earlier of the date of filing the annual return for 2017-18 or the return for September 2018.
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153
Example 5: XYZ received goods from ABC Ltd. on 21.09.2018 worth Rs. 1 Lac for which invoice was issued on
21.09.2018 along with GST of Rs. 18,000. XYZ claimed credit for the month of the same in form GSTR-3B of
September month, but, failed to pay the invoice amount to the supplier till April, 2019. In this case, 180 days
calculated from 21.09.2018, will expire on 20.03.2019. Thus, XYZ will reverse credit of Rs. 18,000 in its GSTR-
3B for the month of March 2019 and interest computation to start from date of availing of credit and not from the
date of invoice.
Section 17 Apportionment of credit & blocked credits

Section 17(1): If goods or services or both are used partly for the purpose of business & partly for other
purposes, the ITC shall be restricted for the purpose of business.
Section 17(2): If goods or services or both are used for taxable supplies, zero rated supply & exempt supply,
the ITC shall be restricted to taxable supplies & zero rated supply.
Section 17(3): Value of exempt supply shall include supply as may be prescribed, and –
a. Supply where GST is payable on reverse charge basis

b. Transactions in securities
c. Sale of land
d. Sale of building (except construction of complex where supply is made before obtaining certificate).
This exception has been made as in fact, GST is payable and hence it is not ‘exempted supply’.
Explanation.—For the purposes of this sub-section, the expression ‘‘value of exempt supply’’ shall not include
the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said
Schedule {Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building}.
For determining the value of exempt supply as per section 17 (3) – (a) the value of land and building shall be
taken as same as adopted for the purpose of paying stamp duty, and (b) the value of security shall be taken as
one percent of the sale value of such security – Explanation below Rule 45 of CGST Rules, 2017.
Section 17(4): A banking company or Financial Institution including NBFC;
a. as per provision of section 17 (2) i.e. proportionate credit; or

b. avail an amount equal to 50% of the eligible input tax credit on inputs, capital goods and input
services in that month and the balance 50% shall lapse.
Provided that option once exercise shall not be withdrawn during the remaining part of financial year.
Provided further that the restriction of fifty percent, shall not apply to the tax paid on supplied made by one
registered person to another registered person having the same PAN.
Rule 38 Claim of credit by Banking company or a financial institution (condition on choosing above option
(b):
(a) The said company or institution shall not avail the credit of –
(i) tax paid on Inputs & Input Services that are used for non-business purposes, and
(ii) the credit attributable (blocked credits) to supplies specified U/s 17 (5), in Form GSTR-2
(b) 50% of the input tax shall be the ITC admissible to the company or the institution and shall be
furnished in Form GSTR -2
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Section 17(5): Notwithstanding anything contained in Sec. 16 (1) and Sec. 18 (1), ITC shall not be available: -
17 (5)(a), (a) motor vehicles for transportation of persons having approved seating capacity of not more
(aa), (ab) than thirteen persons (including the driver), except when they are used for making the following
taxable supplies, namely:—
(A) further supply of such motor vehicles; or
(B) transportation of passengers; or
(C) imparting training on driving, such motor vehicles;
(aa) vessels and aircraft except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or
(C) imparting training on navigating such vessels; or
(D) imparting training on flying such aircraft;
(ii) for transportation of goods
(ab) services of general insurance, servicing, repair and maintenance in so far as they
relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services shall be available—
(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause
(aa) are used for the purposes specified therein;
(ii) where received by a taxable person engaged—
(I) in the manufacture of such motor vehicles, vessels or aircraft; or
(II) in the supply of general insurance services in respect of such motor
vehicles, vessels or aircraft insured by him;
As per section 2(28) of the Motor Vehicles Act, 1988, “motor vehicle” or “vehicle” means any
mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is
transmitted thereto from an external or internal source and includes a chassis to which a body
has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a
vehicle of a special type adapted for use only in a factory or in any other enclosed premises or
a vehicle having less than four wheels fitted with engine capacity of not exceeding twenty-five
cubic centimetres.
Noticeable, for first three exceptions viz., further supply of such vehicles or conveyance,
transportation of passengers and imparting training on driving, flying, navigating such vehicles
or conveyance, the supply must be an outward taxable supply of the registered person. While,
in case of transportation of goods, there is no such requirement of making taxable supply.
The confusion regarding ITC availability on special purpose vehicles such as dumpers, work-
trucks, fork-lift trucks, etc. also gets settled with this amendment, since this clause restricts ITC
of only such motor vehicles which are used for transportation of passengers. Therefore, all types
of vehicles used for transportation of goods are allowed to avail ITC without any restrictions
under this sub-section.
Example 6: Dealer ‘A’ procures cars from Hyundai for further supply to various customers from
its showroom. ITC available for this.
Example 7: ABC Ltd., purchased cars for employees’ official use. ITC not available for this.
Example 8: A cab operator/transport agencies procures car for transportation of passengers.
ITC available for this.
Example 9: XYZ Ltd., purchased buses for daily commuting of employees. ITC available since
credit not restricted on motor vehicles for transportation of passengers with capacity > 13 person.
Example 10: ABC Ltd. bought truck for transportation of tiles manufactured by it. ITC available
for this.
Study Notes
155
Example 11 : A driving school purchases car for imparting training to trainees. ITC available for
this.
Example 12: ABC Ltd. purchased a trailor which is used inside the factory for movement of semi-
finished goods to main plant. ITC available since it is not motor vehicle.
17 (5)(b) The following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and
plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred
to in clause (a) or clause (aa) except when used for the purposes specified therein, life
insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or both shall be
available where an inward supply of such goods or services or both is used by a
registered person for making an outward taxable supply of the same category of goods
or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel
concession:
Provided that the input tax credit in respect of such goods or services or both shall be available,
where it is obligatory for an employer to provide the same to its employees under any law for the
time being in force.
Example 13: ABC Ltd., organized a dealer meet in a hotel and was charged GST on food bills
of that hotel. ITC not available.
Example 14: ABC Ltd., pays GST on monthly purchase of mineral water bottles for its
employees. ITC not available.
Example 15: Director of ABC Ltd., has taken membership of club for which the fee is paid by the
company. ITC not available.
Example 16: ABC Ltd. pays monthly subscription fee for FICCI etc. for their employees to attend
their various programmes for knowledge enrichment. ITC available.
Example 17: ABC Ltd., pays GST on cab services availed for onsite visit of its employees. ITC
not available.
Example 18: A hotel pays GST on cab services availed for airport pick up and drop facilities for
its guests. In turn, the hotel recovers the same from its guests as part of composite supply of
hotel stay services and cab. ITC available.
Example 19: ABC caterers received a big contract for providing catering services to its client on
occasion of marriage. They availed services of another caterer to render quality services and
paid GST to the other caterer for his services. ITC available.
Example 20: ABC Ltd., avails services of a caterer for running canteen for its employees which
is mandatory as per Factories Act, 1948. ITC available.
Example 21: ITC on aircraft purchased by a manufacturing company for official use of its CEO
is blocked.
Example 22: ITC on aircraft purchased by an Aviation School providing training on flying
aircrafts, is allowed.
Example 23: ITC on general insurance taken on a car used by employees of a manufacturing
company for official purposes, is blocked.
Example 24: ITC on maintenance & repair services availed by a company for a truck used for
transporting its finished goods, is allowed.
Example 25: ITC on outdoor catering services availed by a company, for a team development
event organised for its employees, is blocked.
Example 26: ITC on outdoor catering service availed by a company to run a canteen in its factory.
The Factories Act, 1948 requires the company to set up a canteen in its factory. ITC on such
outdoor catering is allowed.
17 (5)(c) Work contract services when supplied for construction of an immovable property (other than
plant and machinery) except where it is an input service for further supply of works contract
service;
156
Example 27: ABC Ltd., availed services of a builder for construction of its factory which will be
used for manufacturing taxable goods. The builder charged GST on invoice raised to ABC Ltd.
ITC not available to ABC Ltd.
Example 28: ABC Ltd., availed services of a building for renovating his office. If this is capitalized
then ITC not available. But let say it is minor expenses and expensed out in Profit & Loss account
then ITC available.
Example 29: ABC Ltd., availed works contract services for constructing foundation of pillars
supporting the machinery and paid GST charged thereupon. ITC available.
17 (5)(d) goods or services or both received by a taxable person for construction of immovable property
(other than plant & machinery) on his own account including when such goods or services or
both are used in the course or furtherance of business .
17 (5)(e) Goods or services or both on which tax has been paid under composition scheme.
17 (5)(f) Goods or services or both received by a Non-resident taxable person except goods imported by
him.
17 (5)(g) Goods or services or both used for personal consumption.
Example 30: ABC Ltd., is engaged in manufacturing tiles. 50 packs of tiles were taken by the
MD of the company for its newly constructed home. ITC not available.
Example 31: ABC & Co. is a CA Firm and provide advice on taxation matters. Two ACs were
purchased for installing in the office. ITC available.
17 (5)(h) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
17 (5)(i) Any tax paid in accordance with the provisions of sections, 74, 129 and 130.
Subject to the provisions of section 17(5) of the CGST Act, if event management services, hotel, accommodation
services, consumables etc. are received by a SEZ developer or a SEZ unit for authorised operations, as
endorsed by the specified officer of the Zone, the benefit of zero rated supply shall be available in such cases
to the supplier. [Circular No. 48/22/2018 Dated 14.06.2018]
Section 17(6): The Government may prescribe the manner in which the credit referred to in Sec 17(1) & Sec.
17 (2) may be attributed.
Note: -
Sec 17 (5) (c) & (d), expression “construction” includes re-construction, renovation, additions or alterations
or repairs, to the extent of capitalization, to the said immovable property.
“Plant & Machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural
support that are used for making outward supply of goods or services or both and includes such foundation
and structural supports but excludes: -
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
Rule 42 Manner of determination of ITC in respect of inputs or input

services and reversal thereof
The ITC in respect of Inputs or Input Services U/s 17 (1)/(2), being partly used for the purposes of business and
partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly
for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in
the following manner, namely , -
Study Notes
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Particulars
T Total Input tax involved on inputs and input services in a tax period
T1 Amount of Input Tax, out of ‘T’, attributable to Inputs and Input Services intended to be used
exclusively for purposes other than business
T2 Amount of Input Tax, out of ‘T’, attributable to Inputs and Input Services intended to be used
exclusively for effecting Exempt Supplies
T3 Amount of Input Tax, out of ‘T’, in respect of Input and Input Services on which credit is not
available u/s 17 (5)
C1 Amount of ITC credited to the Electronic credit ledger of Registered person
C1 = T – (T1+T2+T3)
T4 Amount of ITC attributable to Input & Input Services intended to be used exclusively for effecting
supplies other than exempted but including zero rated supplies
C2 Input Tax Credit left after attribution of ITC under T4 shall be called common credit, and calculated
as:
C2 = C1-T4
Note: ‘T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared by the registered person at the
invoice level in Form GSTR-2 and at summary level in FORM GSTR-3B
D1 Amount of ITC attributable towards Exempt Supplies is calculated as follows –
D1 = (E/F) * C2
Where ‘E’ is the aggregate value of exempt supplies during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax period.
Note:
Where the registered person doesn’t have any turnover during the said tax period or the aforesaid
information is not available, the value of ‘E/F’ shall calculated by taking values of ‘E’ and ‘F’ of the
last tax period for which details of such turnover are available, previous to the month during which
the said value of ‘E/F’ is to calculated.
For the purposes of this clause, the aggregate value of exempt supplies and total turnover shall
exclude the amount of any duty or tax levied under entry 84 and entry 92A of List I of the Seventh
Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule
D2 Amount of credit attributable to non-business purposes if common inputs and inputs services are
used partly for business and partly for non-business purposes and shall be equal to 5% of C2
C3 Remainder of the common credit shall be the eligible ITC attributed to the purposes of business and
for effecting supplies other than exempted supplies but including zero rated supplies –
C3 = C2 – (D1+D2)
Note:
• the amount ‘C3’,’D1‘ and ‘D2‘ shall be computed separately for input tax credit of central tax,
State tax, Union territory tax and integrated tax and declared in FORM GSTR-3B or through
FORM GST DRC-03
• The amount equal to aggregate of ‘D1’ & ‘D2’ shall be reversed by the registered person in
FORM GSTR-3B or through FORM GST DRC-03
• Where the amount of Input Tax relating to Inputs or Input Services used partly for purposes
other than business and partly for effecting exempt supplies has been identified and
segregated at invoice level by the registered person, the same shall be included in ‘T1’ and
‘T2’ respectively, and the remaining amount of credit on such inputs or input services shall
be included in ‘T4’
The ITC determined shall be calculated finally for the financial year before the due date for furnishing of the
return for the month of September following the end of the financial year to which such credit related.
Where the aggregate of the amounts calculated finally in respect of ‘D1’ and ‘D2’ exceeds the aggregate of the
amounts determined in respect of ‘D1’ and ‘D2’, such excess shall be reversed by the registered person in
FORM GSTR-3B or through FORM GST DRC-03 in the month not later than the month of September following
the end of the financial year to which such credit related.
158
The said person shall be liable to pay interest on the said excess amount at the rate specified u/s 50 (1) for the
period starting from first day of April of the succeeding financial year till the date of payment.
Or
Where the aggregate of the amounts determined in respect of ‘D1’ and ‘D2’ exceeds the aggregate of the
amounts calculated finally in respect of ‘D1’ and ‘D2’, such excess amount shall be claimed as credit by the
registered person in his return for a month not later than the month of September following the end of the
financial year to which such credit relates.
Example 32: Out of 10 containers purchased by a registered person engaged in taxable supply of goods, 5
are used for storing non-taxable goods (exempt supply) such as petroleum. ITC on 5 containers used for non-
taxable goods cannot be availed.
Example 33: A registered person (partnership firm) purchases 5 laptops but one of the laptop is being used by
the son of one of the partners of the firm. ITC will not be available on such laptop as it is used for personal
purposes.
Example 34: ABC Ltd. provides taxable as well as exempted services. Turnover of ABC Ltd. during the month
of Nov’17 is as under:
Particulars Amount
Value of exempted supply of services 30,00,000
Value of taxable supply of services 64,00,000
Value of Zero rated taxable supply of services 16,00,000
Supply of services made for personal use 10,00,000
Total 1,20,00,000
Details of ITC for the month of Nov’17 are as under:
Particulars CGST SGST IGST

Total ITC available 1,08,000 1,08,000 54,000
The above ITC on input services includes the following:
(i) Credit on input services exclusively used for supplying exempted 18,000 18,000 7,200
services
(ii) Credit on input services exclusively used for supplying taxable 54,000 54,000 3,600
services (including zero rated supplies)
(iii) Credit availed on inputs which are not eligible u/s 17(5) 18,000 18,000 6,300
(iv) Credit on input services exclusively used for supplying services 10,800 10,800 5,400
for personal use
Please calculate entitlement of ITC for the month of Nov’17.

Total ITC available 1,08,000 1,08,000 54,000
Less:
(i) Credit on input services exclusively used for supplying services for 10,800 10,800 5,400
personal use [T1]
(ii) Credit on input services exclusively used for supplying exempted 18,000 18,000 7,200
services [T2]
(iii) Credit availed on inputs which are not eligible u/s 17(5) [T3] 18,000 18,000 6,300
Amount of ITC to the electronic credit ledger C1 = T – 61,200 61,200 35,100
[T1+T2+T3]
Study Notes
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Less: Credit on input services exclusively used for supplying taxable 54,000 54,000 3,600
services including zero rated supplies [T4]
Common Credit of input & input services used for providing 7,200 7,200 31,500
supply of services [C2 = C1-T4]
Total inadmissible common ITC [D1+D2]** 2,160 2,160 9,450
Net eligible common credit [C3 = C2 – (D1+D2)] 5,040 5,040 22,050
Total credit eligible [T4+C3] 59,040 59,040 25,650
Amount to be reversed by registered person [D1+D2] 2,160 2,160 9,450
** Calculation of amount of ITC exempt supplies and supply made for non-business use :

Aggregate Value of Exempted supply of services [E] 30,00,000 30,00,000 30,00,000
Total turnover for Nov’17 [F] 1,20,00,000 1,20,00,000 1,20,00,000
Credit attributable towards exempt supplies [D1 = (E/F)*C2] 1,800 1,800 7,875
Credit attributable for supplies made for non-business purpose 360 360 1,575
[D2 = 5% *C2]
Total inadmissible common credit [D1+D2] 2,160 2,160 9,450
Rule 43 Manner of determination of ITC in respect of capital goods

and reversal thereof in certain cases
(1) Subject to the provisions of sub-section (3) of section 16, the ITC in respect of capital
goods, which attract the provisions of sub-sections (1) and (2) of section 17, being partly used for
the purposes of business and partly for other purposes, or partly used for effecting taxable supplies
including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the
purposes of business or for effecting taxable supplies in the following manner, namely, -
(a) the amount of input tax in respect of capital goods used or intended to be used exclusively for
non-business purposes or used or intended to be used exclusively for effecting exempt supplies
shall be indicated in FORM GSTR-2 and FORM GSTR-3B and shall not be credited to his electronic credit
ledger;
(b) the amount of input tax in respect of capital goods used or intended to be used exclusively for
effecting supplies other than exempted supplies but including zero rated supplies shall be
indicated in FORM GSTR-2 and FORM GSTR-3B and shall be credited to the electronic credit ledger;
(c) the amount of input tax in respect of capital goods not covered under clauses (a) and (b),
denoted as ‘A’, shall be credited to the electronic credit ledger and the useful life of such goods
shall be taken as five years from the date of the invoice for such goods:
Provided that where any capital goods earlier covered under clause (a) is subsequently
covered under this clause, the value of ‘A’ shall be arrived at by reducing the input tax at the
rate of five percentage points for every quarter or part thereof and the amount ‘A’ shall be
credited to the electronic credit ledger;
Explanation. - An item of capital goods declared under clause (a) on its receipt shall not attract
the provisions of sub-section (4) of section 18, if it is subsequently covered under this clause.
(d) the aggregate of the amounts of ‘A’ credited to the electronic credit ledger under clause (c), to
be denoted as ‘Tc’, shall be the common credit in respect of capital goods for a tax period:
Provided that where any capital goods earlier covered under clause (b) is subsequently
covered under clause (c), the value of ‘A’ arrived at by reducing the input tax at the rate of five
percentage points for every quarter or part thereof shall be added to the aggregate value ‘Tc’;
(e) the amount of input tax credit attributable to a tax period on common capital goods during their
useful life, be denoted as ‘Tm’ and calculated as
Tm= Tc÷60
(f) the amount of input tax credit, at the beginning of a tax period, on all common capital goods
160
whose useful life remains during the tax period, be denoted as ‘Tr’ and shall be the aggregate of
‘Tm’ for all such capital goods;
(g) the amount of common credit attributable towards exempted supplies, be denoted as ‘Te’, and
calculated as
Te= (E÷ F) x Tr
where,
‘E’ is the aggregate value of exempt supplies, made, during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax period:
Provided that where the registered person does not have any turnover during the said tax period or the
aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values of ‘E’ and
‘F’ of the last tax period for which the details of such turnover are available, previous to the month during
which the said value of ‘E/F’ is to be calculated;
Explanation:- For the purposes of this clause, it is hereby clarified that the aggregate value
of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied
under entry 84 and entry 92A of List I of the Seventh Schedule to the Constitution and entry 51 and 54
of List II of the said Schedule [excluding Central & State excise duty , CST & VAT on non-GST supplies,
being petroleum products and alcoholic liquor};
(h) the amount ‘Te’ along with the applicable interest shall, during every tax period of the useful Life of the
concerned capital goods, be added to the output tax liability of the person making such claim of credit.
(i) The amount Te shall be computed separately for input tax credit of central tax, State tax, Union territory
tax and integrated tax and declared in FORM GSTR3B.
There is no provision to make final calculations at end of every financial year.
Notes for rule 42 & 43:

i. If the registered person does not have any turnover during the said tax period, or the above
information is not available, the values for the last tax period may be used.
ii. Here, exempt supplies include supplies charged to tax under reverse charge, transactions in
securities, sale of land and sale of building when entire consideration is received either after issuance
of completion certificate by the competent authority or its first occupation, whichever is earlier. Thus,
ITC attributable to such supplies will need to be reversed.
iii. Here, exempt supplies exclude-
a. supply of services having place of supply in Nepal or Bhutan, against payment in Indian rupees
as specified in Notification No. 42/2017 IT (R) Dated 27.10.2017.
b. supply of services by way of accepting deposits, extending loans or advances where the
consideration is either interest or discount. However, value of such services is included in the
exempt supply when the same are provided by a banking company or a financial institution
including a NBFC.
c. transportation of goods by a vessel from the customs station of clearance in India to a place
outside India.
Thus, ITC attributable to such supplies need not be reversed.
iv. Aggregate value of exempt supplies and total turnover excludes the central excise duty, State excise
duty. CST and VAT.
v. The value of exempt supply in respect of land and building is the value adopted for paying stamp
duty and for security is 1% of the sale value of such security.
Example 35: ABC Ltd., purchased following capital goods in the month of April 2018
Capital Goods Value of Capital Goods (in INR) Amount of GST paid (in INR) @
18%
A 15,00,000 2,70,000
B 14,00,000 2,52,000
Study Notes
161
C 50,00,000 9,00,000
Out of these capital goods, capital good ‘A’ is meant exclusively for making exempt supplies, whereas, capital
good ‘B’ is meant exclusively for making taxable supplies. Capital good ‘C’ is meant to be used commonly for
making taxable as well as exempt supplies.
In the month of April 2018, ABC Ltd. has made exempted supplies of Rs.60,00,000, whereas total taxable
supplies were Rs. 2,50,00,000.
Reversal of common credit for different months shall be made as under-
ITC Reversal for the month of April 2018

Particulars Amount in INR Computation
Step 1: Segregation of ITC in various heads
ITC for capital goods used exclusively for 2,70,000
exempt supplies
taxable supplies
ITC for capital goods used commonly [T c] 9,00,000
Step 2: Computing common ITC for a month
Common ITC for a month 15,000 Tm = Tc / 60 = 9,00,000 / 60
Step 3: Computing common ITC at the beginning of a tax period
Common ITC at beginning of tax period [T r] 15,000 Tr=Tm+Tm+Tm……..
Step 4: Computing Credit pertaining to exempt supplies
Aggregate value of exempt supplies during 60,00,000
the tax period [E]
Total turnover in the State of the registered 3,10,00,000 60,00,000+2,50,00,000
person during the tax period [F]
ITC towards exempt supply 2,903 Te=E/F * Tr
[This has to be added to =60,00,000/3,10,00,000 * 15,000
the output tax liability for
the month of April 2018]
In the above example, suppose in the month of May 2018, following more capital goods were purchased:-
Capital goods Value of capital goods ( in INR) GST (in INR @ 18%)
D 10,00,000 1,80,000
E 9,00,000 1,62,000
Out of these capital goods, capital good ‘D’ is meant exclusively for making taxable supplies, while capital
goods ‘E’ is meant to be used commonly for making taxable as well as exempt supplies.
Further, the capital good ‘B’ purchased in April 2018, which was meant exclusively for making taxable
supplies is decided to be used commonly from the month of May 2018 for effecting both taxable as well as
exempt supplies.
In the month of May 2018, ABC Ltd. has made exempted supplies of Rs. 30,00,000, whereas total taxable
supplies was Rs. 2,00,00,000.
Now, calculation of ITC reversal for the month of May 2018 shall be done as under:
162
ITC Reversal for the month of May 2018
Particulars Amount in INR Computation
Step 1: Segregation of ITC in various heads
ITC for capital goods used exclusively for NIL
exempt supplies
taxable supplies
ITC for capital goods used commonly [A] 1,62,000
Addition to ‘A’ 2,39,400 =2,52,000-5% for one quarter
Total common ITC [Tc] 4.01.400 =1,62,000+2,39,400
Step 2: Computing common ITC for a month
Common ITC for a month 6,690 Tm = Tc / 60 = 4,01,400 / 60
Step 3: Computing common ITC at the beginning of a tax period
Common ITC at beginning of tax period [T r] 21,690 Tr=Tm+Tm+Tm……..
=15,000+6,690
Step 4: Computing Credit pertaining to exempt supplies
Aggregate value of exempt supplies during 30,00,000
the tax period [E]
Total turnover in the State of the registered 2,30,00,000 30,00,000+2,00,00,000
person during the tax period [F]
ITC towards exempt supply 2,829 Te=E/F * Tr
[This has to be added to =30,00,000/2,30,00,000*21,690
the output tax liability for
the month of May 2018]
Note: It may be noted that common credit of Rs. 9,00,000 availed in April, 2018, shall form part of the
common credit and will be subject to proportionate reversal for the next 60 months, i.e. upto March 2023.
From April 2023 onwards Rs. 9,00,000 shall not form part of the common credit. Similarly, will happen for
common credit availed in subsequent months.
Rule 88A Order of utilization of ITC

Input tax credit on account of integrated tax shall first be utilised towards payment of integrated tax, and the
amount remaining, if any, may be utilised towards the payment of central tax and State tax or Union territory
tax, as the case may be, in any order:
Provided that the input tax credit on account of central tax, State tax or Union territory tax shall be utilised
towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after
the input tax credit available on account of integrated tax has first been utilised fully.
Use IGST ITC to pay IGST liability then exhaust IGST ITC balance to pay CGST or SGST
liability in any order & proportion before using CGST/SGST ITC.
Original set-off provision was applicable for tax period July 2017 to January 2019
Section 49A was made effective from 1 February 2019 and accordingly was applicable
for tax period
Provisions of Rule 88A shall be applicable for tax period March 2019 onwards
Study Notes
163
Example 36:
After introduction section

Original set-off provision 49A Rule 88A
Tax ITC
Head ITC
Liability availabl Discharge of ITC Discharge of ITC Discharge of
balan
e liability balance liability balance liability
ce
IGST NIL 800 NIL NIL NIL NIL NIL NIL
CGST – 500 IGST - 800 IGST – 300
IGST – 300 CGST – NIL CGST – 500

CGST 800 500 NIL 500 NIL
Cash - NIL Cash - NIL Cash - NIL
SGST – 200 IGST – NIL IGST – 500
IGST – 500 SGST – 200 SGST – 200

SGST 800 200 NIL NIL NIL
Cash - 100 Cash - 600 Cash - 100
Example 37:
Original set-off After introduction section Rule 88A

Tax ITC provision 49A
Head
liability available Discharge of ITC Discharge of ITC Discharge ITC
liability balance liability balance of liability balance
IGST - 400 IGST - 400 IGST - 400

IGST 400 800 NIL NIL NIL
CGST – 500 IGST - 400 IGST – 300
CGST 800 500 IGST – 300 NIL CGST – 400 100 CGST – 500 NIL
SGST – 200 IGST – NIL IGST – 100
SGST 800 200 IGST – 100 NIL SGST – 200 NIL SGST – 200 NIL
Cash – 500 Cash – 600 Cash – 500
164
Section 18 Credit in Special Circumstances

Section 18(1):
(a) Person who has applied for registration within 30 days from the date on which he becomes liable
for registration and has been granted registration, shall be entitled to take ITC in respect of
inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the
day immediately preceding the date from which he becomes liable to pay tax.
(b) Person who takes registration under Sec. 25 (3) [voluntarily registration], shall be entitled to take
ITC in respect of inputs held in stock and inputs contained in semi-finished or finished goods
held in stock on the day immediately preceding the date of grant of registration.
(c) where any registered person ceases to pay tax under section 10 (composition dealer), shall be
entitled to take ITC in respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock and on capital goods (credit on capital goods shall be reduced by
such percentage points as prescribed) on the day immediately preceding the date from which he
becomes liable to pay tax under Section 9.
(d) where an exempt supply of goods or services or both by a registered person becomes a taxable
supply, such person shall be entitled to take ITC in inputs held in stock and inputs contained in
semi-finished or finished goods held in stock and on capital goods exclusively used for such
exempt supply (credit on capital goods shall be reduced by such percentage points as
prescribed) on the day immediately preceding the date from which he becomes liable to pay tax
under Sec. 9.
Example 38: Mr. A whose liability arises, say, on 1st April, may have paid GST on his purchases, say from 1st
January, is required to take registration within 30 days form 1st April i.e. upto 30th April. Supposedly, the dealer
applies for registration for 29th April, ITC shall be allowed in respect of inputs held in stock, inputs contained in
semi-finished goods or finished goods held in stock as on 31st March.
Example 39: Suppose in the above example, if the supplier whose liability arises, say, on 1st April, applies for
registration on 6th May, when he was required to take registration within 30 days i.e. upto 30 th April. Now,
supposedly, registration is granted on 9th May. In such case, ITC would be allowed only from 9th May. It would
lead to loss of ITC for the period prior to 9th May.
Section 18(2): A registered person shall not be entitled to take ITC U/s 18 (1) in respect of any supply of goods
or services or both to him after 1 year from the date of issue of tax invoice relating to such supply.
Section 18(3): There is a change in the constitution of a registered person on account of sale, merger,
demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities,
the said registered person shall be allowed to transfer the ITC which remains unutilized in his electronic credit
ledger to such sold, merged, demerged, amalgamated, leased or transferred business.
Clarification in respect of transfer of ITC in case of death of sole proprietor
Issue: Whether section 18(3) of the CGST Act provides for transfer of ITC which remains unutilized to the
transferee in case of death of the sole proprietor?
Study Notes
165
Clarification: For the purpose of section 18(3) of the CGST Act and rule 41(1) of the CGST Rules, transfer or
change in the ownership of business will include transfer or change in the ownership of business due to death
of the sole proprietor. [Circular No. 96/15/2019 GST Dated 28.03.2019]
Section 18(4): Where any registered person who has availed of ITC opts to pay tax under section 10 or, where
the goods or services or both supplied by him become wholly exempt, he shall pay an amount by way of debit
in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs
held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced
by such percentage as may be prescribed, on the day immediately preceding the date of exercising of such
option or, as the case be, the date of such exemption.
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit
ledger shall lapse.
This section will be also applicable to registered person who is opting for Notification No. 02/2019- Central Tax
(Rate) Dated 7th March 2019.
Section 18(5): The amount of credit under sub-section (1) & the amount payable under sub-section (4) shall be
calculated in such manner as may be prescribed.
Section 18(6): In case of supply of capital goods or plant and machinery, on which ITC has been taken, the
registered person shall pay an amount equal to the ITC taken on the said capital goods or plant and machinery
reduced by such percentage points as may be prescribed or the tax on the transactions value of such capital
goods or plant and machinery determined U/S 15, whichever is higher.
The amount of credit shall be calculated by reducing the ITC @ 5% for every quarter or part thereof, from the
date of issue of invoice for the capital goods – Rule 40 (2) of CGST & SGST Rules, 2017.
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable
person may pay tax on the transaction value of such goods determined U/s 15.
Rule 40 Manner of claiming ITC in special circumstances

(1) The input tax credit claimed in accordance with the provisions of sub-section (1) of section 18 on the inputs
held in stock or inputs contained in semi-finished or finished goods held in stock, or the credit claimed on capital
goods in accordance with the provisions of clauses (c) and (d) of the said sub-section, shall be subject to the
following conditions, namely,-
(a) the input tax credit on capital goods, in terms of clauses (c) and (d) of sub-section (1) of section
18, shall be claimed after reducing the tax paid on such capital goods by five percentage points
per quarter of a year or part thereof from the date of the invoice or such other documents on which
the capital goods were received by the taxable person.
(b) the registered person shall within a period of thirty days from the date of becoming eligible to avail
the input tax credit under sub-section (1) of section 18, or within such further period as may be
extended by the Commissioner by a notification in this behalf, shall make a declaration,
electronically, on the common portal in FORM GST ITC-01 to the effect that he is eligible to avail
the input tax credit as aforesaid:
Provided that any extension of the time limit notified by the Commissioner of State tax or the
Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
166
(c) the declaration under clause (b) shall clearly specify the details relating to the inputs held in stock
or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital
goods–
(i) on the day immediately preceding the date from which he becomes liable to pay tax under the
provisions of the Act, in the case of a claim under clause (a) of sub-section (1) of section 18;
(ii) on the day immediately preceding the date of the grant of registration, in the case of a claim
under clause (b) of sub-section (1) of section 18;
(iii) on the day immediately preceding the date from which he becomes liable to pay tax under
section 9, in the case of a claim under clause (c) of sub-section (1) of section 18;
(iv) on the day immediately preceding the date from which the supplies made by the registered
person becomes taxable, in the case of a claim under clause (d) of sub-section (1) of section
18;
(d) the details furnished in the declaration under clause (b) shall be duly certified by a practicing
chartered accountant or a cost accountant if the aggregate value of the claim on account of central
tax, State tax, Union territory tax and integrated tax exceeds two lakh rupees;
(e) the input tax credit claimed in accordance with the provisions of clauses (c) and (d) of sub-section
(1) of section 18 shall be verified with the corresponding details furnished by the corresponding
supplier in FORM GSTR-1 or as the case may be, in FORM GSTR- 4, on the common portal.
(2) The amount of credit in the case of supply of capital goods or plant and machinery, for the purposes
of sub-section (6) of section 18, shall be calculated by reducing the input tax on the said goods at
the rate of five percentage points for every quarter or part thereof from the date of the issue of the
invoice for such goods.
Rule 41 Transfer of credit on sale, merger, amalgamation, lease or

transfer of business
(1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer
or change in the ownership of business for any reason, furnish the details of sale, merger, de-
merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the
common portal along with a request for transfer of unutilized input tax credit lying in his electronic
credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the
value of assets of the new units as specified in the demerger scheme.
Explanation:- For the purpose of this sub-rule, it is hereby clarified that the “value of assets” means the
value of the entire assets of the business, whether or not input tax credit has been availed thereon.
(2) The transferor shall also submit a copy of a certificate issued by a practicing chartered accountant
or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of
business has been done with a specific provision for the transfer of liabilities.
(3) The transferee shall, on the common portal, accept the details so furnished by the transferor and,
upon such acceptance, the un-utilized credit specified in FORM GST ITC- 02 shall be credited to
his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his
books of account.
Study Notes
167
Rule 41A Transfer of credit on obtaining separate registration for

multiple places of business within a State or Union territory
(1) A registered person who has obtained separate registration for multiple places of business in accordance
with the provisions of rule 11 and who intends to transfer, either wholly or partly, the unutilised input tax
credit lying in his electronic credit ledger to any or all of the newly registered place of business, shall furnish
within a period of thirty days from obtaining such separate registrations, the details in FORM GST ITC-02A
electronically on the common portal, either directly or through a Facilitation Centre notified in this behalf by
the Commissioner:
Provided that the input tax credit shall be transferred to the newly registered entities in the ratio of the value
of assets held by them at the time of registration.
Explanation.- For the purposes of this sub-rule, it is hereby clarified that the value of assets‘ means the
value of the entire assets of the business whether or not input tax credit has been availed thereon.
(2) The newly registered person (transferee) shall, on the common portal, accept the details so furnished by
the registered person (transferor) and, upon such acceptance, the unutilised input tax credit specified in
FORM GST ITC-02A shall be credited to his electronic credit ledger.
Rule 44 Manner of reversal of credit under Special Circumstances

(1) The amount of input tax credit relating to inputs held in stock, inputs contained in semi-finished
and finished goods held in stock, and capital goods held in stock shall, for the purposes of sub-
section (4) of section 18 or sub-section (5) of section 29, be determined in the following
manner, namely,-
(a) for inputs held in stock and inputs contained in semi-finished and finished goods held in stock,
the input tax credit shall be calculated proportionately on the basis of the corresponding
invoices on which credit had been availed by the registered taxable person on such inputs;
(b) for capital goods held in stock, the input tax credit involved in the remaining useful life in
months shall be computed on pro-rata basis, taking the useful life as five years.
(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of
central tax, State tax, Union territory tax and integrated tax.
(3) Where the tax invoices related to the inputs held in stock are not available, the registered person
shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods
on the effective date of the occurrence of any of the events specified in sub-section (4) of section
18 or, as the case may be, sub-section (5) of section 29.
(4) The amount determined under sub-rule (1) shall form part of the output tax liability of the registered
person and the details of the amount shall be furnished in FORM GST ITC-03, where such amount
relates to any event specified in sub-section (4) of section 18 and in FORM GSTR-10, where such
amount relates to the cancellation of registration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing
chartered accountant or cost accountant.
(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital
goods shall be determined in the same manner as specified in clause (b) of sub rule (1) and the
amount shall be determined separately for input tax credit of central tax, State tax, Union territory
tax and integrated tax: {please refer to rule 40 (2). Look like that is more relevant for Section 18 (6)}
Provided that where the amount so determined is more than the tax determined on the transaction
value of the capital goods, the amount determined shall form part of the output tax liability and the
same shall be furnished in FORM GSTR-1.
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Circular No. 96/15/2019-GST Dated 28th March 2019
• Section 18(3) of the CGST Act provides for transfer of ITC under specified circumstances like sale, merger,
demerger, transfer of business.
• Section 29(1) of CGST Act deals with cancellation of registration and as per sub-clause (a), reason for
transfer of business includes “death of the proprietor”.
• Doubts have been raised whether section 18(3) provides for transfer of ITC which remains unutilized, to
the transferee in case of death of the sole proprietor.
• The circular clarifies that transfer or change in the ownership of business will include transfer or change
in the ownership of business due to death of the sole proprietor.
• Thus, in case of death of sole proprietor if the business is continued by any person being transferee or
successor, the ITC which remains unutilized in the electronic credit ledger is allowed to be transferred to
the transferee as per the provisions of CGST Act and in the manner prescribed in the circular.
Example 40: Mr. Z becomes liable to pay tax on 1st August and has obtained registration on 15th August. Mr. Z
is eligible for ITC on inputs held in stock and as part of semi-finished goods or finished goods held in stock as
on 31st July 2017. Mr. Z cannot take ITC on capital goods.
Example 41: Mr. A applies for voluntarily registration on 5th June and obtain registration on 22 nd June. Mr. A is
eligible for ITC on inputs held in stock and as part of semi-finished goods or finished goods held in stock as on
21st June. Mr. A cannot take ITC on capital goods.
Example 42: Mr. B, a registered taxable person, was paying tax at composition rate upto 30th July. However,
w.e.f. 31st July, Mr. B becomes liable to pay tax under regular scheme. Mr. B will be eligible for ITC on inputs
held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods as on
30th July. ITC on capital goods will be reduced by 5% per quarter from the date of the invoice.
Example 43: Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months = 5 months ignoring a part of the month.
ITC taken on such capital goods = C
ITC attributable to remaining useful life = C * 5/60
Section 19 ITC in respect of goods & capital goods sent to job

worker
Principal is entitled to take ITC of inputs sent for job worker. If it is directly sent to job worker from supplier
premises then principal can avail ITC when these inputs received by job worker. Same rule apply in case of
capital goods.
The most important condition is that ‘inputs’ must be received within 1 year (from the date of dispatch by principal
or if it is directly sent through supplier then from the date when job worker receive) or supplied from the place
of business of job worker & ‘capital goods’ must be received back in 3 years. No time period in case of moulds
& dies, jogs, fixtures or tools.
In case inputs/capital goods are not received back within a period of 1/3 years, it shall be a deemed supply
from the principal to job worker on the date of inputs/capital goods sent for job work & interest need to be
paid.
Study Notes
169
Rule 45 Conditions and restrictions in respect of inputs and capital

goods sent to the job worker
(1) The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a
challan issued by the principal, including where such goods are sent directly to a job-worker, and where
the goods are sent from one job worker to another job worker, the challan may be issued either by the
principal or the job worker sending the goods to another job worker:
Provided that the challan issued by the principal may be endorsed by the job worker, indicating therein
the quantity and description of goods where the goods are sent by one job worker to another or are
returned to the principal: Provided further that the challan endorsed by the job worker may be further
endorsed by another job worker, indicating therein the quantity and description of goods where the
goods are sent by one job worker to another or are returned to the principal.
(2) The challan issued by the principal to the job worker shall contain the details specified in rule 55.
(3) The details of challans in respect of goods dispatched to a job worker or received from a job worker or
sent from one job worker to another during a quarter shall be included in FORM GST ITC-04 furnished
for that period on or before the twenty-fifth day of the month succeeding the said quarter or within such
further period as may be extended by the Commissioner by a notification in this behalf:
Provided that any extension of the time limit notified by the Commissioner of State tax or the
Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.
(4) Where the inputs or capital goods are not returned to the principal within the time stipulated in section
143, it shall be deemed that such inputs or capital goods had been supplied by the principal to the job
worker on the day when the said inputs or capital goods were sent out and the said supply shall be
declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable interest.
Explanation.- For the purposes of this Chapter {Chapter means rules related to ITC i.e. Chapter V of CGST
Rules. It means this rules applicable to entire Input Tax Credit Chapter},-
(1) the expressions ―”capital goods” shall include ― “plant and machinery” as defined in the Explanation to
section 17;
(2) for determining the value of an exempt supply as referred to in sub-section (3) of section 17-
(a) the value of land and building shall be taken as the same as adopted for the purpose of paying stamp
duty; and
(b )the value of security shall be taken as one per cent of the sale value of such security.
Example 44: A supplier of notebooks for schools sends the paper of required dimensions and GSM to a job
worker for making the notebooks as per the design given by him.
However, the Government changes the specifications of notebooks for supply to its schools. The supplier sends
a fresh stock of paper with fresh instructions to the job worker and instructs him to hold the earlier consignment
in stock till a buyer is found. The new notebooks are easily sold, but the paper and semi-finished notebooks of
the old design lie in the godown of the job worker for over a year. Here, sending of paper by the notebook
supplier to the job worker in the first lot will be deemed as a supply and thus, tax would be payable on the same.
Section 20 Manner of distribution of credit by input service distributor

Section 20(1): The Input Service Distributor shall distribute the credit of central tax as central tax or integrated
tax and integrated tax as integrated tax or central tax, by way of issue of a document containing the amount of
input tax credit being distributed in such manner as may be prescribed.
170
Section 20(2): The Input Service Distributor may distribute the credit subject to the following conditions,
namely:–
(a) the credit can be distributed to the recipients of credit against a document containing such details
as may be prescribed;
(b) the amount of the credit distributed shall not exceed the amount of credit available for distribution;
(c) the credit of tax paid on input services attributable to a recipient of credit shall be distributed only
to that recipient;
(d) the credit of tax paid on input services attributable to more than one recipient of credit shall be
distributed amongst such recipients to whom the input service is attributable and such distribution
shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such
recipient, during the relevant period, to the aggregate of the turnover of all such recipients to whom
such input service is attributable and which are operational in the current year, during the said
relevant period;
(e) the credit of tax paid on input services attributable to all recipients of credit shall be distributed
amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a
State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate
of the turnover of all recipients and which are operational in the current year, during the said
relevant period.
Explanation. – For the purposes of this section,–
(a) the “relevant period” shall be–
(i) if the recipients of credit have turnover in their States or Union territories in the financial year
preceding the year during which credit is to be distributed, the said financial year; or
(ii) if some or all recipients of the credit do not have any turnover in their States or Union
territories in the financial year preceding the year during which the credit is to be distributed,
the last quarter for which details of such turnover of all the recipients are available, previous
to the month during which credit is to be distributed;
(b) the expression “recipient of credit” means the supplier of goods or services or both having the
same Permanent Account Number as that of the Input Service Distributor;
(c) the term ‘‘turnover’’, in relation to any registered person engaged in the supply of taxable goods
as well as goods not taxable under this Act, means the value of turnover, reduced by the amount
of any duty or tax levied under entry entries 84 and 92A of List I of the Seventh Schedule to the
Constitution and entries 51 and 54 of List II of the said Schedule.
Section 21 Manner of recovery of credit distributed in excess

Where the Input Service Distributor distributes the credit in contravention of the provisions contained in section
20 resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed
shall be recovered from such recipients along with interest, and the provisions of section 73 or section 74, as
the case may be, shall, mutatis mutandis, apply for determination of amount to be recovered.
Rule 39 Procedure for distribution of ITC by Input Service Distributor

(1) An Input Service Distributor shall distribute input tax credit in the manner and subject to the
following conditions, namely,-
(a) the input tax credit available for distribution in a month shall be distributed in the same month
and the details thereof shall be furnished in FORM GSTR- 6 in accordance with the provisions
of Chapter VIII of these rules;
(b) the Input Service Distributor shall, in accordance with the provisions of clause (d), separately
distribute the amount of ineligible input tax credit (ineligible under the provisions of sub-section
(5) of section 17 or otherwise) and the amount of eligible input tax credit;
(c) the input tax credit on account of central tax, State tax, Union territory tax and integrated tax
Study Notes
171
shall be distributed separately in accordance with the provisions of clause (d);

(d) the input tax credit that is required to be distributed in accordance with the provisions of clause
(d) and (e) of sub-section (2) of section 20 to one of the recipients ‘R1’, whether registered or
not, from amongst the total of all the recipients to whom input tax credit is attributable, including
the recipient(s) who are engaged in making exempt supply, or are otherwise not registered
for any reason, shall be the amount, “C1”, to be calculated by applying the following formula –
C1 = (t1÷T) × C
where,
“C” is the amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1 during the relevant period, and
“T” is the aggregate of the turnover, during the relevant period, of all recipients to whom the
input service is attributable in accordance with the provisions of section 20;
(e) the input tax credit on account of integrated tax shall be distributed as input tax credit of
integrated tax to every recipient;
(f) the input tax credit on account of central tax and State tax or Union territory tax shall-
(i) in respect of a recipient located in the same State or Union territory in which the Input
Service Distributor is located, be distributed as input tax credit of central tax and State tax
or Union territory tax respectively;
(ii) in respect of a recipient located in a State or Union territory other than that of the Input
Service Distributor, be distributed as integrated tax and the amount to be so distributed
shall be equal to the aggregate of the amount of input tax credit of central tax and State tax
or Union territory tax that qualifies for distribution to such recipient in accordance with
clause (d);
(g) the Input Service Distributor shall issue an Input Service Distributor invoice, as prescribed in
sub-rule (1) of rule 54, clearly indicating in such invoice that it is issued only for distribution of
input tax credit;
(h) the Input Service Distributor shall issue an Input Service Distributor credit note, as prescribed
in sub-rule (1) of rule 54, for reduction of credit in case the input tax credit already distributed
gets reduced for any reason;
(i) any additional amount of input tax credit on account of issuance of a debit note to an Input
Service Distributor by the supplier shall be distributed in the manner and subject to the
conditions specified in clauses (a) to (f) and the amount attributable to any recipient shall be
calculated in the manner provided in clause (d) and such credit shall be distributed in the month
in which the debit note is included in the return in FORM GSTR-6;
(j) any input tax credit required to be reduced on account of issuance of a credit note to the Input
Service Distributor by the supplier shall be apportioned to each recipient in the same ratio in
which the input tax credit contained in the original invoice was distributed in terms of clause (d),
and the amount so apportioned shall be-
(i) reduced from the amount to be distributed in the month in which the credit note is included
in the return in FORM GSTR-6; or
(ii) added to the output tax liability of the recipient where the amount so apportioned is in the
negative by virtue of the amount of credit under distribution being less than the amount to be
adjusted.
(2) If the amount of input tax credit distributed by an Input Service Distributor is reduced later on for
any other reason for any of the recipients, including that it was distributed to a wrong recipient by
the Input Service Distributor, the process specified in clause (j) of sub rule (1) shall apply, mutatis
mutandis, for reduction of credit.
(3) Subject to sub-rule (2), the Input Service Distributor shall, on the basis of the Input Service
Distributor credit note specified in clause (h) of sub-rule (1), issue an Input Service Distributor
invoice to the recipient entitled to such credit and include the Input Service Distributor credit note
and the Input Service Distributor invoice in the return in FORM GSTR-6 for the month in which
such credit note and invoice was issued.
172
Example 45: ABC Ltd. a confectionary manufacturer, has paid bills of an advertising company amounting to Rs.
24 Lacs for advertising campaigns for two varieties of cakes, which are manufactured at separate locations in
Pune and Bangalore. The company had a total turnover of Rs. 112 crores in the previous financial year. The
turnover of the Pune unit was Rs. 5 crores, and the turnover of the Bangalore unit was Rs. 10 crores. The
aggregate turnover here is taken as Rs. 15 crores, as advertising was for cakes, which are manufactured at
these two units only.
The ITC is to be distributed Pune and Bangalore units in the ratio 1:2. Therefore, Pune unit will be given ITC of
Rs. 8 Lacs, and the Bangalore unit will be given ITC of Rs. 16 Lacs for the advertising bills.
Example 46: XYZ Ltd., having its head office at Mumbai, is registered as ISD. It has three units in different cities
situated in different States namely Mumbai, Jabalpur and Delhi which are operational in the current year.
M/s XYZ Ltd. furnishes the following information for the month of July 20XX
(i) CGST paid on services used only for Mumbai Unit Rs. 3,00,000
(ii) IGST, CGST & SGST paid on services used for all units Rs. 12,00,000
Total Turnover of the units for the previous financial year are as follows –
Total Turnover Rs. 10,00,00,000
Turnover Mumbai Rs. 5,00,00,000
Turnover Jabalpur Rs. 3,00,00,000
Determine the credit to be distributed by XYZ Ltd. to each of its three units.
Particulars Total Mumbai Jabalpur Delhi

CGST paid on services used only for Mumbai 3,00,000 3,00,000
IGST, CGST & SGST paid on services used for all units 12,00,000 6,00,000 3,60,000 2,40,000
Distribution on pro rata basis to all the units which are
operational in the current year
15,00,000 9,00,000 3,60,000 2,40,000
Note 1:Credit distributed pro rata on the basis of the turnover of all the units is as under :-
1. Unit Mumbai (5,00,00,000/10,00,00,000) * 12,00,000 = Rs. 6,00,000
2. Unit Jabalpur (3,00,00,000/10,00,00,000) * 12,00,000 = Rs. 3,60,000
3. Unit Delhi (2,00,00,000/10,00,00,000) * 12,00,000 = Rs. 2,40,000
Example 47: ABC Ltd., a registered supplier of goods having Head Office at Delhi, also registered as ISD,
furnishes the following information for month of July 2018 and asks you to distribute the credit to various unites:
Input Particulars CGST SGST IGST Total
Service
Alfa Used exclusively in Unit – III 27,000 27,000 54,000
Beta Used in Unit – I, II and III 36,000 36,000
Cancer Used in Unit – I, II, III and IV 12,600 12,600 25,200
Drama Used in Unit – I (Input service “D” is availed for 1,080 1,080 2,160
employee on vacation during the month to its Unit I)
Total 40,680 40,680 36,000
Total Turnover for the units for the year ending 31st March, 2018 is Rs. 3,30,00,000 with details are as under :
Unit I Rs. 50,00,000
Unit II Rs. 30,00,000
Unit III (not registered as exclusively engaged in exempt goods) Rs. 1,50,00,000
Unit IV Rs. 1,00,00,000
All units are operational during the current year. Unit I is located in Delhi whereas Unit II is in Mumbai, Unit III
is in Rajasthan and Unit IV is in Gujarat. Compute credit attributable to each of the units.
Study Notes
173
Particulars Total Credit Available Unit I Unit II Unit III Unit IV

CGST SGST IGST Total CGST SGST IGST IGST IGST IGST
Alfa 27,000 27,000 54,000 54,000
Beta 36,000 36,000 7,826 4,696 23,478
Cancer 12,600 12,600 25,200 1,909 1,909 2,291 11,455 7,636
Drama 1,080 1,080 2,160 1,080 1,080
2,989 2,989 7,826 6,987 88,933 7,636
Working Notes:-
1. The credit of input tax attributable as input service to a particular unit shall be distributed only to that
unit. Since Unit III is exclusively engaged in supply of exempted goods, the total credit of Rs. 54,000 is
distributable to it. Further as per rule 39 (1)(d), no differentiation is to be made whether the unit is
registered or not, and therefore, credit attributable to Unit III is distributed to that unit although it is not
registered, which implies, it is a loss of credit.
2. As per section 20 (2)(b), the credit of tax attributable as input service to more than one unit but not at
all the units shall be distributed only amongst such units to which the input service is attributable and
such distribution shall be pro rata on the basis of the turnover of such units, to the total turnover of all
such units during the relevant period. Hence, the credit of input service “Beta” is distributed to Unit – I,
II & III.
3. Given that the service availed for employee on vacation during the month would not be eligible input
services under section 17 (5), the taxes relating to Invoice “Drama” should be distributed as ineligible
input tax (Rs. 1080 + Rs. 1080), and the distribution must be done separately for CGST and SGST.
Since the service is wholly attributable to Unit I, hence distributed to only to such unit.
174
Excess ITC distributed by an input service distributor (ISD) would be recovered from the recipients along with
interest and penalty, if any. Further, the ISD would also be liable to a general penalty under section 122(1)(ix)
of CGST Act, 2017 .
(Circular No. 71/45/2018-GST Dated 26-10-2018)
ITC on moulds and dies provided by the original equipment manufacturer (OEM) to component
manufacturer on FOC basis
Moulds and dies owned by the original equipment manufacturer (OEM) which are provided to a component
manufacturer (the two not being related persons or distinct persons) on free on cost (FOC) basis does not
constitute a supply as there is no consideration involved. Further, since the moulds and dies are provided on
FOC basis by the OEM to the component manufacturer in the course or furtherance of his business, there is no
requirement for reversal of input tax credit availed on such moulds and dies by the OEM.
However, where the contract between OEM and component manufacturer is for supply of components made by
using the moulds/dies belonging to the component manufacturer, but the same have been supplied by the OEM
to the component manufacturer on FOC basis, the OEM will be required to reverse the credit availed on such
moulds/ dies, as the same will not be considered to be provided by OEM to the component manufacturer in the
course or furtherance of the former’s business
Return of time expired medicines/drugs

Where the time expired medicines/drugs (goods) returned by the retailer/wholesaler as a fresh supply, are
destroyed by the manufacturer, he/she is required to reverse the ITC availed on the return supply in terms of
section 17(5)(h) of the CGST Act. It is pertinent to mention here that the ITC which is required to be reversed
in such scenario is the ITC availed on the return supply and not the ITC that is attributable to the manufacture
of such time expired goods. Illustration: Supposedly, manufacturer has availed ITC of Rs. 10/- at the time of
manufacture of medicines valued at Rs. 100/-. At the time of return of such medicine on the account of expiry,
the ITC available to the manufacturer on the basis of fresh invoice issued by wholesaler is Rs. 15/-. So, when
the time expired goods are destroyed by the manufacturer, he would be required to reverse ITC of Rs. 15/- and
not of Rs. 10/.
The clarification may also be applicable to return of goods for reasons other than being time expired. [Circular
No. 72/46/2018 GST Dated 26.10.2018].
Study Notes
175
Question & Answer

Q1. ABC Co. Ltd. is engaged in the manufacture of heavy machinery. It procured the following items during
the month of July.
S. No. Items GST paid
(i) Electrical transformers to be used in the manufacturing process 5,20,000
(ii) Trucks used for the transport of raw material 1,00,000
(iii) Raw material 2,00,000
(iv) Confectionery items for consumption of employees working in the factory 25,000
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving necessary
explanations for treatment of various items.
Note: All the conditions necessary for availing the ITC have been fulfilled.
A. Computation of ITC available with ABC Co. Ltd. for the month of July:-
S. No. Items ITC
(i) Electrical transformers 5,20,000
[Being goods used in the course or furtherance of business, ITC thereon is available
in terms of section 16(1)]
(ii) Trucks used for the transport of raw material 1,00,000
[After amendment in Section 17 (5) (a), the blockage is only for the motor vehicle for
transportation of passengers. Motor vehicles for transportation of goods are not in the
list of blockage. No condition is required to be fulfilled to avail the ITC for vehicles
meant for carriage of goods.]
(iii) Raw material 2,00,000
[Being goods used in the course or furtherance of business, ITC thereon is available
in terms of section 16(1)]
(iv) Confectionery items for consumption of employees working in the factory
[ITC on food or beverages is specifically disallowed unless the same is used for Nil
making outward taxable supply of the same category or as an element of the taxable
composite or mixed supply-Section 17(5)(b)(i)]
Total ITC 8,20,000
Q2. XYZ Ltd., is engaged in manufacture of taxable goods. Compute the ITC available with XYZ Ltd. for the
month of October, 2018 from the following particulars: -
S. Inward supplies GST Remarks

No.
(i) Inputs ‘A’ 1,00,000 One invoice on which GST payable was Rs. 10,000 is
missing
(ii) Inputs ‘B’ 50,000 Inputs are to be received in two installments. First
instalment has been received in October, 2018.
(iii) Capital goods 1,20,000 XYZ Ltd. has capitalized the capital goods at full invoice
value inclusive of GST as it will avail depreciation on the
full invoice value.
(iv) Input services 2,25,000 One invoice Dated 20.01.2018 on which GST payable was
50,000 has been received in October, 2018.
Note:
All the conditions necessary for availing the ITC have been fulfilled.
ABC Co. Ltd. is not eligible for any threshold exemption.
The annual return for the financial year 2017-18 was filed on 15th September, 2018.
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A.
S. No. Inward supplies ITC
(i) Inputs ‘A’
[ITC cannot be taken on missing invoice. The registered person should have the invoice 90,000
in its possession to claim ITC-Section 16(2)(a)]
(ii) Inputs ‘B’
[When inputs are received in installments, ITC can be availed only on receipt of last Nil
installment-First proviso to section 16(2)]
(iii) Capital goods
[Input tax paid on capital goods cannot be availed as ITC, if depreciation has been Nil
claimed on such tax component – Section 16(3)]
(iv) Input services
[As per section 16(4), ITC on an invoice cannot be availed after the due date of 1,75,000
furnishing of the return for the month of September following the end of financial year
to which such invoice pertains or the date of filing annual return, whichever is earlier.
Since the annual return for the FY 2017-18 has been filed on 15th September, 2018
(prior to due date of filing the return for September, 2018 i.e., 20th October, 2018), ITC
on the invoice pertaining to FY 2017-18 cannot be availed after 15th September, 2018.
Total 2,65,000
Q3. ABC Ltd. supplied goods Rs. 11,500. ABC Ltd. received goods valued at Rs. 10,000. The supplier has
charged GST in his invoice. SGST and CGST rate of supply of goods is 9% each. Calculate the tax payable.
A.
Details SGST CGST
Tax payable on supply of goods by ABC Ltd. on Rs. 11,500 @ 9% 1,035 1,035
ITC of taxes paid by supplier available in Electronic credit ledger 900 900
Net Tax Payable 135 135
Q4. ABC Ltd. supplied goods Rs. 15,000. ABC Ltd. received goods valued at Rs. 20,000. The supplier has
charged GST in his invoice. They sold 60% of inputs procured and balance 40% were in stock. State Tax
(SGST) and Central Tax (CGST) rate on supply and purchase of goods is 9% each. Calculate the tax payable.
A.
Details SGST CGST
Tax payable on supply of goods by ABC Ltd. on Rs. 15,000 @ 9% 1,350 1,350
ITC of taxes paid by supplier available in Electronic credit ledger 1,800 1,800
Net Tax Payable NIL NIL
Credit carried forward in Electronic Credit Ledger 450 450
Q5. ABC Ltd. are manufacture of drugs. SGST and CGST rate on supply of goods is 2.5% each. They sold the
goods at Rs. 20,000. They purchased inputs at Rs. 13,000. The SGST and CGST on inputs is 6% each. All
these inputs were used in Manufacture of final products. There was no opening or closing stock of inputs or
final products. Calculate the tax payable.
A.
Details SGST CGST
Tax payable on supply of goods by ABC Ltd. on Rs. 20,000 @ 2.5% 500 500
ITC of taxes paid by supplier available in Electronic credit ledger 780 780
Net Tax Payable NIL NIL
Study Notes
177
Credit carried forward in Electronic Credit Ledger 280 280

This excess credit is due to inverted tax structure i.e. tax on inputs is more than tax payable on outputs. In that
case, Deepak Manufacturers can claim refund of this excess ITC.
Q6. ABC Ltd. procures input goods and services within State Rs. 1,000. SGST and CGST rate on receipt is 9%
each. He manufactured 2 products out of inputs. One product of value of Rs. 800 was subject to SGST and
CGST @ 9% each. Other product of value of Rs. 800 was exempt from SGST & SGST. Calculate the tax
payable.
A.
Details SGST CGST
Tax payable on supply of goods and services 72 72
ITC of taxes paid on input goods and services available 90 90
Reversal of 50% ITC is ineligible (to be reversed in Electronic Credit Ledger) 45 45
Eligible ITC 45 45
Net tax payable by cash through Electronic cash ledger 27 27
Q7. When the ISD is one State say at Delhi and the Recipients of credits (Suppliers or Locations) are in different
States say in Chennai, Tamil Nadu and Bangalore, Karnataka. Assume the turnovers for the relevant period
(previous financial year) of Chennai unit are Rs. 10 crores and that of Bangalore unit is at Rs. 30 crores.
Credit Available with ISD at Delhi SGST CGST IGST

Amount in Lacs
Credit directly attributable to
Chennai 5 5 10
Bangalore 3 2 5
Common Credits 5 7 8
Total 13 14 23
A.
Credit Available with ISD at Delhi Chennai Bangalore
Amount in Lacs
Directly Attributable
SGST as IGST 5 3
CGST as IGST 5 2
IGST as IGST 10 5
Total (a) 20 10
Common Credit
SGST as IGST 1.25 3.75
(5*10/40) or (5*30/40)
CGST as IGST 1,75 5.25
(7*10/40) or (7*30/40)
IGST as IGST 2 6
(8*10/40) or (8*30/40)
Total (b) 5 15
Total (a+b) 25 25
Q8. ABC Ltd. a registered person supplying taxable goods in Jaipur has opted to pay tax on composition scheme
under Section 10 with effect from 28-02-2018. It provides following information relating to balance of ITC lying
as on 27th Feb 2018:
1. Inputs lying in stock as valued at Rs. 3,36,000 (inclusive of CGST & SGST @12%)
178
2. Inputs contained in finished goods where tax invoice is not available relating to such inputs but it is
known that market price of such inputs (inclusive of CGST & SGST @ 12%) on 28th February 2018 is
Rs. 1,79,200
3. ITC on capital goods purchased on 25th October 2017 is Rs. 1,44,000
4. Balance in Electronic credit ledger is Rs. 2,20,000.
Decide whether ABC Ltd. is eligible for ITC lying on 27th February 2018,
A. As per Section 18 (4), where any registered taxable person who has availed of ITC opts to pay tax under
section 10 i.e. composition scheme, he shall pay an amount, by way of debit in the electronic credit ledger or
electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in stock and on capital goods, taking useful life of capital
goods 5 years, on the day immediately preceding the date of exercising such option. Therefore in given case
ABC Ltd. is required to pay following amounts: -
Particulars Amount
Inputs lying in stock (Rs. 3,36,000*12/112) 36,000
Inputs contained in finished goods lying in stock (Rs. 1,79,200*12/112) 19,200
Input Tax on Capital goods used for 4 months and 2 days, taking residual life as 5 years 1,32,000
(1,44,000*55/60) (55 months being remaining residual life of capital goods)
Amount to be paid by ABC Ltd. (CGST+SGST) 1,87,200
Working Note: As per Rule 44(3) of CGST Rules, 2017, where the tax invoices related to the inputs lying in
stock are not available, the registered person shall estimate the amount under Rule 44 (1) based on the
prevailing market price of goods on the date of opting for composition scheme.
The aforesaid amount can be paid by utilizing the balance in Electronic Credit Ledger. The balance credit in
Electronic Credit Ledger = Rs. 2,20,000 – Rs. 1,87,200 = Rs. 32,800 lapse.
Q9. ABC Ltd. a supplier of goods has purchased capital goods invoice Dated 1st October 2017 for Rs. 4,13,000
(inclusive of CGST and SGST @ 9%). After taking it for business use, the said capital goods were supplied for
Rs. 2,85,000 on 26th April 2018.
A.
Particulars Amount
Date of Invoice of purchase of capital goods 1st Oct’17
Date of supply of capital goods after taking into use 26th Apr’18
No. of Quarter for which it is used 3
CGST & SGST paid on purchase of capital goods [4,13,000 * (18/118)] 63,000
Reduced by Rs. 63,000*5%*3 9,450
Amount of CGST and SGST 53,550
Transaction value on supply of capital goods u/s 15 2,85,000
CGST & SGST payable on supply of Capital Goods @ 18% 51,300
Amount to be payable higher of 53,550
Q10. What would be your answer if capital goods being Refractory Bricks are removed as scrap at a transaction
value of Rs. 25000 on 29th March 2018?
A. As per section 18 (6), where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, there
shall be no requirement for reversal of ITC, taxable person may pay tax on the transaction value i.e. if tax rate
is 9% each then CGST Rs. 2,250 & SGST Rs. 2,250.
Q11. ABC Ltd. a registered manufacturer demerged its entity into AB cement Ltd. and BC Steel Ltd. the total
value of assets of ABC Ltd. is Rs. 25,00,000 and unutilized credit on account of CGST, SGST and IGST
Study Notes
179
amounted to Rs. 60,000, Rs. 45,000 and Rs. 84,600 respectively. The value of assets of AB cement Ltd. and
BC Steel Ltd. is Rs. 12,00,000 and Rs. 13,00,000 respectively obtained as per the scheme. Discuss the eligibility
of credit transferred to new units on account of Demerger?
A. As per Rule 41 of CGST Rules, 2017, in case of Demerger, input tax credit shall be apportioned in the ratio
of Value of assets of new unit as specified in Demerger scheme. In the given case, credit transferred to both
the new units would be –
Particulars ABC Ltd. AB Cement BC Steel Ltd.

Ltd.
Value of Assets 25,00,000 12,00,000 13,00,000
Unutilized credit relating to CGST (to be apportioned
in ratio of value of assets of AB Cement and BC
Steel Ltd.) 60,000 28,800 31,200
SGST 45,000 21,600 23,400
IGST 84,600 40,608 43,992
Total Apportioned Credit 1,89,600 91,008 98,592
Q12. What would be scenario of Input Tax Credit in respect of Immovable Property?
A. Law divides claim of Input Credit in respect of construction of Immovable Property in two parts:
(a) Works contract services when supplied for construction of immovable property (other than plant and
machinery) except where it is an input service for further supply of works contract service;
Example: Mr. A wants to start a Hotel. He engages Mr. B as contractor for construction of the hotel building and
allots him the contract with entire material and labour to be procured by C.
CGST Act, 2017 provides that any person who has paid taxes under a contract which has resulted in
construction of immovable property, he would not be able to claim Input Tax Credit of such taxes paid unless
such services are used as Input Services for further supply of Work contract service.
Thus, in the given scenario, Mr. A would not be eligible to claim input tax credit of taxes paid to Mr. B, as work
contract services of Mr. B have not been used by Mr. A for further supply of works contract service.
(b) Goods or services or both received by a taxable person for construction of an immovable property (other
than plant and machinery) on his own account including when such goods or services or both are used
in the course or furtherance of business
Example: Mr. A wants to start a Hotel land he engages Mr. B as contractor for construction of Hotel Building.
He allots him the contract with part of the material being provided by Mr. A and balance material and labour to
be procured by Mr. B.
In the above cases, Mr. A has provided part of the material to Mr. B, ownership of the material to the extent
provided by Mr. A remains with Mr. A and Mr. B uses the material for the construction of building for Mr. A only.
Mr. A would not be entitled to credit of any taxes paid on purchase of such material for construction of Immovable
property.
Impact of the two provisions: With the insertion of the two provisions, both the scenarios wherein:
(a) A person awards contract of construction of the immovable property to a contractor or
(b) Constructs the immovable property himself by purchasing material and hiring labour,
he would not be able to claim credit of the taxes paid for the construction of the immovable property.
Q13. Mr. Amit, a supplier of goods, pays GST under regular scheme. He is not eligible for any threshold
exemption. He has made the following outward taxable supplies in the month of August, 2019 – Intra-State
supplier of goods 6,00,000, Inter-State supplies of goods 2,00,000. He has also furnished following information
in respect of purchases made by him from registered dealers during August, 2019 – Intra-State purchase of
goods 4,00,000, Inter-State purchase of goods 50,000. Balance of ITC available at the beginning of the August
180
2019 – CGST 15,000, SGST 35,000, IGST 20,000. Compute the net GST payable by Mr. Amit for the month of
August, 2019.
Note : (i) Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively, on both inward and outward
supplies (ii) Both inward and outward supplies given above are exclusive of taxes, wherever applicable (iii) All
the conditions necessary for availing the ITC has been fulfilled.
A. (A) Tax payable
Description CGST (Rs.) SGST (Rs.) IGST (Rs.)
Inter-State taxable supply of goods – Rs. 36,000
2,00,000 – IGST @ 18%
Intra-State taxable supply of goods – Rs. 54,000 54,000
6,00,000 – CGST @ 9% and SGST @ 9%
Total Tax Payable 54,000 54,000 36,000
(B) ITC Available

Opening Balance 15,000 35,000 20,000
Intra-State Purchases {Rs. 4,00,000 - CGST 36,000 36,000
9% & SGST @ 9%}
Inter-State Purchases {Rs. 50,000 – IGST @ 9,000
18%}
Total ITC available 51,000 71,000 29,000
(B) Net Tax Payable

Total Tax Payable 54,000 54,000 36,000
Less ITC available 51,000 71,000 29,000
Net Payable 3,000 NIL 7,000
Less Cross Utilization NIL NIL -7,000
Net Tax Payable 3,000 NIL NIL
Excess ITC carried forward NIL 10,000 NIL
Q14. M Ltd. Mumbai procured goods 10,000 Kgs @ Rs. 100 per Kg. from K Ltd. of Kolkata. These goods came
to M Ltd. of Mumbai in the following manner:
Date of Dispatch No. of Kgs dispatched Date of receipt Transit No. Kgs
Losses received
10th October 2017 3,000 15th November 2017 NIL 3,000
2nd November 2017 4,000 20th November 2017 NIL 4,000
3rd December 2017 3,000 1st January 2018 20 2,980
Invoice shows 10,000 Kgs and IGST @ 18%.

