RECIPIENT OF SUPPLY OF GOODS OR SEVICES UNDER GST ACT

SUBMITTED BY
SAPNA PANDEY
ROLL NO. 1370, 8TH SEMESTER, B.A.LL. B (Hons.)
SUBMITTED TO
DR. G. P. PANDEY
FACULTY OF LAW

FINAL DRAFT SUBMITTED IN FULFILLMENT OF THE COURSE OF TAXATION LAW-

II FOR THE COMPLETION OF THE B.A.LL. B (Hons.) COURSE.

MARCH, 2019

CHANAKYA NATIONAL LAW UNIVERSITY

PATNA (BIHAR)

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Table of Contents

ACKNOWLEDGEMENT ..................................................................................................... 3

DECLARATION .................................................................................................................. 4

RESEARCH METHODOLOGY........................................................................................... 5

CONCEPT ........................................................................................................................ 5

AIMS AND OBJECTIVES ............................................................................................... 5

RESEARCH QUESTIONS: .............................................................................................. 5

METHODS OF DATA COLLECTION ............................................................................. 5

CH-1: INTRODUCTION ...................................................................................................... 6

1.1 DEFINITION.......................................................................................................... 6

CH-2: TIME & PLACE OF SUPPLY UNDER GST ............................................................. 8

2.1 TIME OF SUPPLY UNDER GST ............................................................................... 8

2.2 PLACE OF SUPPLY UNDER GST .......................................................................... 10

CH-3 COMPARATIVE ANALYSIS: BEFORE & AFTER GST ........................................ 12

CH-4 CONCLUSION ......................................................................................................... 17

BIBLIOGRAPHY ............................................................................................................... 18

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 ACKNOWLEDGEMENT

The researcher takes this opportunity to express her profound gratitude and deep regards to

her guide Dr. G. P. PANDEYfor his exemplary guidance, monitoring and constant

encouragement throughout the course of this thesis. The blessing, help and guidance given by

him time to time shall carry the researcher a long way in the journey of life on which the

researcher is about to embark.

THANK YOU,
SAPNA PANDEY

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 DECLARATION

I hereby declare that the work reported in the B.A.LL. B (Hons.) Project Report entitled

“RECIPIENT OF SUPPLY OF GOODS OR SERVICES UNDER GST ACT” submitted

at Chanakya National Law University, Patna is an authentic record of my work carried

under the supervision of Dr. G. P. Pandey.I have not submitted this work elsewhere for any

other degree or diploma. I am fully responsible for the contents of our project report.

SAPNA PANDEY

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA

MARCH, 2019

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RESEARCH METHODOLOGY

CONCEPT:GST is a value-added tax levied at all points in the supply chain, with credit
allowed for any tax paid on input acquired for use in making the supply. It would apply to
both goods and services in a comprehensive manner, with exemptions restricted to a
minimum.

In keeping with the federal structure of India, it is proposed that the GST will be levied
concurrently by the central government (CGST) and the state government (SGST). It is
expected that the base and other essential design features would be common between CGST
and SGSTs for individual states. The inter-state supplies within India would attract an
integrated GST (IGST), which is the aggregate of CGST and the SGST of the destination
state.

Section 2(93) of CGST define recipient of supply of goods or services or both.

AIMS AND OBJECTIVES: the researcher has found out the following during the course of
research:

i) The concept of recipient of supply of goods or services.

ii) The concept of time of supply.

iii) The definition of place of supply.

RESEARCH QUESTIONS: The researcher has formulated the following research

questions, the answer for which has been found during the course of research:

i) What is GST Act?

ii) What is the concept of recipient of supply of goods or services?

iii) What is the meaning of time and place of supply under GST Act?

iv) What was the earlier definition of time and place of supply under Central Excise Act?

SOURCES OF DATA

Primary sources- GST Act, Central Excise Act.

Secondary source-Journals and websites

METHODS OF DATA COLLECTION: The researcher will make use of doctrinal methods.

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CH-1: INTRODUCTION

1.1 DEFINITION
GST is a value-added tax levied at all points in the supply chain, with credit allowed for any
tax paid on input acquired for use in making the supply. It would apply to both goods and
services in a comprehensive manner, with exemptions restricted to a minimum.

In keeping with the federal structure of India, it is proposed that the GST will be levied
concurrently by the central government (CGST) and the state government (SGST). It is
expected that the base and other essential design features would be common between CGST
and SGSTs for individual states. The inter-state supplies within India would attract an
integrated GST (IGST), which is the aggregate of CGST and the SGST of the destination
state.

