The power to levy Goods and Services Tax has been conferred by Article 246A of the Constitution which was introduced by the Constitution (101st Amendment) Act, 2016. The following are the significant provisions introduced in Constitution in relation to GST: : (2) 246A is Article grants power to Centre and State Governments to make laws into respect to GST imposed by centre or such state. The centre has the exclusive power to make laws with respect to GST in case of inter-State supply of goods and/or services. (b) Artiolé 269A ft is related with the levy and collection of GST on inter-State supply. Article 269A stipulates the following: . 7 7 (1) GST on supplies in the course of collected by the Govt. of India. mmerce shall be levied and er-State trade (2) Such tax shall be apportioned between the Union and the States in manner as may be provided by Parliament by Jaw.as the recommendation of GST Council. (3) Import of goods or services will be deemed as in the course of Inter-State trade or commerce, ; ae (4) The Central Government is empowered_to levy IGST. on. import transactions (which were earlier subject to CVD under Customs Tariff Act, 1975) (5) Where an amount collected as I ‘as been used for payment of SGST or vice versa such amount shall not form part of the consolidated fund of India. This is to facilitate the transfer of funds between the Centre and the States. (c) Article 366 Article 366(12A)_; Goods and Services Tax means any tax on supply of goods or services or bath except taxes on the supply of the alcoholic liquor for human consumption. Article 366(26A) _: Services mean anything other than goods, Article 366(26B) : State includesa Union territory with legislative (with reference to article 268, 269, 269A & 279A)_ = “Article 366(12) __:_ Goods include all materials, commodities and articles. (d) Article 279A This Article of the Constitution empowers the President to constitute a joint forum. of the a tre and states namely, Goods and Services Tax Council (GST Council). It has been discuss in detail in Para 2.8. - 246A,[2A CONCEPT OF GsT 7) {fie Goods and Se ‘ax (GST) me: on surly olisleoholle liquor for human consumptiotiy It is a comprehensive tax structure under i irect tax is levied not only on supply of goods but also on supply of services. Th unique feature of GST is the integration of taxes on goods xes on services as well. The GST has subsumed many indirect taxes that existed in PRE-GST era. Some of the taxes were levied by the Central Government (Like Excise Duty, Service Tax, etc.) whereas many others were levied by the State Governments. The GST has been introduced simultaneously at both the Central and the State level. The following are the salient features of GST: (1) Applicability: GST extends to whole of India. (2) Destination based Tax: The GST is a destination-based tax applicable on all transactions involving supply of goods and services. The tax is payable to the state where the goods an services are finally consumed. The aspect ot Place SF Place of supply has been extensively discussed in chapter 7. 1 Lax on supply of goods or services or both except (3) Dual GST: Since India has the federal structure; the tax is levied by both Centre and states. Thus India has adopted Dual GST Model. Accordingly, the GST is imposed concurrently by the Centre and states on taxable supply of goods or services or both, The charge of GST has been explained in detail in chapter 3. (4) IGST on Inter-State supplies: The inter-State supplies of taxable goods and/or services are subject to Integrated Goods and Services Tax (IGS) called as Integrated Tax. It is levied by the Centré on all inter-State supplies. The rate of IGST is approximately thes GST and SGST/UTGST. ae . SGST/UTGS z (5) CGST and SGST/UTGST on Intra-State supplies: In case of Inter-State supply of goods and/ or services both CGST as well as SGST are levied. If case of Union territories, which do not have their own legislature, UTGSTis levied in place of SGST. (6) Legislations governing GST: For Levy of CGST ‘There {s single legislation CGST Act, 2017 (a) | For Levy of UL ‘GST in those Union Territories Governed by UTGST Act, 2017 which do not have thelr state Tegisletves These Union Territories arc : Note Theersuhle Taman DadadNege | (2) Andaman and Nabapants deiar have become single UT. (2) Lakshadweep. agar Haveli and Daman & Diu Gh | For UT having own legislative Their own GST Act (SGST) —— ‘These Union Territories are : (1) Delhi (2) Puducherry (3) Jammu & Kashmir (@) | SGST In 28 States Thelr own GST leg! ‘The names of state Jammu & Kashmir which has been reor tons into 2 UTs wel, 31.10.2019 | |Important to Note (1) The UTGST Act has been passed for Union territories which do not have