You are required to answer:
(a) M Ltd. can avail the proportionate credit on 15th Nov 2017 and 20th Nov 2017.
(b) When can M Ltd. is eligible for input tax credit?
(c) How much credit is allowed to M Ltd.
A. (a) M Ltd. cannot take proportionate credit on the quantity received on 15th November 2017 and 20th
November 2017.
(b) M Ltd. is eligible to avail the input tax credit on 1st January 2018.
(c) Input tax credit allowed = Rs. 1,79,640/- (10,000 Kgs x Rs. 100) x 18% x 9980 kgs/10,000 kgs.
Study Notes
181
Note:
(i) Goods received in lots ITC available only on receipt of last lot/installment [1st proviso to Sec 16(2)]
(ii) ITC is admissible only upon receipt of goods. Thus, ITC not admissible in respect of goods not received.
Q15. M/s X Ltd. has establishment in Chennai, and establishment in Hyderabad. Supply of goods (open market
value of Rs. 5,00,000) made by M/s X Ltd. Chennai to M/s X Ltd. Hyderabad. M/s X Ltd. Chennai paid IGST of
Rs. 60,000. Accordingly M/s X Ltd. Hyderabad availed the input tax credit of Rs. 60,000. 2nd Proviso to Section
16(2) of CGST Act, 2017 is applicable in the given case (i.e. to reverse the credit where payment is not made
within 180 days from the date of invoice). Discuss.
A. As per proviso to rule 37(1) of the CGST Rules, 2017, the value of supplies made without consideration as
specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso
to sub- section (2) of section 16. In the given case M/s X Ltd. Hyderabad is not required to reverse the input tax
credit. Since, as per Section 25(4) of the CGST Act, 2017 two establishments are considered as establishment
of distinct person and accordingly, supply made by one establishment to another establishment will be covered
under Schedule I without consideration.
Q16. XYZ Ltd. is engaged in supply of passenger transportation services. In the month of September, 2017, it
has purchased two motor vehicles for Rs. 18,00,000 plus GST @28%. You are required to advice XYZ Ltd. if it
can avail Input tax credit of the GST paid by it on motor vehicles.
A. As per Section 17(5) (a), input tax credit shall not be available in respect of motor vehicles having approved
seating capacity of not more than thirteen person (including the driver). However, credit will be available when
they are used for making the supplies of transportation of passengers. In this case XYZ Ltd. is engaged in
transportation of passengers it will be entitled to take credit of GST amounting Rs. 5,04,000 i.e. [Rs. 18,00,000
× 28%].
Q17. ABC Bank has purchased a van for transportation of cash (money). Whether ITC of such motor van is
admissible?
A. The blockage is only for the motor vehicle for transportation of passengers. Motor vehicles for transportation
of goods are not in the list of blockage. No condition is required to be fulfilled to avail the ITC for vehicles meant
for carriage of goods.. Under GST law, Cash/money is neither goods nor services (Sec 2(52) and Sec 2(102)
of CGST Act). Since cash/money cannot be considered as ‘goods’, ABC Bank is not eligible for ITC of motor
vans purchased by it for transportation of cash.
Q18. ABC Ltd. is engaged in supply of transport of passengers by air services. The company avails outdoor
catering services of XYZ Caterers in order to provide food and beverages to the passengers. XYZ Caterers
raises an invoice on ABC Ltd charging GST. ABC Ltd. wants to avail the ITC on outdoor catering services
supplied by XYZ Caterers. Advise.
A. ITC shall be available where an inward supply of goods or services or both of a particular category is used
by a registered person as an element of a taxable composite or mixed supply.
In the given case, ABC Ltd will be entitled to avail the ITC of the GST paid to XYZ Caterers since outdoor
catering services forms part of taxable composite supply of passengers by air services.
Q19. ABC Ltd is a BPO which works on night shift basis. As per the Government Guidelines for BPO Sector, it
has to provide rent a cab facilities to its employees who work on night shifts. Whether, ABC Ltd. is eligible to
avail ITC on rent a cab services.
182
A. No, ABC Ltd cannot claim ITC on the GST paid on such rent-a-cab services. The reason being that such
credit is not admissible unless it is obligatory for an employer to provide the same to its employees under any
law for time being in force.
Q20. Mr. A of USA being technician came to India to assemble parts of machinery. He also imported goods
worth Rs. 10,00,000 and paid following customs duties:
(i) Basic customs duty is Rs. 1,00,000.
(ii) Integrated Goods and Services Tax (IGST) of Rs. 1,98,540.
In India Mr. A wants to register as non-resident taxable person and his estimated liability is Rs. 2,50,000. How
much Mr. A is liable to pay as advance tax?
A. Mr A is Non-resident taxable person. NRTP needs to pay tax in advance before he is granted registration
certificate. NRTP is entitled to book credit of goods imported by him. However, only IGST paid on imported
goods is eligible ‘input tax’. Thus, ITC admissible to him is Rs 1,98,540.
Considering the admissible amount of ITC, Mr. A of USA is liable to pay advance tax of Rs. 51,460. (i.e. Rs.
2,50,000 – 1,98,540)
Q21. ABC Bank, having a branch in Jaipur engaged in supply of services by way of accepting deposits and
extending loans opted for Section 17(4). Its head office is in Mumbai and branch in Jaipur. ITC (CGST & SGST)
available for the month August, 2017 is Rs 90,000. Determine the amount of admissible ITC for ABC Bank,
Jaipur Branch. Total ITC of 90,000 includes credit relating to :
Particulars Input Tax (CGST & SGST)
1. Services availed from from Mumbai Head Office (deemed distinct 18,000
person under GST law)
2. Outdoor catering services received for its employees 16,900
3. Auditing Services 22,500
4. Goods which are used for personal use of employees 6,500
A.
Statement showing ITC eligibility for ABC Bank (Jaipur Branch) which has opted for Section 17 (4)
Particulars Input Tax (CGST &
SGST)
Services availed from from Mumbai Head Office (deemed distinct person 18,000
under GST law) – Deemed supply between distinct person - Full ITC available
Outdoor catering services received for its employees {Blocked Credit U/s 17 (5)} Not Allowed
Auditing Services (Allowed @ 50%)
Goods which are used for personal use of employees {Blocked Credit U/s 17 (5)} Not Allowed
ITC available (90,000 – 16,900 – 6,500 – 18,000) = 48,600 @ 50% 24,300

Total Admissible ITC (available for utilization for August Month GST liability) 42,300
Q22. X is a chartered accountant by profession. He gives the following information pertaining to October 20XX
1. Consultancy given to different clients during October 20XX (but not including the transactions given
below) (invoice value : Rs. 35,70,000).
2. Consultancy given to A Ltd. (invoice value : Rs. 8,000, market value of supply : Rs. 50,000, X holds
40 percent shares in A Ltd.)
3. Consultancy given to B (invoice value : nil, market value of supply : Rs. 48,000, B is not a relative of
X).
4. Consultancy given to Mrs. X (invoice value : nil, market value of supply : Rs. 75,000, Mrs. X is not
dependent upon X).
Study Notes
183
5. Consultancy given to C, younger brother of X (invoice value : nil, market value of supply : Rs. 60,000,
C is not dependent upon X).
6. Consultancy given to D, elder brother of X (invoice value : nil, market value of supply : Rs. 70,000, D
is dependent upon X).
7. Consultancy given to E, an employee of X (invoice value : nil, market value of supply : Rs. 80,000).
Above figures are exclusive of GST. GST is 18%. Calculate the amount of GST payable by X for October
20XX. He want to avail input tax credit —
− Balance available in electronic credit ledger on October 1, 20XX : Rs. 22,000
− Fees paid to a chartered accountant pertaining to tax audit of X (taxable value : Rs. 20,000, GST : Rs.
3,600).
− GST paid on food and beverages for employees / clients (amount of GST being Rs. 8,000).
− Motor car purchased for official use of employees (amount of GST being Rs. 2,80,000).
− Motor car purchased for private use of X and his family (amount of GST being Rs. 7,00,000).
− Membership of a club taken by X for entertaining official guests (amount of GST being Rs. 18,000).
− Fees paid to a consultant pertaining to transfer pricing matter of a client (amount of GST being Rs. 20,000).
A.
Particulars Amount (Rs.)
Consultancy given to different clients 35,70,000
Consultancy given to A Ltd. (A Ltd. is related to X, price is not sole consideration, 50,000
market value to be considered)
Consultancy given to B (B is not a relative of X, price is sole consideration, transaction Nil
value to be considered)
Consultancy given to Mrs. X (Mrs. X is “related person”, open market value to be 75,000
considered)
Consultancy given to C, younger brother not dependent upon X (C does not come in Nil
the list of “related persons”, GST applicable on transaction value on the assumption
that price is sole consideration)
Consultancy given to D, elder brother dependent upon X (related person, GST on 70,000
open market value)
Consultancy given to E, an employee of X (employer and employee are related 80,000
persons, gift to employees which is not covered by employment agreement is
chargeable to GST on the basis of market value. Exemption of Rs. 50,000 is
available) invoice value : nil, market value of supply : Rs. 80,000).
Total Outward Supply 38,45,000
GST @ 18% 6,92,100
Less:- Input Tax Credit 45,600
Balance available in electronic credit ledger on October 1, 20XX 22,000
Fees paid to a chartered accountant pertaining to tax audit of X 3,600
GST paid on food and beverages for employees / clients (not eligible) Nil
Motor car purchased for official use of employees (not eligible) Nil
Motor car purchased for private use of X and his family (not eligible) Nil
Membership of a club taken by X for entertaining official guests (not eligible) Nil
Fees paid to a consultant 20,000
Balance to be paid through electronic cash ledger 6,46,500
Q23. X Ltd. provides services pertaining to retail packing of goods. This service is provided in Punjab to
manufacturing units and plantation units. It gives the following information pertaining to January 2018 —
1. Service by bay of waxing, retail packing, labelling of apples provided to A Plantation (P.) Ltd.,
Ludhiana(invoice value : Rs. 17,10,000).
184
2. Service by way of packing and labelling of chemical goods provided to B Ltd. (invoice value : Rs.
28,00,000).
3. Service by way of packing of leather goods provided to C Ltd. (invoice value : Rs. 3,00,000, market
value of similar service to unrelated persons : Rs. 6,50,000).
4. Service by way of waxing and packing of wooden toys provided to D Ltd. (invoice value : Rs.
5,00,000).
X owns 60 per cent shares in X Ltd. and Mrs. X owns 40 per cent shares in C Ltd.
Above figures are exclusive of GST. GST rate is 18 per cent. The above invoices are issued during January
2018. Payment is received from A Plantation (P.) Ltd. on January 27, 2018. Payment from B Ltd. and C Ltd. is
received on February 12, 2018. Nothing is received from D Ltd. so far. On January 31, 2018, X Ltd. gets an
advance payment of Rs. 50,000 from E Ltd. for packing of goods which will be manufactured during 2018-19
(GST rate is 18 per cent, Rs. 50,000 is for providing services in future, nothing is received on account of GST).
Calculate the amount of GST payable by X Ltd. for January 2018. X Ltd. wants to avail input tax credit —
− Balance available in electronic credit ledger on January 1, 2018 : Rs. 61,000.
− Fees paid to an interior decorator for canteen of X Ltd. (taxable value : Rs. 10,000, GST : Rs. 1,800).
− Membership of health club for employees (amount of GST being Rs. 17,000).
A.
Service by way of waxing, retail packing, labelling of apples provided to A Plantation Nil
(P.) Ltd. [it is exempt from GST vide Exemption Notification (Entry 57)]
Service by way of packing and labelling of chemical goods provided to B Ltd. 28,00,000
Service by way of packing of leather goods provided to C Ltd. (X Ltd. and C Ltd. are 6,50,000
related, GST applicable on market value)
Service by way of waxing and packing of wooden toys provided to D Ltd. 5,00,000
Advance payment from E Ltd. (Rs. 50,000 × 100 ÷ 118) 42,373
Total Outward Supply 39,92,373
GST @ 18% 7,18,627
Less:- Input Tax Credit 62,800
Balance available in electronic credit ledger on January 1, 2018 61,000
Fees paid to an interior decorator for canteen 1,800
Membership of health club for employees (not eligible) NIL
Balance to be paid through electronic cash ledger 6,55,827
Q24. ABC Ltd. purchased goods valuing Rs. 10,00,000 (excluding CGST @ 2.5% & SGST @ 2.5%) under the
cover of invoice Dated 25th December 2017. The company made the payment to the supplier as per due date.
The company has not taken ITC at the time of receipt of input since there was a doubt regarding admissibility
of tax credit. It legal consultant has opined that it can very much avail ITC on such inputs. The opinion was
received on 5th May 2018. ABC Ltd. now would like to avail ITC. Can it do so? ABC Ltd. has filed its annual
return for the year 2017-18 on 12th August 2018.
A. As per Section 16 (4), a registered person shall not be entitled to take ITC in respect of any invoice or debit
note for supply of goods or services or both after
(a) The due date of furnishing of the return U/s 39 for the month of September following the end of financial
year to which such invoice pertains; or
(b) Furnishing of the relevant annual return,
Whichever is earlier.
In this case the inputs were purchased by invoice Dated 25th December 2017, hence ITC in respect of such
inputs can be taken on earlier of the following dates-
• 20th Oct’18 being due date of furnishing return of month of Sept’18;
Study Notes
185
• 12th Aug’18 being the date of furnishing of annual return.

ABC Ltd. can avail ITC till 12th Aug’18. Therefore, it can avail credit of CGST Rs. 25,000 & SGST Rs. 25,000.
Q25. A registered supplier of taxable goods supplied goods valued Rs. 1,12,000 (inclusive of CGST Rs. 6,000
and SGST Rs. 6,000) to ABC Ltd. under the forward charge on 12-11-2017 for which tax invoice was also issued
on the same date. But ABC Ltd. did not make any payment towards such supply along with tax thereon to the
supplier and availed input tax credit of CGST and SGST of Rs. 12,000 on 15-12-2017. Is ABC Ltd. eligible to
avail input tax credit on such supply?
Discuss ITC implications if ABC Ltd. makes the payment of Rs. 1,12,000 to the supplier on 15-09-2018.
A. Yes, ABC Ltd. can avail input tax credit on receipt of taxable supply of goods. But it is required to pay the
consideration along with tax within 180 days from the date of issue of invoice.
I. If ABC Ltd. does not make payment within 180 days from the date of invoice: As per Rule 37 of CGST
Rules, 2017, a registered person, who has availed of input tax credit on any inward supply of goods or
services or both, but fails to make payment to the supplier within 180 days from the date of issue of
invoice shall furnish the details of such supply and the amount of input tax credit proportionate to such
unpaid amount, availed of, in FORM GSTR-2 in succeeding month after expiry of 180 days (will be
added to Output Tax Liability alongwith interest)
In this case since ABC Ltd. does not make any payment within 180 days from the date of invoice i.e.
upto 11th May 2018, therefore amount equal to input tax credit availed by ABC Ltd. shall be added
towards its output tax liability along with interest for the month of June, 2018 in which details of such
supplies are required to be furnished.
Interest shall be calculated @18% [as given u/s 50(1) for the period starting from date of availing credit
till the date when input tax credit added to the output tax liability is paid]
Amount of Input tax 12,000
Date of availing credit (Date of taking credit shall be construed as date of 15-12-2017
taking credit in electronic credit ledger)
Date of payment of ITC added to Output Tax Liability 15-06-2018
No. of Days for which interest needs to be paid 182
Interest @ 18% {12000*18%*182/365} 1,077
II. Re-credit of Input tax if payment made after 180 days: If ABC Ltd. makes payment on 15-09-2018 that
is after 180 days from date of issue of invoice, then, it shall be entitled to avail the credit of input tax.
Q26. Determine the amount of ITC admissible to ABC Ltd. in respect of following items procured by them in
the month of December 2017 (below amount is GST amount):-
1. Goods supplied for Captive consumption in a factory Rs. 10,000
2. Goods used in constructing an additional floor of office building Rs. 20,000
3. Packing material used in a factory Rs. 5,000
4. Goods destroyed due to natural calamities Rs. 20,000
5. Goods used for repairing the office building and cost of such repairs is debited to P & L Rs. 25,000
6. Paper for photocopying machine used in Administrative Office Rs. 1,000
7. Goods given as gifts Rs. 25,000
8. Inputs used for tests or quality control check Rs.15,000
9. Goods purchased for being used in repairing the factory shed and same has been
Capitalized in books Rs.18,000
10. Cement used for making foundation and structural support to Plant & Machinery Rs.14,000
11. Inputs used in trial runs Rs.15,000
186
A. Statement showing ITC admissible to ABC Ltd. for the month of December 2017
Goods supplied for Captive consumption in a factory (since, used in course of 10,000
business, hence, ITC on same will be available)
Goods used in constructing an additional floor of office building {As per section 17 NIL
(5) (d), ITC shall not be available in respect of goods or services or both received by
a taxable person for construction of an immovable property (other than plant &
machinery) on his own account including when such goods or services or both are
used in the course or furtherance of business. Hence, ITC shall not be available}
Packing material used in a factory (since, used in course of business, hence, ITC on 5,000
same will be available)
Goods destroyed due to natural calamities {As per section 17 (5) (h), ITC shall not be NIL
available in respect of goods lost, stolen, destroyed, written off or disposed of by way
of gift or free samples. Hence, no ITC shall be available in respect of goods destroyed
due to natural calamities}
Goods used for repairing the office building and cost of such repairs is debited to P & 25,000
L {As per explanation, the expression “construction” includes re-construction,
renovation, additions or alterations or repairs, to the extent of capitalization, to the
immovable property. Goods used for revenue repairs are considered as an eligible
input and credit shall be allowed on the same}
Paper for photocopying machine used in Administrative Office (since, used in course 1,000
of business, hence, ITC on same will be available)
Goods given as gifts {As per section 17 (5) (h), ITC shall not be available in respect of NIL
goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
Hence, no ITC shall be available in respect of goods given as gift}
Inputs used for tests or quality control check (since, used in course of business, hence, 15,000
ITC on same will be available)
Goods purchased for being used in repairing the factory shed and same has been NIL
Capitalized in books {As per section 17 (5) (d), ITC shall not be available in respect of
goods or services or both received by a taxable person for construction of an
immovable property (other than plant & machinery) on his own account including when
such goods or services or both are used in the course or furtherance of business.
Hence, ITC shall not be available}
Cement used for making foundation and structural support to Plant & Machinery {As 14,000
per explanation to Section 17, “plant and machinery” means apparatus, equipment,
and machinery fixed to earth by foundation or structural support that are used for
marking outward supply of goods or services or both and includes such foundation
and structural supports. ITC is admissible in respect of goods or services or both
received by a taxable person for construction of plant and machinery}
Inputs used in trial runs (since, used in course of business, hence, ITC on same will 15,000
be available)
Total Input Tax credit available 85,000
Q27. ABC Ltd. is engaged in supply of works contract services for construction of immovable property. It gives
a part of the construction work to a sub-contractor. The sub-contractor charges GST in his invoice to ABC Ltd.
Whether ABC Ltd. can avail ITC on this?
A. As per section 17 (5) (c), ITC shall not be available in respect of works contract services when supplied for
construction of an immovable property. However, credit is allowed where it is an input service for further supply
of works contract service. In given case, the services supplied by the sub-contractor have been used by the
ABC Ltd. for supply of works contract service. Hence, ABC Ltd. can avail the ITC of the GST charged on the
input service provided by the sub-contractor.
Study Notes
187
Q28. ABC Ltd., a manufacturer, which is engaged in supply of taxable goods has purchased 10,000 kg of
Product ‘A’ for Rs.. 10,00,000 (exclusive of CGST @ 14% and SGST @ 14%) on which input tax credit has
been taken. Due to changes in fashion process, the said product became obsolete and their value has been
written off in the books of accounts. Explain Input tax credit treatment in above case.
A. As per Section 17 (5) (h) of the CGST Act, 2017, if the value of any goods is written off in the books of
account, then no input tax credit shall be allowed in respect of the said input. Where input tax credit has been
taken in respect of the said goods, the same has to be paid by recipient. Since in the given case, ABC Ltd. has
availed input tax credit, thus it has to pay Rs. 1,40,000 (Rs. 10,00,000 @ 14%) towards CGST and Rs. 1,40,000
(Rs. 10,00,000 @ 14%) towards SGST liability.
Q29. ABC Ltd. paying tax under composition scheme becomes liable to pay tax under regular scheme from
01/04/2018. Can it avail Input tax credit and if so determine the amount of ITC available?
Break-up of credit available with ABC Ltd. as on 31/03/2018:
Particulars CGST SGST
Inputs lying in stock (Invoice Dated 11/03/2018) 4,500 4,500
Capital goods procured on 25/09/2017 Invoice Dated 6,000 6,000
27/09/2017
Inputs lying in semi-finished goods in stock (Invoice Dated 1,500 1,500
21/12/2017)
A. As per Section 18(1)(c), where any registered person ceases to pay tax under Section 10, he shall be entitled
to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods
held in stock and on capital goods on the day immediately preceding the date from which he become liable to
pay tax under Section 9.
Therefore, in given case, ABC Ltd. shall be entitled from 01/04/2018 to avail credit available as on 31/03/2018.
The credit of capital goods is to be claimed after reducing the tax paid on such capital goods by 5% points per
quarter of a year or part thereof from the date of invoice or such other documents on which the capital goods
were received by the taxable person. (Rule 40 of CGST Rules)
Statement showing ITC available to ABC Ltd. in respect of inputs
Particulars ITC (CGST + Eligible
SGST) Credit
Inputs lying in stock (4500+4500) 9,000 9,000

Inputs lying in semi-finished goods in stock (Invoice Dated 21/12/2017) (1500+1500) 3,000 3,000
Total Input tax credit available 12,000 12,000
Statement showing ITC available to ABC Ltd. in respect of capital goods

Particulars Amount in Rs.
Date of invoice of capital goods 27/09/2017

Date from which ABC Ltd. are liable to pay tax under Section 9 01/04/2018
No. of quarters from date of invoice 3
12,000
CGST and SGST paid on capital goods procured on 27/09/2017
1,800
ITC to be reduced by Rs.. 12,000 x 5% × 3 quarters
Credit (CGST and SGST) available on capital goods 10,200
188
Note: As per Section 2(92), “quarter” shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year.
Q30. ABC Ltd. a registered dealer engaged in supplying exempted goods to its customers. On 12/09/2018,
exemption notification was rescinded and goods were liable for tax. ABC Ltd. has to make e-payment of tax on
the due date i.e., on 20/10/2018. Determine the eligible credit for the month of September, 2018 if the following
information is provided:
Value
(exclusive of
Particulars CGST/SGST CGST @ SGST @ IGST @ 5%
/IGST) (Rs.) 9% 9% (Rs.) (Rs.)
(Rs.)
Value of Inputs lying in stock as on 11/09/2018. 1,25,000 6,250
Value of inputs contained in semi-finished goods lying in 87,000 7,830 7,830

stock as on 11/09/2018 but only inputs worth 28,000 in
semi-finished goods were procured after 11/09/2017
Inputs received on 30/04/2018 lying in finished goods in 1,15,000 10,350 10,350

stock on 11/09/2018
Capital goods procured in 10/10/2017 which is exclusively 6,55,000 32,750

used in supplying exempted goods
A. As per Section 18(1)(d), where an exempt supply of goods or services or both by a registered person become
a taxable supply, such person shall be entitled to take credit of input tax in respect of inputs held in stock and
inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital
goods exclusively used for such exempt supply on the day immediately preceding the date from which such
supply becomes taxable.
As per CGST Rules, 2017, the input tax credit on capital goods, shall be claimed after reducing the tax paid on
such capital goods by 5% points per quarter of a year or part thereof from the date of invoice or such other
documents on which the capital goods were received by the taxable person.
Computation of Input tax credit relating to CGST/SGST/IGST available to ABC Ltd. in respect of inputs
and capital goods will be as follows:
Particulars CGST (Rs.) SGST (Rs.) IGST (Rs.) Total

Eligible
Credit (Rs.)
ITC on the value of inputs lying in stock. (In absence of -- -- 6,250 6,250
any information, it is assumed that all stocks are
purchased within one year and hence are eligible)
Input tax credit on the value of inputs contained in 2,520 2,520 -- 5,040
semi-finished goods [Working Notes 1]
Study Notes
189
Input tax credit on value of inputs lying in stock of 10,350 10,350 -- 20,700
finished goods stock [Inputs received on 30/04/2018
lying in finished goods in stock on 11/09/2018 as all
inputs were acquired within 1 year prior to the effective
date on which the goods become taxable, therefore,
entire ITC would be allowed]
Capital goods [Working Notes 2] -- -- 26,200 26,200
Total Input tax credit available 12,870 12,870 32,450 58,190
Working Notes:
1. ITC on the value of inputs contained in semi-finished goods – Out of the total stock of Rs.. 87,000,
inputs totaling to Rs.. 59,000 are ineligible as period of 1 year has elapsed form the effective date
of purchase. ITC on inputs contained in stock of Rs.28,000 would be eligible. [Eligible Credit =
Rs.. 7,830 x Rs.. 28,000 ÷ Rs.. 87,000 each in respect of CGST and SGST]
2. Credit available in respect of capital goods:

Particulars Rs.
Date of invoice 10/10/2017

Date from which the goods become taxable 17/09/2018
No. of quarters or part thereof from date of invoice 4
Percentage points to be reduced (5% per quarter) 20%
IGST paid on the capital goods used exclusively in relation to goods exempted upto 11/09/2018 32,750
ITC to be reduced by 20% 6,550
Amount of Input tax credit available in respect of capital goods 26,200
Q31. ABC Ltd. a supplier of goods has purchased capital goods on 01/04/2018 for Rs. 11,20,000 (inclusive of
CGST @ 6% and SGST @ 6%). After taking it for business use, the said capital goods were supplied for Rs.
9,50,000 on 01/12/2018. Explain Input tax credit treatment in this case.
A. As per Section 18(6) of the CGST Act read with Rule 40(2) of CGST Rule, 2017, in case of supply of
capital goods, on which input tax credit has been taken, the registered person shall pay an amount –
Equal to the input tax credit taken on the said capital goods reduced by an amount calculated @ 5% for
every quarter or part thereof from the date of issue of invoice for such goods; or
The tax on the transaction value of such capital goods or plant and machinery determined under Section
15, whichever is higher.
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Computation of amount of tax payable by ABC Ltd.
Particulars Rs.
Date of Invoice of purchase of capital goods 01/04/2018

Date of Supply of capital goods after taking into use 01/12/2018
No. of Quarters from the date of issue of invoice for such goods 3
CGST and SGST paid on purchase of Capital Goods [Rs. 11,20,000 x 12 ÷ 112] 1,20,000
Reduced by Rs. 1,20,000 x 5% × 3 quarters (18,000)
Amount of CGST and SGST (A) 1,02,000
9,50,000
Transaction Value on supply of Capital Goods u/s 15
1,14,000
CGST and SGST payable on supply of Capital Goods @ 12% (B) 1,14,000
Amount to be payable (higher of A or B)
Q32. What would be your answer if capital goods being Jig are removed as scrap at a transaction value of Rs..
1,25,000 on 01/12/2018?
A. As per proviso to Section 18(6), where refractory bricks, moulds and dies, jigs and fixtures are supplied as
scrap, there shall be no requirement for reversal of Input tax credit, taxable person may tax on the transaction
value determined under Section 15.
In the given case, since, jig are cleared as scrap, the manufacturer shall pay an amount equal to the tax leviable
on transaction value i.e. CGST Rs. 1,25,000 x 6% = Rs. 7,500 and SGST Rs. 1,25,000 x 6% = Rs. 7,500.
Q33. A garment factory received a government order for making uniforms for a defense personnel. This supply
is exempt from tax under a special notification. The fabrics is separately procured for the supply, but thread,
buttons and lining material for the collars are the once which are used for other taxable products of the factory.
The turnover of the other garments of the factory and exempted uniforms in July 2018 is Rs. 8 crore and Rs. 2
crore respectively, the ITC on thread, button and lining material procured in July 2018 is Rs. 5,000; Rs. 25,000
and Rs. 15,000 respectively. Calculate the eligible ITC on thread and lining material.
A. Thread, buttons and lining material are inputs which are used for making taxable as well as exempt supplies.
Therefore, credit on such items will be apportioned and credit attributable to exempt supplies will be added to
the output tax liability in items of rule 43 of the CGST rules, 2017.
Credit attributable to exempt supplies = Common credit x (Exempt turnover / Total turnover)
Common credit = Rs. 5,000 + Rs. 25,000 + Rs. 15,000 = Rs. 45,000
Exempt turnover = Rs. 2 Crore
Total turnover = Rs. 10 Crore [Rs. 2 Crore + Rs. 8 Crore]
Credit attributable to exempt supply = (Rs. 2 crore / 10 Crore) x Rs. 45,000 = Rs. 9,000
Ineligible credit of Rs. 9,000 will be added to the output tax liability for the month of July. Credit of Rs. 36,000
will be eligible credit for the month of July.
Q34. Total Credit Available to ISD is Rs. 20,00,000/- & the credit distributed to all the units is Rs. 24,00,000/-
(i.e. Delhi Rs. 10,00,000, unit Jaipur Rs. 6,00,000 & unit Ahmedabad Rs. 8,00,000). What will be the
consequences?
A. The excess credit of Rs. 4,00,000 (Rs. 24,00,000- Rs. 15,00,000) distributed would be recovered from the
recipient along with interest and the provisions of section 73 or 74 shall apply mutatis mutandis for effecting
such recovery.
Study Notes
191
Q35. Total Credit Available to ISD is Rs. 15,00,000/- & the credit should have been distributed equal to all the
units as all units had equal turnover, however credit distributed in violation of Section 21, as under:
Delhi Rs. 7,00,000, Jaipur Rs. 6,00,000, Ahmedabad Rs. 2,00,000. What will be the consequences?
A. The excess credit of Rs. 2,00,000 (Rs. 7,00,000- Rs. 5,00,000) shall be recovered from Delhi and Rs.
1,00,000 (Rs. 600,000 – Rs. 5,00,000) shall be recovered from Jaipur along with interest and the provisions of
section 73 or 74 shall apply mutatis mutandis for effecting such recovery.
Q36. Whether benefit of input tax credit would be available if the company procures health insurance services
for benefit of its employees. Please assume that the procurement of such services is mandatory under Factories
Act?
A. Yes. Section 17(5)(b) of the CGST Act provides that tax paid w.r.t health insurance services will be eligible
as input tax credit where the Government notifies that such services are obligatory for an employer to provide
to its employees under any law for the time being in force. If not notifies by the Government then it is not
available.
Q37. Whether taxes paid on change of interiors of service apartment is eligible for input tax credit?
A. Input tax credit is not available on goods or services received by a taxable person for construction of an
immovable property on his own account other than plant and machinery even when used in course or
furtherance of business. The word “construction” includes reconstruction, renovation, additions or alterations
or repairs to the extent of capitalization to the said immovable property. If the cost of interiors is capitalized
towards the cost of immovable property, then it forms part of the cost of immovable property (Service apartment)
and accordingly taxes paid on change of interiors of service apartment will not be eligible as input tax credit.
Q38. In case the amount is paid partly to the supplier of service, whether full taxes can be adjusted first? If no,
then, whether it has to be calculated proportionately?
A. No, there is no provision under the GST law to allocate part payment of the invoice towards the taxes first
so that the input tax credit can be allowed. Second proviso to Section 16(2) of the CGST Act clearly provides
that the entire value of supply (with tax) is to be paid within 180 days from the date of issue of invoice. Therefore,
as long as the entire payment is made within 180 days, the recipient would be entitled to claim the credit in
full.
Assuming that only part payment is made within 180 days, availing of proportionate credit based on such part
payment is not provided for under the CGST Act. However, Rule 37(1) of the CGST Rules provides for
availability of the amount of input tax credit availed of proportionate to the amount paid to the supplier.
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Section 22 Persons liable for registration

Section 24 Compulsory Registration in Certain Cases
Section 23 Persons not liable for Registration
Section 25 Procedure for Registration
Section 26 Deemed Registration
Section 27 Special provisions relating to CTP and non-resident taxable person
Section 28 Amendment of Registration
Section 29 Cancellation of Registration
Section 30 Revocation of cancellation of registration
Section 22 Persons liable for registration
• Every supplier shall be liable to be registered in the State or UT, other than special
category States, from where he makes a taxable supply of goods or services or both, if
his aggregate turnover in a financial year exceeds, twenty lakh rupees;
• Provided that where such person belongs to special category States, then he shall be
Sec. 22 (1) liable to registered if his turnover in a financial year exceeds ten lakh rupees.
• Provided further that the Government may, at the request of a special category State and
on the recommendations of the Council, enhance the aggregate turnover referred to in
the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees
and subject to such conditions and limitations, as may be so notified.
• Every person who, on the day immediately preceding the appointed day, is registered or
holds a license under an existing law, shall be liable to be registered under this Act with
Sec. 22 (2) effect from the appointed day.
• When a business carried on by a taxable person registered under this Act is transferred
on account of succession or otherwise, as a going concern, the transferee or successor,
Sec. 22 (3) shall be liable to be registered with effect from the date of such transfer or succession.
• Nothwithstanding anything contained in sub-sections (1) & (3), in a case of transfer

pursuant to sanction of a scheme or an arrangment for amalgmation or, demerger of two
or more companies pursuant to an order of a High Court, Tribunal or otherwise, the
transferee shall be liable to be registered, with effect from the date on which the ROC
Sec. 22 (4) issues a certification of incorporation giving effect to such order of High court or
Tribunal.
Explanation:-
• Aggregate turnover includes own supplies or made on behalf of all principals.
• The supply of goods by job worker to principal after completion of job work, shall not be included in
the aggregate turnover of the registered job worker.
• Special category States (as specified in sub-clause (g) of clause (4) of Article 279A of the
Constitution) for GST are Jammu & Kashmir, Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, Tripura, Himanchal Pradesh & Uttarakhand.
• If a person having place of business in different States across India and one branch is in Specified
Category State then threshold limit for GST registration will be reduced to Rs. 10 Lakh.
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Threshold Limit for Registration for Exclusive supply of goods

Aggregate turnover Rs. 20 Lacs Rs. 40 Lacs
Rs. 10 lakhs
1. Manipur 1. Arunachal Pradesh All other states/union territories
2. Mizoram 2. Meghalaya (not applicable if compulsory
3. Nagaland 3. Puducherry registration U/s 24 & persons
4. Tripura 4. Sikkim exercising option under the
5. Telangana provisions of sub-section (3) of
6. Uttarakhand section 25, or such registered
persons who intend to continue
with their registration under the
said Act)
Threshold Limit for Registration for others including Suppliers of Ice cream and other edible
ice, whether or not containing cocoa; Pan masala; Tobacco and manufactured tobacco
substitutes
Rs. 10 Lacs Rs. 20 Lacs
1. Manipur All other states/union territories
2. Mizoram
3. Nagaland
4. Tripura
Threshold Limit for Registration under Composition

Rs. 75 Lacs Rs. 1.5 crore
1. Arunachal Pradesh All other states/union territories
2. Manipur
3. Meghalaya
4. Mizoram
5. Nagaland
6. Sikkim
7. Tripura
8. Uttarakhand
Section 24 is not
subject to
Section 24 Compulsory Registration in Certain cases Section 23
Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall
be required to be registered under this Act, ––
(i) persons making any inter-State taxable supply; Sec. 51: TDS in GST
(ii) casual taxable persons making taxable supply; Sec. 52: TCS by e-
(iii) persons who are required to pay tax under reverse charge; commerce operator
(iv) person who are required to pay tax under sub-section (5) of section 9;
(v) non-resident taxable persons making taxable supply;
(vi) persons who are required to deduct tax under section 51, whether or not separately registered under
this Act;
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(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise {now it has been clarified that such registration is required only by C
& F agents who stock and sale goods on behalf of Principal and not by ordinarily commission agents
who do not deal in goods or services themselves -CBIC circular No. 57/31/2018-GST Dated 4-9-2018}
(viii) Input Service Distributor, whether or not separately registered under this Act;
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of
section 9, through such electronic commerce operator who is required to collect tax at source under
section 52;
(x) every electronic commerce operator who is required to collect tax at source U/s 52
(xi) every person supplying online information and data base access or retrieval services from a place
outside India to a person in India, other than a registered person; and
(xii) such other person or class of persons as may be notified by the Government on the recommendations
of the Council.
• In case a person already registered under GST is required to deduct tax under section 51, he
is required to take separate registration for the purpose of deducting tax under section 51.
• An ISD is required to obtain a separate registration even though it may be separately registered.
Section 23 Persons not liable for registration
Person engaged exclusively in supplying goods/services/both not liable to tax or wholly

exempt from tax
Agriculturist to the extent of supply of produce out of cultivation of land
Specified category of persons notified by the Government
Notification No. 10/2017-IT Government has specified the person making inter-State supplies of
Dated 13-10-2017 w.e.f. 13- taxable services and having an aggregate turnover, to be computed on all
10-2017 India basis, not exceeding Rs. 20 Lakh in a financial year, is exempt from
obtaining registration. If such person aggregate value of such supplies
includes Special Category State (according to Section 22 explanation)
where threshold is 10 Lacs, then should not exceed Rs. 10 Lakh.
Notification No. 05/2017-CT Persons only engaged in making taxable supplies, total tax on which is
Dated 19-06-2017 w.e.f. 22- liable to be paid on reverse charge basis – Exempt from obtaining
06-2017 registration. [(U/s 9 (3)].
Notification No. 7/2017-IT Job worker engaged in making inter-state supply of services – exempt from
Dated 14-09-2017 obtaining registration except engaged in jewelers business. The limit of 20
Lakhs/10 Lakhs will be applicable.
Notification No. 65/2017-CT Persons making supplies of services, other than supplies specified U/s 9(5)
Dated 15-11-2017 through an ECO who is required to collect TCS U/s 52, and having
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195
aggregate turnover, not exceeding an amount of Rs. 20 Lakhs in a financial

year, as the category of persons exempted from obtaining registration
under the said Act. If such person aggregate value of such supplies
includes Special Category State (according to Section 22 explanation)
where threshold is 10 Lacs, then should not exceed Rs. 10 Lakh.
Notification No. 56/2018 – CT As we have seen earlier that as per section 24, a CTP is liable to be
Dated 23.10.2018 registered compulsorily under GST irrespective of the threshold limit.
However, following categories of CTPs have been exempted from
Casual Taxable Persons obtaining registration:
making inter-State taxable a. CTPs making inter-State taxable supplies of handicraft goods notified
supplies of notified goods up under Notification No. 21/2018 CT (R) Dated 26.07.2018.
to Rs. 20,00,000 b. CTPs making inter-State taxable supplies of notified products, when
made by the craftsmen predominantly by hand even though some
machinery may also be used in the process.
Conditions to be fulfilled:
1. CTPs are availing benefit of Notification No. 03/2018 IT Dated
22.10.2018
2. The aggregate value of such supplies, to be computed on all India basis,
does not exceed an amount of Rs. 20 lakh [Rs. 10 lakh in case of Special
Category States] in a FY.
3. Such persons have obtained a PAN and have generated an eway bill.
Notification No. 03/2018 – IT As we have seen earlier that as per section 24 read with Notification No.
Dated 22.10.2018 10/2017 IT Dated 13.10.2017, a person making inter-State supplies of
Persons making inter-State goods is liable to be registered compulsorily under GST irrespective of the
taxable supplies of notified threshold limit.
goods up to Rs. 20,00,000 However, following categories of persons have been exempted from
obtaining registration:
a. Persons making inter-State taxable supplies of handicraft goods
notified under Notification No. 21/2018 CT (R) Dated 26.07.2018.
b. Persons making inter-State taxable supplies of notified products, when
made by the craftsmen predominantly by hand even though some
machinery may also be used in the process.
Conditions to be fulfilled:
1. The aggregate value of such supplies, to be computed on all India
basis, does not exceed an amount of Rs. 20 lakh [Rs. 10 lakh in
case of Special Category States] in a FY.
2. Such persons have obtained a PAN and have generated an eway
bill
Circular No. 71/45/2018 Dated • Amount of advance tax which a casual taxable person (CTP) is
26th October 2018 required to deposit while obtaining registration should be
calculated as the net tax liability after considering the estimated
input tax credit (ITC).
• In cases of long running exhibitions (for a period more than 180
days), the taxable person cannot be treated as a CTP and would
need to obtain registration as a normal taxable person. While
applying for normal registration, the said person should upload a
copy of the allotment letter granting him permission to use the
premises for the exhibition and the allotment letter/consent letter
shall be treated as the proper document as a proof for his place of
business.
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PIB press release Dated 28-5- Support services to agriculture, forestry, fishing or animal husbandry are
2018 exempt from GST. Such exempted support services include renting or
leasing of vacant land with or without a structure incidental to its use.
Agriculturist are also exempt from taking GST registration.
Circular No. 57/31/2018 GST Generally, a commission agent under APMC Act makes supplies on behalf
Dated 04.09.2018 of an agriculturist. As per provisions of section 23(1)(b), an agriculturist
Services provided by the who supplies produce out of cultivation of land is not liable for registration
commission agent for sale/ and therefore does not fall within the ambit of the term ‘taxable person’.
purchase of agricultural Thus, a commission agent who is making supplies on behalf of such an
produce - Registration agriculturist - not a taxable person - is not liable for compulsory registration
requirements under section 24(vii). However, where a commission agent is liable to pay
tax under reverse charge, such an agent will be required to get registered
compulsorily under section 24(iii)of the CGST Act.
(Please refer examples in Chapter 2)
Example 1: A dealer ‘X’ has two offices – one in Delhi and another in Haryana. ‘X’ supply goods & services
both. In order to determine whether ‘X’ is liable to registration, turnover of both the offices would be taken into
account and only if the same exceeds Rs. 20 Lakh, X is liable for registration.
Example 2: XYZ Oils, Punjab, is engaged in supplying machine oil. In order to determine whether, XYZ Oils is
liable for registration, aggregate turnover shall be calculated and if the same exceeds Rs. 40 Lakh, XYZ Oils is
liable to registration.
Example 3: Mohini Enterprises has appointed ABC as its agent. All the supplies of goods made by ABC as
agent of Mohini Enterprises will also be included in the aggregate turnover of ABC (Recollect discussion of
Chapter 2).
Example 4: Mr. A Nasik, has Intra State supply of agricultural produce (own effort) Rs. 15 Lacs, Intra State
supply of exempt goods Rs. 10 Lacs & taxable supplies Rs. 25 Lacs. He is supposed to take registration since
his aggregate turnover is Rs. 15 Lacs + Rs. 10 Lacs + Rs. 25 Lacs = Rs. 50 Lacs.
Example 5: Mr. A Nasik, has Intra State supply of services chargeable at 0% Rs. 20 Lacs, Intra State supply of
exempt services Rs. 20 Lacs & taxable supplies Rs. 1 Lacs. He is supposed to take registration since his
aggregate turnover is Rs. 20 Lacs + Rs. 20 Lacs +Rs. 1 Lacs = Rs. 21 Lacs.
Example 6: ABC is running an electronics shop in Mumbai. His turnover in a financial year is Rs. 9 Lakhs which
includes an inter-State supply of some items to Ahmedabad worth Rs. 10,000. Even though aggregate turnover
of ABC is only Rs. 9 Lakhs, but compulsory registration shall be required for making taxable inter-State supply
of goods to Ahmedabad.
Example 7: ABC is running a toy shop in Delhi. His turnover in a financial year is Rs. 9 lakhs which includes a
consignment for supply of children’s picture & colouring books to Noida, UP worth Rs. 10,000. Here even though
inter-State supply is involved but the items involved are exempt from GST. Thus, provisions of compulsory
registration shall not apply and accordingly no registration shall be required as aggregate turnover of ABC is
only Rs. 9 lakhs.
Example 8: Mr. A is a professional in Gurgaon, Haryana giving consultancy services to various clients in
Gurgaon, Noida & Delhi. His turnover in a financial year is Rs. 19 lakhs. Even though inter-State supply is
involved but same is exempted vide notification no. 10/2017 – integrated tax Dated 13.10.2017 from application
of Section 24. Accordingly, no registration shall be required as aggregate turnover of Mr. A is only Rs. 19 lakhs.
Study Notes
197
Example 9: Mr. A has business in 3 States i.e. Maharashtra, Gujarat, MP. Total turnover of supplies of goods
in different state taken together is below threshold. But from Maharashtra, Mr. A has supplied goods to its units
in MP. In GST, different registrations of a person are considered as distinct persons and stock transfers are
taxable. Further, compulsory registration is required in case of inter-State taxable supply. Thus, benefit of
threshold limit shall not be available in this case. Further when liability to register has arisen in one State then
registration shall be required for all other place of businesses as well.
Example 10 (ICAI):
Aggregate Applicable threshold Whether liable to
Supplier Engaged
turnover limit for registration obtain registration?
exclusively in supply of shoes Rs. 22 lakh Rs. 40 lakh 
exclusively in supply of pan Rs. 22 lakh Rs. 20 lakh ✓
masala
Prithiviraj
exclusively in supply of Rs. 22 lakh Rs. 20 lakh ✓
of Assam
taxable services
in supply of both taxable Rs. 22 lakh Rs. 20 lakh ✓
goods and services
exclusively in supply of toys Rs. 22 lakh Rs. 20 lakh ✓
exclusively in supply of ice Rs. 22 lakh Rs. 20 lakh ✓
cream
Shivaji of
Telangana
taxable services
goods and services
exclusively in supply of paper Rs. 12 lakh Rs. 10 lakh ✓
tobacco
Ashoka of
Manipur
taxable services
goods and services
Section 25 Procedure for Registrations
(1) Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every
such State or Union territory in which he is so liable within thirty days from the date on which he becomes liable
to registration, in such manner and subject to such conditions as may be prescribed:
Provided that a casual taxable person or a non-resident taxable person shall apply for registration at least five
days prior to the commencement of business.
Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005, in a SEZ or
being a SEZ developer shall have to apply for a separate registration, as distinct from his place of business
located outside the Special Economic Zone in the same State or Union territory.
Explanation.—Every person who makes a supply from the territorial waters of India shall obtain registration in
the coastal State or Union territory where the nearest point of the appropriate baseline is located.
(2) A person seeking registration under this Act shall be granted a single registration in a State or Union territory:
198
Provided that a person having multiple places of business in a State or Union territory may be granted a
separate registration for each such place of business, subject to such conditions as may be prescribed.
(3) A person, though not liable to be registered under section 22 or section 24 may get himself registered
voluntarily, and all provisions of this Act, as are applicable to a registered person, shall apply to such person.
(4) A person who has obtained or is required to obtain more than one registration, whether in one State or Union
territory or more than one State or Union territory shall, in respect of each such registration, be treated as distinct
persons for the purposes of this Act.
(5) Where a person who has obtained or is required to obtain registration in a State or Union territory in respect
of an establishment, has an establishment in another State or Union territory, then such establishments shall
be treated as establishments of distinct persons for the purposes of this Act.
(6) Every person shall have a Permanent Account Number issued under the Income- tax Act, 1961 in order to
be eligible for grant of registration: Provided that a person required to deduct tax under section 51 may have, in
lieu of a Permanent Account Number, a Tax Deduction and Collection Account Number issued under the said
Act in order to be eligible for grant of registration.
(7) Notwithstanding anything contained in sub-section (6), a non-resident taxable person may be granted
registration under sub-section (1) on the basis of such other documents as may be prescribed.
(8) Where a person who is liable to be registered under this Act fails to obtain registration, the proper officer
may, without prejudice to any action which may be taken under this Act or under any other law for the time being
in force, proceed to register such person in such manner as may be prescribed.
(9) Notwithstanding anything contained in sub-section (1),––

(a) 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, Consulate or
Embassy of foreign countries; and
(b) any other person or class of persons, as may be notified by the Commissioner,
shall be granted a Unique Identity Number in such manner and for such purposes, including refund of taxes on
the notified supplies of goods or services or both received by them, as may be prescribed.
(10) The registration or the Unique Identity Number shall be granted or rejected after due verification in such
manner and within such period as may be prescribed.
(11) A certificate of registration shall be issued in such form and with effect from such date as may be prescribed.
(12) A registration or a Unique Identity Number shall be deemed to have been granted after the expiry of the
period prescribed under sub-section (10), if no deficiency has been communicated to the applicant within that
period.
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Section 26 Deemed Registration
As per Sec. 26 (1), the grant of registration As per Sec. 26 (2), Any rejection of
or the Unique Identity Number under application for registration or the Unique
SGST/UTGST shall be deemed to be Identity Number under the SGST/UTGST
granted under CGST Act if it is not shall be deemed to be a rejection of
rejected as per Sec. 25 (10) application for registration under CGST.
Section 27 Special provisions relating to casual taxable person and

non-resident taxable person
As per Sec. 27 (1), Certificate of Registration issued to a casual taxable person or a non-
resident taxable person shall be valid for the period specified in application for
registration or 90 days from the effective date of registration, whichever is earlier.
Commissioner can further extend this period by maximum 90 days. Any supply can be
done only after the issuance of certificate of registration (Rule 15).
As per Sec. 27 (2), An advance deposit of tax in an amount

equivalent to the estimated tax liability of such person for the
period for which the registration is sought. In case of extension,
additional amount need to be deposited.
As per Sec. 27 (3), Amount deposited shall

be credited to electronic cash ledger of
such person.
Key Rules related to registration:
Around 30 forms/formats have been prescribed in the CGST Rules, 2017. For every process in the registration
chain such as application for registration, acknowledgement, query, rejection, registration certificate, show
cause notice for cancellation, reply, cancellation, amendment, field visit report etc., there are standard formats.
This makes the process uniform across country. The decision-making process will also be fast. Strict time lines
have been stipulated for completion of different stages of registration process.
Rule 8 Every person seeking registration shall, before applying for registration, declare his
(Application for PAN, mobile number, email address, State or UT in Part A of Form GST REG-01.
Registration except After proper validation reference number will be generated, the applicant shall use
TDS U/s 51 TCS U/s this reference number and file application of registration in Part B of Form GST
52, non-resident REG-01.
taxable person or ISD shall make a separate application for registration.
OIDAR) A casual taxable person shall be given a temporary reference number by the
common portal for making advance deposit of tax.
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Rule 9 Proper office need to verify within 3 working days of application. If he needs
Verification of the clarification, will issue notice within a period of 3 working days and person needs
application and to reply within a period of 7 working days. If proper officer is satisfied with reply then
approval he will issue registration within 7 working days or reject the application. If proper
officer fails to take any action within a period of 3 working days from the date of
submission of the application or within 7 working days from the date of receipt of
reply, the application of registration shall be deemed to have been approve.
For the purposes of this sub-rule, the expression ‘clarification’ includes modification
or correction of particulars declared in the application for registration, other than
Permanent Account Number, State, mobile number and e-mail address declared in
Part A of FORM GST REG-01.
Rule 10 Issue of A certificate of registration in Form GST REG-06 shall be issued. The registration
Registration Certificate shall be effective from the date on which the person becomes liable to registration
where the application for registration has been submitted within a period of 30 days
from such date. Otherwise, effective date of registration shall be the date of the
grant of registration. It will include principal place of business and additional place
of business.
Example 11: Sugam Services Ltd. is engaged in taxable supply of services in MP.
The turnover of Sugam Services Ltd. exceeded Rs. 20 Lakh on 1st November. It is
liable to get registered by 1st December [30 days] in MP. It applies to registration
on 28th November and is granted registration certificate on 5th December. The
effective date of registration is 1st November. If it applies on 3rd December and
granted registration on 10th December then effective registration is 10th December.
Rule 11 Separate (1) Any person having multiple places of business within a State or a Union
registration for multiple territory, requiring a separate registration for any such place of business
places of business under sub-section (2) of section 25 shall be granted separate registration
within a State or a in respect of each such place of business subject to the following
Union territory conditions, namely:-
(a) such person has more than one place of business as defined in clause
(85) of section 2;
(b) such person shall not pay tax under section 10 for any of his places of
business if he is paying tax under section 9 for any other place of
business;
(c) all separately registered places of business of such person shall pay
tax under the Act on supply of goods or services or both made to
another registered place of business of such person and issue a tax
invoice or a bill of supply, as the case may be, for such supply.
Explanation. - For the purposes of clause (b), it is hereby clarified that
where any place of business of a registered person that has been granted
a separate registration becomes ineligible to pay tax under section 10, all
other registered places of business of the said person shall become
ineligible to pay tax under the said section.
(2) A registered person opting to obtain separate registration for a place of
business shall submit a separate application in FORM GST REG-01 in
respect of such place of business.
(3) The provisions of rule 9 and rule 10 relating to the verification and the
grant of registration shall, mutatis mutandis, apply to an application
submitted under this rule.
Rule 12 Grant of A person required to deduct tax as per Sec. 51 or required to collect tax as per Sec.
Registration to 52, shall apply in Form GST REG-07. Registration shall be granted in Form GST
persons required to REG-06.
deduct or collect tax at A person applying for registration to collect tax in accordance with the provisions of
source section 52, in a State or Union territory where he does not have a physical
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presence, shall mention the name of the State or Union territory in PART A of the
application in FORM GST REG-07 and mention the name of the State or Union
territory in PART B thereof in which the principal place of business is located which
may be different from the State or Union territory mentioned in PART A.
Rule 13 Grant of A non-resident taxable person shall file application in Form GST REG-09 along with
Registration to non- a self-attested copy of his valid passport, at least 5 days prior to commencement
resident taxable of business. If business entity incorporated or established outside India, the
person application or registration shall be submitted along with its tax identification number
or unique number on the basis of which the entity is identified by the Government
of that country or its PAN.
A non-resident taxable person shall be given a temporary reference number by the
common portal for making advance deposit of tax.
Rule 14 Registration OIDAR supplying services to non-taxable person, shall file application in Form GST
for a OIDAR REG-10 and registration shall be granted in GST REG-06.
Rule 15 Extension in (1) Where a registered casual taxable person or a non-resident taxable person
period of operation by intends to extend the period of registration indicated in his application of
CTP/NRTP registration, an application in FORM GST REG-11 shall be submitted electronically
through the common portal, either directly or through a Facilitation Centre notified
by the Commissioner, by such person before the end of the validity of registration
granted to him.
(2) The application under sub-rule (1) shall be acknowledged only on payment of
the amount specified in sub-section (2) of section 27.
Rule 16 Suo motu The proper officer finds that a person liable to registration under the Act, has failed
Registration to apply for such registration, such officer may register the said person on
temporary basis and issue and order in Form GST REG-12. Such person, shall
apply for the registration within 90 days. He has right to appeal against such
temporary registration. Once appeal is finalized then he needs to submit the
application within 30 days.
Rule 17 Assignment of The proper officer may, upon submission of an application in Form GST REG-13,
Unique Identity assign a UIN to the eligible entities.
Number to certain The Unique Identity Number granted under sub-rule (1) to a person under clause
Special entities (a) of sub-section (9) of section 25 shall be applicable to the territory of India.
Rule 18 Display of Every registered person shall display his certificate of registration in a prominent
registration certificate location at his principal place of business and at every additional place of business.
and GST Identification He also needs to display his GSTIN on the name board exhibited at the entry of his
Number on the name principal place of business and at every additional place or places of business.
board
Rule 25 Physical Where the proper office is satisfied that the physical verification of the place of
verification of business business of a registered person is required after the grant of registration, he may
premises in certain get such verification done and the verification report along with the other
cases documents, including photographs, shall be uploaded in Form GST REG-30.
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Study Notes
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Section 28 Amendment of Registration (Read with Rule 19)

• Every registered person and a person to whom a UIN has been assigned shall inform the proper officer
of any changes in the information furnished at the time of registration or subsequent thereto. Such
person shall submit an application in prescribed manner, within 15 days of such change.
• In case of amendment of core fields of information (Rule 19)
(i) legal name of business,
(ii) address of the principal place of business or any additional place(s) of business,
(iii) addition, deletion or retirement of partners or directors, Karta, Managing Committee, Board of
Trustees, CEO or equivalent, responsible for the day to day affairs of the business,
The proper officer may, on the basis of information furnished or ascertained by him, approve or reject
amendments in the registration particulars in the prescribed manner.
• If it is non-core filed of information registration certificate shall stand amended upon submission of the
application.
• If there is change in PAN of registration person, then said person shall apply for fresh registration.
• If proper office fails to take any action, within a period of 15 working days from the date of submission
of application or within 7 working days from the date of the receipt of the reply to show cause notice,
the certificate of registration shall stand amended.
• Any particular of the application for registration shall not stand amended with effect from a date earlier
than date of submission of application for amendment on common portal except with order of
Commissioner for reasons to be recorded in writing and subject to conditions specified by
Commissioner in the said order.
Section 29 Cancellation or Suspension of Registration

Section 29 (1)
The proper officer may, either on his own motion or on an application filed by the registered person or by his
legal heirs, in case of death such person, cancel the registration: -
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor,
amalgamated with other entity, demerged or otherwise disposed of;
(b) there is any change in the constitution of business;
(c) the taxable person, other than the person registered U/s 25 (3), is no longer liable to be registered U/s 22
or 24.
Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered
person, the registration may be suspended for such period and in such manner as may be prescribed.
Section 29 (2)
The proper officer may cancel the registration of a person from such date, including any retrospective date, as
he may deem fit, where –
(a) A registered person contravened Act or rules;
(b) A person paying tax U/s 10 (composition dealer) not furnished returns for 3 consecutive tax periods;
(c) Any registered person other than composition dealer has not furnished return for a continuous 6 months;
Provided that where the person instead of replying to the notice served under sub rule (1) of Rule 22 for
contravention of the provisions contained in clause (b) or clause (c) of sub-section (2) of section 29, furnishes
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all the pending returns and makes full payment of the tax dues along with applicable interest and late fee, the
proper officer shall drop the proceedings and pass an order in FORM GST-REG 20.
{Proviso inserted vide Notification No. 39/2018-CT Dated 04.09.2018}
(d) Any person who has taken voluntarily registration but has not commenced business within 6 months from
the date of registration;
(e) registration has been obtained by means of fraud, willful misstatement or suppression of facts.
Provided that the Proper officer shall not cancel the registration without giving the person an opportunity being
heard.
Provided further that during pendency of the proceedings relating to cancellation of registration, the proper
officer may suspend the registration for such period and in such manner as may be prescribed.
Section 29 (3): The cancellation of registration under this section shall not affect the liability of the person to
pay tax and other dues for any period prior to the date of cancellation.
Section 29 (4): the cancellation of registration under the SGST or UTGST, shall be deemed to be a cancellation
of registration under this Act.
Section 29 (5): Every registered person shall pay an amount by way of debit in the electronic credit ledger or
cash ledger, equivalent to the ITC in respects of inputs held in stock and inputs contained in semi-finished or
finished goods or capital goods or plant the machinery on the day immediately preceding the date of such
cancellation or the output tax payable on such goods, whichever is higher. In case of capital goods or plant and
machinery, the taxable person shall pay an amount equal to the ITC taken, which shall be reduced by such
percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and
machinery U/s 15, whichever is higher.
A registered person, other than tax deductor or tax collector to whom a registration has been granted or a
person to whom a UIN has been granted, seeking cancellation of registration, shall apply electronically in
prescribed form.
Further in terms of rule 21 of CGST Rules, the registration granted to a person is liable to be cancelled, if the
said person,-
(a) does not conduct any business from the declared place of business; or
(b) issues invoice or bill without supply of goods or services in violation of the provisions of this Act, or the rules
made thereunder; or
(c) violates the provisions of section 171 of the Act or the rules made thereunder.
Rule 21A Suspension of registration
(1) Where a registered person has applied for cancellation of registration under rule 20, the registration shall be
deemed to be suspended from the date of submission of the application or the date from which the cancellation
is sought, whichever is later, pending the completion of proceedings for cancellation of registration under rule
22.
(2) Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled
under section 29 or under rule 21, he may, after affording the said person a reasonable opportunity of being
heard, suspend the registration of such person with effect from a date to be determined by him, pending the
completion of the proceedings for cancellation of registration under rule 22.
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(3) A registered person, whose registration has been suspended under sub-rule (1) or sub-rule (2), shall not
make any taxable supply during the period of suspension and shall not be required to furnish any return under
section 39.
(4) The suspension of registration under sub-rule (1) or sub-rule (2) shall be deemed to be revoked upon
completion of the proceedings by the proper officer under rule 22 and such revocation shall be effective from
the date on which the suspension had come into effect.
Section 30 Revocation of cancellation of registration

Any registered person, whose registration is cancelled by the proper officer on his own motion, may apply to
such officer for revocation of cancellation of the registration within 30 days from the date of service of the
cancellation order. However, in case registration was cancelled for failure of registered person to furnish returns,
before applying for revocation the person has to make good the defaults (by filing all pending returns, making
payment of all dues in terms of such returns alongwith interest, penalty, late fee, etc.) for which the registration
was cancelled by the officer. The proper officer may either revoke cancellation of the registration or reject the
application, after giving proper opportunity of being heard.
The revocation of cancellation of registration under SGST or UTGST, shall be deemed to be a revocation of
cancellation of registration under this Act.
Amendment in Rule 23 - Pending returns to be filed before revocation of cancellation of registration
Provided further that all returns due for the period from the date of the order of cancellation of registration till the
date of the order of revocation of cancellation of registration shall be furnished by the said person within a period
of thirty days from the date of order of revocation of cancellation of registration:
Provided also that where the registration has been cancelled with retrospective effect, the registered person
shall furnish all returns relating to period from the effective date of cancellation of registration till the date of
order of revocation of cancellation of registration within a period of thirty days from the date of order of revocation
of cancellation of registration
From the combined reading of aforesaid provisions, it can be inferred that where the registration has been
cancelled with effect from the date of order of cancellation of registration, (i) all returns due till the date of such
cancellation are required to be furnished before the application for revocation can be filed and (ii) all returns
required to be furnished in respect of the period from the date of order of cancellation till the date of order of
revocation of cancellation of registration have to be furnished within a period of 30 days from the date of the
order of revocation.
However, where the registration has been cancelled with retrospective effect, the application for revocation of
cancellation of registration can be filed, subject to the condition that all returns relating to the period from the
effective date of cancellation of registration till the date of order of revocation of cancellation of registration shall
be filed within a period of 30 days from the date of order of such revocation of cancellation of registration.
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Circular No. 95/13/2019 Central Tax Dated 28th Mar 2019
Subject: Verification of applications for grant of new registration
Issue:
Recently, the departmental officers has cancelled many registrations due to their non-compliance
Such persons should discharge all the pending liabilities and apply for the revocation of registration.
It is observed that many such tax payers are applying for fresh registration, instead of applying for revocation.
Clarification:
This circular has been issued to guide the departmental officers to cross check the registration applications
properly, to ensure that no such tax payers are provided with a new GSTIN.
Circular No. 96/14/2019-Central Tax Dated 28th March 2019

Subject: Clarification in respect of transfer of input tax credit in case of death of sole proprietor – Reg
Issue:
Clarifications have been sought w.r.t.

• Eligibility to transfer the credit and
• The procedure in case of death of a sole proprietor
Clarification:
The credit transfer shall be eligible. The transferee / successor shall be liable to pay any tax, interest or any
penalty due from the transferor in cases of transfer of business due to death of sole proprietor.
Transfer/change in ownership referred in Sec 18(3), 22(3), 29(1)(a) and 85(1) of the CGST act, includes the
transfer or change in the ownership of business due to death of the sole proprietor.
Process:
• New registration – Transferee / successor should get registered w.e.f. date of transfer
• Cancellation of old registration – Legal heirs should apply for the cancellation in Form Reg-16
• In both the cases, mention the reason as “death of sole proprietor”.
• File ITC-02 in the registration required to be cancelled, before cancellation
• Accept the ITC-02 in the new GSTIN.
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Question & Answer

Q1. There is an assessee located in New Delhi and registered under GST at Delhi. He wishes to participate in
a 15 days trade exhibition in the State of Tamil Nadu where he does not have a permanent place of business.
Would such assessee be liable for registration in the state of Tamil Nadu? In case yes, what would be the
procedure for his registration?
A. A person who occasionally undertakes business transactions in goods and/or services in the State where he
doesn’t have a fixed place of business is considered as a casual taxable person. In the given example, such
person would be considered as a casual taxable person for the State of Tamil Nadu.
The casual taxable person is required to make an application for registration in the state where he doesn’t have
a permanent place of business. Such person is required to deposit a sum called advance deposit which is equal
to the estimated liability of tax for the period he wishes to operate in the respective state. For making advance
deposit of money, such casual taxable person will be allotted a temporary identification number by GSTN.
Q2. In case a person liable for registration on 1 st July makes an application for registration on 10th August, what
substantive benefits will not be available to the assessee for making late application of registration?
A. Since the application for registration is required to be made within 30 days period of being liable for it and
late applications of registration would result in registration to be effective from the date of grant of registration
i.e. 10th August in case of our example. For the period of non-registration 1st July to 10th August, the assessee
will not be able to claim ITC. The customers of the supplier would not be able to claim ITC of material supplied
to them during the period of non-registration.
Q3. Whether the UN bodies, Consulate and Foreign embassies will be liable for registration under the GST
Law?
A. Under the GST Law, tax is required to be charged on taxable supplies made to UN bodies, Consulates or
foreign embassies, At the same time, these bodies have been made entitled to seek refund of any tax paid
under GST Law. To enable them to seek such refund, they are required to seek registration under the GST
Law.
Q4. Can there be multiple ISD of a single registered person?