Section 2 (93) of CGST defines recipient of supply of goods or services

As per Section 2(93) of the Central Goods and Services Tax (CGST) Act, 2017, unless the
context otherwise requires, the term “Recipient” of supply of Goods/ Services has been
defined, as under:

“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.1

The Central Goods and Services Tax (CGST) Act, 2017 was notified by Govt. of India on 12
April, 2017 and CBIC has notified the commencement date for various Sections/ Provisions
thereof from time to time. Subsequently, Govt. has notified the Central Goods and Services
1
S. 2(93) of CGST Act, 2017.

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Tax (CGST) (Amendment) Act, 2018 on 30 Aug. 2018. Further, CBIC has separately notified
the commencement date of provisions of various Sections of the CGST (Amendment) Act
2018 vide Notification No. 2/2019 Central Tax dt. 29 Jan. 2019, except for sections where the
date of commencement is different from 1 Feb. 2019 and has specifically been mentioned in
the CGST Amendment Act, 2018 itself. 2

2
https://caclub.in/section-293-of-cgst-act-meaning-of-recipient-of-supply-of-goods-services/ retrieved on 7th
March, 2019.

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CH-2: TIME & PLACE OF SUPPLY UNDER GST

2.1TIME OF SUPPLY UNDER GST

Under GST, 3 types of taxes can be charged in the invoice. SGST and CGST in case of an
intra-state transaction and IGST in case of an interstate transaction. But deciding whether a
particular transaction is interstate or intrastate is not an easy task. Think about an online
training where customers are sitting in different parts of the world.

Say in case, hotel services, where the receiver may have an office in another state and may be
visiting the hotel only temporarily, or where goods are sold on a train journey passing
through different states. To help address some of these situations, the IGST act lays down
certain rules which define whether a transaction is inter or intrastate. These rules are called
the place of supply rules.3

Time of Supply

Time of supply means the point in time when goods/services are considered supplied’. When
the seller knows the ‘time’, it helps him identify due date for payment of taxes. CGST/SGST
or IGST must be paid at the time of supply. Goods and services have a separate basis to
identify their time of supply.

Time of Supply of Goods

Time of supply of goods is earliest of:

 Date of issue of invoice

 Last date on which invoice should have been issued
 Date of receipt of advance/ payment.

For example:

Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The
payment was received on 31st January. The goods were supplied on 20th January.

Let us analyse and arrive at the time of supply in this case.

3
https://cleartax.in/s/time-place-and-value-of-supply-in-gst retrieved on 10th March, 2019

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Time of supply is earliest of –

1. Date of issue of invoice = 15th January

2. Last date on which invoice should have been issued = 20th January

Thus, the time of supply is 15th January.

What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X on
1st January?

The time of supply for the advance of Rs 50,000 will be 1st January(since the date of receipt
of advance is before the invoice is issued). For the balance Rs 50,000, the time of supply will
be 15th January. 4

Time of Supply for Services

Time of supply of services is earliest of:

 Date of issue of invoice

 Date of receipt of advance/ payment.
 Date of provision of services (if invoice is not issued within prescribed period)

Let us understand this using an example:

Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued on
20th January and the payment for the same was received on 1st February.In the present case,
we need to 1st check if the invoice was issued within the prescribed time. The prescribed
time is 30 days from the date of supply i.e. 31st January. The invoice was issued on 20th
January. This means that the invoice was issued within a prescribed time limit.

The time of supply will be earliest of –

1. Date of issue of invoice = 20th January

2. Date of payment = 1st February

This means that the time of supply of services will be 20th January. 5

4
Ibid
5
https://www.taxmann.com/blogpost/2000000046/what-is-meant-by-time-of-supply-under-gst.aspx, retrived on
7th March, 2019

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 2.2 PLACE OF SUPPLY UNDER GST

It is very important to understand the term ‘place of supply’ for determining the right tax to
be charged on the invoice.

Here is an example:

Location of Service Receiver Place of supply Nature of Supply GST Applicable

Maharashtra Maharashtra Intra-state CGST + SGST

Maharashtra Kerala Inter-state IGST

Place of Supply of Goods

Usually, in case of goods, the place of supply is where the goods are delivered.So, the place
of supply of goods is the place where the ownership of goods changes.What if there is no
movement of goods? In this case, the place of supply is the location of goods at the time of
delivery to the recipient.For example: In case of sales in a supermarket, the place of supply is
the supermarket itself.

Place of supply in cases where goods that are assembled and installed will be the location
where the installation is done.

For example, A supplier located in Kolkata supplies machinery to the recipient in Delhi. The
machinery is installed in the factory of the recipient in Kanpur. In this case, the place of
supply of machinery will be Kanpur.6

Place of Supply for Services

Generally, the place of supply of services is the location of the service recipient.In cases
where the services are provided to an unregistered dealer and their location is not available
the location of service provider will be the place of provision of service.Special provisions
have been made to determine the place of supply for the following services:

 Services related to immovable property

6
https://www.indiafilings.com/learn/time-supply-gst/, retrieved on 8th March, 2019

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  Restaurant services
 Admission to events
 Transportation of goods and passengers
 Telecom services
 Banking, Financial and Insurance services.

