A STUDY OF GST IMPLEMENTATION

At BHILAI STEEL PLANT

SUMMER INTERNSHIP PROJECT REPORT

SUBMITTED BY
DEEPSI NAIK
21/MBA(FM)/037

MBA (FINANCIAL MANAGEMENT)

DEPARTMENT OF COMMERCE
UTKAL UNIVERSITY
VANI VIHAR, BHUBANESWAR, ODISHA
2ND SEMESTER
(BATCH 2021-2023

COMPANY’S PROFILE:

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 STEEL AUTHORITY OF INDIA
1.1 INTRODUCTION
Steel Authority of India Ltd (SAIL) is one of India’s largest steelmakers and
among the top Government owned companies conferred with the prestigious
‘Maharatna’ status.

SAIL is one of the largest state owned steel makers in India and one of the top
steel makers in the world, with turnover of INR 68,452 Crore, the company is
among top five highest profit earning corporate of the country.

SAIL is also the second largest producer of iron ore in India and meets 100% of
its requirement from its captive mines. SAIL offers the widest array of steel
products amongst all Indian manufacturers, including products in mild, special
and alloy steel categories in around 50 products, 500 grades and 5000
dimensions.

SAIL is a government owned steel producer based in New Delhi, India. It is

under the ownership of Ministry of Steel, Government of India with an annual
turnover of INR 68,452 Crore for fiscal year 2020–21. Incorporated on 24
January 1973, SAIL has 61,989 employees (as of 1 May 2022). With an annual
production of 16.30 million metric tons, SAIL is the 20th largest steel producer
in the world and the largest in India. The Hot Metal production capacity of the
company will further increase and is expected to reach a level of 50 million
tonnes per annum by 2025.

The tagline of the company –

There’s a little bit of SAIL in everybody’s life –

symbolizes the fact that in the last five decades it has grown from strength to
strength and the SAIL brand has become well entrenched in peoples’ minds.

Native name SAIL

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Type Statutory Corporation
Traded as NSE: SAIL
BSE: 500113
LSE: SAUD
Industry Steel
Founded 19 January 1954; 68 years ago
Headquarters New Delhi, India
Products Steel, flat steel products, long steel products, wire
products, Wheel & axle for indian railways
Revenue Decrease ₹68,452 crore (US$9.0 billion) (2021)
Operating income Increase ₹6,594 crore (US$870 million) (2020)
Net income Decrease ₹1,926 crore (US$250 million) (2020)
Total assets Increase ₹126,927 crore (US$17 billion) (2020)
Owner Government of India (64.9%)
Number of
employees- 61,989 (1 May 2022)
Parent Ministry of Steel, Government of India
Website www.sail.co.in

SAIL INTEGRATED STEEL PLANTS

o Bhilai Steel Plant (BSP) in Chhattisgarh setup with Soviet Collaboration.
o Rourkela Steel Plant (RSP) in Odisha setup with German Collaboration
o Durgapur Steel Plant (DSP) in West Bengal setup with British
Collaboration
o Bokaro Steel Plant (BSL) in Jharkhand setup with Soviet Collaboration
o IISCO Steel Plant (ISP) at Burnpur, West Bengal

SPECIAL STEEL PLANTS

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 o Steel Authority of India Limited (SAIL), Kanpur, Uttar Pradesh
o Alloy Steels Plant (ASP), Durgapur, West Bengal
o Salem Steel Plants (SSP), Tamil Nadu
o Visvesvaraya Iron and Steel Limited (VISL) at Bhadaravathi, Karnataka

FERRO ALLOY PLANT

o Chandrapur Ferro Alloy Plant (CFP) in Maharashtra

REFACTORY PLANTS - SAIL Refractory Unit (SRU)

o SAIL Refractory Unit, Bhandaridah in Jharkhand
o SAIL Refractory Unit, Bhilai in Chhattisgarh
o SAIL Refractory Unit, IFICO, Ramgarh in Jharkhand
o SAIL Refractory Unit, Ranchi Road in Jharkhand

VISION
To be a respected world class corporation and the leader in Indian steel business in quality,
productivity, profitability, and customer satisfaction.

WORLD RANK
INDIA rank second at producing steel.
World Steel Production for year 2021-
1. CHINA- 1032.8MT
2. INDIA- 118.2MT
3. JAPAN- 96.3MT
4. UNITED STATES- 85.8MT
5. RUSSIA- 75.6

SAIL is also the second largest producer of iron ore in India and meets 100% of its
requirement from its captive mines. SAIL offers the widest array of steel products amongst
all Indian manufacturers, including products in mild, special and alloy steel categories in
around 50 products, 500 grades and 5000 dimensions.

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INTRODUCTION OF BHILAI STEEL PLANT

The Bhilai Steel Plant (BSP), located in Bhilai, in the Indian state of
Chhattisgarh, is India's first and main producer of steel rails,
as well as a major producer of wide steel plates and other steel
products. The plant also produces steel and markets various chemical
by-products from its coke ovens and coal chemical plant. It was set up
with the help of the USSR in 1959.
Bhilai Steel Plant (BSP) is eleven-time winner of the Prime Minister's
Trophy for best integrated steel plant in the country. The plant is
the sole supplier of the country's longest rail tracks, which
measure 260 metres (850 ft). The 130 - meter rail, which would be the
world's longest rail line in a single piece, was rolled at URM, Bhilai Steel
Plant (SAIL) on 29 November 2016. The plant also produces products
such as wire rods and merchant products. Bhilai Steel Plant has been
the flagship integrated steel plant unit of the Public Sector steel
company, the Steel Authority of India Limited and is its largest and
most profitable production facility. It is the flagship plant of SAIL,
contributing the largest percentage of profit.

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Type Public Sector Undertakings in India
(Central Govt. Organization)
Traded as NSE: SAIL
Industry Metallurgical Process
Founded 1955
Headquarters Bhilai, Chhattisgarh, India
Products Rails, Plates, Structurals, Rebars and Wire Rods
Parent Steel Authority of India Limited
Website sail.co.in/bhilai-steel-plant

 THE BEGINNING
The Leadership of free, India took a visionary decision to set up integrated steel
plants under the exclusive responsibility of the state owing to the massive
investment needed for creating additional steel capacity, which private industry
would not be able to mobilize and the cardinal role steel would play in rapid
economic advancement as a major step towards this goal, government of India
and the USSR entered into an agreement, which was signed in New Delhi on 2
March 1955, for the establishment of an integrated iron and steel works at
Bhilai with an initial capacity of one million tons of steel ingot.

The main consideration for choosing Bhilai was the availability of iron ore at
Dalli-Rajhara, about 100 km from the site; limestone from Nandini, about 25

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km from the plant, and dolomite at HIRRI about 140 km away, and coal from
Korba and Kargali coal fields. The water for the plant comes from the Tandula
dam and power from Korba thermal power station. The plant was commissioned
with the inauguration of the first blast furnace by then president of India, Dr.
Rajendra Prasad, on 4 February 1959. The plant was expanded to 2.5 million
tons in September 1967 and a further expansion to 4 MT was completed in
1988. The main focus in the 4 MT stage was the continuous casting unit and the
plate mill, a new technology in steel casting and shaping in India.