A. Yes, a business entity can have multiple ISD in different States or even in one state. No such restriction has
been provided under the GST Act.
Q5. Gaurav is having a rental income from residential house given on rent of Rs.12 Lakhs and he is also having
a kirana shop which has a turnover of Rs. 10 Lakhs. Is he required to be registered under GST.
A. In the given case the aggregate turnover of Gaurav would consist of Rs. 12 Lakhs from exempt supply of
rent from residential property and Rs. 10 Lakh from taxable supply of Kirana Store. Therefore, Gaurav would
be liable to be registered in GST as his aggregate turnover is more than Rs. 20 Lakhs.
Q6. Kuldeep is a trader and he is trading 100% in alcohol for human consumption. His turnover from supply of
alcohol for human is Rs. 2 Crore. Whether he is liable to be registered under GST?
A. As per section 2(47) of the CGST Act, 2017, exempt supply includes non – taxable supply. Alcohol for human
consumption is a non – taxable supply as it is not leviable to tax under the law. Further, as per Section 23 of
the CGST Act, 2017, any person engaged exclusively in the business of supplying goods or services or both
that are not liable to tax or wholly exempt from tax under this Act would not be required to be registered.
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Therefore, as Kuldeep is exclusively supplying Alcohol for human consumption, which is not liable to tax, he
would not be liable to be registered under CGST Act, 2017.
Q7. In the above question, supposedly Kuldeep has also made supply of Soft Drinks of Rs. 10 Lakh. Whether
he would be liable to be registered under CGST Act, 2017?
A. If Kuldeep has also made supply of soft drinks of Rs. 10 Lakh along with turnover of Alcohol for human
consumption of Rs. 2 crores then in such case, exemption given from registration under section 23 of the CGST
Act, 2017 would not be applicable as he is not engaged exclusively in supplying goods not liable to tax
under the Law.
Threshold limit for registration would be counted by taking aggregate of both taxable and non – taxable and
non – taxable supply and as his aggregate turnover would be more than Rs. 40 Lakh (dealing exclusively in
goods), therefore he would be liable for registration under the law.
Q8. Mr. A is a salaried employee (salary income being Rs. 1 crore). Besides, he owns a residential property
which is let out for residential purposes for annual rent being Rs. 30 lakh.
A. In this case, aggregate turnover is Rs. 30 lakh, rent received from residential property renting. Since service
of renting of residential property for residential purpose is exempt supply, Mr. A shall be exempt from registration
requirement as Sec 23 of CGST Act provides for exemption from registration where a person is exclusively
engaged in making exempt supplies.
Since Mr. A is not making supply of any taxable services, he is not liable for registration.
Q9. Pure Oils, Delhi has started the supply of machine oils and high speed diesel in the month of April, 20XX.
The following details have been furnished by it for the said month: -
Particulars Amount*
Supply of machine oils in Delhi 2,00,000
Supply of high speed diesel in Delhi 4,00,000
Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi 3,75,000
Supply made by Pure Oils from its branch located in Punjab 1,80,000
*excluding GST
Determine whether Pure Oils is liable for registration.
Will your answer change, if Pure Oils has a branch in Nagaland from where he supplies machine oils
amounting to Rs. 2,50,000?
A. Computation of Aggregate turnover
Particulars Amount
Supply of machine oils in Delhi {Supply of machine oil in Delhi is intra-state supply of 2,00,000
goods which is taxable under GST law. It shall be includible in ‘aggregate turnover’}
Supply of high speed diesel in Delhi {Supply of HSD in Delhi is intra-state supply of 4,00,000
goods which is non-taxable under GST law. Though non-taxable, it shall be includible
in ‘aggregate turnover’}
Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi {Transfer of 3,75,000
goods to agent for further supply (sale) is also treated as ‘supply’ though such transfer
does not include any consideration. Sec 7(1)(c) read with Schedule I (Entry 3) covers
transfer of goods to agent. Further, since goods have been transferred to Agent in Delhi,
such transfer is an intra-state supply of goods which is taxable under GST. It shall be
includible in ‘aggregate turnover’}
Supply made by Pure Oils from its branch located in Punjab {Supply is made from 1,80,000
branch office in Punjab. Under GST law, such branch office is treated as establishment
of a different
person. Thus, Head Office (Delhi) and Branch Office (Punjab) are treated as ‘deemed
distinct persons (establishment of different persons)’ under GST law. In absence of
specific information, it is presumed that Punjab branch is also making ‘intra-state’
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supply. Since ATO is computed on all India basis (establishments operating with same
PAN), it shall be includible in ‘aggregate turnover’}
Registration Requirement of Pure Oils, Delhi

All the supplies made by Pure Oils are intra-state supplies and thus, his liability for registration shall be governed
by Sec 22 of the CGST Act which provides that every supplier is liable to be registered in the State/UT from
where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year
exceeds Rs. 20 lakh (Rs. 40 Lacs for exclusive supplier of goods).
Since the aggregate turnover is not exceeding threshold limit, Pure Oils is not liable to be registered.
In case where Pure Oils has a branch in Nagaland from where he supplies machine oils amounting to
Rs. 2,50,000, then aggregate turnover in that case will be 14,05,000 (11,55,000 + 2,50,000). Further, in this
situation, the applicable threshold for registration will be Rs. 10 lakh as Nagaland is one of the specified Special
Category States. Thus, in such situation Pure Oils, Delhi shall be liable to be registered.
Q10. Mr. A, a dealer (situated in Mumbai) dealing with Intra State supply of goods and services has place of
business in India furnished the following information in the financial year 20XX-X1:
1. Sale of taxable goods by Head Office located in Chennai for Rs. 2,00,000
2. Supply of taxable services by Branch office at Delhi for Rs. 1,00,000
3. Supply of goods exempted from GST Rs. 10,000
4. Export of goods for Rs. 2,00,000
A. Computation of Aggregate turnover

Particulars Amount
Sale of taxable goods by Head Office located in Chennai 2,00,000
Supply of taxable services by Branch office at Delhi 1,00,000
Supply of goods exempted from GST 10,000
Export of goods and services 2,00,000
Though aggregate turnover is not exceeding Rs. 20 lakhs, but since he is engaged in exports which are inter-
state supplies, his registration falls under section 24 which provides for compulsory registration (i.e., no
threshold limit of 20 Lakhs).
Note: Export (inter-state supplies), Export supplies are zero-rated in terms of Sec 16 of IGST Act.
For availing benefit of zero-rating provided by Sec 16, registration is mandatory. [Sec 16(3) of IGST Act gives
benefit to ‘registered person’]
Q11. Mr. A has aggregate turnover of Rs 15 lakhs in a FY from the State of Maharashtra, through its sole
proprietorship firm. He has a property located in Chennai, which is currently in dispute and has engaged
lawyer for representing his case in dispute. Will Mr. A be required to register himself U/s 24 of the CGST Act,
considering persons required to pay under RCM?
A. Mr. A is a business entity making intra-state supplies in State of Maharashtra only. It is unregistered, as his
aggregate turnover is not exceeding Rs 20 lakhs in a FY. Now, it has received services legal services which
attracts reverse charge and thus, making recipient liable to pay GST. Presuming that legal services have been
sought in relation to business, such service is exempt from payment of GST as Mr. A is a business entity with
aggregate turnover not exceeding Rs 20 lakhs. Such service being exempt, the recipient, Mr. A, is actually not
required to pay GST. Thus, he is not required to take compulsory registration U/s 24 of CGST Act.
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Q12. Whether the Department through the proper officer, can suo-moto proceed with registration of a person
under the Act?
A. Yes. In terms of sub-section (8) of Section 25, where a person who is liable to be registered under the CGST
Act fails to obtain registration, the proper officer may, without prejudice to any action which may be taken
under the CGST Act, or under any other law for the time being in force, proceed to register such person in the
manner as may be prescribed.
Q13. Whether the proper Officer can reject an Application for Registration?
A. Yes. The Proper officer can reject the Application for registration in Form GST REG 05, if after filling the
Application of registration in Form GST REG 01 the proper officer issued notice in Form GST REG 03 for further
clarification and no response or no satisfactory response is given by the applicant.
Q14. What will be the effective date of registration?

A. Where the application for registration has been submitted within thirty days from the date on which the
person becomes liable to registration, the effective date of registration shall be date on which he become
liable for registration.
Where an application for registration has been submitted by the applicant after thirty days from the date of his
becoming liable to registration, the effective date of registration shall be the date of grant of registration.
In case of suo moto registration, i.e. registration pursuant to any survey, enquiry, inspection, search or any other
proceedings, the effective date of registration shall be the date of order of registration.
Q15. At the time of registration will the assessee have to declare all his places of business?
Ans. Yes. The principal place of business and place of business have been separately defined under section
2(85) & 2(89) of the CGST Act respectively. The taxpayer will have to declare the principal place of business
as well as the details of additional places of business in the registration form.
Q16. Should a casual taxable person or non-resident taxable person apply for registration in every State from
which that person is operating or is the registration common for all the States?
Ans. In terms of section 22(1) read with Section 25(1) such persons need to obtain a separate registration
in every such States.
Q17. From which State the taxable person should obtain registration?
Ans. As per Section 22(1) a taxable person should obtain registration in every State from where he makes
taxable supply of goods or services or both.
Q18. Whether licensed Tour Guides having registered office in one state but providing services Pan India will
have to register in each State?
Ans. If the presence of tour guide is in each State and he is supplying services from those States then
registration requirement in each State would be there.
Q19. When a person engaged in the provision of services having registration in the Maharashtra goes to Kolkata
to provide services to its client and stays therefore a period of 3 months and also take a residence in that State
is required to take separate registration in that State.
Ans. No, mere residence is not a business establishment, and therefore he need not take a registration in the
State of West Bengal.
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Section 31 Tax Invoice

Section 34 Credit & Debit Note
Section 32 Prohibition of Unauthorized collection of tax
Section 33 Amount of tax to be indicated in tax invoice and other documents
Types of invoices/Other Documents: A snapshot

Document Type When to Issue
Tax invoice – for supply of taxable Section 31 (1), (2), (4), (5), (6), and (7) read with rule 46 & rule 48
goods and services
Revised tax invoice – in case of grant Section 31 (3) (a) read with rule 53
of registration w.e.f. a date earlier
than the date of issuance of
certificate of registration
Bill of Supply – for supply of Section 31 (3) (c) read with rule 49
exempted goods or services or by
composition dealer or Supplier under
Notification 02/2019 Dated
07.03.2019
Invoice cum Bill of Supply – for Rule 46A
supplying taxable as well as
exempted goods or services
Delivery Challan – to be issued in Rule 55
cases other than supply
Receipt Voucher – for receipt of Section 31 (3) (d) read with rule 50
advance money
Refund Voucher – for refund of Section 31 (3) (e) read with rule 51
advance money
Self-invoice for reverse charge from Section 31 (3) (f)
unregistered suppliers
Payment voucher – for payment of Section 31 (3) (g) read with rule 52
supplies under reverse charge
Credit note – for reduction of taxable Section 34 (1) & (2) read with rule 53
value and/or tax amount, sales return
etc.
Debit note- for increase in taxable Section 34 (3) & (4) read with rule 53
value and/or tax amount
Consolidated tax invoice in specified Section 31 (3) (b) read with rule 46
B2C supplies
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Section 31 Tax Invoice

Goods Services
A registered taxable person shall issue a tax invoice A registered person supplying taxable services shall,
showing descriptions, quantity and value of goods, before or after the provision of service but within a
tax charged thereon and other prescribed particulars, prescribed period, issue a tax invoice, showing the
before or at the time of description, value, tax charged thereon and such
a. Removal of goods for supply to the recipient, other particulars as may be prescribed.
where supply involves movement of goods or Note: As per Rule 47 of CGST Rules, Invoice should
b. Delivery of goods or making available thereof to be issued within 30 days from the date of provision of
the recipient in other cases. Services.
In case of Insurance, Banks or Financial Institution &
NBFC’s the above limit is extended to 45 days.
An insurer or a banking company or a financial
institution, including a NBFC, or a telecom operator,
making taxable supplies of services between distinct
persons as specified in section 25, may issue the
invoice before or at the time such supplier records the
same in his books of account or before the expiry of
the quarter during which the supply was made.
Example 1: Amit Manufacturers, Delhi supplies goods to Kavita Electronics Mumbai. The goods were
removed from its factory in Delhi on 30th September. Amit Manufacturers needs to issue a tax invoice on or
before 30th September.
Example 2: Gagan Ltd. provides security services to ABC Ltd. for exhibition to be organized on 5 th November
2017. Gagan Ltd. needs to issue a tax invoice within 30 days of supply of services i.e. 5th December 2017.
Example 3: ABC Ltd. entered into an AMC contract for pest control with XYZ Ltd. for one financial year. As
per the contract for AMC contract payment had to be made by 7 th April. However XYZ Ltd. paid payment by
15th April 2017. ABC Ltd. has to issue invoice by 7th April.
Example 4: ABC Bank rendered banking services to XYZ Ltd. a company registered in GST for their office in
Mumbai on 10.11.2018. ABC bank can raise the invoice anytime before or after the provision of services, but
within 45 days from the date of supply of services i.e. till 25.12.2018.
Example 5: Mumbai branch of ABC bank rendered banking services to its Chennai branch on 10.11.2018.
The transaction was recorded in books of account of Mumbai branch of ABC bank on 12.11.2018. Mumbai
branch of ABC bank can raise invoice either:
• On or before 12.11.2018 i.e. when entry was made in books of account; or
• Before 31.12.2018 i.e. before the close of quarter during which the supply was made.
Section 31 (3)
Notwithstanding anything contained in sub-sections (1) and (2)–
(a) a registered person may, within one month from the date of issuance of certificate of
registration and in such manner as may be prescribed, issue a revised invoice against
the invoice already issued during the period beginning with the effective date of
registration till the date of issuance of certificate of registration to him;
(b) a registered person may not issue a tax invoice if the value of the goods or services
or both supplied is less than two hundred rupees subject to such conditions and in
such manner as may be prescribed;
(c) a registered person supplying exempted goods or services or both or paying tax under
the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply
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containing such particulars and, in such manner, as may be prescribed:

It is hereby clarified that provisions of clause (c) of subsection (3) of section 31 of the said Act
shall apply to a person paying tax under Notification No. 2/2019- Central Tax (Rate) Dated
07.03.2019 {Removal of Difficulty Order No. 3/2019-Central Tax Dated 8th March, 2019}
(d) a registered person shall, on receipt of advance payment with respect to any supply of
goods or services or both, issue a receipt voucher or any other document, containing
such particulars as may be prescribed, evidencing receipt of such payment;
(e) where, on receipt of advance payment with respect to any supply of goods or services
or both the registered person issues a receipt voucher, but subsequently no supply is
made and no tax invoice is issued in pursuance thereof, the said registered person
may issue to the person who had made the payment, a refund voucher against such
payment;
(f) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of
section 9 (reverse charge) shall issue an invoice in respect of goods or services or both received
by him from the supplier who is not registered on the date of receipt of goods or services or
both;
(g) a registered person who is liable to pay tax under sub-section (3) or sub-section (4) of
section 9 shall issue a payment voucher at the time of making payment to the supplier.
Example 6: XYZ is running a consumer durables shop in Pune. He takes services of an advocate for Rs.
50,000 to litigate a department’s notice. Such advocate is not registered under GST. Here XYZ will issue a
self-invoice for advocate services and accordingly discharge GST liability under reverse charge and take ITC
of the same.
In case of continuous supply of goods, where In case of continuous supply of services
successive statements of accounts or successive (a) if due date is ascertainable from the
payment are involved, the invoice shall be issued contract, invoice shall be issued on or
before or at the time each such statement is issued before such due date of payment;
or, as the case may be, each such payment is (b) where the due date is not ascertainable,
received. the invoice shall be issued before or at the
time of receiving payment
(c) where the payment is linked to the
completion of an event, the invoice shall be
issued on or before the date of completion
of that event.
The goods being sent or taken on approval for sale In a case where the supply of services ceases under
or return are removed before the supply takes place, a contract before the completion of the supply, the
the invoice shall be issued before or at the time of invoice shall be issued at the time when the supply
supply or six months from the date of removal, ceases and such invoice shall be issued to the extent
whichever is earlier. of the supply made before such cessation.
Key Points for Tax Invoice U/s 31 & Rule 46
• There is no format prescribed for Tax Invoice. Invoices may be issued manually or electronically.
• The signature or digital signature of the supplier or his authorised representative shall not be required
in the case of issuance of an electronic invoice in accordance with the provisions of the Information
Technology Act, 2000
This is also applicable to Bill of supply (Rule 49), consolidated tax invoice in case of Insurance/Banking
companies, financial institutions including NBFCs {Rule 54 (2)}, ticket issued for passenger
transportation service {Rule 54 (4)}.
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• A Tax invoice shall be issued by:
➢ Supplying Taxable goods or services
➢ Receiving Taxable goods or services from unregistered supplier
• Export of Invoice shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ
UNIT/SEZ DEVELOPER FOR AUTHORIZED OPERATIONS ON PAYMENT OF INTEGRATED TAX”
or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT/SEZ DEVELOPER FOR AUTHORIZED
OPEATIONS UNDER BOND OR LETTER OF UNDERTAKING WITHOUT PAYMENT OF
INTEGRATED TAX”.
• A consecutive serial number not exceeding sixteen characters, in one or multiple series, containing
alphabets or numerals or special characters-hyphen or dash and slash symbolized as “-“ and “/”
respectively, and any combination thereof, unique for financial year; {This is same in case of:- Bill of
Supply, Receipt Voucher, Refund Voucher, Payment Voucher, Revised tax invoice and credit and debit
notes etc.}
• Invoice and Payment Vouchers to be issued by recipient of supply liable to pay tax under reverse
change [Section 31 (3) (f) & (g) read with second proviso to rule 46 & rule 52].
• CBIC has issued Circular No. 90/09/2019-GST Dated 18th February, 2019, instructing that all registered
persons making supply of goods or services or both in the course of inter-State trade or commerce shall
specify the place of supply along with the name of the State in the tax invoice. The provisions of sections
10 and 12 of the Integrated Goods and Services Tax Act, 2017 may be referred to in order to determine
the place of supply in case of supply of goods and services respectively. Contravention of any of the
provisions of the Act or the rules made there under attracts penal action under the provisions of sections
122 or 125 of the CGST Act.
• As per Rule 46A, notwithstanding anything contained in rule 46 or rule 49 or rule 54, where a registered
person is supplying taxable as well as exempted goods or services or both to an unregistered person,
a single “invoice-cum-bill of supply” may be issued for all such supplies.
• Important content of Tax Invoice
Study Notes
215
If recipient is unregistered and value of supply is more than Rs. 50,000 then
name and address of the recipient and the address of delivery, along with the
name of State & its code. Please recollect discussion of POS.
Disclosure of HSN/SAC Digit

AT is equal or less than 1.5 crores NIL
AT is more than 1.5 & Upto 5 cores crores 2
AT is more than 5 crores 4
Need to mention on each copy of invoice that this is

pertaining to Recipient/Transporter/Supplier
Revised Tax Invoice [Sec. 31 (3) (a) read with rule 53]
Every registered person who has been granted registration with effect from a date earlier than the date of
issuance of certificate of registration to him, may issue Revised Tax Invoices. Such invoices shall be issued
against the invoices already issued during said period. Revised Tax Invoice shall be issued within 1 month
from the date of issuance of certificate of registration. For supplies made by such person during this
intervening period, the law enables the issuance of a revised invoice, so that ITC can be availed by the
recipient on such supplies.
A registered person may issue a consolidated Revised Tax Invoice in respect of all taxable supplies made
to an unregistered recipient (B2C) during such period. In the case of inter-State supplies, where the value
of a supply does not exceed two lakh and fifty thousand rupees, a consolidated revised invoice may be
issued separately in respect of all the recipients located in a State, who are not registered under the Act.
Particulars of Debit & Credit Notes are also same as revised tax invoices.
Consolidated Revised Tax Invoice – B2C supply (Intra-State) :- No limit prescribed

Consolidated Revised Tax Invoice – B2C supply (Inter-State) :- State wise consolidated revised tax invoice.
In case of inter-State supplies, where the value of a supply doesn’t exceed INR 2,50,000, a consolidated
revised invoice may be issued separately in respect of all the recipients located in a State, who are not
registered under GST.
Government amended Rule 53 to distinguish the mandatory requirements in the issue of Revised invoice
and in the issue of debit note or credit note.
Revised invoice can be issued in one month of registration for all supplies done from the date on which
registration was applied till the date registration was granted.
By separating the requirements for revised invoice and debit or credit note the requirement for nature of
document in case of Revised invoice remains of no use and hence deleted. Also, the requirement for
stating the taxable value, rate of tax, amount of tax credited or debited in case of Revised invoice remains
of no use and hence deleted in amendment. {Notification No. 03/2019-Central Tax Dated 29.01.2019}
Any invoice or debit note issued in pursuance of any tax payable in accordance with the provisions of
Section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilized by reason of fraud or any willful misstatement or suppressions of facts), Section 129
(Detention, seizure and release of goods and conveyances in transit), Section 130 (Confiscation of goods
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or conveyances and levy of penalty), shall prominently contain the words, ‘INPUT TAX CREDIT NOT
ADMISSIBLE”.
Consolidated Tax Invoice [Section 31 (3) (b) read with rule 46]
A registered person may not issue a tax invoice if the value of goods or services or both supplied is less
than INR 200 and in lieu thereof, shall issue a consolidated tax invoice for such supplies at the close of
each day in respect of all such supplies, but subject to the following conditions, namely,-
(a) the recipient is not a registered person; and
(b) the recipient does not require such invoice, and
Bill Of Supply [Section 31 (3) (c) read with rule 49]

A registered person supplying exempted goods or services or both or paying tax under composition levy
shall issue a bill of supply instead of a tax invoice.
As per second proviso to Rule 49 of the CGST Rules, any tax invoice or any other similar document issued
under any other Act for the time being in force in respect of any non-taxable supply shall be treated as a bill
of supply for the purposes of GST Act.
Receipt Voucher [Section 31 (3) (d) read with rule 50]

A registered person shall, on receipt of advance payment with respect to any supply of goods or services
or both, issue a receipt voucher evidencing receipt of such payment.
If rate of tax is not determinable, tax shall be paid at the rate of 18%. If nature of supply is not determinable
then same shall be paid as inter-State supply.
Refund Voucher [Section 31 (3) (e) read with rule 51]

Where, on receipt of advance payment with respect to any supply of goods or services or both the registered
person issues a Receipt Voucher, but subsequently no supply is made and no tax invoice is issued in
pursuance thereof, the said registered person may issue to the person who made the payment, a Refund
Voucher against such payment.
Supplier permitted to issue any document other than tax

invoices [Section 31 (2) and proviso to section 31(1) read
with rules 54 and 55]
Supplier of taxable service Document in lieu of the tax invoice
Optional information Mandatory information
Insurer/Banking • Serial Number Other information as prescribed
company/Financial • Address of the recipient for a Tax invoice, under rule 46
institution/NBFC of taxable service Such document may be
issued/made available,
physically/electronically
Study Notes
217
Where the supplier of taxable service is an insurer or a banking company or a financial institution,
including a non-banking financial company, the said supplier may issue a consolidated tax invoice or any
other document in lieu thereof, by whatever name called for the supply of services made during a month
at the end of the month, whether issued or made available, physically or electronically whether or not
serially numbered, and whether or not containing the address of the recipient of taxable service but
containing other information as mentioned under rule 46.
Goods Transport Agency (GTA) • Gross weight of the
supplying services in relation to consignment
transportation of goods by road • Name of the consignor
in a goods carriage and the consignee
• Registration number of
goods carriage in which
the goods are
transported
• Details of goods
transported
• Details of place of origin
and destination
• GSTIN of the person
liable for paying tax
whether as consignor,
consignee or GTA
• Other information as
prescribed for a tax
invoice
Supplier of passenger • Serial number Other information as prescribed
transportation service • Address of the recipient for a tax invoice, under rule 46
of taxable service Tax invoice shall include ticket
in any form, by whatever name
called
It is important to note here that keeping in view the large number of transactions in banking, insurance
and passenger transportation sector, taxpayers need not mention the address of the customer and the
serial number in their invoices.
Delivery Challan (Rule 55)

(1) For the purposes of-
(a) supply of liquid gas where the quantity at the time of removal from the place of business of the
supplier is not known,
(b) transportation of goods for job work,
(c) transportation of goods for reasons other than by way of supply, or
(d) such other supplies as may be notified by the Board, the consignor may issue a delivery
challan, serially numbered not exceeding sixteen characters, in one or multiple series, in lieu of
invoice at the time of removal of goods for transportation, containing the following details,
namely: -
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number of the consignor, if
registered;
(iii) name, address and Goods and Services Tax Identification Number or
Unique Identity number of the consignee, if registered;
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(iv) Harmonized System of Nomenclature code and description of goods;
(v) quantity (provisional, where the exact quantity being supplied is not known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax, Union territory tax or cess,
where the transportation is for supply to the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature.
(2) The delivery challan shall be prepared in triplicate, in case of supply of goods, in the following
manner, namely: –
(a) the original copy being marked as ORIGINAL FOR CONSIGNEE;
(b) the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
(c) the triplicate copy being marked as TRIPLICATE FOR CONSIGNOR.
(3) Where goods are being transported on a delivery challan in lieu of invoice, the same shall be
declared as specified in rule 138 (E-way Bill).
(4) Where the goods being transported are for the purpose of supply to the recipient but the tax invoice
could not be issued at the time of removal of goods for the purpose of supply, the supplier shall
issue a tax invoice after delivery of goods.
(5) Where the goods are being transported in a semi knocked down or completely knocked down
condition or in batches or lots {Inserted vide Notification No. 39/2018-CT, Dated 04.09.2018} –
(a) the supplier shall issue the complete invoice before dispatch of the first consignment;
(b) the supplier shall issue a delivery challan for each of the subsequent consignments, giving
reference of the invoice;
(c) each consignment shall be accompanied by copies of the corresponding delivery challan along
with a duly certified copy of the invoice; and
(d) the original copy of the invoice shall be sent along with the last consignment.
Really, this procedure is possible and practical when machinery is dispatched in span of few day. In case
of large machinery, if supply is likely to be spread over months or even years, separate invoice for each
consignment is the only practical solution.
Tax Invoice or Bill of Supply to accompany transport of goods

(Rule 55A)
The person-in-charge of the conveyance shall carry a copy of the tax invoice or the bill of supply issued in
accordance with the provisions of rule 46 (tax invoice), 46A (invoice cum Bill of supply) or 49 (Bill of supply) in
a case where such person is not required to carry an e-way bill under these rules.
Tax Invoice by ISD [Rule 54 (1) & 54 (1A)

This Rule 54 (1) is applicable when ISD has to distribute the ITC to the various units.
(1) An Input Service Distributor invoice or, as the case may be, an Input Service Distributor credit note
issued by an Input Service Distributor shall contain the following details:-
(a) name, address and Goods and Services Tax Identification Number of the Input Service
Distributor;
(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series,
containing alphabets or numerals or special characters hyphen or dash and slash symbolized
as- “-”, “/” respectively, and any combination thereof, unique for a financial year;
(c) date of its issue;
(d) name, address and Goods and Services Tax Identification Number of the recipient to whom
the credit is distributed;
(e) amount of the credit distributed; and
(f) signature or digital signature of the Input Service Distributor or his authorized representative:
Study Notes
219
Provided that where the Input Service Distributor is an office of a banking company or a financial
institution, including a non-banking financial company, a tax invoice shall include any document in lieu
thereof, by whatever name called, whether or not serially numbered but containing the information as
mentioned above.
This Rule 54 (1A) is applicable when registered person in its own GSTIN gets the invoice from supplier (i.e.
If supplier doesn’t raise the invoice on GSTIN of ISD), then registered person may issue this document to
ISD so as to further allocate the ITC to the units.
(1A) (a) A registered person, having the same PAN and State code as an Input Service Distributor, may issue
an invoice or, as the case may be, a credit or debit note to transfer the credit of common input services to the
Input Service Distributor, which shall contain the following details:-
i. name, address and Goods and Services Tax Identification Number of the registered person having the same
PAN and same State code as the Input Service Distributor;
ii. a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets
or numerals or special characters -hyphen or dash and slash symbolised as ―-‖ and ―/‖ respectively, and any
combination thereof, unique for a financial year;
iii. date of its issue;
iv. Goods and Services Tax Identification Number of supplier of common service and original invoice number
whose credit is sought to be transferred to the Input Service Distributor;
v. name, address and Goods and Services Tax Identification Number of the Input Service Distributor;
vi. taxable value, rate and amount of the credit to be transferred; and
vii. signature or digital signature of the registered person or his authorised representative.
(b) The taxable value in the invoice issued under clause (a) shall be the same as the value of the common
services.
Section 34 Credit & Debit Notes

(1) Where a tax invoice has one or more tax invoices have been issued for supply of any goods or services or
both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable
in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services
or both supplied are found to be deficient, the registered person, who has supplied such goods or services or
both, may issue to the recipient a credit note one or more credit notes for supplies made in a financial year
containing such particulars as may be prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall
declare the details of such credit note in the return for the month during which such credit note has been issued
but not later than September following the end of the financial year in which such supply was made, or the date
of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such
manner as may be prescribed:
Provided that no reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and
interest on such supply has been passed on to any other person.
(3) Where a tax invoice has where one or more tax invoices have been issued for supply of any goods or
services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable
value or tax payable in respect of such supply, the registered person, who has supplied such goods or services
or both, shall issue to the recipient a debit note one or more debit notes for supplies made in a financial year
containing such particulars as may be prescribed.
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(4) Any registered person who issues a debit note in relation to a supply of goods or services or both shall
declare the details of such debit note in the return for the month during which such debit note has been issued
and the tax liability shall be adjusted in such manner as may be prescribed.
Explanation.––For the purposes of this Act, the expression “debit note” shall include a supplementary invoice.
It has to be strictly borne in mind that a credit or a debit note, for the purpose of the GST Law, can be issued by
the registered person who has issued a tax invoice, i.e. the supplier.
One need to bear in mind that mechanism of credit note must not be used to offset the liability of GST on account
of bad debts, which is not permissible under specified purposes of credit note U/s 34 (1).
In Section 34 amendment is made to enable the registered person to issue a single or multiple credit notes or
debit notes against multiple invoices.
Rule 53 sub-Rule (1A) is inserted to provide the mandatory requirements for the issue of credit note or debit
note. The content remain more or less same. In debit or credit note, “serial number(s) and date(s) of the
corresponding tax invoice(s) or, as the case may be, bill(s) of supply”, need to be mentioned.
Example 7: ABC supplied 10 televisions to XYZ for Rs. 6,00,000 on 25.02.2018. Accordingly, GST on the same
was discharged in the month of February, paid on 20.03.2018. Later it was realized that out of 10 sets of
television, one television was of lower grade model and hence Rs. 10,000 has been billed extra to XYZ. But
such credit note can be issued till 30.09.2018 so as to adjust the tax liability paid extra on Rs. 10,000. Based
on the credit note of ABC, XYZ will reduce the amount of ITC availed on Rs. 10,000.
Circular No. 72/46/2018 Dated 26th October 2018

The circular provides two options which can be followed for return of expired drugs or medicine:
The retailer or the wholesaler can issue tax invoice/bill of supply/commercial invoice, as the case may be,
by treating return of expired goods as fresh supply, or
The manufacturer/wholesaler can issue a credit note against the supply made earlier to the wholesaler/
retailer.
Return of time expired goods to be treated as fresh supply
If the wholesaler/retailer is a registered person, it can return the goods by treating it as a fresh supply and
thereby issuing an invoice for the same. The value of the said goods as shown in the invoice on the basis
of which the goods were supplied earlier may be taken as the value of such return supply. The recipient
i.e. the manufacturer or wholesaler as the case may be, will be eligible to take credit of tax paid.
Further, if the person returning the goods, is a composition taxpayer, then he may return goods by issuing
a bill of supply and pay applicable tax. In such case, credit will not be available to the person to whom
goods are returned.
If the expired goods are returned by an unregistered person, then he may return the goods under the
cover of any commercial document.
Where the returned expired goods are destroyed by the manufacturer, it is required to reverse the credit
availed in respect of such returned goods in view of provisions of section 17(5)(h) of the Central Goods
and Services Tax Act and not the credit attributable to the manufacture of such time expired goods.
Illustration: Supposedly, manufacturer has availed ITC of Rs. 10/- at the time of manufacture of medicines
valued at Rs. 100/-. At the time of return of such medicine on the account of expiry, the ITC available to
Study Notes
221
the manufacturer on the basis of fresh invoice issued by wholesaler is Rs. 15/-. So, when the time expired
goods are destroyed by the manufacturer he would be required to reverse ITC of Rs. 15/- & not of Rs.
10/-.
Return of time expired goods by issuing the credit note
As an alternative to the above procedure, the supplier can issue a credit note to the person returning the
goods. The person returning such expired medicines can return it by issuing a delivery challan.
If the credit note is issued within the time limit specified in section 34(2) of the CGST Act, the supplier can
adjust his tax liability, if the person returning the medicine has either not availed ITC or reversed the ITC,
if availed.
A credit note can still be issued if the time limit specified in section 34(2) of the CGST Act has lapsed.
However, the supplier cannot adjust the tax liability. It is also clarified that in such cases, there is no
requirement to declare such credit note on GSTN by the supplier.
The manufacturer will be required to reverse the ITC attributable to the manufacture of such goods at the
time of destruction of such time expired medicines
Further, this circular is applicable to such other scenarios where the goods are returned on account of other
reasons.
Section 32 Prohibition of Unauthorized collection of Tax
A person who is not a registered person shall not collect in respect of any supply of goods or services or both
any amount by way of tax under this Act.
No registered person shall collect tax except in accordance with the provisions of this Act or the rules made
thereunder.
Section 33 Amount of tax to be indicated in tax invoice and

other documents
Notwithstanding anything contained in this Act or any other law for the time being in force, where any supply is
made for a consideration, every person who is liable to pay tax for such supply shall prominently indicate in all
documents relating to assessment, tax invoice and other like documents, the amount of tax which shall form
part of the price at which such supply is made.
Goods moved within the State or from the State of registration to

another State for supply on approval basis and art works sent by artists
to galleries for exhibition
Suppliers of jewellery etc. who are registered in one State may have to visit other States (other than their State
of registration) and need to carry the goods (such as jewellery) along for approval. In such cases if jewellery
etc. is approved by the buyer, then the supplier issues a tax invoice only at the time of supply. Since the
suppliers are not able to ascertain their actual supplies beforehand and while ascertainment of tax liability in
advance is a mandatory requirement for registration as a casual taxable person, the supplier is not able to
222
register as a casual taxable person. Such goods are also carried within the same State for the purposes of
supply.
In view of relevant provisions of rule 55, it is clarified that the goods which are taken for supply on approval
basis can be moved from the place of business of the registered supplier to another place within the same State
or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice
may be issued at the time of delivery of goods. For this purpose, the person carrying the goods for such supply
can carry the invoice book with him so that he can issue the invoice once the supply is fructified. [Circular No.
10/10/2017 GST Dated 18.10.2017].
Likewise, in case where artists supply art works in different States - other than the State in which they are
registered as a taxable person and if the art work is selected by the buyer, then the supplier issues a tax invoice
only at the time of supply, it is clarified that the art work for supply on approval basis can be moved from the
place of business of the registered person (artist) to another place within the same State or to a place outside
the State on a delivery challan along with the eway bill wherever applicable and the invoice may be issued at
the time of actual supply of art work.
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Question & Answer

Q1. ABC Ltd. entered into a contract with XYZ Ltd., for supply of goods on 15 th August 2017. The goods were
to be delivered on 30th August 2017. ABC Ltd. removed goods on 28th August 2017. When should ABC Ltd.
issue the tax invoice?
A. 28th August 2017 according to section 31.
Q2. The aggregate turnover of ABC Ltd. exceeded Rs. 20 Lacs on 15th August 2017. It applied for registration
on 5th September 2017 and was granted registration on 7th September 2017. Please give your commentary for
this.
A. As per Section 25 of CGST Act, ABC Ltd. has applied within 30 days of becoming liable for registration. So,
effective date of registration is date on which it becomes liable to registration i.e. 15 th August 2017.
As per Section 31, ABC Ltd. has to issue the revised tax invoices in respect of taxable supplies effected
during the period starting from the effective date of registration i.e. 15th August 2017, till date of issuance
certificate of registration i.e. 7th September 2017 within 1 month from the date of issuance of certificate of
registration i.e. on or before 7th October 2017.
Q3. ABC Ltd. is a trader dealing in provisions items. It is registered under GST and has undertaken following
sales during the day:
Sr. No. Recipient of Supply Amount
1 A – a registered retail dealer under composition levy 190
2 B – an unregistered dealer 500
3 C – an unregistered buyer 900
4 D Charitable Trust – an unregistered entity 175
5 E – a senior citizen – an unregistered 150
None of the recipients require a tax invoice.
A. In the given question, ABC Ltd. can issue a consolidated tax invoices to supplies made to D Charitable
trust & E as the value of goods supplied to these recipients is less than Rs. 200 (unregistered & don’t require
a tax invoice).
Although A sales is less than Rs. 200 but A is registered retail dealer. So consolidated invoice cannot be
issued. Other sales are anyway more than Rs. 200, so consolidated invoice cannot be issued.
Q4. When can a taxable person not issue credit note?

A. According to proviso to Sec 34 (2) of the CGST Act, 2017, no credit note shall be issued by the taxable
person if the incidence of tax and interest on such supply has been passed by the supplier to the recipient. No
reduction in output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such
supply has been passed on to any other person.
Q5. What is the time limit for issuance of credit note?

A. A supplier cannot issue a credit note pertaining to a supply of goods or services or both of a particular
financial year later than the
(i) Month of September following the end of the financial year in which such supply was made, or
(ii) Date of furnishing of the relevant annual return.
Whichever is earlier.
Example: Suppose, Mr. A has supplied goods to Mr. B in the month of Sept’17. Mr. B sends a complaint to Mr.
A about deficient quality of goods. Mr. A can issue a credit note to Mr. B in respect of such supply of goods
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and declare details of such credit note in the return till the month of Sept’18 or till the date of furnishing of
annual return of 2017-18, whichever is earlier.
Q6. When can a debit note be issued? Is there any time limit for issue of debit note?
A. Debit note can be issued by the supplier of the goods or services or both, to the recipient, when
subsequent to the issue of tax invoice he comes to know that taxable value or tax charged in that tax invoice
is less than the taxable value or tax payable with respect to such supply
Example: Mr. A has provided services of dry cleaning to Mr. B and charges Rs. 500 and tax at the rate of 12%
i.e. Rs. 60. Afterwards, Mr. A comes to know that he has undercharged Mr. B by Rs. 200. He communicates
to Mr. B that he has charged Mr. B less by Rs. 200 and issues debit note and charges additional tax of Rs. 24.
In such a case, tax liability of Mr. A would be on Rs. 700 only and he would have to pay tax of Rs. 84.
There is no time limit for issuance of debit note.
Q7. I am constructing a building for my client. The client is required to pay me on completion of plinth, 1st
floor and 2nd floor. When should the invoice be raised?
Ans. The above instance is a case of continuous supply of services. Here, since the payment is linked to
completion of an event (i.e., milestones set in the contract), an invoice should be raised on or before
the due date of completion of event as per section 31(5)(c) of the CGST Act, 2017. Therefore, an
invoice be raised on or before completion of the 1st floor and the second time on or before the completion
of 2nd floor.
Q8. I had a contract for supplying manpower for 28 days for Rs. 28,000/-. However, after 10 days, the service
has stopped. Should I raise an invoice?
Ans. Yes. Where a supply of service ceases before its completion, an invoice has to be issued at the time
the supply ceases, i.e., on the 10th day. The invoice shall be issued to the extent of the service provided
before its cessation. (Section 31(6) of the CGST Act,2017).
Q9. ABC Ltd., located in Pune (Maharashtra), received the advance to supply the training. As per the
agreement, the supplier may have to impart the training to Jaipur branch or Mumbai branch (both are
registered place of recipient) as per the need. What should be the treatment?
Ans. At the time of receiving the advance, supplier is known that where he has impart the training.
Nevertheless, he has to issue the receipt voucher at the time of receipt of advance. As far as, nature of supply
is concerned, he will have to treat it as inter-State supply and will have to pay IGST on it. If later on it is
supplied that it was imparted in Mumbai Branch (intra-State supply), then as per Section 19 of IGST Act, it
says that person will pay correct tax (here, it is CGST+SGST, being found as intra-State supply) without
interest and claim the refund of IGST paid.
Q10. How can I supply goods without movement?

Ans. In cases where the ownership, or the risks and rewards are transferred without requiring the movement
of goods, the goods would be treated as supplied although no movement is involved in effecting such supply.
E.g. when an Agent who is in possession of certain goods decides to buy the goods from the principal, or in
case where there is an on-site installation of machinery, or in case of sale and lease back transactions, etc.
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Section 35 Accounts & Records

Section 36 Period of retention of accounts
Section 68 Inspection of goods in movement
Rule 138 E-way Bill
Section 35 Accounts & Records & Section 36 Period of

retention of accounts
Applicability [Sec. 35 (1)] Every Registered person

Location [Sec. 35 (1)] At the principal place of business, as mentioned in the certificate of registration.
In case of more than one place of business, the accounts relating to each place
of business shall be kept at such places of business.
Records to be kept [Sec. Registered Person shall keep and maintain, a true and correct account of –
35 (1)] a) Production or Manufacture of goods;
b) Inward & outward supply of goods or services or both;
c) Stock of goods;
d) Input Tax credit availed;
e) Output tax payable and paid; and
f) Such other prescribed particulars.
Electronic Form The registered person may keep and maintain such accounts and other
particulars in electronic form stored on any electronic device and record so
maintained shall be authenticated by means of a digital signature. Back up of
records shall be maintained. Whenever demanded, provide authenticated hard
copy or in any electronically readable format, relevant passwords, codes etc. No
entry to be erased/overwritten.
Persons covered for 1. Following persons shall mandatorily maintain records of the Consignor,
mandatory Maintenance Consignee and other prescribed details: -
of records [Sec. 35 (2) a) Every owner or operator of warehouse or godown or any other place
read with rule 58] used for storage of goods and
b) Every transporter
2. If such persons are not already registered, they shall obtain a unique
enrollment number by applying electronically at the GST common portal.
3. Records to be maintained: -
a) Persons engaged in the business of Transporting Goods: Records
of goods transported, delivered and goods stored in transit by him along
with GSTIN of the registered consignor and consignee for each of his
branches.
b) Owner or Operator of warehouse or Godown: Books of Accounts,
with respect to the period for which particular goods remain in the
warehouse, including the particulars relating to dispatch, movement,
receipt, and disposal of such goods.
For the purposes of Chapter XVI of these rules, a transporter who is registered
in more than one State or Union Territory having the same Permanent Account
Number, he may apply for a unique common enrolment number by submitting
the details in FORM GST ENR-02 using any one of his Goods and Services Tax
Identification Numbers, and upon validation of the details furnished, a unique
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common enrolment number shall be generated and communicated to the said
transporter:
Provided that where the said transporter has obtained a unique common
enrolment number, he shall not be eligible to use any of the Goods and Services
Tax Identification Numbers for the purposes of the said Chapter XVI.
Rule 58 (1A) - Inserted vide notification No. 28/2018-CT, Dated 19.06.2018
Chapter XVI is related to e-way rules. Transporter may apply for a unique
common enrollment number for all his registration under GST. After obtaining
unique common enrolment number, he shall not be eligible to use any of GSTIN
for the purpose of e-way rules.
Power of Commissioner a) May also notify a person to maintain additional accounts or documents
[Sec. 35 (3) & 35 (4)] b) May permit to maintain in prescribed manner.
Requirement for Audit Every registered person whose turnover during a financial year exceeds the Rs.
[Sec. 35 (5)] 2 crores, must get his accounts audited by a Chartered Accountant or Cost
Accountant. He shall submit a copy of the
• Audited Annual accounts, and
• A reconciliation statement u/s 44 (2) [to reconcile the value of supplies
declared in the returns with the audited annual financial statements] &
• Such other documents as may be prescribed
Provided that nothing contained in this sub-section shall apply to any
department of the Central Government or a State Government or a local
authority, whose books of account are subject to audit by the Comptroller and
Auditor-General of India or an auditor appointed for auditing the accounts of
local authorities under any law for the time being in force.
Failure to Account for Proper officer shall determine the of tax payable on the goods or services or
Goods or Services [Sec. both that are not accounted for. Also, provisions regarding determination of tax
35 (6)] not paid or short paid due to Fraud or other reasons shall be equally apply for
determination of such tax.
Records prescribes by Every registered person shall keep and maintain a True and Correct Account of
rules [Rule 56 (1), (3), (5) the following –
& (6)] a) The goods/services imported/exported
b) Supplies attracting payment of tax on reverse charge along with
relevant documents, including invoices, bills of supply, delivery
challans, credit notes, debit notes, receipt vouchers, payment vouchers
and refund vouchers
c) Separate account of advances received, paid and adjustments made
thereto
Registered person also required to keep complete address of suppliers from he
has received goods or services, to whom he has supplies goods or services. He
is also required to keep the particulars of the complete address of premises
where goods are stored by him. If any taxable goods found to be stored at any
place other than those so declared without proper documents then proper officer
shall determine the amount of tax payable on such goods.
Records which are not to a) Stock of goods: No need to keep records of goods received, supplied,
be maintained by a opening balance, goods lost, stolen, destroyed, written off or disposed
supplier opting for of by way of gift or free sample and balance stock.
composition levy [Rule 56 b) Details of Tax: Account, containing the details of tax payable (including
(2) & (4)] tax payable under reverse charge), tax collected and paid, input tax,
ITC claimed, together with a register of tax invoice, credit notes, debit
notes, delivery challan issued or received during any tax period.
Records to be maintained a) Particulars of authorization received by him from each principal to
by Agent [Rule 56 (11)] receive or supply goods or services on behalf of such principal
separately;
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227
b) Particulars including description, value and quantity (wherever

applicable) of goods or services received on behalf of every principal;
c) Particulars including description, value and quantity (wherever
applicable) of goods or services supplied on behalf of every principal;
d) Details of accounts furnished to every principal; and
e) Tax paid on receipts or on supply of goods or services effected on
behalf of every principal;
Records to be maintained Monthly production accounts showing quantitative details of raw materials or
by manufacturer [Rule 56 services used in the manufacture and quantitative details of the goods or
(12)] manufactured including the waste and by products thereof.
Records to be maintained Account showing quantitative details of goods used in the provision of services,
by a supplier of services details of input services utilized and the services supplied.
[Rule 56 (13)]
Separate Accounts to be a) The names and addresses of the person on whose behalf the works
maintained by a contract is executed
registered person b) Description, value and quantity of goods or services received for the
executing works contracts execution of works contract
[Rule 56 (14)] c) Description, value and quantity of goods or services utilized in the
execution of works contracts
d) The details of payment received in respect of each works contract and
e) The names and addresses of suppliers from whom he received goods
or services
Records to be maintained Any person having custody over the goods in the capacity of a carrier or a
by a custodian/clearing clearing and forwarding agent for delivery or dispatch thereof to a recipient on
and forwarding agent behalf of any registered person shall maintain true and correct records in respect
[Rule 56 (17)] of such goods handled by him on behalf of such registered person and shall
produce the details thereof as and when required by the proper officer
Period of Retention of Till expiry of 72 months from the due date of furnishing of annual return
Accounts [Section 36]
Extended time limit If a registered person, is a party to
a) An appeal or shall retain the
b) Revision or accounts & other
c) Any other proceedings before any records pertaining
Appellate Authority or Revisional to the subject
Authority or Appellate Tribunal or matter
Court, or - for a period of
d) Is under investigation for an offence 1 year after final
disposal of
such matter or
for 72 months
whichever is
later
Requirement of In case of auction of tea, coffee, rubber etc., the requirement of maintaining the
maintaining the books of books of accounts at the Principal Place of Business (PPoB) and Additional
accounts in case of Place(s) of Business (APoB) is as below:
auction of tea, coffee, a. For the purpose of auction of tea, coffee, rubber, etc, the principal and the
rubber etc. auctioneer may declare the warehouses, where such goods are stored, as
[Circular No. 47/21/2018 their APoB. The buyer is also required to disclose such warehouse as his
GST Dated 08.06.2018] APoB if he wants to store the goods purchased through auction in such
warehouses. For the purpose of supply of tea through a private treaty, the
principal and an auctioneer may also comply with the said provisions.
b. The principal and the auctioneer for the purpose of auction of tea, coffee,
rubber etc., or the principal and the auctioneer for the purpose of supply
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of tea through a private treaty, are required to maintain the books of
accounts relating to each and every place of business in that place itself
in terms of the first proviso to section 35(1) of the CGST Act [discussed
earlier]. However, in case difficulties are faced in maintaining the books of
accounts, it is clarified that they may maintain the books of accounts
relating to the APoB at their PPoB instead of such additional place(s).
c. The principal and the auctioneer for the purpose of auction of tea, coffee,
rubber etc., or the principal and the auctioneer for the purpose of supply
of tea through a private treaty, shall intimate their jurisdictional officer in
writing about the maintenance of books of accounts relating to the APoB
at their PPoB.
ITC availment: It is further clarified that the principal and the auctioneer for the
purpose of auction of tea, coffee, rubber etc., or the principal and the auctioneer
for the purpose of supply of tea through a private treaty, shall be eligible to avail
ITC subject to the fulfilment of other provisions of the CGST Act read with the
rules made thereunder.

Sec. 68 (1) Carrying of documents
For the movement of goods, the person in charge of a conveyance may require to carry such documents as
may be specified by the government and such devices as may be prescribed. The documents may be required
to carry by the person in charge only in case if they are exceeding the value specified in this respect.
Sec. 68 (2) Validation of documents
The details of documents required to be carried under sub-section (1) shall be validated in such manner as may
be prescribed.
Sec. 68 (3) Inspection of documents
Proper officer may intercept any person in charge carrying goods in conveyance to produce such documents
and devices as prescribed in sub-section (1) to check the validity of the movement of goods, and such person
in charge of goods will be required to produce the same for verification.
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230
Rule 138 Information to be furnished prior to commencement of

movement of goods and generation of e-way bill
E-way bill is of three parts:

Part A is description of
goods, which is normally
expected to be filled by
consignor, but can be filled
by others also.
Part B is description of
mode of transport, which is
normally expected to be
filled in by transporter but in
many cases, by other also.
The third part is unique e-

way bill number and date,
which is generated on
common portal once both
parts get filled up.
(1) Every registered person who causes movement of goods of consignment value exceeding Rs. 50,000:
(i) In relation to a supply; or
(ii) For reasons other than supply; or
(iii) Due to inward supply from an unregistered person,
shall, before commencement of such movement, furnish information relating to the said goods as
specified in Part A of Form GST EWB-01, electronically, on the common portal and a unique number
will be generated on the said portal.
Transporter, may furnish such information on authorization from the registered person.
ECO or courier agency, may furnish such information on authorization from the consigner.
In case of job work, principal/job worker (if registered) can furnish information if it is inter-State,
irrespective of value of consignment.
In case of interstate supply of handicraft goods, even if person has been exempted from the requirement
of obtaining registration, e-way bill shall be generated irrespective of value of consignment.
Consignment value of goods would be value, determined in accordance with Section 15 and
would be declared in an invoice, bill of supply or a delivery challan and include central tax,
State or Union territory tax, integrated tax and cess charged, if any, in the document and shall exclude
the value of exempt supply of goods where the invoice is issued in respect of both exempt and taxable
supply of goods.
(2) Where the goods are transported by registered person as a consignor or the recipient of supply as the
consignee, whether in his own conveyance or a hired one or a public conveyance, by road, the said person
shall generate the e-way bill in Form GST EWB-01 on the common portal after furnishing information in
Part B of Form GST EWB-01.
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(2A)Where the goods are transported by railways or by air or vessel, the e-way bill shall be
generated by registered supplier or registered recipient. He shall generate before or after the
commencement of movement, the information in Part B of Form GST EWB-01. Where the goods are
transported by railways, the railways shall not deliver the goods unless the e-way bill is produced for
delivery.
(3) Where the e-way bill is not generated under sub-rule (2) and the goods are handed over to a transporter for
transportation by road, the registered person shall furnish the information relating to the transporter on the
common portal and the e-way bill shall be generated by the transporter on the said portal on the basis of
the information furnished by the registered person in Part A of FORM GST EWB-01:
Provided that the registered person or, the transporter may, at his option, generate and carry the e-way bill
even if the value of the consignment is less than fifty thousand rupees:
Provided further that where the movement is caused by an unregistered person either in his own
conveyance or a hired one or through a transporter, he or the transporter may, at their option, generate the
e-way bill in FORM GST EWB-01 on the common portal in the manner specified in this rule:
Provided also that where the goods are transported for a distance of upto fifty kilometers within the State or
Union territory from the place of business of the consignor to the place of business of the transporter for
further transportation, the supplier or the recipient, or as the case may be, the transporter may not furnish
the details of conveyance in Part B of FORM GST EWB-01.
Explanation 1.– For the purposes of this sub-rule, where the goods are supplied by an unregistered supplier
to a recipient who is registered, the movement shall be said to be caused by such recipient if the recipient
is known at the time of commencement of the movement of goods.
Explanation 2.- The e-way bill shall not be valid for movement of goods by road unless the information in
Part-B of FORM GST EWB-01 has been furnished except in the case of movements covered under the
third proviso to sub-rule (3) and the proviso to sub rule (5).
(4) Upon generation of the e-way bill on the common portal, a unique e-way bill number (EBN) shall be made
available to the supplier, the recipient and the transporter on the common portal.
(5) Where the goods are transferred from one conveyance to another, the consignor or the recipient, who has
provided information in Part A of the FORM GST EWB-01, or the transporter shall, before such transfer and
further movement of goods, update the details of conveyance in the e-way bill on the common portal in Part
B of FORM GST EWB-01:
Provided that where the goods are transported for a distance of upto fifty kilometers within the State or
Union territory from the place of business of the transporter finally to the place of business of the consignee,
the details of the conveyance may not be updated in the e-way bill.
(5A)The consignor or the recipient, who has furnished the information in Part A of FORM GST
EWB-01, or the transporter, may assign the e-way bill number to another registered or enrolled
transporter for updating the information in Part B of FORM GST EWB-01 for further movement of
the consignment:
Provided that after the details of the conveyance have been updated by the transporter in Part B of
FORM GST EWB-01, the consignor or recipient, as the case may be, who has furnished the information
in Part A of FORM GST EWB-01 shall not be allowed to assign the e-way bill number to another
transporter.
(6) After e-way bill has been generated in accordance with the provisions of sub-rule (1), where multiple
consignments are intended to be transported in one conveyance, the transporter may indicate the serial
number of e-way bills generated in respect of each such consignment electronically on the common portal
and a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on the said common portal
prior to the movement of goods.
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Example 1: ABC transport in Kashmir, has to transport 3 different type of goods to 3 different traders in New
Delhi. All 3 consignments are being transported against 3 different invoices issued by 3 different traders
but, will be transported in a single truck. ABC transport may generate a consolidated e-way bill.
(7) Where the consignor or the consignee has not generated the e-way bill in FORM GST EWB-01 and the
aggregate of the consignment value of goods carried in the conveyance is more than fifty thousand rupees,
the transporter, except in case of transportation of goods by railways, air and vessel, shall, in respect of
inter-State supply, generate the e-way bill in FORM GST EWB-01 on the basis of invoice or bill of supply or
delivery challan, as the case may be, and may also generate a consolidated e-way bill in FORM GST EWB-
02 on the common portal prior to the movement of goods:
Provided that where the goods to be transported are supplied through an e-commerce operator or a courier
agency, the information in Part A of FORM GST EWB-01 may be furnished by such e-commerce operator
or courier agency.
(8) The information furnished in Part A of FORM GST EWB-01 shall be made available to the registered
supplier on the common portal who may utilize the same for furnishing the details in FORM GSTR-1:
Provided that when the information has been furnished by an unregistered supplier or an unregistered
recipient in FORM GST EWB-01, he shall be informed electronically, if the mobile number or the e-mail is
available.
(9) Where an e-way bill has been generated under this rule, but goods are either not transported or are not
transported as per the details furnished in the e-way bill, the e-way bill may be cancelled electronically on
the common portal within twenty four hours of generation of the e-way bill:
Provided that an e-way bill cannot be cancelled if it has been verified in transit in accordance with the
provisions of rule 138B:
Provided further that the unique number generated under sub-rule (1) shall be valid for a period of fifteen
days for updation of Part B of FORM GST EWB-01.
(10) An e-way bill or a consolidated e-way bill generated under this rule shall be valid for the period as mentioned
in column (3) of the Table below from the relevant date, for the distance, within the country, the goods have
to be transported, as mentioned in column (2) of the said Table:-
Sr. No. Distance Validity Period

1. Upto 100 KM One day
2. For every 100 KM, or part thereof thereafter One additional day
3. Upto 20 KM One day in case of over
Dimensional Cargo
4. For every 20 KM or part thereof thereafter One additional day in case
of over Dimensional cargo
Example 2: Suppose eway bill generated on April 1, 2018 at 5 p.m. for transport of cargo which will cover
a distance of 90 kms. This eway bill will be valid for one day (till mid night of April 2, 2018);
Suppose eway bill generated on April 1, 2018 at 5 p.m. for transport of cargo which will cover a distance of
190 kms. This eway bill will be valid for two days (till mid night of April 3, 2018).
Provided that the Commissioner may, on the recommendations of the Council, by notification, extend the
validity period of an e-way bill for certain categories of goods as may be specified therein:
Provided further that where, under circumstances of an exceptional nature, including trans-shipment, the
goods cannot be transported within the validity period of the e-way bill, the transporter may extend the
validity period after updating the details in Part B of FORM GST EWB-01, if required.
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Explanation 1.—For the purposes of this rule, the ―”relevant date” shall mean the date on which the e-way
bill has been generated and the period of validity shall be counted from the time at which the e-way bill has
been generated and each day shall be counted as the period expiring at midnight of the day immediately
following the date of generation of eway bill.
Explanation 2.— For the purposes of this rule, the expression ―”Over Dimensional Cargo” shall mean a
cargo carried as a single indivisible unit and which exceeds the dimensional limits prescribed in rule 93 of
the Central Motor Vehicle Rules, 1989, made under the Motor Vehicles Act, 1988 (59 of 1988).
(11) The details of the e-way bill generated under this rule shall be made available to the-
(a) supplier, if registered, where the information in Part A of FORM GST EWB-01 has been furnished by
the recipient or the transporter; or
(b) recipient, if registered, where the information in Part A of FORM GST EWB-01 has been furnished by
the supplier or the transporter,
on the common portal, and the supplier or the recipient, as the case may be, shall communicate his
acceptance or rejection of the consignment covered by the e-way bill.
(12) Where the person to whom the information specified in sub-rule (11) has been made available does not
communicate his acceptance or rejection within seventy two hours of the details being made available to
him on the common portal, or the time of delivery of goods whichever is earlier, it shall be deemed that he
has accepted the said details.
(13) The e-way bill generated under this rule or under rule 138 of the Goods and Services Tax Rules of any
State or Union territory shall be valid in every State and Union territory.
(14) Specific goods that are exempt from eway bill rules are:
1. Transportation of those goods laid down in the annexure to rules as specified below:
▪ Liquefied petroleum gas for supply to household and non-domestic exempted category
customers
▪ Kerosene oil sold under PDS
▪ Postal baggage transported by Department of Posts
▪ Natural or cultured pearls and precious or semi-precious stones; precious metals and metals
clad with precious metal
▪ Jewellery, goldsmiths’ and silversmiths’ wares and other articles
▪ Currency
▪ Used personal and household effects
▪ Unworked and worked coral
2. Goods being transported are alcoholic liquor for human consumption, petroleum crude, high-speed
diesel, petrol, natural gas or aviation turbine fuel.
3. Goods being transported are not treated as supply under Schedule III of the Act (Schedule III consists
of activities that would neither be supply of goods nor service like service of an employee to an
employer in the course of his employment, functions performed by MP, MLA etc.)
4. Goods transported are empty cargo containers
5. Goods, other than de-oiled cake, being transported are specified in notification No. 2/2017– Central
tax (Rate) Dated the 28th June, 2017. Few of the goods that are included in the above notification
are as follows:
▪ Curd, lassi, buttermilk
▪ Fresh milk and pasteurized milk not containing added sugar or other sweetening matter
▪ Vegetables
▪ Fruits
▪ Unprocessed tea leaves and unroasted coffee beans
▪ Live animals, plants and trees
▪ Meat
▪ Cereals
▪ Unbranded rice and wheat flour
234
▪ Salt
▪ Items of educational importance (books, maps, periodicals)
6. Goods exempted under notification No. 7/2017– Central Tax (Rate) Dated 28th June 2017 (supply
by CSD to unit run canteens and authorized customers) and notification No. 26/2017– Central Tax
(Rate) Dated 21st September 2017 (consists of heavy water and nuclear fuels)
7. Where empty cylinders for packing of liquefied petroleum gas are being moved for reasons other than
supply.
Other transactional cases where eway bill is not required are:
1. Eway bill is optional for Goods of value less than Rs. 50,000 (except in cases of mandatory
Eway bill provisions like the movement of Handicraft goods and movement of goods for Inter-
state Job work )
2. If goods are being transported by a non- motorized conveyance (Ex. Horse carts or manual
carts)
3. If goods are being transported:
▪ From the port, airport, air cargo complex and land customs station to an inland
container depot (ICD) or a container freight station (CFS) for clearance by Customs
▪ From ICD or CFS to a customs port, airport, air cargo etc. under customs bond
▪ From one customs port/station to another one under customs bond
▪ Goods transported under the customs supervision or customs seal
4. Goods transported within the notified area
5. Goods transported are transit from/to Nepal/ Bhutan
6. If goods are transported to a weighbridge within 20kms and back to the place of business by
being covered under a Delivery Challan
7. Where Government or local authorities transport goods by rail as a consignor
8. Goods transported are to/from the Ministry of Defense
Rule 138A Documents and devices to be carried by a person-in-

charge of a conveyance
(1) The person-in-charge of conveyance shall carry-
(a) The invoice or bill of supply or delivery challan, and
(b) A copy of e-way bill in physical form or the e-way bill number in electronic form or mapped to a
Radio Frequency Identification Device embedded on to the conveyance in such manner as may
be notified by the Commissioner:
Provided the nothing contained in clause (b) of this sub-rule shall apply in case of movement of
goods by rail or by air or vessel.
Provided further that in case of imported goods, the person in charge of a conveyance shall also
carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and
date of the bill of entry in Part A of FORM GST EWB-01
(2) A registered person may obtain an Invoice Reference Number from the common portal by uploading,
on the said portal, a tax invoice issued by him in Form GST INV-1 and produce the same for verification
by the proper officer in lieu of the tax invoice and such number shall be valid for a period of thirty days
from the date of uploading.
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Rule 138B Verification of documents and conveyances

(1) The Commissioner or an officer empowered by him in this behalf may authorize the proper officer to
intercept any conveyance to verify the e-way bill in physical or electronic form for all inter-State and
intra-State movement of goods.
(2) The Commissioner shall get Radio Frequency Identification Device readers installed at places where
the verification of movement of goods is required to be carried out and verification of movement of
vehicles shall be done through such device readers where the e-way bill has been mapped with the
said device.
(3) The physical verification of conveyances shall be carried out by the proper officer as authorized by the
Commissioner or an officer empowered by him in this behalf.
Provided that on receipt of specified information on evasion of tax, physical verification of a specific
conveyance can also be carried out by any other officer after obtaining necessary approval of the
Commissioner or an officer authorized by him in this behalf.
Rule 138C Inspection and verification of goods

(1) A summary report of every inspection of goods in transit shall be recorded online by the proper officer
in Part A of Form GST EWB-03 within 24 hours of inspection and the final report in Part B of Form GST
EWB-03 shall be recorded within 3 days of such inspection.
Provided that where the circumstances so warrant, the Commissioner, or any other officer authorised
by him, may, on sufficient cause being shown, extend the time for recording of the final report in Part B
of FORM EWB-03, for a further period not exceeding three days.
Explanation.- The period of twenty four hours or, as the case may be, three days shall be counted from
the midnight of the date on which the vehicle was intercepted.
(2) Where the physical verification of goods being transported on any conveyance has been done during
transit at one place within the State or UT or in any other State or UT, no further physical verification of
the said conveyance shall be carried out again in the State or UT, unless a specific information relating
to evasion of tax is made available subsequently.
Example 3: Where a conveyance carrying 25 consignments is intercepted and the person-in-charge of such
conveyance produces valid e-way bills and/or other relevant documents in respect of 20 consignments, but is
unable to produce the same with respect to the remaining 5 consignments, detention/ confiscation can be made
only with respect to the 5 consignments and the conveyance in respect of which the violation of the Act or the
rules made thereunder has been established by the proper officer.
Rule 138D Facility for uploading information regarding detention

of vehicle
Where a vehicle has been intercepted and detained for a period exceeding 30 minutes, the transporter may
upload the said information in Form GST EWB-04 on the common portal.
Explanation. - For the purposes of this Chapter (E-way Bill), the expressions ‘transported by railways‘,
‘transportation of goods by railways‘, ‘transport of goods by rail‘ and ‘movement of goods by rail‘ does not include
cases where leasing of parcel space by Railways takes place.
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Circular No. 64/38/2018-GST Dated 14.09.2018
It is clarified that in case a consignment of goods is accompanied by an invoice or any other specified document
and not an e-way bill, proceedings under section 129 of the CGST Act may be initiated.
Further, in case a consignment of goods is accompanied with an invoice or any other specified document and
also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following
situations:
a. Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is
correct;
b. Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject
to the condition that the error in the PIN code should not have the effect of increasing the validity period
of the e-way bill;
c. Error in the address of the consignee to the extent that the locality and other details of the consignee
are correct;
d. Error in one or two digits of the document number mentioned in the e-way bill;
e. Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned
is correct;
f. Error in one or two digits/characters of the vehicle number.
In case of the above situations, penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and
the respective State GST Act should be imposed (Rs.1000/- under the IGST Act) in FORM GST DRC-07 for
every consignment. A record of all such consignments where proceedings under section 129 of the CGST Act
have not been invoked in view of the situations listed in paragraph 5 above shall be sent by the proper officer
to his controlling officer on a weekly basis.
Circular No. 61/35 /2018 GST Dated 04.09.2018 {Consignee/ recipient taxpayer storing goods in the
transporter’s godown}
Textile traders use transporters’ godown for storage of their goods due to their weak financial conditions. The
transporters providing such warehousing facility will have to get themselves registered under GST and maintain
detailed records in cases where the transporter takes delivery of the goods and temporarily stores them in his
warehouse for further transportation of the goods till the consignee/recipient taxpayer’s premises.
In this regard, it is clarified that since e-way bill is a document which is required for the movement of goods from
the supplier’s place of business to the recipient taxpayer’s place of business, the goods in movement including
when they are stored in the transporter's godown (even if the godown is located in the recipient taxpayer’s
city/town) prior to delivery shall always be accompanied by a valid e-way bill.
Further, section 2(85) defines the “place of business” [see definitions] to include “a place from where the
business is ordinarily carried out, 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”. An additional place of business (APoB)
is the place of business from where taxpayer carries out business related activities within the State, in addition
to the principal place of business.
Declaring the transporter’s godown as APoB
In case the consignee/ recipient taxpayer stores his goods in the godown of the transporter, the transporter’s
godown has to be declared as an APoB by the recipient taxpayer. Mere declaration by the recipient taxpayer to
this effect with the concurrence of the transporter in the said declaration will suffice.
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In such cases, the transportation under the e-way bill shall be deemed to be concluded once the goods have
reached the transporter’s godown (recipient taxpayer’ APoB). Hence, e-way bill validity in such cases will not
be required to be extended.
Whenever the goods move from the transporter’s godown (recipient taxpayer’s APoB) to the recipient taxpayer’s
any other place of business, relevant provisions of the e-way bill rules shall apply. Consequently, a valid e-way
bill shall be required, as per the extant State-specific e-way bill rules.
Requirement of maintaining accounts and records
1. Transporter, being a warehouse keeper, has to maintain accounts and records as specified in section 35 read
with rule 58 [discussed earlier in this chapter].
2. Recipient taxpayer shall also maintain accounts and records as required under rules 56 and 57 [discussed
earlier]. Furthermore, as per rule 56(7), books of accounts in relation to goods stored at the transporter’s
godown (i.e., the recipient taxpayer’s APoB) by the recipient taxpayer may be maintained by him at his
principal place of business
Question & Answer

Q1. Who all can generate E-way bill (EWB)?
A. Every registered person who causes movement of goods of consignment value exceeding Rs. 50,000 or
the threshold prescribed (in each State/Union Territory) in relation to supply; or reasons other than supply; or
inward supply from unregistered person shall generate EWB.
It means, the consignor or consignee, as a registered person or a transporter of the goods can generate the
EWB. The unregistered transporter can enroll on the common portal and generate the EWB for movement of
goods for his clients.
Q2. Whether EWB may be generated if the consignment value is less than Rs. 50,000?
A. Yes, the registered person or the transporter, as the case may be, may generate EWB voluntarily, even
if the value of consignment is less than Rs. 50,000.
However, Proviso 3 and 4 to Rule 138(1) of the CGST Rules 2017 mandatorily requires a registered person
to generate an EWB irrespective of the value of consignment where:
• the goods are to be sent by the principal located in one State or Union Territory to a job worker in
other State or Union Territory.
• handicraft goods are transported from one State or Union territory to another State or Union territory
by a person who has been exempted from the requirement of obtaining registration under clauses
(i) and (ii) of section 24 of the CGST Act.
Q3. Who has been casted with the ultimate responsibility of generating EWBs? Consignor, consignee or the
transporter?
A. The primary responsibility to generate EWB shall be of the registered person who causes the movement of
goods, i.e. the consignor or the consignee, as the case may be. However, if such consignor or consignee
doesn’t generate the EWB, it may be generated by transporter as well, if authorized by the registered person.
Also, in case of supply of goods by an unregistered person to registered person, the liability to generate EWB
is on the recipient.
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Q4. Whether EWB would be required, if transportation is done in one's own vehicle or through a public transport?
A. Yes, as per Rule 138 (2), it has been provided that EWB shall be required to be generated, in case the
goods are transported by consignor or consignee in his own vehicle or in a hired one or a public conveyance,
by road. In such case, the registered person causing the movement of goods may raise the EWB after
furnishing the vehicle no. in Part B of FORM GST EWB – 01 if the value of goods being transported is more
than Rs. 50,000.
Q5. How shall one calculate the distance and validity of goods in case of supply through multi-modal transport?
A. The distance and the validity of EWB shall remain the same even if the goods are supplied through a multi-
modal transport. In order to calculate the validity of the EWB, the distance to be covered by all the modes
combined together must be taken into consideration. The validity provided in the CGST Rules is as under:
The “relevant date” shall mean the date on which the e-way bill has been generated and the period of validity
shall be counted from the time at which the e-way bill has been generated and each day shall be counted as
the period expiring at midnight of the day immediately following the date of generation of e-way bill. For
example:
• Suppose eway bill generated on April 1, 2018 at 5 p.m. for transport of cargo which will cover a distance
of 90 kms. This eway bill will be valid for one day (till mid night of April 2, 2018);
• Suppose eway bill generated on April 1, 2018 at 5 p.m. for transport of cargo which will cover a distance
of 190 kms. This eway bill will be valid for two days (till mid night of April 3, 2018).
Note:- Supplier handed over the goods to the transporter on April 1, 2018. Part A of the eway bill was submitted
by the supplier on April 1, 2018 after updating the GSTIN of the transporter. Transporter loaded the goods on
the truck on April 3, 2018 and completed Part B of the eway bill by updating the vehicle number. In this case,
the validity of the eway bill commences from April 3, 2018.
Q6. What is the liability of generation of EWB in case of transportation of goods through e-commerce?
A. Generally, in case of an E-Commerce business model, the logistics is handled by an independent third party
logistic service provider. So, in such a case 4 parties are involved in the transaction (seller, buyer, logistic service
provider and E-Commerce operator). Therefore, in such cases where the goods are to be transported through
an e-commerce operator, on an authorization from consignor, Part A of the EWB may be furnished by the E-
Commerce operator and Part B of the EWB may be furnished either by the E-Commerce operator or by the
third party logistic service provider.
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Q7. Whether any other document needs to be provided to the transporter in addition to EWB, for movement of
goods?
A. In accordance with Rule 55A read with Rule 138A of the CGST Rules, the person in-charge of conveyance
shall carry
➢ Tax Invoice or Delivery Challan or Bill of Supply, as the case may be; and
➢ a copy of the EWB in physical form or the EWB number in electronic form or mapped to a Radio
Frequency Identification Device embedded on to the conveyance in such manner as may be notified by
the Commissioner:
EWB is an additional document and not a substitute for Tax Invoice, delivery challan or any other prescribed
document for the said transaction.
Q8. Can the EWB be deleted?

