Name: - Sameer Prasad

Roll No: - 82
Subject: - Indirect Taxation
Under the Guidance of Prof. Avinash Darbare
 Pratibha Institute of Business Management
Chinchwad, Pune
Home Assignment Questions
MBA: SEM III
Subject- Indirect Taxation (FIN.-315)
AY 2020-21

Q.1) What is the GST? Discuss the evolution of GST.

Answer :

GST, or Goods and Services Tax, is a tax that customers have to bear when they buy any goods
or services, such as food, clothes, electronics, items of daily needs, transportation, travel, etc.
The concept of GST is that it is an “Indirect Tax”, ie, this tax is not directly paid by customers to
the government, but is rather levied on the manufacturer or seller goods and the providers of
services. The sellers usually add the tax expense into their costs, and the price the customers pay
is inclusive of GST. Thus, in most cases, you end up paying a tax even if you are not an income
taxpayer.

Prime Minister Narendra Modi launched GST into operation on the midnight of 1 July 2017. But
GST was almost two decades in the making since the concept was first proposed under the Atal
Bihari Vajpayee government. The development of GST took many consultations, negotiations
and revisions before it was launched in its final form in 2017. The launch of GST was also made
difficult by the fact that it required a Constitutional Amendment, and hence, a two-thirds
majority approval in the Parliament, and a nod of more than at least half of the states.

Evolution of GST
 2000: In India, the idea of adopting GST was first suggested by the Atal Bihari Vajpayee
Government in 2000. The state finance ministers formed an Empowered Committee (EC)
to create a structure for GST, based on their experience in designing State VAT.
Representatives from the Centre and states were requested to examine various aspects of
the GST proposal and create reports on the thresholds, exemptions, taxation of inter-state
supplies, and taxation of services. The committee was headed by Asim Dasgupta, the
finance minister of West Bengal. Dasgupta chaired the committee till 2011.
 2004: A task force that was headed by Vijay L. Kelkar the advisor to the finance
ministry, indicated that the existing tax structure had many issues that would be mitigated
by the GST system.
 February 2005: The finance minister, P. Chidambaram, said that the medium-to-long
term goal of the government was to implement a uniform GST structure across the
country, covering the whole production-distribution chain. This was discussed in the
budget session for the financial year 2005-06.
 February 2006: The finance minister set 1 April 2010 as the GST introduction date.
 November 2006: Parthasarthy Shome, the advisor to P. Chidambaram, mentioned that
states will have to prepare and make reforms for the upcoming GST regime.
 February 2007: The 1 April 2010 deadline for GST implementation was retained in the
union budget for 2007-08.
 February 2008: At the union budget session for 2008-09, the finance minister confirmed
that considerable progress was being made in the preparation of the roadmap for GST.
The targeted timeline for the implementation was confirmed to be 1 April 2010.
 July 2009: Pranab Mukherjee, the new finance minister of India, announced the basic
skeleton of the GST system. The 1 April 2010 deadline was being followed then as well.
 November 2009: The EC that was headed by Asim Dasgupta put forth the First
Discussion Paper (FDP) , describing the proposed GST regime. The paper was expected
to start a debate that would generate further inputs from stakeholders.
 February 2010: The government introduced the mission-mode project that laid the
foundation for GST. This project, with a budgetary outlay of Rs.1,133 crore,
computerized commercial taxes in states. Following this, the implementation of GST was
pushed by one year.
 March 2011: The government led by the Congress party puts forth the Constitution
(115th Amendment) Bill for the introduction of GST. Following protest by the opposition
party, the Bill was sent to a standing committee for a detailed examination.
 June 2012: The standing committee starts discussion on the Bill. Opposition parties raise
concerns over the 279B clause that offers additional powers to the Centre over the GST
dispute authority.
 November 2012: P. Chidambaram and the finance ministers of states hold meetings and
set the deadline for resolution of issues as 31 December 2012.
 February 2013: The finance minister, during the budget session, announces that the
government will provide Rs.9,000 crore as compensation to states. He also appeals to the
state finance ministers to work in association with the government for the implementation
of the indirect tax reform.
 August 2013: The report created by the standing committee is submitted to the
parliament. The panel approves the regulation with few amendments to the provisions for
the tax structure and the mechanism of resolution.
 October 2013: The state of Gujarat opposes the Bill, as it would have to bear a loss of
Rs.14,000 crore per annum, owing to the destination-based taxation rule.
 May 2014: The Constitution Amendment Bill lapses. This is the same year that Narendra
Modi was voted into power at the Centre.
 December 2014: India’s new finance minister, Arun Jaitley, submits the Constitution
(122nd Amendment) Bill, 2014 in the parliament. The opposition demanded that the Bill
be sent for discussion to the standing committee.
 February 2015: Jaitley, in his budget speech, indicated that the government is looking to
implement the GST system by 1 April 2016.
 May 2015: The Lok Sabha passes the Constitution Amendment Bill. Jaitley also
announced that petroleum would be kept out of the ambit of GST for the time being.
 August 2015: The Bill is not passed in the Rajya Sabha. Jaitley mentions that the
disruption had no specific cause.
 March 2016: Jaitley says that he is in agreement with the Congress’s demand for the
GST rate not to be set above 18%. But he is not inclined to fix the rate at 18%. In the
 future if the Government, in an unforeseen emergency, is required to raise the tax rate, it
would have to take the permission of the parliament. So, a fixed rate of tax is ruled out.
 June 2016: The Ministry of Finance releases the draft model law on GST to the public,
expecting suggestions and views.
 August 2016: The Congress-led opposition finally agrees to the Government’s proposal
on the four broad amendments to the Bill. The Bill was passed in the Rajya Sabha.
 September 2016: The Honorable President of India gives his consent for the Constitution
Amendment Bill to become an Act.
 2017: Four Bills related to GST become Act, following approval in the parliament and
the President’s assent:
o Central GST Bill
o Integrated GST Bill
o Union Territory GST Bill
o GST (Compensation to States) Bill

The GST Council also finalized on the GST rates and GST rules. The Government declares that
the GST Bill will be applicable from 1 July 2017, following a short delay that is attributed to
legal issues.

