UNIT I

SYLLABUS OF THIS UNIT

GST in India, Constitutional provisions of Indirect Taxes, Basic concepts – Supply, Composite
and Mixed Supplies, Services under GST, Levy and charge of GST, Procedure for Registration,
Person and Taxable Person, Payment of Tax.

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GST in India : A Historical Perspective

Goods and Services Tax (GST) was proposed and given a go-ahead in 1999 during a meeting
between the Prime Minister Atal Bihari Vajpayee and his economic advisory panel, which
included three former RBI governors IG Patel, Bimal Jalan and C Rangarajan. Vajpayee set up
a committee headed by the Finance Minister of West Bengal, Asim Dasgupta to design a GST
model. The Ravi Dasgupta committee which was also tasked with putting in place the back-
end technology and logistics. It later came out for rolling out a uniform taxation regime in the
country. In 2002, the Vajpayee government formed a task force under Vijay Kelkar to
recommend tax reforms. In 2005, the Kelkar committee recommended rolling out GST as
suggested by the 12th Finance Commission. However, with many political fights, the BJP led
NDA launched GST at midnight on 1 July 2017 by the President of India, and the Government
of India. The launch was marked by a historic midnight (30 June – 1 July) session of both the
houses of parliament convened at the Central Hall of the Parliament. It came into force from
1st July, 2017 after 101th amendment in the Constitution of India. GST law merged various
central level taxes (Excise duty, Service Tax, CST, CVD, Special CVD, various Cesses and
Surcharges) and state level taxes (VAT, Luxury Tax, taxes on advertisement, Purchase tax,
Octroi/Entry tax etc.) to coin a new single tax which is known as Goods and Service Tax. GST
was basically adopted to remove the cascading effects existing in earlier system, to make the
indirect system easy so that tax evasion could be minimised using the information technology
system. India adopted dual GST system in which there are two types of GST i.e. Central GST
(CGST) and State GST (SGST) in case of intra-state supply. In case of inter-state supply, an
integrated GST (IGST) is levied. The central is supposed to collect IGST and apportion the
same between the Centre and the concerned state in a prescribed manner. GST is, primarily,
inspired from the input tax credit system in Value Added System to remove the cascading
effect. However, GST could not remove the same completely because tax credit is restricted or
blocked in various situations.
Note: From examination point of view, if a student wants to increase the length of the content
of the topic GST in India, the constitutional provisions of Indirect Taxes below can be added.

Constitutional provisions of Indirect Taxes

Constitutional provisions of Indirect taxes can be understood in two phase of time a) before
implementation of the GST law and b) after the implementation of the GST law.
Before GST
1. Article 265 of the Constitution of India states that, no tax of any nature can be levied
or collected by Central or State governments except by authority of law.

2. Articular 246 gives authority to the Central or State governments to levy or collect
taxes. The article gives such authority or power under three lists known as List I, List
II and List III.
List – I
This list is also known as Union list. The parliament has the power to make laws
including the law for levy of taxes in respect of the matter in this list.

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 List – II
This list is also known as State list. The legislature of any state has the power to make
laws including the law for levy of taxes in respect of the matter in this list.
List – III
This list is also known as concurrent list. The parliament or the legislature of a state has
power to make laws in respect of the matter in this list.
3. Further, the Parliament has power to make laws with respect to any matter for any part
of the territory of India not included in the State i.e., Union Territory.

4. Indirect Taxes are those taxes which can be shifted by the taxpayer to some other
person.

Here are the entries of List -I regarding the imposition of Indirect Taxes by the Central
Government:
Entry 83 – Customs duty
Entry 84 - Excise Duty on tobacco and other goods manufactured or produced in India
except on
a) Alcoholic liquor for human consumption;
b) Opium, Indian hemp and other narcotic drugs and narcotics
but including medicinal and toilet preparation containing alcohol or opium/Indian
hemp/narcotic drugs/narcotics.
Entry 92A – Central Sales Tax i.e. Sales tax imposed on inter-state transactions.
Entry 92B – Tax on consignment of goods.
Entry 92C – Service tax.
Entry 97 – Any other matter not enumerated in List II or List III including any tax not
mentioned in their of those lists. This is a residuary entry.
Here are the entries of List -II regarding the imposition of Indirect Taxes imposed by
the State government:
Entry 46 – Taxes on agricultural income.
Entry 49 – Taxes on lands and buildings.
Entry 51 – Excise duty on goods manufactured or produced in the State and
countervailing duties at the same or lower rates on similar goods manufactured or
produced elsewhere in India : -
a) Alcoholic liquor for human consumption;
b) Opium, Indian hemp and other narcotic drugs and narcotics
but not including medicinal and toilet preparation containing alcohol or opium/Indian
hemp/narcotic drugs/narcotics.
Entry 52 – Octroi or Entry Tax.