legislature. Fe, the purpose of GST, each Union Territory shall be considered as a separate Union territory, For instance, the goods have been supplied by a trader from Chandigarh to Lakshadwer Now, although both the UT's are governed by the same UTGST Act but it will be treated as Inter-State Supply & is subject to IGST. (2) Out of 8 Union Territories, the three Union territories “Delhi”, “Puducherry” and “Jammu & Kashmir” have their own legislature and they have passed their own SGST Acts. That is why, Delhi, Puducherry and J&K are not covered by the list of UT for this purpose. (3) All the 28 states have passed their own State GST Act in order to impose SGST on supply of Goods & Services within the State. It may be noted that all provisions of State GST Acts a: identical with CGST Act. Illustration 2.1 Inrespect of the followingindependent cases, determine the type of GST leviable on supply of ‘goods or services, () Mr. Shiv of Delhi supplied goods to Mr. Vinod of Delhi. (2) Raman of Kashmir provided services to Shyam of Pune. (® Janaki of Goa supplied goods to Mr. Cruz of Goa. (4 Pankaj supplied goods from his place of business in Chandigarh to Surender of Dehradun (Uttarakhand), (5) Ms. Kajol sold goods to Rani. They both live in the State of Rajasthan. % Solution - oa 2 The type of GST to be levied depends upon the nature of supply. In case of intra-State supplies, CGST and z SGST are levied whereas in case of inter-state supplies IGST is applicable. & ‘Type of GST to'be levied © A | Sisest. UTGST 1 Intra-State v v 2 INTER-STATE v 3 Intra-State v ¥v 4 INTER-STATE ¥ 5 Intra-State : v v Illustration 2.2 Consider the following details in respect independent cases of taxable supplies by a registered person: icase | To, le Particulara 1” Walue of Supply.) 1, | Local Intra-State Supply in. Delhi 40,000 2. | Local Intra-State supply in Punjab 60,000, 3,_| Supply from Assam to Punjab 25,000" 4,__| Supply from Delhi to Goa ; 30,000 3, | Supply from Delhi to Puducherry 30,000 6._ | Local Supply in Chandigarh 20,000 The rates of GST to be followed are CGST @ 9%; SGST/UTGST @ 9% & IGST @ 18%; Find out the amount of respective GST in respect of above independent cases of taxable supplies at normal rates, The values gives above are exclusive of GST.Solution [ese Sis Particulars Calculation [GST [SGsT | UTGST | 1csT 1, | Intra-State Supply 40,000 @ 9% -| 3,600 7 . (UT with state legislative) soo00@ox |. - | 3600] - -_| 2 | Intra-State Supply e000 @9% | 5400] - 60,000 @ 9% + 5,400 = = 3._[Inter-State Supply’ 25,000 @ 18%| : ~__| 4500 4. | Inter-State Supply 30,000@ 18%] - : : 5,400 Inter-State Supply 50,000 @ 18%| 7 =| 9,000 Intra-State Supply 2000 @9% | - - | 1800] - (Union territory without state legislation) 20,000 @ % | 1,800 : = : [25 TAXES SUBSUMED IN GST (GOODS AND SERVIC CES TAX) As already discussed, India moved into GST wef, Ist July, 2017. There has been paradigm shift i ce ctracture and functioning of Indirect Taxes in India. The new system of GST has subsumed many of the Central and State level indirect taxes. Although, there ar few levies like Customs Duty, Excise Duty on Alcoholic liquor for human consumption, etc. which are still in force even eae evoduction of GST. The following table shows the lst of various Central and State taxes subsumed in GST. [Central levies Subsumed ‘State Levies Subsumed 1 | Central Excise Duty 1 |State surcharges and cesses in so far as they relate to supply of goods & services 2 | Additional Excise Duties 7 | Entertainment Tax (except those levied by local bodies) 3 3, | Tax on lottery, betting and gambling | 7 Entry Tax (all forms) & Purchase Tax ration Act 5 | CVD & Special CVD 5_| VAT/Sales tax 6 | Central Sales Tax 6 | Luxury Tax 7 T Central Surcharges and Cesses insofar as they 7 Taxes on advertisements relate to supply of goods & services Taxes not subsumed In GST: Although the GST has subsumed many taxcs as stated above, yet there are few similar indirect taxes which have not been subsumed under GST. These are as follows: Central Taxes: Basic Customs Duty, Research and Development Cess, Export Duty, Anti-Dumping duty, safeguard duty, etc. . State Taxes: State Excise duty, Stamp Duty, Professional Tax, Motor Vehicle tax, ete. ee i FOR GST ‘The deficienciesin earlier tax laws have already been discussed in Chapter 1, The rationale for intro ducing GST was to overcome these issues. But, the ultimate positive effects of GST were manifold. All the stakeholders are being benefited including industry, Government and even. the consumer, The following are the major benefits which justify the rationale for introducing GST. aNNVIVXVL,(1) ‘Benefits to the Government: (a) GST aims to make India a common market with common tax rates and procedirs, It