Q.2.Write short notes on:-

(i) Central GST, State GST, Union Territory GST, Integrated GST
Answer:
I. Central Goods and Services Tax or CGST

Just like State GST, the Central Goods and Services Tax of CGST is a tax under the GST regime
which is applicable on intrastate (within the same state) transactions. The CGST is governed by
the CGST Act. The revenue earned from CGST is collected by the Central Government. As
mentioned in the above instance, if a trader from West Bengal has sold goods to a customer in
West Bengal worth Rs.5,000, then the GST applicable on the transaction will be partly CGST
and partly SGST. If the rate of GST charged is 18%, it will be divided equally in the form of 9%
CGST and 9% SGST. The total amount to be charged by the trader, in this case, will be
Rs.5,900. Out of the revenue earned from GST under the head of CGST, i.e. Rs.450, will go to
the Central Government in the form of CGST.

II. State Goods and Services Tax or SGST

The State Goods and Services Tax or SGST is a tax under the GST regime which is applicable
on intrastate (within the same state) transactions. In case of intrastate supply of goods and/or
services, both State GST and Central GST are levied. However, the State GST or SGST is levied
by the state on the goods and/or services that are purchased or sold within the state. It is
governed by the SGST Act. The revenue earned through SGST is solely claimed by the
respective state government. For instance, if a trader from West Bengal has sold goods to a
customer in West Bengal worth Rs.5,000, then the GST applicable on the transaction will be
partly CGST and partly SGST. If the rate of GST charged is 18%, it will be divided equally in
the form of 9% CGST and 9% SGST. The total amount to be charged by the trader, in this case,
will be Rs.5,900. Out of the revenue earned from GST under the head of SGST, i.e. Rs.450, will
go to the West Bengal state government in the form of SGST.

III. Union Territory Goods and Services Tax or UTGST

The Union Territory Goods and Services Tax or UTGST is the counterpart of State Goods and
Services Tax (SGST) which is levied on the supply of goods and/or services in the Union
Territories (UTs) of India. The UTGST is applicable on the supply of goods and/or services in
Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra and Nagar Haveli, and
Lakshadweep. The UTGST is governed by the UTGST Act. The revenue earned from UTGST is
collected by the Union Territory government. The UTGST is a replacement for the SGST in
Union Territories. Thus, the UTGST will be levied in addition to the CGST in Union Territories.

IV. Integrated Goods and Services Tax or IGST

The Integrated Goods and Services Tax or IGST is a tax under the GST regime that is applied on
the interstate (between 2 states) supply of goods and/or services as well as on imports and
exports. The IGST is governed by the IGST Act. Under IGST, the body responsible for
collecting the taxes is the Central Government. After the collection of taxes, it is further divided
among the respective states by the Central Government.
 (ii) Discuss the rates of goods are services under GST.
Answer:
List of Various GST Tax Slabs Rates in India  2020

No Tax

 Goods – No taxes will be levied on goods like sanitary napkins, deities made of stone,
marbles or wood, Rakhis without any precious metals like gold, silver, raw material used in
brooms, Saal leaves and fortified milk, fruits, vegetables, bread, salt, bindi, curd, sindoor,
natural honey, bangles, handloom, besan, flour, eggs, stamps, printed books, judicial papers,
newspapers
 Services – All hotels and lodges who carry a tariff below INR 1,000 are exempted from
taxes under GST. The list also includes IMM courses and bank charges on savings account,
jan Dhan Yojana

GST Tax Slab of 5%

 Goods – The goods which will attract a taxation of 5% under GST include skimmed milk
powder, fish fillet, frozen vegetables, coffee, coal, fertilizers, tea, spices, pizza bread,
kerosene, ayurvedic medicines, agarbatti, sliced dry mango, insulin, cashew nuts, unbranded
namkeen, lifeboats , Ethanol- Solid biofuel pellets- Handmade carpets and other handmade
textile floor coverings (including namda/ gabba)- Hand-made braids and ornamental trimming
in the piece
 Services – Small restaurants along with transport services like railways and airways,
Standalone ACs non-ACs Restaurants and those which serve liquor, Takeaway Food,
Restaurants in hotels with a room tariff less than INR 7,500 (no input credit for these
restaurants), will come under this category. Special flights for pilgrims (Economy Class) come
under 5%

GST Tax Slab of 12%

 Goods – Items coming are the tax slab of 12% include frozen meat products, butter,
cheese, ghee, pickles, sausage, fruit juices, namkeen, tooth powder, medicine, umbrella,
instant food mix, cell phones, sewing machine, man-made yarn, -Handbags including pouches
and purses; jewelry box, Wooden frames for painting, photographs, mirrors etc, Ornamental
framed mirrors, Brass Kerosene Pressure Stove, Art ware of iron, etc.
 Services – Business class air tickets will attract a tax of 12% under GST. The slab also
includes movie tickets priced under INR 100

