GST BRIEF NOTES

Applicable for CA Intermediate

May 2020 Exams

By CABlogIndia.com
© CABlogIndia.com

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 Index of Chapters
Chapter Page No.

GST in India - An Introduction 1.1

Supply Under GST 2.1 – 2.8

Charge of GST 3.1 – 3.6

List of services exempt from GST 4.1 – 4.18

Time and Value of Supply 5.1 – 5.5

Input Tax Credit 6.1 – 6.21

Registration 7.1 – 7.10

Tax Invoice, Credit and Debit Notes 8.1 – 8.14

Payment of Tax 9.1 – 9.6

Returns 10.1 – 10.4

 GST BRIEF NOTES

GST in India - An Introduction

→ GST is one of the most demanding reforms in the field of indirect taxation.

GST is an indirect tax which has replaced many indirect taxes like excise duty,

service tax, VAT, CST and many other central and state level taxes.

→ In order to make this reform there was a need to amend constitution so that

Central and State Government can have power to tax on both goods and

services.

→ Taxable event for GST is supply. If any business makes a supply that will be

subject to GST provided other conditions are fulfilled.

→ Supply is of two types-intra-state supply and inter-state supply. Supply within

same state, there will be two taxes being CGST and SGST and in case of inter-

state supply only one tax will be levied that is IGST. Thus, in India we have

followed Dual GST Model.

→ Generally, liability to pay GST is on the supplier but in certain circumstances

liability to pay GST has been put on Recipient of Supply. This is known as

Reverse Charge Mechanism (RCM).

→ In order to provide comfort to small dealers from the complexities of GST a

concept known as composition scheme has been introduced (though not new it

also existed in earlier laws). Small dealers have been identified on the basis

of turnover made by them during the preceding financial year.

→ Central Government has been granted power to grant exemptions either

generally or specially in respect of supply of goods or services or both.

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 GST BRIEF NOTES

SUPPLY UNDER GST

Contents of Chapter
Supply for consideration in course or furtherance of business [Section 7(1)(a)] ..................................2.2

Importation of services for consideration whether or not in course or furtherance of business

[Section 7(1)(b)] .....................................................................................................................................................2.2

Supply without consideration - Deemed Supply [Section 7(1)(c) read with Schedule I].......................2.3

PERMANENT TRANSFER/DISPOSAL OF BUSINESS ASSETS ...........................................................2.3

SUPPLY BETWEEN RELATED PERSONS OR DISTINCT PERSONS ....................................................2.3

SUPPLY BETWEEN PRINCIPAL AND AGENT ............................................................................................2.3

IMPORTATION OF SERVICES ......................................................................................................................2.4

Activities or transactions to be treated as Supply of goods or Supply of services [Section 7(1A)

read with Schedule II] .........................................................................................................................................2.5

Negative list under GST [Section 7(2)(a) read with Schedule III] ..........................................................2.7

Composite and mixed supplies..............................................................................................................................2.8

☞ The taxable event under GST is supply. The scope of supply under GST can be
understood in terms of following parameters:

Supply should be of goods or services

Supply should be made for a consideration

Supply should be made in the course or furtherance of business

☞ While these parameters describe the concept of supply, under certain

circumstances, transactions have been deemed as supply even when the supply is
made without consideration or not in the course or furtherance of business.
Activities specified in Schedule I are deemed to be a supply even without
consideration. Further, import of services for a consideration, whether or not in the
course or furtherance of business is treated as supply.

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 SUPPLY UNDER GST

☞ Besides, some specified transactions/ activities are neither treated as supply of

goods nor a supply of services. Furthermore, certain activities have been categorized
as supply of goods or as supply of services.

☞ The discussion with respect to supply is broadly categorized into following:

Supply
Includes Excludes
Supply for consideration in course or Negative list
furtherance of business.
Importation of services for
consideration whether or not in course
or furtherance of business.
Supply without consideration
Activities to be treated as supply of
goods or supply of services

☞ Sub-sections of section 7 along with related Schedules

has been summarised as follows:

Supply for consideration in course or furtherance of business

[Section 7(1)(a)]
Supply includes sale, transfer, barter, exchange, licence, rental, lease,
disposal, etc.
for consideration
in the course or furtherance of business

Importation of services for consideration whether or not in

course or furtherance of business [Section 7(1)(b)]
Supply should be in course or furtherance of business. The exception to said
rule is import of services is deemed as supply even if the same has been
imported not in course/furtherance of business.