will boost foreign Investment and *Make in India” campaign. (6) The states will be benefited due to improvement in investment cult in the country, (c) The uniform SGST and IGST rates actually reduce the incentive for tax evasion, (d) It will bring buoyancy to the Government revenue by widening the tax base ad improving the tax payer compliance. (2) Benefits to Trade and Industry: (a) The multiplicity of indirect taxes has been reduced. (b) By allowing a set-off of prior-stage taxes for the transactions across the entire val. chain, GST leads to mitigation of ill effects of cascading. (c) Due to uniformity in tax rates, the common national market has been developed. (d) The export has been classified as zero rated supply. It will boost the exports. (3) Benefits to customer : (a) Itis relatively simple tax system. (b) On account of mitigation of cascading effect, there is a reduction in prices of goots and services. (c) The pricing structure is uniform through the country. . : (d) The taxation system is more transparent. 2 By STRUCTURE OF GST.) The architecture of GST may be discussed in following points: 1. The GST is on supply of goods and/or services 2. There are four types of taxes in GST : (a) Central Tax (ie. CGST) levied under CGST Act, 2017 (8) Integrated Tax (ie, IGST) levied under IGST Act, 2017 (0) State Tax (ie. SGST) levied under SGST Act, 2017 (A) Union Territory Tax (i.e. UTGST) levied under UTGST Act, 2017 3. In addition, there is a provision for the levy of GST compensation cess on sin and hwy goods (it has been discussed in Para 2.10) 4, There are four Acts relating to GST laws namely CGST Act, SGST Act, UTGST Act and 1GST Act. (These have already been discussed in Para 2.4) 5. With effect from 31st October 2019, there are 28 States in India and accordingly they have their own state GST Acts. Article 366(26B) provides that state included Union Territory Wi its own legislative, Out of 8, we have three Union territories (Delhi, Puducherry & Jammwao Kashmir) with their own State legislative. Therefore, these three union territories also [eNY SGST and not UTGST, Itis clear that, in total there are 31 SGST Acts (28 SGST Acts enaste! by respective states and 3 SGST Acts enacted by Union Territories namely Delhi, PuduchertY and J&K). We have already discussed the same in detail in Para 2.2 :[28,GST.COUNCIL KGoods and Services Tax Council (6ST Couneil) i recommendations to Union and States relating to GST. (authority) to decide policies of GST. The following ecice Policies of Gs (a) The Article 279A in Constitution of india m This Article empowers the les to make: uuncil is the apex constitutional body are the important points as regards GST Council: akes provision for Con: President for the same, (©) The function of the council is to make A ‘i "commendations to the union and the states on important issues like tax rates, exemptions, threshold limi lution, ctc. 43841 Members in GST Council 5 sO Live following are the members of GST Council, phinneno be SAAN | (2) The Union Finance Minister (Chairperson). > *™* on pychs vil] A | ® the Union Minister of State in Charge of Revenue or Finance (Member, ,5* 32 4(0) The Minister in charge of Finance or taxation or any other Minister nominated by each State ints’ , Government (Member) ~~ ope gy” The'members of the GST Council referred to clause (c) above shall, as soon as may be, choose one q | amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide. ee ee ound {iad ae 7 Present status of number of members in GST Council > NV After reorganisation of erstwhile State of Jammu & Kashmir into two UTs, wef. 31st October 2019, India shaving 28 States, 3 Union Territories with legislature and 6 Union Territories without separate legislature. Accordingly, the GST Council has 33 members in total, in the following manner. Representation of ‘| No.of Members Central Government d 2] 28 States 28 3 UTs with legislature 3 6 UTs without separate legislature Nil i Bs Total members > Enisesi [tb reNERNT 39) UncRaAg — 2.8.2 Recommendations of GST Council 9 The Goods and Services Tax Council, ie GST Council, shall make recommendations to the Union and the States on the following matters: (@) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (& the goods and services that may be subjected to, or exempted from the goods and services tax; (© model Goods and Services Tax Laws, principles of levy, Tax levied on supplies in the course of Inter-State trad the principles that govern the place of suppl ly; @ the threshold limit of turnover below which and services tax; apportionment of Goods and Services le or commerce under article 269A and ' goods and services may be exempted from goods (©) the rates including floor rates with bands of