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 Entry 54 – Value Added Tax.
Entry 60 – Taxes on professions, trades, callings and employments.
Entry 63 – Stamp Duty in respect of documents other those specified in List – I.
After GST
In order to implement GST law in India, the constitutional amendment was necessary and
therefore 101th amendment was made in the Constitution of India. This necessity of
amendment arose because List – I and List – II give separate powers to the Centre and State
governments for imposing indirect taxes. For example: VAT was a matter of State while CST
was a matter of the Centre. Moreover, although, CST was matter of the Centre but its collection
and retention was made by the state governments.
If we go through the definition of GST, then we would find that these separate powers could
not execute GST, hence, those separates taxes were to be merged into GST. This was done by
doing 101th amendment in Indian constitution and the following taxes were merged to GST.
1. Excise duty imposed by the Central government;
2. Service tax;
3. CVD and Special CVD imposed by the Customs Tariff Act, 1975.
4. VAT
5. and some other taxes.
Here is brief description of the 101th amendment.
1. Article 246A gave powers the Centre and the States to levy and collect the GST.
2. Article 246A provides that Parliament shall have exclusive power to make laws with
respect to GST where supply of goods or of services or both takes place in the course
of inter-state trade or commerce. In other words, the power to impose IGST vests with
the Central government.
3. Article 269A provides GST on supplies in the course of inter-state trade or commerce
shall be levied and collected by the Government of India and such tax shall be
apportioned between the Union and the States in the manner prescribed by Parliament
by a law on the recommendation of GST Council.
4. Article 269A further gives powers to the Central government to impose IGST on import
of Goods to India and as a result CVD and Special CVD have been removed.
5. Article 279A provides that GST council shall recommend the date on which the GST
be levied on –
a. Petroleum crude
b. High speed diesel
c. Motor spirit i.e. Petrol
d. Natural Gas
e. Aviation turbine fuel

GST Council

Article 279A provides that the President shall, within 60 days from the date of commencement
of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a
council which is known as the GST council.

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The Council has the following members: -
a. The Union Finance Minister as a Chairperson;
b. The Union Minister of State in charge of Revenue or Finance as member and one Vice-
Chairperson of the Council shall be selected from such members.
c. The Minister in charge of Finance or Taxation or any other Minister nominated by each
State government as member.
The Council shall make recommendation to the Union and the States on -
a. The taxes, cesses and surcharges levied by the Union, the States and the local bodies
which may be merged with the GST.
b. The goods and services that may be liable to or exempted from the GST.
c. model GST laws, principles of levy, apportionment of GST levied on supplies in the
course of inter-state trade or commerce and the principles that govern the place of
supply.
d. Threshold limit of turnover below which GST may be exempted.
e. GST rates including floor rates with bands of GST.
f. Any special rate or rates for a special period to raise additional resources during any
natural calamity or disaster.
g. Special provision with respect to the States of Arunanchal Pradesh, Assam, J&K,
Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and
Uttarakhand.
h. any other matter related to GST as the council may decide.

i. Article 279A provides that GST council shall recommend the date on which the GST
be levied on –
▪ Petroleum crude
▪ High speed diesel
▪ Motor spirit i.e. Petrol
▪ Natural Gas
▪ Aviation turbine fuel

j. The quorum is 50% of the total council members for the council meeting.
k. The council shall determine the procedure in the performance of its functions.
l. Every decision of the 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 such a way that the
Central government will have 1/3 weightage and 2/3 for the states.
m. The council shall establish a mechanism to adjudicate any dispute between the Centre
and one or more states etc. arising out of the recommendations of the Council.

Basic Terms

Taxable person – Section 2(107)

Taxable person means a person who is registered or liable to be registered under section 22 or
section 24.