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 GST BRIEF NOTES

Supply without consideration - Deemed Supply [Section 7(1)(c)

read with Schedule I]
This includes all supplies made to a taxable or non-taxable person, even if the
same is without consideration. These are specifically mentioned in Schedule I
appended to the CGST Act.
As per Schedule I, in the following four cases, supplies made without
consideration will be treated as supply under section 7 of the CGST Act:

PERMANENT TRANSFER/DISPOSAL OF BUSINESS ASSETS

Any kind of disposal or transfer of business assets made by an entity on
permanent basis even though without consideration qualifies as supply.
However, it is important to note that this provision would apply only if input
tax credit has been availed on such assets.

Therefore, in order to qualify as supply under this para, following conditions

need to be satisfied:
There must be a disposal or transfer of business assets.
Transfer/disposal must be permanent.
ITC must have been availed on such business assets.

SUPPLY BETWEEN RELATED PERSONS OR DISTINCT PERSONS

Supply of goods or services or both between ‘related persons’ or between
‘distinct persons’ as specified in section 25, will qualify as supply provided it
is made in the course or furtherance of business.

SUPPLY BETWEEN PRINCIPAL AND AGENT

Supply of goods by a principal to his agent, without consideration, where the
agent undertakes to supply such goods on behalf of the principal is considered
as supply.
Similarly, supply of goods by an agent to his principal, without consideration,
where the agent undertakes to receive such goods on behalf of the principal
is considered as supply.

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 SUPPLY UNDER GST

Points which merit consideration, in this regard, are as follows:

Only supply of goods and not supply of services is covered here.
Supply of goods between principal and agent without consideration is
also supply.
Thus, the supply of services between the principal and the agent and vice versa
would therefore require “consideration” to be considered as supply and thus,
to be liable to GST.

IMPORTATION OF SERVICES
Import of services by a person from a related person or from his
establishments located outside India, without consideration, in the course or
furtherance of business shall be treated as “supply”.
The combined provisions of relating to import of services [as stipulated under
section 7(1)(b) and section 7(1)(c) read with Schedule I] have been depicted
in the below mentioned diagram:
in course or
futherance of Supply
business

with
consideration not in course
or futherance Supply
of business

Import of
services
related
person/distinct
person + in
Supply
course or
without futherance of
consideration business

Other cases Not a Supply

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 GST BRIEF NOTES

Activities or transactions to be treated as Supply of goods or

Supply of services [Section 7(1A) read with Schedule II]
S. Activity/ Type Supply of
No. Transaction Goods/
Service
1 Transfer (i) Title in goods
(ii) Title in goods under an agreement
Goods
that property shall pass at a
future date.
Right/undivided share in goods without
Services
transfer of title in them
2 Land and Lease, tenancy, easement, licence to
Services
Building occupy land
Lease/letting out of building including a
commercial/ industrial/ residential
Services
complex for business/ commerce, wholly/
partly.
3 Treatment Applied to another person’s goods
Services
or Process
4 Transfer of Goods forming part of business assets are
Business transferred/disposed off by/under
Assets directions of person carrying on business Goods
so as no longer to form part of those
assets, whether or not for consideration
Goods held/used for business are put to
private use or are made available to any
person for use for any purpose other than
Services
business, by/under directions of person
carrying on the business, whether or not
for consideration
Goods forming part of assets of any
Services
business carried on by a person who

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 SUPPLY UNDER GST

ceases to be a taxable person, 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.
Exceptions:
Business transferred as a going
concern.
Business carried on by a personal
representative who is deemed to be
a taxable person.
5 Renting of immovable property
Construction of complex, building, civil structure,
etc.
Temporary transfer or permitting use or
enjoyment of any intellectual property right
Development, design, programming, customisation, Services
adaptation, upgradation, enhancement,
implementation of IT software
Agreeing to obligation to refrain from an act, or
to tolerate an act or situation, or to do an act.
Transfer of right to use any goods for any purpose
6 Following composite supplies: -
Works contract services.
Services
Supply of goods, being food or any other article
for human consumption or any drink.
7 Supply of goods by an unincorporated association or body
of persons to a member thereof for cash, deferred Goods
payment or other valuable consideration.