goods and services tax;v () any special rate orrates for a specified pertod, toralse additional resource: during any Natural calamity or di ery (2) special provision with respect tothe States of Arunachal Pradesh, Assam,Jamm\ Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Py khand; and wand Kashmir, radesh and Uttara, (2) any other matter relating to the goods and services tax, as the Council may decide, Date of Levy on Petroleum Products : The GST Council shall also r High speed diesel motor ccommended the date on which GST bi , natural gas and aviation turbine fucl, GST Council proceedings are valld even If there Is specified Irregulariiy No act or proceedings of the Goods and Services Tax Council shall be invalid mer: (@ any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a Member of the Council; or (©) any procedural irregularity of the Council no Mechanism to adjudicate any dispute * The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute. (a) between the Government of India and one or more States; or (5) between the Government of India and any State or States on one side States on the other side; or (©) between two or more States, arisi tation thereof, ¢ levied on petroleum crude, ely by reason of- t affecting the merits of the case. le and one or more other ing out of the recommendations of the Councilor implemen- 2.8.3 Decision-making Process at GST Council As a part of decision making process, after deliberations & discussions in the: (@) Valid Meeting (8) Valid Decision the member's views are taken on a given subject matter or resolution Council In order totakea decision, two parameters arerequired namely: 2.8.4 Valid Meeting (Quorum of meeting) In order to take a valid decision, there should be participation of substantial members in the reeting. The minimum number of members to be present in order to take official and legal action is called as quorum, The Article 279A provides that one-half of the total number of members of the GST council shall constitute a quorum for the meeting. Total number of members in GST Council (including chairperson)=33 Quorum = 50% of 33 = 17 Members. Thus, the presence of 17 members constitutes a valid meeting of the council, . 2.8.5 Valid Decision (Required majority) As per Article 279A(9), every decision of the GST council shall be taken at a meeting, by a majority o et ese iatiiectomte of the weighted votes of the members present and voting, in accordance with tire following principles.(@ The vote of the Central Government shall have a weightage of one third of the total votes cast, an — (2) The votes of alll the State Governments taker of the total votes cast, in that meeting, Government _| Weightage of Votes Cast | n together shall have a weightage of two - thirds Central 1/3 [i.e. 33.33%] Minimum 75% Votes should be in favour to pass Resolution State 2/3 [i.e. 66.67%] Illustration There are 2 members from Central Government (CG) & 31 members from State Governments (SG) in the GST council. All the members have attended the meeting, Consider the following detail: Case No. | Members who east vote Votes Against No. of members Total No. in favour abstained of members cG SG ce SG cG SG 1 2 31 0 0 0 oo | 33 22) 2 19 0 5 0 T [33 3 2 15 0 5 0 u 33 4 2 14 0 15 0 2 33 petermine the weighted votes in favour of resolution in each of the above independent case & also coment whether the resolution can be said to have been passed? Answer: Table showing the weightage of votes Case No. of Votes cast ‘Weights of Votes cast Remarks about Resolu- No. Govt. tion Favour | Against Favour Against Central | 2 0 33.33% 0. Passed Unanimously 1 [State 31 0 66.67% 0 TOTAL | 33 0 100% 100% Central | 2 0 33.33% 0 Passed by Majority 5 = (86.11%) 2 [State 9 ° [66.67% 22 =52.78%| 6667 5 = 3.89% 24 24 TOTAL | 21 5 861195 13.8996 100% Central 0 33.33% 0 Passed by Majority 5 5 5 (83.33%) 3 | State 5 ° 166.67x 15 =s0.00%| 66.67% 5 = 16.67% 20 20 . TOTAL | 17 5 8333% 16.6795 100% Central | 2 0 33.33% 0 Not Passtd as majority State 14 15 of the states are not in 4 |e 66.67 4 =32.19%] 66.67 x 2 =34.48%! Favour of Resolution TOTAL | -16 15 65.52% 34.48% | 100%qd) Me weiglts of votes in favour (State Government) have been determined using the following formula: as Pa Votes in Favour (State Govt) =Tot ght (ic. 66. ee et tate Govt) Total Weight (ie. 66.67%) xan Cast (State Govt) Where, Votes Cast = Votes in favour + Votes in against. (2) Article 279A provides to determine weight lage on the basis of total votes case. It mneans the members who remained abstained will not be considered in such calculation Status of Voting at GST Council in Actual Practice The 38th meeting of GST council was held on 18h December, 2019, Up to first 37 meetings, all decisions