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As far as the term person is concerned, then this is defined under section 2(84) of the CGST
Act, 2017. The term person includes:
a. an individual
b. HUF
c. a Company
d. a firm
e. a Limited Liability Firm.
f. an association of persons or a body of individuals.
g. any corporation established by or under any Central Act, State Act or Provincial Act or
a Government company as defined in section 2(45) of the Companies Act, 2013.
h. a body corporate.
i. a co-operative society
j. a local authority.
k. Central Government or a state government.
l. Society as defined under the Societies Registration Act, 1860.
m. a trust and
n. every artificial juridical person not falling within any of the above.

Taxable territory – Section 2(109)

Taxable territory means the territory to which the provisions of the GST Act apply.

Goods – Section 2(52)

The term goods has been defined under section 2(52) of the CGST Act, 2017. Goods means every type
of movable property other than money and securities but including actionable claim and 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.

Services – Section 2(102)

Services means anything other than goods, money and securities but it 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. Services also
include facilitating or arranging transaction in securities.

Consideration – Section 2(31)

As per the section, consideration 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 or by any other person,
but does not include any subsidy given by the Central Government or 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,

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 ▪ whether by the recipient or by any other person,
but does not include any subsidy given by the Central Government or State Government.
Conclusion: Consideration may be monetary as well as non-monetary. It may be past, present or future.

Business – 2(17)

The term business includes:

a. any trade, commerce, manufacture, profession, vocation, adventure, wager or any other
such similar activity whether or not it is for a particular benefit.
b. any activity or transaction in connection with or incidental or ancillary to point (a)
above.
c. any activity or transaction in the nature of point (a) above, 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 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. Activities of a race-club in including by way of totalisator or a license to book maker
or activities of a licensed book maker in such club.
i. Any activity or transaction by the Central Government, a State Government or any
local authority in which they are engaged as public authorities.

Supply – Section 7

In GST law, the term is a wider term and section 7 describes various situations to define the
term supply.
1. Supply includes all form of supply of goods or services or both i.e.,
▪ Sale
▪ Transfer
▪ Exchange
▪ Barter
▪ Lease
▪ Rent
▪ License
▪ Disposal
made or agreed to be made for a consideration by a person in the course or furtherance
of business.
2. Import of services for a consideration whether or not in the course or furtherance of
business.
3. The activities specified in Schedule I, made or agreed to be made without a
consideration.

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 4. Schedule II categorially specifies the activities or transactions which are to be treated
as supply of goods or supply of services.
5. The term supply does not include –
a. Activities or transactions specified in Schedule III or
b. such activities or transactions undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities.

Schedule I
Schedule I specifies the activities made or agreed to be made without a consideration to be
treated as supply.
1. Permanent transfer or disposal of business assets where input tax credit has been
availed on such assets.
2. Supply between related persons or distinct persons.
3. Supply of goods by a principal to his agent or by an agent to his principal but excluding
a commission agent.
4. Import of services by a taxable person –
a. Services imported from a related person or a distinct person in the course or
furtherance of business is a supply.
b. Other cases : Not a supply, hence, no GST.
Schedule II
S. no Activities Nature of supply
1. Transfer of Supply of goods
a. title in goods
b. right in goods or of undivided share in goods
without transfer of title
c. title in goods under an agreement which specifies
that title shall pass at a future date upon payment of
full consideration

2. Land and building

a. any lease, tenancy, easement, license to occupy land. Supply of services
b. Lease of letting out of the building including a
commercial, industrial or residential complex for
business or commerce either wholly or partly.
3. Treatment or process applied to another person’s goods i.e. Supply of services
job work.
4. Transfer of business assets
a. the assets of a business are transferred or disposed of Supply of goods
whether or not for a consideration, whether by the
business person carrying business or under his
direction.
b. goods which held or used for business but later on
held for private use or made available to any person
for use whether for consideration or without.
c. business assets before cease of the business.