GST Tax Slab of 18%

 Goods – As mentioned above, most of the items are part of this tax slab. Some of the
items are flavored refined sugar, cornflakes, pasta, pastries and cakes, detergents, washing and
cleaning preparations, safety glass, mirror, glassware, sheets, pumps, compressors, fans, light
fitting, chocolate, preserved vegetables, tractors, ice cream, sauces, soups, mineral water,
deodorants, suitcase, brief case, vanity case, oil powder, chewing gum, hair shampoo,
preparation for facial make-up, shaving and after-shave items, washing powder, Refrigerators,
Water Heaters, Washing Machines, Televisions (up to 68 cm), Vacuum Cleaners, Paints, Hair
Shavers, Hair Curlers, Hair Dryers, Scent Sprays, Lithium-ion batteries, detergent, stones used
in flooring, marble & granite, sanitary ware, leather clothing, wrist watches, cookers, stoves,
cutlery, telescope, goggles, binoculars, oil powder, cocoa butter, fat, artificial fruits, artificial
flowers, foliage, physical exercise equipment, musical instruments and their parts, stationery
items like clips, some diesel engine parts, some parts of pumps, electrical boards, panels,
wires, razor and razor blades, furniture, mattress, cartridges, multi-functional printers, door,
windows, aluminum frames, monitors and television screens, tyres, power banks for lithium
ion batteries, video games, carriage accessories for disabled, etc
 Services – Restaurants located inside hotels with tariffs of INR 7,500 and above, outdoor
catering (input tax credit to be available), movie tickets priced above INR 100, actual bill of
hotel stay below INR 7,500, IT and Telecom services and financial services along with
branded garments will be part of this tax slab.

GST Tax Slab of 28%

 Goods – Over 200 goods will be taxes at a rate of 28%. The goods which will be part of
this category under GST are sunscreen, pan masala, dishwasher, weighing machine, paint,
cement, vacuum cleaner. Other items include automobiles, hair clippers, and motorcycles.
 Services – As mentioned above, five-star hotels, whose actual bill of hotel stay above
INR 7,500, racing, movie tickets and betting on casinos and racing will come under this
category.

Q.3. Discuss the threshold for registration under GST &

Explain the procedure for registration under GST.
Answer:

 Threshold for registration under GST

1. The journey of GST commenced from 1 st July 2017, and lot many changes have taken place
since then. Due to a large number of amendments in the Act, there is a confusion as regards to
threshold limit for registration under the Act. In this article, an attempt has been made to explain
the requirement for registration under GST.

2. A taxable person is required to take registration under GST in the following cases :-

(a) Crossing of Threshold limit of aggregate turnover

(b) Compulsory Registration

(c) Voluntary Registration

3. The article covers provisions related to point (a) above ie crossing of threshold limit of
aggregate turnover. Point (b) & (c) that is Compulsory Registration & Voluntary Registration
will be covered in the next article

4. As per section 22(1) of CGST Act, every supplier shall be liable to be registered in the State or
Union Territory (other than special category states) from where he makes supply of goods or
services or both, if his aggregate turnover in a financial year exceeds Rs. 20 lakhs.

In case of ‘special category states’, registration is required if his aggregate turnover in a financial
year exceeds Rs. 10 lakhs – first proviso to section 22(1) of CGST Act [renumbered vide CGST
(Amendment) Act, 2018, w.e.f. 1-2-2019]

However, CGST (Amendment) Act, 2018 second proviso to section 22(1) has been inserted to
provide 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 notified.

Accordingly, threshold limit remains rupees twenty lakhs for the States of Jammu and Kashmir,
Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand w.e.f. 1-
Feb- 2019 and rupees ten lakhs for the States of Manipur, Mizoram, Nagaland and Tripura.

The expression “aggregate turnover” has been defined under section 2(6) of the CGST Act.
Aggregate Turnover is PAN based and not State/ Union Territory based

5. For calculating the threshold limit, the turnover shall include all supplies made by the taxable
person, whether on his own account or made on behalf of all his principals. Explanation (i) to
section 22 of CGST Act

As per sec 2(88) of CGST Act , the term ‘principal’ applies to clearances made by C&F Agent
on behalf of Principal. It does not apply to clearances made by job worker.

Further, the supply of goods by a registered job worker, after completion of job work, shall be
treated as the supply of goods by the “principal” referred to in section 143 (i.e. Job work
procedure) of this Act. The value of such goods shall not be included in the aggregate turnover of
the registered job worker. Thus , in case of job work, value of material will be included in
aggregate turnover of principal and not of job worker

6. The Government , on recommendation of GST Council can grant exemption to specific

category of person by issuing notification .Following category of person are not required to take
registration

(a) Persons engaged in rendering taxable services where GST is payable under reverse charges
by the recipient , are not required to take registration – (Notification No. 5/2017–Central Tax,
dated 19.06.2017).

(b) A Job-worker with turnover less than 20/10 Lakhs is exempt from registration , even if he
engaged in making inter-State supply of goods. This exemption is not available to jewellery,
goldsmiths’ and silversmiths’ wares and other articles manufactured on job work basis –
Notification No. 7/2017– Integrated Tax, dated 14.09.2017 as amended vide Notification No.
2/2019-Integrated Tax, dated 29-Jan-2019, w.e.f. 1-Feb-2019.