 THE ORGNIZATION
Bhilai Steel Plant functions as a unit of SAIL, with corporate offices in New
Delhi. SAIL is governed by a Board consisting of function Directors, Managing
Directors and government nominee directors, 85.62% of the shares of SAIL are
with India Government and balance are with financial institutions, mutual
funds, Indian public and others, corporate office formulate policies, stratergies
and overall guidelines for its unit, central organization like CMO (Central
Marketing Organization), RDCIS (Research and Development Centre Iron &
Steel), CET(Centre of Engineering and Technology) look after the relevant
activities for the plates under SAIL.

Over the years, Bhilai Steel Plant developed an organizational culture that run
forces its commitment to values and stimulates continuous improvements and
higher levels of performance. The chief executive at Bhilai is the Managing
Director (MD) who is in overall controls of the operations of the plant,
township, and iron mines. The CEO is assisted by his D.R.O.s(Direct Reporting
Officers), i.e. the functional heads, executive directors, general Manager
concept of zonal heads, and HODs who integrate functions with clear
accountability for achieving the corporate vision, company goals, and
objectives.

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 ACHIEVEMENT
Eleven times winner of Prime Minister's Trophy for Best Integrated Steel Plant
in the country
Bhilai Steel Plant, one of Steel Authority of India's flagship units, has bagged
the PM's.Bhilai and has earlier won the Prime Minister's Trophy for Best
Integrated Steel Plant in the country nine times for the years 1992-93, 1993-94,
1995-96, 1996-97, 1997-98, 2003-04 and 04-05, 2006-07 and 2007-08.

 MODERIZATTION AND EXPANSION PROGRAMS

Bhilai steel plant is raising its capacity of steel production through
modernization and new projects. The major upcoming project is the
commissioning of a giant Blast Furnace of volume 4060 cubic meters with a hot
metal production capacity of 8000 mt per day.

Projects in progress include a new compressed air station, oxygen plant, new
installations to support power requirements, and ore handling capacities
expansion. Presently, the total requirement of iron ore of Bhilai Steel Plant is
met from Dalli Rajhara Iron Ore Complex (IOC). In view of IOC's rapidly
depleting reserves, BSP is opening an iron ore mine at Rowghat, about 80
kilometres (50 mi) from Dalli Rajhara in Narayanpur District of Chhattisgarh.
Accordingly, Bhilai Steel Plant will develop the mine in Block-A of Deposit-F
of Rowghat with a production capacity of 14.0 MT per year during 2011-12. For
environmental reasons, the beneficiation plant shall be of dry circuit type.
However, the grant of forest clearance under the Forest (Conservation) Act,
1980 is still pending.

The Bhilai steel plant has created steel for one of the Railways' most
challenging projects, construction of the 345 km (214 mi) railway line and plane
network between Jammu and Baramulla at an investment of ₹19,000 crore
(US$2.5 billion). BSP has also developed a special grade of TMT rebars for use
in the high-altitude tunnel inside the Banihal Pass. BSP had also developed the
special soft iron magnetic plates for the prestigious India-based Neutrino
Observatory (INO) project of the Bhabha Atomic Research Centre (BARC). It

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has also developed special grade high-tensile (DMR249A) steel for building
India's first indigenously built anti-submarine warfare corvette, INS Kamorta.

 ACCIDENTS
On 12 June 2014, a gas leak in Bhilai Steel Plant killed six people, including
two senior officials. Over 50 people were affected by the accident. A breakdown
in the water pump house caused a leak of the poisonous gas carbon monoxide,
which infiltrated the premises due to pressure differences along the purification
chamber lines.[9] Among the dead were two deputy general managers, while the
injured included Central Industrial Security Force personnel as well as workers
and officials of the public-sector plant. The leak started at around 6:10 pm IST.

On 9 October 2018, Thirteen plant employees died including four BSP fire
services officials, and 14 were injured including six BSP fire services officials
in a blast at the plant. The blast took place in a pipeline near the coke oven
section at the steel plant in the town of Bhilai.

FINANCE AND ACCOUNTS DEPARTMENT PROFILE:

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An Overview
For any organization, the finance and accounts function plays a key role in
guiding the organization to meet its ultimate goals and objectives. While finance
function embarks upon regulating the inflow and outflow of funds, the accounts
function basically supports the finance function by way of analyzing the
transaction in a most befitting manner. Finance & Accounts function is like a
mirror through which one can peep into the health of organisation.
Finance & Accounts Department of BSP has to execute several activities. The
Department has been divided into several sections based on organizational
needs and functional expertise required by grouping activites of similar nature
as a section. The objective of department is always to meet the requirements of
line departments, customers, suppliers, stakeholders and Government
Departments while discharging its own function such as accounting, budgetary
control, rendering advice on financial matters and meeting the statutory
requirements. To backup all functions, the department has a vast and dedicated
team of professional accountants and experts.
The entire department is represented by the following sections-
 Cash & Bank
 Central Accounts & Assets Accounts
 Central Excuse & Service Tax
 Contract Concurrence
 Contributory Provident Fund (CPF)
 Cost Accounting & Energy Cells
 Final Claim Cell (FCC)
 Finance Co-ordination & Administration
 Freight & Claims
 Import Accounts
 Incentive Cell
 Management Accounting
 Medical Accounts
 Mines-Rajhara, Nandini, Hirri
 Operation Accounts
 Operation Budget
 Project Financing Accounts
 Purchase Concurrence
 Raw Material Accounts
 Rent Cell
 Sales Accounting

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  Sales Invoicing and Central Freight
 Sales Tax & Entry Tax
 Stock Ledger (Stock valuation)
 Stock Verification
 Store Accounts
 Store Bill Accounting
 Store Bills
 Township Accounts
 Wages
Finance also discharge special functions such as taxation like Central
Excise, Sales Tax, VAT, CST, Entry Tax and Terminal Tax.

Figure 2: Organisational structure of finance & account dept. of BSP

Organisational structure of finance and account department of BHILAI STEEL
PLANT

GM (F&A)

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D.G.M.(F&A) D.G.M(F&A) CFM CFM CFM CFA

CASH, WAGES- MINES, ZONAL PROJECT FINANCE

WAGES- WAGES, WAGES CAPITAL BUDGET,
INCENTIVE CELL, COORDINATION WORKS FINANCE.
STORES, FIN.
ESTABLISHMENT RAW
ADMINISATION MATERIALS SALES
A/C, FREIGHT & EXCISE,
CLAMS, STOCK SALES TAX

CENTRAL A/CS, MANAGEMENT VERIFICATION

A/CS, ASSETS A/CS, OPERATION
BUDGET, COST A/CS.

CHAPTER - 1
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INTRODUCTION
Taxation is the inherent power of the state to impose and demand contribution
upon persons, properties, or right for the purpose of generating revenues for
public purposes.
Taxes are enforced proportional contributions from persons to property levied
by the law making body of the state by virtue of its sovereignty for the support
of the government and all public needs.

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Taxation
The most important source of revenue of the Government is taxes. The act of
levying taxes is called taxation. A tax is compulsory charge or fees imposed by
the Government on individuals or corporations. The persons who are taxed have
to pay the tax irrespective of any corresponding return from the Goods and
Services by the Government. The taxes may be imposed on income and wealth
of persons or corporations and the rate may vary.

What is Tax?:
Compulsory monetary contribution to the states revenue, assessed and
imposed by a Government on the activities, enjoyment, expenditure,
income, occupation, privilege, property, etc of individuals and
organizations. Tax is imposition of financial charge or other levy upon
a taxpayer by a state or other the functional equivalent of the state.