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 5. a. Renting of immovable property. However, the Supply of services
Central government has exempted this service.
b. Construction of a complex, building, civil structure or
a part thereof. However, the structure is transferred
after completion, this is not liable to GST.
c. Temporary transfer or permitting the use or
enjoyment of any Intellectual Property Right (IPR)
like copyright, patent etc.
d. Development, design, programming, customisation,
adaptation, upgradation, enhancement,
implementation of IT software. However, it does not
include pre-packed or canned software (this is supply
of goods not service).
e. Agreeing to the obligation to refrain from an act or to
tolerate an act or a situation or to do an act.
f. Transfer of the right to use any goods for any purpose
for cash, deferred payment or other valuable
consideration.
6. The following composite supply
a. Works contract – Section 2(119) Supply of services
b. Supply of food or any other article for human
consumption or any drink (other than alcoholic liquor
for human consumption) for cash, deferred payment
or other valuable consideration.
7. Supply of goods by an unincorporated association or Body Supply of goods
of individuals to its members for cash, deferred payment or
other valuable consideration.

Schedule III : Negative list

Schedule III states the activities which are neither supply of goods or supply of services. Hence,
not liable to GST. The list is as follows:
1. Services by an employee to the employer in the course of or in relation to his
employment. However, gifts in value greater than Rs. 50,000 given to employees in a
financial year may be subject to GST.
2. Services by any court including District court/High court/Supreme court or Tribunal.
3. A) the functions performed by the MPs, MLAs, Members of Panchayats, Members of
Municipalities and member of other local authorities B) Services from a constitutional
post and C) the duties performed by any person as a Chairperson or member or a
director in a body established by CG/SG or local authority and who is not deemed as
an employee as an employee before the commencement of this clause.
4. Services of funeral, crematorium, mortuary, transportation of diseased.
5. Sale of land and building.
6. Actionable claims except lottery, betting and gambling.
7. Supply of goods from Non-taxable territory to Non-taxable territory without entering
into India.
8. A) supply of warehoused goods to any person before clearance for home consumption
B) supply of goods by the consignee to any other person, by endorsement of title

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 documents after the goods have been dispatched from the port of origin outside India
but before clearance for home consumption.
Provisions shown in diagram form

Supply of goods or services or both in all forms for a consideration in

the course or furtherance of business is liable to GST.

Services imported for a consideration, whether in the course or

furtherance of business or not, is liable to GST.

Permanent transfer of business assets on which ITC

has been availed is a supply and liable to GST.

Activities listed in
Supply between related/distinct persons
Supply

Schedule I
is liable to GST.
(without
consideration)
From related person/distinct person in
the course or furtherance of buiness is
taxable.
Import of service
Scheule II
other case (not taxable)
(To determine
nature of supply)

Schedule III
(Negative List) No
GST

Types of Supply

1. Taxable and Exempt supply

Exempt supply means supply of any goods or services or both – which attracts Nil rate
of tax or which may be wholly exempt under section 11 of the CGST Act, 2017 or
under section 6 of the IGST Act and includes non-taxable supply. As per section 2(78),
non-taxable supply means a supply of goods or services or both which is not leviable
to tax under the CGST Act or IGST Act. Remaining goods are known as taxable goods.
2. Inter-state and Intra-State supplies
Refer the topic payment of GST below on page 16. Also, refer the place of supply of
goods and services (POS) provisions of sections 2(15), 10, 11, 12, 13 of the IGST Act,
2017 for further details.
3. Zero rated supplies
Zero rated supply means
a. Export of goods or services or both or
b. Supply of goods or services to SEZ developer or a SEZ unit. However, supply of
non-alcoholic beverages to the SEZ unit is not a zero rated supply.
4. Composite supply and mixed supply

Composite supply – section 2(30)