A. The EWB once generated cannot be deleted. However, it can be cancelled by the generator within 24 hours
of its generation. If it has been verified by any proper officer within 24 hours, then it cannot be cancelled. Further,
EWB can be cancelled if, either goods are not transported or are not transported as per the details furnished in
the EWB. A recipient has right to cancel/ reject the EWB within 72 hours of its generation or actual receipt of
goods, whichever is earlier.
Q9. In case of High Sea Sale Transactions – Whether EWB is required?

A. EWB is required for movement of goods within the country. In case of High Sea Sales as the supply is
affected before the goods cross the custom frontiers of India, EWB is not required to be generated. When the
ultimate buyer files bill of entry, he is required to generate EWB for movement of goods from port to his place
of business.
Q10. Whether EWB is required to be generated for the movement of goods between CFS /ICD to port in
the course of importation and exportation of goods?
A. Rule 138(14) of the CGST Rules 2018, provides that no EWB is required to be generated in respect of:
➢ Movement of goods from the port, airport, air cargo complex and land customs station to an ICD or a
CFS for clearance by Customs in the course of importation.
➢ where the goods are being transported—
1. under customs bond from an ICD or a CFS to a customs port, airport, air cargo complex and land
customs station, or from one customs station or customs port to another customs station or customs
port, or
2. under customs supervision or under customs seal
Therefore, EWB is not required for movement of goods between CFS/ICD to port or vice versa in the course of
importation and exportation of goods.
Q11. How to handle “Bill to” - “Ship to” invoice in e-way bill system?
A. Sometimes, the tax payer raises the bill to somebody and sends the consignment to somebody else as per
the business requirements. There is a provision in the e-way bill system to handle this situation, called as ‘Bill
to’ and ‘Ship to’.
In the e-way bill form, there are two portions under ‘TO’ section. In the left hand side - ‘Billing To’ GSTIN and
trade name is entered and in the right hand side - ‘Ship to’ address of the destination of the movement is entered.
The other details are entered as per the invoice.
In case ship to state is different from Bill to State, the tax components are entered as per the billing state party.
That is, if the Bill to location is inter-state for the supplier, IGST is entered and if the Bill to Party location is intra-
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state for the supplier, the SGST and CGST are entered irrespective of movement of goods whether movement
happened within state or outside the state.
Q12. Whether multiple invoices can be clubbed in one E way bill? If yes, then to what extent?
A. The value of goods determined in the invoice shall be regarded as the value of consignment, on the basis
of which it is decided whether the consignor or consignee is required to generate EWB or not. Therefore, a
separate EWB is required to be generated for every individual invoice where value of corresponding
consignment exceeds Rs.50,000.
Q13. If the goods are taken from one State to another for the purpose of display in exhibition, whether EWB is
required to be generated?
A. EWB would be required to be generated, where the value of the consignment exceeds Rs. 50,000.
Q14. How to generate the EWB in case goods are to be moved to a weighbridge situated outside the factory
and invoice cannot be issued unless goods are weighed?
A. EWB is not required to be generated where the goods are to be transported up to a distance of 20 kms for
the purpose of weighment from the place of business of consignor to a weighbridge, or, from the weighbridge
back to place of consignor. However, such movement should be along with delivery challan to be covered under
relaxation of EWB generation.
Q15. What if the vehicle is stuck at a particular point in the journey due to calamity or traffic jam?
A. The goods are required to be transported within the validity period of the EWB. However, it is provided
that under circumstances of exceptional nature, the transporter may generate another EWB after updating the
details in Part-B of FORM GST EWB-01. These circumstances could be said to be in the nature of exceptional
nature. However, in the absence of specific meaning of the term “exceptional nature”, further clarification is
required.
Q16. What if the same invoice contains both categories of goods i.e. ones exempted for the purpose of
EWBs and taxable, then whether EWB needs to be generated?
A. It is to be noted that the explanation to the Rule 138(1) provides that consignment value for the purpose
of EWB shall be the value, determined in accordance with the provisions of Section 15, declared in invoice or
delivery challan or bill of supply as the case may be. However, it shall exclude the value of exempt supply where
the invoice is issued in respect of both exempted and taxable supply of goods. Therefore, the value of taxable
goods only shall be considered for the purpose of consignment value.
Q17. A registered person has purchased a new mobile phone for Rs. 75,000 and carrying with him on
motorized vehicle. Whether EWB is required to be generated?
A. Yes. It appears that if the movement is caused by a registered person, EWB is required to be generated
for goods exceeding value of Rs. 50,000.
.
Q18. A person has been shifting his households from one State to another on account of job change. Whether
EWB is required to be generated?
A. Used personal and household effects have been covered in the Annexure to the Rule 138 in respect
of which EWB is not required to be generated. Hence, such person is not required to generate EWB in such
cases.
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Q19. How to consider consignment value in case goods is being moved for renting purpose. Do we need to
take the value of goods or value of the rent charged on goods?
A. The consignment value is the value of goods to be determined under section 15 of the CGST Act including
applicable tax thereon. The rent charged represents the value of service portion whereas EWB is to be
generated for the value of goods for which movement is to be undertaken. Hence, in such cases, the value to
be considered should be of the goods not the rental charges charged by the supplier of services. The
movement could be based on delivery challan based on which EWB may be generated.
Q20. Supply of goods through pipeline, whether oil, petroleum, gases, water, electricity etc. whether EWB
is required to be generated?
A. EWB is required to be generated when movement of goods is through motorized conveyance. Further, the
EWB portal has 4 modes of transportation i.e. road, air, rail and ship. As the transportation of goods through
pipeline may not involve movement of goods through motorized vehicle, there may not be need to generate
EWB for such movement of goods.
Q21. An outdoor catering company is transporting utensils and other accessories for catering outside the
kitchen, interstate or intra state. Whether EWB is necessary? If yes what are the documents to be attached
with the EWB? If not under which document, it has to be dispatched?
A. The EWB is required for every movement of goods, even if it is for the purpose other than supply. When
the goods are transported by caterer for use by him in the course of making supply of catering services, it
could be said to be movement of goods by him for himself/ self-use. Though there is no supply of utensils and
other materials to the customer, yet there is movement of goods and hence EWB is required to be generated.
Such EWB may be generated against delivery challan, by providing “Outward” movement and “For own use”
under the reason for transportation.
Q22. A farmer carries the goods from his farm to Mandi for the purpose of sale therein. Whether there is
requirement to generate EWB?
A. Many of the agricultural produces have been exempted from the levy of GST. Wherever items to be
transported is exempted from GST, there is no need to generate EWB. However, if the goods being
transported by farmer are in the nature of taxable goods, EWB has to be generated.
Q23. Where goods are supplied on “as is-where is” basis, whether EWB is required to be generated?
A. EWB is not required to be generated for supply of goods unless it involves movement of goods through
motorized conveyance. In case of sale of goods on “as is – where is” basis, there is no movement of goods.
Hence, there is no need to generate EWB in case of such instances.
Q24. In many cases where manufacturer or wholesaler is supplying to retailers, or where a consolidated
shipment is shipped out, and then distributed to multiple consignees, the recipient is unknown at the time the
goods are dispatched from shipper’s premises. A very common example is when FMCG companies send a
truck out to supply kirana stores in a particular area. What needs to be done in such cases?
A. In such cases, EWB shall be generated for outward movement of goods. No supply is being made, movement
is caused on behalf of self. In such cases, delivery challan may be used for generation of EWBs. All the
provisions for delivery challan need to be followed along with the rules for EWBs.
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Q25. Where an invoice is in respect of both goods and services, whether the consignment value should be
based on the invoice value (inclusive of value of services) or only on the value of goods. Further, whether HSN
wise details of service is also required to be captured in Part A of the EWB in such case.
A. Consignment value and HSN needs to be determined for goods only not for services as only the goods are
in movement and EWB needs to be generated accordingly.
Q26. What shall be the consequence if any document, register, or books of accounts belonging to a registered
person are found at any premises other than those mentioned in the certificate of registration?
A. As per Rule 56(10) of the CGST Rules, 2017, unless it is proved otherwise, if any document, register, or
books of accounts belonging to a registered person are found at any premises other than those mentioned in
the certificate of registration, they shall be presumed to be maintained by the said registered person.
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Section 49 Payment of tax, interest and other amounts

Rule 85 Electronic Liability Register
Rule 86 Electronic Credit Ledger
Rule 87 Electronic Cash Ledger
Rule 88 Unique Identification number
Section 50 Interest on delayed payment of tax
Section 51 Tax deduction at Source
Section 52 Collection of Tax at Source
Section 53 Transfer of ITC
Section 49 Payment of tax, interest and other amounts

Payments
Payments Deposited in Utilized for
(a) Every deposit made Electronic Cash Payment towards tax, interest, penalty,
towards Tax, Interest, Ledger fees or any other amount payable under
Penalty, Fee or any other the provisions of this Act or the rules
amount by a Person [Sec. 49 (1)] [Sec. 49 (3)]
(b) ITC as self-assessed in the Electronic Credit Any payment towards output tax under
Return of a Registered Ledger this Act or under the IGST Act
Person [Sec. 49 (2)] [Sec. 49(4)]
When GST is payable under reverse charge, it should be paid by cash i.e. through Electronic Cash Ledger, the
GST under reverse charge cannot be paid by utilizing ITC – Section 49 (4) read with section 2 (82).
Date of Payment
Payment of taxes by the normal tax payer is to be done on monthly basis by the 20 th of the succeeding month.
Cash payment will be first deposited in the Cash Ledger and the tax payer shall debit the ledger while making
payment in the monthly returns and shall reflect the relevant debit entry number in his return. Payment can also
be debited from the Credit Ledger. Payment of taxes for the month of March shall be paid by the 20th April.
Composition tax payers will need to pay tax on quarterly basis. [The Date of Credit to the account of the
Government in the authorized Bank shall be deemed to be the date of deposit in the Electronic Cash Register].
Mode of Payment
i. Internet Banking, or
ii. By using Credit or Debit cards, or
iii. NEFT/RTGS
iv. By such other mode prescribed by the Government
Rounding off Tax [Sec. 170]

The amount of duty, interest, penalty, fine or any other sum payable, and the amount of refund or any other
sum due, under CGST shall be rounded off to the nearest rupee.
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Utilization of Credit available in Electronic Credit Ledger [Sec. 49 (5)]

The amount of input tax credit available in the electronic credit ledger of the registered person on account of–
(a) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any,
may be utilised towards the payment of central tax and State tax, or as the case may be, Union territory
tax, in that order;
(b) the central tax shall first be utilised towards payment of central tax and the amount remaining, if any,
may be utilised towards the payment of integrated tax;
(c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may
be utilised towards payment of integrated tax;
Provided that the input tax credit on account of State tax shall be utilised towards payment of
integrated tax only where the balance of the input tax credit on account of central tax is not available
for payment of integrated tax.
(d) the Union territory tax shall first be utilised towards payment of Union territory tax and the amount
remaining, if any, may be utilised towards payment of integrated tax;
Provided that the input tax credit on account of Union territory tax shall be utilized towards payment
of integrated tax only where the balance of the input tax credit on account of central tax is not
available for payment of integrated tax.
Please refer
(e) the central tax shall not be utilised towards payment of State tax or Union territory tax; and
Rule 88A in
(f) the State tax or Union territory tax shall not be utilised towards payment of central tax. Chapter 8
ITC
Discharge of Tax Liability [Sec. 49 (7), (8) & (9)]
1. All liabilities of a taxable person under this Act shall be recorded and maintained in an Electronic Liability
Register.
2. Every taxable person shall discharge his tax and other dues under this Act in the following order –
a. Self-assessed tax, and other dues related to Returns of Previous Tax Periods,
b. Self-assessed tax, and other dues related to the Return of the Current Tax Period,
c. Any other amount payable under this Act or the Rules made thereunder including the demand
for recovery of tax determined U/s 73 or U/s 74.
3. Every person who has paid the tax on goods or services or both under this Act shall, unless
the contrary is proved by him, be deemed to have passed on the full incidence of such tax to
the recipient of such goods or services or both.
Note
➢ Tax period means the period for which the tax return is required to be furnished.
➢ Tax dues means the tax payable under this Act and does not include interest, fee and
penalty, and
➢ Other dues mean interest, penalty, fee or any other amount payable under this Act or the
rules made thereunder.
Section 49A Notwithstanding anything contained in section 49, the input tax credit on account of central tax,
State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or
Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has
first been utilised fully towards such payment.
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Section 49B Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and
clause (f) of sub-section (5) of section 49, the Government may, on the recommendations of the Council,
prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, central tax,
State tax or Union territory tax, as the case may be, towards payment of any such tax
Please see example in Chapter 8 :- Input tax credit to understand utilisation of ITC {Rule 88A}
Sec
Tax wrongfully collected and paid to Central Government or State

Government [Sec. 77]
➢ If a registered person has paid the Central tax and State tax/UT tax on a transaction considered by him
to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall be refunded
the amount of taxes so paid.
➢ If a registered person who has paid Integrated tax on a transaction considered by him to be an inter-
State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay
any interest on the amount of central tax and State tax/UT tax payable.
There is identical provision in Section 19 of IGST Act, 2017 for wrongly transactions considered as inter-State
instead of intra-State.
Rule 85 Electronic Liability Register

1. Form: The Electronic Liability Register Specified U/s 49 (7) shall be maintained in FORM GST PMT-01
for each person liable to pay tax, interest, penalty, late fee or any other amount on the Common Portal
and all amounts payable by him shall be debited to the said register.
2. Amounts debited: The electronic liability register of the person shall be debited by:
a. Amount payable towards Tax, Interest, Late fee or any other amount payable as per the return
furnished by the said person,
b. Amount of tax, interest, penalty or any other amount payable as determined by a Proper Officer
in pursuance of any proceedings under the Act or as ascertained by the said person;
c. Amount of tax and interest payable as a result of mismatch u/s 42 or u/s 43 or u/s 50, or
d. Amount of interest that may accrue from time to time.
3. Corresponding Debits in Electronic Credit/Cash Ledger: Payment of every liability by a Registered
Person as per his Return shall be made by debiting the Electronic Credit Ledger maintained or the
Electronic Cash Ledger maintained and the Electronic Liability Register shall be credited accordingly.
4. Credit Entries in the Electronic Liability Register: The following amounts shall be paid by debiting the
Electronic Cash Ledger and crediting the Electronic Liability Register –
a. Amount deducted u/s 51, or
b. Amount collected u/s 52, or
c. Amount payable or Reverse charge basis, or
d. Amount payable u/s 10,
e. Amount payable towards interest, penalty, fee or any other amount under this Act,
5. Electronic Tax Liability Register: The Electronic Liability Register shall be credited with –
a. Any amount of demand debited in the Electronic Liability Register which stands reduced to the
extent of relief given by the Appellate Authority or Appellate Tribunal or Court.
246
b. Amount of Penalty imposed or liable to be imposed which stands reduced partly or fully, as the
case may be, if the taxable person makes the payment of tax, interest and penalty specified in
the show cause notice or demand order.
6. Discrepancy: A Registered person shall, upon noticing any discrepancy in his Electronic Liability
Ledger, communicate the same to the officer exercising jurisdiction in the matter, through the Common
Portal in FORM GST PMT-04.
Rule 86 Electronic Credit Ledger

➢ Form: The Electronic Credit Ledger shall be maintained in FORM GST PMT-02 for each registered
person eligible for ITC under the Act on the Common Portal and every claim of ITC under the Act shall
be credited to the said ledger.
➢ Discharge of liability: The Electronic Credit Ledger shall be debited to the extent of discharge of any
liability in accordance with the provisions of U/s 49 or U/s 49A or U/s 49B.
➢ Refund of Unutilized amount:
a. Where a Registered Person has claimed refund of any unutilized amount from the Electronic
Credit Ledger u/s 54, the amount to the extent of the claim shall be debited in the said ledger.
b. If the refund so filed is rejected, either fully or partly, the amount debited to the extent of
rejection, shall be re-credited to the Electronic Credit Ledger by the Proper Officer by an order
made in FORM GST PMT-03.
➢ Discrepancy: A registered person shall, upon noticing any discrepancy in his Electronic Credit Ledger,
communicate the same to the officer exercising jurisdiction in the matter, through the common portal in
FORM GST PMT – 04.
Please note:
➢ No entry shall be made directly in the Electronic Credit Ledger under any circumstance.
➢ A refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives
an undertaking to the proper officer that he shall not file an appeal.
Rule 87 Electronic Cash Ledger

1. Form: The Electronic cash ledger u/s 49 (1) shall be maintained in FORM GST PMT-05 for each person,
liable to pay tax, interest, penalty, late fee or any other amount, on the Common Portal for crediting the
amount deposited and debiting the payment therefrom towards tax, interest, penalty, fee or any other
amount.
2. Major Heads & Minor Heads:

Major Head Minor Head for each Major Head
IGST Tax
CGST Interest
SGST/UTGST Penalty
Cess Fee
Others
3. A registered taxpayer can make cash deposits in the recognized Banks through the prescribed modes
to the Electronic Cash Ledger using any of the Online or Offline modes permitted by the GST Portal.
The Cash deposits can be used for making payments like tax liability, interest, penalties, fee and others.
4. Restriction in cross utilization of Major Heads: The amount available in Electronic Cash Ledger can be
utilized for payment of any liability for the respective major or minor heads. For example, liability for the
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tax under SGST/UTGST can be settled only from the available amount of cash under SGST/UTGST
Major head.
Example 1: An amount of Rs. 1,000 available under minor head ‘tax’ of major head ‘SGST/UTGST’ and
the taxpayer has a liability of Rs. 200 for minor head ‘interest’ under the same major head
‘SGST/UTGST’. Since, there is no amount available under minor head ‘interest’ under major head
‘SGST/UTGST’, therefore, interest payment cannot be made from the amount available under ‘tax’ of
the same major head.
Amount available under one Major head cannot be utilized for discharging the liability under any other
major head. For example, amount available in SGST/UTGST cannot be utilized for discharging liabilities
under CGST, IGST or Cess and vice versa.
Example 2: A taxpayer made a cash deposit of Rs. 1,000 to IGST – Tax, through net banking. The tax
payer can utilize this cash deposit of Rs. 1,000 in the cash ledger to make payment only of the IGST –
tax liability by debiting the cash ledger.
➢ Challan:
a. Any person, or a person on his behalf, shall generate a challan in FORM GST PMT – 06 on the
common portal and enter the details of the amount to be deposited by him towards tax, interest,
penalty fees or any other amount.
b. It shall be valid for a period of 15 days.
c. For making payment of any amount indicated in the challan, the commission, if any, payable in
respect of such payment shall be borne by the person making such payment.
➢ Mode of Deposit:
a. Internet Banking through authorized banks,
b. Credit Card or Debit Card through the authorized bank,
c. NEFT/RTGS
d. Over the counter (OTC) payment through authorized banks for deposits up to Rs. 10,000 per
challan per tax period, by cash, cheque or demand draft.
➢ OTC limit not applicable:
a. Government Departments or any other deposit to be made by notified persons,
b. Proper Officer or any other officer authorized to recover outstanding dues from any person,
including recovery made through attachment or sale of movable or immovable properties,
c. Proper Officer or any other officer authorized for the amounts collected by way of cash, cheque or
demand draft during any investigation or enforcement activity or any ad hoc deposit.
➢ Temporary Identification Number: Any payment required to be made by a person who is not registered
under the Act, shall be made on the basis of a Temporary Identification Number generated through the
Common Portal.
➢ Payment through NEFT/RTGS:
a. Where the payment is made by way of NEFT/RTGS mode from any bank, the mandate form shall
be generated along with the challan on the Common Portal and the same shall be submitted to the
bank from where the payment is to be made.
b. The mandate form shall be valid for a period of 15 days from the date of generation of Challan.
➢ Generation of Challan Identification Number (CIN):
a. On successful credit of the amount to the concerned government account maintained in the
authorized bank, a CIN will be generated by the collecting Bank and the same shall be indicated in
the challan.
248
b. On receipt of CIN from the Collecting Bank, the said amount shall be credited to the Electronic Cash
Ledger of the person on whose behalf the deposit has been made and the Common Portal shall
make available a receipt of this effect.
c. Where the bank account of the person concerned, or the person making the deposit on his behalf,
is debited but no CIN is generated or generated but not communicated to the Common Portal, the
said person may represent electronically in FORM GST PMT-07 through the Common Portal to the
Bank or electronic gateway through which the deposit was initiated.
➢ Tax deduction/collection: Any amount deducted u/s 51 or collected u/s 52 and claimed in FORM GSTR-
02 by the Registered Taxable Person from whom the said amount was deducted or, as the case may
be, collected shall be credited to his Electronic Cash Ledger in accordance with the provisions of Rule
87.
➢ Refund from Electronic Cash Ledger:
a. Where a person has claimed refund of any amount from Electronic Cash ledger, the amount shall
be debited to the Electronic Cash Ledger.
b. If the refund so claimed is rejected, either fully or partly, the amount debited to the extent of rejection,
shall be credited back to Electronic cash ledger by an order made in FORM GST PMT-03.
➢ Discrepancy: A registered person shall, upon noticing any discrepancy in his electronic cash ledger,
communicate the same to the officer exercising jurisdiction in the matter, through the common portal in
FORM GST PMT-04.
Note: A refund shall be deemed to be rejected, if the appeal is finally rejected or it the claimant gives an
undertaking to the proper officer that he shall not file an appeal.
Rule 88 Unique Identification Number

1. A unique identification number shall be generated at the common portal for each debit or credit to the
electronic cash or credit ledger, as the case may be.
2. The unique identification number relating to discharge of any liability shall be indicated in the
corresponding entry in the electronic liability register.
3. A unique identification number shall be generated at the common portal for each credit in the electronic
liability register for reasons other than those covered under sub-rule (2).
Study Notes
249
Example 3: ABC has deposited the following amounts in its Electronic Cash Ledger under its major heads.
The position of Electronic Cash Ledger for the month of May 2019 is as follows:-
IGST CGST Cess SGST

Balance 9.000 10,000 - 12,000
For the month of May 2019 Tax Liability:-

Net Tax Liability IGST CGST Cess SGST
Tax 8,000 12,000 - 12,000
It is to be determined as to how ABC can utilize the balance in Electronic Cash Ledger for payment of net tax
liability?
Description Total Tax Taxes paid through Electronic Cash Ledger
Payable IGST CGST SGST Cess
IGST 8,000 8,000
CGST 12,000 10,000
SGST 12,000 12,000
Cess
In this case, ABC need to deposit INR 2,000 more for payment of CGST.
Section 50 Interest on delayed payment of tax

(1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made
thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed,
shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at
such rate, not exceeding eighteen percent, as may be notified by the Government on the
recommendations of the Council.
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the
day succeeding the day on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of
section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall
pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be,
at such rate not exceeding twenty-four percent, as may be notified by the Government on the
recommendations of the Council.
Example 4: Mr. A has provided following information with respect to filing of return for the period of June 2018:-
Particulars Amount (INR)
Amount of IGST to be deposited 2,00,000
Due Date of filing GSTR 3B for the month of June 2018 is 20.07.2018
Actual Deposit is made on 30.07.2018
In this case, interest to be deposited is Rs. 986 {Rs. 2,00,000 * 18%* 10 days/365 days}
Section 51 Tax deduction at source

(1) Notwithstanding anything to the contrary contained in this Act, the Government may mandate,–
(a) a department or establishment of the Central Government or State Government; or
(c) Governmental agencies; or
(d) such persons or category of persons as may be notified by the Government on the
250
recommendations of the Council
Notified under notification No. 50/2018 – CT Dated 13.09.2018 & 57/2018 – CT Dated 23.10.2018}
The following persons have been notified under clause (d) of sub-section (1) of section 51 of the CGST Act
by the Central Government:
(a) an authority or a board or any other body, -
i. set up by an Act of Parliament or a State Legislature; or
ii. established by any Government,
with 51% or more participation by way of equity or control, to carry out any function;
(b) society established by the Central Government or the State Government or a Local Authority under the
Societies Registration Act, 1860;
(c) public sector undertakings
With respect to deductor under section 51(1)(a), provisions of TDS are applicable only on the certain
prescribed authorities of Ministry of Defence, remaining authorities under the Ministry of Defence are exempt.
✓ No TDS in case of supply of goods or services or both from a public sector undertaking to another
public sector undertaking, whether or not a distinct person, with effect from the 1st day of October,
2018.
{Notification No. 61/2018 – Central Tax Dated 5th November, 2018}.
✓ Nothing in this notification shall apply to the supply of goods or services or both which takes place
between one person to another person specified under clauses (a), (b), (c) and (d) or sub-section (1)
of Section 51 of said Act.
Notification No.73/2018 – Central Tax Dated 31st December, 2018}
✓ The CBIC vide circular no. 76/50/2018 – GST Dated 31.12.2018 has clarified that the provisions of
TDS are applicable only to such authority or a board or any other body, set up by an Act of Parliament
or a State Legislature or established by any government in which fifty one percent or more
participation by way of equity or control is with the Government.
(hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one percent under CGST Act,
2017, (also need to consider deduction under SGST Act, 2017 i.e. 1% CGST & 1% SGST = Total 2%) from the
payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of taxable
goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty
thousand rupees:
Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or
Union territory which is different from the State or as the case may be, Union territory of registration of the
recipient.
Example 5: Registered dealer of Bhubaneswar has placed supply order to a registered dealer of Bihar for
delivery of material to a party in Patna. The supply would be intra-State supply and Central tax and State tax
would be levied. In such case, transfer of TDS (Central tax + State tax of Orissa) to the cash ledger of the
supplier (Central tax + State tax of Bihar) would be difficult. So in such cases, TDS would not be deducted.
• Value of supply shall exclude GST taxes & Cess.

• The amount of tax deducted at source should be deposited to the Government account by deductor by 10th
of the succeeding month.
• A TDS certificate is required to be issued by deductor (the person who is deducting tax) in prescribed form
to the deductee (the supplier from whose payment TDS is deducted).
• If the deductor does not furnish the certificate of deduction-cum- remittance within 5 days of the remittance,
the deductor has to pay a late fee of Rs. 100 per day from the expiry of the 5th day until the day he furnishes
the certificate. This late fee would not be more than Rs. 5000/-.
• If the deductor has not remitted the amount deducted as TDS to the Government within the prescribed time
limit, he is liable to pay penal interest under Section 50 in addition to the amount of tax deducted.
• The amount of tax deducted is reflected in
➢ Electronic Cash Ledger of deductee.
➢ Return filed by deductor under section 39(3).
Study Notes
251
The deductee can claim credit of the tax deducted, in his electronic cash ledger. This provision enables
the Government to cross check whether the amount deducted by the deductor is correct and that there
is no mis-match between the amount reflected in the electronic cash ledger and the amount shown in
the return filed by deductor.
• The deductor or the deductee can claim refund of excess deduction or erroneous deduction. The provisions
of section 54 relating to refunds would apply in such cases. However, if the deducted amount is already
credited to the electronic cash ledger of the supplier, the same shall not be refunded.
FAQ released by CBIC
Situations / Contracts Deduction required Remarks

YES / NO
Finance Department is making a Yes Where the total contract value of
payment of Rs.3 Lakh to a taxable supply is more than
supplier of ‘printing & stationery’. Rs.2.5 Lakh deduction is
mandatory.
Education Department is making Yes, deduction is required in Books are exempted goods; no
payment of Rs.5 Lakh to a respect of payment of Rs. 3 Lakh deduction is required in respect of
supplier of ‘printed books and only i.e. for payment in respect of supply of books.
printed or illustrated post cards’ taxable supply. However, payment involving
where payment for books is Rs.2 ‘printed or illustrated post cards’
Lakh and Rs.3 Lakh is for other is for supply of taxable goods and
printed or illustrated post cards. value of such supply is > Rs.2.5
Lakh; so deduction is required.
Finance Department, is making See Remarks Deduction is mandatory in case
payment of Rs.1.5 Lakh to a the total value of taxable supply
supplier of ‘car rental service’. under the contract > Rs.2.5 Lakh
irrespective of the amount paid.
However, if the total value of
supply under a contract is <
Rs.2.5 Lakh, deduction is not
required.
Health Department executed a No Total value of supply as per the
contract with a local supplier to contract is Rs.2.6 Lakh (including
supply “medical grade oxygen” of GST). Tax rate is 12%. So,
Rs.2.6 Lakh (including GST) and taxable value of supply (excluding
is making full payment. GST) stands at Rs.2.6L x
100/112 = Rs.2.32 L < Rs.2.5
Lakh Hence, deduction is not
required.
Municipal Corporation of Kolkata Yes, deduction is required @ 2% Deduction is required in case of
purchases a heavy generator inter-State supply and if the value
from a supplier in Delhi. Now, it is of taxable supply under a contract
making payment of Rs.5 Lakh exceeds Rs.2.5 Lakh.
and IGST @18% on Rs.5 Lakh
for such purchase.
Fisheries Department is making a No This supply of service is exempt
payment of Rs.10 Lakh to a in terms of Sl. No. 3 of notification
contractor for supplying labour for No.12/2017 – Central Tax (Rate)
digging a pond for the purpose of Dated 28.06.2017 and hence
Fisheries. deduction is not required.
252
Municipality is making payment of No This supply of service is exempt
Rs.5 Lakh to a supplier in respect in terms of Sl. No. 3A of
of cleaning of drains where the notification No.12/2017 – Central
value of supply of goods is not Tax (Rate) Dated 28.06.2017 as
more than 25% of the value of amended by notification no.
composite supply 2/2018- Central Tax (Rate) Dated
25.01.2018 and hence deduction
is not required.
Government school is making a No This supply of service is exempt
payment of Rs.3 Lakh to a in terms of Sl. No. 66 of
supplier for supply of cooked food notification No. 12/2017 – Central
as mid-day meal under a scheme Tax (Rate) Dated 28.06.2017 as
sponsored by Central/State amended and hence deduction is
Government. not required.
Health Department is making No This supply of goods is exempt in
payment of Rs.10 Lakh to a terms of Sl. No.142 of notification
supplier for supply of Hearing No. 2/2017 – Central Tax (Rate)
Aids. Dated 28.06.2017 as amended
and hence deduction is not
required.
Example 6 (ICAI): Suppose a supplier makes a supply worth Rs. 1000/- to a recipient and the GST at the rate
of 18% is required to be paid. The recipient, while making the payment of Rs. 1000/- to the supplier, shall deduct
1% viz Rs. 10/- as TDS.
The value for TDS purpose shall not include 18% GST. The TDS, so deducted, shall be deposited in the account
of Government by 10th of the succeeding month.
The TDS so deposited in the Government account shall be reflected in the electronic cash ledger of the supplier
(i.e. deductee) who would be able to use the same for payment of tax or any other amount. The purpose of TDS
is just to enable the Government to have a trail of transactions and to monitor and verify the compliances.
Example 7:
Particulars (in all cases Location of Place of State of Type of Tax TDS
taxable contract value is Supplier Supply Registration of Supply deductio
over Rs.2.5 Lakh) recipient n
State Government of Jaipur Jaipur Rajasthan Intra- CGST & Yes

Rajasthan purchases State SGST
taxable goods from a
local supplier
State Government of Mumbai Punjab Punjab Inter- IGST Yes
Punjab purchases State
taxable goods from a
supplier in Mumbai
State Government of Delhi Delhi Haryana Intra - CGST & No
Haryana engages a State SGST
contractor of Delhi for
repairing of Haryana
Bhawan in Delhi
Study Notes
253
Section 52 Collection of Tax at Source

(1) Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator
(hereafter in this section referred to as the “operator”), not being an agent, shall collect an amount calculated
at such rate not exceeding one per cent., as may be notified by the Government on the recommendations
of the Council, of the net value of taxable supplies made through it by other suppliers where the
consideration with respect to such supplies is to be collected by the operator.
Explanation.––For the purposes of this sub-section, the expression “net value of taxable supplies” shall
mean the aggregate value of taxable supplies of goods or services or both, other than services notified
under sub-section (5) of section 9, made during any month by all registered persons through the operator
reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.
(2) The power to collect the amount specified in sub-section (1) shall be without prejudice to any other mode
of recovery from the operator.
(3) The amount collected under sub-section (1) shall be paid to the Government by the operator within ten days
after the end of the month in which such collection is made, in such manner as may be prescribed.
(4) Every operator who collects the amount specified in sub-section (1) shall furnish a statement, electronically,
containing the details of outward supplies of goods or services or both effected through it, including the
supplies of goods or services or both returned through it, and the amount collected under sub-section (1)
during a month, in such form and manner as may be prescribed, within ten days after the end of such month.
(5) Every operator who collects the amount specified in sub-section (1) shall furnish an annual statement,
electronically, containing the details of outward supplies of goods or services or both effected through it,
including the supplies of goods or services or both returned through it, and the amount collected under the
said sub-section during the financial year, in such form and manner as may be prescribed, before the thirty
first day of December following the end of such financial year.
(6) If any operator after furnishing a statement under sub-section (4) discovers any omission or incorrect
particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax
authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the
month during which such omission or incorrect particulars are noticed, subject to payment of interest, as
specified in sub-section (1) of section 50:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due
date for furnishing of statement for the month of September following the end of the financial year or the
actual date of furnishing of the relevant annual statement, whichever is earlier.
(7) The supplier who has supplied the goods or services or both through the operator shall claim credit, in his
electronic cash ledger, of the amount collected and reflected in the statement of the operator furnished
under sub-section (4), in such manner as may be prescribed.
(8) The details of supplies furnished by every operator under sub-section (4) shall be matched with the
corresponding details of outward supplies furnished by the concerned supplier registered under this Act in
such manner and within such time as may be prescribed.
(9) Where the details of outward supplies furnished by the operator under sub-section (4) do not match with
the corresponding details furnished by the supplier under section 37 or Section 39, the discrepancy shall
be communicated to both persons in such manner and within such time as may be prescribed.
(10) The amount in respect of which any discrepancy is communicated under sub-section (9) and which is not
rectified by the supplier in his valid return or the operator in his statement for the month in which discrepancy
is communicated, shall be added to the output tax liability of the said supplier, where the value of outward
supplies furnished by the operator is more than the value of outward supplies furnished by the supplier, in
254
his return for the month succeeding the month in which the discrepancy is communicated in such manner
as may be prescribed.
(11) The concerned supplier, in whose output tax liability any amount has been added under sub-section (10),
shall pay the tax payable in respect of such supply along with interest, at the rate specified under sub-
section (1) of section 50 on the amount so added from the date such tax was due till the date of its payment.
(12) Any authority not below the rank of Deputy Commissioner may serve a notice, either before or during the
course of any proceedings under this Act, requiring the operator to furnish such details relating to—
(a) supplies of goods or services or both effected through such operator during any period; or
(b) stock of goods held by the suppliers making supplies through such operator in the godown or
warehouses, by whatever name called, managed by such operator and declared as additional places
of business by such suppliers,
as may be specified in the notice.
(13) Every operator on whom a notice has been served under sub-section (12) shall furnish the required
information within fifteen working days of the date of service of such notice.
(14) Any person who fails to furnish the information required by the notice served under sub-section (12) shall,
without prejudice to any action that may be taken under section 122, be liable to a penalty which may extend
to twenty-five thousand rupees.
Explanation.—For the purposes of this section, the expression “concerned supplier” shall mean the supplier of
goods or services or both making supplies through the operator.
• In cases where someone is selling their own products through a website, there is no requirement to
collect tax at source as per the provisions of this Section. These transactions will be liable to GST at
the prevailing rates.
• If we purchase goods from different vendors and are selling them on our website under our own
billing. In this case, there are two transactions - where we purchase the goods from the vendors,
and where we sell it through our website. For the first transaction, GST is leviable, and will need to
be paid to our vendor, on which ITC is available to us. The second transaction is a supply on our own
account, and not by other suppliers and there is no requirement to collect tax at source. The
transaction will attract GST at the prevailing rates.
• If electronic commerce operator has suppliers in different States, he is required to obtain GST
registration in each State. However, he can indicate his head office as place of business, if he doesn’t
have place of business in that State. Thus, all returns can be filed through HO.
{Sr. Nos. 5 to 7 of FAQ released by Law Committee of GST Council on 28-9-2018}
• The supplier cannot supply under composition scheme. He must supply goods or services through
normal scheme only.
{Sr. Nos. 6 & 16 of FAQ released by Law Committee of GST Council on 28-9-2018}
• The net value of taxable supplies will be calculated at GSTIN level and not at gross level. In other
words, net suppliers are to be calculated for each supplier separately.
• If in a particular month, the sale returns are more than supplies made, there will be no TCS for that
month. However, such negative figure will not be carried forward. Hence, such shortage cannot be
adjusted in next month.
{Sr. Nos. 20 of FAQ released by Law Committee of GST Council on 28-9-2018}
• The TCS by electronic commerce operator shall be on billing basis and not on collection basis
TCS provision is not applicable when GST is payable on reverse charge. TCS provisions also do
not apply in case of exempt supply.
• TCS provision don’t apply on import of goods or services.
Study Notes
255

• The rate of TCS are as follows-
(a) For supplies within the State – 0.5% CGST plus 0.5% SGST/UTGST
(b) For inter-State supplies – 1% IGST
of the net value of supplies made through it by other suppliers where consideration with respect to
such supplies is to be collected by the said operator.
{Notification Nos. 52/2018-CT and 02/2018-IT both Dated 20-9-2018}
• The payment of TCS is to be made through electronic cash ledger only within 10 days from close of
month. Payment of TCS amount cannot be made through electronic credit ledger.
• As per Section 24 (ix) every person supplying goods or services through an e-commerce operator
who is required to collect TCS under Section 52, is required to be mandatorily register in GST
irrespective of the value of supply made by him. However, vide notification No. 65/2017-central tax
Dated 15.11.2017, such supplier is going to get threshold limit. It means e-commerce operator is not
liable to collect TCS on supply of services being by such supplier through their portal.
• The Government vide circular no. 74/48/2018 – GST Dated 05.11.2018 has clarified on applicability
of TCS provisions on operator of electronic auction system for trading tea, in view of the
representation received from the Tea Board of India.
The CBIC vide above circular has clarified that the Tea Board admittedly falls under the category of
e-commerce operator liable to collect TCS at notified rate in accordance with the provisions of Section
52 of the CGST Act, respectively from the:
✓ Sellers (i.e. tea producers) on the net value of supply of goods i.e. tea; and
✓ Auctioneers on the net value of supply of services (i.e. brokerage)
• The CBIC vide circular no. 76/50/2018 – GST Dated 31.12.2018 has clarified that for the purpose of
determination of value of supply under GST, Tax collected at source (TCS) under the provisions of
the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of
tax.
E-commerce Operator liable to E-commerce Operator not E-commerce Operator not

collect TCS liable to collect TCS liable to collect TCS
Amazon is liable to collect TCS, Amazon will not be treated as e- Titan supplying watches and
because they are facilitating commerce operators liable to jewels through its own website
actual supply of goods through collect TCS, in relation to those would not be considered as an e-
their platform (popularly called supplies which they make on their commerce operator for the
market place model) own account (popularly called purpose of Section 52. Thus, TCS
inventory model) provisions are not applicable.
Example 8: ABC Ltd. is an e-commerce operator. For the month of May 2019, following information was
provided by ABC Ltd.
Particulars Amount in INR
Aggregate Value of all taxable supplies made through ABC Ltd. by all taxable persons 50,00,000
Supplies returned out of above taxable supplies 10,00,000
Value of supply of notified services made by unregistered suppliers through ABC Ltd., 15,00,000
falling under Section 9 (5) of the CGST Act
In this case net value of taxable supplies for the purpose of collecting TCS @ 1% shall be Rs. 40,00,000 (Rs.
50,00,000-Rs. 10,00,000). Accordingly TCS amount is Rs. 40,000. ABC Ltd. would be considered deemed
supplier of service in terms of Section 9 (5) of the CGST Act for Rs. 15,00,000 and TCS won’t be applicable on
this. If suppose suppliers are registered & responsible for GST payment then TCS will be also applicable on Rs.
15,00,000. So total TCS amount will become Rs. 55,000.
256
Section 53 Transfer of ITC

On utilization of input tax credit availed under this Act for payment of tax dues under the Integrated Goods and
Services Tax Act in accordance with the provisions of sub-section (5) of section 49, as reflected in the valid
return furnished under sub-section (1) of section 39, the amount collected as central tax shall stand reduced by
an amount equal to such credit so utilized and the Central Government shall transfer an amount equal to
the amount so reduced from the central tax account to the integrated tax account in such manner and within
such time as may be prescribed.
CPIN stands for Common Portal Identification Number given at the time of generation of challan. It is a 14
digit unique number to identify the challan. The CPIN remains valid for a period of 15 days.
CIN or Challan Identification number is generated by banks, once payment in lieu of a generated challan is
successful. It is a 17-digit number that is 14-digit CPN plus 3-digit bank code. CIN is generated by the
authorized banks/Reserve Bank of India (RBI) when payment is actually received by such authorized banks
or RBI and credited in the relevant government account held with them. It is an indication that the payment
has been realized and credited to the appropriate government account. CIN is communicated by the
authorized bank to taxpayer as well as to GSTN.
BRN or Bank reference number is the transaction number given by the bank for a payment against a challan.
E-FPB stands for Electronic Focal Point Branch. These are branches of authorized banks which are
authorized to collect payment of GST. Each authorized bank will nominate only one branch as its E-FPB for
pan India Transactions. The E-FPB will have to open accounts under each major head for all governments.
Total 38 accounts (one each for CGST, IGST and one each for SGST for each State/UT Government) will
have to be opened. Any amount received by such E-FPB towards GST will be credited to the appropriate
account held by such E-FPB. For NEFT/RTGS transactions, RBI will act as E-FPB.
Question & Answer

Q1. How to determine the value limit of Rs. 2,50,000 to decide on the applicability of TDS?
A. As per Section 51, tax to be deducted "where the total value of such supply, under a contract, exceeds Rs
2,50,000”. If there is a Purchase order for supply of goods or services or both, for a value exceeding Rs.
2,50,000 then TDS provisions would be attracted. Against the Purchase Order, if several supplies are made
under several invoices, even if the value of any particular invoice is less than Rs. 2,50,000 TDS would apply i.e.
Public Sector Unit issues ‘Purchase order’ for a total value of Rs. 10,00,000 on 01.10.2018. Supplier is
supplying goods through various invoices & one invoice value is Rs. 50,000. Even then TDS is applicable for
this invoice, as the contract value is more than Rs. 2,50,000.
Further, while determining the value, the CGST, SGST, UTGST and IGST shall not be included. For example,
if the value of the goods or services being supplied is Rs. 2,40,000/- plus 5% GST, total invoice value Rs.
2,52,000, TDS provisions will not apply, as the value, excluding GST is less than Rs.2,50,000/-.
Q2. State TDS applicability in following cases:

(a) Supply under RCM
(b) Supply by unregistered supplier
(c) Supply by composition Supplier
A.
(a) No TDS, where the tax is to be paid on reverse charge by the recipient i.e. the deductee;
(b) No TDS, where the payment is made to an unregistered supplier;
(c) TDS is required in case of supply received from Composition Supplier i.e. Supplier ZA is a person
registered under the composition scheme in Jharkhand who makes taxable supply worth Rs. 10,000 to
a Local Authority of Jharkhand where value of taxable supply under the contract is for Rs. 2,55,000
which is more than Rs. 2.5 Lakh and hence deduction of tax is required.
Study Notes
257
Q3. Mr. X has deducted Rs 1 lakh of TDS in Nov’18. He deposits Rs 70,000 on 10.12.2018 & the rest of Rs
30,000 on 30.01.2019. He submits the return in FORM GSTR 7 on 28.02.2019. Has he incurred any liability to
pay late fee or interest? Is he liable to pay any penalty? {FAQ released by CBIC}
A. Electronic Cash Ledger of the DDO is credited on 10.12.2018 and 30.01.2019 with Rs. 70,000 and Rs. 30,
000 respectively on account of deposit of TDS of Rs 70,000/- on 10.12.2018 & Rs 30,000 on 30.01.2019. Since
return in FORM GSTR 7 for the month of November, 2018 is filed on 28.02.2019 and he discharges his payment
liability of tax so deducted by debiting his electronic cash ledger as well on this date only, therefore, late fee of
80 days (11.12.2018 to 28.02.2019) have to be paid under CGST and SGST. The amount of late fee will be
restricted to Rs. 5000 (upper limit provided in the Act). Interest has also to be paid for the delay. Penalty is also
payable by a DDO if he fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51,
or deducts an amount which is less than the amount required to be deducted under the said sub-section, or
where he fails to pay to the Government under sub-section (2) of section 51 [section 122 (v) refers]. He is liable
to penalty of Rs.1,00,000/-.
Q4. Whether a supplier of goods or services supplying through ecommerce operator would be entitled to
threshold exemption? {FAQ released by CBIC}
A. As per Section 24 (ix) of the CGST Act, 2017, every person supplying goods through an ecommerce operator
shall be mandatorily required to register irrespective of the value of supply made by him. However, a person
supplying services, other than supplier of services under section 9 (5) of the CGST Act, 2017, through an e-
commerce platform are exempted from obtaining compulsory registration provided their aggregate turnover
does not exceed INR 20 lakhs (or INR 10 lakhs in case of specified special category States) in a financial year.
Government has issued the notification No. 65/2017 – Central Tax Dated 15th November, 2017 in this regard.
Q5. Whether e-Commerce operator is required to obtain registration in every State/UT in which suppliers listed
on their e-commerce platform are located to undertake the necessary compliance as mandated under the law?
{FAQ released by CBIC}
A. As per the CGST law, registration for TCS would be required in each State / UT as the obligation for collecting
TCS would be there for every intra-State or inter-State supply. In order to facilitate the obtaining of registration
in each State / UT, the e-commerce operator may declare the Head Office as its place of business for obtaining
registration in that State / UT where it does not have physical presence. It may be noted that each State/UT has
indicated one administrative jurisdiction where all e-commerce operators having business (but not having
physical presence) in that State/UT shall register. The proper officer for the purpose of registration of ECOs has
also been notified by each State/UT.
Q6. Foreign e-commerce operator do not have place of business in India since they operate from outside. But
their supplier and customers are located in India. So, in this scenario will the TCS provision be applicable to
such ecommerce operator and if yes, how will foreign e-commerce operator obtain registration?
{FAQ released by CBIC}
A. Where registered supplier is supplying goods or services through a foreign e-commerce operator to a
customer in India, such foreign ecommerce operator would be liable to collect TCS on such supply and would
be required to obtain registration in each State / UT. It may be noted that each State/UT has indicated one
administrative jurisdiction where all ecommerce operators having business (but not having physical presence)
in that State/UT shall register. The proper officer for the purpose of registration of ECOs has also been notified
by each State/UT. If the foreign e-commerce operator does not have physical presence in a particular State /
UT, he may appoint an agent on his behalf.
258
Section 37 Furnishing details of outward supplies

Section 39 Furnishing Returns Please download
Section 40 First Return offline utility to
understand
Section 44 Annual Return
Returns, to make it
Section 45 Final Return
simple &
Section 46 Notice to Return defaulters
interesting. Please
Section 47 Levy of Late Fee memorize below
Section 48 Goods & Service Tax Practitioners chart (important
Section 150 Information Return for MCQ)
Section 123 Penalty for failure to furnish Information Return
Return Form Details of Return Due Date

GSTR -1 Details of Outward Supplies i.e. invoices, debit notes 10th of Succeeding Month/Quarter
and credit notes issued by taxable person (including (Quarterly filing if aggregate
casual taxable person). Not applicable to ISD, NRTP, turnover upto Rs. 1.50 crores)
Composition Dealer, TDS & TCS.
GSTR – 3B Summary return (including casual taxable person) 20th of Succeeding Month
FORM GST Composition Dealer or person paying tax by availing 18th day of the month succeeding
CMP-08 the benefit of Notification 02/2019 - Central Tax (Rate), quarter
Dated the 7th March, 2019
ITC – 04 Details of inputs sent for job work Quarterly within 25 days from end
of quarter
GSTR – 4 Annual return for Composition Dealer or person paying Thirtieth day of April following the
tax by availing the benefit of Notification 02/2019 - end of such financial year
Central Tax (Rate), Dated the 7th March, 2019
GSTR – 5 Return for NRTP 20th Day from end of month or
within 7 days after the last day of
validity of registration whichever
is earlier
GSTR – 5A Return for OIDAR 20th of Succeeding Month
GSTR – 6 Return for ISD 13th Day of Succeeding Month
GSTR – 9 Annual Return (Not applicable to ISD, NRTP, Casual 31st December of Next Financial
Taxable Person, Government, TDS & TCS) Year
GSTR – 9A Annual Return for Composition taxable person 31st December of Next Financial
Year
GSTR – 9C GST Reconciliation Statement With annual return
GSTR – 10 Final Return (Every registered person whose Within 3 months of the date of
registration has been cancelled) cancellation of registration or
order of cancellation whichever is
later.
GSTR – 11 Details of inward supplies to be furnished by a person 28th Day of Succeeding Month
having UIN and claiming refund
Study Notes
259
Section 37 Furnishing Details of Outward Supplies

Details of outward supplies [Section 37 (1] read with rule 59 (1)]
Every registered person including casual registered person excluding:

• Input Service Distributor
• Non-resident taxable person
• Person paying tax under composition scheme
• Person deducting TDS
• Person collecting tax at source i.e. ECO, not being an agent
• OIDAR
Form & Due Date: FORM GSTR 1 & due date is on or before 10th of succeeding month. GSTR-1 cannot be
filed between 11th & 15th of the succeeding month. GSTR-1 can be filed on or after 16th of month., if due date of
10th of the month is missed.
The due date of filing GSTR-1 may be extended by the Commissioner/Commissioner of State
GST/Commissioner of UTGST for a class of taxable persons by way of notification.
A taxpayer cannot file GSTR-1 before the end of current tax month period except
• Casual taxpayers, after the closure of their business
• Cancellation of GSTIN of a normal taxpayer
Details of outward supplies are required to be furnished in GSTR-1 [Explanation to section 37 read
with rule 59(2) of CGST Rules]
• Invoices can be modified/deleted any number of times till the final submission.
• If there is no consideration as per Schedule I, the taxable value needs to be worked out
• HSN details Upto 1.5 crores (NIL), more than 1.5 crores and upto Rs. 5 crores (2 digits) & More
than Rs. 5 crores (4 digits)
260
Prior periods amended [Section 37 (3)]
A. Scope of amendment/correction entries

The supplier can make amendments in the particulars furnished in GSTR-1 filed by him for the prior
periods if he agrees to the mismatch report communicated to him by the system every month, after
the processing of the return.
The details of original debit notes/credit notes/refund vouchers issued by the tax-payer in the
current tax period as also the revision in the debit notes/credit notes/refund vouchers issued in the
earlier tax periods are required to be shown in Table 9 of GSTR-1.
Ordinarily in Amendment Table the supplier is required to give details of original invoice (No. and
Date), the particulars of which have been wrongly entered in GSTR-1 of the earlier months and are
now sought to be amended. However, it may happen that, a supplier altogether forgets to include
the entire original invoice while furnishing the GSTR-1 for a particulars month. In such cases also,
he would be required to show the details of the said missing invoice which was issued in earlier
month in the Amendment Table only, as such type of errors would also be regarded as data entry
error.
B. Time limit for rectification
Suppose for some reason, supplier could not make correction at the time of filing of GSTR-1 then
he can make correction in the subsequent periods but maximum time limit permissible:
• Date of filing of monthly return u/s 39 for the month of September following the end of
financial year to which such details pertain or
• Date of filing of the relevant annual return.
Key Points to remember:

• GSTR 1 needs to be filed even if there is no business activity in the tax period.
• All values like invoice value, taxable value and tax amounts in GSTR 1 are to be declared up to 2 decimal digits.
The rounding off of the self-declared tax liability to the nearest rupee will be done in GSTR 3B.
• As a measure of easing the compliance requirement for small tax payers, GSTR-1 has been allowed to be filed
quarterly by small tax payers with aggregate annual turnover up to Rs. 1.5 crore in the preceding financial year or
the current financial year. Tax payers with annual aggregate turnover above Rs. 1.5 crore will however continue
to file GSTR- 1 on a monthly basis.
• Taxpayer opting for voluntary cancellation of GSTIN will have to file GSTR 1 for active period.
• In cases where a taxpayer has been converted from a normal taxpayer to composition taxpayer, GSTR 1 will be
available for filing only for the period during which the taxpayer was registered as normal taxpayer. The GSTR 1
for the said period, even if filed with delay would accept invoices for the period prior to conversion.
Study Notes
261
Section 39 Furnishing of Returns

Persons liable to file returns, forms, periodicity and due dates of furnishing returns [Section
39 read with rules 61, 62, 63, 65 & 82]
Extension of due date

The due-date of filing of the returns under section 39 may be extended by the Commissioner/Commissioner of
State GST/Commissioner of UTGST for a class of taxable persons by way of a notification.
Due date for payment of tax [Section 39 (7)]
Due dates for payment of tax in respect of the persons required to file GSTR-3B, GSTR-4 & GSTR 5 are linked
with due dates for filing of such returns i.e. the last dates of filing such returns are also the due dates for payment
of tax in respect of persons required to file such returns.
However, NRTPs or casual taxable persons are required to make advance deposit of tax of an amount
equivalent to the estimated tax liability of such person for a period for which registration is sought or extension
of registered is sought in terms of section 27 (2).
GSTR 3B filed without payment of self-assessed tax disclosed therein, is not be regarded as a valid return in
terms of section 2 (117).
Time limit for rectification
Omission or incorrect particulars discovered in the returns filed u/s 39 can be rectified in the return to be filed
for the month/quarter during which such omission or incorrect particulars are noticed.
Any tax payable as a result of such error or omission will be required to be paid along with interest.
Exceptions: It is important to note that section 39 (9) does not permit rectification of error or omission discovered
on account of scrutiny, audit, inspection or enforcement activities by tax authorities.
Maximum time limit for amendment:
• Date of filing of monthly return u/s 39 for the month of September following the end of
financial year to which such details pertain or
• Date of filing of the relevant annual return.
Content of GSTR-3B
GSTR-3B is required to be furnished on or before 20th day of the next month. This is the summary return. This
return mainly covered details with respect to
Outward Supply:
• Consolidated monthly details of the outward supply along GST is required to be recorded.
• Further, the details of Non-GST outward Supply is also required to be reported. This supply could
include Free Sample, Supply as per Schedule III, etc. Accordingly, the taxpayer should keep the
separate record of such transactions.
• In addition to aforesaid taxpayer is required to submit separate details for sale to customer who has
opted Composition scheme and also who are unregistered under GST regime.
262
Inward Supply:
Hereinunder, the taxpayer has to provide the details of input tax credit availed, ineligible input tax credit,
reversal of input tax credit if any. Further, the taxpayer has to bifurcate the procurement details in to
• Supplier where ITC available

• Supplier where ITC not available
• Supplier under Composition Scheme
• Supply covered under Exempt Supply
• Supply covered under Nil rate
• Non - GST Supply
Composition Dealer or person paying tax by availing the benefit of Notification 02/2019 - Central Tax
(Rate), Dated the 7th March, 2019 [Section 39 (2) read with rule 62]
• furnish a statement, every quarter or, as the case may be, part thereof, containing the details of payment
of self-assessed tax in FORM GST CMP-08, till the 18th day of the month succeeding such quarter;
and
• furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4, till the
thirtieth day of April following the end of such financial year,
electronically through the common portal, either directly or through a Facilitation Centre notified by the
Commissioner.
• Every registered person furnishing the statement shall discharge his liability towards tax or interest
payable under the Act or the provisions of this Chapter by debiting the electronic cash ledger.
• The return furnished shall include the- (a) invoice wise inter-State and intra-State inward supplies
received from registered and un-registered persons; and (b) consolidated details of outward supplies
made.
• From the beginning of a financial year shall, where required, furnish the details of outward and inward
supplies and return under rules 59, 60 and 61 (GSTR 1,2 & 3B) relating to the period during which the
person was liable to furnish such details and returns till the due date of furnishing the return for the
month of September of the succeeding financial year or furnishing of annual return of the preceding
financial year, whichever is earlier.
For the purposes of this sub-rule, it is hereby declared that the person shall not be eligible to avail input
tax credit on receipt of invoices or debit notes from the supplier for the period prior to his opting for the
composition scheme
• A registered person opting to withdraw from the composition scheme at his own motion or where option
is withdrawn at the instance of the proper officer shall, where required, furnish a statement in FORM
GST CMP-08 for the period for which he has paid tax under the composition scheme till the 18th day
of the month succeeding the quarter in which the date of withdrawal falls and furnish a return in FORM
GSTR-4 for the said period till the thirtieth day of April following the end of the financial year during
which such withdrawal falls.
• A registered person who ceases to avail the benefit of notification No. 02/2019, shall, where required,
furnish a statement in FORM GST CMP-08 for the period for which he has paid tax by availing the
benefit under the said notification till the 18th day of the month succeeding the quarter in which the date
of cessation takes place and furnish a return in FORM GSTR - 4 for the said period till the thirtieth day
of April following the end of the financial year during which such cessation happens.
Study Notes
263
GSTR 5 (NRTP) [Section 39 (5) read with rule 63]
A registered NRTP is not required to file separately the Statement of Outward, Inward supplies. A simplified
monthly tax return has been prescribed in Form GSTR 5 which they need to file 20 days after the end of the
calendar month or within 7 days after the last day of validity period of the registration, whichever is earlier.
GSTR 11 (UIN) [Rule 82]
Such person shall furnish the details of those inward supplies of taxable goods and/or services on which refund
of taxes has been claimed in Form GSTR-11, along with application for such refund claim.
GSTR 6 (ISD) [Section 39 (4) read with rule 60 (5) & rule 65]
An ISD is required to distribute both eligible as well as ineligible credit as per rule 39.
ISD is not required to file separate statements of outward and inward supplies with its return.
Form GSTR 6 contains the details of input tax credit received for distribution, total ITC/eligible/ineligible ITC to
be distributed for the tax period, distribution of ITC, details of debit/credit notes etc. Return needs to be filed
after 10th of the month and before 13th of the month succeeding the tax period.
The details of ITC received for distribution by an ISD will be auto populated in Form GSTR-6A. Such details are
auto-populated in Form GSTR-6A when the registered suppliers file their GSTR-1.
ISD can view the auto-populated details of ITC received for distribution in GSTR-6A and, where required, after
adding, correcting or deleting the details, furnish GSTR-6.
ISD will not have reverse charge supplies. If ISD wants to take reverse charge supplies, in that case it has to
separately register as a Normal taxpayer.
264
Section 40 First Return

Every registered person who has made outward supplies in the period between the date on which he became
liable to registration till the date on which registration has been granted shall declare the same in the first return
furnished by him after grant of registration.
Section 44 Annual Return

(1) Every registered person, other than an
• Input Service Distributor,
• a person paying tax under section 51 or section 52,
• a casual taxable person, and
• a non-resident taxable person,
• other than those referred to in the proviso to sub-section (5) of section 35 (CAG or auditor of local
authorities)
shall furnish an annual return for every financial year electronically in such form and manner as may be
prescribed on or before the thirty-first day of December following the end of such financial year.
(2) Every registered person who is required to get his accounts audited in accordance with the
provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-
section (1) along with a copy of the audited annual accounts and a reconciliation statement,
reconciling the value of supplies declared in the return furnished for the financial year with the
audited annual financial statement, and such other particulars as may be prescribed.
• Annual Return is to be filed electronically in Form GSTR 9 through common portal. Composition
Scheme supplier is required to file in Form GSTR 9A.
• Aggregate Turnover exceeding INR 2 crores is subject to audit. Reconciliation Statement will
reconcile the value of supplies declared in the return furnished for the financial year with the audited
annual financial statement and such other particulars, as may be prescribed.
Section 45 Final Return

Every registered person who is required to furnish a return U/s 39 (1) and whose registration has been cancelled
shall furnish a final return within three months of the date of cancellation or date of order of cancellation,
whichever is later, in such form and manner as may be prescribed. (Form GSTR 10)
Section 46 Notice to Return Defaulters

Where a registered person fails to furnish a return under section 39 (Normal Return) or section 44 (Annual
Return) or section 45 (Final Return), a notice shall be issued requiring him to furnish such return within fifteen
days in such form and manner as may be prescribed.
Section 47 Levy of late fee

(1) Any registered person who fails to furnish the details of outward or inward supplies required under
section 37 (Statement of Outward Supplies) or section 38 (Statement of Inward Supplies) or
returns required under section 39 (Returns) or section 45 (Final Return) by the due date shall
pay a late fee of one hundred rupees for every day during which such failure continues subject to
a maximum amount of five thousand rupees.
Study Notes
265
(2) Any registered person who fails to furnish the return required under section 44 by the due date
shall be liable to pay a late fee of one hundred rupees for every day during which such failure
continues subject to a maximum of an amount calculated at a quarter per cent (0.25%) of his turnover in
the State or Union territory.
Section 48 Goods & Services Tax Practitioners (Read with Rule 83)
(1) The manner of approval of goods and services tax practitioners, their eligibility conditions, duties
and obligations, manner of removal and other conditions relevant for their functioning shall be
such as may be prescribed.
(2) A registered person may authorize an approved goods and services tax practitioner to furnish the
details of outward supplies under section 37, the details of inward supplies under section 38 and
the return under section 39 or section 44 or section 45, and to perform such other functions
in such manner as may be prescribed.
(3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any
particulars furnished in the return or other details filed by the goods and services tax practitioners
shall continue to rest with the registered person on whose behalf such return and details are
furnished.
GST Practitioner – Eligibility Criteria

Any person who is a citizen of India having necessary qualification, of sound mind and not convicted or
adjudicated as insolvent can become a GST Practitioner. To be qualified as a GST Practitioner, the person
must be:
• A retired officer of the Commercial Tax Department of any State Government or of the Central Board
of Excise and Customs, Department of Revenue, Government of India, who, during his service under
the Government, had worked in a post not lower in rank than that of a Group-B gazetted officer for a
period of not less than two years; or
• Has been enrolled as a sales tax practitioner or tax return preparer under the existing law for a period
of not less than five years;
• Has the following degree or qualification:
o A graduate or postgraduate degree or its equivalent examination having a degree in
Commerce, Law, Banking including Higher Auditing, or Business Administration or Business
Management from any Indian University established by any law for the time being in force; or
o A degree examination of any Foreign University recognized by any Indian University as
equivalent to the degree examination having a degree in Commerce, Law, Banking including
Higher Auditing, or Business Administration or Business Management; or
o Any other examination notified by the Government, on the recommendation of the Council, for
this purpose; or
o Has passed any of the following examinations, namely:
▪ Final examination of the Institute of Chartered Accountants of India;
▪ Final examination of the Institute of Cost Accountants of India;
▪ Final examination of the Institute of Company Secretaries of India.
Duties of a GST Practitioner {Rule 83 (8)}
A goods and services tax practitioner can undertake any or all of the following activities on behalf of a registered
person, if so authorised by him to-
(a) furnish the details of outward and inward supplies;
(b) furnish monthly, quarterly, annual or final return;
(c) make deposit for credit into the electronic cash ledger;
(d) file a claim for refund;
266
(e) file an application for amendment or cancellation of registration;
(f) furnish information for generation of e-way bill;
(g) furnish details of challan in FORM GST ITC-04;
(h) file an application for amendment or cancellation of enrolment under rule 58; and
(i) file an intimation to pay tax under the composition scheme or withdraw from the said scheme:
Provided that where any application relating to a claim for refund or an application for amendment or cancellation
of registration or where an intimation to pay tax under composition scheme or to withdraw from such scheme
has been submitted by the goods and services tax practitioner authorised by the registered person, a
confirmation shall be sought from the registered person and the application submitted by the said practitioner
shall be made available to the registered person on the common portal and such application shall not be further
proceeded with until the registered person gives his consent to the same.
GST Practitioner – Application Procedure
Any person who is eligible to become a GST Practitioner as per the criteria above can apply using FORM
GST PCT-01 through the GST Common Portal or through a GST Facilitation Centre notified by the
Commissioner for GST Practitioner enrolment. On receiving the application, the GST officer would process
the application and make enquires as considered necessary for enrolment. If the Officer is satisfied, a GST
Practitioner certificate would be issued in GST PCT 02.
Rule 83A inserted vide notification No. 60/2018 – CT Dated 30.10.2018, which is related to Examination of
Goods and Services Tax Practitioners. The National Academy of Customs, Indirect Taxes and Narcotics
(hereinafter referred to as “NACIN”) shall conduct the examination. The rules contains syllabus, frequency of
examination, examination centers, period for passing the examination and number of attempts allowed, nature
of examination, qualifying marks, guidelines for the candidates etc.
Validity of License
GST Practitioner license would valid until its cancelled by the relevant authority. However, any person holding
a GST Practitioner license would be required to pass examinations held by the GST Authority and notified by
the Commissioner from time to time. Further, all persons applying to become a GST Practitioner through the
sales tax practitioner or tax return preparer route are required to pass an exam conducted by the GST Authority
within thirty months from the implementation of GST.
Further, a goods and services tax practitioner enrolled in any State or Union Territory shall be treated as enrolled
in the State/Union territory for the purposes.
Filing GST Returns as GST Practitioner
Once a person is enrolled as a GST Practitioner, his/her client can authorise the Practitioner to file GST returns
on the taxpayers behalf by filing Form GST PCT-05 on the GST Common Portal. The GST Practitioner can then
prepare GST return on behalf of taxpayer with diligence and affix his/her digital signature on the GST
return prepared by him/her or electronically verify the credentials.
When a GST return is prepared by a GST Practitioner, the GST return will be held for filing and the filing must
be approved by the registered person. Confirmation for filing the return prepared by the GST Practitioner will be
requested from the registered person through email and SMS. If the registered person fails to respond to the
request for confirmation till the last date of furnishing of such statement, then the return prepared by the GST
practitioner will be automatically filed.
In case a GST taxpayer is not satisfied with the services of a GST Practitioner, the taxpayer can withdraw a
Practitioner’s authorisation at any time through the GST Common Portal. If any GST Practitioner is found guilty
Study Notes
267
of misconduct, then a GST Officer can provide a reasonable opportunity for being heard and then if required,
disqualify him/her from practising as a GST Practitioner.
Section 150 Information Return

(1) Any person, being—
(a) a taxable person; or
(b) a local authority or other public body or association; or
(c) any authority of the State Government responsible for the collection of value added tax or sales
tax or State excise duty or an authority of the Central Government responsible for the collection of
excise duty or customs duty; or
(d) an income tax authority; or
(e) a banking company; or
(f) a State Electricity Board or an electricity distribution or transmission licensee under the Electricity
Act, 2003, or any other entity entrusted with such functions by the Central Government or the State
Government; or
(g) the Registrar or Sub-Registrar appointed under section 6 of the Registration Act, 1908; or
(h) a Registrar within the meaning of the Companies Act, 2013; or
(i) the registering authority empowered to register motor vehicles; or
(j) the Collector referred to in clause (c) of section 3 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013; or
(k) the recognised stock exchange referred to in clause (f) of section 2 of the Securities Contracts
(Regulation) Act, 1956; or
(l) a depository referred to in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996;
or
(m) an officer of the Reserve Bank of India as constituted under section 3 of the Reserve Bank of
India Act, 1934; or
(n) the Goods and Services Tax Network, a company registered under the Companies Act, 2013; or
(o) a person to whom a Unique Identity Number has been granted under sub-section (9) of section
25; or
(p) any other person as may be specified, on the recommendations of the Council, by the
Government,
who is responsible for maintaining record of registration or statement of accounts or any periodic return or
document containing details of payment of tax and other details of transaction of goods or services or both or
transactions related to a bank account or consumption of electricity or transaction of purchase, sale or exchange
of goods or property or right or interest in a property under any law for the time being in force, shall furnish an
information return of the same in respect of such periods, within such time, in such form and manner and to
such authority or agency as may be prescribed.
(2) Where the Commissioner, or an officer authorised by him in this behalf, considers that the
information furnished in the information return is defective, he may intimate the defect to the
person who has furnished such information return and give him an opportunity of rectifying the
defect within a period of thirty days from the date of such intimation or within such further period
which, on an application made in this behalf, the said authority may allow and if the defect is not
rectified within the said period of thirty days or, the further period so allowed, then, notwithstanding
anything contained in any other provisions of this Act, such information return shall be treated as
not furnished and the provisions of this Act shall apply.
(3) Where a person who is required to furnish information return has not furnished the same within
the time specified in sub-section (1) or sub-section (2), the said authority may serve upon him a
notice requiring furnishing of such information return within a period not exceeding ninety days
from the date of service of the notice and such person shall furnish the information return.
268
Section 123 Penalty for failure to furnish Information Return
If a person who is required to furnish an information return under section 150 fails to do so within the period
specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall
be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish
such return continues:
Provided that the penalty imposed under this section shall not exceed five thousand rupees.
Question & Answer

Q1. ABC Ltd. furnished annual returns for the year 2017-18 on September 15, 2018. An error is discovered in
respect of a transaction pertaining to outward supplies of January 2018. Determine the time limit to rectify the
mistake in case return of Sept’18 furnished on October 15 ,2018.
A. Annual return has been furnished by September 15,2018 and return for the month of Sept’18 filed on October
15, 2018. The rectification of error pertaining to January 2018 cannot be done beyond September 15, 2018 as
per provision of Section 37 (3).
Q2. In some period of the year, there may not be any business activity like in case of seasonal business.
Whether a taxable person will be required to file return in such case also?
A. Every registered taxable person is required to file returns. Without filing the return of the period, next return
cannot be filed. Therefore, even if there is no taxable supplies made or received during any period, such person
is required to file a NIL return but not filing the return is not an option in GST.
Q3. A compounding taxpayer, who has opted for composition scheme U/s 10 is required to file quarterly returns.
Whether he is required to file Annual Return also?
A. According to Sec. 39 (2), every registered taxable person who has opted for composition scheme under the
provisions of Section 10 of the GST Act besides filing the quarterly return is also required to file an annual return.
Q4. What are the different means available to taxpayer for filing the returns?
A. The taxpayer can file the return on GSTN by using one of the followings: -
1) By taxpayer himself by using the user id and password issued to such taxpayer
2) By the authorized representative using the login and password issued to such authorized
representative. Such authorized representative should have been selected by the taxpayer before such
filing and such authorized representative should be linked to such taxpayer account.
3) Through the Facilitation Centre (FC) by using the login and password of such FC. Post filing by FC,
system generates a message for taxpayer by mail and SMS.
Facilitation Centre is a facility for digitization and uploading of returns on the GSTN data base. This
facility is created with the approval of Central Board of Indirect Taxes or by respective State
Governments. Small taxpayers who don’t have facility for digitization of their data and/or uploading their
returns can use this facility of facilitation centers for doing this function.
Q5. How would a supplier who has taken a new registration, file his first return under GST?
A. There might be cases wherein a person is liable to be registered under the law from a particular date and
there is time gap between the date from when he was liable to be registered under the law and the date on
which registration is granted to such person. He would have made outward supplies in this period between the
date when he was liable to be registered under the law and the date from which is granted registration.
Study Notes
269
In such case the registered person who has made outward supplies in the period between the dates on which
he became liable to registration till the date on which registration has been granted shall declare the details of
such outward supplies in the first return filed by him after the date of grant of registration.
Q6. Whether credit of Input Tax can be used for making payment of Interest, Fees, Penalty and any other
Amount?
A. No, Input Tax Credit can only be utilized for making payment towards output tax liability. It can’t be used for
making payment towards Interest, Fees, Penalty or any other amount payable under this Act.
Q7. Whether GSTR 3B can be revised after filing? Whether there is any column in GSTR 3B for reporting any
discrepancies which have taken place while filing returns for previous months?
A. No, GSTR 3B filed, can’t be revised. Form GSTR 3B doesn’t contain any column for reporting of differential
figures for past month(s).
Q8. If a return has been filed, how can it be revised if some changes are required to be made?
A. In GST since the returns are built from details of individual transactions, there is no requirement for having a
revised return. Any need to revise a return may arise due to the need to change a set of invoices or debit/ credit
notes. Instead of revising the return already submitted, the system will allow changing the details of those
transactions (invoices or debit/credit notes) that are required to be amended. They can be amended in any of
the future GSTR- 1 in the tables specifically provided for the purposes of amending previously declared details.
Q9. What will be the legal position in regard to the reversed input tax credit if the supplier later realizes the
mistake and feeds the information?
A. At any stage, but before September of the next financial year, supplier can upload the invoice and pay duty
and interest on such missing invoices in his GSTR-3B of the month in which he had earlier failed to upload the
invoice. The recipient shall be eligible to reduce his output tax liability to the extent of the amount in respect of
which the supplier has rectified the mis-match. The interest paid by the recipient at the time of reversal will also
be refunded to the recipient by crediting the amount in corresponding head of his electronic cash ledger.
Q10. During the course of inspection/audit/scrutiny/enforcement activity, the department has pointed out certain
omissions or incorrect particulars in the returns. Whether the assessee can rectify the returns to correct the
omissions or incorrect particulars in its returns?
A. As per Section 39(9), provides for correction in the returns on account of Omission of wrong particulars filed
other than as a result of audit/inspection/scrutiny/enforcement, the assessee can rectify such
omissions/incorrect particulars in the returns. In the month/quarter in which such omission/ incorrect particulars
are noticed, the due tax and interest shall be payable thereon.
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Section 14 (IGST) OIDAR

Section 2 (10) & 2 Import of Goods/Services
(11) (IGST)
Section 2 (5) & 2 (6) Export of Goods/Services
(IGST)
Section 16 (IGST) Zero Rated Supply
Section 15 (IGST) Refund of Integrated Tax Paid on Supply of Goods to Tourist Leaving
India
Section 14 OIDAR (IGST Act)

Both the following conditions must be satisfied to be a OIDAR service. If one is not satisfied, the service is not
OIDAR {Section 2 (17) of IGST}.
• Delivery is mediated through internet.