(c ) Persons effecting inter-State supplies of taxable services – where the aggregate value of
supplies on PAN-India basis does not exceed Rs. 20 Lakhs in a year (Rs. 10 Lakhs for special
category States- Manipur, Mizoram, Nagaland and Tripura) (w.e.f. 13.10.2017) – Notification
No. 10/2017– Integrated Tax, dated 13.10.2017 as amended vide Notification No. 3/2019-
Integrated Tax, dated 29-Jan- 2019, w.e.f. 1-Feb-2019.

(d) Categories of persons effecting inter-State taxable supplies of handicraft goods – where the
aggregate value of supplies on PAN-India basis does not exceed Rs. 20 Lakhs in a year (Rs. 10
Lakhs for special category States- Manipur, Mizoram, Nagaland and Tripura) – (w.e.f.
22.10.2018) – Notification No. 3/2018–Integrated Tax dated 22.10.2018. This notification has
superseded Notification No. 8/ 2017-Integrated Tax, dated 14.09.2017.
(e) Categories of casual taxable persons making taxable supplies of handicraft goods- where the
aggregate value of supplies on PAN-India basis does not exceed Rs. 20 Lakhs in a year (Rs. 10
Lakhs for special category States-Manipur, Mizoram, Nagaland and Tripura) – (w.e.f.
23.10.2018) – Notification No. 56/2018-Central Tax, dated 23.10.2018. This notification has
superseded Notification No. 32/ 2017-Central Tax, dated 15.09.2017.

(f) Persons providing services through an e-commerce who is required to collect tax at source,
provided their aggregate turnover does not exceed Rs. 20 lakh (Rs. 10 lakh in special category
States- Manipur, Mizoram, Nagaland and Tripura) (w.e.f. 15.11.2017). – Notification No.
65/2017–Central Tax, dated 15.11.2017 as amended vide Notification No. 6/2019-Central Tax,
dated 29-Jan- 2019, w.e.f. 1-Feb-2019. The relaxation is not applicable to supplier of goods.

7. Note: W.e.f. 01.04.2019 – the basic limit beyond which obtaining registration becomes
mandatory is increased from Rs. 20 lakhs to Rs. 40 lakhs for certain categories of persons vide
notification No. 10/2019-Central Tax, dated 07.03.2019

 Procedure for registration under GST

How to register for GST

Here is how you can register for GST:

- Use your PAN, email ID and mobile number to fill out GST REG-01 and submit the same
- Verify your mobile number and email ID with a one-time password after PAN verification
- Store the application reference number [ARN] sent to your mobile number and email ID after
verification is complete
- Put in your ARN number and attach supporting documents where required
- Fill out the automatically generated GST REG-03 form in case additional information is
required
- After verification of all information submitted, a certificate of registration will be issued to you
within 3 working days

What are the documents required for GST registration

- Certificate of Incorporation
- Authorized signatory’s photo
- Stakeholder’s photo (Promoter / Partner)
- Proof of business address which includes electricity bill or property tax receipt or Municipal
Khata Copy or legal ownership document
- Copy of Resolution passed by BoD/ Managing Committee and Acceptance letter or letter of
Authorization
- Proof bank accounts details which includes a copy of your bank statement, cancelled cheque, or
the first page of your Pass Book
How to track the status of your GST registration

Here is how you can track the status of your application without logging in:
- Log on to http://gst.gov.in
- Click on the ‘Services’ tab
- Select ‘Registration’
- Choose the ‘Track application status’ option
- Enter your ARN in the new window and click on search
- Your application status will be displayed on the screen and sent to your registered mobile
number and email ID

Alternatively, you can also check your application status after logging in by following these
steps:
- Log in to http://gst.gov.in with the help of your credentials
- Move your mouse over the services tab for a drop-down menu and select ‘Registration’
- Click on ‘Track application status’, enter your ARN and click on search

Q.4. Short notes
(i) Casual Taxable person
Answer:

According to section 2(20) of the CGST Act, 2017, Casual Taxable Person means a person who
occasionally undertakes transactions involving supply of goods or services or both in the course
or furtherance of his business. Such a person may act as a principal, an agent or a person in any
other capacity in a State or UT, where he has no fixed place of business.

Thus, every casual taxable person making taxable supplies in India must compulsorily register
under GST. Furthermore, such a person cannot opt for registration under Composition Scheme.

As per the decisions taken in the 32nd GST Council Meeting, a person is required to register
under GST if his annual turnover in the preceding financial year or the current financial year
exceeds Rs 40 Lakhs. This is in case the person is engaged in the supply of goods. Likewise, a
supplier of goods in special category states is required to register under GST if his annual
turnover in the preceding or current financial year exceeds Rs 20 Lakhs.

However, the supplier of services needs to register under GST if his annual turnover in preceding
or current financial year exceeds Rs 20 Lakhs.

But, as mentioned above, there are certain category of persons who are obligated to register
under GST irrespective of their annual turnovers. This means the annual turnover threshold for
GST does not apply to such persons. Casual Taxable Persons is one of such categories of persons
who need to mandatorily get registered under GST.
Further, the casual taxable person cannot opt for registration under the GST Composition
Scheme. He or she must avail a temporary registration, which is valid for a period of 90 days, at
least five days before the commencement of business in India. Additionally, the casual taxable
person is obligated to pay advance tax. Such an advance tax is equal to his approximate tax
liability for a period for which such a person has availed registration under GST.