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1. It is a supply made by a taxable person to a recipient.
2. It consists of two or more taxable supplies of goods or services or both or any
combination thereof which are naturally bundled and supplied in the ordinary
course of business.
3. There is a principal supply or main supply.
4. As per section 8(a) of the CGST Act, 2017, the GST rate applicable shall be the
rate on principal supply as defined under section 2(90).
5. As per section 7 of the CGST Act (Schedule II) , the following composite supplies
are to be treated supply of services.
a. Works contract – Section 2(119)
b. Supply of food or any other article for human consumption or any drink
(other than alcoholic liquor for human consumption) for cash, deferred
payment or other valuable consideration.
Example 1 : When we purchase an air-conditioner, then we generally get warranty too.
This is a composite supply and the principal supply is supply of air-conditioner and all
other supplies are ancillary.
Example 2: When we stay in a hotel, then we generally get food services along with
the accommodation. This is a composite supply and the principal supply is
accommodation in a hotel and all other supplies are ancillary.
Example 3: An air travel ticket from Delhi to Hyderabad may include carriage of
luggage, providing food on board and free insurance. This is a composite supply and
the principal supply is transport of passenger and all other supplies are ancillary.
Mixed supply – section 2(74)
The supply which is not a composite supply. Its features are as follows:
1. It is a supply made by a taxable person to a recipient.
2. It consists of two or more individual supplies of goods or services or both or
any other combination thereof.
3. The supply is made for a single price/consolidated price.
4. The supply is not naturally bundled.
5. The supply is not in conjunction with each other in the ordinary course of
business.
6. As per section 8(b) of the CGST Act, 2017, the GST rate applicable shall be
the highest rate of all the individuals supplies rates.
Example 1: When we buy a package made of canned foods, sweets, chocolates, cakes,
dry fruits etc. at a single price, then this is a case of mixed supply. Each of these items
can be supplied separately and is not dependent on any other.
Example 2: Two floors of a house let out for a single rent deed executed is a mixed
supply.

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Registration

Persons liable for registration – Section 22

1. Every supplier who makes a taxable supply of goods or services or both if his aggregate
turnover in a financial year exceeds Rs. 20 lakhs. However, for specified states (With
effect of 1.2.2019, Manipur, Mizoram, Nagaland, Tripura) the limit is Rs. 10 lakhs.
Also, the threshold limit of Rs. 20 lakhs or Rs. 10 lakhs is not available for a supplier
of inter-state supply of goods due to Notification No. 10/2017 dated 13-10-2017.

Aggregate turnover here means all supplies made by the taxable person, whether on
his own account or made on behalf of all his principals. Further, the supply of goods,
after completion of job-work, by a registered job-worker shall be treated as the supply
of goods by the principal not by the job-worker.

2. 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 the CGST
Act with effect from the appointed day.

3. When a business carried on by a taxable person registered under the CGST Act is
transferred on account of succession or otherwise, as a going concern , the transferee or
successor, shall be liable to be registered with effect from the date of such transfer or
succession.

Persons not liable for registration – Section 23

1. Person engaged in exclusively in supplying goods or services or both not liable to tax
or wholly exempt from tax.
2. Agriculturist to the extent of supply of produce out of cultivation of land.
3. Persons exempted by various notifications which are as follows:
a. Persons who are making supplies of taxable goods or services or both, where total
tax is payable on reverse charge basis.
b. Person supplying handicrafts having the aggregate turnover less than Rs. 20/10
lakhs but making inter-state supplies.
c. A job-worker with turnover less than Rs. 20/10 lakhs exempt from registration even
if they make inter-state supplies to a registered person.
d. Person making inter-state supply of taxable services if aggregate turnover is less
than Rs. 20/10 lakhs.
e. Persons who are suppliers of service and supplying services through e-commerce
operator if the aggregate turnover is less than Rs. 20/10 lakhs.

Compulsory registration – Section 24

1. Notwithstanding anything contained in section 22(1), the following persons are to be

registered compulsorily.
2. Persons making any inter-state taxable supply of goods. However, in case of supply of
services, if the turnover exceeds Rs. 20/10 lakhs, then supplier is required to register.
3. Causal taxable person making taxable supply.

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 4. Recipient liable to pay tax under reverse charge mechanism.
5. Persons covered by section 9(5).
6. Non-resident taxable persons making supply.
7. Person who are required to deduct tax under section 51 whether or not separately
registered under the CGST Act.
8. Persons who make taxable supply of goods or services or both on behalf of other taxable
person whether as an agent or otherwise.
9. Input Service Distributor.
10. Every e-commerce operator.
11. 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
12. Any person notified by the Government of India on the recommendation of the GST
council.

