QUES 1:

● A) MEANING : The goods and services tax (GST) is a value-added tax levied on most
goods and services sold for domestic consumption. The GST is paid by consumers, but it
is remitted to the government by the businesses selling the goods and services. GST is
one indirect tax for the whole nation, which will make India one unified common market.
GST is a single tax on the supply of goods and services.

b) IMPORTANCE OF GST:

1) Taxes levied by Central Government were not available as set off against the taxes
levied State Governments. For example, Excise Duty was not adjustable against VAT.
Further, VAT was levied on the portion of Excise duty included in the price of goods.
Credit of CST levied by Union Government was not available. Thus, it all became
part of the cost of business.
2) Rate of CST(central sales tax) being different from VAT created a tax arbitrage
which was exploited.
3) Certain taxes levied by the State Governments were not allowed as set off for
payment of other taxes levied by State Governments.
4) Different VAT laws, in force in different parts of the country, had divided the nation
into separate economic spheres.
5) Tariff and non-tariff barriers such as octroi, entry tax, check posts, etc., hindered the
free flow of trade throughout the country.

c) LIMITATIONS OF GST:

1. GST Scheme has increased the cost of operation

With the GST in place, businesses have to update their books and accounting with the latest
GST-compliant software or Enterprise Resource Planning (ERP) software to keep their
business afloat. ERP software is costly, and it takes proper training to manage and run this
software, thereby increasing the cost to companies. Moreover, compliance with GST norms
has drastically increased the operational cost of SMBs, and they have to hire professionals to
help them out with the GST laws.

2. Increased tax liability on SMBs (small and medium size businesses)

According to the earlier scheme, the excise duty was levied only on businesses with an
annual turnover of more than Rs.1.5 crore. However, now businesses with an annual turnover
of more than Rs.40 lakh have to pay taxes under the new GST Scheme.

3. Enhance burden of compliance

With the GST scheme in place, every company must register on the GST portal in the state of
their operation. The whole process of registering, maintaining documents, invoices, and filing
returns is tiresome. It unnecessarily increased the burden on companies that had already been
facing too many bureaucratic hurdles in India. On top of that, most states are not that savvy
when it comes to technology, increasing the hurdles of compliances for the companies. All of
these results in enhanced difficulties for the companies, especially new businesses.

4. Penalties for non-GST-compliant firms

As mentioned above, every company has to register themselves with the GST portal, and if
they don’t do so, they will have to pay penalties. It is quite possible for MSMEs(ministry of
micro, small and medium enterprises) not to understand the nuances of the GST tax regime.
And, in that case, they will either have to hire an expert or look out for online help.
Nonetheless, many online platforms are offering free GST-compliant digital invoices for
helping SMBs.

D) Procedure for obtaining Registration Certificate

The following documents are required for obtaining service tax registration in India:

1. Self-attested copy of the PAN Card of the Proprietor or Company or LLP or Legal
entity
2. Photograph and proof of identity of the person filing the service tax registration
application
3. PAN card
4. Passport
5. Voter Identity Card
6. Aadhar Card
7. Driving license
8. Any other Photo-identity card issued by the Central Government, State Government
or Public Sector Undertaking.
9. Address proof for the address submitted along with proof of ownership, lease or
rent agreement, allotment letter from Government.
10. No Objection Certificate from the legal owner.
11. Bank Account Details
12. Memorandum of Association (For Company)
13. Articles of Association (For Company)
14. List of Directors (For Company)
15. Authorization by the Board of Directors/Partners/Proprietor for the person filing
the application.
16. Business transaction numbers obtained from other Government departments or
agencies such as Customs Registration No. (BIN No), Import Export Code (IEC)
number, State Sales Tax Number (VAT), Central Sales Tax Number, Company
Index Number (CIN) which have been issued prior to the filing of the service tax
registration application

Procedure for Applying for Service Tax Registration

To obtain service tax registration, the applicant can file the ST-1 application for service tax
through the Automation of Central Excise and Service Tax (ACES) website. The documents
listed above along with the requisite information must be submitted online.
On filing the ST-1 service tax registration application online, the applicant must submit a self
attested copy of the above documents by registered post/speed Post to the concerned
Division, within 7 days for the purposes of verification.

If the documents and information submitted are acceptable, service tax registration would be
granted within 2 days of filing ST-1 online – based on trust. The service tax applicant can use
the electronic service tax registration certificate as proof of registration and begin electronic
payment of taxes.