(ii) Non Resident Taxable person

Answer:

A Non – Resident Taxable Person means a person who supplies goods or services occasionally.
This person does not have a fixed place of business or residence in India. Moreover, he can
supply goods or services either as a principal or an agent or in any other capacity.

Furthermore, a Non – Resident Taxable Person has to get himself registered necessarily in order
to make a taxable supply in India. Thus, he needs to apply for registration at least five days prior
to commencing his business in India in Form GST REG 09. This application needs to be filed
electronically along with a self attested copy of his valid passport. Such a person need not have a
PAN in India.

As per the decisions taken in the 32nd GST Council Meeting, a normal person is required to
register under GST if his annual turnover in the preceding financial year or the current financial
year exceeds Rs 40 Lakhs. This is in case the person is engaged in the supply of goods.
Likewise, a supplier of goods in special category states is required to register under GST if his
annual turnover in the preceding or current financial year exceeds Rs 20 Lakhs.

However, the supplier of services needs to register under GST if his annual turnover in preceding
or current financial year exceeds Rs 20 Lakhs.

But, as mentioned above, there are certain category of persons who are obligated to register
under GST irrespective of their annual turnovers. This means the annual turnover threshold for
GST does not apply to such persons.

Non-Resident Taxable Persons is one of such categories of persons who need to mandatorily get
registered under GST. Such a person is required to apply for registration using his valid passport
and is not required to have a Permanent Account Number (PAN) in India. Further, a Non-
Resident Taxable Person needs to apply for such a registration at least five days before the
commencement of business in India.

Also, a Non-Resident Taxable Person cannot opt for registration under the GST Composition
Scheme. Additionally, any business entity incorporated outside India is also required to submit
its tax identification number or a unique number along with the application for registration. This
is because it is with this number with the help of which the government of that particular foreign
country would identify such an entity. Also, such an entity can also provide PAN if available.
Lastly, a Non-Resident Taxable person is obligated to pay advance tax. Such an advance tax is
equal to his approximate tax liability for a period for which such a registration has been availed
by him under GST.

(iii)Unique Identification Number

Answer:

 The idea behind the unique identification number was to assign each individual a unique
12 digit number which will help to identify the individual uniquely.
 The objective was to attach all the biometric and demographic data of an individual with
a 12-digit unique identity number called Aadhaar. The biometric and demographic data
of individual will be stored in a centralized database.
 The act related to Aadhaar was initially introduced as a money bill in the parliament of
India on 3rd March 2016.
 The bill was passed in the Lok Sabha on 11th March 2016 and on 26th March 2016, this
bill became an Act.
 The process of issuing the unique number and collection, maintenance and updating of
biometric and demographic data related to each individual is done by the ‘Unique
Identification Authority of India (UIDAI)‘, which is a central government agency of
India.
 With the issuance of Aadhaar card, India has entered the group of countries which has
national identity cards for its native residents.
 Even though Aadhaar was initially started to eliminate leakages, with time it became a
basic identity document.

Reasons for this move:-

 This process of attaching all the legal data of an individual with a unique number is an
attempt of India to develop a secure system of identification and will have a long term
impact.
 The first recommendation of any such identity number was after the 1999 Kargil war by
the Kargil Review Committee to then Prime Minister of India, for the security and
authenticity reasons.
 With the centralized database of each individual, it became possible for security agencies
to access information of each citizen under a certain emergency situation in the interest of
the national cause.
 By considering the population of India, it was necessary to have such a secure
identification system for controlling illegal migration and anti-national activities.
(iv) Registration Number Format /Format of 15 Digit GSTIN
Answer:

Earlier, whenever you buy some services or goods, then the seller used to give you the bill. In
that bill, you usually find the TIN (Taxpayer Identification Number). This was unique 11 digit
number allotted to each business entity which registers with the commercial tax department.

This TIN registration was mandatory for all Manufacturer/Traders /Exporters/Dealer.

Now, after the entry of GST regime, this TIN is now replaced with 15 digit GSTIN (Goods and
Services Tax Identification Number).

So this 15 digit GSTIN (Goods and Services Tax Identification Number) is nothing but the
replacement of TIN of VAT era.

Let me explain the same by taking an example of two bills. One bill issued prior to 1st July 2017
and another on or after 1st July 2017. The difference is as below (I am not concentrating on the
rate changes of VAT to GST)

First two Digits-The first digit of GSTIN is state code as per Indian Census 2011. The state
codes are as below.

01-Jammu and Kashmir, 02-Himachal Pradesh, 03-Punjab, 04-Chandigarh, 05-Uttarakhand, 06-

Haryana, 07-Delhi, 08-Rajastan, 09-UP, 10-Bihar, 11-Sikkim, 12-Arunachal Pradesh, 13-
Nagaland, 14-Manipur, 15-Mizoram, 16-Tripura, 17-Meghalaya, 18-Assam, 19-West Bengal,
20-Jharkhand, 21-Orrissa, 22-Chattisgarh, 23-MP, 24-Gujarat, 25-Daman and Diu, 26-Dadar and
Nagar Haveli, 27-Maharashtra, 28-Andhra Pradesh, 29-Karnataka, 30-Goa, 31-Lakshadweep,
32-Kerala, 33-Tamil Nadu, 34-Puducherry and 35-Anadaman and Nicobar Islands.