• The supply is essentially automated involving minimal human intervention and impossible without
information technology.
Examples of OIDAR services:

• Advertising on internet
• Providing cloud services (Google Drive)
• Provision of e-books, movie, music, software and other intangibles via internet (Hotstar, Amazon
Prime Video)
• Providing data or information, retrievable or otherwise, to any person, in electronic form through a
computer network;
• Online gaming
Non-OIDAR services
• Supplies of goods, where the order and processing is done electronically
• Supplies of physical books, newsletters, newspapers or journals
• Services of lawyers and financial consultants who advise clients through email
• Booking services or tickets to entertainment events, hotel accommodation or car hire
• Educational or professional courses, where the content is delivered by a teacher over the internet
• Offline physical repair services of computer equipment
• Advertising services in newspapers, on posters and on television
Applicability of GST for OIDAR Services
Location of Location of Taxabil Forward Charge/ Reverse Examples

Supplier of recipient of ity Charge
service service
India India Yes Forward Charge Hotstar (registered in India)

(GST payable by the service allows Indian users to register
provider) and watch movies.
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271
Outside India Yes Reverse Charge An Indian Co.(registered) asks

India Blue Host (US) for web hosting
Recipient: (GST payable by the
services. GST is payable by
Registered recipient)
the Indian Co. under RCM.
Recipient: Yes Forward Charge A student in India registers in

Non-Taxable Netflix (US) for watching
(GST payable by the service
Person movies. Netflix has to pay
provider)
IGST.
India Outside India No NA Hotstar allows foreigners to

register and watch movies.
(Export
GST is not applicable as it is an
of
export of service.
service)
Outside Outside India No NA Netflix (US) provides online

India movie streaming services to
(Not
people in US.
covered
under This is not covered in Indian
GST) GST.
Who will register and pay GST for OIDAR services when the service provider is located outside India?
In respect of import of online information and database access or retrieval services (OIDAR) by unregistered,
non-taxable recipients, the supplier located outside India will be responsible for payment of taxes.
The service provider (or intermediary as the case may be) will be required to take a single registration for paying
IGST under the Simplified Registration Scheme to be notified by the Government.
Either he will have to take registration or he will have to appoint a person in India to pay GST.
The person receiving any such services i.e. OIDAR should pay the IGST to the government only if he is
registered under GST as a taxable person.
The peculiarity of OIDAR service is that it can be provided online from a remote location outside India.
• If a similar service is provided by an Indian Service Provider, from India to recipients in India then such
service would be taxable.
• If such services are received by a registered entity in India then GST will be payable under reverse
charge.
This gives the overseas suppliers of such services an unfair tax advantage if their services are left out of the
tax net.
Again, as the service provider is located overseas and might not have a presence in India, the compliance
becomes difficult. So, the government has a simplified scheme of registration for such service providers located
outside India.
272
Other important points: -
• Where the supplier of OIDAR service is located outside India and the recipient is located in India, the
place of supply would be the location of the recipient of service,
• Intermediary located outside India arranges or facilitates supply of such service to a non-taxable
online recipient in India, the intermediary would be deemed to be the supplier of the said service,
except when the intermediary satisfies the following conditions: -
❖ The invoice or customer’s bill or receipt issued by such intermediary taking part in the supply
clearly identifies the service in question and its supplier in non-taxable territory
❖ If intermediary neither collects or processes payment in any manner nor is responsible for the
payment between the non-taxable online recipient and the supplier of such services
❖ The intermediary involved in the supply doesn’t authorize delivery
❖ The general terms & conditions of the supply are not set by the intermediary involved in the
supply but by the supplier of services.
Section 2 (10) & 2 (11) Import of Goods/Services (IGST Act)

Import of Goods
Import of Goods {Section 2 (10) of IGST Act}
‘‘Import of goods”, means bringing goods into India from a place outside India;
➢ Supply of goods into India till they cross the customs frontiers of India is deemed to be an inter-State
supply and thus, attracts levy of IGST. IGST on goods imported into India is levied and collected in
accordance with the provisions of section 3 of the Customs Tariff Act, 1975. Thus, though goods
imported into India are leviable to IGST under IGST Act, the machinery of customs law is used to collect
IGST.
The place of supply of goods, imported into India is the location of the importer [Section 11]. Thus, if
an importer say is located in Karnataka, the state tax component of the IGST accrues to the State of
Karnataka.
➢ IGST on goods imported into India is levied and collected at the point when duties of customs are levied
on the said goods under the Customs Act, 1962. Customs duty is leviable when importation of goods
gets complete, i.e. when the goods become part of the mass of goods within the country; the taxable
event being reached at the time when the goods reach the customs barriers and bill of entry for home
consumption is filed. Thus, the point of levy and collection of IGST will also be the point when the bill
of entry for home consumption is filed.
➢ In addition, GST Compensation Cess, may also be leviable on certain luxury and de-merit goods under
the Goods and Services Tax (Compensation to States) Cess Act, 2017.
➢ Value of the goods for the purpose of levying IGST shall be, assessable value plus basic custom duty
& any other duty chargeable on the said goods under any law for the time being in force as an addition
to, and in same manner as, a duty of customs.
➢ Value of the goods for the purpose of levying Cess shall be, assessable value plus basic custom duty
& any other duty chargeable on the said goods under any law for the time being in force as an addition
to, and in same manner as, a duty of customs.
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273
➢ In cases where imported goods are liable to Anti-Dumping Duty or Safeguard Duty, value for calculation
of IGST as well as GST Compensation Cess also includes Anti-Dumping Duty and Safeguard duty
➢ There is no GST liability on high sea sales. GST is payable only when goods are cleared from customs.
Circular No. 33/2017 Cus Dated 01.08.2017 has also clarified that IGST on high sea sale(s) transactions
of imported goods, whether one or multiple, shall be levied and collected only at the time of importation,
i.e. when the import declarations are filed before the Customs authorities for the customs clearance
purposes for the first time. Further, value addition accruing in each such high sea sale shall form part
of the value on which IGST is collected at the time of clearance. The importer (last buyer in the chain)
would be required to furnish the entire chain of documents, such as original invoice, high seas sales
contract, details of service charges/commission paid etc. to establish a link between the first contracted
price of the goods and the last transaction.
➢ Goods imported by a unit or a developer in the Special Economic Zone (SEZ) for authorised operations
are exempted from the whole of IGST leviable under section 3(7) of the Customs Tariff Act, 1975 vide
Notification No. 64/2017 Customs Dated 05-07-2017.
➢ Goods imported by Export Oriented Undertaking (EOU) attract liability to customs duty. Import of goods
by 100% EOU’s are governed by Notification No. 52/2003 Cus as amended by Notification No. 65/2018
Cus Dated 24.09.2018. EOUs are allowed duty free import of goods (exempt from Customs duties,
IGST & GST Compensation Cess) under the said notifications. However, exemption from IGST is
available only till 31.03.2019.
Import of Services
Import of Services {Section 2 (11) of IGST Act}
‘‘Import of services” means the supply of any service, where––

(i) the supplier of service is located outside India;
(ii) the recipient of service is located in India; and
(iii) the place of supply of service is in India;
➢ Services imported by a unit or a developer in the SEZ for authorized operations, are exempt from the
whole of the IGST {Notification No. 18/2017-IT (R) Dated 05-07-2017}
➢ Import of service (please recollect Schedule I): -
Nature of Service Consideration Business Test
Import of services Necessarily Required Not Required
Import of services by a taxable Not required Necessarily Required
person from a related person
or from a distinct person
274
Section 2 (5) & 2 (6) Export of Goods/Services (IGST Act)

Export of goods and services are important for any nation. Goods and services are to be exported, taxes are
not to be exported. Supplies to SEZ Unit & SEZ Developer are treated at par with physical exports.
Export of Goods {Section 2 (5) of IGST Act}
“Export of goods” , means taking goods out of India to a place outside India.
Example 1: ABC Ltd. having place of business in Delhi receives an order for supply of goods worth Rs. 1,00,000
from XYZ Ltd., Sri Lanka. ABC Ltd. supplied goods to XYZ Ltd., Sri Lanka. This is export of goods by ABC Ltd.
to XYZ Ltd.
If suppose ABC Ltd. received order for supply of goods worth Rs. 1,00,000 from XYZ Ltd., Sri Lanka, but it is
mentioned that goods may directly be supplied to the XYZ Ltd.’s client site in Hyderabad. In this case, such
supply of goods will not qualify as export of goods since, goods are not taken out of India.
Export of Services {Section 2 (6) of IGST Act}
“Export of services” means the supply of any service when, -

(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible
foreign
exchange or in Indian Rupees wherever permitted by the Reserve Bank of India; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct
Person in accordance with Explanation 1 in section 8;
Example 2: Indian branch office of ABC Ltd., supplies consultancy services to Head Office of UK. Supply of
services in this case will not be treated as export of services since Head Office & Branch Office are treated as
establishment of distinct persons.
Example 3: ABC Ltd. is wholly owned subsidiary of XYZ Ltd. (a UK based company). ABC Ltd. supplies
consultancy services to its parent company in UK. Supply of services in this case will be treated as export of
services since holding and subsidiary company under different PAN cannot be treated as establishment of
distinct persons. Thus, benefit of export of services will be available.
Section 16 Zero Rated Supply (IGST Act)

“Zero-rated supply” means a supply of any goods or services or both in terms of section 16 of IGST Act – Section
2(23) of IGST Act.
Section 16 (1) of IGST Act: Export of goods or services or both and supplies of goods or services or both to
SEZ unit or SEZ developer will be zero rated supply.
Section 16 (2) of IGST Act: ITC may be availed for making zero-rated supplies, even if such supply is exempted
supply.
Section 16 (3) of IGST Act: The registered person making zero rated supply can claim refund under either of
two options –
a. supply of goods under bond or LUT without payment of IGST and claim refund of unutilized ITC.
The facility of export under LUT has been now extended to all registered persons who intend to supply
goods or services for export without payment of IGST except those who have been prosecuted for any
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275
offence under the CGST Act or the IGST Act or any of the existing laws and the amount of tax evaded in
such cases exceeds Rs. 2,50,00,000. A bond in all cases, shall be accompanied by a bank guarantee of
15% of the bond amount.
b. supply goods on payment of IGST and claim refund of IGST paid on goods and services.
The refund will be in accordance with section 54 of CGST Act.
“Manufacturer exporter” means a person who exports goods manufactured by him or intends to export such
goods – para 9.32 of FTP 2015-2020
“Merchant exporter” means a person engaged in trading activity and exporting or intending to export goods –
para 9.33 of FTP 2015-2020
Special Provisions for Export

It may be noted that Export may be seen for any of the two aspects:-
1. First way (Refund): Export without paying IGST, so need of LUT arises and assessee may get refund
of ITC. Generally LUT is furnished before export but by way of Circular No. 37/11/2018-GST issues on
15th March 2018, it is clarified that the delay in furnishing of LUT in such cases may be condoned and
the facility for export under LUT may be allowed on for previous cases also taking into account the facts
and circumstances of each case.
It need to be borne in mind that in terms of Rule 89 (4) of the CGST Rules, which prescribes the formula
for computing eligible amount of refund of untilized ITC in the case of zero-rated supply of goods or
services or both made without payment of tax under bond/LUT, meaning of “Net ITC” is defined as ITC
availed on inputs and input services during the relevant period. Thus under this , there will be no refund
of credit paid on capital goods.
2. Second way (Rebate): Export by paying IGST, so no need of LUT arises and refund of IGST can be
availed.
It is worthwhile here to note that rebate model of zero-rated supply is beneficial for faster processing of
refund and under this option, there will not be any bar on refund of credit of capital goods, as the same
can be utilized along with credit of inputs and input services for discharging IGST liability on outward
supply and then claiming full refund of IGST so paid.
If one is not paying the tax (i.e. IGST being inter-State supply) on exports then he will have to file LUT and he
may get refund of ITC and if one exports by way of paying IGST then no need of LUT arises and so, the need
of refund arises in second case.
Submission of LUT to be made in form GST RFD-11 online and no physical documentation is to be submitted
to department as specified by Circular No. 40/14/2018-GST issued on 6-4-2018.
Though the theme behind GST was to keep refund based on online working but due to non-availability of online
module, circular was issued stating that refund process will be handled manually which will go on till online
module is operationalised. (Circular No. 17/17/2017 Dated 15-11-2017 and Circular No. 24/24/2017-GST Dated
21-12-2017). This is the reason, new rule 97A inserted w.e.f. 15th November 2017 allowing manual filing &
processing, in respect of refund process.
276
Other Points: -
➢ Exporter will be eligible for refund of Compensation Cess paid on goods exported by him {on similar
lines as refund of IGST}. No compensation Cess if export is under bond or LUT and he can claim refund
of accumulated ITC on Compensation Cess like IGST.
➢ Exporter need to only file shipping bill with the customs. The shipping bill filed with the custom is treated
as an application for refund of IGST (if he opt for “rebate” explained above).
➢ Export will be under self-sealing & self-certification.
➢ Duty credit scrip under the export incentive schemes of FTP (MEIS and SEIS) can be utilized only for
payment for BCD or additional duties of customs.
➢ Benefits of exemption under Advance Authorization scheme, EPCG scheme and duty credit scrips such
as MEIS and SEIS shall be restricted only to BCD, safeguard duty, transitional product specific
safeguard duty and Anti-dumping duty in respect of goods leviable to IGST.
➢ It has been clarified vide CBE&C circular no. 37/11/2018-GST Dated 15-3-2018 that BRC (Bank
Remittance Certificate) or FIRC (Foreign Inward Remittance Certificate) is required only in case of
export of services and not in case of export of goods.
➢ Services supplied by establishment of person in India to own establishment out of India is exempt, if
place of supply is out of India (it is not zero-rated).
➢ All exporters registered under GST can export goods or services without payment of IGST, on execution
of LUT, except those who have been prosecuted for offence under any law where tax evade exceeds
Rs. 250 Lakhs. The LUT is valid for whole financial year. However, if payment is not received within
prescribed period, facility of LUT is deemed to have been withdrawn. If payment is received later, the
facility to export under LUT is restored. Export can be done under bond while LUT is not allowed.
➢ Where date of filing GSTR-1 has been extended by Commissioner, the supplier shall furnish information
relating to export invoices in Table 6A of form GSTR-1 after return in form GSTR-3B has been furnished.
➢ LUT not required in case of export of exempted or non GST goods. The exporter may follow procedure
under Central Excise or State Vat Laws or Customs Act – CBI&C circular No. 45/19/2018-GST Dated
30-5-2018.
Circular no. 78/52/2018-GST Dated 31 December 2018
The circular clarifies the GST implications where the Indian exporter of services outsources part of the activities
to a person outside India and the consideration relating to such outsourced services is not received by the
exporter in India. In such case, the Indian exporter would be liable to pay IGST on reverse charge basis on
import of services on such portion which has been provided by the supplier located outside India to the recipient
of services located outside India. Furthermore, the Indian exporter would be eligible for taking input tax credit
(ITC) of the integrated tax so paid.
Even if the full consideration for the services exported is not received in convertible foreign exchange in India
due to the fact that the recipient of services located outside India has directly paid to the supplier of services
located outside India, such portion of the consideration shall also be treated as consideration received for export
in terms of section 2(6)(iv) of the IGST Act. This is subject to the conditions that:
✓ IGST has been paid by the Indian exporter for import of services; and
✓ RBI, by general instruction or by specific approval, has allowed part of the consideration for such exports
to be retained outside India.
Example 4: ABC Ltd. India has received an order for supply of services amounting to $ 5,00,000/- to a US based
client. ABC Ltd. India is unable to supply the entire services from India and asks XYZ Ltd. Mexico (who is not
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277
merely an establishment of a distinct person viz. ABC Ltd. India, in accordance with the Explanation 1 in Section
8 of the IGST Act) to supply a part of the services (say 40% of the total contract value).
ABC Ltd. India shall be the exporter of services for the entire value if the invoice for the entire amount is raised
by ABC Ltd. India. The services provided by XYZ Ltd. Mexico to the US based client shall be import of services
by ABC Ltd. India and it would be liable to pay integrated tax on the same under reverse charge and also be
eligible to take input tax credit of the integrated tax so paid.
Further, if the provisions contained in section 2(6) of the IGST Act are not fulfilled with respect to the realization
of convertible foreign exchange, say only 60% of the consideration is received in India and the remaining amount
is directly paid by the US based client to XYZ Ltd. Mexico, even in such a scenario, 100% of the total contract
value shall be taken as consideration for the export of services by ABC Ltd. India provided integrated tax on
import of services has been paid on the part of the services provided by XYZ Ltd Mexico directly to the US
based client and RBI (by general instruction or by specific approval) has allowed that a part of the consideration
for such exports can be retained outside India. In other words, in such cases, the export benefit will be
available for the total realization of convertible foreign exchange by ABC Ltd. India and XYZ Ltd. Mexico.
Refund claim in case of Deemed Export

Supplies to EOU units, supplies against annual advance authorization etc. are deemed export. These don’t
leave the country at the time of supply and payment is in Indian rupees. EOU units have to procure goods on
payment of GST as applicable. Supplies to EOU are like any other supplies. Zero rating is applicable to EOU
only in case of goods or services exported by them. EOU units clearing goods in Domestic Tariff Area or to
other EOU unit will be required to pay IGST/CGST/SGST/UTGST as applicable.
In respect of supplies regarded as deemed exports, the application may be filed by
a. The recipient of deemed export supplies; or

b. The supplier of deemed export supplies in cases where the recipient doesn’t avail of ITC on such
supplies and furnishes an undertaking to the effect that the supplier may claim the refund – third proviso
to Rule 89 (1) of CGST & SGST Rules 2017 as amended w.e.f. 18-10-2017.
If supplier has claimed benefit of deemed export under Notification No. 48/2017-CT Dated 18-10-2017, refund
of ITC, availed in respect of other inputs or input services is available if the recipient makes a zero rated supply
– 89 (4A) of CGST Rules.
If the supplier is claiming deemed export benefits, export by recipient of goods on payment of IGST not
permissible. If still IGST is paid on export of goods or services, its ITC is not available – Rule 96 (10) of CGST
Rules.
Merchant Export
Merchant exporter means a person engaged in trading activities and exporting or intending to export such
goods. Notification No. 41/2017 – IT (R) Dated 23rd Oct’17, states that inter-State supply made to Merchant
exporters will be charged at rate of 0.1% {0.05% CGST(equivalent SGST) in case of intra-State as per
Notification No. 40/2017 – CT (R) Dated 23rd Oct’17}. If regular rate of goods is 12% then a registered supplier
supplying to merchant exporter (registered recipient) will charge GST only 0.1% which means tax 11.9% will be
exempted in such a case, if conditions prescribed in Notification No. 41-2017-IT (R) are satisfied (within 90 days
278
needs to export from the date of tax invoice by the supplier, registered with an Export Promotion Council, move
the said goods directly to the port, ICD or registered warehouse etc.).
If goods were procured on payment of 0.1% GST, the merchant exporter can export the goods only under
LUT/Bond and cannot export on payment of IGST – Rule 96 (10).
Section 15 Refund of Integrated Tax Paid on Supply of Goods to

Tourist Leaving India
The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded
in such manner and subject to such conditions and safeguards as may be prescribed.
Explanation: For the purposes of this section, the term “tourist” means a person not normally resident in India,
who enters India for a stay of not more than six months for legitimate non-immigrant purposes.
Question & Answer

Q1. Who shall be liable to collect and discharge the Integrated tax liability in cases of provision of cross
border B2C OIDAR services?
A. Service providers providing OIDAR services to a non-taxable online recipient in taxable territory would be
responsible for collection and discharge of integrated tax.
Q2. Under what circumstances an intermediary, who arranges or facilitates the supply of OIDAR services
would not be liable to collect tax from non-taxable online recipient?
A. If the intermediary satisfies the following conditions, he shall not be liable to collect tax from non-taxable
online recipient;
(a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in
the supply clearly identifies the service in question and its supplier in non-taxable territory;
(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its
charge which is that the intermediary neither collects or processes payment in any manner nor is
responsible for the payment between the non-taxable online recipient and the supplier of such services;
(c) the intermediary involved in the supply does not authorise delivery; and
(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply
but by the supplier of services.
Q3. Who is non-taxable online recipient?

A. “Non-taxable online recipient” means any Government, local authority, governmental authority, an individual
or any other person not registered and receiving online information and database access or retrieval services
in relation to any purpose other than commerce, industry or any other business or profession, located in taxable
territory.
Q4. Would a supplier of OIDAR required to take registration in all states in India in GST Act?
A. No. The CBIC has notified the Principal Commissioner of Central Tax, Bengaluru West and all the officers
subordinate to him as the officers empowered to grant registration in case of online information and database
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279
access or retrieval services provided or agreed to be provided by a person located in non-taxable territory
and received by a non-taxable online recipient.
Q5. Mr. A is supplying goods to SEZ Unit. Whether he has to charge IGST on supply of goods.
A. As per the provision of section 16 of IGST Act, 2017, Supply to SEZ Unit are Zero Rated Supplies. Therefore,
in such case Mr. A can either supply goods against payment of IGST (which can be claimed as refund) or he
can supply goods without payment of IGST (against LUT /Bond).
Q6. A person had submitted Bank Guarantee for Issue of Bond for export of goods without payment of tax. He
was granted Bond with a validity period upto 31st March 2018. However, in view of Notification No. 37/2017 –
Central Tax Dated 4th October 2017, he wants to submit Letter of Undertaking and get the bond released which
was submitted earlier. Can he do so.
A. Yes, he can submit a Letter of Undertaking as per the guidelines issued vide Notification No. 37/2017 –
Central Tax Dated 4th October 2017 and get the bond submitted earlier released.
Q7. What is the meaning of the term “Zero Rated Supply”?

A. “Zero Rated Supply” refers to supplies made to SEZ units / developers or exports of goods or services or
both. Zero rated supply doesn't necessarily mean that the above supplies are not leviable to IGST or will taxed
at "0" (Zero) Rate or will be exempt from IGST unconditionally.
Q8. Are exports and supplies to SEZ units/Developers out of the ambit of GST?
A. No. They are treated as IGST supplies under the IGST Act, 2017. However, the tax burden on the same
will be neutralized by granting refunds to persons making such supplies.
Q9. Can SEZ unit / Developers claim refund of IGST charged by his supplier?
A. No. The IGST Act, 2017 allows the supplier of SEZ unit / developer to claim refund of IGST paid by him on
supplies to SEZ unit / Developers.
Q10. Are supplies made by SEZ units/Developer are Zero rated supplies?
A. No. only the supplies made TO SEZ units/Developer are zero rates supplies. However, exports made by SEZ
units/Developer will be zero rated supplies.
280
Section 54 Refund of Tax

Section 55 Refund to UN Bodies, Embassies, etc.
Section 56 Interest on Delayed Refunds
Section 57 Consumer Welfare Fund
Section 58 Utilization of Fund
Section 15 Refund of Integrated tax paid on supply of goods to Tourist leaving
[IGST] India
Section 54 Refund of Tax

A. Situation leading to refund claims
Refund may be due to situations discussed U/s 54 or U/s 77 of CGST Act and the requirement of submission
of prescribed relevant documents as is an indicator of the various situations that may necessitate a refund
claim. A claim for refund may arise on account of any one of the following:
1. Export of goods or services (Unjust enrichment – No)
2. Supplies to SEZs units and developers (Unjust enrichment – Yes)
3. Deemed exports (Unjust enrichment – Yes)
4. Casual Taxable Person (CTP)/Resident Taxable Person (NRTP) (Unjust enrichment – Yes)
5. Refund of taxes on purchase made by UN or Embassies etc. (Unjust enrichment – No)
6. Refund arising on account of judgement, decree, order or direction of the Appellate Authority,
Appellate Tribunal or any court (Unjust enrichment – Yes)
7. Refund of accumulated ITC on account of inverted duty structure (Unjust enrichment – No)
8. Finalisation of provisional assessment (Unjust enrichment – No)
9. Refund of pre-deposit (Unjust enrichment – No)
10. Excess payment due to mistake (Unjust enrichment – Yes)
11. Refunds to International Tourists of GST paid on goods in India and carried abroad at the time of their
departure from India (Unjust enrichment – No)
12. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods
or services have not been supplied (Unjust enrichment – No)
13. Refund of CGST and SGST paid by treating the supply as intra-State supply which is subsequently
held as inter-State supply and vice-versa (Unjust enrichment – No)
However, refund of unutilized ITC shall not be allowed if
• The goods exported out of India are subjected to export duty;
• The supplier of goods or services or both avails of drawback in respect of CGST or claims refund of the
IGST paid on such supplies. While claiming refund of accumulated ITC in case of zero rated supplies
without payment of tax, a supplier can avail drawback of only basic customs duty and cannot claim
drawback of any of the taxes under GST (Central Tax, Integrated Tax, State/Union Territory Tax). In
other words, a supplier availing drawback of only basic customs duty shall be eligible for refund of
unutilized ITC of central tax/ State tax/ Union territory tax/ integrated tax/ compensation cess under the
said provision. It is further clarified that refund of eligible credit on account of State tax shall be available
even if the supplier has availed of drawback in respect of central tax [Circular No.24/24/2017 GST Dated
21.12.2017 and Circular No. 37/11/2018 GST Dated 15.03.2018].
Study Notes
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B. Time limit within which refund claim can be filed
❖ Any person claiming refund of any tax, interest, if any paid on such tax or any other amount paid by
him, may make an application before the expiry of 2 years from the ‘Relevant Date’ in such form and
manner as may be prescribed [Section 54 (1)]
❖ A registered person may claim refund of any unutilized ITC in case of zero rated supplies {clause (i) U/s
54 (3)} or accumulated ITC on account of inverted duty structure {clause (ii) U/s 54 (3)} at the end of
any tax period. Government may, on the recommendations of the Council, notify supplies of certain
goods or services or both where no refund of unutilized ITC on account of inverted duty structure is
allowed. [Section 54 (3)]
C. Meaning of ‘Relevant Date’ [Explanation 2 to section 54]

Case Relevant Date
1. Taxable goods are exported by Sea or Air Date on which the Ship or Aircraft in which such
goods are loaded, leaves India
2. Taxable goods are exported by Land Date on which such goods pass the Frontier
3. Taxable goods are exported by Post Date of Despatch of goods by the Post Office, to a
place outside India
4. Supply of goods regarded as Deemed Date on which return relating to such deemed
Export exports is furnished
5. Export of Services out of India [where the Date of receipt of payment in convertible foreign
supply of services had been completed prior exchange or in Indian rupees wherever permitted by
to the receipt of such payment] the Reserve Bank of India
6. Export of Services out of India [where Date of issue of invoice
payment for the services had been received
in advance prior to the date of issue of the
invoice]
7. Refund of tax as a consequence of Date of communication of judgement, decree, order
judgement, decree, order or direction of or direction
Appellate Authority, Tribunal or Court
8. In the case of refund of unutilised input tax End of the financial year in which such claim for
credit under clause (ii) of the first proviso to refund arises the due date for furnishing of return
sub-section (3) – Inverted duty structure under section 39 for the period in which such claim
for refund arises
9. Tax paid on Provisional Assessment Date of adjustment of tax after final assessment
10. Refund to a person, other than the supplier Date of receipt of goods or services by such person
11. Any other case Date of payment of tax
D. Application for refund of tax, interest, penalty, fees or any other amount [Rule 89]
❖ Any person, except the persons covered by notification issued under section 55, claiming refund of any
tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on
goods exported out of India, may file an application in Form GST RFD-01 electronically through GST
common portal. [Rule 89 (1)]
❖ Any claim for refund relating to balance in the Electronic Cash Ledger in as per Section 49 (6) may also
be made through the return furnished for the relevant tax period in Form GSTR 3 or 4 or 7.
❖ Casual Taxable person/NRTP, shall get the refund only when they furnished all the returns related to
period specify in the certificate of registration. [Section 54 (13)]
Refund amount, shall be claimed in the last return required to be furnished by him.
❖ In respect of supplies regarded as deemed export, the application shall be filed by the recipient of
deemed export supplies. The supplier of deemed export can also file the application if recipient give
undertaking that he has not availed ITC and supplier can claim refund. [Third proviso to rule 89 (1)]
❖ In respect of supplies to a SEZ unit/developer, the application shall be filed by the-
282
a) Supplier of goods after such goods have been admitted in full in the SEZ for authorized
operations, as endorsed by the specified officer of the Zone.
b) Supplier of services along with such evidence regarding receipt of services for authorized
operations as endorsed by the specified officer of SEZ. [Second proviso to rule 89 (1)]
E. Documents for filing refund claim [Sec. 54 (4)]

1. The application for refund shall be accompanied by –
a) Such documentary evidence as may be prescribed to establish that a refund is due to the applicant,
and
b) Such documentary or other evidence (including the documents referred u/s 33) as the applicant may
furnish to establish that the amount of tax and interest or any other amount paid in relation to which
refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not
been passed on to any other person.
2. Self-Declaration: If the claimed refund amount doesn’t exceed Rs. 2,00,000, it is not necessary for
the applicant to furnish any documentary and other evidences. Instead, he may file a self-
declaration, based on the documentary or other evidences available with him, certifying that the
incidence of such tax and interest had not been passed on to any other person.
The application shall be accompanied by any of the following documentary evidences, in Annexure I in Form
GST RFD-01 as applicable, to establish that a refund is due to the applicant namely:
Situation Documents treated as Evidence

Pre-Deposit of Tax U/s 107 (6) or 112 (8) Reference number of the order and a copy of the
order passed by the proper officer/appellate
authority/appellate tribunal/court resulting in refund
or reference number of the payment of the pre-
deposit of tax
Refund on account of Exports of Goods A statement containing the number and date of
shipping bills or bills of export and the number and
date of relevant export invoices
Refund on account of Export of Services Statement containing the number and date of
invoices and the relevant Bank Realization
Certificates or Foreign Inward Remittance
Certificates
Refund on account of supply of goods to SEZ unit or Statement containing the number and date of
SEZ developer invoices as provided in Rule 46 along with the
evidence regarding goods admitted in full for
authorized operations as endorsed by the specified
officer of SEZ
Refund on account of supply of services to SEZ unit Statement containing the number and date of
or SEZ developer invoices, along with the evidence regarding receipt of
services for authorized operations as endorsed by
the specified officer of SEZ., and the details of
payment
Refund on account of supply of goods or services or A declaration to the effect that tax has not been
both to SEZ unit or SEZ developer collected from the Special Economic Zone unit or the
Special Economic Zone developer
Refund is on account of deemed exports Statement containing the number and date of
invoices along with such other evidence as may be
notified
Study Notes
283
Refund on account of unutilised ITC due to Inverted A statement containing the number and the date of
Duty Structure (other than nil rated or fully exempt the invoices received and issued during a tax period
supplies)
Refund on account of finalization of Provisional Reference number of the final assessment order and
assessment a copy of the said order
Refund u/s 77 for wrong collection and payment of A statement showing the details of transactions
tax to Central and State Government considered as intra-State supply but which is
subsequently held to be inter-State supply
Refund on account of excess payment of tax Statement showing the details of the amount of claim
In case where the amount of refund
i) doesn’t exceed Rs. 2 Lacs/or i) Declaration for the claim.
ii) exceeds Rs. 2 Lacs ii)) If it exceeds Rs. 2 Lacs then Certificate in Annex
(tax paid but incidence has not been passed to the 2 of FORM GST RFD-01 issued by a Chartered
other person) Accountant or a Cost Accountant to the effect of
claim.
Note: If the amount of tax has been recovered from the recipient, it shall be deemed that the
incidence of tax has been passed on to the ultimate consumer.
Further, neither a declaration by the applicant nor a certificate by a Chartered Accountant/Cost Accountant
is not required to be furnished in the following cases:-
(a) refund of tax paid on export of goods or services or both or on inputs or input services used in making
such exports;
(b) refund of unutilised input tax credit under sub-section (3);
(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has
not been issued, or where a refund voucher has been issued;
(d) refund of tax in pursuance of section 77;
(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations
of the Council, by notification, specify.
F. Amount to be claimed as refund in case of zero rated supply of goods or services and on
account of inverted duty structure (Rule 89)
As per Rule 89 (4), in the case of zero-rated supply of goods or services or both without payment of
tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of
the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be
granted as per the following formula –
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of

services) x Net ITC ÷Adjusted Total Turnover
Where,-
(A) “Refund amount” means the maximum refund that is admissible;
(B) “Net ITC” means input tax credit availed on inputs and input services during the relevant
period other than the ITC availed for which refund is claimed under Deemed export {Rule 89 (4A)} or
Merchant export {Rule 89 (4B)} or both.
(C) “Turnover of zero-rated supply of goods” means the value of zero-rated supply of goods made
during the relevant period without payment of tax under bond or letter of undertaking, other than the
turnover of supplies in respect of which refund is claimed under Deemed export {Rule 89 (4A)} or
Merchant export {Rule 89 (4B)} or both.
(D) “Turnover of zero-rated supply of services” means the value of zero-rated supply of services
284
made without payment of tax under bond or letter of undertaking, calculated in the following
manner, namely:-
Zero-rated supply of services is the aggregate of the payments received during the relevant
period for zero-rated supply of services and zero-rated supply of services where supply has
been completed for which payment had been received in advance in any period prior to the
relevant period reduced by advances received for zero-rated supply of services for which the
supply of services has not been completed during the relevant period;
(E) “Adjusted Total Turnover” means the sum total of the value of-
(a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the
turnover of services; and
(b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-
rated supply of services,
excluding-
(i) the value of exempt supplies other than zero-rated supplies; and
(ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B)
or both, if any,
during the relevant period.
(F) “Relevant period” means the period for which the claim has been filed.
As per Rule 89 (5), In the case of refund on account of inverted duty structure, refund of input tax
credit shall be granted as per the following formula –
Maximum Refund Amount = {(Turnover of inverted rated supply of goods & Services) x Net
ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods &
Services No refund
on input
Explanation:- For the purposes of this sub-rule, the expressions –
services &
(a) Net ITC shall mean input tax credit availed on inputs during the relevant period other than the capital
input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and goods
(b) “Adjusted Total turnover” and “relevant period” shall have the same meaning as assigned to them in
sub-rule (4).
Circular 79/53/2018-GST:-
Refund of Accumulated ITC on A/c of Inverted Duty Structure-
Input A – GST @ 5%
Input B – GST @ 12% Output Product @ 12%
Input C – GST @ 18%
The above-mentioned case belongs to the Inverted Duty Structure. Department officers were denying the
refund of Accumulated ITC of Input A & B, since GST rate of Tax for these inputs is less than or equal to the
GST rate of output supply.
Clarification: – The accumulated ITC on Input A & B will also be included for the calculation of maximum
refund amount. Since, the definition of “Net ITC” includes the same as per rule 89(5) of the CGST Rules.
Refund of ITC of GST paid on invoices of earlier tax period but availed in the subsequent tax period-
Goods purchased against a Tax invoice which is issued in Aug 2017. But ITC on that invoice was availed in
the GST return of Sept 2017, that ITC cannot be excluded from the calculation of the refund amount for the
month of Sept 2017.
Study Notes
285
Net ITC means input availed during the relevant period but only till the due date of GST return of Sept month
of the next FY.
Relevant period means the period for which the refund claim has been filed.
In the above case, the relevant period would be Sept 2017. Input will be deemed to have been availed when
it is shown in GSTR-3B, and was reflected in the Electronic Credit Ledger. Hence, that ITC would be included
in the refund calculation for the month of Sept 2017.
Duration for the GST Refund by department-
If Deficiency Memo is issued, 60 days will be counted from the date of submission of fresh refund application.
If GST refund is not credited to the bank A/c of the taxpayer within 60 days as mentioned above, interest @
6% p.a. on the refund amount will be paid.
Interpretation of the term “Inputs”-
On certain occasions, departmental officers do not consider ITC on stores and spares, packing
materials, materials purchased for machinery repairs, printing and stationery items, as part of Net ITC
on the grounds that these are not directly consumed in the manufacturing process and therefore, do
not qualify as input.
The circular clarifies that ITC of the GST paid on inputs shall be available to a registered person as long
as he uses or intends to use such inputs for the purposes of his business and there is no specific
restriction on the availment of such ITC anywhere else in the GST Act.
Thus, the GST paid on inward supplies of stores and spares, packing materials etc. shall be available
as ITC as long as these inputs are used for the purpose of business and/or for effecting taxable supplies,
including zero rated supplies, and the ITC for such inputs is not restricted under section 17(5) of the
CGST Act.
Further, capital goods have been clearly defined in section 2(19) of the CGST Act as goods whose
value has been capitalized in the books of account and which are used or intended to be used in the
course or furtherance of business. Stores and spares, which has been charged as a revenue expense
in the books of account, cannot be held to be capital goods.
Example 1: ABC Ltd. is a registered taxable company having registered office at Hyderabad, engaged in
providing consultancy service to its client in India and outside India. It is exporting services without payment of
IGST under LUT. The company after adjusting all the taxable liability for the period September 2017 to March
2018, claim excess ITC as refund from the department. The following are the information provided by the
company, for calculating amount of ITC eligible for refund (all amount in INR)
Taxable @ 18% Tax @ 18%

Sr.
Particular Turnover on outward Inward Supply on inward
No.
supply supply
1. Domestic Outward Supply 1000 180 1250 225
2. Export (Zero rated supply) 500
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3. Exempt Supply 250 - -
Total 1750 180 1250 225
Additional information:-
Sr. Tax @ 18% on inward
Other Inward Supplies Value
No. supply
1. Consultancy Services 100 18
2. Rent 250 45
3. Food Items (assume 18%) 200 36
4. Cleaning Services 50 9
Total 600 108
Note: Impact of Rules 42 & 43 is ignored for simplicity.
A.
Particular Amount Total
Turnover for zero rated supply 500 500
Adjusted total turnover
Total Turnover 1750
Less: Exempt Supply 250 1500
Input Tax Credit
Inward input tax credit 225
Add: Total common input tax credit 108
Less: Blocked credit [U/s 17 (5)] 36
Less: Outward Tax 180 117
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net
ITC ÷Adjusted Total Turnover
Refund Amount = 500/1500*117 = 39 i.e. Rs. 39
Example 2: XYZ Ltd. is a registered manufacturing company at Kochi, indulged in the business of processing
of woven fabrics which is taxable @ 5%. The inputs used for making such product are taxable @ 12%. The
company wants to determine the ITC eligible for refund.
Following are the information provided by the company during the period January to March 2019:
Sr. No. Particular Amount Tax Amount
1. Raw materials used (inward supply) @ 12% 100 12
2. Woven fabrics (outward supply) @ 5% 150 7.5
3. Consultancy service @ 18% (other inward supply) 10 1.8
A.
Maximum Refund Amount = {(Turnover of inverted rated supply of goods & Services) x Net ITC ÷ Adjusted
Total Turnover} – tax payable on such inverted rated supply of goods & services
Maximum Refund Amount= {150*12/150)/150}-7.5 = Rs. 4.5

Note:- No refund permissible for accumulated credit on input services i.e. Rs. 10
Example 3: My smart Ltd. furnishes following information. Please compute maximum refund eligible on
account of inverted duty structure:
ITC availed on inputs 3,60,000
ITC availed on inputs services 36,000
ITC availed on capital goods 2,00,000
Turnover of inverted rated supply of goods (taxable @ 5%) 30,00,000
Study Notes
287
Turnover of inverted rated supply of services (taxable @ 5%) 3,00,000

Note:- included in turnover of other supplies of goods & services i.e. Rs. 15,00,000
Turnover of other supplies of goods and services (including exempt supplies Rs. 15,00,000
5,00,000)
A.
Net ITC i.e. ITC availed on Inputs 3,60,000
Turnover of inverted rated supply of goods & services (30,00,000+3,00,000) 33,00,000
Total Adjusted Turnover {30,00,000+15,00,000-5,00,000} 40,00,000
Tax paid on inverted rated supply of goods & services (33,00,000*5%) 1,65,000
Maximum Refund {33,00,000 x 3,60,000÷ 40,00,000} – 1,65,000 1,32,000
G. Acknowledgement of refund claim [Rule 90]
I. The application relates to a claim for refund from the electronic cash ledger, shall get acknowledgement
(specifying date of filing) through the Common Portal electronically.
II. The application relates to a claim other than claim for refund from the electronic cash ledger, shall be
forwarded to proper officer, who will within a period of 15 days, shall issue acknowledgement through
the Common Portal electronically (specifying date of filing) if the application is found to be complete in
terms of rule 89.
III. If any deficiencies are noticed, the proper officer shall communicate the deficiencies through the
common portal, requiring him to file a fresh refund application.
H. Order of Refund [Section 54 (5), (7) read with rule 92]
❖ If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount
claimed as refund is refundable, he may make an order in FORM GST RFD – 06 and the amount so
determined shall be credited to the Fund referred to in section 57. [Sec. 54 (5)]
❖ The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt
of application complete in all respects. [Sec. 54 (7)]
Extract of CGST Rule 92

➢ The proper officer shall issue the order of sanctioning the amount in Form GST RFD-06 stating:
• The amount of refund due to the applicant,
• The amount provisionally refunded to the applicant (if any),
• The amount adjusted against any outstanding demand,
• The balance amount refundable to the applicant.
In case the whole amount of refund is adjusted against any outstanding demand under this Act or
under any of the existing law an order mentioning the details of such adjustment shall be issued in
Part A of Form GST RFD-07 {Rule 92 (1)}
➢ Where the proper officer is satisfied that the amount refundable under sub-rule (1) or sub-rule (2) is
payable to the applicant under sub-section (8) of section 54, he shall make an order in FORM GST
RFD-06 and issue a payment advice in FORM GST RFD-05 for the amount of refund and the same
shall be electronically credited to any of the bank accounts of the applicant mentioned in his
registration particulars and as specified in the application for refund:
Provided that the order issued in FORM GST RFD-06 shall not be required to be revalidated by the
proper officer:
Provided further that the payment advice in FORM GST RFD-05 shall be required to be revalidated
where the refund has not been disbursed within the same financial year in which the said payment
advice was issued {Rule 92 (4)}
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I. Grant of Provisional refund [Section 54 (6) read with rule 91]
Irrespective of Sec. 54 (5), 90% of refund may be sanctioned on provisional basis in such manner and subject
to such conditions, limitations and safeguard as may be prescribed (paid to the claimant) without verification of
documents if following conditions are satisfied:
➢ Claim for refund on account of zero-rated supply
➢ Made by registered persons
➢ Other than such category of registered person as may be notified by the government
Remaining 10% may be refunded after due verification of documents furnished by the applicant.
Extract of CGST Rule 91

(1) The provisional refund of 90% shall be granted to the applicant if the person claiming the refund has
not been prosecuted for any offence under the act or under an existing law where the amount of tax
evaded exceeds two hundred and fifty lakh rupees during any period of five years immediately
preceding the tax period to which the claim for refund relates.
(2) The proper officer, after scrutiny of the claim and the evidence submitted in support thereof and on
being prima facie satisfied that the amount claimed as refund under sub-rule (1) is due to the
applicant in accordance with the provisions of subsection (6) of section 54, will sanction such refund
in Form GST RFD-04 within seven days from the issue of acknowledgement of application of refund
in Form GST RFD-02. Provided that the order issued in FORM GST RFD-04 shall not be required to
be revalidated by the proper officer.
(3) The payment advice of the refund sanctioned shall be issued by the proper officer in Form GST RFD-
05 and the same shall be credited in his bank account. Provided that the payment advice in FORM
GST RFD-05 shall be required to be revalidated where the refund has not been disbursed within the
same financial year in which the said payment advice was issued.
With combined reading of Rule 91 & 92, it can be concluded that Government inserted the proviso to Rule
91(2) and Rule 91(3) to provide that in the case where refund is not disbursed, the order issued by officer in
GST RFD-04 form for grant of provisional refund shall not be revalidated and only payment advice issued in
FORM GST RFD 05 shall be revalidated if refund is not disbursed within same financial year in which said
payment advice was issued.
J. Principal of Unjust Enrichment [Section 54 (8) & (9)]
The person who has not passed the incidence of tax will be eligible to claim the refund. Under unjust enrichment,
a presumption is always drawn that the businessman will shift the incidence of tax to the final consumer. This
is because GST is an indirect tax whose incidence is to be borne by the consumer. It is for this reason that
every refund claim if sanctioned is first transferred to the “consumer welfare fund”.
The GST Law makes this test inapplicable in case of refund of accumulated ITC, refund on account of exports,
refund of payment of wrong tax (IGST instead of CGST + SGST & vice versa), refund of tax paid on a supply,
which is not provided or when refund voucher is issued or if the applicant shows that he has not passed on the
incidence of tax to any other person.
If refund claim doesn’t exceed Rs. 2 Lacs, then a self-declaration of the applicant and in case of more than Rs.
2 Lacs, a certificate from Chartered Accountant/Cost Accountant will have to be given.
Cases where refundable amount shall be paid to the applicant [Sec. 54 (8):
The refund shall be sanctioned directly to the claimant, in the following cases –
➢ Refund of tax paid on zero-rated supply export of goods or services or both or on inputs or input services
used in making such zero-rated supply exports;
➢ Refund of unutilised input tax credit under sub-section (3);
➢ The tax/interest/other amounts paid by the applicant, where the incidence had not passed on to any
other person;
Study Notes
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➢ Refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice
has not been issued or where a refund voucher has been issued;
➢ Refund of tax in pursuance of section 77 which means a registered person who has paid
CGST/SGST/UTGST on a transaction considered by him as intra-state supply but held as
inter-state supply.
➢ The tax or interest borne by notified class of applicant.
In all cases other than the one listed above, where the application is found to be in order, the refund amount,
shall be credited to consumer welfare fund within 60 days of receipt of the application.
K. Issue of SCN and rejection of refund claim [Rule 92 (3)]
➢ The Proper Office is satisfied that the whole or any part of the refund amount claimed, is not admissible,
he shall issue “Show Cause Notice”.
➢ Applicant will be required to furnish a reply within 15 days of the receipt of notice.
➢ The proper officer shall, after considering reply and giving him an opportunity of being heard, make an
order in Form GST RFD-06, sanctioning the amount of refund in whole or part, or rejecting the said
refund claim.
L. Withholding of refund claim & other provisions [Sec. 54 (10) to Sec. 54 (15)]
Sec. 54 (10)
Proper officer may withhold the refund due in case on non-filing of return or non-payment of tax, interest and
penalty which is not stayed by any court, tribunal or appellate authority by specified date (in case no appeal has
been filed – the last date for filing an appeal under this act) until he files return or pay the amount due. Proper
officer may also adjust the amount payable from refund amount.
Sec. 54 (11)
The commissioner/board may, after giving the tax payer an opportunity of being heard, withhold the refund till
such time as he may determine in case where he is of the opinion that such refund is –
➢ Likely to have an adverse effect on the revenue and
➢ An order giving rise to a refund is the subject matter of an appeal or further proceeding or where any
other proceeding under this act is pending on account of malfeasance or fraud committed. (order need
to be passed in Part B of Form GST RFD-07)
Sec. 54 (12)
If refund has been withheld by commissioner/board U/s 54 (11) above and later he becomes entitled to the
refund, he shall be entitled to interest @ 6%, irrespective of Section 56.
Sec. 54 (13)
The amount of advance tax deposited by a casual taxable person or a non-resident taxable person at the time
of taking registration would be refunded only after completion of entire period for which the certificate of
registration granted and all the returns required to be furnished U/s 39 are furnished.
Sec. 54 (14)
No refund shall be granted or paid to an applicant, if the amount is less than Rs. 1000. The limit of Rs. 1,000
shall apply for each tax head separately and not cumulatively. Further, the limit would not apply in cases of
refund of excess balance in the electronic cash ledger. {Circular No. 59/ 33/ 2018 GST Dated 04.09.2018}
M. Any refund claim rejected shall be re-credited to the Electronic Credit Ledger [Rule 93]
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N. Refund of Integrated tax paid on goods or services exported out of India [Rule 96]
A taxable person has option to pay IGST on goods exported out of India and claim refund. Shipping bill filed by
exporter of goods shall be deemed to application for refund of IGST. A Departure Manifest or Export Manifest
or Export report covering the number and date of shipping bill should have been filed. The applicant should
have filed valid return in Form GSTR 3 or GSTR 3B as the case may be.
Details of export invoices in respect of goods contained in valid return in Form GSTR 3 or GSTR 3B as the case
may be, shall be transmitted to system in respect of designated by customs. The system shall confirm that the
goods have been exporters out of India.
Where date of filing of GSTR 1 has been extended by Commissioner the supplier shall furnish information
relating to export invoices in table 6A of form GSTR 1 after return in form GSTR 3B has been furnished.
The system designated by the Customs or the proper officer of Customs, as the case may be, shall process the
claim of refund in respect of export of goods and an amount equal to the integrated tax paid in respect of each
shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in
his registration particulars and as intimated to the Customs authorities.
Refund of IGST paid on services exported shall be filed in form GST RFD – 01 and shall be dealt with in
accordance with provisions of rule 89 of CGST Rules – Rule 96 (9) of CGST Rules, 2017.
The Central Government may pay refund of the IGST to the Government of Bhutan on the exports to Bhutan
for such class as may be notified in this behalf and where such refund is paid to the Government of Bhutan, the
exporter shall not be paid any refund of the integrated tax.
The claim for Refund shall be withheld where-

a. A request has been received from jurisdictional Commissioner of Central tax, State tax & Union Territory
Tax;
b. The proper officer of customs determined that the goods were exported in violation of the provisions of
the Customs Act, 1962.
Rule 96(10) of the CGST Rules, 2017 restricted the refund of IGST paid on exports if the exporter had claimed
the benefit under certain specified notifications. The rule has been amended and the net effect of the
amendment is that any exporter who imported goods by claiming benefit under customs notification nos.
78/2017 and 79/2017 can claim refund of IGST paid on exports till 9 October, 2018 when rule 96(10) of the
CGST Rules, 2017 was amended by notification no. 54/2018 Central Tax. After the amendment, such exporters
will not be able to claim refund of IGST paid on exports, except for the exporters receiving capital goods under
the EPCG scheme.
[Circular No. 70/44/2018 Dated 26.10.2018]
Study Notes
291
O. Export of goods or service under bond or LUT [Rule 96A] Or such further period as
may be allowed by the
Commissioner
Filing of invoices is
similar to Rule 96
Pay within 15 days after expiry of 1 year from Date of

Invoice if not received payment in convertible foreign
exchange or
in Indian rupees, wherever permitted by the RBI
If fails to pay the amount mentioned in specified time, the export as

allowed under bond/LUT shall be withdrawn. It shall be restored
immediately when the registered person pays the amount due.
Section 55 Refund of UN Bodies, Embassies etc. [Sec. 55 read

with Rule 95 (2)]
1. Applicability:
➢ Specialised Agency of the United Nations Organization or
➢ Consulate or Embassy of foreign countries
➢ Any Multilateral Financial Institution and Organization notified under the United Nations
(Privileges and Immunities) Act, 1947
➢ Any other notified person
2. Application for refund shall be made in Form GST RFD-10 once in every quarter. Also to file a statement
of inward supplies of goods or services or both in Form GSTR 11. (Entities covered U/s 55, shall make
an application for refund of tax paid by it on inward supplies, to the jurisdictional tax authority, in such
form and manner as specified, before the expiry of 18 months from the last date of the quarter in which
such supply was received)
3. Acknowledgement for Application of refund shall be given in Form GST RFD-02.
4. Condition for Refund:
a. The inward supplies of goods or services or both were received from a registered person
against a tax invoice.
b. Name and GSTIN or UIN of the applicant is mentioned on the tax invoice and
5. In case of inconsistent provisions, International Treaty will prevail over rules.
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In exercise of above power, following persons have been notified, subject to fulfilment of specified conditions:
i. United Nations or a specified international organization**; and
ii. Foreign diplomatic mission or consular post in India, or diplomatic agents or career consular
officers posted therein.
**Specified international organisation means an international organisation declared by the Central
Government in pursuance of section 3 of the United Nations (Privileges and Immunities Act) 1947, to which
the provisions of the Schedule to the said Act apply.
Further, in exercise of said power, Canteen Stores Department (CSD), under the Ministry of Defence, has
been notified as a person who shall be entitled to claim a refund of 50% of the applicable CGST/IGST paid
by it on all inward supplies of goods received by it for the purposes of subsequent supply of such goods to
the Unit Run Canteens of the CSD or to the authorized customers of the CSD.
Section 56 Interest on Delayed Refunds

In case of refund arising from an order passed by Government shall pay an interest of 9% from the
the adjudicating authority, appellate authority or date immediately after the expiry of 60 days from
appellate tribunal the date of receipt of application of refund.
Other Cases The Government shall pay an interest of 6% from
the date immediately after the expiry of 60 days
from the date of receipt of application of refund.
Section 57 Consumer Welfare Fund

The Government shall constitute a Fund, to be called the Consumer Welfare Fund and there shall be credited
to the Fund,—
(a) the amount referred to in sub-section (5) of section 54;
(b) any income from investment of the amount credited to the Fund; and
(c) such other monies received by it,
in such manner as may be prescribed.
Amounts to be credited to/paid from Consumer Welfare Fund [Rule 97 of the CGST Rules, 2017]
✓ All amounts of duty CGST/ SGST/ IGST/ UTGST/ cess and income from investment along with other
monies specified in section 12C(2) of the erstwhile Central Excise Act, 1944, section 57 of the CGST
Act, 2017 read with section 20 of the IGST Act, 2017, section 21 of the UTGST Act, 2017 and section
12 of the GST (Compensation to States) Act, 2017 shall be credited to the Fund [discussed earlier in
this chapter] [Rule 97(1)].
✓ An amount equivalent to 50% of the amount of IGST determined under section 54(5) of the CGST Act,
read with section 20 of the IGST Act, shall be deposited in the Fund [Proviso to rule 97(1)].
✓ An amount equivalent to 50% of the amount of compensation cess determined under section 54(5) of
the CGST Act, read with section 11 of the GST (Compensation to States) Act, shall be deposited in the
Fund. [Second Proviso to rule 97(1)]]
✓ Any amount, having been credited to the Consumer Welfare Fund, ordered or directed as payable to
any claimant by orders of the proper officer, Appellate Authority or Appellate Tribunal or Court, shall be
paid from the Fund [Rule 97(2)].
Study Notes
293
Section 58 Utilization of Fund

(1) All sums credited to the Fund shall be utilised by the Government for the welfare of the consumers in
such manner as may be prescribed.
(2) The Government or the authority specified by it shall maintain proper and separate account and other
relevant records in relation to the Fund and prepare an annual statement of accounts in such form as
may be prescribed in consultation with the Comptroller and Auditor-General of India.
Section 15 (IGST) Refund of Integrated Tax paid on supply of

goods to tourist leaving India
The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him shall be refunded
in such manner and subject to such conditions and safeguards as may be prescribed.
Explanation: For the purposes of this section, the term “tourist” means a person not normally resident in India,
who enters India for a stay of not more than six months for legitimate non-immigrant purposes.
Question & Answer

Q1. What are the cases under which refund of unutilized input tax credit shall not be allowed?
A. As per first proviso to Sec. 54 (3), no refund of unutilized ITC shall be allowed except in following cases:
(i) Zero rated supplies made without payment of tax, or
(ii) Credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output
supplies (other than Nil rated or exempt supplies). However, such refund should not relate to supply of
goods or services or both as may be notified by the government on recommendation of GST council.
Thus, except the above two exceptions, refund of unutilized credit will not be allowed.
Q2. Whether refund of unutilized ITC can be allowed in case where export of goods is subject to export duty?
A. As per second proviso to Sec. 54 (3), no such refund will be allowed in case goods exported out of India are
subject to levy of export duty.
Q3. Whether refund of unutilized ITC can be allowed in case where exporter of goods or services claims
drawback or refund of taxes paid on such supplies?
A. The export of goods has to be free from the effect of any taxes. It is important to note that refund of unutilized
credit is only one of the methods to free export transactions from the burden of taxes. The other 2 methods are
drawback of taxes or refund of taxes paid on such supplies. As per second proviso to sec. 54 (3), refund of input
taxes shall not have allowed in case supplier of goods or services avail drawback of central taxes or claims
refund of IGST paid on such supplies.
Q4. Whether the principle of unjust enrichment be applicable to export?

A. The principle of unjust enrichment will not be applicable in case of export of goods and services.
Q5. In case of rejection of refund application, what would happen to the amount debited from Input Tax Ledger?
A. As provided in rule 93 (2), in case of rejection of refund application wholly or partly, the amount of claim
rejected will be re-credited in the electronic ledger of the applicant.
Example: A Ltd. made an application of refund of unutilized ITC amounting to Rs. 7 Lacs. A Ltd. reduced the
balance of Rs. 7 lacs from their electronic credit ledger. The proper officer was not satisfied with claim of Rs. 2
294
Lacs. He approved the claim of Rs. 5 lacs and rejected the claim of Rs. 2 lacs. Rs. 5 lacs will be credited to the
bank account of A Ltd and Rs. 2 lacs will be re-credited to electronic credit ledger of A Ltd.
Q6. ABC Ltd., filed an application for refund of tax amounting Rs. 9,00,000 on 1st Nov’’17. The refund was
granted on 25th Jan’17. Compute the interest payable?
A. Interest is payable after 60 days which is completing on 31 st Dec’17 (60 days from 1st Nov’17). So, interest
is payable for 25 days @ 6% i.e. Rs. 9,00,000 * 6% * 25/365 = Rs. 3,698
Q7. Mr. A has opted for Export against LUT / Bond without payment of taxes. LUT/ Bond issued by the
Jurisdictional Officer is valid till 31st March 2018. He has exported goods against such LUT / Bond till December
2017. Can he start to export goods against payment of IGST from January 2018?
A. Yes, even though validity of LUT / Bonds is till 31st March 2018, Mr. A can start exporting goods against
payment of IGST from January, 2018.
Q8. Mr. A is supplying goods to SEZ Unit. Whether he has to charge IGST on supply of goods?
A. As per the provision of section 16 of IGST Act, 2017, Supply to SEZ Unit are Zero Rated Supplies. Therefore,
in such case Mr. A can either supply goods against payment of IGST (which can be claimed as refund) or he
can supply goods without payment of IGST (against LUT /Bond).
Q9. A person had submitted Bank Guarantee for Issue of Bond for export of goods without payment of tax. He
was granted Bond with a validity period upto 31st March 2018. However, in view of Notification No. 37/2017 –
Central Tax Dated 4th October 2017, he wants to submit Letter of Undertaking and get the bond released which
was submitted earlier. Can he do so.
A. Yes, he can submit a Letter of Undertaking as per the guidelines issued vide Notification No. 37/2017 –
Central Tax Dated 4th October 2017 and get the bond submitted earlier released.
Q10. Can goods be sold to EOU without payment of GST as was being done prior to implementation of GST?
A. No, goods cannot be supplied to EOU without payment of taxes, however, as per Notification No. 48/2017 –
Central Tax Dated 18th October 2017, domestic supplies to holder of Advance Authorization / EPCG and EOUs
would be treated as deemed exports under section 147 of CGST / SGST Act and refund of tax paid on such
supplies can be claimed by the supplier.
Following supplies have been treated as deemed exports under section 147 of the CGST Act:
Sr. No. Description of supply

i. Supply of goods by a registered person against Advance Authorisation
Provided that goods so supplied, when exports have already been made after availing input tax
credit on inputs used in manufacture of such exports, shall be used in manufacture and supply of
taxable goods (other than nil rated or fully exempted goods) and a certificate to this effect from a
chartered accountant is submitted to the jurisdictional commissioner of GST or any other officer
authorised by him within 6 months of such supply,;
Provided further that no such certificate shall be required if input tax credit has not been availed
on inputs used in manufacture of export goods.
ii. Supply of capital goods by a registered person against Export Promotion Capital Goods
Authorization.
iii. Supply of goods by a registered person to Export Oriented Unit
iv. Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017 –
Customs, Dated the 30th June, 2017, (as amended) against Advance Authorization.
Study Notes
295
Explanation –
For the purposes of this notification, -
“Advance Authorization” means an authorization issued by the Director General of Foreign Trade under Chapter
4 of the Foreign Trade Policy 2015 – 20 for import or domestic procurement of inputs on pre – import basis for
physical exports.
Export Promotion Capital Goods Authorization means an authorization issued by the Director General of Foreign
Trade under Chapter 5 of the Foreign Trade Policy 2015 – 20 for import of capital goods for physical exports.
“Export Oriented Unit” means an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software
Technology Par Unit or Bio – Technology Par Unit approved in accordance with the provisions of Chapter 6 of
the Foreign Trade Policy 2015 – 20.
Q11. Will unutilized ITC at the end of the financial year (after introduction of GST) be refunded?
A. There is no such provision to allow refund of such unutilized ITC at the end of the financial year in the GST
Law. It shall be carried forward to the next financial year.
Q12. Are SEZ Units liable to pay taxes on their inward supplies? Who will be eligible for refund of taxes paid
on supplies to SEZ?
A. No. SEZ units shall not be charged with taxes for supplies made to them.
In respect of supplies to a SEZ unit or a SEZ developer, the application for refund shall be filed by the –
(a) supplier of goods after such goods have been admitted in full in the SEZ for authorised operations,
(b) supplier of services along with such evidence regarding receipt of services for authorised operations;
as endorsed by the specified officer of the Zone.
Q13. Can the refund of balance in cash or credit ledger be claimed?

A. Yes, as per provisions of Section 49 (6), the balance of cash or credit after payment of tax, interest, penalty,
fee or any other amount payment refund can be claimed as per provisions of Section 54. Once the refund is
claimed, the amount of credit of CGST/SGST/ IGST (as the case may be) would be reduced to that extent.
Q14. Whether separate applications need to be filed for refund in case of export of goods and export of services?
A. Yes, there shall be separate application and different procedure for refund of export of goods and export of
services.
Q15. Who can file an application for refund in case of deemed export?
A. In terms of third proviso to Rule 89 inserted vide Notification No. 47/2017 – Central Tax Dated 10.10.2017,
application for refund in case of deemed export can be filed by:
• the recipient of deemed export supplies; or
• the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit
on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund
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Section 2 (68) Job Work definition

Section 19 ITC in respect of goods & capital goods sent to job worker
Section 141 Transition provision
Section 143 Job Work Procedures
Section 2 (68) Job Work Definition

It means any treatment or process undertaken by a person by goods belonging to another registered person
and the expression “job worker” shall be construed accordingly.
The characteristics of job work, 1. Process or treatment carried out by “Job worker: as per instructions of
“Principal” 2. Ownership remain with “Principal”. 3. “Principal” shall be registered.
Section 19 ITC in respect of goods & capital goods sent to job worker
Principal is entitled to take ITC of inputs sent for job worker. If it is directly sent to job worker from supplier
premises then principal can avail ITC when these inputs received by job worker. Same rule apply in case of
capital goods.
The most important condition is that ‘inputs’ must be received within 1 year (from the date of dispatch by principal
or if it is directly sent through supplier then from the date when job worker receive) or supplied from the place
of business of job worker & ‘capital goods’ must be received back in 3 years. No time period in case of moulds
& dies, jogs, fixtures or tools.
If the inputs or capital goods are not returned within time limit specified, the principal is liable to pay tax
along with interest @18% from the day goods sent out by deeming the activity as an outward supply. In
case Principal, directly deliver to Job worker from supplier then date of receipt at Job worker’s premises.
Section 143 Job Work Procedures: -
Study Notes
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Job worker can clear waste/scrap on payment of GST. If unregistered then, principal has to discharge GST
Liability as per section 143 (5).
Section 143 (1) is amended to give power to commissioner: The period of one year and three years may, on
sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year
and two years respectively.
Other key points: -
• Supply under job work will be considered as principal’s turnover.