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 GST BRIEF NOTES

Negative list under GST [Section 7(2)(a) read with Schedule

III]
S. Activities or transactions which shall be treated neither as a
No. 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.
2 Services by any court or Tribunal established under any law for the
time being in force.
3 a) Functions performed by the Members of Parliament, Members
of State Legislature, Members of Panchayats, Members of
Municipalities and Members of other local authorities;
b) Duties performed by any person who holds any post in
pursuance of the provisions of the Constitution in that
capacity; or
c) 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 paragraph 5(b) of Schedule II, sale of
building.
6 Actionable claims, other than lottery, betting and gambling.

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 SUPPLY UNDER GST

Composite and mixed supplies

• Consist of two or more supplies

• Naturally bundled
• In conjunction with each other
Composite
• One of which is principal supply
Supply
• Tax liability shall be rate of principal supply
• Example: Charger supplied alongwith mobile
phones.
• Consist of two or more supplies for a single price
• Not naturally bundled
• Though can be supplied independently, still
supplied together
Mixed Supply
• Tax liability shall be the rate applicable to the
supply that attracts highest rate of tax
• Example: A gift pack comprising of choclates,
candies, sweets and balloons.

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 GST BRIEF NOTES

CHARGE OF GST
Contents of Chapter
Extent & Commencement of CGST Act/ SGST Act/ UTGST Act/ IGST Act ........................................3.2

Levy and collection of CGST/IGST ....................................................................................................................3.2

Composition levy......................................................................................................................................................3.3

ADVANTAGES ....................................................................................................................................................3.3

PROCEDURE FOR OPTING FOR THE SCHEME ..........................................................................................3.3

TURNOVER LIMIT FOR OPTING FOR THE SCHEME .............................................................................3.4

RATES OF TAX ..................................................................................................................................................3.4

CONDITIONS AND RESTRICTIONS FOR COMPOSITION LEVY ......................................................3.4

WHO ARE NOT ELIGIBLE TO OPT FOR COMPOSITION SCHEME? .................................................3.4

OTHER POINTS .................................................................................................................................................3.5

Option to pay concessional tax at concessional rate Notification No. 2/2019 CT (R) dated
07.03.2019 ...............................................................................................................................................................3.5

WHO ARE THE PERSONS NOT ELIGIBLE FOR COMPOSITION SCHEME, BUT ELIGIBLE FOR
NOTIFICATION NO. 2/2019 CT (R)? ..........................................................................................................3.6

INELIGIBLE SUPPLIERS .................................................................................................................................3.6

OTHER POINTS .................................................................................................................................................3.6

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 CHARGE OF GST

Extent & Commencement of CGST Act/ SGST Act/ UTGST

Act/ IGST Act
Applicability CGST SGST UTGST IGST
Intra-State supply Inter-State
supply
States of ✔ ✔ ✔
India
Union
Territories
with
Legislature
Union ✔ ✔ ✔
Territories
without
Legislature

Levy and collection of CGST/IGST

Particulars CGST IGST
Levied on Intra-State supplies of Inter-State supplies of
goods/services/both goods/services/both
Collected and paid by Taxable person
Supply outside purview Alcoholic liquor for human consumption
of GST
Value for levy Transaction value under section 15 of the CGST Act
Rates Rates as notified by IGST rate= CGST rate +
Government. Maximum SGST rate (more or less)
rate of CGST can be 20%. Maximum rate of IGST
can be 40%.
Supplies on which tax petroleum crude
would be levied w.e.f. a high speed diesel
notified date motor spirit (commonly known as petrol)

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 GST BRIEF NOTES

natural gas and

aviation turbine fuel
Tax payable under Supply of goods or services or both, notified by
reverse charge the Government.
Supply of specified categories of goods or
services or both by an unregistered supplier to
specified class of registered persons.
Tax payable by the The Government may notify specific categories of
electronic commerce services the tax on supplies of which shall be paid by
operator electronic commerce operator (ECO) as if such
services are supplied through it.