at the GST Council were taken through consensus. The former Finance Minister Late Shri Arun Jaitley had earlier said that, “The GST Council was an excellent federal institution in which thousands of issues were decided through consensus.” In 38th meeting, when the issue of imposition of uniform tax rate of 28% for both state-run and state- authorised for lottery was placed for discussion and decision, the tradition of taking decision through Consensus was challenged by Kerala's Finance Minister ‘Thomas Isaac’. The Union Finance Minister ‘Nirmala Sitharaman’, who heads the council, made every attempt to keep the set tradition of unanimous decision alive, but when the council was reminded that the rules allow and that tradition was not part of the Rule book”, the voting was held at 5:31 PM (18-12-2019) on the request of one member. The following was the result of voting: Votes in Favour ‘Votes Against Abstained Central Govt. 2 0 o State Govt. 21 7 3 TOTAL 23 7 3 Calculation of weighted majority ‘No. of Votes cast ‘Weights of Votes cast core Favour’ | Against Favour ‘Against Central 2 oO 33.33% 0 State 21 7 41 7. : 66.67» 5 = 50.00% | 66.67» 2 = 16.67% TOTAL 23 7 83.33% “16.67% Thus, 83.33% of members voted in favour of a uniform rate of lottery effective from March 1, 2020 and resolution was passed. It was a partial defeat for Kerala Finance Minister Thomas Isaac’s proposal on whose insistence voting was conducted. [2I9GOODS AND SERVICESTAXNETWORK(GSTN) == Cd ia The Goods and Services Tax Network (or GBTN) is a section 25 company, (Section 8 under Com- panies Act, 2013] ie. a non-government, non-profit organization. It has been formed with the sole purpose of providing the IT backbone to Government, pertaining to Goods and. Services Tax Law. It manages the entire IT system of the GST portal, which is the mother database for everything GST. This portal will be used by the government to track every financial transaction, and will provide taxpayers with all services - from registration to filing taxes and maintaining all tax details. GSTN helps India fulfil its dream of paperless transactions where the compliances related to GST can beperformed digitally with maximum the taxpayer and also createa com, Provision of automation, It will establish a uniform interface for mon and shared IT infrastructure between the Centre and States. 2.9.1 Salient Features of the GSTN The following are the main features of GSTN: 1. = 2 = Ownership: It is partly owned by Central Government include Banks and Financial Institutions, Central and State Governments. Grant: 5 (49%) and partly by Private players (51%) which The 49% holding is divided equally between the The GSTN has also been approved for a non: Authorised Capital: The authorized capital of the GSTN is ¥ 10 crore (US$1.6 million). Management: “recurring grant of @ 315 crores. The team at GSTN is led by Mr. Navin Kumar as its Chairman and Mr. Prakash Kumar as its CEO. Mr. Navin Kumar, an Indian Administrative Service servant (1975 batch), has served in many senior positions with the Govt. of Bihar, and the Central Govt. Technology Partner: The contract for developing this vast technological backend was awarded to Infosys in September 2015. Infosys, as technology service provider, has continuously strives to keep it updated and robust. Trusted National Information Utility: The GSTNis a trusted National Information Utility (NIU) providing reliable, efficient and ro- bust IT backbone for the smooth functioning of GST in India, It is capable of handle a large number of confidential data on behalf of the Indian taxpayers. So the information is kept confidential and secure. Government Control: The government has complete control over GSTN including, on the composition of the Board, mechanisms of Special Resolution and Shareholders Agreement, and agreements between the GSTN and other State Governments. Since the Central Government holding is much larger than any individual private holding, it ensures a complete control by the Government over the governing body of the institution. . Handles Complex Transactions: The proper functioning of GSTN requires a strong IT infrastructure which can capture, pro- cess and exchange the information. Considering the volume of transactions all over India, the adjustment of IGST (for inter-State trade) at the government level (Centre & various States) is extremely complex. The GSTN has made possible a rapid settlement mechanism amongst the States and the Centre. . Sharing of Expenses: The user charges will be paid entirely by the Central Government and the State Governments in equal proportion (ie. 50:50) on behalf of all users. The state share will be then apportioned to individual states, in proportion to the