In case there is a need for verification of the premises or documents submitted, the same can
be requested by an authorized Service Tax Officer. Further, under the following
circumstances, the service tax registration certificate may be revoked by the service tax
department:

1. The premises are found to be non existent or not in possession of the assessee.

2. No documents are received within 15 days of the date of filing the registration application.

3. The documents are found to be incomplete or incorrect in any respect.

e) DIFFERENCE BETWEEN VAT AND GST:

differences vat gst

Taxable event ● VAT is ● GST is imposed on

imposed on the sale every supply, and
of goods. supply includes
goods and services.
 
 
● It is a summary
based tax that occurs ● It is a transaction-
on the sale of goods. based tax that
occurs on the supply
point

Taxes and Laws in each ● VAT rates vary in ● Uniform duty rates
state each state. all over India 

● For States, we have

State GST Act
(SGST)
● For intrastate
 supplies of services
or goods, there is
Central GST Act
(CGST)
● For provisions made
between the states,
we have the
Integrated GST Act
(IGST). 
● For Union regions
engaged with an
inventory exchange,
we have Union
Territory GST Act
(UGST).

Registeration policy ● Individuals or ● Individuals or

business entities business entities
need to register if need to register if
they have a turnover they have a turnover
of less than Rs 10 of more than Rs 20
lakhs. lakhs.

Authorities that regulate ● Is a tax collected by ● Goods and Service

Tax respective state Tax is equally shared
legislatures. by the state/central
government.
 
 
● Is collected by the
seller’s state. ● Is collected by the
consumer’s state.

Input Tax Credit (ITC) ● No ITC is available ITC is available under GST
for customs duty where a taxpayer can claim
paid. the credit on supplies
received

Payment Mode ● Can be paid only ● Can be paid both

offline. online (mandatory if
GST to be paid is
more than Rs
 10,000) and offline.

Abidances Goods' movement :  Goods' movement : 

● Compliance for the ● Compliance for the

movement of goods movement of goods
varies in different between states is
states.  similar.

Returns:  Improved on Returns: 

● The dates for return ● The return filings are

filing are the 10th, to be done every
15th and 20th of next 20th of the next
month for each month for each
preceding month.  preceding month. 

QUES 3 : INSPECTION:

Inspection’ is the act of examining something, often closely. In tax/legal language ,it is a
softer provision than search. It enables officers to access any place of business of a taxable
person and also any place of business of a person engaged in transporting goods or who is an
owner/operator of a warehouse or godown.

Inspection under GST

When does inspection under GST occur?

A Joint Commissioner (or an officer of higher rank) may have “reasons to believe” that in
order to evade tax, any person has done the following

● Suppressed any transaction of supply

● Suppressed stock in hand
● Claimed input tax credit in excess
● Violated of any of the provisions
● Any transporter or owner/operator of a warehouse has kept goods which have escaped
tax payment or has kept accounts and/or goods in such a way as to evade tax

Then he can authorize any officer in FORM GST INS-01 to inspect places of businesses
of:

taxable person or transporter or owner/ operator of warehouse . He can also examine any
other place if he sees fit.
 QUES 6:

Offences Under GST

What is an offence?

An offence is a breach of a law or rule, i.e., an illegal act. Similarly, an offence under GST is
a breach of the provisions of the GST Act and Rules.

What are the offences under GST?

When has anyone committed an offence under GST?

There are 21 offences under GST. For easy understanding, these have been grouped into
heads as given below:

Fake or wrong invoices:

1. A taxable person supplies any goods/services without any invoice or issues a

false invoice.
2. He issues any invoice or bill without supply of goods/services in violation of
the provisions of GST
3. He issues invoices using the identification number of another bonafide taxable
person

Fraud:

1. He submits false information while registering under GST

2. He submits fake financial records/documents or files fake returns to evade tax
3. Does not provide information/gives false information during proceedings

Tax evasion:

1. He collects any GST but does not submit it to the government within 3 months
2. Even if he collects any GST in contravention of provisions, he still has to
deposit it to the government within 3 months. Failure to do so will be an
offence under GST.
3. He obtains a refund of any CGST/SGST by fraud.
4. He takes and/or utilizes input tax credit without actual receipt of goods and/or
services
5. He deliberately suppresses his sales to evade tax
Supply/transport of goods:

1. He transports goods without proper documents

2. Supplies/transports goods that he knows will be confiscated
3. Destroys/tampers goods that have been seized

Others:

1. He has not registered under GST although he is required to by law

2. He does not deduct TDS or deducts less amount where applicable.
3. He does not collect TCS or collects less amount where applicable.
4. Being an Input Service Distributor, he takes or distributes input tax credit in
violation of the rules
5. He obstructs the proper officer during his duty (for example, he hinders the
officer during the audit by tax authorities)
6. He does not maintain all the books that he required to maintain by law
7. He destroys any evidence

Penalties under GST

What does penalty mean?