Why are Taxes levied?

The reason for levy of taxes is that they constitute the basic source of revenue to
the government. Revenue so raised is utilized for meeting the expenses of
government like defence, provision of education, health care, infrastructure
facilities like roads, damns etc.
What are the reason of Taxation?

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 1. Provide the basic facilities for every citizen of country.
2. It is generally payable by money.
3. It proportionate in character, usually based on ability to pay.
4. It is levied on person and property with the jurisdiction of the state.
5. It is levied for public purpose.
6. It is commonly required to be paid a regular intervals.

Types of taxes:
There are two types of taxes in India – (a) Direct Taxes (b) Indirect
Taxes
a) Direct Tax: A direct tax is really a tax which is paid by a person on
whom it is legally imposed and the burden of which cannot be shifted
to any other person is called a direct tax.
For example - Income Tax, Wealth Tax, etc.

b) Indirect Tax: The taxes in which the burden is passed on to a third

party are called Indirect Taxes.
For example - Service Tax, VAT, Excise duty, Custom duty, etc.

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 Difference between Direct Tax and Indirect Tax
Sr. Point of Direct Tax Indirect Tax
No. Distinction
1. Meaning Direct tax is a tax wherein the levy of In this the levy of tax is made on one
tax is made on a person and the person and the responsibility of paying
responsibility of paying such tax is the tax to government is fixed on some
fixed on that person. other person,
2. Levy Direct tax is levied on person. Indirect tax is levied on goods and
services.
3. Transfer The burden of direct tax cannot be The burden of indirect tax can be
of tax transferred to other person. transferred to the end users.

4. Nature Direct tax is considered progressive Indirect tax is considered as

Tax. regressive tax.
5. Effect The purpose of direct tax is to Indirect tax increases the price of
redistribute the wealth of a nation. goods or services.
6. Examples Income Tax, Wealth Tax, Gift Tax. Excise Duty, Customs Duty, Sales Tax,
VAT, etc.

PRE-GST STRUCTURE IN INDIA

16
Source :www.taxguru.in

Direct Tax
A type of tax where the impact and the incidence fall under the same
category can be defined as a Direct Tax. The tax is paid directly by the
organisation or an individual to the entity that has imposed the payment.
The tax must be paid directly to the government and cannot be paid to
anyone else.

Types of Direct Taxes

The various types of direct tax that are imposed in India are mentioned
below:
 Income Tax
Depending on an individual’s age and earnings, income tax must
be paid. Various tax slabs are determined by the Government of
India which determines the amount of Income Tax that must be
paid. The taxpayer must file Income Tax Returns (ITR) on a yearly
basis. Individuals may receive a refund or might have to pay a tax
depending on their ITR. Huge penalties are levied in case
individuals do not file ITR.

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 Wealth Tax
The tax must be paid on a yearly basis and depends on the
ownership of
properties and the market value of the property. In case an
individual owns
a property, wealth tax must be paid and does not depend on
whether the
property generates an income or not. Corporate taxpayers,
Hindu Undivided
Families (HUFs), and individuals must pay wealth tax depending
on their
residential status.

 Estate Tax
It is also called as Inheritance Tax and is paid based on the value of
the estate
or the money that an individual has left after his/her death.

 Corporate Tax
Domestic companies, apart from shareholders, will have to pay
corporate tax. Foreign corporations who make an
income in India will also have to pay corporate tax. Income earned via
selling assets, technical service fees, dividends, royalties, or I interest
that is based in India are taxable. The below-mentioned taxes are also
included under Corporate Tax:
 Capital Gains Tax
It is a form of direct tax that is paid due to the income that is earned from
the sale of assets or investments. Investments in farms, bonds, shares,
businesses, art, and home come under capital assets.

INDIRECT TAX
Indirect tax is something that a manufacturer pays to the Government of his
country. The burden of tax payment is on end consumer as they are the ones
purchasing the products. Unlike direct taxes, these are levied on materialistic
goods.
Indirect tax is a tax that can be passed on to another individual or entity. Indirect
tax is generally imposed on suppliers or manufacturers who pass it on to the
final consumer. Excise duty, customs duty, and Value-Added Tax (VAT) are
examples of Indirect taxes.

What Is an Indirect Tax?

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It is a tax levied upon goods or services by the Indian government on the end
consumer. Typically, the market price of the goods or services includes this tax.
Indirect taxes in India are not well defined by any Act. However, our
government brings out notifications and circulars to impose indirect taxes on
tangible and intangible products.

What Are the Types of Indirect Taxes?

There are various types of indirect taxes in India. Though all these taxes
came under one group after the introduction of GST, the pre-existing types
are as follows –

1. Service Tax
A consumer pays service tax to purchase a service from any entity. The
Indian government collects service tax on certain transactions that a
service provider performs to sell a service.

2. Value Added Tax

State governments collect this tax on a good or service at each point of
purchase where a value has been added. This tax is applicable from the
point of a raw material purchase to the sale of a finished product.

3. Custom Duty
The Union government collects this indirect tax on an import of a product in
India. Timely, it is applicable on products exported from India.

4. Excise Duty
Our government collects excise duty from the manufacturers of goods
manufactured in an Indian company. The manufacturers collect it from their
buyers through the price of the goods.

5. Sales Tax
Central government imposes this tax on an Inter-state sale and the State
government on an Intra-state sale of a good.

6. Entertainment Tax

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State government charges this tax on the purchase of any entertainment-
related goods and services. This can be purchasing goods like video
games or services like movies, theatres, sports, amusement parks

Why GST is Indirect Tax?

The Goods and Services Tax, or GST as it is commonly known, was
implemented on July 1st, 2017 to subsume the various indirect taxes in the
country. The taxes that were once compulsory are now done away with due
to the introduction of the new tax regime. One of the main benefits of GST
is that it has eliminated the cascading effect of tax, thereby ensuring that
they do not end up paying for every value addition.

The taxes subsumed under GST on the state level include service tax,
state excise duty, countervailing duty, additional excise duty, and special
additional custom duties. The taxes subsumed under GST at the central
level include sales tax, central sales tax, purchase tax, entertainment tax,
luxury tax, octroi and entry tax, and taxes on betting and lottery gambling.

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 ABOUT THE
GOODS & SERVICE TAX
(GST)

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INTRODUCTION

BACKGROUND
“Just as Sardar Vallabh Bhai Patel unified India by helping several princely States subsume
into a common entity, the GST will bring economic unification. If we take into consideration
the 29 states, the 7 Union Territories, the 7 taxes of the Centre and the 8 taxes of the States,
and several different taxes for different commodities, the number of taxes sum up to a figure
of 500! Today all those taxes will be shred off to have ONE NATION, ONE TAX right from
Ganganagar to Itanagar and from Leh to Lakshadweep.