In case of services related to immovable property, the location of the property is the place of
provision of services.

Example 1:

Mr. Anil from Delhi provides interior designing services to Mr. Ajay(Mumbai). The property
is located in Ooty(Tamil Nadu).In this case, place of supply will be the location of the
immovable property i.e. Ooty, Tamil Nadu.

Example 2:

A registered taxpayer offers passenger transport services from Bangalore to Hampi. The
passengers do not have GST registration. What will be the place of supply in this case?The
place of supply is the place from where the departure takes place i.e. Bangalore in this case. 7

7
Supra Note 1

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CH-3 COMPARATIVE ANALYSIS: BEFORE & AFTER GST

GST has brought in ‘one nation one tax’ system, but its effect on various industries is slightly
different. The first level of differentiation will come in depending on whether the industry
deals with manufacturing, distributing and retailing or is providing a service. GST is a boost
competitiveness and performance in India’s manufacturing sector. Declining exports and high
infrastructure spending are just some of the concerns of this sector. Multiple indirect taxes
had also increased the administrative costs for manufacturers and distributors and with GST
in place, the compliance burden has eased and this sector will grow more strongly.

But due to GST business which was not under the tax bracket previously will now have to
register. This will lead to lesser tax evasion.

Before GST, there is central Excise act. Sec 4 of Section 4 Central Excise Act talks about
valuation of goods.

Section 4 of Central Excise Act:8

Valuation of goods for purposes of charging of duty of excise. -

(1) Where under this Act, the duty of excise is chargeable on any excisable goods with
reference to their value, then, on each removal of the goods, such value shall -

(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the
removal, the assessee and the buyer of the goods are not related and the price is the sole
consideration for the sale, be the transaction value;

(b) in any other case, including the case where the goods are not sold, be the value
determined in such manner as may be prescribed.

Explanation. - For the removal of doubts, it is hereby declared that the price-cum-duty of the
excisable goods sold by the assessee shall be the price actually paid to him for the goods sold
and the money value of the additional consideration, if any, flowing directly or indirectly
from the buyer to the assessee in connection with the sale of such goods, and such price-cum-
duty,

excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty
payable on such goods.

8
Section 4 of Central Excise Act, 1944

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(3) For the purpose of this section, -

(a) “assessee” means the person who is liable to pay the duty of excise under this Act and
includes his agent;

(b) persons shall be deemed to be “related” if -

(i) they are inter-connected undertakings;

(ii) they are relatives;

(iii) amongst them the buyer is a relative and a distributor of the assessee, or a sub distributor
of such distributor;

or

(iv) they are so associated that they have interest, directly or indirectly, in the

business of each other.

Explanation. — In this clause –

(i) “inter-connected undertakings” shall have the same meaning assigned to it in clause (g) of
section 2 of the Monopolies and Restrictive Trade Practices Act, 1969;

(ii) “relative” means the meaning assigned to it in clause (41) of section 2 of the Companies
Act, 1956;

(c) “place of removal” -

(i) factory or any other place or premises of production or manufacture of the

excisable goods;

(ii) warehouse or any other place or premises wherein the excisable goods have

been permitted to be deposited without [payment of duty;]

(iii) depot, premises of a consignment agent or any other place or premises from

where the excisable goods are to be sold after their clearance from the factory;

from where such goods are removed;

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(cc) “time of removal”, in respect of the excisable goods removed from the place of removal
referred to in sub-clause (iii) of clause (c), shall be deemed to be the time at which such
goods are cleared from the factory;

(d) “transaction value” means the price actually paid or payable for the goods, when sold, and
includes in addition to the amount charged as price, any amount that the buyer is liable to pay
to, or on behalf of, the assessee, by reason of, or in connection with the sale, whether payable
at the time of the sale or at any other time, including, but not limited to, any amount charged
for, or to make provision for, advertising or publicity, marketing and selling organization
expenses, storage, outward handling, servicing, warranty, commission or any other matter;
but does not include the amount of duty of excise, sales tax and other taxes, if any, actually
paid or actually payable on such goods.9

But after GST Act came, valuation of goods can be determined under section 15 of the GST
Act. Now the term ‘supply’ has been used in place of ‘removal’.

Time of Supply of goods is described under Sec 12 of GST Act.10

(2) The time of supply of goods shall be the earlier of the following dates, namely: —

a. the date of issue of invoice by the supplier or the last date on which he is required,
under sub-section (1) of section 31, to issue the invoice with respect to the supply; or
b. the date on which the supplier receives the payment with respect to the supply:

Provided that where the supplier of taxable goods receives an amount up to one thousand
rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of
such excess amount shall, at the option of the said supplier, be the date of issue of invoice in
respect of such excess amount.