Procedure for registration – Section 25

1. Every person liable to registration under Section 22 or Section 24 to apply for

registration within 30 days from the date on which he becomes liable to registration. If
he is operating in more than one State or UT, then he will apply in every such state or
UT.
2. The applicant seeking registration shall be granted a single registration in a State or UT.
Person having multiple business verticals in a State of UT may be granted a separate
registration for each business vertical.
3. A person not liable to take registration under Section 22 or Section 24, may apply for
voluntary registration.
4. A person who has obtained or is required to obtain one registration in State of UT or
more than one State of UT, shall be treated as distinct person for reach registration.
5. A person who has obtained or is required to obtain registration in a State of UT, has an
establishment in another State of UT, then such establishments shall be treated
establishments of distinct person.
6. Every person must have Permanent Account Number (PAN) issued by the Income Tax
Department. A person required to deduct tax under Section 51 may have Tax Deduction
and Collection Account number issued under the CGST Act in lieu of PAN.
7. Non-resident person may be granted registration on the basis of such other documents
as may be prescribed.
8. A person who is liable to be registration under the CGST Act, then the proper office
shall take necessary action.
9. Any specialised agency of the UNO or any Multilateral Financial Intuitions and
organisations notified by UN consulate or Embassy of foreign countries or any other
person notified by the Commissioner shall be granted a Unique Identity Number (UIN)
for refund and such other purposes.
10. The registration or the UIN shall be granted or rejected after due verification 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.

Deemed registration – Section 26

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If a registration under SGST/UTGST is not rejected under section 25(10) of the CGST Act,
then this is deemed registration under the CGST Act.

Special provisions relating to casual taxable person and non-resident

taxable person – Section 27

Certificate of Registration issued to a casual taxable person or a non-taxable person shall be

valid for the period mentioned in application or 90 days form the effective date of registration
whichever is earlier. Commissioner can further extend this period by maximum 90 days.

Amendment of Registration – Section 28

1. If there is a change in the information furnished by a registration person at the time of

registration, he should inform the proper officer within 15 days of such change.
2. The proper officer may accept or reject the amendment of the information in case of
core information like legal name.
3. If there is a change in PAN, then fresh registration is required.

Cancellation of registration – Section 29

Registration cancellation may be cancellation on application by the registered person or his

legal heir and Suo-motu cancellation.
Cancellation on application
In the following situations, application for cancellation can be filed.
1. The business has been discontinued, transferred fully, amalgamated with other entity,
demerged or otherwise disposed of;
2. There is any change in the constitution of business;
3. The taxable person is no longer liable to be registered under Section 22 or Section 24.
Suo-motu cancellation by a proper officer i.e. a proper officer may cancel on his motion the
registration from such date, even with retrospective effect, as may be deemed to be fit when he
notices –
1. A registered person contravened the Act or Rules.
2. A person paying tax under Section 10 has not furnished returns for 3 consecutive tax
periods.
3. Any registered person who has taken voluntarily registration but has not commenced
business within 6 months form the date of registration.
4. Any registration person other than composition dealer has not furnished return for a
continuous 6 months.
5. Registration has been obtained by means of fraud, wilful misstatement or suppression
of facts.
Notes:
1. The proper officer shall give an opportunity for being heard before cancellation of the
registration.
2. Cancellation of registration shall not effect the GST liability due.

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 3. Cancellation of registration of SGST/UTGST shall be deemed to be cancellation of
registration under CGST Act.

Revocation of cancellation of registration – Section 30

In case of Suo-motu cancellation by a proper officer, the registered person may apply within
30 days from the date of service of the cancellation order to revoke the cancellation. The proper
officer may accept the application for revocation.

Process of obtaining registration

• Apply in Form GST REG-01 on GST Portal. This form has

two parts A and B. Part A rquiring details like PAN, e-mail,
Mobile number etc. Part B requires other relevant details
submit this form along with documents specified.
Application • On receipt of the application, an acknowledgment is generated
electronically in Form GST REG-02.

• At this stage, the application shall be forwarded to the proper

officer who shall examine the application and documents. The
officer shall do initial verification within 3 working days from
Verification the date of application. The proper officer may seek
clarfication in Form - REG 03 and the applicant can submit
the same in Form -REG 04.

•If the clarifications are not satisfactory, intimation of rejection is

given in Form GST REG 05. After his (proper officer) satsifcation,
Approval/Rej he approves the grant of registration within 7 working days from the
ection date of application in Form GST REG 06 known as Certificate of
Registration.

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Levy and Charge of GST

Taxable event

Taxable event means the point of time when the liability to pay GST arises. This is known as
time of supply. The provisions of time of supply of goods or services or both are contained in
Sections 12, 13 and 14 of the CGST Act, 2017.