– Hon’ble Prime Minister Shri

Narendra Modi on the launch of GST

In India, the power to tax vest in both the Central and State governments. The power to levy
and collect taxes stems from the Indian Constitution, which divides the power between the
Central and the State governments.
Prior to the launch of unified tax system as GST, Indian indirect tax regime was highly
fragmented. Centre and States were separately taxing goods and services. The Centre was
empowered to tax goods at the production or manufacturing stage, whereas the States had the
power to tax goods at distribution stage. The Centre was also empowered to levy tax on
services. This structure of taxation suffered from various shortcomings.
There were multiple taxes like central excise duty, service tax, VAT, CST, purchase tax,
entertainment tax etc. Additionally, there was multiplicity of rates, laws and procedures. This
caused heavy compliance burden on the taxpayers. Imposition of tax-on-tax or cascading of

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taxes was another serious problem. For example, VAT was levied on a value that included
central excise duty.
Input tax credit chain broke as goods moved from one State to another, resulting in hidden
cost for the business. There were tax nakas at every inter-State border, creating bottlenecks in
inter-State transport of goods. Every State was effectively a distinct market for the industry as
well as consumer. Industry’s choice of locating factories or warehouses was heavily
influenced by the prevailing tax regime rather than pure business considerations, making the
industry uncompetitive
Some of the primary problems with the pre-GST tax regime
were:

01/ Taxation at manufacturing level Central excise duty was levied on goods
manufactured or produced, limiting the taxable event at manufacturing point leading to a
narrow base and posed a severe impediment to an efficient neutral application of tax.

02/ Exclusion of Services The States were precluded from taxing services. This
arrangement posed difficulties in taxation of goods supplied as part of a composite works
contract involving a supply of both goods and services, and under leasing contracts, which
entail a transfer of the right to use goods without any transfer of their ownership.

03/ Tax Cascading Tax cascading means a tax-on-tax. Tax cascading occurred under
both the Centre and the State taxes. The most significant contributing factor to tax cascading
was the partial coverage by the Central and the State taxes. Under the erstwhile system, tax
payable at the time of sale was levied on a value which already included the tax paid at the
time of manufacture that is central excise duty. Furthermore, there were certain taxes for
which input credit tax was not admissible which thus formed a part of the cost of the goods.
Moreover, input tax credit in respect of CST on inter-State sale of goods was not admissible.
All these taxes become a part of cost of goods thereby leading to cascading.

04/ Complexity in determining the nature of transaction The advancement in

information technology had blurred the distinction between goods and services. In the present
scenario, goods, services and other supplies are being packaged through as composite bundles
and offered for sale to the consumers. Neither the Central nor the State government could
levy tax on such bundles in a seamless manner.

05/ Complexity In spite of the improvements made in the tax design and administration
over the years, the tax regime remained complex. They were subject to disputes and court
challenges and the process for resolution of disputes was slow and expensive. At the same
time, the systems suffered from substantial compliance gaps, except in the highly organised
sectors of the economy

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06/ Lack of uniformity in VAT provisions and rates The VAT structure lacked
uniformity across the States which was not only confined to the tax rate but also extended to
procedures, definitions, computations and exemptions.

O7/ Local Sale v/s Central Sale Fixing the situs of the sale transaction that is whether
the sale takes place in one State or another was a major conflict as it affects the revenue of the
State. CST that is Central Sales Tax was a tax levied on inter-State sale of goods by the
Central government but the power to collect and retain the CST was vested with the State
government.

08/Interpretation- al Issues Problems also arose in respect of interpretation of various

provisions and determining the category of the commodities. To decide the nature of
transaction that is whether an activity was sale or works contract; sale or service was not free
from doubt.

Thus, a reform was necessary to simplify the tax structure, to facilitate free flow of goods and
services throughout the country and to bring in transparency through a robust IT
infrastructure

The complexities of the Pre GST regime formed the cornerstone for
implementing the GST. Thus, GST was a positive step in shifting the Indian
economy from the informal to the formal economy…

DIGITALISATION OF TAX
Since its launch, the country has witnessed digitalisation in tax compliance and
improved supply chain efficiencies. It is a tax regime founded on a technology-
based monitoring system with e-business processes like, e-Returns, e-Invoices,
e-Way bills, etc. It was also vital to recognise the effectiveness of the Centre-
State collaboration under the auspices of the GST council, which has ensured
policy implementation uniformly across States. Despite the scale of the
COVID-19 crisis, the government and the industry was agile in adjusting to the
“new normal” and restarting economic activity. GST has made Indian products
competitive in the domestic and international markets owing to the full
neutralisation of input taxes across the value chain of production and
distribution

In the words of Hon’ble Prime Minister Shri Narendra Modi, the Goods and
Services Tax (GST) is “a path-breaking legislation for New India”. This

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revolutionary taxation system was rolled out on the midnight of 01st July, 2017
in a ceremony held in the Central Hall of Parliament. GST is not merely a tax
reform but a milestone in realising Sardar Vallabhbhai Patel’s dream of
building.

INTRODUCTION

“GST is the taxation system of New India; of the Digital India. It is not
merely Ease of Doing Business. It is demonstrating Way of doing Business.
GST is not just a tax reform, but it is a landmark step towards economic
reforms. Beyond the taxation revamp, it is also paving the way towards
social reforms. It is an avouchment for corruption free taxation system. In
legal parlance GST may be known as Goods and Services Tax. But the
benefits of GST will positively ensure it to be ‘Good and Simple Tax’ for the
citizens of India.” - Hon’ble Prime Minister Shri Narendra Modi on the
launch of GST (01st July 2017

GST is considered as an indirect tax for the whole nation that would make India
one unified common market. It is a tax which is imposed on the sale,
manufacturing and the usage of the goods and services. It is a single tax that is
imposed on the supply of the goods and services, right from the manufacturer to
the customer. The credits of the input taxes that are paid at each stage will be
available in the subsequent stage of value addition which makes GST essentially
a tax only on the value addition on each stage. The final consumers will bear
only the tax charged by the last dealer in the supply chain with the set of
benefits that are at all the previous stages.
It is charged at the national and state level at similar rates for the same products
and it also replaces almost all the current indirect taxes that are imposed
separately by the Centre and the States. Goods & Services Tax is a destination
based tax which means that the tax is paid at the place of supply.

Benefits of GST
1 .Eliminating the cascading effects of taxes

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2. Tax rates would be comparatively lower
3. Reduce tax evasion and increase the revenue and GDP by widening the tax
base
4. There would be seamless flow of the input tax credit
5. Price of the goods and the services would fall
6. There would efficient supply chain management
7. It would promote the shift from unorganized sector to organized sector.
8. It would eliminate 17 indirect taxes and therefore the compliance cost would
fall
Eligibility
Its eligibility would primarily be decided on the basis of turnover. Small taxpayers may thus
either be exempt (turnover < Rs. 20 lakh) or they may opt for the Composition Scheme
(turnover < Rs. 75 lakhs). The medium and large taxpayers will have to file all GST Returns.
The diagram below would help us to get the concept of working of GST in a better way.

 All the taxpayers that are eligible for exemption will have the option of
paying tax with Input Tax Credit benefits through Voluntary Registration.
 The list of the exempted goods and services would be common for the
Centre and the States/U.T.s.

ADVANTAGES OF GST
❖ Reduction in prices: Manufacturers or traders would not have to
include taxes as a part of their cost of production, which would lead to
reduction in prices.