Next 10 Digits-It is the PAN number of a business entity like your shop, mall or company.

13th Digit-It indicates the number of registrations as a business entity has within a state for the
same PAN. It will be an alpha-numeric number (first 1-9 and then A-Z) and will be assigned on
the basis of the number of registrations a legal entity (having the same PAN) has within one
state.
Let say the company ABC registered in the same state for 5 times for different businesses. In
such case, this digit will be printed as 5. Let us assume, the same company registered for around
15 times, then it should be represented as F (1-9 numeric and later on 10th registration be named
as A and 11th as B and so on up to Z).

Hence, a business entity can register the GSTIN within a single state for the maximum of 35
times (1-9 and later on A-Z).

14th Digit-It will be by default as Z.

15th Digit-The last digit will be a check code which will be used for detection of errors.

Q.5 What is the meaning of the supply? Discuss the

scope and types of supply.
Answer:

The taxable event in GST is supply of goods or services or both. Various taxable events like
manufacture, sale, rendering of service, purchase, entry into a territory of state etc. have been
done away with in favor of just one event i.e. supply. The constitution defines “Goods and
Services Tax” as any taxon supply of goods, or services or both, except for taxes on the supply of
the alcoholic liquor for human consumption.

The Central and State governments will have simultaneous powers to levy the GST on Intra-
State supply. However, the Parliament alone shall have exclusive power to make laws with
respect to levy of Goods and Services Tax on Inter-State supply.

The term, “supply” has been inclusively defined in the Act. The meaning and scope of supply
under GST can be understood in terms of following six parameters, which can be adopted to
characterize a transaction as supply:

Scope of Supply under GST

 Supply of Goods or Services or Both

Goods as well as services have been defined in the GST Law. The securities are excluded from
the definition of goods as well as that of services. Money is also excluded from the definition of
goods as well as services, however, 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 are included in services. Schedule
II to the CGST Act, 2017 lists a few activities which are to be treated as supply of goods or
Supply of services. For instance, any transfer of title in goods would be a supply of goods,
whereas any transfer of right in goods without transfer of title would be considered as services.
Further Schedule III to the CGST Act, 2017 spells out activities which shall be treated as neither
supply of goods nor supply of services or outside the scope of GST. This includes:
1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
3. Sale of land and sale of building where the entire consideration has been received after
completion certificate is issued or after its first occupation. Actionable claims are included in the
definition of goods, however, Schedule III provides that actionable claims other than lottery,
betting and gambling shall be neither good nor services.

 Supply for Consideration

Consideration has specifically been defined in the CGST Act, 2017. It can be in money or in
kind. Any subsidy given by the Central Government or a State Government is not considered
as consideration. It is immaterial whether the payment is made by the recipient or by any other
person. 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.
Further, when there is barter of goods of services, the same activity constitutes supply as well as
a consideration. When a barber cuts hair in exchange for a painting, hair cut is a supply of
services by the barber. It is a consideration for the painting received. However, there are
exceptions to the requirement of ‘Consideration’ as a pre-condition for a supply to be called a
supply as per GST. As per schedule to CGST Act, 2017, activities as mentioned below shall be
treated as supply even if made without consideration:
1. Permanent transfer or disposal of business assets where input tax credit has been availed on
such assets.
2. Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, when made in the course or furtherance of business: Provided that gifts
not exceeding fifty thousand rupees in value in a financial year by an employer to an employee
shall not be treated as supply of goods or services or both.
3. Supply of goods— (a) by a principal to his agent where the agent undertakes to supply such
goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to
receive such goods on behalf of the principal.
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.

 Supply in the Course or Furtherance of Business

GST is essentially a tax only on commercial transactions. Hence, only those supplies that are in
the course or furtherance of business qualify as supply under GST. Hence, any supplies made by
an individual in his personal capacity do not come under the ambit of GST unless they fall within
the definition of business as defined in the Act. Sale of goods or service even as a vocation is a
supply under GST. Therefore, even if a famous politician paints paintings for charity and sells
the paintings even as a one-time occurrence, the sale would constitute supply. However, there is
one exception to this ‘Course or Furtherance of Business’ rule i.e., import of services for a
consideration.

 Supply by a Taxable Person

A supply to attract GST should be made by a taxable person. Hence, a supply between two non-
taxable persons does not constitute supply under GST. A “taxable person” is a person who is
registered or liable to be registered under section 22 or section 24. Hence, even an unregistered
person who is liable to be registered is a taxable person. Similarly, a person not liable to be
registered but has taken voluntary registration and got himself registered is also a taxable person.
It should be noted that GST in India is State-centric. Hence, a person making supplies from
different States needs to take separate registration in each State. Further, the person may take
more than one registration within a State if the person has multiple business verticals. 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 GST. Hence, a supply between
these entities constitutes supply under GST.

 Taxable Supply
For a supply to attract GST, the supply must be taxable. Taxable supply has been broadly defined
and means any supply of goods or services or both which, is leviable to tax under the Act.
Exemptions may be provided to the specified goods or services or to a specified category of
persons/ entities making supply.

 Supply in the Taxable Territory

For a supply to attract GST, the place of supply should be in India except for the State of Jammu
and Kashmir. The place of supply of any goods or services is determined based on Sections 10,
11, 12 and 13 of IGST Act 2017.