Intra-State supply

Intra-state supply means when the location of supplier of goods or services and the place of
supply falls in the same state or Union Territory.
In case of intra-state supply, two types of GST shall be levied and collected by the supplier of
goods or services or both.
1. Central Goods and Service Tax (CGST)
2. State Goods and Service Tax (SGST)
3. Union Territory Goods and Service Tax (UTGST)
Thus, if the intra-state supply is in a State, then GST levied and collected is:
a. CGST
b. SGST
Similarly, if the intra-state supply is in a Union Territory, the GST levied and collected is:
a. CGST
b. UTGST
Example 1: A, a registered person, supplies goods to B for Rs. 10,000. Assuming that the
location of A is Maharashtra and the place of supply is also Maharashtra, then this is the case
of intra-state supply. Therefore, A will collected CGST and Maharashtra SGST from B.
Example 2: A, a registered person, supplies goods to B for Rs. 10,000. Assuming that the
location of A is Chandigarh and the place of supply is also Chandigarh, then this is the case of
intra-state supply. Therefore, A will collect CGST and Chandigarh UTGST from B.
Important Notes:
1. Supply of goods or services to or by a SEZ developer or a SEZ unit is not Intra-state
supply.
2. Supply of goods made to a tourist referred to in Section 15 are not intra-state supply.

Inter-State supply

The following supplies are to be treated as inter-state supply:

1. If the location of supplier of goods or services is in a particular State/UT and the place
of supply is in another state/UT
2. Supply of goods or services imported into the territory of India i.e. import of goods or
services.
3. Supplier is located in India and the place of supply is outside India.

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 4. Supply to or by an SEZ developer or SEZ Unit.
5. Supply which is not an intra-state supply and not mentioned anywhere else.
Inter-state supply is subject to Integrated Goods and Service Tax (IGST). It may be subject to
Customs duty as in case of import of goods under the Customs Act, 1962.
Example 1: A, a registered person, supplies goods to B for Rs. 10,000. Assuming that the
location of A is Delhi and the place of supply is Mumbai, then this is the case of inter-state
supply. Therefore, A will collect IGST from B.
Example 2: A, a registered person, supplies goods to B for Rs. 10,000. Assuming that the
location of A is Maharashtra and the place of supply is Chandigarh (an Union Territory), then
this is the case of inter-state supply. Therefore, A will collect IGST from B.

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Payment of GST

Who is liable to pay GST?

There are two types of payment mechanisms in GST law. These mechanisms are:
1. Forward charge mechanism which is a General Mechanism
Under this mechanism, the liability to pay GST is on the shoulders of the supplier of goods or
services or both. However, he may collect the GST from the recipient of the goods or services
or both.

2. Reverse charge mechanism

Under this mechanism, the liability to pay GST is on the shoulders of the recipient of goods or
services or both. Reverse charge mechanism is applicable in the following cases:

Reverse charge mechanism in case of supply of goods

S.no. Goods Supplier Recipient

1 Cashew nuts, not shelled or peeled Agriculturist Any registered
person
2 Bidi wrapper leaves Agriculturist Any registered
person
3 Tobacco leaves Agriculturist Any registered
person
4 Silk yarn Any person who Any registered
manufactures silk person
yarn from silk or silk
worm cocoons for
supply of silk yarn.
5 Raw cotton Agriculturist Any registered
person
6 Supply of lottery State Government, Lottery
UT or any local distributor or
authority selling agent
7 Used vehicles, seized and confiscated Central Government, Any registered
goods, old and used goods, waste and State Government, person
scrap UT or a local authority
8 Priority sector lending certificate Any registered person Any registered
person

Reverse charge mechanism in case of supply of services

S.no. Services Supplier Recipient

1 Goods Transport Agency(GTA) if Factory, society, co-
it does not opt for forward charge operative society,
mechanism. Goods Transport taxable person, body
Agency (GTA) corporate,
partnership, casual
taxable person located
in taxable territory
2 Legal services (directly or Individual advocate, Any business entity
indirectly) senior advocate or a located in taxable
firm of advocates. territory.