number of taxpayers in the state.TAXMANN®™ 2.9.2 Functions of GSTN Portal The GSTN portal a a window for inte the Department. This portal facil i istration, receiving Invoice details and Retr tion of payment of refunds, etc, It has to support about 3 billion invoices per for 65 to 70 lakh taxpayers. The functions of the GSTN (@) To facilitate the registration of the perso1 ction between the GST t end-to-end compliances ri pay ding G! sof the country and ‘ax including reg. es by the taxpayers, nonth and the subsequent return fi s follows: () To forward the returns to Central and State authoriti (©) To compute and settle the IGST among union and states. (d) To facilitate the matching of tax payment details with banking network. (@) To provide various MIS reports to the Central and the State Governments based on the taxpayer return information. & Providing analysis of taxpayers’ profile; and running the matching engine for matching, reversal and reclaim of input tax credit. 2.9.3 GST Suvidha Providers (GSP) The GSTN has selected certain IT, ITeS and financial technology companies to be called as GST Suvidha Providers (GSPs). The function of GSPs is to develop applications to be used by taxpayers for interacting with the GSTN. They facilitate the tax payers in uploading invoices as well as filing of returns and act as a single stop shop for GST related services. They customize products that address the needs of different segment of users. GSPs may take the help of Application Service Providers (ASPs) who act as a link between taxpayers and GSPs. 2.9.4 Goods and Services Tax Identification Number (GSTIN) The Goods and Services Tax Identification Number (GSTIN) is the unique number each taxpayer will receive once they have registered on the common portal. It comprises of its PAN number and codes denoting the State it is registered in entity number in that particular state, alphabet ‘Z’ and a check code of a single number, It has been discussed in Chapter 3 of the book.,Taxable event in a law is an event, the occurrence or hap- pening of which triggers the imposition of tax. It means the incidence of tax arises only after the occurrence of the taxable event. : Before GST: Under the earlier indirect tax laws, Central exCise was levied on “manufacture of goods”, VAT/CST was levied 6: € OF Goods”, Service tax was charged on “Services provided or agreed tobe provided’, etc. Under GST: According to Article 366(12A) of the Constitution of India, Goods andServices Tax SDis. “Any tax on Supply of goods or services or both except taxes on Su ot the Alcoholicligu ‘for human consumption,’ Therefore under GST, th event is “Supply of Goods or provision of Services or both”. As already state , under the scenario ces y 4.1has been shifted from multiple taxable event namely inanulacture, sales, provision of services, er. Oo eee apply. The CST is applicable if there is Supply of goods or prove OS eee iS forms of Supply have been discussed in detail in next Para. 43.” Ja.3 FORMS OF SUPPLY." Under GST, supply includes all forms of supply of goods or survices or both. The concept of su is the key stone of the GST architecture because the supply of anything other than goods OF Services joes not attract GST. There are two forms of supply under GST namely, goods and services, (3.1 Goods~ As p& section 2(52) of CGST Act, 2017, “Goods" means every kind of movable property other thay money and securities but includes actionable claim, growing crops, grass and things attached to forming part of the land which are agreed to be severed before supply or under a contract of supply, _Sroas, | Ttincludes It excludes Actionable Claims : Money & Securities Growing Crops, Grass, ete. Actionable claim: The section 2(1) of CGST Act provides that the definition of actionable claims shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882. As per section 3 of the Transfer of Property Act, 1882, ‘actionable claim means a claim to any debt, other than a debt secured by mortgage of immovable property or by hypothecation or pledge of movable property, or to any beneficial interest in movable property not in the possession, either actual or constructive, of the claimant, which the civil courts recognise as affording grounds for relief, whether such debt or beneficial interest be existent, accruing, conditional or contingent” It may be noted that there are certain activities listed in Schedule II which are treated neither as Supply of goods nor as Supply of services (Refer Para. 4.11). Actionable claims (other than lottery, betting & gambling) have been included in this Schedule. Thus, only lottery, betting & gambling shall be treated as Supply under GST. All the other actionable claims shall not be Supplies. Money: As per section 2(75) of CGST Act, ‘Money means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value" Transaction in money: The transaction in money is outside the ambit of GST as it is not included in the definition of goods/services. When we deposit principal amount in the bank or if such amount is withdrawn, then it is simply a transaction in money. se transactions donot Constitute ser- vice & thus are not chargeable to GST However, if'a separate consideration is charged for these activities, sideration is subject to GST. For example: if € 2000 note is exchanged for 20 notes of € 100 then it is transaction in money. But, if in consideration & 1950 is given, then GST becomes payable on 50. Securities: The term “securities” shall have the same meaning as assigned tot in clause (hi) of se tion 2 of the Securities Contracts (Regulation) Act, 1956. As per this Act, the term securities include the following in India:— shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of alike nature in or of any incorpor ted company or other body corporate — derivatives which includes — Government security - a security created and issued by the Central Government or a State Government = units or any other instrument issued by any collective investment scheme to the investors in such schemes = units or any other such instrument issued to the investors under any mutual fund scheme but does not include any unit linked insurance policy which is a hybrid instrument providing for life risk cover and investments : — security receipts issued under SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) — Securitized debt instruments (collateralized debt obligations etc.) — such other instruments as may be declared by the Central Government to be securities; and — Rights or interest in securities [Please note that Securities are neither goods nor Services. 43.2 Service ‘The term ‘Service’ has been defined under section 2(102) of CGST Act, 2017. As per this section, ‘homvice means anything other than, goods, money and securities but includes activities relating to the use of money oF its conversion by cash or by any other mode, from one form, currency oF ve hemnination, to another form, currency or denomination for which a separate consideration is charged" : Itmeans the Servicerefers to anything other than goods, money and securities ‘butincludes activities relating to use of money or conversion of money for which separate consideration is charged. , : Service —|[— __ It includes Ttexcludes Activities relating to use of money 1. Goods or conversion of money for which 2. Money separate consideration is charged. 3 Soniiiies Explanation to section 2(102)* Statutory Provision: “For removal of doubts, it is’ hereby clarified that the expression Services’ in- cludes facilitating or arranging transactions in securities. al Explanation: AS per the definition ‘of goods and services, the securities are excluded from the definition of both ‘goods’ and ‘services’ in the CGST Act and they aré neither goods nor services. However, facilitating or arranging transactions in securities is. liable to GST. In order to clarify the same, the above explanation has been inserted to section 2(102).Example: In relation to transactions in securities, if some service charges or service fees or docy. rrentation fees or broking charges or such like fees or charges are charged, then the same woulg be a consideration for provision of service and shall be chargeable to GST. NOTE: Under GST, the supply should be of goods or services. Supply of anything other than goods or services docs not attract GST. Supply to be classified elther as Goods or ay Services Jor Services viz cither as wholly goods or wholly service, tion atises, ply involves both goods and services? The GST la, as, wholly goods or wholly servic classifica | . es that such supplies would be classifinble ei ny provided in Schedule Iof the Act, which has been discussed later in this chapter. [alaTVPES OF SUPPLIES” a der GST includes supply of goods as well as As already stated in previous Para, the term supply un supply of services. This supply may be classified on various basis. On the basis of movement/flow (a) Inward supply (b) Outward supply _Soycon the basis of Continuity ~~ (a) One time supply (b) Continuous supply (c)_On the basis of taxability — @ Taxable supply (b) Non-taxable supply (c) Exempt supply (d) Zero-rated supply (d)-On the basis of Geographical location — (a) Intra-state supply (b) Inter-state supply (c) Supplies in territorial waters Sm the basis of Goods supplied in conjunction (Explained in Para 4.5) : (a) Composite supply ~] (b) Mixed supply 4.4.1 Types of Supplies on the basis of movement/flow olves two parties namely supplier and