26
 ❖ Lower compliance and procedural cost: There would be reduction
in the load to maintain compliance. Also keeping record of CGST,
SGST and IGST separately would not be required.
❖ Move towards a Unified GST: Although India is adopting dual
GST, it is still a good move towards a Unified GST which is regarded
as the best method of Indirect Taxes.
❖ GST rollout can help boost India’s GDP growth by 100-200 bps or
(1 to 2%) as this will help faster and cheaper movement of goods
across the country with a uniform taxation structure.
❖ GST’s successful implementation would give a strong signal to the
foreign investors about India’s ability to support business.
❖ GST will be beneficial with more transparency, efficient
compliance, ramp up in GDP growth to the Centre, states,
industrialists, manufacturers, the common man and the country at
large.

DISADVANTAGES 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 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.

27
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 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.

28
THE JOURNEY TILL 1st JULY, 2017
Launch of GST was a win-win situation for the entire country. It benefited all
stakeholders namely industry, government and the consumer. It lowered the cost
of goods and services, gave a boost to the economy and made the goods and
services globally competitive. But it took over 10 years to ideate, deliberate,
formulate and implement this Act!
• The idea of adopting Goods and Services Tax (GST) - a unified tax system for
all goods and services throughout the country was first suggested by the Atal
Bihari Vajpayee Government in 2000.
• An Empowered Committee of State Finance Ministers (EC) was established
by the Vajpaee Government in the year 2000 to recommend reforms for sales
tax regime in the country.
• In 2003-04 Fiscal Responsibility and Budget Management (FRBM)
Committee was formed which recommended introduction of GST and in 2006,

29
the then Union Finance Minister, in the 2006-07 Budget Speech, announced
introduction of GST from 01st April, 2010.
• The Empowered Committee was requested to come up with a roadmap and
structure for GST based on their experience in designing the State VAT.
• Joint Working Groups of officials having representatives of the States as well
as the Centre were set up to examine various aspects of GST and draw up
reports specifically on exemptions and thresholds, taxation of services and
taxation of inter-State supplies. Based on discussions within and between it and
the Central government, the EC released its First Discussion Paper (FDP) on the
GST in November, 2009.
• In 2011, Constitution (115th Amendment) Bill, 2011 for incorporating relevant
provisions of GST was introduced in Parliament and the Bill was referred to a
Standing Committee for a detailed examination. However, the Bill lapsed in
2014, with the dissolution of 15th Lok Sabha, necessitating a fresh
Constitutional Amendment Bill.
• In December, 2014, the then Finance Minister, Arun Jaitley, introduced the
Constitution (122nd Amendment) Bill, 2014 in the parliament. In May, 2015,
the Constitution Amendment Bill was passed by the Lok Sabha.
• After its passage in Lok Sabha, the Bill was sent to Rajya Sabha wherein it
was referred to the Select Committee of GST. The Select Committee submitted
its report in July, 2015 and the bill, with certain amendments, was passed by
Rajya Sabha on 03rd August, 2016 and by the Lok Sabha on 08th August, 2016.
• After ratification by 50% of the States, the Hon’ble President of India gave his
assent to the Constitution Amendment Bill to become an Act in September,
2016. Constitutional changes made vide the Constitution (101st Amendment)
Act came into force w.e.f. 08th September, 2016.

• Goods and Service Tax Network (or GSTN), a special purpose vehicle, was
established in March, 2013, for automation of business processes with equal
participation of the Centre and the States.
• GST Council was set up on 15th September, 2016 and the first meeting was
held on 22nd and 23rd September, 2016. Subsequently, 17 more meetings were
held till 30th June, 2017 and the Council made recommendations on all aspectes
of GST framework such as GST Law, GST Rules, the rate of tax on goods and
services, the compensation formula, the administrative mechanism for handling
the taxpayers, etc.

30
• Four Bills related to GST namely the Central GST Bill, 2017; the Integrated
GST Bill, 2017; the Union Territory GST Bill, 2017 and the GST
(Compensation to States) Bill, 2017 were passed by Lok Sabha on 29th March,
2017 and thereafter by the Rajya Sabha on 20th April, 2017.
The GST was finally launched w.e.f. 01st July, 2017 in the entire country except
in J&K. The GST was introduced in J&K on 08th July, 2017; and India, in
addition to being a political union, also became an economic union
RATES
These rates are decided by the GST Council. The GST Council meets for a
couple of items in a year as and when required however there is no regular
fashion. The last time the GST council met was September 2019. These rates
are as of October 1, 2019
There are around six slabs of rates.
1) 5%
The most commonly used products that are subjected to a 5% GST rate are
cream and yogurt, paneer, cashew nut, raisins, fruit and nuts and a few
others. Now for these products, 2.5% goes to the state government and the
rest 2.5% goes to the CGST. Many household items are covered in this
section.

2) 12%
6% GST rate is the second slab of rates under GST. Citrus fruits, jams,
sausages, 20l drinking water, statues, pots and jars, geometry box, cutlery,
railway coaches, printer ink, wooden toys and more. Here for every product,
6% goes towards CGST and 6% goes towards SGST. This section covers
processed food to a great extent.
3) 18%
The next GST slab rate is 18%. Examples of products being taxed at 18% are
bindis, chocolates, fountain pens, tripods, soap, toothpaste and industrial
intermediate products are therein this slab. Here 9% goes towards SGST and
9% goes towards CGST. The central goods and services tax act 2017 has a
full list of items.

31
 4) 28%
Examples of products being taxed at a GST rate of 28% are cigarettes,
caffeinated beverages, pan masala, motor cars and motorcycles, air
conditioners, refrigerators etc. Mainly luxury items are covered in this sector.
In this, 14% goes towards SGST and 14% goes towards CGST.
5) 3%
Coins, gold, silver, platinum, imitation jewellery, etc are taxed at 3%. Here
1.5% goes towards SGST and 1.5% towards CGST. 7/9/22, 1:13 PM CGST
(Central Goods and Service Tax) - Meaning & Rates Slab
https://groww.in/p/tax/cgst 5/7
6) 0.25%
Precious stones are taxed at 0.25% where 0.125% goes towards CGST and
0.125% goes towards SGST.
7) 0%
There are also some products that are taxed at 0%, basically they are tax
free.
Mammals, live swine, live bovine mammals, birds, insects, fish, curd, lassi,
buttermilk, bananas, apples, grapes, human hair, sanitary napkins among
others.
The central GST Act 2017 has a full updated list of all items under all GST
tax slabs.

Some of the State taxes that will be subsumed under GST are –

32
PRE-GST STRUCTURE IN INDIA-

Source www.taxguru.in

Some of the Central taxes that would be subsumed under GST are –GST Central Taxes

Proposed Tax Structure in India

33
 Download source: www.taxguru.in

Types of Taxes
The various types of taxes that are under GST are –

1. If the supply of the goods and the services are made within the state, then the
two types of taxes which are applicable are, the Central Goods and Services
Tax (CGST) and the State Goods and Services Tax (SGST).
2. If the supply is made across the state, then Integrated Goods and Services Tax
(IGST) is applicable.

Subsuming of Existing Taxes

34
Introduction

The federal structure of India is divided into central and state authority. The
constitution defines the rights and power of both state and central. Further,
often difference arises between state and centre over their jurisdictions.

As said, there were various reasons in the past which had led to centre state face
off. E.g. Over some transaction, VAT and service tax both are applicable, hence
both the authorities try to increase their tax base, which often led to injustice in
the form of double taxation.

To remove this ambiguity, the government has amended the constitution to

resolve the issues to a certain extent.

35
Goods and Services Tax was introduced in India several times by different
governments before it was actually implemented from July 1, 2017, onwards.
The idea of bringing about GST was to have ‘One Nation One Tax’.