 Inter/Intra State Supply

The location of the supplier and the place of supply determines whether a supply is treated as an
Intra State supply or an Inter State supply. Determination of the nature of supply is essential to
ascertain whether integrated tax is to be paid or Central plus State tax are to be paid. Inter- State
supply of goods means a supply of goods where the location of the supplier and place of supply
are in different States or Union territories. Intra State supply of goods means supply of goods
where the location of the supplier and the place of supply are in the same State or Union
territory. Imports, Supplies from and to SEZs are treated as deemed Inter-State supplies.

 Composite/Mixed Supply
A composite supply means a supply made by a taxable person to a recipient comprising two or
more supplies of goods or services or any combination thereof, which are naturally bundled and
supplied in conjunction with each other in the ordinary course of business, one of which is a
principal supply. For instance, a travel ticket from Mumbai to Delhi may include service of food
being served on board, free insurance, and the use of airport lounge. In this case, the transport of
passenger, constitutes the pre-dominant element of the composite supply, and is treated as the
principal supply and all other supplies are ancillary.
The GST Law lays down the tax liability on a composite or mixed supply in the following
manner.
1. Composite Supply comprising two or more supplies one of which, is a principal supply, shall
be treated as supply of such principal supply.
2. Mixed Supply comprising two or more supplies, shall be treated as supply of that particular
supply which attracts the highest rate of tax.

Type of Supply under GST

(i) Composite Supply under GST
Next relevant definition is the definition of ‘composite supply’ under sec.2(30). Composite
supply means a supply made by a taxable person to a recipient consisting of two or more taxable
supplies of goods or services or both, or any combination thereof, which are naturally bundled
and supplied in conjunction with each other in the ordinary course of business, one of which is a
principal supply.  The definition has also given an illustration which has got statutory value. 
This definition implies that when supply is made which consists of different forms of supply
including goods or services but which are necessarily, naturally and integrally connected to the
main supply, then the entire supply should be taken as a single supply which has got essential
character of principal supply.

(ii) Principal Supply under GST

The definition of principal supply under sec. 2(90) of the Act states that Principal supply means
the supply of goods or services which constitutes the pre-dominant element of a composite
supply and to which any other supply forming part of that composite supply is ancillary.  In other
words, if the composite supply consists various supplies which are bundled and integrally
connected to the main supply, the supplies which get bundled in the supply leading to the
principal supply will be treated as an ancillary supply. For the purpose of classification,
taxability and exemption the entire supply will be treated as a single supply and the principal
supply will be relevant factor for such determination.

In this context the latest decision of Hon’ble Gujarat High Court in 2020(34)GSTL 385 (Guj) in
the case of Torrent Power Ltd vs. UOI, held that in case of naturally bundled services in the
course of business the whole service is to be treated as single service for taxability and
exemption. Ex-post discussing principal supply and Composite supply moving to its parallel onto
Mixed Supply under GST.

(iii) Mixed Supply under GST

As against composite supply, one has to examine the definition of ‘mixed supply’ as given under
sec.2(74) of the Act. Mixed supply refers to two or more individual supplies of goods or
services, or any combination thereof, made in conjunction with each other by a taxable person
for a single price where such supply does not constitute a composite supply. The definition has
also given an illustration which is part of the act itself.

(iv) Mixed Supply v. Composite Supply

Taking into account the two definitions of supply viz., composite supply and mixed supply, one
can understand the essential statutory differences between the two kinds of supply.  Under mixed
supply reference is made to ‘price factor’ as a condition there must be a ‘single price’ where such
supply does not constitute a composite supply. Whereas in the case of composite supply it may
be seen from the definition there is no reference to a price factor. In other words, irrespective of
manner of pricing or manner of invoicing, in the case of composite supply, once the supply
comes under the scope of composite supply, the same has to be assessed for the purpose of
classification, taxability and exemption based upon the principal supply only.  In the case of
mixed supply as per the definition itself, if the supplier does not charge a single price, then it
may not fall under the definition and if it does not come under the scope of composite supply
also, the whole supply has to be treated on individual basis without referring to composite supply
or mixed supply.

In the context of determining the tax liability on composite and mixed supplies, sec.8 of the
CGST Act, while referring to composite supply, comprising two or more supplies, one of which
is principal supply, the section refers to the whole supply to be treated as supply of such principal
supply. For example when a supplier has ordered under a contract or agreement or a purchase
order as the case may be, to deliver certain goods and erect and install the same at the sight of the
customer, the supply is to be treated as composite supply, where supply of goods and supply of
service relating to erection and installation are integrally connected.  Since the customer requires
the goods and the erection and installation activity is ancillary to the principal activity of supply
of goods, the classification, taxability, exemption, valuation and the rate of tax must be related to
the principal supply which is a supply of goods.

(v) Exempt Supply & Non-Taxable Supply

Sec.2(47) defines ‘Exempt supply’ referring to supply of any goods or services or both which
attracts nil rate of tax or which may be wholly exempt from tax under sec.11, or under sec.6 of
the Integrated Goods and Services Tax Act, and includes non-taxable supply.