(3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge
basis, the time of supply shall be the earliest of the following dates, namely: —

(a) the date of the receipt of goods; or

(b) the date of payment as entered in the books of account of the recipient or the date on
which the payment is debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any
other document, by whatever name called, in lieu thereof by the supplier:
9
http://www.cbic.gov.in/htdocs-cbec/excise/cx-act/cx-act-ch2-june16, retrieved on 8th March, 2019
10
Section 12 of GST Act, 2017

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Provided that where it is not possible to determine the time of supply under clause (a) or
clause (b) or clause (c), the time of supply shall be the date of entry in the books of account
of the recipient of supply.

(4) In case of supply of vouchers by a supplier, the time of supply shall be—

(a) the date of issue of voucher, if the supply is identifiable at that point; or
(b) the date of redemption of voucher, in all other cases.

(5) Where it is not possible to determine the time of supply under the provisions of sub-
section (2) or sub-section (3) or sub-section (4), the time of supply shall––

(a) in a case where a periodical return has to be filed, be the date on which such return is
to be filed; or
(b) in any other case, be the date on which the tax is paid.

(6) The time of supply to the extent it relates to an addition in the value of supply by way of
interest, late fee or penalty for delayed payment of any consideration shall be the date on
which the supplier receives such addition in value.

Place of supply of goods is described under Sec 13 of IGST Act:11

(1) The provisions of this section shall apply to determine the place of supply of services
where the location of the supplier of services or the location of the recipient of services is
outside India.

(2) The place of supply of services except the services specified in sub-sections (3) to (13)
shall be the location of the recipient of services:

Provided that where the location of the recipient of services is not available in the ordinary
course of business, the place of supply shall be the location of the supplier of services.

(3) The place of supply of the following services shall be the location where the services are
actually performed, namely: —

(a) 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 in order to provide the services:

11
Section 13 of IGST Act, 2017

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Provided that when such services are provided from a remote location by way of electronic
means, the place of supply shall be the location where goods are situated at the time of supply
of services:

Provided further that nothing contained in this clause shall apply in the case of services
supplied in respect of goods which are temporarily imported into India for repairs or for any
other treatment or process and are exported after such repairs or treatment or process without
being put to any use in India, other than that which is required for such repairs or treatment or
process;

(b) 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, with the supplier for the supply of
services.

(4) The place of supply of services supplied 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, shall be the place where
the immovable property is located or intended to be located.12

12
https://caclub.in/section-13-of-igst-act-2017-place-of-supply-of-services-supplier-or-recipient-located-outside-
india/ retrieved on 9th March, 2019

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CH-4 CONCLUSION

In order to calculate and discharge tax liability it is important to know the date when the tax
liability arises i.e. the date on which the charging event has occurred. In GST law, it is known
as Time of Supply. GST law has provided separate provisions to determine the time of supply
of goods and time of supply of services. Sections 12, 13 & 14 of the CGST Act, 2017, deals
with the provisions related to time of supply and by virtue of section 20 of the IGST Act,
2017, these provisions are also applicable to inter-State supplies leviable to Integrated tax.
The inter-state supplies within India would attract an integrated GST (IGST), which is the
aggregate of CGST and the SGST of the destination state.

Thus, in respect of supply of goods by normal registered persons (other than composition
dealers), the time of supply will be the issue of invoice (or the last date by which invoice has
to be issued in terms of Section 31) Therefore, all taxpayers (except composition taxpayers)
are exempted from paying GST at the time of receipt of advance in relation to supply of
goods. The entire GST shall be payable only when the invoice is issued for such supply of
goods. The special procedure will be applicable to this class of persons (registered persons
making supplies of goods other than composition dealers) even in situations governed by
Section 14 of the Act (change in rate). Thus, the basic principle of GST is that it should
effectively tax the consumption of such supplies at the destination thereof or as the case may
at the point of consumption.

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BIBLIOGRAPHY
Websites:
 https://caclub.in/section-293-of-cgst-act-meaning-of-recipient-of-supply-of-goods-
services/
 https://cleartax.in/s/time-place-and-value-of-supply-in-gst
 https://www.taxmann.com/blogpost/2000000046/what-is-meant-by-time-of-supply-
under-gst.aspx,
 https://www.indiafilings.com/learn/time-supply-gst/
 http://www.cbic.gov.in/htdocs-cbec/excise/cx-act/cx-act-ch2-june16
 https://caclub.in/section-13-of-igst-act-2017-place-of-supply-of-services-supplier-or-
recipient-located-outside-india/

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