What is CGST?

CGST or Central Goods and Service tax is the tax levied and collected by the
central government on every supply of goods and services within the state. This
tax is not applicable if supply is made outside the state.

Under GST, there are three components;

 CSGT or Central Goods and Service Tax

 SGST or State Goods and Service Tax
 IGST or Integrated Goods and Service Tax

CGST and SGST are applicable on the supply of goods and service within the
state. Further, IGST is applicable on the supply of goods and services outside the
state. The combined rate of CGST and SGST is equal to IGST rate.

Meaning of CGST
On this blog we have already talked about GST – Introduction and Working and this article is
based on Central Goods and Services Tax, which is one of the 3 categories under Goods and
Services Tax (CGST, IGST and SGST) with a concept of one nation one tax.

It falls under the Central Goods and Services Tax Act, 2017.
It is levied on the Intra State movement of goods and services. The revenue
collected under Central Goods and Services Tax is for the Central Government.
However, Input Tax Credit on it is given partly to the Centre and partly to the
States as it will be utilized against the payment of both CGST and IGST.

For example, a manufacturer makes a product in Maharashtra and sells it

within the state only, SGST and CGST both will be applicable wherein SGST
will go to Maharashtra state government’s coffers and Central Goods and
Service Tax will go to the central government’s kitty.

36
In almost all cases, the total tax liability is divided into two equal halves and
distributed equally between state and central government.

Exemption
There are few products that still do not come under the ambit of GST and sales
tax/VAT are still applicable on them
For example alcohol, petrol, diesel, natural gas, airline fuel and a few others.
Examples of services where GST is not applicable are wages and salary,
electricity and a few others. While the government wants to limit the price of
alcohol and limit consumption and hence alcohol has not been brought under
the GST ambit, petrol continues to bring high amounts of revenue for the states.

Input Tax Credit of CGST

The input tax credit of CGST is available only against the payment of CGST or
IGST. It is not allowed to adjust any amount against the payment of SGST.

CGST will subsume other taxes

In simple terms, CGST will be applicable in place of central taxes presently levied
in the form of excise duty, service tax, Custom, etc.

Important Features of CGST

Here are some important features about the CGST;

1. It is levied by Central government to replace the existing tax like service

tax, excise, etc.
2. It is applicable only within the state.
3. The credit of CGST is available only against CGST and IGST.
4. The exemption limit of Rs.20 Lakh is applicable.
5. The dealer can use the benefit of composition scheme up to turnover of
50 lakh.

37
KEY HIGHLIGHTS OF GOOD AND SERVICE TAX ACT

Taxable Event:
• Tax on supply of goods or services rather than on manufacture / production of
goods, provision of services or sale of goods
• On intra-State supplies of goods or services - CGST & SGST shall be levied
by the Central and State government respectively, at the rate to be prescribed -
Maximum rate ring fenced in law to 20% each
• On inter-State supplies of goods or services - IGST shall be levied by the
Central government, at the rate to be prescribed - Maximum rate ring fenced in
law to 40%.

Place of supply:
• The new tax regime under GST lays down elaborate Rules to determine the
place of supply in case of inter-State supply of goods and services

Liability to pay:
• Under the GST regime liability to pay tax arises only when the taxable person
crosses the exemption threshold

Composition Scheme:
• The GST tax system has introduced a composition scheme for levy of tax on
fixed rate on aggregate turnover up to a prescribed limit in a financial year
(Composition scheme) without participation in ITC chain

Time & Value of supply:

• Elaborate principles devised for determining the time of supply of goods or
services with following being crucial determinants with certain exceptions:
• Date on which supplier issues invoice
• Date on which supplier receives the payment, whichever is earlier

38
• Tax is to be paid on Transaction Value (TV) of supply generally i.e., the price
actually paid or payable for the supply of goods or services

BHILAI STEEL PLANT GST

Major Commodities ( Steel)

• Pig Iron
• Billet
• Bloom
• Slab
• Plate
• Rail
• TMT
• Angle
• Channel
• Wire Rods

Plant capacity
 PRESENT PLANT CAPACITY
Crude Steel - 6.20 MTPA
Saleable Steel - 5.70 MTPA

39
EXPANSION PLAN-
BY 2025 - Increase in Saleable Steel Production - 4.60
MTPA to 6.20 MTPA.
Post 2025 - Expansion of another 5 MTPA is on the
cards.

Price Changes

Production ( In Million Tonnes)

40
GST Details Year Wise ( In Crs)

41
GST Revenue Year Wise Trend

GST ITC to Cash Payment

GST Revenue 2021-22

42
Export sale

43
EXPLANATION OF SOME IMPORTANT SECTIONS
OF CGST ACT 2017-----

SECTION 7 of CGST ACT 2017- SCOPE OF SUPPLY

7. (1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed to be made for a consideration by a person
in the course or furtherance of business
(b) import of services for a consideration whether or not in the course or furtherance of
business;

The term ‘ Supply ‘ has not been defined in CGST ACT 2017. Section 7(1)(a) of the CGST
Act contemplates various forms of supply such as sale, transfer, barter, exchange, license,
rental, lease or disposal. These forms of supply are only illustrative and not exhaustive.
Parameters of Scope of Supply :- The important Parameters of scope of supply are
consideration and furtherance of business. An activity made by a person for a consideration
and in the course or furtherance of business is a supply under section 7(1)(a) of CGST
Act.However, there are exceptions in the meaning of supply where certain activities are
considered as supplies even without consideration and furtherance of business.
The requirement of consideration and necessity of furtherance of business for an activity to
be considered as supply is as tabulated below :-

Sl Activities Consideration Furtherance Statutory Analysis

of Business Provision
(a) Supply of Required Necessary Sec7(1)(a)
Goods &
Services

(b) Import of Required Necessary Sec7(1)(b)

Services
(c) Import of services Not Necessary Schedule 1 Import of Service(
by a person from Required -Clause(4) not goods) by a peersn
a related person / (taxable or not)
establishment

44
 outside India
(d) Import for charity Required Not Sec7(1)(b)
Activities Necessary

(e) Note :- The term ‘supply’ is from the point of view of person who is supplying and not
person who is receiving the supply. Thus, if supplier is not in the business of supplying the
goods or services, GST is not applicable.

SECTION 12 OF CGST ACT 2017- TIME OF SUPPLY OF

GOODS

Section 12(1): The liability to pay tax on goods shall arise at the time of
supply, as determined in accordance with the provisions of this section.

Section 12(2): The time of supply of goods shall be the earlier of the following
dates, namely: —
(a) the date of issue of invoice by the supplier or the last date on which he is
required, under section 31, to issue the invoice with respect to the supply; or
(b) the date on which the supplier receives the payment with respect to the
supply:

Provided that where the supplier of taxable goods receives an amount up to one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess amount shall, at the option of the said
supplier, be the date of issue of invoice in respect of such excess amount.
Analysis : Time of Supply –Forward Charge
Time of supply prescribed as earlier of –
♦ date of issue of invoice or last date on which the invoice is required to be
issued with respect to the supply

45
♦ date of receipt of payment.
So now focus is on date of issue of invoice or last date on which the invoice is
required to be issued with respect to the supply.
Here two kinds of situations need to be discussed-
i. A case where the supply involves movement of goods
ii. Any other case

Supply involves movement of goods– Where the supply involves movement of

goods then an invoice must be issued at the exact time when the goods are about
to be removed. Movement of goods may be caused by the supplier (or his agent
or transporter) or by the recipient (or his agent or transporter).