The word “penalty” is not specifically defined in GST and so it takes the meaning from
various judicial pronouncements and principles of jurisprudence. A penalty is a punishment
imposed by law for committing an offence or failing to do something that was the duty of a
party to do. A penalty can be both corporal or pecuniary, civil or criminal. Both corporal
(jail) and pecuniary (monetary) penalties are applicable under GST.

What are the penalties under GST?

If any of the offences are committed then a penalty will have to be paid under GST. The
principles on which these penalties are based are also mentioned by law.

Penalty in cases of fraud

An offender has to pay a penalty amount of tax evaded/short deducted etc.,

i.e., 100% penalty, subject to a minimum of Rs. 10,000. For the 21 offences above, for fraud
cases, the penalty will be 100% (minimum Rs. 10,000).
What is the penalty for helping someone to commit fraud under GST?

Not only the taxable person but any person who does the following will have to pay a
penalty extending up to Rs. 25,000

1. Helps any person to commit fraud under GST

2. Acquires/receives any goods/services with full knowledge that it is in violation
of GST rules
3. Fails to appear before the tax authority on receiving a summons
4. Fails to issue an invoice according to GST rules
5. Fails to account/vouch any invoice appearing in the books

Penalty for Other Cases (no intention of fraud or tax evasion)

An offender not paying tax or making short-payments has to pay a penalty of 10% of the tax
amount due, subject to a minimum of Rs.10,000. 
Therefore, the penalty will be high at 100% of the tax amount when the offender has
evaded i.e., where there is a deliberate fraud. For other non-fraud cases, the penalty is
10% of tax.

General Penalty

Any offence under GST for which penalty is not specifically mentioned will be liable to a
penalty extending Rs. 25,000.  

QUES 5:

Supply includes sale, transfer, exchange, barter, license, rental, lease and disposal. If a person
undertakes either of these transactions during the course or furtherance of business for
consideration, it will be covered under the meaning of Supply under GST.

Supply has two important elements:

● Supply is done for a consideration

● Supply is done in course of furtherance of business

THREE COMPONENTS OF SUPPLY UNDER GST:

● Place of Supply - This component determines whether a transaction is an intra-state

supply, an inter-state supply, or an external trade, which determines the type of GST
that will be associated with it.
 ● Value of Supply - This component decides the taxable value of supply made, and
thus the amount of tax that needs to be paid for it.
● Time of Supply - This component determines when the associated taxes and GST
returns are due.

TYPES OF SUPPLY:

1) TAXABLE SUPPLY: the taxable supply refers to the sale of taxable goods or
the delivery of taxable services. The importation of the taxable goods can also
be referred to as the taxable supply. Taxable means that the VAT is imposed
on the transactions. There exist two rates of VAT. They include the standard
rate which goes at 15% and it is applicable to different goods and services
which are mostly imported and sold. The other one is the zero rate at 0%
which is applicable to the exports and specific list of commodities following
the schedule of the VAT.
2) 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 from tax
under section 11, or under section 6 of the Integrated Goods and Services Tax
Act, and includes non-taxable supply.
3) INTER STATE: Under GST, the supply of goods or services from one state
to another would be called interstate supply. The GST Act defines interstate
supply as when the location of the supplier and the place of supply for the
customer are in:
Two different States; or
Two different Union territories

4) INTRA STATE: Under GST, the supply of goods or services within the same
state or Union territory is called an intrastate supply. However, the supply of
goods or services to a Special Economic Zone developer or Special Economic
Zone unit situated within the same state would not be intrastate supply. As any
supply of goods or services to a Special Economic Zone developer or Special
Economic Zone unit is classified as interstate supply.
5) COMPOSITE: A composite supply is two or more goods or services that are
only sold as a set and cannot be sold individually.Every composite supply has
a principal supply, which is the main product or service that the buyer
primarily wants. FOR EXAMPLE : A dealer sells a brand-new vehicle along
with registration, insurance, a tool kit and first aid kit, and 4 free maintenance
services. This is a composite supply, because vehicle insurance, registration
and free maintenance services cannot be supplied without the vehicle (which
is the principal supply).