 Non-taxable supply is defined under sec.2 (78) of the Act as referring to 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.  The dispute arises as to which supply would constitute a non-taxable supply.
It may be seen from the definition of ‘non-taxable supply’ under sec.2 (78) of the Act referred to
above that non-taxable supply should essentially be supply, i.e.,  it should satisfy the ingredients
of the supply under the act viz. supplying service or goods for a consideration in the course of
furtherance of business. If a supply satisfies these ingredients but yet they are not taxable under
this Act, then such supply becomes non-taxable. For example, the Act excludes alcoholic liquor
for human consumption and petroleum products for the present, though these transactions may
come under the scope of supply under the Act, because the charging section excludes alcoholic
liquor for human consumption, the same is not taxable under this Act.  Similarly sub-section 2 of
section 9 of CGST Act indicates that the tax on the supply of petroleum crude, High Speed
Diesel, motor spirit (known as petrol), etc. will be levied with effect from such date as may be
notified by the Government.  Currently however these products are not chargeable under GST.

(vi) Scope of Non-Taxable Supply

Since supplies of alcoholic liquor for human consumption are not leviable to tax under the Act,
though they are supplies, such supplies will come under the scope of non-taxable supply.  The
question that may arise is which supplies or which transactions may fall outside the scope of
non-taxable supply?   Since the scope of the Act is clear that only a supply is taxable and since
non-taxable supply pre-supposes a supply, the Act does not treat certain transactions as either
supply of service or supply of goods, then such transactions cannot be brought under the scope of
non-taxable supply even when the supplier is engaged in such transactions.  For example.
Schedule III of the CGST Act specifically refers to activities of transactions which shall be
treated neither as supply of goods nor supply of services. These transactions as given under
Schedule III cannot be brought under the scope of nontaxable supply.

(vii) Inward & Outward Supply

Sec.2(67), sec.2(83) relating to inward supply and outward supply should be read together.

While ‘inward supply’ refers to receipt of goods or services or both whether by purchase,
acquisition or any other means with or without consideration, the ‘outward supply’ refers to
supply of goods or services or both, by any mode, made or agreed to be made by such person in
the course or furtherance of business.

(viii) Zero rated supply

At the same time, in IGST Act, zero rated supply has been referred to as under sec.16 of the Act. 
Sec.16 of the Act refers to Zero rated supply as follows:

 sec.16. 1. ‘zero rated supply’ means any of the following supplies of goods or services or both,
namely: ––

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.

2. Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services
Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that
such supply may be an exempt supply.

3. A registered person making zero rated supply shall be eligible to claim refund under either of
the following options, namely: ––

(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such
conditions, safeguards and procedure as may be prescribed, without payment of integrated tax
and claim refund of unutilized input tax credit; or

(b) he may supply goods or services or both, subject to such conditions, safeguards and
procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid
on goods or services or both supplied, in accordance with the provisions of section 54 of the
Central Goods and Services Tax Act or the rules made thereunder.
From the above definition it is clear that zero rated supply is confined to two situations. They are

(a) Export of goods or services or both; or

(B) Supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.

In the IGST Act under the provisions it is clearly indicated that the input tax credit is available
on zero rated supply also though no tax is paid and the provision also enables a registered person
to claim refund in respect of goods and services supplied under bond or letter of undertaking
without payment of IGST and also to claim refund of unutilized input tax credit and to claim
refund of IGST if it has been paid on supply of goods and services.  Since zero rated supply
covers export of services also it is useful to find out what exactly is export of service as defined
under IGST Act. Sec.2(6) of IGST Act defines export of service as follows which is extracted
below:

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; 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.

It may be seen that unless all the conditions are satisfied, the supply cannot be treated as export
of service. Only when the supply satisfies all the conditions as laid down in the above sections,
the supplier can claim the benefit of zero-rated supply.

Q.6. Explain the input tax credit process with examples.

Answer:
Input Credit in GST

Input Credit Mechanism is available to you when you are covered under the GST Act.

Which means if you are a manufacturer, supplier, agent, e-commerce operator, aggregator or any
of the persons mentioned, registered under GST, You are eligible to claim INPUT CREDIT for
tax paid by you on your PURCHASES.

How to claim input credit under GST?

To claim input credit under GST –

 You must have a tax invoice(of purchase) or debit note issued by registered dealer

Note: Where goods are received in lots/installments, credit will be available against the tax
invoice upon receipt of last lot or installment.

 You should have received the goods/services

Note: Where recipient does not pay the value of service or tax thereon within 3 months of issue
of invoice and he has already availed input credit based on the invoice, the said credit will be
added to his output tax liability along with interest.

 The tax charged on your purchases has been deposited/paid to the government by the
supplier in cash or via claiming input credit
 Supplier has filed GST returns

Possibly the most path breaking reform of GST is that input credit is ONLY allowed if your
supplier has deposited the tax he collected from you. So every input credit you are claiming shall
be matched and validated before you can claim it.

Therefore, to allow you to claim input credit on Purchases all your suppliers must be GST
compliant as well.

There’s more you should know about input credit –

  It is possible to have unclaimed input credit. Due to tax on purchases being higher than
tax on sale. In such a case, you are allowed to carry forward or claim a refund.

If tax on inputs > tax on output –> carry forward input tax or claim refund

If tax on output > tax on inputs –> pay balance

No interest is paid on input tax balance by the government

 Input tax credit cannot be taken on purchase invoices which are more than one year old.
Period is calculated from the date of the tax invoice.
 Since GST is charged on both goods and services, input credit can be availed on both
goods and services (except those which are on the exempted/negative list).
 Input tax credit is allowed on capital goods.
 Input tax is not allowed for goods and services for personal use.
 No input tax credit shall be allowed after GST return has been filed for September
following the end of the financial year to which such invoice pertains or filing of relevant
annual return, whichever is earlier.