Composition levy
An option for specified categories of small taxpayers to pay GST at a very low rate
on the basis of turnover.

ADVANTAGES
Low rate of tax
Hassel free simple procedures for such taxpayers
Simple calculation of tax based on turnover
A very simple annual return

PROCEDURE FOR OPTING FOR THE SCHEME

Category of persons How to exercise option Effective date of
composition levy
New registration under Intimation in the From the effective date
GST registration form of registration
Registered person opting Intimation in prescribed Beginning of the financial
for composition levy form year

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 CHARGE OF GST

TURNOVER LIMIT FOR OPTING FOR THE SCHEME

For Special Category States except Assam, Himachal Rs. 75 lakhs
Pradesh and J&K
For remaining States Rs. 1.5 crore

RATES OF TAX
Category of registered persons Rate
Manufacturer 1 % (½% CGST +½% SGST/UTGST)
Suppliers of food 5%
Others 1%

CONDITIONS AND RESTRICTIONS FOR COMPOSITION LEVY

Person opting for composition:

is neither a casual taxable person nor a non-resident taxable person

shall pay tax under section 9(3)/9(4) on inward supply
was not engaged in the manufacture of notified goods
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
shall mention the words “composition taxable person” at a prominent place at
his place of business

WHO ARE NOT ELIGIBLE TO OPT FOR COMPOSITION SCHEME?

Supplier of services other than restaurant services**
Supplier of goods not leviable to tax
Supplier of inter- State outward supplies of goods
Person supplying goods through an electronic commerce operator who is
required to collect tax at source under section 52
Manufacturer of icecream, panmasala and tobacco
Supplier and manufacturer of aerated water

**A registered person opting for composition scheme is allowed to supply services
[other than restaurant services] alongwith supply of goods or supply of restaurant
services of value not exceeding 10% of the turnover in the preceding financial year
in a State/Union territory or Rs. 5 lakh, whichever is higher.

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 GST BRIEF NOTES

OTHER POINTS
Bill of supply shall be issued instead of tax invoice.
Tax shall not be not collected from recipient of supply
Input tax credit shall not be availed
Composition Scheme if availed shall include all registered persons having same
PAN
Penalty shall be imposed in case of irregular availment of the composition
scheme

Option to pay concessional tax at concessional rate

Notification No. 2/2019 CT (R) dated 07.03.2019

An option for small service providers with aggregate

turnover upto Rs.50 lakh in preceding FY who are not
eligible for composition scheme

to pay tax @ 3% [Effective rate 6% (CGST+

SGST/UTGST)]

on first supplies of goods and/or services upto an aggregate

turnover of Rs.50 lakh made on/after 1st April in any FY,
subject to specified conditions

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 CHARGE OF GST

WHO ARE THE PERSONS NOT ELIGIBLE FOR COMPOSITION

SCHEME, BUT ELIGIBLE FOR NOTIFICATION NO. 2/2019 CT
(R)?
A registered person

whose aggregate turnover in the preceding financial year does not exceed
Rs.50 lakh and:
who is exclusively engaged in supplying services other than restaurant services

INELIGIBLE SUPPLIERS
Supplier is neither a casual taxable person nor a non- resident taxable person
Supplier making supplies not leviable to tax
Supplier of inter-State outward supplies neither of goods nor of services
Person supplying goods through an electronic commerce operator who is
required to collect tax at source under section 52
Supplier of icecream, panmasala and tobacco

OTHER POINTS
Bill of supply shall be issued instead of tax invoice.
Tax shall not be not collected from recipient of supply
Input tax credit shall not be availed
All registered persons having same PAN shall pay tax at the concessional rate
under this notification
Tax on inward supplies under section 9(3)/9(4) shall be paid at the applicable
rates, by the registered person opting for concessional rate
In computing aggregate turnover in order for determining eligibility for this
scheme, interest on loans/deposit/advances will not be taken into account.

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