• Job worker can use his own goods for providing the services of job work (Circular 38/12/2018 Dated
26th March 2018).
• As per valuation Rule 27, “Value of supply of goods or services where the consideration is not wholly
in money”. So, what will be treatment of wastage/scrap generated during the process (CCE, Jaipur V/s
General Engineering Works, SC, 2007)? It may be an issue of litigation if job worker is retaining the
scrap and selling it to scrap dealer without adding that amount in assessable value charge to principal.
• The principal shall prepare in triplicate, the challan, for sending goods to job worker. Two copies of
challan may be sent to the job worker along with goods. The job worker should send one copy of the
said challan along with goods, while returning them to the principal.
• Where goods are sent from one job worker to another job worker, the goods may move under the cover
of a challan issued either by the principal or the job worker. Alternatively, the challan issued by the
principal may be endorsed by the job worker sending the goods to another job worker, indicating therein
the quantity and description of goods being sent. The same process may be repeated for subsequent
movement of the goods to other job workers, indicating therein the quantity and description of goods.
• Where the goods are sent directly by the supplier to the job worker, the goods may move from the place
of business of the supplier to the place of business/premises of the job worker with a copy of the invoice
issued by the supplier in the name of the buyer (i.e., the principal) wherein the job worker’s name and
address should also be mentioned as the consignee in such invoice. Further, the buyer (i.e., the
principal) shall issue the challan [required to be issued under rule 45] and send the same to the job
worker directly.
In case of import of goods by the principal which are then supplied directly from the customs station of
import, the goods may move from the customs station of import to the place of business/premises of
the job worker with a copy of the Bill of Entry and the principal shall issue the challan under rule 45 and
send the same to the job worker directly.
• In case the goods after carrying out the job work, are sent in piecemeal quantities by a job worker to
another job worker or to the principal, the challan issued originally by the principal cannot be endorsed
and a fresh challan is required to be issued by the job worker.
• It is clarified that it is the responsibility of the principal to include the details of all the challans relating
to goods sent by him to job worker or from one job worker to another and its return therefrom during a
quarter in Form GST ITC-04 by the 25th day of the month succeeding the relevant quarter. This period
can be extended by the Commissioner/Commissioner of State GST/Commissioner of UTGST. The
Form GST ITC-04 will serve as the intimation as envisaged under section 143 of the CGST Act.
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Question & Answer

Q1. Are transactions of repair included in job work?
A. The activity of carrying out repairs on goods will get covered on job work and thus would be covered by
provisions of section 143.
Q2. Whether job worker has to be a different person or can some other unit of principal can also become job
worker?
A. Job worker has been defined to mean undertaking of treatment or process by a person on the goods
belonging to another registered taxable person. In view of the fact that another unit of the same person has
been categorized as a distinct person. As a distinct person, it has got all the obligations as are applicable to
separately registered person, it can be concluded that even if the job worker happens to be another unit of the
same person, it would be covered by provisions of sec 143 of the GST Act.
Q3. What would happen in case job worked goods are not received back by the principal within a period of one
year?
A. In case job worked goods are not received back by the principal within one year of their being sent for job
work, it shall be deemed that such goods were supplied by the job worker on the day when these goods were
sent out and the principal is required to pay GST on the goods so sent for job work along with interest at the
appropriate rate.
Q4. Can goods be sent by the principal for further job work from one job to another job worker?
A. Yes, inputs/capital goods can be sent for further job work from one job worker to another job worker. However,
time limit of one year/three year to bring back inputs/capital goods after completion of job work, would be
counted from the date when they were first sent for job work.
Q5. If job worker purchased additional material and incorporate the same in the goods received from the
principal amount to supply?
A. Yes, it amounts to supply in the hands of the job worker as composite supply or otherwise.
Q6. Can a job worker take input credit on the inputs used in the process of job work?
A. Yes, the job worker is eligible to claim input tax credit since the processing charges received in respect of
labour charges and the supply of additional goods added is taxable in the hands of the job worker.
Q7. If the job-worker subsequently registers, should the principal amend his registration by cancelling the job-
workers premises as his additional place of business?
A. Yes.
Q8. Whether intermediate goods can also be sent for job work?
A. Yes. The term inputs, for the purpose of job work, includes intermediate goods arising from any treatment or
process carried out on the inputs by the principal or job worker.
Q9. Whether the goods of principal directly supplied from the job worker’s premises will be included in the
aggregate turnover of the job worker?
A. No, it will be included in the aggregate turnover of principal. However, the value of goods or services used
by the job worker for carrying out the job work will be included in the value of services supplied by the job worker.
Study Notes
299
Q10. ABC Ltd. sends the goods to XYZ & Co. for making finished goods on 30-08-2017. What are the tax
implications, in the following cases if GST @ 18% is levied:
i. XYZ & Co. sends the goods back to ABC Ltd. within one year of being sent.
ii. XYZ & Co. sells the goods directly to the customer on behalf of ABC Ltd.
A. As per Section 143 of CGST Act 2017, supply of goods to a job worker without payment of tax is permissible
upon an intimation. In the given example, the implications are as follows:
➢ On supply of goods to XYZ & Co., as per the section 143 of CGST Act 2017, no tax shall be payable
on supply of goods to XYZ & Co., However, the tax will be payable if finished goods is not returned
before one year from 30-08-2017.
➢ XYZ & Co. sends the finished goods back to ABC Ltd.: As per the act, there is no tax liability on returning
of goods back to the principal i.e. ABC Ltd. within a period of one year. Hence, post completion of Job
work, no tax is leviable on finished goods returned to ABC Ltd.
➢ XYZ & Co. sells the finished goods on behalf of ABC Ltd.: Section 143 also allows the job worker to
directly sell the goods on behalf of principal, wherein the liability to pay tax is of the principal and not
the job worker. ABC Ltd. is liable to pay GST on sale of finished goods to customer by XYZ & Co.
However, ABC Ltd. must declare the premises of XYZ & Co., as ‘additional place of business’ and the
sale of finished goods will form part of aggregate turnover of ABC Ltd.
Such a declaration is not required in case where:
i. Job worker is registered under section 25; or
ii. Principal is engaged in supply of notified goods.
Q11. ABC Ltd. sends the goods (inputs) to XYZ & Co. for further processing on 30-08-2017. The value of goods
sent for Job work is Rs. 2,00,000. What are the tax implications, in following cases, if GST @ 18% is levied:
(i) XYZ & Co. sends the processed goods back to ABC Ltd on 30-11-2017
(ii) XYZ & Co. sends the processed goods back to ABC Ltd on 30-10-2018.
A. XYZ & Co. sends the processed goods back to ABC Ltd. on 30-11-2017: As per Section 143 of the Act,
Principal can remove the goods without payment of tax and take input tax credit provided inputs sent for job
work are returned back within one year of removal. Otherwise, it shall be treated as supply from principal to Job
worker as on 30-08-2017 and subject to tax along with interest.
(i) In the present case, as the inputs are received back on 30-11-2017 i.e. before completion of one year,
and hence no tax is payable.
(ii) XYZ & Co. sends the processed goods back to ABC Ltd. on 30-10-2018: In the present case, the goods
are received after the period of one year and hence, ABC Ltd. needs to pay the tax along with the
interest on the supply made by him to XYZ & Co. Hence, ABC Ltd. need to pay Rs. 18,000 (CGST) and
Rs. 18,000 (SGST) along with specified interest.
Q12. Under what circumstances can the principal directly supply goods from the premises of job worker without
declaring the premises of job worker as his additional place of business?
A. The goods can be supplied directly from the place of business of job worker without declaring it as additional
place of business in two circumstances namely where the job worker is a registered taxable person or where
the principal is engaged in supply of such goods as may be notified by the Commissioner.
Q13. Who is responsible for the maintenance of proper accounts related to job work?
A. It is completely the responsibility of the principal to maintain proper accounts of job work related inputs and
capital goods.
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Section 59 Self-Assessment
Section 60 Provisional Assessment
Section 61 Scrutiny of Returns
Section 62 Assessment of Non-Filers of Returns
Section 63 Assessment of Unregistered Persons
Section 64 Summary Assessment in Certain Cases
Section 65 Audit by Tax Authorities
Section 66 Special Audit
Assessment means determination of tax liability under GST law and also the tax payable thereon, which is
paid/payable by the taxable person, ‘audit’ refers to a systematic & independent examination of books, accounts,
statutory records, etc., of an organization to ascertain how far the financial statements as well as non-financial
statements discloses a true and fair view of the concern. Below are the various types of assessment under
GST. Types of Assessment under GST:
• Self-assessment
• Provisional assessment
• Scrutiny assessment
• Assessment of non-filers of returns
• Assessment of unregistered persons
• Summary assessment
Only self-assessment is done by the taxpayer himself. All the other assessments are by tax authorities.
Study Notes
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Section 59 Self-Assessment
Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax
period as specified under section 39.
Self-Assessment is the first stage for all the assessments now. The registered person is required to compute
his output, take the available input credit and pay the balance amount and file the returns in the prescribed
forms. Prima- Facie the department shall accept such self-assessed returns and declarations, subject to
scrutiny and other modes of assessment in the selected cases and in the prescribed manner.
Section 60 Provisional Assessment

(1) The taxable person is
• unable to determine the value of goods or services or both or
• unable to determine the rate of tax
he may request the proper officer in writing giving reasons for payment of tax on a provisional basis.
The proper officer may request additional information by issuing notice and request person to
appear in person. The proper officer shall pass an order, within a period not later than ninety days
from the date of receipt of such request, allowing payment of tax on provisional basis at such rate
or on such value as may be specified by him.
Normally, provisional assessment is done in the case of imports and in a case of foreign ships doing
business through Indian ports. Provisional assessment also opts in certain cases of manufacturing and
processing which may attract litigation as to taxability and valuation.
(2) The payment of tax on provisional basis may be allowed, if the taxable person executes a bond in such
form as may be prescribed, and with such surety or security as the proper officer may deem fit, binding
the taxable person for payment of the difference between the amount of tax as may be finally assessed
and the amount of tax provisionally assessed. Rule 98 (3) in this regard provides that proper officer will
decide the amount of security to be furnished, the amount of which will not exceed 25% of the amount
covered under bond. Rule 98 (4) provides that the security will be in the form of bank guarantee of the
amount as determined in rule 98 (3). For the purposes of this rule, the expression “amount” shall include
the amount of integrated tax, central tax, State tax or Union territory tax and cess payable in respect of
the transaction.
These kind of surety clauses exist along with the provisional assessment clauses, so as to ensure that
the revenue is not at loss post such provisional assessment, which is normally done in haste.
(3) The proper officer shall, within a period not exceeding six months from the date of the communication
of the order issued under sub-section (1), pass the final assessment order after taking into account
such information as may be required for finalising the assessment:
Provided that the period specified in this subsection may, on sufficient cause being shown and for
reasons to be recorded in writing, be extended by the
• Joint Commissioner or Additional Commissioner for a further period not exceeding six months
and
• Commissioner for such further period not exceeding four years.
(4) The registered person shall be liable to pay interest on any tax payable on the supply of goods or
services or both under provisional assessment. In simple words, in case any tax amount becomes
payable subsequent to finalization of the provisional assessment, then interest at the specified rate will
also be payable by the supplier from the first day after the due date of payment of the tax till the date of
actual payment, whether such amount is paid before or after the issuance of order for final assessment.
(5) Where the registered person is entitled to a refund consequent to the order of final assessment under
sub-section (3), subject to the provisions of sub-section (8) of section 54, interest shall be paid on such
refund as provided in section 56. In simple words, in case any tax amount becomes refundable
302
subsequent to finalization of the provisional assessment, then interest (subject to the eligibility of refund
and absence of unjust enrichment) at the specified rate will be payable to supplier.
The applicant may file an application for release of security furnished after issue of final assessment order. The
proper officer shall release the security furnished after ensuring that the applicant has paid the amount, within
a period of seven working days from the date of the receipt of the application.
Example 1: ABC Ltd. is in business of manufacturing various components and caters to various industries. In
the course of its business, ABC Ltd. receives order for manufacturing some specialized components for which
the required moulds are provided free of cost (FOC) by recipient. ABC Ltd. was unsure as to whether amortized
cost of tools was to be added to arrive at the value of the components supplied for the purpose of GST.
Accordingly, ABC Ltd. made an application to proper officer, for assessment on provisional basis on 01.10.2018.
Time period for passing provisional order, 90 days to be calculated from 01.10.2018 i.e. 30.12.2018.
Suppose, in this case the provisional assessment order was passed and communicated to ABC Ltd. on
30.11.2018. Now, the final order shall be passed by the proper officer within 6 months from 30.11.2018 i.e. by
29.05.2019. For sufficient reasons, the time limit of 6 months can be extended upto:-
• By Joint/Additional Commissioner – 28.11.2019 (i.e. 6 months from 29.05.2019)
• Order by Commissioner – 28.05.2023 (4 years from 29.05.2019)
Section 61 Scrutiny of Returns

(1) The proper officer may scrutinise the return and related particulars furnished by the registered person
to verify the correctness of the return and inform him of the discrepancies noticed, if any, in such manner
as may be prescribed and seek his explanation thereto.
As per Rule 99, proper officer shall issue a notice to the said person, informing him of such discrepancy
and seeking his explanation thereto within such time, not exceeding thirty days from the date of service
of the notice or such further period as may be permitted by him and also, where possible, quantifying
the amount of tax, interest and any other amount payable in relation to such discrepancy.
(2) In case the explanation is found acceptable, the registered person shall be informed accordingly and
no further action shall be taken in this regard.
(3) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the
proper officer or such further period as may be permitted by him or where the registered person, after
accepting the discrepancies, fails to take the corrective measure in his return for the month in which the
discrepancy is accepted, the proper officer may initiate appropriate action including those under section
65 (audit by tax authorities) or section 66 (special audit) or section 67 (inspection, search & seizure) ,
or proceed to determine the tax and other dues under section 73 or section 74.
Section 61, deals with discretionary power to a proper officer to scrutinize returns filed by registered
persons to verify the correctness of the return. It is a pre-adjudication process. The process of
adjudication is provided in Section 73 to Section 75. The return’s scrutiny process is entirely automated
in GST regime as compared to earlier regime.
Study Notes
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Section 62(1) & Section 63

will have an overriding
Section 62 Assessment of Non-Filers of Returns effect over the provisions
of Section 73 & 74
(1) Notwithstanding anything to the contrary contained in section 73 or section 74, where a registered
person fails to furnish the return under section 39 or section 45, even after the service of a notice under
section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his
judgment taking into account all the relevant material which is available or which he has gathered and
issue an assessment order within a period of five years from the date specified under section 44 for
furnishing of the annual return for the financial year to which the tax not paid relates.
(2) Where the registered person furnishes a valid return within thirty days of the service of the assessment
order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but
the liability for payment of interest under subsection (1) of section 50 or for payment of late fee under
section 47 shall continue.
This is a provision similar to “Best Judgement Assessment (BJA)” under the Income Tax Act, 1961. Noticeably,
issuing notice U/s 46 to return defaulter appears to be a pre-condition for initiating proceedings of best
judgement assessment U/s 62. Therefore, it can be seen that non-compliance with the notice U/s 46, paves the
way for initiating the proceedings under this section. If the assessee fails to furnish the return within 15 days of
issue of notice U/s 46, then the proper officer may assess the tax liability based on his judgement. It may be
noted that consequences of late fee U/s 47 and interest U/s 50 of the CGST Act will both be applicable in case
of best judgement assessment made under this section.
Example 2: if a person defaults in filing of return for any tax period falling in FY 2017-18, period of 5 years shall
be reckoned from the due date of filing of Annual Return for FY 2017-18 i.e. 31st December 2018. Accordingly,
the best judgement assessment can be made by Proper Officer on or before 31st December 2023.
Section 63 Assessment of Unregistered Persons
Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable person fails to
obtain registration even though liable to do so or whose registration has been cancelled under sub-section (2)
of section 29 but who was liable to pay tax, the proper officer may proceed to assess the tax liability of such
taxable person to the best of his judgment for the relevant tax periods and issue an assessment order within a
period of five years from the date specified under section 44 for furnishing of the annual return for the financial
year to which the tax not paid relates:
Provided that no such assessment order shall be passed without giving the person an opportunity of being
heard.
As per Rule 100 (2), the proper officer shall issue a notice to a taxable person containing the grounds on which
the assessment is proposed to be made on best judgment basis and shall also serve a summary thereof
electronically in FORM GST DRC-01, and after allowing a time of fifteen days to such person to furnish his
reply, if any, pass an order in FORM GST ASMT-15 and summary thereof shall be uploaded electronically in
FORM GST DRC07.
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Section 64 Summary Assessment in Certain Special Cases

(1) The proper officer may, on any evidence showing a tax liability of a person coming to his notice, with
the previous permission of Additional Commissioner or Joint Commissioner, proceed to assess the tax
liability of such person to protect the interest of revenue and issue an assessment order, if he has
sufficient grounds to believe that any delay in doing so may adversely affect the interest of revenue:
Provided that where the taxable person to whom the liability pertains is not ascertainable and such
liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the
taxable person liable to be assessed and liable to pay tax and any other amount due under this section.
(2) On an application made by the taxable person within thirty days from the date of receipt of order passed
under sub-section (1) or on his own motion, if the Additional Commissioner or Joint Commissioner
considers that such order is erroneous, he may withdraw such order and follow the procedure laid down
in section 73 or section 74.
This provision gives a right to the proper officer to carry out assessment and pass orders in case of special
cases, where the department has ‘sufficient grounds’ to believe adverse effect to the revenue. In this case,
the liability can be raised either by the taxable person or if the taxable person is not known (E.g. – In the case
of confiscation of goods), the person-in-charge of the goods can be deemed as ‘taxable person’ and liability
can be raised on him accordingly.
Within 30 days of such an order, either on application and representation made by a taxable person or on its
own motion, an order under this section can be withdrawn if found to be erroneous.
Though section does not specifically say so, principles of natural justice like issue of SCN, opportunity of
hearing, order with reasons etc. have to be followed.
Summary of various assessment orders to be uploaded on portal
The summary of assessment orders under section 62, 63 and 64 of the CGST Act is
required to be uploaded electronically in the prescribed forms.
[Notification No. 16/2019 CT Dated 29.03.2019]
Study Notes
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Section 65 Audit by Tax authorities & Section 66 Special Audit
Sec. 65 Audit by Tax authorities Sec. 66 Special Audit

• The Commissioner or a person authorised by him • During any stage of any investigation, scrutiny,
may undertake an audit of a registered person for assessment or any other proceedings under this
the period, frequency and manner prescribed act, if the proper officer, not below the rank of
• As per Rule 101 (1), the period of audit to be Assistant Commissioner, with the prior approval
conducted, shall be a financial year or part of Commissioner, may get the books of accounts
thereof or multiples thereof. audited by a CA or Cost Accountant nominated
• Audit can be carried out either in the premises of by the Commissioner, if so required in interest of
the registered person or may also be done at the revenue keeping in view of the complexity of
office of the proper officer, by calling for transactions or business or claim of input credit
information and documents • Such CA or Cost Accountant is required to submit
• 15 days clear notice shall be provided to the duly signed and certified report within 90 days to
person before initiation of such an audit such Assistant Commissioner, extendable to
• The audit proceedings have to be closed within 3 further period of 90 days in case of an application
months from the date of initiation of audit (where in writing by such CA or Cost Accountant or for a
the date of commencement of audit shall be the sufficient reason
date on which all the documents and information • Such audit report is subject to principle of natural
called for are provided or audit actually initiated justice, wherein, an opportunity to be heard shall
at the business premises, whichever is later) also be provided to the registered person
• Also, if the Commissioner is satisfied that the • Remuneration or fee of such nominated person
audit cannot be completed in 3 months, he can shall be decided by the commissioner and his
record the reasons in writing extend the time for decision shall be final
a further period of maximum 6 more months • All other provisions of tax, interest, penalty and
• The registered person is obliged to provide all collection shall apply to audit under this section
necessary details, documents and information too (Sec. 73 & Sec. 74)
required for completion of an audit
• On conclusion of an audit, the proper officer shall,
within thirty days, inform the registered person,
about the findings, his rights & obligations and the
reasons for such findings
• Once the above are done, the proper officer may
determine tax payable and interest and penalty
(Sec. 73 & Sec. 74), if any, thereon, and also
initiation collection proceedings
Under GST, power has been given specifically to the department to conduct audit of any registered person. This
matter was highly debated under pre GST service tax era.
However, still in the GST Law, there is no provision which prescribes that if any tax authority has conducted
audit of an assessee for a particular period, then another tax authority would not conduct audit for the same
period, otherwise it would create undue-hardship to the assessee.
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Question & Answer

Q1. Can a person who has furnished a return on self-assessment basis make a request for provisional
assessment?
A. For provisional assessment a request needs to be made to proper officer for filing return on provisional
basis. In case the taxable person furnishes the return on self-assessment basis, he foregoes the right to make
an application for permission to furnish return and pay tax on provisional basis.
Q2. Please provide brief summary on various assessments.

Section Type of Assessment Assessment by Conditions precedent to assessment
59 Self-assessment Taxable Person Where registered taxable person
assesses his tax liability himself.
60 Provisional assessment Proper Officer Where registered taxable person is
unable to determine following:
• Value of supply, and/or
• Rate of applicable tax on supply
61 Scrutiny assessment Proper Officer Verifying the correctness of the return
by scrutinizing the return and particulars
furnished by taxable person.
62 Assessment of non-fliers Proper Officer Where the registered taxable person
of return (Best Judgement fails to furnish return U/s 39 or Sec. 45
Assessment) even after service of notice U/s 46.
63 Assessment of Proper Officer Where a taxable person fails to obtain
unregistered person (Best registration, even though liable to do so.
judgment assessment)
64 Summary Assessment Proper Officer To protect the interest of revenue with
previous permission of Additional/Joint
Commissioner.
Q3. Audit has to be completed within a stipulated period of three months (subject to extension) from the date
of commencement. What is implied by date of commencement of audit?
A. ‘Commencement of audit’ shall imply that date on which the records and other documents, called for by the
tax authorities, are made available by the taxable person or date of actual institution of audit at the place of
business, whichever is later. The period of three months can be extended by six months for reasons to be
recorded in writing.
Example:
Date of which documents requested 1 st April 2017
Date of which documents/recorded made available 20th April 2017
Date of actual institution of audit at auditee’s placed 5th May 2017
The date of commencement of audit will be taken as 5th May 2017
Date by which audit should be completed in normal course 4th Aug 2017
Last date by which audit should be completed (including extended period) 4 th Feb 2018
Q4. What is the difference between the two audit Sec. 65 and Sec. 66?
Issue Audit U/s 65 Audit U/s 66
Trigger Point General audit; audit of business Nature & complexity of case, interest of
transaction, no specific reason to be cited revenue, incorrect value of supply or
abnormal availment of credit
Nature of Audit Departmental Audit Special Audit
Study Notes
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Conducted by Officers of department authorized by Chartered Accountant/Cost Accountant

commissioner appointed by Commissioner
Frequency Discretionary Discretionary
Prior notice to Yes, 15 days’ notice is required No such notice/intimation envisaged
auditee
Time for conclusion 3 months, further extension of 6 months 90 days, further extension of 90 days
of audit allowed allowed
Audit findings report To be intimated soon on completion of Report to Deputy/Assistant Commissioner
audit
Audit expenses Borne by department Borne by department
Opportunity of No specific provision Yes, where material gathered during audit
being heard is to be used in any proceedings against
the auditee
Action based on If results in demand of tax, shall be If results in demand of tax, shall be
report recovered U/s 73 or 74 recovered U/s 73 or 74
Q5. What would be the process of Scrutiny of Returns?

A. The proper officer would inform registered person of the discrepancies noticed during the course of scrutiny
of returns. The proceedings would be dropped if the explanation submitted by the registered person is found
acceptable. However, if no explanation is furnished within the stipulated period by the registered person or no
corrective action is taken by the registered person after accepting discrepancy, proper officer may initiate
appropriate action against the registered person.
Q6. What are the consequences on conclusion of provisional assessment by way of passing final assessment
order in so far as short/excess remittance of tax is concerned?
A. The consequences on concluding the provisional assessment by way of passing final assessment order
would be as follows:
• Additional tax liability: In case of short remittance of taxes in terms of final assessment order, the
additional tax liability, if any should be remitted along with interest at the rate prescribed U/s 50 (1) for
delay in remittance of taxes viz., from the 1st day after the due date of remittance of taxes as prescribed
U/s 39 (7) till the date of actual payment.
• Excess remittance of tax on provisional basis: In case of excess remittance of taxes in terms of final
assessment order, the registered person is entitled to refund of such excess remittance in the manner
as provided in Section 54 (8) along with interest as provided under Section 56.
Q7. Whether any time limit has been specified to issue notice for scrutiny?
A. No, the provisions relating to scrutiny assessments do not specify time limit for issuing notice for scrutiny of
assessments.
Q8. Whether any reason to believe or evidence is required for initiate audit U/s 65?
A. No, Section 65 doesn’t specify any such requirements. Commissioner can initiate audit on any taxable person
for such period, at such frequency and in such manner as may be prescribed.
Q9. Is there any additional opportunity provided for taxable person to submit a return even after passing an
assessment order under Section 62 (1)?
A. Yes, if the registered person furnishes a valid return within 30 days from the date of service of best judgement
assessment order u/s 62 (1), the said assessment order shall be deemed to have been withdrawn.
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Q10. Whether Self-Assessment and provisional assessment are mutually exclusive?
A. Yes, if the taxable person opts for self-assessment, he cannot opt for provisional assessment for the same
period for same supply. However, he can opt for provisional assessment if he is unable to determine taxable
value / tax liability/ (rate of tax) for any subsequent periods.
Q11. Whether audit by officer can be done for a person other than registered person U/s 65?
A. Audit by officer cannot be ordered for a person who is not registered even if he is required to be registered
as per the provisions of the law. [S. 65(1)]
Q12. What process of audit is required to be followed by the officer in case audit is conducted U/s 65?
A. Following process is to be followed for conduct of audit by officer:
1. Proper Officer shall verify the documents, correctness of turnover, exemptions and deductions
claimed, the rate of tax applied, input tax credit availed and utilized and refund claimed. [R.101(3)]
2. Proper Officer shall record the observations in audit notes. [R. 101(3)]
3. Proper Officer may inform discrepancies noticed during audit to registered person [R.101(4)]
4. Registered Person shall reply to discrepancies [R. 101(4)]
5. Proper officer shall finalize findings of audit only after due consideration of reply [R. 101(4)]
6. On the conclusion of audit, Proper Officer shall inform the Registered Person whose records are
audited about the:
- findings
- reasons for findings,
- assessee’s rights and obligations. [S. 65(6)]
7. Information of findings, reasons, right and obligations shall be made within 30 days (in FORM
GST ADT-02) [S. 65(6)]
Q13. What action will be initiated when the audit conducted u/s 65(1) results in a demand?
A. Where the audit u/s 65(1) results in detection of tax not paid or short paid or erroneously refunded, or input
tax credit wrongly availed or utilized, the proper officer may initiate action under Section 73 or Section 74.
Q14. At what stage the directions of special audit can be given?

A. At any stage of scrutiny, inquiry, investigation or any other proceedings, having regard to the nature and
complexity of the case and interest of revenue, a direction to Registered Person to get its accounts examined
and audited can be given [S.66(1)]
Q15. Whether already audited accounts are also covered by special audit?
A. Special Audit may be directed even if accounts of the registered person have been audited under any other
provisions of this Act or any other law for the time being in force.[S.66(3)]
Q16. How to deal with detection of short paid taxes as a result of special audit?
A. Where audit results in detection of tax not paid/short paid /erroneous paid or ITC wrongly availed or utilized,
Proper Officer may initiate action u/s 73 or 74 [S.66(6)]
Q17. Whether the phrase “nature and complexity of the case” is defined in the Act?
A. No, Section 66 does not define the phrase “nature and complexity of the case’. However, there is enough
jurisprudence under the Income Tax Laws to determine what will constitute complexity of the case.
Study Notes
309
Section 67 Power of Inspection, search & seizure

Section 69 Power to arrest
Section 70 Power to summon persons to give evidence and produce documents
Section 71 Access to Business premises
Section 72 Officers to assist proper officers
Section 67 Power of Inspection, Search & Seizure

Sec. 67 (1) Power of Inspection
In case a proper officer holding the rank of joint commissioner or a higher rank has reason to believe that –
a) Any transaction relating to supply of goods or services or both has been suppressed by the taxable person
or any person has claimed any amount of tax as ITC in excess of credit available to him under the act or
any person has contravened any provisions of the Act or rules made thereunder to evade tax; or
b) Any goods which have escaped from the payment of tax or are kept in a manner to cause evasion of tax
and are in the custody of any transporter of the goods or owner or operator of a warehouse or godown or
any other place,
Only upon a written authorization (Rule 139 Form GST INS-01) given by an officer of the rank of joint
commissioner or above, the officer can conduct the inspection of the place of business of the taxable person or
the place of transporter of goods or owner or operator of warehouse or godown or any other place.
Sec. 67 (2) Power to search and seize

In case a proper officer holding the rank of joint commissioner or a higher rank has reason to believe, whether
on the basis of inspection carried out or otherwise, that any goods are liable to confiscation U/s 130 or any
document or books or things which shall be useful for or relevant to any of the proceedings, he may search and
seize such goods, documents, books or things by himself or he may authorize any other officer to search and
make order of seizure in Form GST INS-02.
As per sub-rule (5) of Rule 139 of CGST Rules, the proper officer or the officer authorized by him shall make
the inventory of the goods or documents or things to seized containing description, quantity, make and model
and shall get it signed by the custodian of the goods or documents.
In case where seizure of the goods is not possible, the proper officer or the officer authorized by him, may serve
the notice in Form GST INS-03 to prohibit the owner or custodian of the goods to remove, part with, or otherwise
deal with the goods without taking prior permission of the officer.
The officer may retain the documents or books or things so seized for a period as may be necessary for the
examination of the facts of the proceeding under the Act.
Example1: Jurisdiction officer of ABC Ltd. has reasons to believe that certain activities are being carried out by
them in order to evade taxes. Accordingly, business premises of ABC Ltd. were visited by Revenue Authorities
as directed under rule 139 (1) under form GST INS-01, for carrying out search proceedings, and production of
books & accounts was demanded, on observing certain irregularities with the books and stock. As ABC Ltd.
was not in possession of documents, it sought 24 hours for production of books and accounts. In such situation,
even though ABC Ltd., sought time for production of books and accounts, the goods are liable to be seized,
provided seizure order is passed in Form GST INS-02.
Let say, during the search in ABC Ltd.’s manufacturing unit, it comes to notice of the proper officer that the ABC
Ltd. has installed new machinery, which nowhere has been accounted for in the books of accounts, thus, the
machinery is liable to be seized, unless the ABC Ltd. proves that it has been accounted for into the books of
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accounts. The proper officer may seize such machinery by way of making the ABC Ltd. as the custodian of the
machinery and serve an order of prohibition in Form GST INS -03.
Sec. 67 (3) Releasing of non-related document

Where the accounts or documents so seized or produced by the taxable person are not relevant for further
proceeding or are not serving the solution of the purpose for which the notice was issued then such documents
shall be returned to the person within a period of 30 days from the date of issue of notice.
Sec. 67 (4) Power to access premises

In case where any person refuses to allow an officer to provide access of premises, almirah, locker, box,
electronic device or safe or godown then the officer is authorized in sub-section (2) to seal or break down the
door or premises or can break the almirah, electronic safe, box etc. in which any goods or relevant documents
are suspected to be kept.
Sec. 67 (5) Grant to take extracts

The custodian of the documents or books, which are seized in sub-section (2), shall be allowed to take the
copies of the documents so seized in the presence of the officer at such place and time as provided by such
officer. However, the officer may refuse the custodian to take copies of such documents in case he is of the
opinion that taking such copies may adversely impact the investigation.
Sec. 67 (6) Execution of bond

The goods so seize under sub-section (2) shall be released by the officer provisionally on receipt of bond (as
per Rule 140, Form GST INS-04) equivalent to the amount of goods along with security in form of bank
guarantee equivalent to the amount of applicable tax, interest and penalty payable.
The “applicable tax” shall include central tax and State tax or central tax & the Union territory tax, as the case
may be and the cess, if any, payable under the Goods and Services Tax (Compensation to States) Act.
In case the custodian fails to produce such provisionally released goods, the proper officer may encash the
bank guarantee & shall adjust the same against tax, interest and penalty or fine payable in respect of such
goods.
Sec. 67 (7) Releasing of goods

The goods so seized shall be returned to the custodian from whose custody the goods were seized where notice
in respect thereof is not given within a period of six months or such period extended by the officer from the date
of seizure.
The period of six months in sub-section (7) may be extended by proper officer, on sufficient cause, by a further
period not exceeding six months.
Sec. 67 (8) Disposal of specified seized goods

In case goods seized in sub-section (2) are perishable or hazardous in nature or goods are depreciated with
the passage of time or in case of any issues in storage of such goods or any other issued arises, in that case
the government may, by notification, allow proper officer to dispose such goods or class of goods.
The goods specified in sub-section (8) shall be release by the proper officer if the taxable persons pays an
amount equivalent to the lower of :
• Market price of the goods, or
• The amount of tax, interest or penalty in respect to such goods is payable.
Proper officer, on the proof of payment, shall pass the order in Form GST INS-05 and shall release the goods.
The list of such goods has been given in Notification no. 27/2018 CT Dated 13-6-2018. The list covers salt, raw
hides, newspapers, cell, batteries, fireworks, red sander, sandalwood, food articles, unclaimed goods which are
depreciable on account of change in technology, change in model etc.
Sec. 67 (9) Inventory of specified seized goods

The proper officer or the officer authorized by him, in prescribed manner, shall prepare the inventory of all the
goods so seized as specified in sub-section (8).
Study Notes
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Sec. 67 (10) Procedure of search and seizure

The procedure of search and seizure will be the same as of the provisions of search and seizure prescribed in
code of criminal procedure, 1973. However, documents or records so seized shall be given to the
“Commissioner” instead of magistrate and the commissioner, on application of the custodian, shall provide the
copies of the seized documents.
Sec. 67 (11) Retention of accounts, register or document

The proper officer, for the reasons recorded, may seize the books of accounts, documents or registers produced
before him by the registered person and shall retain it for so long as required for any proceeding under the act
for prosecution. The proper officer shall retain such accounts or documents on in case he has reason to believe
that the person has evaded or attempting to evade any payment of tax provide the receipt of the books or
documents so seized.
Sec. 67 (12) Surprise check of invoicing

The Commissioner or an officer authorized by him, to check whether a registered person is issuing proper
invoice or not, may purchase any goods or services or both by themselves or by authorizing any person on their
behalf. The taxable person or any other person authorized by him shall, on return of such goods by such officer
shall refund the amount so paid at time of purchase and shall cancel such invoice or bill of supply issued earlier.
[look like service is not included for refund]

Sec. 68 (1) Carrying of documents
For the movement of goods, the person in charge of a conveyance may require to carry such documents as
may be specified by the government and such devices as may be prescribed. The documents may be required
to carry by the person in charge only in case if they are exceeding the value specified in this respect.
Sec. 68 (2) Validation of documents

The details of documents required to be carried under sub-section (1) shall be validated in such manner as may
be prescribed.
Sec. 68 (3) Inspection of documents

Proper officer may intercept any person in charge carrying goods in conveyance to produce such documents
and devices as prescribed in sub-section (1) to check the validity of the movement of goods, and such person
in charge of goods will be required to produce the same for verification.
Section 69 Power to arrest

Sec. 69 (1) Order to Arrest
In case where a commissioner has reason to believe that a person has committed any offence under clause (a)
or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable as imprisonment
in clause (i) or (ii) of sub-section (1), or sub-section (2) of section 132, in that case the proper officer may
authorize any officer to arrest such person.
Relevant extract of Section 132 (1):
In case a person has committed the below mentioned offences, namely :
(a) Supply of goods without issue of any invoices to evade tax,
(b) Issues any invoices in violation of the act to avail any wrongful input tax credit or refund of tax,
(c) Availed input tax credit on false invoices,
(d) Collects the tax from customer but not paid the same to the Government within 3 months from the
due date,
As per Section 132 (1) (i), where such amount so evaded or wrongly claimed or refund taken exceeds five
hundred lakh rupees will be punishable as imprisonment up to five years with fine.
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As per Section 132 (1) (ii), where such amount so evaded or wrongly claimed or refund taken exceeds two
hundred lakh rupees but not exceeding five hundred lakh rupees will be punishable as imprisonment up to
three years with fine.
As per Section 132 (2), where a person commits offence prescribed in section 132 for the second or
subsequent time shall be punishable as imprisonment up to five years with fine.
Sec. 69 (2) Appearance before magistrate for non-bailable offences

In case a person has committed an offence under sub-section (5) of section 132 i.e. the offences which are
cognizable and non-bailable, the officer who has arrested the person shall inform that person the grounds for
which he is arresting him and shall take him before the magistrate within twenty four hours from the arrest.
Sec. 69 (3) Arrest in case of bailable offences

Subject to the provisions of the Code of Criminal Procedure, 1973, -
a) Where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of
section 132 i.e. bailable offences shall be released on bail or in default of bail shall be forwarded to the
custody of the magistrate.
b) The deputy commissioner or the assistant commissioner shall, for the purpose of releasing an arrested
person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-
in-charge of a police station.
Section 70 Power to Summon Persons to give Evidence and

Produce Documents
(1) In case the proper officer requires the presence of any person in any inquiry to provide any document or
thing which he seems is required in any proceeding then he may summon that person for his presence
and the officer shall have the same powers as prescribed under the provisions of Code of Civil procedure,
1908 in this regard.
(2) The proceeding before the officer who has issued the summon shall deemed to be the “Judicial
proceeding” within the meaning of section 193 and section 228 of the Indian Penal Code.
Section 71 Access to Business Premises

Sec. 71 (1) Access to place of business
The officer authorized by the proper officer shall have the access to any place of business of the registered
person and he may inspect any books of account, documents, computers, computer programs, computer
software and other things, available at such place, which seems to be required by him for carrying out any audit,
scrutiny, verification and checks to safeguard the interest of the revenue.
Sec. 71 (2) Responsibility of person in charge

The officer so authorized in sub-section (1) or the audit party deputed by the officer or a cost accountant or a
chartered accountant nominated by the department to conduct special audit U/s 66 may demand any of the
below mentioned documents to conduct any audit or scrutiny and it will be the responsibility of the person in
charge of that place of business to provide the same to the concerned person within fifteen days from their
demand or such further period allowed to him.
Documents that can be demanded by the officer or audit party or a cost accountant or a chartered accountant
nominated U/s 66 –
• Records that are prepared or maintained by the registered person and declared to the proper officer in
such manner as may be prescribed,
• Trial Balance,
• Statements of annual financial accounts, duly audited, wherever required,
• Report of cost audit, if applicable, prescribed in Section 148 of the Companies Act, 2013,
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• Tax audit report where the person is required to get his books of accounts audited U/s 44 AB of the
Income-Tax Act, 1961, and
• Any other document or record as may be required by him.
Section 72 Officers to Assist Proper Officer

To safeguard the interest of revenue all the officers of police, railways, customs and those officers engaged in
the collection of land revenue, including village officers, officers of state tax and officers of union territory tax
shall assist the proper officers in the implementation of this Act.
Further the Government may empower and require any class of officers other than specified above to assist the
proper officers in the implementation of the act.
Question & Answer

Q1. What is the distinction in law between ‘Seizure’ and ‘Detention’?
A. Denial of access to the owner of the property or the person who possesses the property at a particular point
of time by a legal order/notice is called detention. Seizure is taking over of actual possession of the goods by
the department. Detention order is issued when it is suspected that the goods are liable to confiscation. Seizure
can be made only on the reasonable belief which is arrived at after inquiry/investigation that the goods are liable
to confiscation.
Q2. What is meant by the expression ‘reason to believe’?

A. The expression, ‘reason to believe’ is not defined anywhere but needs to be understood through judicial
interpretation, some of which are as follows:
In ITO v Lakhmani Mewal Das (1976) 103 ITR 437 (SC), it was held that the expression ‘reason to believe’
doesn’t mean a purely subjective satisfaction on the part of the income-tax officer. The reason must be held in
good faith. It cannot be merely a pretence. In CIT v Kelvinator India Ltd. (2010) 320 ITR 562 (SC), it was held
that there must be tangible material for the formation of the belief in the context of search.
As per Sec. 26 of IPC, a person is said to have reason to believe a thing, if he has sufficient cause to believe
that thing, but not otherwise.
Q3. Will access to place of business premises U/s 71 also include unregistered premises?
A. Perhaps, yes. This provision facilitates access to a business premise which is not registered by a taxable
person as a principal or additional place of business but has books of accounts, documents, computers etc.
which are required for audit or verification of accounts of a taxable person.
Q4. Whether the list of documents/information is exhaustive and no other document can be inspected?
A. No, the list of documents is considered illustrative. Certain documents are specifically listed in this provision
but if any other relevant records are maintained at the said premises, they may also be required to be produced.
Q5. Is it mandatory that such ‘reasons to believe’ has to be recorded in writing by the proper officer, before
issuing authorization for Inspection or Search and Seizure?
A. Although the officer is not required to state the reasons for such belief before issuing an authorization for
search, but he should disclose the material on which his belief was formed. ‘Reason to believe’ need not be
recorded invariably in each case.
Q6. Can the proper officer access business premises of a registered taxable person?
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A. Yes. An audit party of CGST, deputed by proper officer or a cost accountant or chartered accountant
nominated under section 66 have access to any business premises without issuance of a search warrant for
the purposes of revenue carrying out any audit, scrutiny, verification and checks as may be necessary to
safeguard the interest of. Further, in terms of Section 71(1), an officer authorised by a proper officer not below
the rank of Joint Commissioner can also have access business premises of a registered person.
Q7. What is the meaning of ‘Inspection’, ‘Search’ & ‘Seizure’?

A.
Inspection Search Seizure
It is a softer provision than The term ‘search’, in simple language, In Law Lexicon Dictionary, ‘seizure’,
search to enable officers to denotes an action of a government is defined as the act of taking
access any place of machinery to go, look through or possession of property by an officer
business of a taxable examine carefully a place, area, under legal process. It generally
person and also any place person, object etc. in order to find implies taking possession forcibly
of business of a person something concealed or for the purpose contrary to the wishes of the owner
engaged in transporting of discovering evidence of a crime. The of the property or who has the
goods or who is an owner or search of a person or vehicle or possession and who was unwilling
an operator of a warehouse premises etc. can only be done under to part with the possession.
or godown. proper and valid authority of law.
Q8. What is meant by term ‘Arrest’ and ‘Cognizable & Non Cognizable Offence’?
A.
Arrest Cognizable Offence Non Cognizable Offence
The term ‘arrest’ has not been defined Generally, cognizable offence Non-cognizable offence means
in the CGST/SGST Act. However, as means serious category of an offence in respect of which a
per judicial pronouncements, it offences in respect of which a police officer does not have the
denotes ‘the taking into custody of a police officer has the authority to authority to make an arrest
person under some lawful command make an arrest without a warrant without a warrant and an
or authority’. In other words, a person and to start an investigation with investigation cannot be initiated
is said to be arrested when he is taken or without the permission of a without the permission of a
and restrained of his liberty by power Court. Court.
or colour of lawful warrant.
Q9. What are the safeguards provided for a person who is placed under arrest?
A. The following are the safeguards provided for a person who is placed under arrest:
a) If a person is arrested for a cognizable offence, he must be informed in writing of the grounds of arrest
and he must be produced before a Magistrate within 24 hours of his arrest;
b) If a person is arrested for a non-cognizable and bailable offence, the Deputy/ Assistant Commissioner
shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and
be subject to the same provisions as an officer-in-charge of a police station.
All arrest must be in accordance with the provisions of the Code of Criminal Procedure, 1973 relating
to arrest.
Q10. Which are the places of business / premises which can be inspected by the CGST officer?
A. CGST officer authorized by the proper officer not below the rank of Joint Commissioner shall have the
powers to carry out inspection of any of the following places / premises:
a) any place of business of a taxable person;
b) any place of business of a person engaged in the business of transporting goods;
c) any place of business of an owner or an operator of a warehouse or godown or any other place;
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Section 73 Determination of tax not paid or short paid or erroneously refunded

Section 74 Determination of tax not paid or short paid or erroneously refunded by
reason of fraud or wilful misstatement or suppressions of facts
Section 75 General provisions relating to determination of tax
Section 76 Tax collected and not deposited with the Central Government or a State
Governments
Section 77 Tax wrongfully collected and deposited with the Central Government or
a State Government
Section 78 Initiation of Recovery Proceedings
Section 79 Recovery of tax
Section 80 Payment of tax and other amount in installments
Section 81 Transfer of property to be void in certain cases
Section 82 Tax to be first charge on property
Section 83 Provisional attachment to protect revenue in certain cases
Section 84 Continuation and validation of certain recovery proceedings
Section 73 Determination of tax not paid or short paid or

erroneously refunded & Section 74 Determination of tax not
paid or short paid or erroneously refunded by reason of fraud
or wilful misstatement or suppression of facts
Sub Section Defaults made U/s 73 (for reason Defaults made U/s 74 (For reasons of
other than fraud etc.) fraud, or any wilful-misstatement or
suppressions of facts etc.)
(1) Issuance • Tax not paid, or • Tax not paid, or
of Show • Short paid, or • Short paid, or
Cause • Erroneously refunded, or • Erroneously refunded, or
Notice • ITC has been wrongly • ITC has been wrongly
(SCN) availed/utilized availed/utilized
Proper Officer will issue SCN why Proper Officer will issue SCN why
taxable person should not pay the taxable person should not pay the
amount specified in notice along with amount specified in notice along with
interest U/s 50 & applicable penalty as interest U/s 50 & penalty equivalent to
per Act & Rules. the tax specified in the notice.
(2) Time limit At least three months prior to time limit At least Six months prior to time limit
for SCN specified for issuance of order [Refer to specified for issuance of order [Refer to
sub-section (10)] sub-section (10)]
(3) Deemed Proper officer may serve a statement Proper officer may serve a statement for
Notice for such periods other than those such periods other than those covered
covered in above sub-section (1), on in above sub-section (1), on the person
the person chargeable to tax chargeable to tax
(4) Status of The above statement shall be deemed The above statement shall be deemed
statement to be service of notice, if ground to be service of notice, if ground remain
issued on same as per above sub-section (1)
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recurring remain same as per above sub-section
SCN (1)
(5) Intimation The person chargeable with tax may, The person chargeable with tax may,
by before service of notice under sub- before service of notice under sub-
taxable section (1) or (3), pay the amount section (1), pay the amount along with
person of along with interest U/s 50 on his own interest U/s 50 & penalty equivalent to
deposit ascertainment or as ascertained by the 15% of such tax, on his own
prior to proper officer and inform proper officer ascertainment or as ascertained by the
issue of in writing of such payment. proper officer and inform proper officer
notice in writing of such payment.
(6) Proper Proper Officer, on receipt of deposit Proper officer, on receipt of deposit
Officer not information, shall not service any information, shall not serve any notice
to issue notice Under sub section (1) or (3), in under sub-section (1), in respect of the
SCN on respect of tax so paid or any penalty tax so paid or any penalty payable
receipt of payable under the provisions of this act under the provisions of this Act or the
information or rules. rules made thereunder.
of deposit
(7) Short Issue SCN for the sum short paid Issue SCN for the sum short paid under
receipt of under sub section (1). sub section (1).
tax under
sub-
section (5)
as per
opinion of
proper
officer
(8) Conclusion On deposit of sum of tax along with On deposit of tax along with interest and
of interest as per SCN within 30 days of a penalty equivalent to 25% of such tax
proceedings SCN, no penalty shall be payable and within 30 days of issue of the notice, all
within 30 all proceedings in respect of SCN, shall proceeding in respect of SCN, shall be
days of issue be deemed to be concluded. deemed to be concluded.
of SCN
(9) Considering Order for payment of Order for payment of
representation tax+interest+penalty not more than tax+interest+penalty.
and issue of 10% of tax or Rs. 10,000 whichever is
order of SCN higher.
(10) Limitation Within 3 years from due date of annual Within 5 years from due date of annual
period for return or 3 years from the date of return or 5 years from the date of
issuance of erroneous refund. erroneous refund.
an order
(11) Miscellaneous Notwithstanding anything contained in On deposit of tax along with interest and
sub-section (6) or (8), penalty under a penalty equivalent to 50% of such tax
sub-section (9) shall be payable where within 30 days of issue of the order, all
any amount of self-assessed tax or any proceeding in respect of notice, shall be
amount collected as tax has not been deemed to be concluded.
paid within a period of 30 days from the
due date of payment of such tax.
For the purpose of section 73 & 74 –
i. The expression “all proceeding in respect of the said notice” shall not include proceedings
under section 132 (prosecution/punishment for certain offences);
ii. Where the notice under the same proceedings is issued to the main person liable to pay
tax and some other persons, and such proceedings against the main person have been
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317
concluded under section 73 or section 74, the proceedings against all the person liable to
pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded.
“Suppression” shall mean non-declaration of facts or information which a taxable person is required to
declare in the return, statement, report or any other document furnished under this Act or the rules made
thereunder, or failure to furnish any information on being asked for, in writing by the proper officer.
Penalty provisions (over and above interest amount U/s 73 & 74 at a glance:
Situation Penalty U/s 73 Penalty U/s 74

Before issuance of SCN No Penalty 15% of the tax amount
Within 30 days after the issuance No Penalty 25% of the tax amount
of SCN
Within 30 days of issuance of 10% of the tax or INR 10,000 50% of the tax amount
order whichever is higher (INR 20000 –
total of CGST & SGST or IGST)
After 30 days of issuance of order 10% of the tax or INR 10,000 100% of the tax amount
whichever is higher (INR 20000 –
total of CGST & SGST or IGST)
Circular No. 76/50/2018-GST Dated 31st March 2019

The circular clarifies that delayed filing of Form GSTR-3B will not attract penalty leviable u/s 73(11) of
Central Goods and Services Tax (CGST) Act as the tax along with applicable interest has already been
paid.
Further, as tax has been paid after the due date in contravention of the provisions of CGST Act, a general
penalty under section 125 of the CGST Act may be imposed.
Table below, the functions as the proper officers in relation to issue of show cause notices and orders -
Circular No. 31/05/2018 – GST Dated 9th Feb’18
Designation of Monetary limit of the Monetary limit of the Monetary limit of the
Officer amount of CGST amount of IGST (including amount of CGST and
(including cess) for cess) for issuance of IGST (including cess)
issuance of show show cause notices & for issuance of show
cause notices & orders u/s 73 and 74 of cause notices & orders
orders u/s 73 & 74 of CGST Act made applicable u/s 73 and 74 of CGST
CGST to IGST Act made applicable to
IGST
Superintendent Up to Rs. 10 lakhs Up to Rs. 20 lakhs Up to Rs. 20 lakhs
Deputy or Above Rs. 10 lakhs up to Above Rs. 20 lakhs up to Above Rs. 20 lakhs up to
Assistant Rs. 1 crore Rs. 2 crore Rs. 2 crore
Commissioner
Additional or Joint Above Rs. 1 Crore Above Rs. 2 Crore Above Rs. 2 Crore
Commissioner
Example 1: ABC Ltd. sold 100 boxes of chocolates for Rs. 1,00,000 on which tax was payable @ 18%. However,
ABC Ltd. did not show the transaction in it books and raised bogus invoices of supply. If ABC Ltd. decides to
pay tax before issuance of SCN, then it is liable to pay penalty U/s 74 i.e. 1,00,000*18% = Rs. 18,000*15%=
Rs. 2,700 penalty. If it pay within 30 days of issuance of SCN then penalty is Rs. 18,000*25%= Rs. 4.500
penalty. Apart from penalty, tax & interest thereon also need to be paid by ABC Ltd.
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Section 75 General provisions relating to determination of tax
Sec. 75 (1) Exclusion of stay period from time limit for demand order
Where a court or Appellate Tribunal issues the order of stay in respect of serving of notice or issue of order of
demand then such period of stay shall not be included while computing the time period specified the issue of
notice and demand order.
Example 2: Let say if court has issued the stay order for 6 months then if annual return date is 31st December
2018 then order of demand within 5 years (in case of fraud) is 31st December 2023 and since order is stayed
for 6 months then order can be issued by 30th June 2024.
Sec. 75 (2) Change in opinion

Where any person has been served with a notice to show cause with charges of fraud or wilful misstatement or
suppression of facts to evade tax and later any Appellate authority or appellate tribunal or Court opines that the
charges of fraud has not been established then the proper officer shall proceed to determine the tax liability as
if the tax has not paid or erroneously refund is for the reason other than fraud, deeming the notice has been
served under sub-section (1) of section 73.
If we try to interpret then one argument can be : such change in opinion has been made in the fourth year from
the last date of filing of annual return for such tax period then the proceeding shall not be continued as the time
limit for the issue of demand of order has already been lapsed (3 years).
Sec. 75 (3) Order in case of direction of court

In case the Appellate Authority or Appellate Tribunal or a court has directed the issue of any order then such
order shall be issued within a period of two years from the date of issue of such direction by the Appellate
Authority or Appellate Tribunal or a court.
Sec. 75 (4) Opportunity of being heard

An opportunity of hearing shall be given to the aggrieved party if he makes the representation in writing or where
any adverse decision has been contemplated against him.
Sec. 75 (5) Adjournment of hearing

The proper officer on sufficient cause shown by the person chargeable to tax and for reasons recorded in writing
shall grant the time to such person and shall adjourn the hearing. However such adjournment shall be allowed
to the maximum of three times to a person.
Sec. 75 (6) Disclosure of facts in order

The proper officer, in his order, shall set out the relevant facts and the basis of his decision.
Sec. 75 (7) Basis of order

The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified
in the notice including deemed notice and no demand shall be confirmed on the grounds other than grounds
specified in the notice.
A welcome change has been introduced under the GST Law by incorporating the provision which prescribes
that the order cannot travel beyond the allegations or grounds raised in the SCN. In the pre-GST indirect tax
regime, this principle has been established only through legal Jurisprudence.
Sec. 75 (8) Consequences of modification of order

In case where the Appellate Authority or Appellate Tribunal or court has modified the amount of tax in any order
then the amount of interest and penalty shall also stand modified proportionately computed on the basis of the
amount of tax so modified.
Example 3: In case any order of demand has been served: Tax Rs. 1,00,000, Interest Rs. 36,000 (2 years
@18%), Penalty Rs. 1,00,000 (100% of tax).
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Appellate Authority/Tribunal or Court has modified tax amount to Rs. 50,000: Tax Rs. 50,000, Interest Rs.
18,000 (2 years @18%), Penalty Rs. 50,000 (100% of tax).
Sec. 75 (9) to Sec. 75 (13) Miscellaneous provisions

Interest on tax short paid or not paid shall be payable at applicable rates whether or not specified in the order
of demand.
In case any proper officer fails to issue the demand order within the time prescribed under sub-section (10) of
section 73 or sub-section (10) of section 74 then such proceedings shall deemed to be concluded.
Where in some other proceeding on which the Appellate Authority or the Appellate Tribunal or the High Court
has given its decision which is prejudicial to the interest of revenue and an appeal has been filed which is
pending for decision in Appellate Tribunal or the High Court or the Supreme Court then for computing the time
period for issue of order under sub-section (10) of section 73 or under sub-section (10) of section 73 shall not
include the period spent between:
Decision of Appellate Authority Appellate Tribunal High Court Supreme Court
Therefore, an issue on which an Appellate Authority or Tribunal or High Court has given its decision against the
revenue, against which an appeal to the Appellate Tribunal or High Court or Supreme Court is pending, then,
the period spent between the two dates of decision shall be excluded in computing the period of 3 years (non-
fraud cases) or 5 years (fraud cases) respectively, for issue of order.
Where a person has self-assessed the tax in accordance with a return furnished U/s 39 and fails to pay such
tax, either wholly or partly, then such amount of tax remains unpaid shall be recovered from the person
chargeable with tax in accordance with provisions U/s 79. Serving of notice to show cause or order of demand
shall not be required for recovery of such taxes.
Where any penalty is imposed U/s 73 or 74 then no penalty shall impose under any other provisions of this act
for the same omission or same act.
Section 76 Tax Collected but not paid to Government

Sec. 76 (1) Amount collected as tax
Where a person has collected any amount from any person as a tax under GST, whether the supply was taxable
or not, shall pay the amount of tax to the Government irrespective of anything contrary contained in any order
or the Appellate Authority or Appellate Tribunal or Court or in any other provisions of this Act or the rules made
thereunder or any other law for the time being in force.
Example 4: In case A has sold goods chargeable @ 18% to B by charging 28% tax on such goods. A shall pay
the whole of tax collected from B.
Sec. 76 (2) SCN for tax collected but not paid to Government
Where a person has collected tax under GST but fails to pay the same to the Government then the proper officer
may issue SCN as to why the amount so collected by him as tax along with penalty equivalent to the tax should
be paid by him to the Government.
Sec. 76 (3) to 76 (6) Determination of tax liability

The proper officer shall determine the tax liability of the person, to whom notice has been served, under sub-
section (2) considering the representations made by him and such person shall pay the amount so determined
along with the interest U/s 50 from the date of collection of such amount to the date of payment.
The proper officer shall issue the order of demand within a period of one year from the date of notice under sub-
section (2) and the opportunity of hearing shall be granted where the person to whom the notice was served
has requested in writing.
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Sec. 76 (7) Exclusion of stay period from time limit for demand order
Where a court or Appellate Tribunal issues the order of stay in respect of serving order of demand then such
period of stay shall not be included while computing the time period of one year for the issue of demand order.
Sec. 76 (8) Disclosure of facts in demand order

The proper officer shall disclose the facts on the basis of which he has made the decision of the proceedings in
the order.
Sec. 76 (9) to 76 (11) Adjustment of tax paid

The amount paid to the Government which was collected in excess of tax or under the notice of payment of
such excess deduction shall be adjusted against the tax payable and where the surplus is left after adjustment
of tax it shall credited to the fund or shall be refunded to the person who borne the incidence of tax.
The person who borne the incidence of tax may apply for refund of the tax in accordance with the provisions of
Section 54 in Form GST RFD-01, along with documentary evidence. [Rule 89 (2)]
Section 77 Adjustment of Tax paid

In case where Central tax and State tax/Union Territory tax, as the case may be, has been paid on any supply
considering it to be an intra-state supply and later it came to notice that it is to be an interstate supply and
Integrated tax should have been paid then amount so paid earlier at the time of supply shall be refunded as per
the provisions of section 54.
However, where Integrated tax has been paid on any supply considering it to be an interstate supply and later
it came to notice that it is to be an intrastate supply and Central tax and State tax/Union territory tax, as the case
may, then he shall not be required to pay any interest on the amount Central tax and State tax/Union territory
tax, as the case may be payable.
[the person may apply for refund according to Sec. 54 in Form GST RFD-01 along with documentary evidence
(Rule 89 (2)]
Section 78 Initiation of Recovery Proceedings

If tax demand is not paid within 3 months from the date of service of order, recovery proceedings shall be
initiated. The proper officer may require payment of amount prior to expiry of 3 months to protect interest of
revenue.
Section 79 Recovery of tax

i. Modes of recovery: The proper officer shall proceed to recover the amount by one or more of the
following modes, namely –
a) Recovery of deduction from any money owed to such person.
b) Detention and sale of goods belonging to such person which are under the control of the
department.
Rule 144: -
• The proper officer shall make the inventory of the goods so detained with estimated
market value and shall proceed to sale only so much of goods which are required
for recovering the amount due from him and administrative cost of detaining and
selling such goods. The goods shall be sold through auction.
• The last date of submission of bid for an auction shall not be earlier then fifteen days
from the date of issue of notice of auction. However, the proper officer may sell such
goods immediately which are perishable or hazardous in nature or where the cost of
keeping the goods are likely to exceed the value of goods.
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c) Garnishee proceedings i.e. Recovery from debtors of the assessee:

• Debtor bound to comply with the notice. Recovery can be made from post office,
banking company or an insurer and it shall not be necessary to produce any pass book,
deposit receipt, policy or any other document for the purpose of any entry, endorsement
or the like being made before payment is made.
• In case of non-compliance of notice, the debtor shall be deemed to be defaulter and if
he discharges the liability, he shall be personally liable. The officer issuing a notice
may, at any time, amend or revoke such notice of extend the time for making any
payment in pursuance of the notice.
• Debtor shall be discharged from assessee’s liability to extent of such payment made to
the Government.
• However, such person is not personally liable as above, if he proves to the officer
issuing the notice that the money demanded or any part thereof was not due to the
person in default or at the time of service of the notice he did not hold any money for
or on account of the person in default, the money was not demanded from him; or any
part of the money demanded is not likely to become due to such other person or any
part of the money will not likely be held for or on account of such person.
Rule 147:-
• The proper officer shall make the inventory of the movable or immovable property so
detained with estimated market value.
• The order of attachment of such property and notice of sale shall be issued in Form
GST DRC-16 to prohibit any transaction with respect to such movable or immovable
property.
• Where any immovable property has been attached then the notice of attachment
shall be pasted on such immovable property and shall remain affixed till the
confirmation of sale of such property.
• Where any movable property has been attached then such movable property shall
be seized by the proper officer.
• The property so attached shall be sold by an auction, the notice of which shall be
issued in Form GST DRC-17.
• The last date of submission of bid for an auction shall not be earlier fifteen days from
the date of issue of notice by auction. However, the proper officer may sell such
goods immediately which are perishable or hazardous in nature or where the cost of
keeping the goods are likely to exceed the value of goods.
d) Collection by detention and sale of any movable or immovable property

[As per Rule 154:- First , be apportioned against the administrative cost of the recovery process.
Second, against the amount to be recovered. Next, be apportioned against any other amount
due under the Act. Balance amount shall be rendered to the defaulter]
e) Through the collector of the district in which such person owns any property or resides or carries
on his business, as if it was an arrear of land revenue.
f) The proper officer may file an application to the magistrate to recover the amount specified in
the application and the magistrate shall recover such amount as it is a fine imposed on such
person.
ii. Recovery of amount specified in bond can be made as per the above provisions.
iii. SGST/UTGST Officer may also recover CGST dues from defaulter and credit the same to Central
Government
iv. Apportionment of amount collected to State/Central Government in proportion to the amount due to
each such Government.
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For the purposes of this section, the word person shall include “distinct persons” as referred to in sub-
section (4) or, as the case may be, sub-section (5) of section 25.
Rule 142 Notice and order for demand of amounts payable under the Act
(1) The proper officer shall serve, along with the

(a) notice issued under section 52 or section 73 or section 74 or section 76 or section
122 or section 123 or section 124 or section 125 or section 127 or section 129 or
section 130, a summary thereof electronically in FORM GST DRC-01,
(b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a
summary thereof electronically in FORM GST DRC-02,
specifying therein the details of the amount payable.
(2) Where, before the service of notice or statement, the person chargeable with tax makes
payment of the tax and interest in accordance with the provisions of sub-section (5) of
section 73 or, as the case may be, tax, interest and penalty in accordance with the
provisions of sub-section (5) of section 74, or where any person makes payment of tax,
interest, penalty or any other amount due in accordance with the provisions of the Act he
shall inform the proper officer of such payment in FORM GST DRC-03 and the proper
officer shall issue an acknowledgement, accepting the payment made by the said person
in FORM GST DRC–04.
(3) Where the person chargeable with tax makes payment of tax and interest under sub-
section (8) of section 73 or, as the case may be, tax, interest and penalty under sub-section
(8) of section 74 within thirty days of the service of a notice under sub-rule (1), or where
the person concerned makes payment of the amount referred to in sub-section (1) of
section 129 within fourteen days of detention or seizure of the goods and conveyance, he
shall intimate the proper officer of such payment in FORM GST DRC03 and the proper
officer shall issue an order in FORM GST DRC-05 concluding the proceedings in respect
of the said notice.
(4) The representation referred to in sub-section (9) of section 73 or sub-section (9) of section
74 or sub-section (3) of section 76 or the reply to any notice issued under any section
whose summary has been uploaded electronically in FORM GST DRC-01 under sub-rule
(1) shall be furnished in FORM GST DRC-06.
(5) A summary of the order issued under section 52 or section 62 or section 63 or section 64
or section 73 or section 74 or section 75 or section 76 or section 122 or section 123 or
section 124 or section 125 or section 127 or section 129 or section 130 shall be uploaded
electronically in FORM GST DRC-07, specifying therein the amount of tax, interest and
penalty payable by the person chargeable with tax.
(6) The order referred to in sub-rule (5) shall be treated as the notice for recovery.
(7) Where a rectification of the order has been passed in accordance with the provisions of
section 161 or where an order uploaded on the system has been withdrawn, a summary
of the rectification order or of the withdrawal order shall be uploaded electronically by the
proper officer in FORM GST DRC-08.
Rule 142A Procedure for recovery of dues under existing laws
(1) A summary of order issued under any of the existing laws creating demand of tax, interest, penalty, fee
or any other dues which becomes recoverable consequent to proceedings launched under the existing law
before, on or after the appointed day shall, unless recovered under that law, be recovered under the Act
and may be uploaded in FORM GST DRC-07A electronically on the common portal for recovery under the
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Act and the demand of the order shall be posted in Part II of Electronic Liability Register in FORM GST
PMT-01.
(2) Where the demand of an order uploaded under sub-rule (1) is rectified or modified or quashed in any
proceedings, including in appeal, review or revision, or the recovery is made under the existing laws, a
summary thereof shall be uploaded on the common portal in FORM GST DRC-08A and Part II of Electronic
Liability Register in FORM GST PMT-01 shall be updated accordingly.
Section 80 Payment of tax and other amount in installments

▪ On Application of the concerned person, the Commissioner may extend the time or allow making of
payment in monthly installments not exceeding 24, subject to payment of interest U/s 50 and subject to
such conditions and limitations as may be prescribed.
However, the extension and installments shall not be allowed for the amount due as per the liability self-
assessed in any return.
▪ In case of default in payment of installment, all outstanding installments shall become due and payable
on date of such default and shall, without any further notice being served on the person, be liable for
recovery.
▪ The facility for deferred payment/payment in installments shall not be allowed where –
✓ The taxable person has already defaulted on the payment of any amount under CGST Act,
2017 or the IGST Act, 2017 or the UTGST Act, 2017 or any of the SGST Act, 2017 for which
the recovery process is on;
✓ The taxable person has not been allowed to make payment in installments in the preceding
financial year under the CGST Act, 2017 or the IGST Act, 2017 or any of the SGST Tax Act,
2017;
✓ The amount for which installment facility is sought is less than Rs. 25,000.
Section 81 Transfer of property to be void in certain cases

Where a person after any amount has become due from him, creates a charge on or parts with the property
belonging to him or in his possession by way of sale, mortgage, exchange, or any other mode of transfer
whatsoever of any of his properties in favour of any other person with the intention of defrauding the Government
revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum
payable by the said person.
Such charge or transfer shall not be void if it is made for adequate consideration, in good faith and without
notice of the pendency of such proceedings under this Act or without notice of such tax or other sum payable
by the said person, or with the previous permission of the proper officer.
Example 5: Mr. A was served with a notice of demand of Rs. 25 Lakhs on 05.05.2018. He filed a reply for the
said notice on 15.05.2018, stating that he was unable to deposit tax dues as he was financially stressed. On
10.05.2018, Mr. A transferred all the property Rs. 40 Lakhs under his name to the name of his wife for
consideration of Rs. 1,00,000. As per Section 81, this transfer would be void and the property worth Rs. 40
Lakhs would be considered still to be in hands of Mr. A.
Example 6: On Mr. B, notice was issued on 05.05.2018. However, the same was received by Mr. B on
15.05.2018. Meanwhile the property of Mr. B was sold to Mr. X for INR 1 crore. The sale is valid since the date
of sale there was no pending proceeding on Mr. B.
Section 82 Tax to be first charge on property

Notwithstanding anything to the contrary contained in any law for the time being in force, save as otherwise
provided in the Insolvency and Bankruptcy Code, 2016, any amount payable by a taxable person or any other
person on account of tax, interest or penalty which he is liable to pay to the Government shall be a first charge
on the property of such taxable person or such person .
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Section 83 Provisional attachment to protect revenue in certain

cases
I. During pendency of any proceedings, if the Commissioner is of the opinion that for the purpose of
protecting the interest of the Government revenue, it is necessary to do so, he may, by order in writing
attach provisionally any property, including bank account, belonging to the taxable person in such
manner as may be prescribed.
II. Every such provisional attachment shall cease to have effect after the expiry of a period of one year
from the date when provisional attachment order is made under this section.
III. Where the property attached is of perishable or hazardous nature, and if the taxable person pays an
amount equivalent to the market price of such property or the amount that is or may become payable
by the taxable person, whichever is lower, then such property shall be released forthwith.
Section 84 Continuation and validation of certain recovery

proceedings
Issuance of fresh notice is required when government dues are enhanced in appeal, revision or other
proceedings and recovery proceedings of earlier demand will be continued as per earlier notice.
Issuance of fresh notice is not necessary when government dues are reduced in appeal, revision or other
proceedings and any recovery proceedings initiated on the basis of the demand served upon him prior to the
disposal of such appeal, revision or other proceedings may be continued in relation to the amount so reduced
from the stage at which such proceedings stood immediately before such disposal.
Question & Answer

Q1. Will Omission on the part of the taxable person to provide correct information constitute ‘suppression of
facts’ for the purpose of Section 74 of the CGST Act, 2017? Write a brief note with reasons.
A. Yes. As per explanation to Section 74 of CGST Act, 2017, the expression “suppression” shall mean non-
declaration of facts or information which a taxable person is required to declare in the return, statement, report
or any other document furnished under this Act or the rules made thereunder, or failure to furnish any information
on being asked for, in writing, by the proper officer. Thus, omission on the part of the taxable person to provide
correct information constitute “suppression of facts”.
Q2. A ltd. is entitled for exemption from tax under GST Act. It collected tax from its buyers in Nov’17. It has not
deposited the said amount collected as GST with the Government. What are the consequences of not depositing
the same with Government as provided U/s 76?
A. It is mandatory to pay amount, collected from other person representing tax under GST Act, to the
Government [Sec. 76]. Every person who has collected from any other person any amount as representing the
tax under GST Act, and has not the said amount to the Government, shall forthwith pay the said amount to the
Government, irrespective of whether the supplies in respect of which such amount was collected are taxable or
not. Proper officer may issue SCN for recovery of such amount and penalty equivalent to amount specified in
notice.
The proper officer shall, after considering the representation, if any, made by the person on whom SCN is
served, determine the amount due from such person and thereupon such person shall pay the amount so
determined along with interest at the rate specified under section 50 from the date such amount was collected
by him to the date such amount is paid by him to the Government.
Q3. Can the person chargeable with the tax seek adjournment of hearings?
A. Yes, the person chargeable with tax can seek adjournment of hearing and he can be granted time in case
sufficient cause is shown by person chargeable with tax. The hearing will be adjourned for reasons to be
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recorded in writing. As provided in Sec. 75 (5) of the GST Act, no such adjournments shall be provided for more
than 3 times.
Q4. Would taxable person would be liable for payment of interest besides paying the tax U/s 77?
A. No, Sec. 77 (2) provides that such taxable person would not be liable for payment of interest on the amount
of central tax or state tax as the case may be.
Q5. Can the refund claim on account of Sec. 77 be subjected to provision of undue enrichment?
A. No, the claim of refund due to Sec. 77 will not be subjected to provision of undue enrichment. This has also
been clarified by the Government in flier of refunds issued by CBIC.
Q6. Can GST be collected, during a search operation, without an assessment order being passed by the
concerned authority?
A. No. In case law Chitra Builder Pvt. Ltd. V Addl. Commi. Of CCex & ST [2013] [Mad], it was held that it is a
well settled position in law that no tax can be collected from the assessee, without an appropriate assessment
order being passed by the authority concerned and without following the procedures established by law.
Q7. When can extended period of limitation can be invoked?