For example–
Ram in Gujarat gets an order from Mr. Sham in West Bengal on 15th March
2020 for supply of refrigerators. Mr. Ram dispatches the goods from his
premises to his transporter’s premises on 20th March 2020. The transporter
initiates the transportation on 22nd March 2020 and the goods finally reach the
premises of Mr. Y on 26th March 2020. The removal of goods will be said to be
caused on 20th March 2020 i.e. the date when the goods leave the premises of
Mr. Ram. The last date of issue of invoice will also be 20th March 2020 in the
given case.

Supply does not involve movement- Where the supply does not involve
movement of goods then an invoice must be issued at whatever is the time when
the goods are delivered or made available to the recipient.
For example-
Mr. X agrees to sell his godown in Delhi to Mr. Y on 15th March 2020. There is
a separate agreement entered by Mr. X and Mr. Y for the selling of furniture
within the godown on 19th March 2020. Mr. X hands over the possession of the
godown and the furniture on 25th March 2020. In this case, the furniture will be
considered to be delivered on 25th March 2020 which will also be the last date
of issue of invoice as per Section 31.

46
Continuous supply of goods – Now what is meaning of continuous supply of
goods ?
As per Section 2(32) of the CGST Act 2017, continuous supply of goods means
a supply of goods which is provided or agreed to be provided continuously or
on recurrent basis, under a contract whether or not by means of wire, cable,
pipeline or other conduit and for which the supplier invoices the recipient on a
regular or periodic basis and includes supply of such goods as the Government
may subject to such conditions as it may by notification specify.
For the purpose of continuous supply, it is necessary that successive statement
of accounts or successive payments or both are involved for the purpose of
determining the consideration for such supply. As per Section 31, in respect of
continuous supply of goods, it has been stated that invoice should be issued
before or at the time each such statement is issued or each such payment is
received.
Goods sent or taken on approval for sale or return basis –
As per this system, certain goods are sent to the recipient without
supplying/selling the same at its outset. These goods can be examined or tested
by the recipient as to whether his requirements are fulfilled. The recipient can at
his behest, approve the said supply or return the said goods. If the goods are
returned, no supply will be deemed to have taken place. If the goods are
approved by the recipient, then it will amount to a supply. The last date of
issuance of invoice in such cases as per Section 31(7) of the CGST Act 2017 has
been given as earlier of-
 Before or at the time of supply
 Six months from the date of removal
Capital Goods/Goods sent to Job worker without payment of tax-
The intention of the law is not to tax capital goods / inputs sent to job-worker as
supply since in such an arrangement the goods are received back by the
principal. However, if such goods are not received back within three years and
one year respectively, it would qualify as supply by way of operation of
deeming fiction provided under section 143(2) and section 143(3). In such a
scenario, the date of sending the goods to the job-worker would be deemed to
be the date when the goods were sent to the job-worker originally.

Now let us take an example of continuous supply of goods and Goods send on
approval or return basis

47
 A cement manufacturing company generates certain waste materials which are
supplied to a recycling factory through a pipeline on a continuous basis.
Example- 1
Monthly payments of Rs 200000 are made by 7th of next month as per contract
, For the period October-December , following were dates of issuances of
invoices and payments:
Period Date of issuance Date of receipt of Time of Supply
of invoice payment
October 4th November 2019 6th November 2019 4th November 2019
November 6th December 2019 8th December 2019 6th December 2019
December 9th January 2020 5th January 2020 5th January 2020

Example 2-
Certain goods are sent by Mr. X on sale on approval or return basis to Mr. Y on
22nd April 2019 The supply gets confirmed and invoice is issued on:
Case 1: 20th August 2019
Case 2: 22nd November 2019

Payment in each of the cases is made on 23rd November 2019

Answer=
Case 1- the confirmation of supply occurred before 6 months from the date of
removal. So, the last date of issuance of invoice was 20th August 2019. On this
date, the invoice was issued. So, the time of supply will be 20th August 2019.
Case 2- the confirmation of supply happened after 6 months from the date of
removal. Six months expired on 21st October 2018. So, the invoice was
required to be issued by this date.

48
Explanation 1: For the purposes of clauses (a) and (b), “supply” shall be deemed
to have been made to the extent it is covered by the invoice or, as the case may
be, the payment.

Explanation 2: For the purposes of clause (b), “the date on which the supplier
receives the payment” shall be the date on which the payment is entered in his
books of account or the date on which the payment is credited to his bank
account, whichever is earlier.

Section 12(3): In case of supplies in respect of which tax is paid or liable to

be paid on reverse charge basis, the time of supply shall be the earliest of
the following dates, namely: —
(a) the date of the receipt of goods; or
(b) the date of payment as entered in the books of account of the recipient
or the date on which the payment is debited in his bank account, whichever
is earlier; or
(c) the date immediately following thirty days from the date of issue of
invoice or any other document, by whatever name called, in lieu thereof by
the supplier:

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

Analysis-
Where tax is payable on reverse charge basis, the time of supply is appointed to
be the earliest of
(a) date of receipt of goods,
(b) date of payment or
(c) 30 days from the date of issue of invoice by the supplier.

49
If for any reason, one of these three dates cannot be determined then the time of
supply will be the date of recording the supply in the books of the recipient.
Reverse charge in case of goods may arise either under Section 9(3) or Section
9(4) of the CGST Act.
Let us understand with an example-
Mr.X, an agriculturist supplies raw cotton (under reverse charge) to Mr. Y who
manufactures cotton shirts. The date wise turnout of events is given below:
01.04.2019- Mr.Y approaches Mr.X and places an order for 2 tonnes of cotton
10.04.2019- Mr.Y receives the goods 15.04.2019- Mr.X issues an invoice
20.04.2019- Mr.Y makes a payment by cheque and accordingly records it in his
books of accounts.
25.04.2019- The payment gets debited from Mr.Y’s bank account.

What will be the time of supply in the given case?

♦ Answer- Date of receipt of goods- e 10.04.2019
♦ the date of payment as recorded in the books of Mr.Y i.e. 20.04.2019 or the
date when the payment gets debited in the books of the recipient i.e. 25.04.2019
whichever is earlier
♦ the date immediately following thirty days from the date of issue of invoice,
i.e.
15.04.2019+30days+1day=16.05.2019
Therefore, the time of supply will be 10.04.2019

Section 12(4): In case of supply of vouchers by a supplier, the time of

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

Section 12(5): Where it is not possible to determine the time of supply

under the provisions of sub-section (2) or sub-section (3) or sub-section (4),
the time of supply shall––

50
(a) in a case where a periodical return has to be filed, be the date on which
such return is to be filed; or
(b) in any other case, be the date on which the tax is paid.