6) MIXED SUPPLY: A mixed supply is two or more independent products or

services which are offered together as a bundle but can also be sold separately.
In a mixed supply, the item or service with the highest GST rate is treated as
the principal supply (whether or not it is the main part of the bundle). The
mixed supply is taxed at the GST rate of the principal supply. FOR
EXAMPLE: A plant nursery sells cut flowers, ornamental plants, and
 gardening services together as a bundle. When they’re sold separately, the
plants and flowers incur GST at a rate of 5%, and the gardening services incur
GST at a rate of 18%. When they’re offered together as a bundle, the whole
bundle will incur GST at the 18% rate.

7) ZERO RATED SUPPLY: “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. EXAMPLE:
Examples of items that may be zero-rated include certain foods and beverages,
exported goods, donated goods sold by charity shops, equipment for the
disabled, prescription medications, water, and sewage services, books and
other printed publications, and children's clothing.

QUES 2: PENALTY:

The word “penalty” is not specifically defined in GST and so it takes the
meaning from various judicial pronouncements and principles of
jurisprudence. A penalty is a punishment imposed by law for committing an
offence or failing to do something that was the duty of a party to do. A
penalty can be both corporal or pecuniary, civil or criminal. Both corporal
(jail) and pecuniary (monetary) penalties are applicable under GST.

Common Offences Under GST And Their Penalties

Type of offence Amount of penalty

Penalty for delay in filing GSTR The late fee is Rs. 100 per day per Act. So it is 100 under CGST
under SGST. Total will be Rs. 200/day. The maximum is Rs. 5,0
There is no late fee on IGST.

Penalty for not filing GSTR Penalty 10% of the tax due or Rs. 10,000 – whichever is higher

Penalty for committing a fraud Penalty 100% of the tax due or Rs. 10,000 – whichever is highe
value fraud cases also have jail term)

Penalty for helping a person to  Penalty extending up to Rs. 25,000

commit fraud
 Penalty for opting for
composition scheme even
though he is not eligible
Demand & recovery provisions of sections 73 & 74 will apply.
(i) Fraud case- Penalty 100% of the tax due or Rs. 10,000 – wh
is higher
(ii) Non-fraud casePenalty 10% of the tax due or Rs. 10,000 –
whichever is higher

Penalty for wrongfully Penalty 100% of the tax due or Rs. 10,000    -whichever is high
charging GST rate— charging a additional GST collected is not submitted with the govt)
higher rate

Penalty for not issuing an Penalty 100% of the tax due or Rs. 10,000 – whichever is highe
invoice

Penalty for not registering Penalty 100% of the tax due or Rs. 10,000 – whichever is highe
under GST

Penalty for incorrect invoicing A penalty of Rs. 25,000

QUES 4: C) ITC

Input Tax Credit means claiming the credit of the GST paid on purchase of Goods
and Services which are used for the furtherance of business. The Mechanism of
Input Tax Credit is the backbone of GST and is one of the most important reasons
for the introduction of GST.

Input Tax Credit of CGST/ SGST/ UTGST/ IGST

GST comprises of the following levies:-

1. Central Goods and Services Tax (CGST) [also known as Central Tax] which is levied

on intra-state or intra-union territory on supply of goods or services or both.

2. State Goods and Services Tax (SGST) [also known as State Tax] which is levied on

supply of goods or services or both within the same state.

 3. Union Territory Goods and Services Tax(UTGST) [also known as Union Territory

Tax] which is levied on supply of goods or services within the same union territory.

4. Integrated Goods & Services Tax (IGST) [also known as Integrated Tax) on inter-

state supply of goods or services of both.

Documents on the basis of which the ITC can be claimed

1. Invoice issued by supplier of goods or services or both.

2. Invoice issued by Recipient along with proof of payment of Tax.

3. A Debit note issued by the supplier.

4. Bill of entry or similar document prescribed under the Customs Act.

5. Revised Invoice.

6. Document issued by the Input Service Distributer.

ITC allowed only for Goods and/or Services used for Business

1. Input Tax Credit is not allowed for Goods and Services used for Personal Use.

2. When Goods and/or Services are received partly for Business and partly for personal

use, one can avail ITC but only for the portion which is used for Business.

3. When goods and/or services are used partly for taxable supplies and partly for

exempt supplies, one can avail ITC only on the portion used for making taxable

supplies and zero rated supplies.

4. ITC is not allowed on the portion used for making exempt supplies.