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3 Services by Arbitral Tribunal Arbitral Tribunal Any business entity
located in taxable
territory.
4 Services of sponsorship Sponsor who may be Any body corporate or
any person partnership located in
taxable territory.
5 Services supplied by way of – Government or UT Any business entity in
a. Rental of immovable or local authority or the taxable territory.
property
b. Speed post, express parcel
post, life insurance and
agency services.
c. Services in relation to
Aircraft or a vessel inside
or outside the precincts of
a port or an airport
d. Transport of goods or
passengers
6 Rental of immovable property Central Government, A person registered
State Government, under the CGST Act,
Union or local 2017.
authority
7 Transfer of development rights or Any person Promotor
Floor Space Index for construction
of a project by a promoter.
8 Lease of land for 30 years or more Any person Promotor
against consideration in the form
of upfront amount and/or periodic
rent for construction of a project
by a promoter
9 Services supplied by a director to Director The company or a
his company or the body corporate body corporate
located in taxable
territory.
10 Insurance agent service Insurance agent Any person carrying
on insurance business
11 Recovery agent service Recovery agent A banking company
or a financial
institution or a NBFC
located in taxable
territory.
12 Business facilitating Business facilitator A banking company
located in taxable
territory
13 Services provided by an agent of An agent of business A business
business correspondent to correspondent correspondent located
business correspondent in taxable territory
14 Authoring, music composition, Author, music Publisher, music
photography etc. composer, company , producer
photographer, artist etc.
etc.
15 Supply of services by the members Members RBI
of overseeing committee to RBI

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 16 Security services Any person other A registered person
than a body
located in the taxable
corporate territory
14 Any service any person who is Any person other than
located in a non- non-taxable online
taxable territory recipient.
Note: IGST is
applicable in this case.
15 Transportation of goods by a A person located in An importer
vessel from place outside India up non-taxable territory Note: IGST is
to the customs station of clearance applicable in this case.
in India

Important notes

• No partial reverse charge is applicable under the GST regime as was in Service Tax.
• Payment of taxes under reverse charge mechanism cannot be made using tax credit, therefore,
tax is to be paid in cash only.
• Reverse charge mechanism is applicable in that case also where the supplier of goods or
services is unregistered but the recipient is registered.

3. In some notified cases of intra-state supply of services, the liability to pay GST may be cast
on e-commerce operators through which such services are supplied.

4. Government Departments making payments to vendors above a specified limit are required
to deduct TDS.

5. E-commerce operators required to collect TCS on the net value of the supplies made through
them and deposit it with the Government.

How to pay GST?

In GST system, three Electronic ledgers have been developed on GST portal. These ledgers are:
1. Electronic cash register (ECL)
In very simple terms, this serves as electronic cash wallet available on GST portal. TDS/TCS
under section 51 and section 52 respectively shall also be shown in this ledger only. This ledger
shall be maintained in Form GST PMT-05.
2. Electronic credit ledger (ECrL)
This is a statement of input tax credit in respect of each registered tax payer. In simple terms,
this serves as the record of input tax credit available. This ledger shall be maintained in Form
GST PMT -04.
3. Electronic liability ledger
This ledger shows the total tax liability including interest, penalty etc. of a taxpayer. This ledger
shall be maintained in Form GST PMT -01.

Process to pay GST, interest, penalty or other amounts:

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 •First create a payment challan on GST portal to trasfer money to Electronic
Cash Ledger. This payment challan can be paid using internet banking, Credit
card, debit card, RTGS/NEFT. Over the counter payment (in branches of
designated banks) can also be made but upto a specified amount i.e. Rs. 10,000
Payment per challan per tax period using cash/DD or cheque.
challan • Check the Electronic Cash Ledger balance, then you will notice that the
creation money paid is being shown in the balance.
•This balance can be used to pay GST, interest, penalty or other amount.
•The link of GST portal is https://www.gst.gov.in/

Electronic
Credit
Ledger
• Check the balance in electronic credit ledger that can be used to pay
GST but not interest, penalty or other amount.

• Thus, now you have cash in ECL and input tax credit in ECrL to pay
Electronic GST. Use this amount in set off the GST liablity, interest etc. in
Liablity
ledger electronic liability ledger. Keep in mind the order of tax credit of IGST,
CGST, SGST/UTGST to pay IGST, CGST and SGST/UTGST.

Interest on delayed payment of tax

As per section 50 of the CGST Act, 2017, if a taxable person fails to pay the tax or any part thereof to
the Government within the specified time, he is liable to pay interest not exceeding 18%.

Interest on excess or undue claim of tax credit

24% of such undue or excess claim or such undue/excess reduction of output tax liability.

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