Section 12(6): The time of supply to the extent it relates to an addition in

the value of supply by way of interest, late fee or penalty for delayed
payment of any consideration shall be the date on which the supplier
receives such addition in value.
Analysis- Now, the time of supply in the case of vouchers is stated to be:
(i) the date of issue of voucher if the supply is identifiable at that point;
or
(ii) in all other instances, the date of redemption of the voucher.
What is voucher? – Voucher is therefore ‘instrument with obligation’ that is
accepted as consideration. Voucher does not contain any ‘stored value’ but
‘value-to-use’. This ‘value-to-use’ is credited into a voucher by a contractual
arrangement between the issuer-redeemer of the voucher. This basically means
that if the exact nature of goods to be supplied along with its quantity value of
such goods are available when the voucher is issued, the time of supply will be
the date of issue of voucher. On the other hand, if the natures of supply of goods
are not available at the time of issue of voucher, then the time of supply will be
considered as the date of redemption of voucher. This is not to say that the time
of supply will determine the value also. This is because as per Rule 32(6), the
value will always be the redemption or face value of the voucher irrespective of
the time of supply.

Examples –
Illustration Voucher or not Nature of Instrument

Shopping gift card Not voucher It’s money, by way of ‘stored

purchased for `5,000/- value’ even if not encashable

Coupons or token given to Not voucher It is future discount by

51
making purchase of customer way of ‘value-to-use’
by pizza outlet on `1,000/- not encashable
which allows 10% discount
on next purchase

Transfer of liability towards Voucher Now it’s become an

accumulated loyalty points ‘instrument with obligation
credited to customers

♦ Time of Supply – Residuary

Where none of the above provisions are able to satisfactorily answer the time of
supply, it is to be determined based on the residuary provision which states that
the time of supply is:
(i) where a periodical return has to be filed, the due date prescribed for such
return; or
(ii) in any other case, the date of payment of the tax.

Time of supply under this residuary provision is applicable only when the other
provisions are found to be inapplicable and not merely when there is some
difficulty in determining the facts that are sought for by the relevant provision.

♦ Time of Supply – Special Charges

Special charges imposed for delay in payment of consideration will enjoy the
facility of time of supply being date of receipt of the charges imposed, that is,
cash-basis of payment of GST.
Example-

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Mr. X enters into a contract for supply of goods worth 4,00,000 with Mr. Y on
10th April 2019. Such goods are removed with an invoice dated 12th April 2019
on 13th April 2019 for delivery to Mr. Y. The terms of the contract demanded
the payment against such supply to be made within 60 days beyond which a late
payment charge of ` 10,000 will have to be paid by Mr. Y. Mr. Y makes the
payment of Rs, 4,00,000 along with the late payment charges on 15th July 2019.
What will be the time of supply in respect of the entire amount?
Answer–
In Section 12(2), the time of supply in respect of ` 4,00,000 will be the date of
issuance of invoice or last date of issuance of invoice. Last date of issuance of
invoice will be the date of removal where supply involves movement of goods.
♦ Date of issuance of invoice: 12th April 2019
Last date of issuance of invoice: 13th April 2019 (date of removal) So, the time
of supply will be 12th April, 2019 in respect of ` 4,00,000. However, in respect
of the time of supply for the amount of Rs, 10,000 paid as late payment charges,
time of supply as per Section 12(6) has been stated to be the date on which the
supplier receives the addition in value. Here, the additional amount of ` 10,000
is received on 15th July 2019. So, the time of supply for this amount will also
arise on 15th July 2019.

Section 13- Time of supply of services

Section 13(1): The liability to pay tax on services shall arise at the time of
supply, as determined in accordance with the provisions of this section.

Section 13(2): The time of supply of services shall be the earliest of the
following dates, namely:—

1. the date of issue of invoice by the supplier, if the invoice is issued within
the period prescribed under section 31 or the date of receipt of payment,
whichever is earlier; or
2. the date of provision of service, if the invoice is not issued within the
period prescribed under section 31 or the date of receipt of payment,
whichever is earlier; or

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3. the date on which the recipient shows the receipt of services in his books
of account, in a case where the provisions of clause (a) or clause (b) do not
apply:

Provided that where the supplier of taxable service receives an amount up to

one thousand rupees in excess of the amount indicated in the tax invoice, the
time of supply to the extent of such excess amount shall, at the option of the
said supplier, be the date of issue of invoice relating to such excess amount.

Analysis: Time of Supply – Forward Charge

Similar to goods as discussed in my previous article, time of supply of services
is prescribed to be the earlier of
a) date of issue of invoice and
b) date of receipt of payment.
Date of issue of invoice requires us to examine section 31 which deals with
the requirement to issue a “tax invoice”. In relation to services, section 31
requires that a tax invoice be issued whether before or after provision of service

Rule 47 of the CGST Rules prescribes the time period within which such
invoice should be issued. It states that in case of the taxable supply of services,
invoice should be issued within thirty days from the date of supply of services.

In case of banking company/financial institution/non-banking financial

company, the time period becomes forty five days from the date of supply of
services. When these banking/financial institution/non-banking financial
Institution/telecom operator companies make taxable supplies of services
between distinct persons invoice may be issued before or at the time such
supplier records the same in his books of account or before expiry of the quarter
during which the supply was made.

If the invoice is issued within the prescribed time period, the time of supply will
be the earlier of the date of issue of invoice or the date of payment. Now
question comes in your mind if invoice not issued within prescribed time limit

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of 30 days or 45 days as case may be then the time of supply will be the earlier
of the date of completion of service or the date of payment. If none of these two
cases are applicable, then the time of supply will be the date when the recipient
shows the receipt of services in his books of accounts.

Now take an example to understand-

Date Particulars Time of Supply
08.04.2019 Advance Rs 10000 Suppose Mr x issues a
recived from Y invoice on 15.04.2019
10.04.2019 Consultancy services
are provided

16.05.2019 Mr X receives balance

payment of Rs 40,000
and records it in his books

Answer- For Rs 10000 date of issue of Invoice or date of payment whichever is

earlier i.e 08.04.2019
And for balance amount, Rs 40000 time of supply will be 15.04.2019 earlier of
payment.
Exceptions: When an amount in excess of tax invoice is received up to `
1,000/-, the time of supply in respect of such excess at the option of the supplier
shall be the date of such invoice.
Example- A Telephone Company receives ` 4,000 on 27th July 2019 against an
invoice of`3,700 on 23rd July 2019 in respect of the services provided. The
excess amount of ` 300 can be adjusted against the invoice to be issued in the
next month. Time of supply will arise only for ` 3700 on 23rd July 2019. For the
balance amount of ` 300, the time of supply may not arise on 27th July 2019 at
the option of the supplier and may be adjusted against the next month’s invoice.
But if amount exceeds Rs 1000 there is no option available with the supplier.

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Transaction Value – Section 15 of CGST Act 2017

Section 15(1): Value of taxable supply : The value of a supply of goods and/or
services shall be the transaction value, that is the price actually paid or payable
for the said supply of goods and/or services where the supplier and the recipient
of the supply are not related and the price is the sole consideration for the
supply.

Section 15(2): The value of supply shall include–––

(a) any taxes, duties, cesses, fees and charges levied under any law for the time
being in force other than this Act, the State Goods and Services Tax Act, the
Union Territory Goods and Services Tax Act and the Goods and Services Tax
(Compensation to States) Act, if charged separately by the supplier;
(b) any amount that the supplier is liable to pay in relation to such supply but
which has been incurred by the recipient of the supply and not included in the
price actually paid or payable for the goods or services or both;
(c) incidental expenses, including commission and packing, charged by the

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supplier to the recipient of a supply and any amount charged for anything done
by the supplier in respect of the supply of goods or services or both at the time
of, or before delivery of goods or supply of services

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