A. U/s 74, extended period of limitation can be invoked if the GST has not been paid or has been short-paid or
erroneously refunded by reason of fraud or wilful mis-statement or suppression of facts or contravention of any
of the provision of CGST Act or of rules made thereunder with an intent to evade the payment of GST.
Q8. M/s ABC Ltd., were granted a refund by the Appellate Authority under CGST Act, 2017. The jurisdictional
Assistant Commissioner has issued a notice U/s 73 demanding the amount of refund on the ground that such
a refund is erroneous. Briefly discuss whether the action taken by Assistance Commissioner of Central Excise
is valid in law.
A. It is well settled law that if an order passed by statutory authority is not challenged by way of appeal/revision
or otherwise and the same becomes final, the said order holds the field and the same has to be given full effect
to. Nothing can be done and/or adjudicated, which is in contravention of what has been held in that order. In
overseas Engineers V/s CCEx [2007] [Tri], it was held that where orders sanctioning refund were not appealed
against or reviewed by Department, then, recovery from the appellant of refund paid to him, by issuance of
show cause notice U/s 73 is not tenable/sustainable.
Q9. How to compute period of limitation referred to in Section 73 (10) or Section 74 (10) where an issue on
which the Appellate Authority or the Appellate Tribunal or the High Court has given its decision which is
prejudicial to the interest of the revenue in some other proceedings and an appeal in the Appellate Tribunal or
the High Court or the Supreme Court against such decision is pending?
A. While computing the period of limitation referred to in Section 73 (10) or Section 74 (10), the period spent
between the date of the decision of the Appellate Authority/Appellate Tribunal/High Court and the date of the
decision of the Appellate Tribunal/High Court/Supreme Court as the case may be, shall be excluded.
Q10. What will be the recourse available to the proper officer in case of default in payment of any installment
on its due date by the taxable person?
A. Where there is default in payment of any one installment on its due date by the taxable person, the whole
outstanding balance payable on such date shall become due and payable forthwith, without any further notice.
The proper officer can initiate recovery of dues.
Q11. In case the person does not deposit tax collected in contravention of Section 76, what is the course of
action available to the proper officer?
A. The proper officer shall issue notice requiring him to show cause as to
• Why the amount so collected as tax should not be paid by him to the Government;
• Why a penalty equivalent to the amount specified in the notice should not be imposed on him under the
provisions of the Act; and
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• The proper officer shall adjudicate the matter and issue order within 1 year from the date of issue of the
show cause notice.
Q12. Whether the amount of tax, interest and penalty demanded in the order can exceed the amount specified
in the notice?
A. No. The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount
specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in
the notice.
Q13. Please explain time limit for issue of notice U/s 73 & U/s 74 by giving example.
A. Under Section 73: Let say, in case Mr. A has not paid the tax on a transaction considering it to be exempt for
the tax period of August 2017. The due date of filing annual return for which will be 31st December 2018. The
proper officer may serve the notice at least three months prior to the last date of order of demand.
The order of demand shall be served within 3 years from 31st December 2018 i.e. 31st December 2021.
Therefore, show cause notice shall be required to be served by 30th September, 2021.
Under Section 74: Let say, in case Mr. A has not paid the tax on a transaction for the tax period of August 2017.
The due date of filing annual return for which will be 31st December 2018. The proper officer may serve the
notice at least six months prior to the last date of order of demand
The order of demand shall be served within 5 years from 31st December 2018 i.e. 31st December 2023.
Therefore, show cause notice shall be required to be served by 30th June, 2023.
Q14. Whether proper officer can issue similar show cause notice for any periods other than those covered under
section 73(1)?
A. Yes, it can be issued for subsequent periods on same grounds raised in the show cause notice. The proper
officer may serve a statement under section 73(3) along with a summary electronically in Form GST DRC-02
containing details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or
utilized where the grounds relied upon by the proper officer for such periods are the same as are mentioned in
the earlier notice issued under section 73(1). The service of such statement shall be deemed to be service of
show cause notice on the person chargeable with tax.
Q15. Whether notice for a period of 5 years is valid even if charge of suppression, fraud and misstatement are
not sustained?
A. No, when the allegations of fraud, suppression or misstatement are not established, the notice issued under
section 74 would get covered under section 73 and 3 years’ time would be applicable for date of issue of order.
Q16. What happens when the Notice issued under Section 74(1) is held not sustainable by any Appellate
Authority or Tribunal or Court for the reason that the charges of fraud or any willful misstatement or suppression
of facts to evade tax has not been established?
A. The proper officer shall determine the tax payable by such person deeming as if the Notice were issued
under section 73(1).
Q17. What is the time limit for issue of order in pursuance of the direction of the Appellate Authority or Appellate
Tribunal or a Court?
A. The order shall be issued within 2 years from the date of communication of the said direction.
Q18. What happens in cases where Notice is issued but order has not been passed within 3 years (Section 73)
or 5 years (Section 74)?
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A. The adjudication proceedings shall be deemed to be concluded if the order is not issued within the limitation
period of 3 years under section 73(10) or 5 years under section 74(10), as the case may be.
Q19. Is interest applicable in all cases, even if not specifically mentioned?

A. Yes, interest is applicable whenever the tax is payable whether or not it is specifically mentioned.
Q20. In case the person does not deposit tax collected in contravention of Section 76, is the same recoverable
with interest?
A. Yes. In addition to the amount payable by him, the person is required to pay interest under Section 50 on the
same from the date of collection of the amount till the date such amount is paid to the Government.
Q21. Is there any time limit for issue of notice under section 76 in cases where tax collected but not paid to
Government?
A. No. Notice can be issued on detection of such cases without any time limit. Once show cause notice is issued,
the proper officer shall pass the order within 1 year from the date of issue of such notice.
Q22. How is the amount of surplus left after adjustment with tax payable dealt with?
A. Where any surplus is left after the adjustment against the tax payable, the amount of such surplus shall either
be credited to the Consumer Welfare Fund or, as the case may be, refunded to the person who has borne the
incidence of such amount.
Q23. What happens if the tax demand is not paid within the time limit prescribed under section 78?
A. The proper officer shall initiate recovery proceedings if the tax demand is not paid within 3 months from the
date of service of the order.
Q24. Whether the proper officer can require a taxable person to make payment of tax demand within shorter
period lesser than 3 months?
A. Yes. If it is expedient in the interest of the revenue, the proper officer, after recording reasons in writing, may
require taxable person to make such payment within shorter period as may be prescribed by him.
Q25. What are the methods of recovery as prescribed in Section 79?

A.
— Deduction out of any money owing to defaulter.
— By detaining and selling the goods belonging to defaulter.
— Recovery from any other person who owes money to defaulter.
— Collection by detention of any movable or immovable property.
— Recovery through District Collector.
— Recovery through Magistrate.
Q26. Whether proper officer can allow payment of self-assessed tax in installments U/s 80?
A. No. The proper officer shall have the power to allow payment of any amount due under this Act in installments
on tax other than the self-assessed tax.
Q27. Under which proceedings the property of a taxable person can be provisional attached?
A. Provisional attachment shall be applicable for the following pending proceedings of a taxable person:
(a) Assessment of non-filers of returns. (Section 62)
(b) Assessment of unregistered persons. (Section 63)
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(c) Summary assessment in certain special cases. (Section 64)
(d) Inspection, search and seizure. (Section 67)
(e) Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed
or utilized for any reason other than fraud or any wilful misstatement or suppression of facts. (Section
73)
(f) Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed
or utilized by reason of fraud or any wilful-misstatement or suppression of facts. (Section 74)
During the pendency of any proceedings under section 62, 63, 64, 67, 73 or 74, the Commissioner may pass
an order in Form GST DRC-22 to attach any property including bank account belonging to a taxable person
provisionally for the purpose of protecting the interest of the Government revenue.
Q28. Whether any amount payable by the taxable person under this Act is a first charge on his property?
A. Yes. As per section 82 of CGST Act 2017, notwithstanding anything to the contrary contained in any law for
the time being force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, first charge
shall be on –
a) the property of taxable person in respect of any amount payable by such taxable person, or
b) the property of any other person on account of tax, interest or penalty which he is liable to pay to the
Government.
Q29. In case of recovery of SGST/UTGST by CGST officer in the course of recovery of CGST, where the total
amount recovered is Rs. 5 Crore whereas the amounts due were Rs. 5 Crores of CGST and Rs. 10 Crore of
SGST/UTGST, to which account, the amount recovered would be allocated?
A. Rs. 5 Crores recovered will be allocated between Centre and State/Union Territory in the proportion of 1:2.
Q30. ‘A’ requested the Commissioner to provide the benefit to pay Rs. 5,00,000/- under installments.
Commissioner directs ‘A’ to make the payment in five monthly installments. How to pay the interest?
A. It is assumed that the actual date on which the tax was required to be paid as 06.06.2015. Benefit of
installment was granted by Commissioner on 25.05.2016 to be paid w.e.f. 02.06.2016 onwards over 5
installments.
Payment date Interest to be paid as per section 45 – No Amount on which
of days interest to be paid
1st Installment – 02.06.2016 06.06.2015 to 01.06.2016 = 361 days Rs. 100,000
2nd Installment – 02.07.2016 06.06.2015 to 01.07.2016 = 391 days Rs. 100,000
3rd Installment – 02.08.2016 06.06.2015 to 01.08.2016 = 422 days Rs. 100,000
4th Installment - 02.09.2016 06.06.2015 to 01.09.2016 = 453 days Rs. 100,000
5th Installment – 02.10.2016 06.06.2015 to 01.10.2016 = 483 days Rs. 100,000
Q31. Please provide comment for below with respect to provision U/s 81.
• Mr. Defrauder was served with a notice of demand for Rs. 20 Lakhs on 10th June 2018. He filed a reply
for the said notice on 20th June 2018, stating that he was unable to deposit tax dues as he was
financially stressed. On 15th June 2018, Mr. Defrauder transferred all the property worth Rs. 35 Lakhs
under his name to the name of his wife for a consideration of Rs. 10,000/-. Is this act of Mr. Defrauder
valid?
• In the above illustration, if transfer of property was for a consideration of Rs. 42 Lakhs to Mr. X who is
unaware of the pending proceedings of Mr. Defrauder. The transfer took place on 15th June 2018. Is
the act of Mr. Defrauder valid?
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• On Mr. Perfect, notice was issued on 10th June 2018. However, the same was received by Mr. Perfect
on 20th June, 2018. Meanwhile the property of Mr. Perfect was sold to Mr. Perfectionist for Rs. 35 lakhs.
Is the sale void or valid?
A.
• As per section 81, the said transfer would be void and the property worth Rs. 35 Lakhs would be
considered still to be in the hands of Mr. Defrauder.
• In this case the transaction would be a valid act, since the transfer was made for adequate consideration
and also without notice of the pendency of proceeding.
• The sale is valid since on the date of sale there was no pending proceeding on Mr. Perfect.
Q32. How should the recovery proceedings of enhanced demand under an appeal, revision of application or
other proceedings to be continued U/s 84?
A. In case of enhanced demand consequent to appeal, revision of application or other proceedings, then
• the Commissioner is required to issue fresh notice of demand only for enhance demand.
• If already recovery proceedings of Govt. dues is served on taxable person before disposal of appeal,
revision of application or other proceedings, then the enhanced demand would be merged with the first
recovery proceedings.
Q33. Checkernot has self-assessed tax liability under IGST Act, 2017, as Rs. 80,000. He fails to pay the tax
within 30 days from the due date of payment of such tax.
Determine the interest and penalty payable by him explaining the provisions of law, with the following particulars
available from his records:
Date of collection of tax 18th December, 2017
Date of payment of tax 26th February, 2018
No Show Cause Notice (SCN) has been issued to him so far, while he intends to discharge his liability, even
before it is issued to him, on the assumption that no penalty is leviable on him as payment is made before issue
of SCN. (CA Final May 2018 Old)
A. Due date for payment of tax collected on 18.12.2017 is 20.01.2018. However, since tax is actually paid on
26.02.2018, interest @ 18% p.a. is payable for the period for which the tax remains unpaid [37 days] in terms
of section 50 of CGST Act, 2017 read with Notification No. 13/2017 CT Dated 28.06.2017.
Amount of interest is: = Rs. 80,000 × 18% × 37/365 = Rs. 1,460 (rounded off)
As per section 73(11) of CGST Act, 2017, where self-assessed tax/any amount collected as tax is not paid
within 30 days from due date of payment of tax, then, inter alia, option to pay such tax before issuance of SCN
to avoid penalty, is not available.
Consequently, penalty equivalent to
(i) 10% of tax, viz., Rs. 8,000 or
(ii) Rs. 10,000,
whichever is higher,
is payable in terms of section 73(9) of CGST Act, 2017. Therefore, penalty of Rs. 10,000 will have to be paid
by Checkernot.
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Section 85 Liability to pay in case of transfer of business

Section 86 Liability of agent and principal
Section 87 Liability to pay in case of an amalgamation/merger
Section 88 Liability in case of company in liquidation
Section 89 Liability of directors of private company
Section 90 Liability of partners of firm to pay tax
Section 91 Liability of guardians, trustees etc.
Section 92 Liability of Court of Wards etc.
Section 93 Special provisions regarding liability to pay tax, interest or penalty in
certain cases
Section 94 Liability in other cases
Section 85 Liability to pay in case of transfer of business

Prior to transfer of business Post transfer of business
In respect of liability of tax, interest or penalty arising In respect of liability arising post transfer, the
prior to transfer of business, the transferor and transferee liable for tax dues. Further, if he is a
transferee shall be jointly and severally liable. registered person under this Act, apply within the
prescribed time for amendment of his certificate of
registration.
Interestingly, even penal liability, which is quasi-criminal in nature, is sought to be fastened on transferee,
although he would not have been responsible for the non-payment of tax, interest or penalty liability by the
transferor prior to transfer of such business. Thus, a person to whom the business is transferred needs to be
very cautious at the time of transfer.
Section 86 Liability of agent & principal

Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his principal
shall, jointly and severally, be liable to pay the tax payable on such goods under this Act.
Section 87 Liability in case of amalgamation or merger of

companies
If merger is effective from retrospective date, then, transactions between amalgamating/merging companies
and amalgamated/merged company during the period from ‘effective date of merger’ to ‘date of order upholding
merger’ shall be taxable and for this, companies are deemed to be separate.
Example 1: if merger order is passed on 1-9-2017 and merger takes effect from 1-5-2017, then, transactions
during May 2017 to August 2017 between the said companies would be taxable.
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Section 88 Liability in case of company in liquidation

The liquidator of company is required to give intimation of his appointment to Commissioner within 30 days after
his appointment. The Commissioner shall notify the liquidator within 3 months from the date on which he
receives intimation the amount which in the opinion of the Commissioner would be sufficient to provide for any
tax, interest or penalty which is then, or it likely thereafter to become, payable by the company.
When any private company is wound up and any tax, interest or penalty determined under this Act on the
company for any period, whether before or in the course of or after its liquidation, cannot be recovered, then
every person who was a director of such company at any time during the period for which the tax was due shall,
jointly and severally, be liable for the payment of such tax, interest or penalty.
The director of a private company shall not be held liable if he proves to the satisfaction of the Commissioner
that such non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in
relation to the affairs of the company.
Section 89 Liability of directors of private company

Directors shall be jointly and severally liable in case tax dues cannot be recovered from company unless the
director proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty
on his part in relation to the affairs of the company. In case of conversion of private company into public
company, then, this section will not apply for dues arising prior to such conversion. However, any personal
penalty imposed on such director will not be affected and can continue.
Section 90 Liability of partners of firm to pay tax

Where any firm is liable to pay any tax, interest or penalty under this Act, the firm and each of the partners of
the firm shall, jointly and severally, be liable for such payment. Where any partner retires from the firm, he or
the firm, has to intimate the date of retirement of partner to the Commissioner and such partner shall be liable
to pay tax, interest or penalty due up to the date of his retirement whether determined or not, on that date.
If no such intimation is given within one month from the date of retirement, the liability of such partner under the
first proviso shall continue until the date on which such intimation is received by Commissioner.
Section 91 Liability of guardians, trustees, etc.

If business is carried on for the benefit of a minor or incapacitated person, Guardian/Trustee/Agent will be liable
to pay tax. Guardian, trustee or agent liable in like manner as minor or other incapacitated person is liable. The
dues are recoverable from the guardian, trustee or agent in respect of business of the minor or other
incapacitated person by treating them as major or capacitated person, who is conducting the business for
himself.
Section 92 Liability of Court of wards, etc.

Where the estate or any portion of the estate of a taxable person owning a business in respect of which any
tax, interest or penalty is payable under this Act is under the control of the Court of Wards, the Administrator
General, the Official Trustee or any receiver or manager (including any person, whatever be his designation,
332
who in fact manages the business) appointed by or under any order of a court, the tax, interest or penalty shall
be levied upon and be recoverable from such Court of Wards, Administrator General, Official Trustee, receiver
or manager in like manner and to the same extent as it would be determined and be recoverable from the
taxable person as if her were conducting the business himself, and all the provisions of this Act or the rules
made thereunder shall apply accordingly.
Example 2: Mr. A is appointed as manager of Mr. X, to manage the estate of Mr. X, who owns an automotive
business. Mr. X is liable to pay Rs. 10,00,000 of CGST & Rs. 5,00,000 of SGST along with interest and penalty
to the Government. The department can recover such dues from Mr. A who is managing the estates of Mr. X,
by invoking this provision.
Section 93 Special provisions regarding liability to pay tax,

interest or penalty in certain cases
(1) Liability in case of death of individual: Save as otherwise provided in the Insolvency and Bankruptcy
Code, 2016, where a person, liable to pay tax, interest or penalty under this Act, dies, then –
a. In case of continuation of business: person who continues the business shall be liable to pay
tax, interest or penalty due from such person under this Act; and
b. In case of discontinuation of business before or after his death: Legal representative is liable to
pay tax, interest or penalty and the liability shall be limited to the extent of estate of deceased.
(2) In case of partition of HUF or AOP: Members or group of members shall be jointly or severally liable to
pay the tax, interest or penalty due from the taxable person.
(3) In case of dissolution of firm: Partners of the firm at the time of dissolution shall be jointly and severally
liable to pay the tax, interest or penalty due from the firm.
(4) In case of termination of Guardianship or Trusteeship: The ward or the beneficiary shall be liable to
pay the tax, interest or penalty due from the taxable person upto the time of the termination of the
guardianship or trust, whether such tax, interest or penalty has been determined before the termination
of guardianship or trust but has remained unpaid or is determined thereafter.
Section 94 Liability in other cases

a. Where business is discontinued the tax, interest or penalty payable under this Act by firm, association
or family up to the date of such discontinuance may be determined as if no such discontinuance had
taken place; and every person who, at the time of such discontinuance, was a partner of such firm, or
a member of such association or family, shall, notwithstanding such discontinuance, jointly and
severally, be liable for the payment of tax and interest determined and penalty imposed and payable by
such firm, association or family, whether such tax and interest has been determined or penalty imposed
prior to or after such discontinuance and subject as aforesaid, the provisions of this Act shall, so far as
may be, apply as if every such person or partner or member were himself a taxable person. [In short,
erstwhile members/partners are liable to pay dues upto date of discontinuance/dissolution]
b. There will be Joint & several liability of partners of firm or member of AOP in case of change in
constitution of firm/AOP.
Explanation: For the purpose of this chapter:
I. Wherever the word “Firm” is used in this chapter, it shall include the LLP registered under Limited
Liability Partnership Act, 2008.
II. “court” means the district court, high court or supreme court.
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Question & Answer

Q1. A person, liable to pay GST, interest and penalty under GST Act, dies. Who will be liable to pay his dues
after his death if business carried on by such person legal representative or business carried on by such person
who has dies, is discontinued after his death?
A. As per Section 93, if a business carried on by the person is continued after his death by his legal
representative or any other person, such legal representative or other person, shall be liable to pay tax, interest
or penalty due from such person under this Act, whether such tax, interest or penalty has been determined
before his death but has remained unpaid or is determined after his death.
If a business carried on by the person is discontinued, whether before or after his death, his legal representative
shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting
the charge, the tax, interest or penalty due from such person under this Act, whether such tax, interest or penalty
has been determined before his death but has remained unpaid or is determined after his death.
Q2. ABC Ltd. engages XYZ Ltd. as an agent to sell goods on its behalf. XYZ Ltd. sells goods to DEF Ltd. on
behalf of ABC Ltd. Who will be liable U/s 86?
A. Where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his principal
shall, jointly and severally, be liable to pay the tax payable on such goods under this Act. Thus, in the given
case, ABC Ltd. and XYZ Ltd. shall, jointly and severally, be liable to pay GST payable on such goods.
Q3. Whether the minor for whom the business is carried out by Guardian can escape liability on the ground of
minority of the beneficiary?
A. The minor is deemed to be a major for the purposes of collection of any tax/interest/penalties arising out of
the business carried out for him. Hence the general principle of law has no application and the Guardian, Trustee
or Agent cannot escape such liability.
Q4. Who is liable to pay tax dues if the estate of a taxable person is controlled by Court of Wards?
A. The dues are recoverable from the Court of Wards as if he is conducting the business for himself. Mr. Amit
Roy is appointed as manager of Mr. Sumit, to manage the estate of Mr. Sumit, who owns the business of
glasses. Mr. Sumit is liable to pay Rs. 10 Lakhs of GST, interest & penalty to the Government. The department
can recover such dues from Mr. Amit Roy who is managing the estates of Mr. Sumit by invoking Section 92.
Q5. Whether the director of a Private Limited Company is liable for the payment of tax in respect of the supply
made by or to such Private Company?
A. Yes. Every director of the private company during the period for which. tax, interest or penalty due in respect
of any supply of goods or services or both, is not recovered shall jointly and severally be liable for the payment
of such tax, interest or penalty, unless he proves that the non-recovery cannot be attributed to any gross neglect,
misfeasance or breach of duty on his part in relation to the affairs of the Company.
Q6. Whether the liability of the director still exists if such Private Limited Company is converted into Public
Limited Company?
A. No. If a Private Limited Company is converted into a Public Limited Company, then the provisions of this
section do not apply. However, any other personal penalty could be imposed on the Director.
Q7. Whether the retiring partner is liable in respect of the transactions taken place after his retirement?
A. No. The Retiring partner is not liable for the transactions taken place after his retirement provided he or the
firm intimates to the Commissioner by a notice in writing of his retirement within one month from the date of
retirement.
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Section 122 Penalty for certain offences

Section 123 Penalty for failure to furnish information return
Section 124 Fine for failure to furnish information return
Section 125 General penalty
Section 126 General disciplines related to penalty
Section 127 Power to impose penalty in certain cases
Section 128 Power to waive penalty or fee or both
Section 129 Detention, seizure and release of goods and conveyances in transit
Section 130 Confiscation of goods or conveyances and levy of penalty
Section 131 Confiscation or penalty not to interfere with other punishments
Section 132 Punishments for certain offences
Section 133 Liability of officers and certain other person
Section 134 Cognizance of offences
Section 135 Presumption of culpable mental state
Section 136 Relevancy of statements under certain circumstances
Section 137 Offences by companies
Section 138 Compounding of offences
Section 122 Penalty for certain offences

Sec. 122 (1) he shall be liable to pay a penalty
Where a taxable person who- of
(i) supplies any goods or services or both without issue of any • Rs. 10,000 (Rs. 20,000
invoice or issues an incorrect or false invoice with regard to CGST+SGST/IGST) or
any such supply; • Any of the following: -
(ii) issues any invoice or bill without supply of goods or services or a. Tax evaded
both in violation of the provisions of this Act or the rules made b. ITC availed or
thereunder; passed on or
(iii) collects any amount as tax but fails to pay the same to the distributed
Government beyond a period of three months from the date irregularly
on which such payment becomes due; c. TDS not
(iv) collects any tax in contravention of the provisions of this Act deducted/short
but fails to pay the same to the Government beyond a period deducted/not
of three months from the date on which such payment deposited to
becomes due; Government
(v) fails to deduct the tax in accordance with the provisions of sub- d. TCS not
section (1) of section 51, or deducts an amount which is less collected/short
than the amount required to be deducted under the said sub- collected/not
section, or where he fails to pay to the Government under deposited to
subsection (2) thereof, the amount deducted as tax; Government
(vi) fails to collect tax in accordance with the provisions of sub- e. refund claimed
section (1) of section 52, or collects an amount which is less fraudulently
than the amount required to be collected under the said sub- whichever is higher
section or where he fails to pay to the Government the amount
collected as tax under sub-section (3) of section 52;
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(vii) takes or utilises input tax credit without actual receipt of goods
or services or both either fully or partially, in contravention of
the provisions of this Act or the rules made thereunder;
(viii) fraudulently obtains refund of tax under this Act;
(ix) takes or distributes input tax credit in contravention of section
20, or the rules made thereunder;
(x) falsifies or substitutes financial records or produces fake
accounts or documents or furnishes any false information or
return with an intention to evade payment of tax due under this
Act;
(xi) is liable to be registered under this Act but fails to obtain
registration;
(xii) furnishes any false information with regard to registration
particulars, either at the time of applying for registration, or
subsequently;
(xiii) obstructs or prevents any officer in discharge of his duties
under this Act;
(xiv) transports any taxable goods without the cover of documents
as may be specified in this behalf;
(xv) suppresses his turnover leading to evasion of tax under this
Act;
(xvi) fails to keep, maintain or retain books of account and other
documents in accordance with the provisions of this Act or the
rules made thereunder;
(xvii) fails to furnish information or documents called for by an
officer in accordance with the provisions of this Act or the rules
made thereunder or furnishes false information or documents
during any proceedings under this Act;
(xviii) supplies, transports or stores any goods which he has
reasons to believe are liable to confiscation under this Act;
(xix) issues any invoice or document by using the registration
number of another registered person;
(xx) tampers with, or destroys any material evidence or document;
(xxi) disposes off or tampers with any goods that have been
detained, seized, or attached under this Act,
Example:
1. ABC issues an invoice of 100 kg of chocolates for a consignment of 250 kg of chocolates. If such
consignment is caught by the tax authorities and misdeclaration is verified, then ABC, shall be liable
to pay penalty.
2. Mr. A supplied goods on 05.08.2018 and issued a tax invoice accordingly, for which payment was
also received in the same month. In this case, the due date for payment of tax on such supply of
goods will be 20.09.2018 (i.e. the due date for filing return for the month of August 2018). Mr. A is
obligated to make the payment of tax by 20.12.2018 for refraining from payment of penalty. However,
he shall continue to be liable to pay interest @ 18% p.a. for delayed payment of tax starting from the
date following the due date of payment, till the date of payment.
3. Mr. B is engaged in trading of goods, collects tax at the rate of 28% from the buyer, whereas the
actual tax rate is 18%. He deposited tax at 18% to the exchequer. Here, the differential tax of 10%
collected by Mr. B, but not deposited to government, cannot be retained by it. Penalty U/s 122 (1)
can be levied in such case. Further, interest @ 18% p.a. for delayed payment of tax starting from the
date following the due date of payment, till the date of payment, shall also be leviable.
4. Mr. A engaged in inter-State supply of various taxable goods. In terms of Section 24 (i), Mr. A is
mandatorily required to take registration in GST but fails to take registration under GST even after
30 days of conducting business. In such case, he shall be liable to penalty U/s 122 (1).
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5. XYZ Ltd. has various warehouses through which they supply goods to their customers, but such
warehouses have not been declared as additional place of business in their registration. XYZ Ltd.
shall be liable to penalty under this clause.
Sec. 122 (2) • Penalty Rs. 10,000 or 10%
Any registered person who supplies any goods or services or both on of tax involved, whichever
which tax has not been paid or short-paid or erroneously refunded, or is higher
where the ITC has been wrongly availed or utilized • In case of fraud/wilful
misstatement/suppressions
of facts to evade tax
Penalty Rs. 10,000 or
100% of the tax amount,
whichever is higher
Sec. 122 (3)
Any person who-
a) Aids or abets offences specified U/s 122 (1) Amount which may extent
b) Acquires possession of, or in any way concerns himself in to Rs. 25,000
transporting, removing, depositing, keeping, concealing,
supplying, or purchasing or in any other manner deals with any
goods which he knows or has reasons to believe are liable to
confiscation under this Act or the rules made thereunder;
c) Receives or is in any way concerned with the supply of, or in
any other manner deals with any supply of services which he
knows or has reasons to believe are in contravention of any
provisions of this Act or the rules made thereunder;
d) Fails to appear before the officer of central tax, when issued
with a summon for appearance to give evidence or produce a
document in an inquiry;
e) Fails to issue invoice in accordance with the provisions of this
Act or the rules made thereunder or fails to account for an
invoice in his books of account,
Section 123 Penalty for failure to furnish information return

Section 124 Fine for failure to furnish information return
Section 125 General Penalty
Sec. 123
Failure to furnish information return with the period Rs. 100 for each day of the period during which the
as specified in notice failure to furnish information return continues subject
to maximum of Rs. 5,000
Sec. 124
Fails to furnish statistics without reasonable • Rs. 10,000
cause/wilfully furnishes or causes to furnish false • In continuing offence Rs. 100 per day
information subject to maximum of Rs. 25,000
Sec. 125
Contravention for which no penalty is provided Amount which may extent to Rs. 25,000
separately
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Section 126 General disciplines related to penalty

I. Penalty shall not to be imposed for minor breaches or omission or mistake in documentation made
without fraudulent intent or gross negligence. A breach shall be considered a ‘minor breach’ if the
amount of tax involved is less than Rs. 5,000. An omission or mistake in documentation shall be
considered to be easily rectifiable if the same is an error apparent on the face of record.
II. Penalty imposed shall depend on the facts and circumstances of each case and shall be commensurate
with the degree and severity of the breach. No penalty shall be imposed on any person without giving
him an opportunity of being heard. Penalty order must clearly specify the nature of breach.
Voluntary disclosure to be a mitigating factor when quantifying a penalty. The provision of this section
shall not apply in such cases where the penalty specified under this Act is either a fixed sum or
expressed as a fixed percentage.
Section 127 Power to impose penalty in certain cases

Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under
any proceedings under section 62 or section 63 or section 64 or section 73 or section 74 or section 129 or
section 130, he may issue an order levying such penalty after giving a reasonable opportunity of being heard to
such person.
Section 128 Power to waive penalty or fee or both

The Government may, by notification, waive in part or full, any penalty referred to in section 122 or section 123
or section 125 or any late fee referred to in section 47 for such class of taxpayers and under such mitigating
circumstances as may be specified therein on the recommendations of the Council.
Section 129 Detention, seizure and release of goods and

conveyances in transit
If a person contravenes any provision of the Act while transporting or storing goods, then such goods and the
conveyance in which such goods are carried and all the documents relating to such goods and conveyance can
be detained or seized. The proper officer detaining and seizing the goods and/or conveyance has to give proper
opportunity to the transporter to explain his case by issuing a proper notice to him. After hearing the transporter,
the officer shall pass an appropriate order.
(a) In case of default, where the owner of the goods comes forward for the payment of tax, penalty
will be levied equal to
• 100% of the amount of tax and
• in case of exempted goods 2% of the value of goods or Rs. 25,000/- whichever is less.
(b) In case where owner of the goods does not come forward for payment of tax, then an order
shall be passed for
• payment of amount of tax and penalty equal to 50% of the value of goods reduced by
tax amount paid (to be paid by any other person other than owner) and
• in case of exempted goods 5% of the value of goods or Rs. 25,000/- whichever is less.
(c) Upon furnishing a security equivalent to the amount payable under above clause (a) or (b) in
such form and manner as may be prescribed.
The proper officer shall release the goods upon the payment of tax and amount of penalty in the above manner
and all the proceedings under this particular section shall deemed to be concluded. However, if the person
(either owner of the goods or any other person) fails to discharge the amount of tax and penalty under this
section within 7 14 days, than the goods and/or conveyance shall be liable for confiscation (proceedings U/s
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130). The period of 7 14 days can be reduced by proper officer if goods are of perishable or hazardous nature.
Further, such goods can be released on provisional basis under bond as per the provisions of section 67.
Circular No. 76/50/2018 – Central Tax Dated 31.12.2018 clarifies that if the invoice or any other specified
document is accompanying the consignment of goods, then either the consignor or the consignee should be
deemed to be the owner. But if the invoice or any other specified document is not accompanying the
consignment of goods, then in such cases, the proper officer should determine who should be declared as the
owner of the goods.
Example 6: Mr. A (owner), a registered taxable person is getting its goods (taxable @ 18%) amounting to Rs.
10,00,000 (exclusive of GST) transported, without cover of an invoice and an e-way bill.
In this case, the said goods and the vehicle carrying such goods shall be liable to detention or seizure. If detained
or seized, the goods of Mr. A would be released on payment of the following amounts:-
(a) Where Mr. A, comes forward for the payment of tax and penalty:
Applicable tax (Rs. 10,00,000 * 18%) Rs. 1,80,000
Penalty equal to 100% of the tax payable on the subjected goods Rs. 1,80,000
Total Rs. 3,60,000
(b) Where Mr. A, doesn’t come forward for the payment of tax and penalty:
Applicable tax (Rs. 10,00,000 * 18%) Rs. 1,80,000
Penalty equal to 50% of the value of the subjected goods reduced by the tax Rs. 3,20,000
amount paid thereon (i.e. 50% of Rs. 10,00,000 less Rs. 1,80,000)
Total Rs. 5,00,000
Section 130 Confiscation of goods or conveyances and levy of

penalty
This section provides for specific causes leading to confiscation of goods/conveyances. The nature of
authorization to confiscate and opportunity to release goods/conveyances liable for such confiscation are
detailed in this section.
There are five precise causes for confiscation of goods and/or conveyances specified in this section and they
are:
Action Consequence
Supply or receive goods in contravention of the Act or rules made Resulting in actual evasion of tax
thereunder
Not accounting for goods Carrying a liability to payment of tax
Supply of goods liable to tax Without applying registration
Contravention of the provisions of Act or rules made thereunder With intent to evade payment of tax
Use of conveyance as a means of transport/for carriage of taxable In contravention of the Act or rules made
goods thereunder
In all the above cases, goods or conveyance shall be liable for confiscation. However, the conveyance shall not
be confiscated where the owner of the conveyance proves that it is without the connivance of owner himself,
his agent or person in charge of the conveyance. Further, the person shall be liable to pay penalty under section
122 of the Act.
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If the goods or conveyance are liable to be confiscated under the provisions of this Act, the proper officer shall
give the owner of the goods an option to pay fine in lieu of confiscation.
The amount of fine shall not exceed the market value of goods as reduced by the amount of tax payable thereon.
However, at the same time aggregate of fine and penalty leviable shall not be less than the amount of penalty
as leviable under section 129(1). While section 129 is applicable on transporters, section 130 primarily covers
the owner.
Where the conveyance is used for transportation of goods or passenger on hire, the owner of the conveyance
shall be given an option to pay in lieu of confiscation of the conveyance a fine equal to amount of tax payable
on the goods transported on his conveyance. It is worthwhile to note that the amount of fine payable is in addition
to any tax, penalty and other charges payable on confiscated goods or conveyance.
The order for confiscation cannot be issued without giving the person an opportunity of being heard.
The title of the confiscated goods or conveyance shall be vested upon the Government.
The proper officer adjudging confiscation shall take and hold possession of the things confiscated on behalf of
the Government and every officer of police shall assist in taking such hold and possession.
If the proper officer is satisfied that the confiscated goods/conveyance are not required for any proceedings
under the Act, then he shall after giving reasonable time not exceeding 3 months to pay fine in lieu of
confiscation, dispose the goods and deposit the sale proceeds with the Government.
Section 131 Confiscation or penalty not to interfere with other

punishments
Without prejudice to the provisions contained in the Code of Criminal Procedure, 1973, no confiscation made
or penalty imposed under the provisions of this Act or the rules made thereunder shall prevent the infliction of
any other punishment to which the person affected thereby is liable under the provisions of this Act or under
any other law for the time being in force.
Such other proceedings can be that of prosecution (commencement of criminal proceeding), arrest, cancellation
of registration etc., as applicable and provided for the relevant non-compliances. Thus, confiscation made, or
penalty imposed cannot relieve the person from other punishments, as may be applicable.
Section 132 Punishment for certain offences

(1) Whoever commits any of the following offences, namely:
(a) Supply of goods or services or both without the cover of invoice with an intent to evade tax;
(b) If any person issues any invoice or bill without actual supply of goods or services or both leading to
wrongful input tax credit or refund of tax;
(c) Any person who avails input tax credit using invoice referred in point (b) above;
(d) Collection of taxes without payment to the government for a period beyond 3 months of due date;
(e) Evasion of tax, availment of credit or obtaining refund with intent of fraud where such offence is not
covered in clause (a) to (d) above;
(f) Falsifying financial records or production of false records/ accounts/ documents/ information with an
intent to evade tax;
(g) Obstructs or prevents any officer from doing his duties under the act;
(h) Acquires or transports or in any manner or deals with any goods which he knows or has reasons to
believe are liable for confiscation under this Act or rules made thereunder;
(i) Receives or in any way, deals with any supply of services which he knows or has reason to believe
are in contravention of any provisions of this law;
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(j) Tampers with or destroys any material evidence or documents;
(k) Fails to supply any information which he is required to supply under this law or supply false information;
(l) Attempts or abets the commission of any of the offences mention above {clauses (a) to (k) of this
section.
This section enables institution of prosecution proceedings against the offenders and the period of imprisonment
and quantum of fine varies depending on the amount of tax evaded or seriousness of the offence listed below.
Amount of Tax evaded/ erroneous refund/ wrong ITC availed or utilized Fine Imprisonment
(i) Exceeding 5 Crores Yes Upto 5 years
(ii) Exceeding 2 Crores to 5 Crores Yes Upto 3 years
(iii) Exceeding 1 Crores to 2 Crores Yes Upto 1 year
If any person commits any offence specified in clause (f), (g) or (j) above, he shall be punishable with
imprisonment for a term which may extend to six months or with fine or with both.
In case of repetitive offences without any specific/special reason which is recorded in the judgment of the Court
will entail an imprisonment term of not less than 6 months and which could extend to 5 years plus with a fine.
The Imprisonment referred to in clauses (i), (ii) & (iii) and repetitive offences, in the absence of special and
adequate reasons to the contrary to be recorded in the judgment of Court, be for a term not less than six months.
All offences mentioned in this section are non-cognizable and bailable except the following cases:
• Where the amount exceeds 5 Crores and
• Instances covered by (a) to (d) in sub section (1) above.
Every prosecution proceeding initiated requires prior sanction of the Commissioner.
Section 133 Liability of officers and certain other persons

Where –
• any person engaged in collection of statistics or compilation or computerisation thereof
• if officer having access to Annual Information Return, or
• if any person engaged in provision of service on common portal or agent of common portal,
wilfully disclosed any information or the contents of any return furnished under this Act or rules made there
under (otherwise than in execution of his duties or for prosecution for an offence), he shall be punishable with
imprisonment for a term which may extend to 6 months or with fine which may extend to Rs. 25,000, or with
both.
Section 134 Cognizance of offences

No court shall take cognizance of any offence punishable under this Act or the rules made thereunder except
with the previous sanction of the Commissioner, and no court inferior to that of a Magistrate of the First Class,
shall try any such offence.
Section 135 Presumption of culpable mental state

In any prosecution for an offence under this Act which requires a culpable mental state on the part of the
accused, the court shall presume the existence of such mental state but it shall be a defence for the accused
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to prove the fact that he had no such mental state with respect to the act charged as an offence in that
prosecution.
Explanation.—For the purposes of this section,–
(i) the expression “culpable mental state” includes intention, motive, knowledge of a fact, and belief in, or reason
to believe, a fact;
(ii) a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely
when its existence is established by a preponderance of probability.
Now, once the law has stated that in case of any prosecution which requires the existence of a culpable mental
state, the Court would presume the existence of it.
Under the old revenue laws, the burden to prove was on the one who alleges it. The Hon’ble Supreme Court in
the case of Uniworth Textiles Limited vs. Commissioner of Central Excise, Raipur [(2013) 31 taxmann.com 67
(SC)] stated that “Burden to prove invocation of extended period on Department. The assessee cannot be asked
to bring evidence to prove his bona fide. Similarly it is a cardinal postulate of law that the burden of proving any
form of mala fide lies on the shoulders of the one alleging it.”
The accused can prove that he had no such mental state in respect of a particular act for which he is charged.
The expression “Culpable Mental State” is defined inclusively to cover “intent, motive, knowledge of fact, belief
in or reason to believe”. It also covers facts which exist beyond a reasonable doubt and not based on
probabilities.
Hence, a very landmark judgement of the Hon’ble Supreme Court would lose its relevance in the cases covered
by this section.
Section 136 Relevancy of statements under certain circumstances

Statement made and signed by a person on appearance in response to any summons issued U/s 70 shall be
valid in prosecution proceedings when the person who made the statement is dead or cannot be found, or is
incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be
obtained without an amount of delay or expense which, under the circumstances of the case, the court considers
unreasonable; or when the person who made the statement is examined as a witness in the case before the
court and the court is of the opinion that, having regard to the circumstances of the case, the statement should
be admitted in evidence in the interest of justice.
Section 137 Offences by companies

Where an offence committed by a company, every person who, at the time the offence was committed was in
charge of, and was responsible to, the company for the conduct of business of the company, as well as the
company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished
accordingly.
Where it is proved that the offence has been committed with the consent or connivance of, or it attributable to
any negligence on the part of, any director, manager, secretary, or other officer of the company, they shall also
be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Offences by LLP/Firm/HUF/Trust: Partner or Karta or managing trustee shall be liable to be proceeded against
and punished accordingly.
Section 138 Compounding of offences

(1) Compounding of offences by the Commissioner [Sec. 138 (1)]: Any offence under this Act may, either
before or after the institution of prosecution, be compounded by the Commissioner on payment by the
person accused of the offence, to the Central Government or the State Government, as the case be, of
such compounding amount in such manner as may be prescribed.
Cases, where compounding is not possible: Nothing contained in this section shall apply to
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a. a person who has been allowed to compound once in respect of any of the offences specified
in Sec. 132 (1) (a) to (f) and the offences specified in clause (I) which are relatable to offences
specified in clauses (a) to (f) of the said sub-section;
b. a person who has been allowed to compound once in respect of any offence, other than those
in clause (a), under this Act or under the provisions of any SGST Act of the UTGST Act of the
IGST Act in respect of supplies of value exceeding Rs. 1 crores;
c. a person who has been accused of committing an offence under this Act which is also an
offence under any other law for the time being in force;
d. a person who has been convicted for an offence under this Act by a court;
e. a person who has been accused of committing an offence specified in Section 132 (1)(g)/(j)/(k);
and
f. any other class of persons or offences as may be prescribed.
Compounding not to affect proceedings instituted under other law: Any compounding allowed under the
provisioning of this section shall not affect the proceedings, if any, instituted under any other law.
Tax/Interest/Penalty to be paid before compounding: Compounding shall be allowed only after making
payment of tax, interest and penalty involved in such offences.
(2) Compounding amount [Section 138 (2)]: The amount for compounding of offences under this section
shall be such as may be prescribed, subject to –
a. The minimum limit for compounding amount is to be the higher of the following amounts:
• 50% of tax involved, or
• Rs. 10,000 (Rs. 20,000 CGST+SGST/IGST).
b. The upper limit for compounding amount is to be higher of the following amount:
• 150% of tax involved, or
• Rs. 30,000 (Rs. 60,000 CGST+SGST/IGST).
(3) Abatement of proceedings and non-initiation of criminal proceedings [Section 138 (3)]: On payment of
such compounding amount as may be determined by the Commissioner, no further proceedings shall
be initiated under this Act against the accused person in respect of the same offence and any criminal
proceedings, if already initiated in respect of the said offence, shall stand abated.
Example 7: Suppose, the amount of tax involved is Rs. 90,000. In this case, the minimum and maximum
amount to be paid for compounding for offence will be calculated as under:-
• Minimum amount: Higher of Rs. 20,000 or Rs. 45,000 (50% of Rs. 90,000)
• Maximum amount: Higher of Rs. 60,000 or Rs. 1,35,000 (150% of Rs. 90,000)
Please remember penalty specified in CGST Act, is only for CGST Act. So, SGST/UTGST
will be equivalent to CGST & IGST will be double.
Question & Answer

Q1. Mr. A, an unregistered person under GST purchases the goods supplied by Mr. B who is a registered person
without receiving a tax invoice from Mr. B and thus helps in tax evasion by Mr. B. What action may be taken by
tax authorities to curb such type of cases and on whom?
A. Both Mr. A & Mr. B will be liable to penalty as:
Mr. A, penalty U/s 122 (3) which may extend to Rs. 25,000 (under CGST Act);
Mr. B, penalty U/s 122 (1), which will be higher of Rs. 10,000 (under CGST Act) or 100% of tax evaded.
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Q2. What is the difference between the penalty under sub-section (1) and (3) of sec. 122?
A. Apart from the amount of penalty & nature of offences, U/s 122 (1) penalty is imposed on a taxable person
whereas in U/s 122 (3), penalty is imposed on any person who may or may not be a taxable person.
Q3. What is the general penalty which can be levied for any violation for which no specific penalty has been
prescribed?
A. Section 125 of the GST Act prescribes penalty of rupees twenty-five thousand for all those violations of
provisions of the Act or any rules for which no penalty is separately provided for under the Act.
Q4. When breach of law will be considered as a minor breach and easily rectifiable mistakes?
A. As per explanation to sub-section (1) of section 126 of the GST Act, provides that a ‘minor breach’ shall be
considered as minor breach if the amount of tax involved is less than Rs. 5,000. An omission or mistake in
documentation will be considered to be ‘easily rectifiable’ if the same is an error apparent on record.
Q5. I am collecting tax on supply of goods & services and did not remit the same within 3 months to the
Government. Does the same attract penalty? If yes, what is the amount of penalty?
A. Collection of tax and non-remittance of the same within 3 months to the Government from the due date for
remittance is considered to be an offence under Section 122 (1) (iii) of the CGST Act, 2017 attracting penalty
of (a) an amount equal to the tax so collected or (b) an Rs. 10,000 (whichever is higher).
Q6. Whether prosecution or other punishments could also be initiated along with confiscation or penalty?
A. In terms of section 131 confiscation made or penalty imposed under the provisions of this Act or the rules
made thereunder shall not prevent the infliction of any other punishment to which the person affected thereby
is liable under the provisions of this Act or under any other law.
Q7. Mr. A has collected tax on supply of exempted goods and did not remit the tax so collected to the
Government account. Would Mr. A, be liable to penal and other consequences?
Ans. Yes, in terms of Section 122(1) (iv) of the CGST Act, 2017, collection of tax in contravention to the
provisions of the CGST Act, 2017 and subsequent failure to remit the same to the credit of the Government
beyond a period of 3 months from the date on which such payment becomes due is an offence attracting penalty
of Rs. 10,000/- or amount equal to the amount of tax so collected, whichever is higher.
Further, in terms of Section 132(1) (d) read with Section 132(1) (I) of the CGST Act, 2017, the said offence
attracts imprisonment which may extend from 1year to 5 years based on the quantum of tax evasion.
Q8. What is the penalty prescribed for a person who opts for composition scheme despite being ineligible for
the said scheme?
Ans. Section 10(5) of the CGST Act provides that if a person who has paid under composition levy is found
as not being eligible for compounding then such person shall be liable to penalty to an amount equivalent to
the tax payable by him under the provisions of the Act i.e. as a normal taxable person and that this penalty shall
be in addition to the tax payable by him.
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Section 107 Appeals to Appellate Authority

Section 108 Powers of Revisional Authority
Section 109 Constitution of Appellate Tribunal and Benches thereof
Section 110 President and Members of Appellate Tribunal, their qualification,
appointment, conditions of service, etc.
Section 111 Procedure before Appellate Tribunal
Section 112 Appeals to Appellate Tribunal
Section 113 Orders of Appellate Tribunal
Section 114 Financial and administrative powers of President
Section 115 Interest on refund of amount paid for admission of appeal
Section 116 Appearance by authorized representative
Section 117 Appeal to the High Court
Section 118 Appeal to the Supreme Court
Section 119 Sums due to be paid notwithstanding appeal etc.
Section 120 Appeal not to be filed in certain case
Section 121 Non-appealable decisions and orders
Brief chart showing Appellate Mechanism under indirect taxes
Description Appellate Revisional Appellate High Court Supreme Court

Authority Authority Tribunal
Section 107 108 112 117 118
Appeal can be Order of Suo Motu Against order of Order of Order of
filed against Adjudicating Revision (a) Appellate State/Area National/Region
Authority Authority or bench of al bench of
(b) Revisional Tribunal (If Tribunal and
Authority case involves against orders
substantial of HC if HC
question of certifies fit case
law) for appeal to
SC
Departmental Department can NA Department can Order of Order of
Appeal file appeal after file appeal on state/Area National/Region
review by review of bench of al bench of
Commissioner Commissioner Tribunal (If Tribunal and
case involves against orders
substantial of HC if HC
question of certifies fit case
law) for appeal to
SC
Place of Appealable Revision National/Regional No Yes
supply matters power bench of Tribunal
extends can hear
Other Matters Appealable Revision State/Area Bench Yes Yes
power of Tribunal can
extends hear
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345
Description Appellate Revisional Appellate High Court Supreme Court

Authority Authority Tribunal
Section 107 108 112 117 118
Appeal Fee Nil NA Rs. 1,000 per - -
lakh of tax or ITC
subject to
maximum of Rs.
25,000
Time limit to 3 months + 1 Power 3 months + 3 Within 180 As per Code of
appeal month extension exercisable months extension days + Civil Procedure,
only after 6 condonation 1908
months but of delay
within 3 without time
years from limit
date of order
{if no appeal
filed}
Pre-deposit 100% of admitted NA 100% of admitted All tax dues All tax dues are
{mandatory} due (with due (with are required required to be
interest/penalty)+ interest/penalty) to be deposited
10% of disputed + Additional 20% deposited
tax (before of disputed tax
interest/penalty) (before
subject to a interest/penalty)
maximum of 25 subject to a
crore rupees maximum of 50
crore rupees
If assessee Deposit refunded NA Pre-deposit Sums to be Sums to be
wins with interest refunded with refunded refunded
interest
Section 107 Appeals to Appellate Authority

This section pertains to appeals to appellate authority by any person who is aggrieved against decision or order
passed by adjudicating authority. This section also provides for appeal by revenue against decision or order
passed by adjudicating authority.
i. The appeal is to be filed by the assessee within a period of 3 months from the date of communication
of decision or order in Form GST APL-01, along with relevant documents either electronically or
otherwise as notified by the Commissioner against a provisional acknowledgement. The grounds of
appeal and form of verification must be duly signed and a certified copy of the decision or order is to
be filed before the Appellate Authority within 7 days of filing the appeal electronically. Thereafter, a
final acknowledgement indicating the appeal number shall be issued in Form GST APL-02 by the said
authority. In such a situation the appeal shall be deemed to be filed on the date on which the
provisional acknowledgement stands issued.
In case the said certified copy is submitted after a period of 7 days, the date of filing of appeal shall be
the date of submission of such copy.
The appeal shall be treated to be filed only when the final acknowledgement, indicating the appeal
number is issued.
ii. The Commissioner of Central / State or any Union territory with a view to satisfying himself about the
legality or propriety of any order or decision direct a subordinate officer to file an application before the
Appellate Authority within six months from the date of communication of decision or order in Form GST
346
APL-03, along with relevant documents either electronically or otherwise as notified against issue of an
acknowledgement. A certified copy of the decision or order of the appeal is to be filed before the
Appellate Authority within 7 days of filing the application electronically and an appeal number shall be
generated accordingly.
iii. The appellate authority in either of the above cases is empowered to condone the delay up to a period
of 1 month.
iv. Appeal to be filed in prescribed form duly verified in prescribed manner along with
— Amount of tax, interest, fine, fee & penalty, as is admitted, in full; and
— pre-deposit of sum equal to 10% of remaining amount of tax in dispute subject to a maximum of 25
crore rupees (50 crores CGST+SGST/IGST).
v. On payment of above amount, the recovery proceedings for balance amount are deemed to be stayed.
vi. Maximum 3 adjournments shall be granted to a party on showing reasonable cause that is to be
recorded in writing.
vii. Appellate authority may allow any additional grounds not specified in the grounds of appeal on being
satisfied that the omission was not wilful or unreasonable.
viii. Appellate authority to pass the order confirming, modifying or annulling the decision or order appealed
against but shall not remand the case back to the adjudicating authority.
ix. Opportunity of being heard to be granted in case of order for enhancing fees or penalty or fine in lieu of
confiscation of goods or reducing amount of refund/input tax credit after issuing show cause notice.
x. The appellate authority has power to issue show cause notice in case it is of the opinion that any tax
has not been paid or short paid or erroneously refunded or input tax credit is wrongly availed or utilised.
The appellant is given notice to show cause against the proposed order and the order is passed within
the time limit specified under section 73 or 74.
xi. Appellate authority need to hear and decide the appeal, wherever possible, within a period of 1 year
from the date of filing.
xii. Where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall
be excluded in computing the period of one year.
xiii. Appellate authority to communicate the copy of order to the appellant, the respondent, the adjudicating
authority, jurisdictional Commissioner of CGST, SGST and UTGST.
xiv. The Appellate Authority shall, along with its order under sub-section (11) of section 107 of the Act, issue
a summary of the order in FORM GST APL-04 clearly indicating the final amount of demand confirmed.
As per Rule 109 A, if order is passed by the Additional/Joint Commissioner then appeal will be filed with
Commissioner (Appeals). If order is passed by the Deputy Commissioner/Assistant Commissioner
/Superintendent then appeals will be filed with any officer not below the rank of Joint Commissioner (Appeals).
Example 1:
Date of filing of appeal in Form Submission of certified
Date of filing of appeal
Case GST APL-01 and issuance of copy of decision or order
shall be
provisional acknowledgement appealed against
Case I 24.07.2018 28.07.2018 24.07.2018
Case II 24.07.2018 03.08.2018 03.08.2018
Example 2: Mr. A, wants to file an appeal to appellate authority against the order passed by the adjudicating
authority, which was received on 10.01.2018. In this case, the company can appeal against such order by
09.04.2018 in Form GST APL-01 i.e., within 3 months from the date of communication of adjudicating
authority.
Now, suppose due to some unforeseen circumstances, the company could not file the appeal within given
time period. The appellate authority, may, after being satisfied as to existence of sufficient cause, condone the
delay upto 09.05.2018 (i.e. 1 month from expiry of 3 months), within which time aggrieved person must file the
appeal.
Example 3: Mr. X has been served with an order wherein demand of Rs. 5,00,000 has been alleged by the
adjudicating authority. Mr. X, admits liability of Rs. 1,00,000 but decides to litigate the demand of balance
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347
amount, and hence file an appeal to the appellate authority. In this case, the amount of pre-deposit will be
calculated as follows:
(a) Demand admitted = Rs. 1,00,000
(b) Remaining Demand/Amount disputed = Rs. 4,00,000
10% of amount disputed i.e. (Rs. 4,00,000*10/100) = Rs. 40,000
Hence, the amounts of pre-deposit to be paid by Mr. X will be total of Rs. 1,40,000.
On amount of above amount of pre-deposit, the recovery proceedings for balance amount shall be deemed to
be stayed.
Section 108 Power of Revisional Authority

i. Revision authority on his own motion or upon information received by him or on request from the
commissioner of State tax/UT, after examining the record of any proceeding, the Revisional Authority
may stay the operation of any decision or order if he considers that such decision or order passed by
any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of the revenue.
ii. After giving the concerned person an opportunity of being heard and after making further necessary
inquiry, the Revisional Authority may pass such order within 3 years of passing of the said order sought
to be revised including enhancing or modifying or annulling the said decision or order.
iii. The Revisional Authority shall not exercise such revisionary powers if
(a) appeal is filed against the order to –
a. Appellate Authority U/s.107
b. Appellate Tribunal U/s.112
c. High Court U/s.117
d. Supreme Court U/s.118
(b) period of 6 months as specified in section 107 (2) has not expired or more than 3 years have
expired after passing the decision or order
(c) the order has already been taken for revision at any earlier stage
(d) revisionary order has already been passed once.
iv. However, the Revisional Authority may pass an order on any point which has not been raised & decided
in an appeal, referred to hereinabove, within 1 year from the date of order passed in such appeal or
within 3 years from the date of such order sought to be revised, whichever is later.
v. It may be noted that the said power of the revisional authority is subject to Section 121 of the CGST Act
(i.e. non appealable decisions and orders). Thus, the revisional authority cannot revise the decision or
order passed under the CGST Act/SGST Act/UTGST Act, by any officer subordinate to him, in the
matters as prescribed in Section 121 of the CGST Act, which are non-appealable in GST.
vi. Notification No. 74/2018 – Central tax Dated 31.12.2018 has inserted, new Rule 109B of the CGST
Rules, which provides that where the Revisional Authority decides to pass an order in revision U/s 108,
which is likely to affect the person adversely, the revisional authority shall serve on him a notice in Form
GST RVN-01 and shall give him a reasonable opportunity of being heard. In addition, as per sub-rule
(2) of rule 109B, a summary order is to be issued in Form GST Apl-04 clearly indicating the final amount
of demand confirmed.
vii. Every revision order shall be, subject to further appeal to the Tribunal, High Court or Supreme Court,
be final and binding on the parties.
348
viii. If the said decision or order involves an issue which is appealed in higher forum, the period spent
between the date of the decision of the lower authority and the date of the decision of the higher
authority shall be excluded in computing the period of limitation.
ix. Where the issuance of an order is stayed by the order of a court or Appellate Tribunal, the period of
such stay shall be excluded in computing the period of limitation referred to in Section 108 (2) (b) i.e. 3
years.
Section 109 Constitution of Appellate Tribunal and Benches

thereof
A. Constitution and structure of Appellate Tribunal
i. The law envisages constitution of a two tier Tribunal i.e. National Bench/Regional Benches and the
State Bench/ Area Benches. Jurisdiction of the two constituents of the GST Tribunal is also defined.
ii. If place of supply is one of the issues in dispute, then the National Bench/ Regional benches of the
Tribunal will have jurisdiction to hear the appeal.
If the dispute relates to issues other than the place of supply, then the State/Area Benches
will have the jurisdiction to hear the appeal.
iii. An appeal from the decision of the National Bench will lie directly to the Supreme Court and an appeal
from the decision of the State Bench will lie to the jurisdictional High Court on substantial questions
of law.
iv. A diagrammatic representation of the structure of the Appellate Tribunal is shown below:
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349
President Appellate Tribunal -State
State Bench Area Bench
Technical Technical Technical Technical

Judicial Judicial
Member Member Member Member
Member Member
( Centre ) ( State ) ( Centre ) ( State )
The appointments to the Tribunal and functioning shall be in the manner prescribed under sections
110 and 111 of the CGST Act. On ceasing to hold office, the appointees to the Appellate Tribunal
shall not be entitled to appear, act or plead before the Appellate Tribunal.
v. In the absence of a Member in any Bench due to vacancy or otherwise, any appeal may, with the
approval of the President or, as the case may be, the State President, be heard by a Bench of two
Members.
However, any appeal where the tax or ITC involved or the difference in tax or ITC involved or the
amount of fine, fee or penalty determined in any order appealed against, does not exceed Rs.
5,00,000 and which does not involve any question of law may, with the approval of the President, be
heard by a bench consisting of a single member.
Section 110 President and Members of Appellate Tribunal,

their qualification, appointment, conditions of service, etc.
(1) A person shall not be qualified for appointment as—
(a) the President, unless he has been a Judge of the Supreme Court or is or has been the Chief
Justice of a High Court, or is or has been a Judge of a High Court for a period not less than
five years;
(b) a Judicial Member, unless he—
i. has been a Judge of the High Court; or
ii. is or has been a District Judge qualified to be appointed as a Judge of a High Court; or
iii. is or has been a Member of Indian Legal Service and has held a post not less than
Additional Secretary for three years;
(c) a Technical Member (Centre) unless he is or has been a member of Indian Revenue
(Customs and Central Excise) Service, Group A, and has completed at least fifteen years of
service in Group A;
350
(d) a Technical Member (State) unless he is or has been an officer of the State Government not
below the rank of Additional Commissioner of Value Added Tax or the State goods and services
tax or such rank as may be notified by the concerned State Government on the
recommendations of the Council with at least three years of experience in the administration of
an existing law or the State Goods and Services Tax Act or in the field of finance and taxation.
(2) The President and the Judicial Members of the National Bench and the Regional Benches shall be
appointed by the Government after consultation with the Chief Justice of India or his nominee:
Provided that in the event of the occurrence of any vacancy in the office of the President by reason of
his death, resignation or otherwise, the senior most Member of the National Bench shall act as the
President until the date on which a new President, appointed in accordance with the provisions of this
Act to fill such vacancy, enters upon his office:
Provided further that where the President is unable to discharge his functions owing to absence, illness
or any other cause, the senior most Member of the National Bench shall discharge the functions of the
President until the date on which the President resumes his duties.
(3) The Technical Member (Centre) and Technical Member (State) of the National Bench and Regional
Benches shall be appointed by the Government on the recommendations of a Selection Committee
consisting of such persons and in such manner as may be prescribed.
(4) The Judicial Member of the State Bench or Area Benches shall be appointed by the State Government
after consultation with the Chief Justice of the High Court of the State or his nominee.
(5) The Technical Member (Centre) of the State Bench or Area Benches shall be appointed by the Central
Government and Technical Member (State) of the State Bench or Area Benches shall be appointed by
the State Government in such manner as may be prescribed.
(6) No appointment of the Members of the Appellate Tribunal shall be invalid merely by the reason of any
vacancy or defect in the constitution of the Selection Committee.
(7) Before appointing any person as the President or Members of the Appellate Tribunal, the Central
Government or, as the case may be, the State Government, shall satisfy itself that such person does
not have any financial or other interests which are likely to prejudicially affect his functions as such
President or Member.
(8) The salary, allowances and other terms and conditions of service of the President, State President and
the Members of the Appellate Tribunal shall be such as may be prescribed:
Provided that neither salary and allowances nor other terms and conditions of service of the President,
State President or Members of the Appellate Tribunal shall be varied to their disadvantage after their
appointment.
(9) The President of the Appellate Tribunal shall hold office for a term of three years from the date on which
he enters upon his office, or until he attains the age of seventy years, whichever is earlier and shall be
eligible for reappointment.
(10) The Judicial Member of the Appellate Tribunal and the State President shall hold office for a term of
three years from the date on which he enters upon his office, or until he attains the age of sixty-five
years, whichever is earlier and shall be eligible for reappointment.
(11) The Technical Member (Centre) or Technical Member (State) of the Appellate Tribunal shall hold office
for a term of five years from the date on which he enters upon his office, or until he attains the age of
sixty-five years, whichever is earlier and shall be eligible for reappointment.
(12) The President, State President or any Member may, by notice in writing under his hand addressed to
the Central Government or, as the case may be, the State Government resign from his office: Provided
that the President, State President or Member shall continue to hold office until the expiry of three
months from the date of receipt of such notice by the Central Government, or, as the case may be, the
State Government or until a person duly appointed as his successor enters upon his office or until the
expiry of his term of office, whichever is the earliest.
(13) The Central Government may, after consultation with the Chief Justice of India, in case of the President,
Judicial Members and Technical Members of the National Bench, Regional Benches or Technical
Members (Centre) of the State Bench or Area Benches, and the State Government may, after
consultation with the Chief Justice of High Court, in case of the State President, Judicial Members,
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351
Technical Members (State) of the State Bench or Area Benches, may remove from the office such
President or Member, who—
(a) has been adjudged an insolvent; or
(b) has been convicted of an offence which, in the opinion of such Government involves moral
turpitude; or
(c) has become physically or mentally incapable of acting as such President, State President or
Member; or
(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as
such President, State President or Member; or
(e) has so abused his position as to render his continuance in office prejudicial to the public interest:
Provided that the President, State President or the Member shall not be removed on any of the
grounds specified in clauses (d) and (e), unless he has been informed of the charges against
him and has been given an opportunity of being heard.
(14) Without prejudice to the provisions of sub-section (13),––
(a) the President or a Judicial and Technical Member of the National Bench or Regional Benches,
Technical Member (Centre) of the State Bench or Area Benches shall not be removed from
their office except by an order made by the Central Government on the ground of proved
misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court nominated
by the Chief Justice of India on a reference made to him by the Central Government and of
which the President or the said Member had been given an opportunity of being heard;
(b) the Judicial Member or Technical Member (State) of the State Bench or Area Benches shall
not be removed from their office except by an order made by the State Government on the
ground of proved misbehaviour or incapacity after an inquiry made by a Judge of the concerned
High Court nominated by the Chief Justice of the concerned High Court on a reference made
to him by the State Government and of which the said Member had been given an opportunity
of being heard.
(15) The Central Government, with the concurrence of the Chief Justice of India, may suspend from office,
the President or a Judicial or Technical Members of the National Bench or the Regional Benches or the
Technical Member (Centre) of the State Bench or Area Benches in respect of whom a reference has
been made to the Judge of the Supreme Court under sub-section (14).
(16) The State Government, with the concurrence of the Chief Justice of the High Court, may suspend from
office, a Judicial Member or Technical Member (State) of the State Bench or Area Benches in respect
of whom a reference has been made to the Judge of the High Court under sub-section (14).
(17) Subject to the provisions of article 220 of the Constitution, the President, State President or other
Members, on ceasing to hold their office, shall not be eligible to appear, act or plead before the National
Bench and the Regional Benches or the State Bench and the Area Benches thereof where he was the
President or, as the case may be, a Member.
Section 111 Procedure before Appellate Tribunal

(1) The Appellate Tribunal shall not be bound by the procedure laid down in the Code of Civil Procedure,
1908. However, it shall be guided by the principles of natural justice and shall have power to regulate
its own procedure.
(2) The Appellate Tribunal shall have the same powers as are vested in a civil court under the Code of
Civil Procedure, 1908 while trying a suit in respect of the following matters, namely:
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
352
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872,
requisitioning any public record or document or a copy of such record or document from any
office;
(e) issuing commissions for the examination of witnesses or documents;
(f) dismissing a representation for default or deciding it ex-parte;
(g) setting aside any order of dismissal of any representation for default or any order passed by it
ex-parte; and
(h) any other matter which may be prescribed.
(3) Order of the Appellate Tribunal may be enforced in the same manner as if it were a decree made by
a court in a suit pending therein. The Appellate Tribunal can send for execution of its orders to the
court within the local limits of whose jurisdiction, —
(a) in the case of an order against a company, the registered office of the company is situated; or
(b) in the case of an order against any other person, the person concerned voluntarily resides or
carries on business or personally works for gain.
(4) All proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the
meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code. The
Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI
of the Code of Criminal Procedure, 1973.
Section 112 Appeals to Appellate Tribunal

a. Appeal by the Assessee:
i. Any person aggrieved by an order of Appellate Authority or Revisional Authority may appeal to the
Appellate Tribunal against such order within 3 months from the date on which the order sought to
be appealed against is communicated to the person preferring the appeal. The tribunal can condone
the delay of up to 3 months beyond the specified time period of 3 months, if it is satisfied that there
was sufficient cause for the delay.
ii. Fees of filing and restoration of appeal: The fees for filing of appeal or its restoration shall be Rs.
1,000 for every Rs. 1 Lac of tax or ITC involved or the difference in tax or ITC involved or the amount
of fine, fee or penalty determined in the order appealed against, subject to maximum of Rs. 25,000.
iii. Discretionary Power: The Appellate Tribunal may, in its discretion, refuse to admit any such appeal
where the tax or ITC involved, or the difference in tax or ITC involved, or the amount of fine, fee or
penalty determined by such order, does not exceed Rs. 50,000.
iv. Conditions for Pre-deposit - 20% of the disputed tax: No appeal shall be filed unless the appellant
has paid –
• In full, such part of the amount of tax, interest, fine, fee and penalty arising from the
impugned order, as is admitted by him, and
• A sum equal to 20% of the remaining amount of tax in dispute, in addition to the amount
paid U/s 107 (6), arising from the said order subject to a maximum of fifty crore rupees (100
crores CGST+SGST/IGST), in relation to which the appeal has been filed.
On pre-deposit of tax, the recovery proceedings shall be stayed till the disposal of the appeal.
b. Departmental appeal:
i. Orders appealable to Appellate Tribunal [Section 112 (3)] : The commissioner may, on his own
motion, or upon request from the State/UT Commissioner call for and examine the record of
any order passed by Appellate Authority or Revisional Authority for the purpose of satisfying
himself as to the legality or propriety of the said order and may, by order, direct any officer
subordinate to him to apply to the Appellate Tribunal within 6 months from the date on which
the said order has been passed for determination of such points arising out of the said order as
may be specified by him.
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ii. The Application so filed shall be dealt by the Appellate Tribunal as it were an appeal made
against the order of Appellate Authority or Revisional Authority and all the provisions of the Act
shall apply accordingly.
iii. There is no requirement of making a pre-deposit in case of departmental appeal.
c. Other aspects:
Memorandum of cross objection to be filed within 45 days [Section 112 (5)]: On receipt of notice that
an appeal has been preferred, the other party may, within 45 days of the receipt of notice from tribunal,
file a memorandum of cross-objections against any part of the order appealed against and such
memorandum shall be disposed or by the Appellate Tribunal, as if it were an appeal presented within
the specified time limit.
Production of additional evidence before the Appellate Authority or the Appellate Tribunal
[Rule 112]:
i. General bar on production of additional evidences [Rule 112 (1)]: The appellant shall
not be allowed to produce before the Appellate Authority or the Appellate Tribunal any
evidences, whether oral or documentary, other than the evidence produced by him during
the course of the proceedings before the adjudicating authority or, as the case may be, the
Appellate Authority except in the following circumstances namely: -
• where the adjudicating authority or, as the case may be, the Appellate Authority has
refused to admit evidence which ought to have been admitted, or
• where the appellant was prevented by sufficient cause from producing the evidence
which he was called upon to produce by the adjudicating authority or, as the case
may be, the Appellate Authority, or
• where the appellant was prevented by sufficient cause from producing before the
adjudicating authority or, as the case may be, the Appellate Authority any evidence
which is relevant to any ground of appeal, or
• where the adjudicating authority or, as the case may be, the Appellate authority has
made the order appealed against without giving sufficient opportunity to the
appellant to produce evidence relevant to any ground of appeal.
ii. No evidence shall be admitted unless the Appellate Authority or the Appellate Tribunal
records in writing the reasons for its admission.
iii. The Appellate Authority or the Appellate Tribunal shall not make any evidence produced
unless the adjudicating authority or an officer authorised in this behalf by the said authority
has been allowed a reasonable opportunity –
• to examine the evidence or document or to cross-examine any witness produced by
the appellant; or
• to produce any evidence or any witness in rebuttal of the evidence produced by the
appellant.
Section 113 Orders of Appellate Tribunal

i. Appellate Tribunal to pass the order confirming, modifying or annulling the decision or order appealed
against.
ii. The Appellate Tribunal also has power to remand the case back to the appellate authority or the
Revisional authority or the original adjudicating authority.
iii. Maximum 3 adjournments shall be granted to a party on showing reasonable cause to be recorded in
writing.
iv. The Appellate Tribunal is empowered to amend its order to rectify any mistake apparent from record,
However, tribunal may rectify its order if the mistake is brought to its notice by Commissioner or other
party to appeal within period of 3 months of date of such order. Opportunity of being heard to be granted
354
in case such rectification results into enhancing an assessment or reducing a refund or input tax credit
or otherwise increasing the liability.
v. The Appellate Tribunal to hear and decide the appeal, as far as possible, within a period of 1 year from
the date of filing.
vi. The Appellate Tribunal to communicate the copy of order to appellate authority / Revisional authority /
original adjudicating authority, the appellant, the jurisdictional Commissioner, Commissioner of State
Tax or Union Territory Tax.
vii. The jurisdictional officer shall issue a statement in FORM GST APL-04 clearly indicating the final
amount of demand confirmed by the Appellate Tribunal.
Section 114 Financial and administrative powers of President

The President is empowered to delegate his financial and administrative powers to any other Member or any
officer of the National Bench and Regional Benches, on a condition that such Member or officer shall continue
to act under the direction, control and supervision of the President while exercising such delegated powers.
Section 115 Interest on refund of amount paid for admission of

appeal
Where an amount paid by the appellant under sub-section (6) of section 107 or sub-section (8) of section 112
is required to be refunded consequent to any order of the Appellate Authority or of the Appellate Tribunal,
interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment
of the amount till the date of refund of such amount.
Section 116 Appearance by authorised representative

This section provides for appearance by authorised representative in proceedings or appeals except in
circumstances where personal appearance is required for examination on oath or affirmation.
i. “Authorised representative” means –

— relative or regular employee
— Practising Advocate
— Practising CA, CWA or CS
— A retired government officer who had worked for not less than 2 years in a post not lower in rank
than Group-B gazetted officer
— Goods and Services Tax Practitioner
ii. Any person, who has retired or resigned after serving more than 2 years in the indirect tax
departments of Government of India or any State Government as a gazetted officer, shall not be
entitled to appear as authorised representative for a period of 1 year from the date of retirement or
resignation.
iii. Any person,
— who has been dismissed or removed from government service; or
— who is convicted of an offence under CGST Act, SGST Act, IGST Act, UTGST Act or under
erstwhile laws; or
— who is found guilty of misconduct by the prescribed authority;
shall not be qualified as authorised representative
iv. Any person, who has become insolvent, shall not be qualified as authorised representative during the
period of insolvency.
v. Any disqualification under SGST Act or UTGST Act shall be construed as disqualification under
CGST Act.
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Section 117 Appeal to High Court

i. High Court may admit an appeal if it is satisfied that the case involves a substantial question of law.
ii. No appeal shall lie to High Court if such order is passed by National Bench or Regional Benches.
iii. Appeal to be filed in the form GST APL 08, precisely stating the substantial question of law involved,
within 180 days from the date of receipt of order appealed against accompanied by prescribed fee.
iv. High Court is empowered to condone the delay in filing appeal.
v. On being satisfied, High Court shall formulate a substantial question of law.
vi. Appeal to be heard only on the question so formulated and the respondent shall be allowed to argue
that the case does not involve such question.
vii. The High Court may hear the appeal on any other substantial question of law not formulated by it after
satisfying, for reasons to be recorded, of involvement of such question in the case.
viii. The High Court may determine any issue which has not been determined or has been wrongly
determined by the State Bench or Area Benches.
ix. Appeal to be heard by a Bench of not less than 2 Judges of High Court and shall be decided in
accordance with the majority of opinion of such Judges.
x. Difference of opinion on any point shall be referred to one or more of the other Judges of High Court
and such point shall be decided according to the opinion of majority of Judges who have heard the case
including those who first heard it.
xi. The effect of judgment of High Court shall be given on the basis of a certified copy of the judgment.
xii. The provisions of Code of Civil Procedure relating to appeals to High Court shall apply to appeals under
this section.
Section 118 Appeal to Supreme Court

(1) An appeal shall lie to the Supreme Court—
(a) from any order passed by the National Bench or Regional Benches of the Appellate Tribunal; or
(b) from any judgment or order passed by the High Court in an appeal made under section 117 in any
case which, on its own motion or on an application made by or on behalf of the party aggrieved,
immediately after passing of the judgment or order, the High Court certifies to be a fit one for appeal
to the Supreme Court.
(2) The provisions of the Code of Civil Procedure, 1908, relating to appeals to the Supreme Court shall, so
far as may be, apply in the case of appeals under this section as they apply in the case of appeals from
decrees of a High Court.
(3) Where the judgment of the High Court is varied or reversed in the appeal, effect shall be given to the
order of the Supreme Court in the manner provided in section 117 in the case of a judgment of the High
Court.
Section 119 Sums due to be paid notwithstanding appeal, etc.

The sums due to the Government as a result of an order passed by the Appellate Tribunal or High Court shall
be paid notwithstanding that an appeal has been preferred to High Court or Supreme Court, as the case may
be.
Section 120 Appeal not to be filed in certain cases

The board may fix monetary limits for regulating the filing of appeal etc. The Central tax officer may file appeal
etc. in any other case involving the same or similar issues or questions of law if monetary amount is more. No
person, being a party in appeal or application shall content that the officer of the central tax has acquiesced in
the decision on the disputed issue by not filing an appeal or application. The Appellate Tribunal or court hearing
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such appeal or application shall have regard to the circumstances under which appeal or application was not
filed by the departmental officer.
Section 121 Non-appealable decisions & orders

No appeal shall lie against any decision taken or order passed by an officer of central tax if such decision taken
or order passed relates to any one or more of the following matters, namely:-
a. An order of the Commissioner or other authority empowered to direct transfer of proceedings from one
officer to another officer; or
b. An order pertaining to the seizure or retention of books of account, register and other documents; or
c. An order sanctioning prosecution under this act; or
d. An order passed U/s 80 (Payment of tax & other amount in installment).
Question & Answer

Q1. What is the time limit for filing appeal to the Appellate authority by a person aggrieved by any decision or
order passed by an adjudicating authority? Whether this time limit can be extended?
A. A person aggrieved by any decision or order passed by an adjudicating authority may file an appeal to the
Appellate Authority within 3 months from the date of communication of decision/order of adjudicating authority.
The Appellate Authority can condone the delay in filing of appeal by 1 month if it is satisfied that there was
sufficient cause for such delay.
Q2. Section 113 (3) of the CGST Act, 2017 provides that the Appellate Tribunal, may at any time within 3 months
of the date of order, with a view to rectifying any mistake apparent from the record, amend any order passed by
it. What would constitute “mistake apparent from record” for the purpose of this provision?
A. Failure to make into consideration the material evidence, which is present on record, would amount to a
“mistake apparent on the face of the record”. [CCEx V. Bharat Bijlee Ltd. 2006 (SC)]
When a decision rendered by the Apex Court is not considered, non-consideration of such binding precedent
constitutes an error apparent on the face of the record. The binding decision of the Apex Court would cover
even the period prior to the inception of such law during which the orders contrary to such ratio of the subsequent
decision were passed [HLL V. CCEx, 2006 (Tri. LB)]
Other mistakes apparent on the face of the record, which can be rectified by the Tribunal in terms of section
113 (3), can be typographical error, calculation mistakes, point raised in appeal but not considered, retrospective
amendments in the statute, etc.
Q3. An assessee moved an application on 15th December 2018 under section 113 (3) for rectification of mistake
in order passed on 30th September 2018. The Tribunal took up the application on 15th May 2019 and dismissed
the same on the ground that the Tribunal cannot entertain an application for rectification beyond a period of 3
months. Is this correct?
A. Section 113 (3) states that the Appellate Tribunal may at any time within 3 months from the date of the order,
with a view to rectifying any mistake apparent from the record, amend any order passed by it. Since, in the
present case, the application has been made within 3 months from the date of the order, it is not relevant for
the purpose of limitation as to when the Tribunal takes up the same for hearing and disposal. Therefore, in this
case, the Tribunal cannot reject the application for rectification of mistake on the ground of limitation if
application is made with in time limit.
Study Notes
357
Q4. Discuss with the help of decided case, whether the re-appreciation of evidence on a debatable point by the
GST Appellate Tribunal can be considered as rectification of mistake apparent on record U/s 113 (3)?
A. No, re-appreciation of evidence by GST Appellate Tribunal on a debatable point cannot be considered to be
rectification of mistake apparent on record U/s 113 (3) of the CGST Act, 2017.
Supreme Court, in case of CCE V RDE Concrete India Pvt. Ltd. [2011] observed that a mistake apparent on
record must be an obvious and patent mistake. It need not be established by a long-drawn process of reasoning.
Arguments not accepted earlier during disposal of appeal cannot be accepted while hearing rectification of
mistake application.
The Supreme Court held that CESTAT had reconsidered its legal view as it concluded differently by accepting
the arguments which it had rejected earlier. Hence, the court opined that in pursuance of a rectification
application, CESTAT cannot reappreciate the evidence and reconsider its legal view taken earlier.
Q5. Can department file appeal in respect of same assessee, if in respect of some years, no appeal was filed
involving identical dispute?
A. It was held in C.K. Gangadharan V. CIT [2008] (SC) that if the revenue has not filed an appeal against any
order/judgement in one case, it would not be allowed to file an appeal in another case when the same issue is
involved due to the reasons that it cannot pick and choose and certainty in law should be ensured.
However, the revenue can file an appeal in another case involving same/similar issue –
• Where there is just cause in doing so i.e. where appeal was not preferred earlier in view of small amount
involved; or
• Where it is in public interest to do so; or
• For a pronouncement by higher court when divergent views are expressed by Tribunals/High Courts.
Section 120 provides that the Board may issue orders or instructions or directions fixing monetary limits for the
purposes of regulating the filing of appeal, etc. by the Department. If Department has not filed an appeal, etc.
as per circular fixing monetary limits, the Department may file any appeal, application or revision in any other
case involving the same or similar issues or questions of law and the assessee cannot contend that the
Department has accepted the decision on the disputed issue by not filing the appeal.
Q6. Where Commissioner of CGST feels that the order passed is not legal or proper, whether he can revise the
order on his own?
A. The Commissioner cannot revise the order U/s 107. For CGST, as per Sec. 107 (2), if the commissioner
finds an order or decision (passed by an adjudication authority) to be not legal or proper, he can pass an order
setting out the points for determination where he is of the view that the order is not legal and proper and directing
a GST officer sub-ordinate to him to file an application to appellate authority. Such application is then treated
by the appellate authority as if it were an appeal.
Q7. Does the AA have the power to remand the case back to the adjudicating authority for whatever reasons?
A. No. Section 107(11) specifically states that the AA shall, after making such inquiry as may be necessary,
pass such order, as he thinks just and proper, confirming, modifying or annulling the decision or order appealed
against, but shall not refer the case back to the authority that passed the decision or order.
Q8. When the Tribunal is having powers to refuse to admit the appeal?
A. In cases where the appeal involves –
• tax amount or input tax credit or
• the difference in tax or the difference in input tax credit involved or
• amount of fine, fees or amount of penalty determined by such order,
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does not exceed Rs 50,000/-, the Tribunal has discretion to refuse to admit such appeal. (Section 112(2))
Q9. Whether interest becomes payable on refund of pre-deposit amount?

A. Yes. As per Section 115 of the Act, where an amount deposited by the appellant under sub-section (6) of
section 107 or under sub-section (8) of section 112 is required to be refunded consequent to any order of the
Appellate Authority or of the Appellate Tribunal, as the case may be, interest at the rate specified under section
56 not exceeding 9% shall be payable in respect of such refund from the date of payment of the amount till the
date of refund of such amount.
Q10. Compute the quantum of pre-deposit required to be made on U/s 107 of the CGST Act 2017 in each of
the following independent case:
(a) In an order Dated 18-10-2018 issued to ABC Ltd., the Joint Commissioner of central tax has confirmed
a tax demand of Rs. 50,00,000. ABC Ltd. has admitted Rs. 5,00,000 as tax liability and intends to file
an appeal with the Commissioner (Appeals) against tax demand of Rs. 45,00,000.
(b) In an order Dated 18-10-2018 issued to XYZ Ltd., the Joint Commissioner of central tax has confirmed
a tax demand of Rs. 50,00,000 and imposed a penalty of Rs. 5,00,000. XYZ Ltd. intends to file an
appeal with the Commissioner (Appeals) against the said order.
A.
(a) Section 107 (6) of the CGST Act 2017, require an appellant before Appellate Authority to pre-deposit
full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned order
and a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned order.
Thus, ABC Ltd. has to pre-deposit Rs. 5,00,000 (admitted tax) and 10% of Rs. 45,00,000 (tax in dispute)
= Rs. 9,50,000.
(b) Section 107 (6) of the CGST Act 2017, require an appellant before Appellate Authority to pre-deposit
full amount of tax, interest, fine, fee and penalty, as is admitted by him, arising from the impugned order
and a sum equal to 10% of the remaining amount of tax in dispute arising from the impugned order. In
this case since entire amount of tax demanded is in dispute, hence XYZ Ltd. has to pre-deposit 10% of
Rs. 50,00,000 = Rs. 5,00,000.
Q11. Whether other party could file cross objections against the appeal preferred by the assessee or by the
department?
A. On receipt of notice that an appeal has been preferred under section 112, other party against whom an
appeal is preferred, could file a cross objection to the appeal even though he has not preferred an appeal. A
Memorandum of Cross-Objections have to be filed within 45 days from the date of receipt of the notice of appeal
in FORM GST APL-06. The Tribunal shall dispose of the cross objections as if it is an appeal.
Q12. Whether appeal / application / cross objections filed beyond the time limit would be entertained?
A. Tribunal has been conferred with powers to condone the delay upto 3 months, beyond the period of 3 months
or 6 months in case of filing of appeals, where sufficient cause for the delay is shown. Similarly, delay upto 45
days could be condoned by the Tribunal in filing the memorandum of cross objections where sufficient cause
for the delay is shown.
Q13. Whether interest becomes payable on refund of pre-deposit amount?

A. Yes. As per sec 115 of the Act, where an amount deposited by the appellant under section 107(6) or under
section 112(8) is required to be refunded consequent to any order of the Appellate Authority or of the Appellate
Tribunal, as the case may be. Interest at the rate specified under section 56 shall be payable in respect of such
refund from the date of payment of the amount till the date of refund of such amount.
Study Notes
359
Q14. Whether the Tribunal has power to rectify / amend the orders passed by it?
A. Yes, the Tribunal may amend any order passed by it under in terms of Section 113(1) so as to rectify any
mistake apparent from the record. The Hon’ble Tribunal could undertake rectification on its own or on application
by either of the parties to the appeal (by the Commissioner or the Commissioner of State tax or the
Commissioner of the Union territory tax or the other party to the appeal). The application for rectification shall
be made within a period of three months from the date of the Order sought to be rectified.
However, no amendment which has the effect of enhancing an assessment or reducing a refund or input tax
credit or otherwise increasing the liability of the other party, shall be made under section 113(3), unless the
Tribunal has given notice to him of its intention to do so and has allowed him a reasonable opportunity of being
heard.
Q15. What are the orders against which appeal could be preferred before the Supreme Court?
A. Following orders could be challenged before the Supreme Court:
a) Order passed by the National Bench or Regional Benches of the Appellate Tribunal; or (no appeal in
High Court)
b) Judgment or order passed by the High Court in an appeal made under section 117 in any case which,
on its own motion or on an application made by or on behalf of the party aggrieved, immediately after
passing of the judgment or order, the High Court certifies to be a fit one for appeal to the Supreme
Court.
Q16. Who is an Appellate Authority?

A. “Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section
107. Section 107 provides that appeal shall be preferred before such Appellate Authority as may be prescribed.
Rule 109A provides that for the purpose of appeal, an Appellate Authority shall be:
(a) the Commissioner (Appeals) where such decision or order is passed by the Additional or Joint
Commissioner;
(b) Any officer not the below the rank of Joint Commissioner (Appeals) where such decision or order is
passed by the Deputy or Assistant Commissioner or Superintendent.
Q17. Under what circumstances Commissioner could direct the Officer to prefer an appeal against the order of
the adjudicating authority?
A. The Commissioner may, on his own motion, or upon request from the Commissioner of State tax
Commissioner of Union Territory tax, call for and examine the records of any proceeding in which an
adjudicating authority has passed any decision or order under the CGST Act or the SGST Act or the UTGST
Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order. The
Commissioner may by an order, direct any Officer subordinate to him to apply to the Appellate Authority within
six months from the date of communication of the said decision or order for the determination of such points
arising out of the said decision or order as may be specified by the Commissioner in his order.
Q18. What type of order could the Appellate Authority pass? Whether Appellate Authority could refer the case
back to Adjudicating Authority?
A. The Appellate Authority may pass such order, as he thinks just and proper, confirming, modifying or annulling
the decision or order appealed against. The order shall be in writing giving details as to determination. The
Appellate Authority shall, along with its order under section 107(11), issue a statement in FORM GST APL-04
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clearly indicating the final amount of demand confirmed. However, the Appellate Authority does not have power
to refer the case back to the Adjudicating Authority that passed the said decision or order.
Q19. Whether Order of the Appellate Authority could also be stayed by Revisional Authority?
A. The Order which has been subject to an appeal before the Appellate Authority (section 107) as well as orders
of the Appellate Authority which are appealed before the Tribunal cannot be stayed by the Revisional Authority.
However, the Revisional Authority could pass an order under revisionary power on any point which has not
been raised and decided in an appeal before Appellate Authority. Such, revision order could be passed within
1 year from the date of the order of the Appellate Authority or 3 years from the date of the original order,
whichever is later.
Q20. When a Revisional Authority cannot exercise its powers?

A. Revisional authority shall not exercise its powers, in case of following:
(a) When the order has been subject to an appeal before the adjudicating authority (under section 107) or
the Tribunal (under section 112) or the High Court (under section 117) or the Supreme Court (under
section 118); or
(b) If the period of 6 months as specified under 107(2) for preferring an appeal by department before
Appellate Authority has not yet expired or where more than three years have expired after the passing
of the decision or order sought to be revised; or
(c) where the order has already been taken for revision under section 108 at any earlier stage; or
(d) revisionary order passed under section 108(1).
Q21. What is the Constitution of National Appellate Tribunal and how the same is constituted? Where the
National Bench and Regional Bench shall be located?
A. The Central Government shall on the recommendation of the GST Council by Notification constitute Goods
and Services Tax Appellate Tribunal (hereinafter referred to as the Appellate Tribunal) for hearing appeals
against the orders passed by the Appellate Authority or the Revisional Authority.
National bench shall be located at New Delhi. The Central Government on the recommendations of the Council,
by notification, constitute such number of Regional Benches as may be required.
Q22. What is the composition of National Bench and Regional Benches?

A. National Bench shall be headed by the National president along with one Technical member (Centre) and
one Technical Member (State). Regional Benches shall consist of a Judicial Member, one Technical Member
(Centre) and one Technical Member (State).
Q23. What is jurisdiction of National or Regional Benches of the Appellate Tribunal?

A. National or Regional Benches of the Appellate Tribunal shall have jurisdiction to hear appeals against the
orders passed by the Appellate Authority or the Revisional Authority in the cases where one of the issues
involved relates to the place of supply.
Q24. What is State Bench or Area Bench?

A. The Government, by notification, specify for each State or Union territory, a Bench of the Appellate Tribunal,
for exercising the powers of the Appellate Tribunal within the concerned State or Union territory. Government
shall, on receipt of a request from any State Government, constitute such number of Area Benches in that State,
as may be recommended by the Council.
Study Notes
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Q25. What is jurisdiction of State Bench or Area Bench?

A. State Bench or Area Benches shall have jurisdiction to hear appeals against the orders passed by the
Appellate Authority or the Revisional Authority in all cases other than those involving matters where one of the
issues involved relates to the place of supply.
Q26. What is the composition of State Bench and Area Benches?

A. Each State Bench and Area Benches shall consist of a Judicial Member, one Technical Member (Centre)
and one Technical Member (State) and the State Government may designate the senior most Judicial Member
in a State as the State President.
Q27. Whether any matter could be heard by bench consisting of members less than 3 as set out above?
A. Yes, in the absence of a Member in any Bench due to vacancy or otherwise, any appeal may, with the
approval of the President or, as the case may be, the State President, be heard by a Bench of two Members.
Further, where the tax or input tax credit involved or the difference in tax or input tax credit involved or the
amount of fine, fee or penalty determined in any order appealed against, does not exceed Rs. 5 Lakhs and
which does not involve any question of law may, with the approval of the President and subject to such
conditions as may be prescribed on the recommendations of the Council, be heard by a bench consisting of a
single member.
Q28. What would be consequence where there is a difference of opinion on any issue among the members of
the bench?
A. If the Members of the Bench (National/Regional/State/Area) differ in opinion on any point or points, it shall
be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided,
they shall state the point or points on which they differ, and the case shall be referred by the President or as the
case may be, State President for hearing on such point or points to one or more of the other Members of the
National Bench, Regional Benches, State Bench or Area Benches and such point or points shall be decided
according to the opinion of the majority of Members who have heard the case, including those who first heard
it.
Q29. Can the Tribunal reject to entertain an appeal based on the monetary limits?
A. Yes. The Tribunal has been conferred with discretion to refuse to admit an appeal where:
• the tax or input tax credit involved or
• the difference in tax or input tax credit involved or
• the amount of fine, fee or penalty determined by such order,
does not exceed Rs. 50,000/-
Q30. Which are the matters on which the appeal against order of the Tribunal could be preferred before the
High Court?
A. Appeal shall lie to the High Court against an Order passed by the State Bench or Area Benches of the
Tribunal.
Q31. Whether all decisions and orders can be appealed?

A. No. in terms of Section 121, orders listed below cannot be appeal against:
(a) An order of the Commissioner or other competent authority for transfer of proceeding from one officer
to another officer; or
(b) An order pertaining to the seizure or retention of books of account, register and other documents; or
362
(c) An order sanctioning prosecution under this Act; or
(d) An order passed under section 80 relating to payment of tax, interest and other dues in installments.
Q32. XY Company received an adjudication order passed by the Assistant Commissioner of Central Tax on 01-
11-2017 under section 73 of the CGST Act, 2017 wherein it was decided as follows:
Particulars
CGST and SGST due (Total) Rs. 6,00,000
Interest @ 18% p.a. for number of delayed days
Penalty Rs. 60,000
The assessee filed an appeal before the Appellate Authority on 26-11- 2017.
Case I How much the company has to pay as pre-deposit of duty under section 107(6) of the CGST Act, 2017?
Case II Whether your answer would be different if the assessee appeals only against part of the demanded
amount say Rs. 4,00,000 and admits the balance liability of tax amounting to Rs. 2,00,000 arising from the said
order. (CA Final May 2018 New)
A. Section 107(6) of the CGST Act, 2017 provides that no appeal shall be filed before Appellate Authority, unless
the appellant pays:-
(a) in full, tax, interest, fine, fee and penalty arising from impugned order, as is admitted by him; and
(b) 10% of remaining tax in dispute arising from the impugned order.
Thus, in Case-I, XY Company has to make a pre-deposit of 10% of Rs. 6,00,000, which is Rs. 60,000 assuming
that XY Company disagrees with the entire tax demanded.
However, in Case-II, since XY Company admits the tax liability of Rs. 2,00,000 and disputes the tax demanded
of only Rs. 4,00,000, it has to make a pre-deposit of:
(i) Rs. 2,00,000 + Rs. 20,000 [proportionate penalty on tax admitted] + interest @ 18% p.a. payable on
the tax admitted for the period of delay, and
(ii) 10% of Rs. 4,00,000 which is Rs. 40,000.
Study Notes
363
Section 97 Questions for which advance ruling can be sought

Section 96 & 99 Authority for Advance Ruling (AAR) and Appellate Authority for
Advance Ruling (AAAR)
Section 98 Procedure for obtaining advance ruling
Section 100 & 101 Appeals against order of AAR to the Appellate Authority
Section 102 Rectification of Mistakes
Section 103 Applicability of Advance Ruling
Section 104 Advance Ruling to be void in certain circumstances
Section 105 & 106 Powers and Procedure of AAR and AAAR
Section 97 Questions for which advance ruling can be sought
a. Classification of any goods or services or both;

b. Applicability of a notification issued under the provisions of this Act;
c. Determination of time and value of supply of goods or services or both;
d. Admissibility of input tax credit of tax paid or deemed to have been paid;
e. Determination of the liability to pay tax on any goods or services or both;
f. Whether applicant is required to be registered;
g. Whether any particular thing done by the applicant with respect to any goods or services or both
amounts to or results in a supply of goods or services or both, within the meaning of that term.
Section 96 Authority for Advance Ruling (AAR)
The Authority for advance ruling constituted under the provisions of a State Goods and Services Tax Act or
Union Territory Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect
of that State or Union territory.
The Government shall appoint an officer not below the rank of Joint Commissioner as member of the Authority
for Advance Ruling. The authority shall consist of 1) one member from amongst the officers of CGST; and
2) one member from amongst the officers of SGST/UTGST.
Section 99 Appellate Authority for Advance Ruling (AAAR)

The Appellate Authority for Advance Ruling constituted under the provisions of a State Goods and Services Tax
Act or a Union Territory Goods and Services Tax Act shall be deemed to be the Appellate Authority in respect
of that State or Union territory.
The Appellate Authority shall consist of 1) Chief Commissioner of CGST as designated by the Board; and
2) the Commissioner of SGST/UTGST having jurisdiction over the applicant.
This would mean that the ruling given by the AAR & AAAR will be applicable only within the jurisdiction of the
concerned state or union territory. It is also for this reason that questions on determination of place of supply
cannot be raised with the AAR or AAAR.
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Section 98 Procedure for obtaining advance ruling
i. The applicant desirous of obtaining advance ruling should make application to AAR in a prescribed form
and manner.
ii. Upon receipt of an application, the Authority shall send a copy of application to the concerned officer in
whose jurisdiction the applicant falls and call for relevant records.
iii. The Authority may, after examining the application and the records called for and after hearing the
applicant or his authorized representative and the concerned officer or his authorized representative,
by order, either admit or reject the application.
iv. Application for advance ruling will not be admitted in cases where the question raised in the application
is already pending or decided in any proceedings in the case of an application under any of the
provisions of this Act.
v. If the application is rejected, it should be by way of speaking order giving the reasons for rejection.
vi. If the application is admitted, the AAR shall pronounce its ruling within 90 days of receipt of application.
Before giving its ruling, it shall examine the application and any further material furnished by the
applicant or by the concerned department officer.
vii. Before giving the ruling, AAR must hear the applicant or his authorized representative as well as the
jurisdictional officers of CGST /SGST.
viii. If there is a difference of opinion between the two members of AAR, they shall refer the point or points
on which they differ to the AAAR for hearing the issue. If the members of AAAR are also unable to come
to a common conclusion in regard to the point(s) referred to them by AAR, then it shall be deemed that
no advance ruling can be given in respect of the question on which difference persists at the level of
AAAR.
ix. A copy of the advance ruling pronounced by the Authority duly signed by the members and certified in
such manner as may be prescribed shall be sent to the applicant, the concerned officer and the
jurisdictional officer.
Section 100 & 101 Appeals against order of AAR to the

Appellate Authority
i. If the applicant is aggrieved with the ruling of the AAR, he can file an appeal with AAAR. Similarly, if the
jurisdictional officer of CGST / SGST does not agree with the finding of AAR, he can also file an appeal
with AAAR.
ii. Any appeal must be filed within 30 days from the receipt of the advance ruling. AAAR has the power to
condone the delay of 30 days on being shown the sufficient cause for the delay.
iii. The Appellate Authority must pass an order after hearing the parties to the appeal within a period of 90
days of the filing of an appeal.
iv. If members of AAAR differ on any point referred to in appeal, it shall be deemed that no advance ruling
is issued in respect of the question under appeal.
v. A copy of the advance ruling pronounced by the Appellate Authority duly signed by the members and
certified in such manner as may be prescribed shall be sent to the applicant, the concerned officer, the
jurisdictional officer & to the Authority.
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Section 102 Rectification of mistakes

The law gives power to AAR and AAAR to amend their order to amend any order passed by them under section
98 or section 101 of the CGST / SGST Act,2017, so as to rectify any error apparent on the face of the record, if
such error is noticed by the Authority or the Appellate Authority on its own accord or is brought to its notice by
the concerned officer, the jurisdictional officer, the applicant or the appellant within a period of six months from
the date of the order. If a rectification has the effect of enhancing the tax liability or reducing the quantum of
input tax credit, the applicant must be heard before the order is passed.
Section 103 Applicability of Advance Ruling

An advance ruling pronounced by AAR or AAAR shall be binding only on the applicant and on the concerned
officer or the jurisdictional officer in respect of the applicant. This clearly means that an advance ruling is not
applicable to similarly placed other taxable persons in that State. It is only limited to the person who has applied
for an advance ruling. There is no specific fixed time period for advance ruling validity; it has been provided that
advance ruling shall be binding till the period when the law, facts or circumstances supporting the original
advance ruling have not changed.
Section 104 Advance Ruling to be void in certain circumstances

However, an advance ruling shall be held to be ab initio void if the AAR or AAAR finds that the advance ruling
was obtained by the applicant by fraud or suppression of material facts or misrepresentation of facts. An order
declaring advance ruling to be void can be passed only after hearing the applicant.
Example 1: ABC Ltd. sought an advance ruling regarding the taxability of “Kumkum” manufactured by them &
used for pooja & other religious purposes as claimed by them. The authority ruled in favour of ABC Ltd. and
exempted their product “Kumkum” from the levy of GST as a pooja material. Later, it brought into the notice of
the Authority that the said product is actually used as a colorant in the cloth industry as a dying agent. After
giving opportunity, the authority can now pass an order U/s 104, declaring the advance ruling as void ab initio.
Section 105 & 106 Powers & Procedure of AAR and AAAR
i. Both the Authority and the Appellate Authority are vested with the powers of a civil court under the Code
of Civil Procedure, 1908, for discovery and inspection, enforcing the attendance of a person and
examining him on oath, and compelling production of books of account and other records.
ii. Both the Authority and the Appellate Authority shall be deemed to be a civil court for the purposes of
section 195 of the Code of Criminal Procedure, 1973.
iii. Any proceeding before the Authority or the Appellate Authority shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian
Penal Code. 1860. The both authorities have the power to regulate their own procedure.
A new rule 107A has been inserted vide N/N 55/2017-CT, Dated 15.11.2017, which states that in respect of
any process or procedure prescribed in Chapter XII, any reference to electronic filing of an application,
intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common
portal shall, in respect of that process or procedure, include the manual filing of the said application,
intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as
appended to the CGST Rules.
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Question & Answer

Q1. What is the objective of having a mechanism of Advance Ruling?
A. The broad objective for setting up such an authority is to:
• provide certainty in tax liability in advance in relation to an activity proposed to be undertaken by the
applicant;
• attract Foreign Direct Investment (FDI);
• reduce litigation;
• pronounce ruling expeditiously in transparent and inexpensive manner.
Q2. Whether Appeal can be filed before High Court or Supreme Court against the ruling of Appellate Authority
for Advance Rulings?
A. The CGST /SGST Act do not provide for any appeal against the ruling of Appellate Authority for Advance
Rulings. Thus, no further appeals lie and the ruling shall be binding on the applicant as well as the jurisdictional
officer in respect of applicant. However, writ petition may lie before Hon’ble High Court or the Supreme Court.
Q3. Can advance ruling be applied for after supply of goods and/or services?
A. Yes, as per section 95 (a) of the Act, application can be made for advance ruling in relation to the supply of
goods and/or services, being undertaken by applicant.
Q4. When AAR shall not admit the application for advance ruling?
A. AAR shall not admit the application where the issue raised is already pending or decided in any proceedings
in the case of an applicant under any of the provisions of this Act.
Q5. Are the tax authorities bound by the advance ruling?

A. Only the jurisdictional officer/concerned officer, in respect of applicant who has sought advance ruling is
bound by such rulings pronounced.
Q6. What are the powers vested with the authority and the appellate authority?
A. The authority or the appellate authority shall have all the powers of a civil court to exercise the following
powers:
(i) discovery and inspection;
(ii) enforcing attendance of any person and examining him on oath;
(iii) issuing commissions and compelling production of books of account and other records.
Q7. Can the Ruling issued by the AAR or order passed by the AAAR be rectified?
A. In case there is any error apparent on the face of the records, the AAR or AAAR as the case may be, can
amend the original order passed by it, if such error is noticed by the AAAR or AAAR on its own record or is
brought to its notice by the concerned officer, the jurisdictional officer, the applicant or the appellant, within a
period of 6 months from the date of said order. However, no rectification which has the effect of enhancing the
tax liability or reducing the amount of admissible input tax credit shall be made unless the applicant or the
appellant has been given an opportunity of being heard.
Example: In case AAR or AAAR has decided the advance ruling and issued the order on 31st July 2018 and
later on 28th September 2018, it has been noticed by the authority itself (or any concerned officer or any
jurisdictional officer or applicant) that there is some mistake apparent on record then the authority may rectify
such order. The tax rate decided in earlier order was taken as 18% instead of 28%, then before rectifying such
order the Authority shall provide the opportunity of hearing to the applicant.
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Section 144 Where any document–
Presumption as i. is produced by any person under this Act or any other law for the time being
to documents in in force; or
certain cases ii. has been seized from the custody or control of any person under this Act or any
other law for the time being in force; or
iii. has been received from any place outside India in the course of any proceedings
under this Act or any other law for the time being in force,
and such document is tendered by the prosecution in evidence against him or any other
person who is tried jointly with him, the court shall—
(a) unless the contrary is proved by such person, presume—
i. the truth of the contents of such document;
ii. that the signature and every other part of such document which
purports to be in the handwriting of any particular person or which the
court may reasonably assume to have been signed by, or to be in the
handwriting of, any particular person, is in that person’s handwriting,
and in the case of a document executed or attested, that it was
executed or attested by the person by whom it purports to have been
so executed or attested;
(b) admit the document in evidence notwithstanding that it is not duly stamped,
if such document is otherwise admissible in evidence.
Section 145 The Micro films, facsimile copies and computer printouts shall be deemed to be document
Admissibility of and is admissible as evidence.
Micro Films, In any proceedings, where it is desired to give a statement in evidence, a certificate
Facsimile copies identifying the document containing the statement and describing the manner in which it
of Documents was produced and giving such particulars of any device involved in the production of that
and Computer document as may be appropriate for the purpose of showing that the document was
Printouts as produced by a computer, shall be evidence of any matter stated in the certificate and for
documents and the purposes of this sub-section it shall be sufficient for a matter to be stated to the best
as evidence of the knowledge and belief of the person stating it.
Section 146 The common portal (www.gst.gov.in) would facilitate registration, tax payment, filing of
Common Portal returns, computation and settlement of integrated tax and other prescribed purposes.
www.ewaybillgst.gov.in would facilitate furnishing electronic way bill (e-way bill).
Section 147 The Government may, on the recommendations of the Council, notify certain supplies of
Deemed exports goods as deemed exports, where goods supplied do not leave India, and payment for
such supplies is received either in Indian rupees or in convertible foreign exchange if such
goods are manufactured in India. The Central Government vide Notification No. 48/2017
Dated 18th Oct’17 has notified the following supplies as deemed exports: -
1. Supply of goods by a registered person against Advance Authorisation
Provided that goods so supplied, when exports have already been made after
availing input tax credit on inputs used in manufacture of such exports, shall be
used in manufacture and supply of taxable goods (other than nil rated or fully
exempted goods) and a certificate to this effect from a chartered accountant is
submitted to the jurisdictional commissioner of GST or any other officer
authorised by him within 6 months of such supply,;
Provided further that no such certificate shall be required if input tax credit has
not been availed on inputs used in manufacture of export goods.
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2. Supply of capital goods by a registered person against Export Promotion Capital
Goods Authorisation.
3. Supply of goods by a registered person to EOU.
4. Supply of gold by a bank or PSU specified in the Notification No. 50/2017-
Customs, Dated the 30th June 2017 (as amended) against Advance
Authorisation.
Section 148 The Government may, on the recommendations of the Council, and subject to such
Special conditions and safeguards as may be prescribed, notify certain classes of registered
procedure for persons, and the special procedures to be followed by such persons including those with
certain regard to registration, furnishing of return, payment of tax and administration of such
processes persons.
Section 149 (1) Every registered person may be assigned a goods and services tax compliance
Goods & rating score by the Government based on his record of compliance with the
Service Tax provisions of this Act.
Compliance (2) The goods and services tax compliance rating score may be determined on the
Rating basis of such parameters as may be prescribed.
(3) The goods and services tax compliance rating score may be updated at periodic
intervals and intimated to the registered person and also placed in the public
domain in such manner as may be prescribed.
Section 150 Covered in Chapter 13 Returns
Information
Return
Section 151 The Commissioner may, by way of a notification, direct collection of statistics for the
Power to collect purpose of better administration of the Act. After issuance of such notification, the
statistics Commissioner or any person authorized by Commissioner in this regard may call all
concerned persons to furnish such information or return relating to any matter in respect
of which statistics is being collected.
Section 152 Bar There is bar on publication and use of information of any individual return furnished U/s
on disclosure of 150/151 relating to a particular person and no such information shall be used for the
information purpose of any proceedings under this Act. Similarly, there is bar on access to any
information or any individual return referred to in Sec. 151. However, this bar is not
applicable to the publication of any information relating to a class of taxable persons or
class of transactions, if in the opinion of the Commissioner, it is desirable in the public
interest to publish such information.
Section 153 Any officer not below the rank of Assistant Commissioner may, having regard to the nature
Taking and complexity of the case and the interest of revenue, take assistance of any expert at
assistance from any stage of scrutiny, inquiry, investigation or any other proceedings before him.
an expert
Section 154 The Commissioner or an officer authorized by him may take samples of goods form the
Power to take possession of any taxable person, where he considers it necessary, and provide a receipt
samples for any samples so taken.
Section 155 Where any person claims that he is eligible for input tax credit under this Act, the burden
Burden of proof of proving such claim shall lie on such person.
Section 156 All persons discharging functions under this Act shall be deemed to be public servants
Persons within the meaning of section 21 of the Indian Penal Code.
deemed to be
public servants
Section 157 Immunity from any legal or departmental proceedings is provided to the GST officers and
Protection of officers of the Tribunal for the acts done in good faith under the provisions of this Act.
Actions taken in exercise of official functions cannot result in liability devolving on the
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action taken officers. It is this protection that officers enjoy while exercising authority vested in the law
under this Act without fear or favour.
Section 158 (1) All particulars contained in any statement made, return furnished or accounts or
Disclosure of documents produced in accordance with this Act, or in any record of evidence
information by a given in the course of any proceedings under this Act (other than proceedings
public servant before a criminal court) or in any record of any proceedings under this Act, save
as provided in Section 158 (3), shall not be disclosed.
(2) No court shall require any officer appointed or authorized under this Act to
produce before it or to give evidence before it is respect of particulars referred to
in Section 158 (1).
(3) Nothing contained in this section shall apply to the disclosure of information –
a. For prosecution.
b. For carrying out the objects of the Act.
c. For service of notice or recovery of demand.
d. For furnishing to Court in a proceeding where Government is a party.
e. For audit of tax receipts or refunds.
f. For inquiry into the conduct of GST officer.
g. For enabling levy/realization of any tax or duty.
h. By lawful exercise of powers.
i. For inquiry into a charge of misconduct by any professional.
j. For data entry on automated system.
k. For any other law.
l. In public interest.
Section 159 If the commissioner or any authorized officer, is of the opinion that it is necessary or
Publication of expedient in the public interest to publish the name of any person and any other particulars
information in relating to any proceedings or prosecution under this Act in respect of such person, it may
respect of cause to be published such name and particulars in such manner as it think fit.
persons in No publication shall be made in respect of penalty till disposal of appeal if the same has
certain cases been filed or time limit for filing appeal has not expired. In this case of firm, company or
other association of persons, the names of the partners of the firm, directors, managing
agents, secretaries and treasurers or managers of the company, or the members of the
association, as the case may be, may also be published if, in the opinion of the
Commissioner, or any other officer authorized by him in this behalf, circumstances of the
case justify it.
Section 160 Assessment, re-assessment, etc. shall not to be invalid merely on grounds of procedural
Assessment infractions. The service of any notice, order or communication shall not be called in
proceedings, question, if the notice, order or communication, as the case may be, has already been
etc., not to be acted upon by the person to whom it is issued or where such service has not been called
invalid on in question at or in the earlier proceedings commenced, continued or finalized pursuant
certain grounds to such notice, order or communication.
Section 161 Without prejudice to the provisions of section 160, and notwithstanding anything
Rectification of contained in any other provisions of this Act, any authority, who has passed or issued
errors apparent any decision or order or notice or certificate or any other document, may rectify any
on the face of error which is apparent on the face of record in such decision or order or notice or
record certificate or any other document, either on its own motion or where such error is
brought to its notice by any officer appointed under this Act or an officer appointed under
the State Goods and Services Tax Act or an officer appointed under the Union Territory
Goods and Services Tax Act or by the affected person within a period of three months
from the date of issue of such decision or order or notice or certificate or any other
document, as the case may be:
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Provided that no such rectification shall be done after a period of six months from the
date of issue of such decision or order or notice or certificate or any other document:
Provided further that the said period of six months shall not apply in such cases where
the rectification is purely in the nature of correction of a clerical or arithmetical error,
arising from any accidental slip or omission:
Provided also that where such rectification adversely affects any person, the principles
of natural justice shall be followed by the authority carrying out such rectification.
Section 162 Bar Save as provided in sections 117 and 118, no civil court shall have jurisdiction to deal with
on jurisdiction of or decide any question arising from or relating to anything done or purported to be done
civil courts under this Act.
Section 163 Wherever a copy of any order or document is to be provided to any person on
Levy of fee an application made by him for that purpose, there shall be paid such fee as may be
prescribed.
Section 164 (1) The Government may, on the recommendations of the Council, by notification,
Power of make rules for carrying out the provisions of this Act.
Government to (2) Without prejudice to the generality of the provisions of sub-section (1), the
make rules Government may make rules for all or any of the matters which by this Act are
required to be, or may be, prescribed or in respect of which provisions are to be or
may be made by rules.
(3) The power to make rules conferred by this section shall include the power to give
retrospective effect to the rules or any of them from a date not earlier than the date
on which the provisions of this Act come into force.
(4) Any rules made under sub-section (1) or sub-section (2) may provide that a
contravention thereof shall be liable to a penalty not exceeding ten thousand
rupees.
Section 165 The Board may, by notification, make regulations consistent with this Act and the rules
Power to make made thereunder to carry out the provisions of this Act.
regulations
Section 166 a. The Act permits making of rules by Government, issuance of regulation by Board
Laying of rules, and issuance of notification by the Government.
regulations & b. Such rule, regulation and notification, which is a part of delegated legislation is
notifications placed before the Parliament.
c. It is laid before the Parliament, as soon as may be after it is made or issued, when
the Parliament is in session, for a total period of thirty days which may be
comprised in one session or in two or more successive sessions.
d. Before the expiry of the session or successive sessions both Houses may make
suitable modifications and would have effect in such modified form.
e. However, any such modification or annulment shall be without prejudice to the
validity of anything previously done under that rule or regulation or notification, as
the case may be.
Section 167 The Commissioner may, by notification, direct that subject to such conditions, if any, as
Delegation of may be specified in the notification, any power exercisable by any authority or officer
powers under this Act may be exercisable also by another authority or officer as may be specified
in such notification.
Section 168 There are three aspects to the provision, namely:
Power to issue
instructions or • authority issuing the instruction;
directions • persons whom it binds, and
• its efficacy.
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It is the Competent Authority who is empowered to issue the orders, instruction or
directions. The purpose is to bring in uniformity in the implementation of the Act; and it is
binding on all GST officers.
Thus, any circular which is general or administrative in nature is binding on the assessing
officer and other officers at basic level. Once the circular is cited they cannot ignore it and
decide the matter independently. The circular or instruction is not binding on the assessee.
As regards contrary views regarding binding force of a circular which is against the legal
provisions on the assessee or the Authorities is not expressly addressed in this Section.
However, officers are not liable for passing orders contrary to law involving interpretation
by higher judiciary if it can be shown that such orders are in conformity with orders,
instruction or directions issued under this Section.
Sub-section (2) of section 168 designates the Commissioner or Joint Secretary posted in
the Board for exercising certain powers conferred under specific provisions. Such powers
would be exercised with the approval of the Board.
Section 169 (1) Manner of Service: Any decision, order, summons, notice or other communication
Service of notice under this Act or the rules made thereunder shall be served by any of the following
in certain methods, namely:-
circumstances (a) by giving or tendering it directly or by a messenger including a courier to the
addressee or the taxable person or to his manager or authorised
representative or an advocate or a tax practitioner holding authority to
appear in the proceedings on behalf of the taxable person or to a person
regularly employed by him in connection with the business, or to any adult
member of family residing with the taxable person; or
(b) by registered post or speed post or courier with acknowledgement due, to
the person for whom it is intended or his authorised representative, if any,
at his last known place of business or residence; or
(c) by sending a communication to his e-mail address provided at the time of
registration or as amended from time to time; or
(d) by making it available on the common portal; or
(e) by publication in a newspaper circulating in the locality in which the taxable
person or the person to whom it is issued is last known to have resided,
carried on business or personally worked for gain; or
(f) if none of the modes aforesaid is practicable, by affixing it in some
conspicuous place at his last known place of business or residence and if
such mode is not practicable for any reason, then by affixing a copy thereof
on the notice board of the office of the concerned officer or authority who or
which passed such decision or order or issued such summons or notice.
(2) Deemed Service: Every decision, order, summons, notice or any communication
shall be deemed to have been served on the date on which it is tendered or
published or a copy thereof is affixed in the manner provide in section 169 (1).
(3) Deemed service in case of registered post or speed post: When such decision,
order summons, notice or any communication is sent by registered post or speed
post, it shall be deemed to have been received by the addressee at the expiry of
the period normally taken by such post in transit unless the contrary is proved.
Section 170 The amount of tax, interest, penalty, fine or any other sum payable, and the amount of
Rounding off of refund or any other sum due, under the provisions of this Act shall be rounded off to the
tax, etc. nearest rupee and, for this purpose, where such amount contains a part of a rupee
consisting of paise, then, if such part is 50 paise or more, it shall be increased to Rs. 1
and if such part is less than 50 paise it shall be ignored.
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Section 171 It mandatory that any reduction in rate of tax on any supply of goods or services or the
Anti-profiteering benefit of input tax credit shall be passed to the recipient by way of commensurate
measure reduction in prices.
National Anti-Profiteering Authority is therefore being constituted by the Central
Government to examine whether input tax credits availed by any registered person or the
reduction in the tax rate have actually resulted in a commensurate reduction in the price
of the goods and/or services supplied by him.
The National Anti-Profiteering Authority shall be a five member committee consisting of a
Chairman who holds or has held a post equivalent in rank to a Secretary to the
Government of India; and four Technical Members who are or have been Commissioners
of State tax or central tax for at least one year or have held an equivalent post under
earlier laws.
The Authority shall cease to exist after the expiry of two years from the date on which the
Chairman enters upon his office unless the GST Council recommends otherwise.
Duties of Authority:
It shall be the duty of the authority-
I. to determine whether the reduction in tax rate or the benefit of input tax credit has
been passed on by the seller to the buyer (hereinafter collectively referred to as
‘benefit’) by reducing the prices
II. to identify the taxpayer who has not passed on the benefit
III. to order
a. reduction in prices
b. return to the recipient, an amount equivalent to the amount not passed
on by way of commensurate reduction in prices along with interest at the
rate of 18% from the date of collection of the higher amount till the date
of the return of such amount or recovery of the amount not returned, as
the case may be. If the eligible person does not claim return of the
amount or is not identifiable, the amount must be deposited in the
Consumer Welfare Fund;
c. imposition of penalty
d. cancellation of registration
IV. to furnish a performance report to the GST Council by the 10th of the month
succeeding each quarter
Process followed by the Authority
Application to the Authority: All applications from interested parties on issues of local
nature shall first be examined by the State Level Screening Committee. On being
satisfied that the supplier has not passed on the benefit, the Screening Committee will
forward the application with its recommendations to the Standing Committee on Anti-
profiteering.
If the Standing Committee is satisfied that there is a prima facie evidence to show that
the supplier has not passed on the benefit, it shall refer the matter to the Director General
of Anti-profiteering for a detailed investigation.
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Investigation: Directorate General of Anti-profiteering shall conduct investigation and
collect evidence necessary to determine undue profiteering and before initiation of the
investigation, issue a notice to the interested parties (and to such other persons as
deemed fit for a fair enquiry into the matter).
The evidence or information presented to Directorate General of Anti-
profiteering by one interested party can be made available to the other interested parties,
participating in the proceedings. The evidence provided will be kept confidential and the
provisions of section 11 of the Right to Information Act, 2005, shall apply mutatis mutandis
to the disclosure of any information which is provided on a confidential basis.
Directorate General of Anti-profiteering can seek opinion of any other agency or statutory
authorities in the discharge of his duties. The Director General of Anti-profiteering, or an
officer authorized by him will have the power to summon any person either to give
evidence or to produce a document or any other thing. He will also have same powers
as that of a civil court and every such inquiry will be deemed to be a judicial proceeding.
Directorate General of Anti-profiteering will complete the investigation within a period of
3 months or within such extended period not exceeding a further period of 3 months for
reasons to be recorded in writing as allowed by the Standing Committee. Upon
completion of the investigation, Directorate General of Anti-profiteering will furnish to the
Authority, a report of its findings along with the relevant records.
Order of the Authority

Where the Authority determines that a registered person has not passed on the benefit of
the reduction in the rate of tax on the supply of goods or services or the benefit of input
tax credit to the recipient by way of commensurate reduction in prices, the Authority may
order-
(a) reduction in prices;
(b) return to the recipient, an amount equivalent to the amount not passed on by way
of commensurate reduction in prices along with interest at the rate of eighteen per
cent, from the date of collection of the higher amount till the date of the return of
such amount or recovery of the amount including interest not returned, as the case
may be;
(c) the deposit of an amount equivalent to fifty per cent. of the amount determined under
the above clause in the Fund constituted under section 57 and the remaining fifty
per cent. of the amount in the Fund constituted under section 57 of the Goods and
Services Tax Act, 2017 of the concerned State, where the eligible person does not
claim return of the amount or is not identifiable;
(d) imposition of penalty as specified under the Act; and
(e) cancellation of registration under the Act.
Explanation: For the purpose of this sub-rule, the expression, “concerned State” means
the State in respect of which the Authority passes an order.
{Rule 133 (3)- Substituted vide Notification No. 26/2018-CT Dated 13.06.2018}
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The following are noteworthy in this regard:
• Any order passed by the Authority shall be immediately complied with by

the registered person failing which action shall be initiated to recover the
amount.
• The Authority will pass order within 3 months from the date of the receipt of
the report from the Directorate General of Anti-profiteering.
• A minimum of three members of the Authority shall constitute quorum at its
meeting. If opinion differ then decision will be taken by majority. If equal
votes, the Chairman shall have the second or casting vote.
• An opportunity of being heard will be given, if the interested parties request
for it in writing.
• Period of interest will be calculated from the date of collection of higher
amount till the date of return of such amount.
• If the eligible person (i.e., the buyer) does not claim the return or the person
is unidentifiable then the amount must be deposited to the Consumer
Welfare Fund along with applicable interest.
Section 172 (1) If any difficulty arises in giving effect to any provisions of this Act, the Government
Removal of may, on the recommendations of the Council, by a general or a special order
difficulties published in the Official Gazette, make such provisions not inconsistent with the
provisions of this Act or the rules or regulations made thereunder, as may be
necessary or expedient for the purpose of removing the said difficulty:
Provided that no such order shall be made after the expiry of a period of three
years from the date of commencement of this Act.
(2) Every order made under this section shall be laid, as soon as may be, after it is
made, before each House of Parliament.
Section 173 Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be
Amendment of omitted.
Act 32 of 1994
Section 174 (1) Save as otherwise provided in this Act, on and from the date of commencement of
Repeal & this Act, the Central Excise Act, 1944 (except as respects goods included in entry
Saving 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal
and Toilet Preparations (Excise Duties) Act, 1955, the Additional Duties of Excise
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(Goods of Special Importance) Act, 1957, the Additional Duties of Excise (Textiles
and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 (hereafter
referred to as the repealed Acts) are hereby repealed.
(2) The repeal of the said Acts and the amendment of the Finance Act, 1994
(hereafter referred to as “such amendment” or “amended Act”, as the case may
be) to the extent mentioned in the sub-section (1) or section 173 shall not—
a. revive anything not in force or existing at the time of such amendment
or repeal; or
b. affect the previous operation of the amended Act or repealed Acts and
orders or anything duly done or suffered thereunder; or
c. affect any right, privilege, obligation, or liability acquired, accrued or
incurred under the amended Act or repealed Acts or orders under such
repealed or amended Acts:
Provided that any tax exemption granted as an incentive against
investment through a notification shall not continue as privilege if the said
notification is rescinded on or after the appointed day; or
d. affect any duty, tax, surcharge, fine, penalty, interest as are due or
may become due or any forfeiture or punishment incurred or inflicted in
respect of any offence or violation committed against the provisions of
the amended Act or repealed Acts; or
e. affect any investigation, inquiry, verification (including scrutiny and
audit), assessment proceedings, adjudication and any other legal
proceedings or recovery of arrears or remedy in respect of any such duty,
tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability,
forfeiture or punishment, as aforesaid, and any such investigation,
inquiry, verification (including scrutiny and audit),
assessment proceedings, adjudication and other legal proceedings or
recovery of arrears or remedy may be instituted, continued or enforced,
and any such tax, surcharge, penalty, fine, interest, forfeiture or
punishment may be levied or imposed as if these Acts had not
been so amended or repealed;
f. affect any proceedings including that relating to an appeal, review or
reference, instituted before on, or after the appointed day under the said
amended Act or repealed Acts and such proceedings shall be continued
under the said amended Act or repealed Acts as if this Act had not come
into force and the said Acts had not been amended or repealed.
(3) The mention of the particular matters referred to in sub-sections (1) and (2)
shall not be held to prejudice or affect the general application of section 6 of the
General Clauses Act, 1897 with regard to the effect of repeal.
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Section 20 Subject to the provisions of this Act and the rules made thereunder, the provisions of
Application of Central Goods and Services Tax Act relating to,—
provisions of (i) scope of supply;
CGST Act (ii) composite supply and mixed supply;
(iii) time and value of supply;
(iv) input tax credit;
(v) registration;
(vi) tax invoice, credit and debit notes;
(vii) accounts and records;
(viii) returns, other than late fee;
(ix) payment of tax;
(x) tax deduction at source;
(xi) collection of tax at source;
(xii) assessment;
(xiii) refunds;
(xiv) audit;
(xv) inspection, search, seizure and arrest;
(xvi) demands and recovery;
(xvii) liability to pay in certain cases;
(xviii) advance ruling;
(xix) appeals and revision;
(xx) presumption as to documents;
(xxi) offences and penalties;
(xxii) job work;
(xxiii) electronic commerce;
(xxiv) transitional provisions; and
(xxv) miscellaneous provisions including the provisions relating to the imposition of
interest and penalty,
shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they
apply in relation to central tax as if they are enacted under this Act:
Provided that in the case of tax deducted at source, the deductor shall deduct tax at the
rate of two per cent from the payment made or credited to the supplier:
Provided further that in the case of tax collected at source, the operator shall collect tax
at such rate not exceeding two per cent, as may be notified on the recommendations of
the Council, of the net value of taxable supplies:
Provided also that for the purposes of this Act, the value of a supply shall include any
taxes, duties, cesses, fees and charges levied under any law for the time being in force
other than this Act, and the Goods and Services Tax (Compensation to States) Act, if
charged separately by the supplier:
Provided also that in cases where the penalty is leviable under the Central Goods and
Services Tax Act and the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act, the penalty leviable under this Act shall be the sum total of
the said penalties.
Provided also that where the appeal is to be filed before the Appellate Authority or the
Appellate Tribunal, the maximum amount payable shall be fifty crore rupees and one
hundred crore rupees respectively.
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Section 17 Supplies in respect of which the IGST shall be apportioned
Apportionment
Sub-section (1) of section 17 lays down that in respect of the IGST paid on the following
of tax and
supplies of goods and/or services, the IGST shall be apportioned:
settlement of
funds a) inter-State supply to an unregistered person or to a registered person paying tax
under composition scheme;
b) inter-State supply where the registered person is not eligible for input tax credit;
c) inter-State supply made in a financial year to a registered person, where he does
not avail of the input tax credit within the specified period and thus the tax remains
in the integrated tax account after expiry of the due date for furnishing of annual
return for such year in which the supply was made;
d) import by an unregistered person or by a registered person paying tax under
composition scheme;
e) import where the registered person is not eligible for input tax credit;
f) import made in a financial year by a registered person, where he does not avail
of the said credit within the specified period and thus the tax remains in the
integrated tax account after expiry of the due date for furnishing of annual return
for such year in which the supply was received.
Thus, fundamentally IGST shall be apportioned only in respect of those supplies

where the input tax credit cannot be availed and thus, the tax revenue finally
accrues to the exchequer.
Methodology of apportionment
The IGST paid on the supplies mentioned above shall be apportioned as under:
I. The amount of tax calculated at the rate equivalent to the CGST on similar intra-
State supply shall be apportioned to the Central Government.
II. The balance amount of IGST remaining in the integrated tax account shall be
apportioned to the State where such supply takes place and to the Central
Government if such supply takes place in a Union territory.
If the place of such supply made by any taxable person cannot be determined
separately, the balance amount shall be apportioned to each of the
States/Central Government (in relation to Union territories) in proportion to the
total supplies made by such taxable person to each of such States/Union
territories in a financial year.
If the taxable person making such supplies is not identifiable, the said balance
amount shall be apportioned to all States and the Central Government in
proportion to the amount collected as SGST/UTGST by the respective State/ the
Central Government during the immediately preceding financial year.
The amount not apportioned under sub-section (1) and sub-section (2) may, for the
time being, on the recommendations of the Council, be apportioned at the rate of fifty
per cent. to the Central Government and fifty per cent. to the State Governments or
the Union territories, as the case may be, on ad hoc basis and shall be adjusted
against the amount apportioned under the said sub-sections.
Thus, essentially, the new sub-section (2A) provides for apportionment of IGST in
respect of B2B supplies wherein input tax credit has been taken by the recipients.
378
IGST
The interest, penalty and compounding amount realized in connection with the IGST shall
also be apportioned in the similar manner.
The Central Government shall transfer the amount apportioned to it to the CGST
account or UTGST account, as the case may be and the amount apportioned to the
State Government(s) to the SGST account of the respective States.
Section 18 Section 18 of the IGST Act provides as under:
Transfer of ITC
• When IGST credit is utilized for payment of CGST, the amount collected as
IGST shall stand reduced by the amount equal to such credit. The Central
Government shall transfer an amount equal to the amount so reduced from
the IGST account to the CGST account.
• When IGST credit is utilized for payment of UTGST, the amount collected as
IGST shall stand reduced by the amount equal to such credit. The Central
Government shall transfer an amount equal to the amount so reduced from
the IGST account to the UTGST account.
• When IGST credit is utilized for payment of SGST, the amount collected as
IGST shall stand reduced by the amount equal to such credit and shall be
apportioned to the appropriate State Government. The Central Government
shall transfer the amount so apportioned to the account of the appropriate
State Government.
• Appropriate State means the State or Union territory where a taxable person
is registered or is liable to be registered under CGST Act.
Question & Answer

Q1. Is there any condition that consideration must be received in foreign currency for deemed export goods?
A. There is no condition that consideration for goods notified as deemed exports must be received in convertible
foreign exchange. The consideration may be received in Indian Rupees also.
Q2. Whether imported goods, supplied ‘as such’ qualify for deemed exports?
A. Only goods manufactured in India, which are notified by Central Government qualify to be treated as deemed
exports. Thus goods notified u/s 147, if imported do not qualify as deemed exports, if they are supplied ‘as
such’.
Q3. Whether goods notified u/s 147, if manufactured in India from imported goods qualify for the benefit of
deemed exports?
A. Provisions of Section 147 apply to ‘goods manufactured in India’. There is no restriction that raw materials
required for manufacture of notified goods must also be manufactured in India. Hence notified goods, if
manufactured from imported goods would qualify as deemed exports.
Q4. Who can rectify a mistake apparent on record U/s 161?

A. Any authority, who has passed or issued any decision or order or notice or certificate or any other document,
may rectify any error which is apparent on the face of record in such decision or order or notice or certificate or
any other document.

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GST Fully Ammended Book For CA Final Nov 19 PDF

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First fully amended book

of Goods & Services Tax

AMENDED ON THE BASIS OF ICAI STATUTORY

C A final idt Part I

Goods & services

GST Bare Act Pages 120

Feedbacks of Classes & doubt clearance available openly in telegram

Thanks in advance for helping us!

Overall Structure of GST

Deficiency in the earlier Indirect tax regime

How GST Works (‘No Tax on Tax’ in GST)

Net Tax Payable = Value Addition * Tax Rate

For Wholesaler = 10 {Profit/Value Addition} * 18% = 1.80

For Retailer = 10 {Profit/Value Addition} * 18% = 1.80

Framework of GST in India

➢ GST Common Portal (www.gst.gov.in managed by GSTN)

Facilitating Forwarding Computation Matching of Providing Providing

There is separate portal for generating e-way bill.

➢ Taxes subsumed in GST: -

Article 246A – Newly Inserted

Special provision w.r.t GST

Article 269A – Newly Inserted

Levy and collection of GST in course of inter-State trade or commerce

Article 270 – Amendment

Article 271 – Amendment

Article 279A – Newly Inserted

Goods and Service Tax Council

No act or proceedings of GST Council shall be invalid merely by reason of—

GST Council shall establish a mechanism to adjudicate any dispute—

Article 286 – Amendment

Restrictions as to imposition of tax on the sale or purchase of goods

Article 366 – Amendment

Article 368 – Amendment

Powers of Parliament to amend the Constitution and procedure thereof

Seventh Schedule [Article 246] – Amendment

List I – Union List

✓ Motor Spirit (Commonly known as petrol)

List II – State List

Clause 18 - Compensation to States for loss of revenue on account of implementation of GST

Clause 20 - Power of President to remove difficulties

Section 2 of CGST Act, 2017 – Definitions under GST (below

(17) “Business” includes––

(31) “consideration” in relation to the supply of goods or services or both includes––

(34) “conveyance” includes a vessel, an aircraft and a vehicle;

(49) “family” means, ––

(63) “input tax credit” means the credit of input tax;

(69) “local authority” means––

(70) “location of the recipient of services” means, -

(71) “location of the supplier of services” means, -

(84) “person” includes—

(85) “place of business” includes––

(93) “recipient” of supply of goods or services or both, means—

(96) “removal’’ in relation to goods, means—

(103) “State” includes a Union territory with Legislature;

(113) “usual place of residence” means––

(114) “Union territory” means the territory of—

Section 2 of IGST Act, 2017 – Definitions under GST (below

(6) “export of services” means the supply of any service when, -

(11) ‘‘import of services” means the supply of any service, where––

(14) “location of the recipient of services” means, ––

(15) “location of the supplier of services” means, ––

Question & Answer

Q2. Whether ‘securities’ are goods or services?