recipient. When we consi Every transaction necessarily inv the point of view of either of the party, it may be classified er a supply of goods/sérvices from inward supply or outward supply. (a) Inward supply : In relation to a person, “inward supply” means receipt of goods or servic or both, whether by purchase, acquisition or any other means with or without consideratic In relation to a taxable person, ‘outward supply” means supply of goods ~ (b) Outward supply: transfer, barter, exchange, licence, rental, lease or dispo services or both, whether by sale,or any other mode, made or agreed to be made by such person in th i 1c Ce e1 e of business. i ‘ourse or furtherance Example: Ravish Computers Ltd, a registered dealer has sold deskto ' price of € 26,000 plus GST. This single transaction of supply oleompaicr cori “heed zt forrecipient (ie. for ABC Ltd.) and “Outward Supply" for the Supplier (:e.for Ravish computers td, ; 4.4.2 Types of Supplies on the basis of Continuity The recurrence of a Supply is the basis for this classification: (a) One-time Supply: It simply refers to Supply of goods or Services which is provided or agree purchases a machine from M/s ABC, then itis one-time Supply. This category is required j fo recognise the other type of Supply, which is continuous Supply pelea (b) Continuous Supply: The continuous supply may be as regards goods as well as for services. Continuous Supply of Goods: As per section 2(32) of 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 a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis. . Continuous Supply of Services: As per section 2(33) of CGST Act, 2017, “continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations. Example: Kanika uses LPG stove and is a registered customer with Shivani Enterprises, a dealer of LPG Cylinders. She acquires two cylinders every month on regular basis. It is the example of one-time supply where every supply of cylinder is a separate transaction. On the other hand, Ms. Tania has taken PNG connection at her kitchen from Indraprastha Gas Limited. The billing is done monthly on the basis of meter reading. It is the case of continuous supply of goods. 4.4.3 Types of Supplies on the basis of taxability ‘The scope of supply has been given in section 7 of CGST Act, 2017. Even if an activity is a supply, itis not necessary that the same is subject to GST. On this basis, there can be following types of supplies: (a) Taxable Supply: As per section 2(108) of CGST Act, “Taxable Supply refers to a Supply of Goods arid/or Services which is leviable to tax under CGST Act”. (b) Non-Taxable Supply: As per section 2(78) of CGST Act, “Non-Taxable Supply means a Supply of Goods or Services or both which is not leviable to tax under CGST Act or under the IGST Act”. (©) Exempt Supply: As per s Goods or Services or both which attracts tax under Section 11, or under section 6 of IGST Act, and incl (d Zero Rated Supply: It is Supply of any Goods and /or Services on which no tax is payable but input tax credit pertaining to that Supply is admissible. As per Section 16(1) of IGST Act, 2017, szero rated supply” means any of the following supplies of goods or services or both, namely:— (@ export of goods or services or both; or vices or both to a Special Economic Zone developer or a Special ection 2(47) of CGST Act, “Exempt Supply means a Supply of any Nilrate of tax or which may be wholly exempt from Judes non-taxable Supply”. (8) supply of goods or se Economic Zone unit.TAXMANN® 4.4.4 On the basis of Geographical location When we consider the movement of Supply geogr ly, it can be of three types namely Inj. State Supply, Intra-State Supply and Supplies in the territorial waters. (1) Inter-State Supply: As per Section 7(1) of IGST Act, Subject to the provisions of section y supply of goods, where the location of the supplier and the place of supply are in (@ two different States; (4) two different Union territories; or (0) a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce. Similarly, as per section 7(3), Subject to the provisions of section 12, supply of services, wie, the location of the supplier and the place of supply are in— (a) two different States; (b) two different Union territories; or (¢) a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce. (2) Intra-State Supply: As per Section 8(1) of IGST Act, Subject to the provisions of sectioa supply of goods where the location of the supplier and the place of supply of goods arein same State or same Union territory shall be treated as intra-State supply: Provided that the following supply of goods shall not be treated as intra-State supply, namey- (® supply of goods to or by a Special Economic Zone developer or a Special Econo Zone unit; . (i. goods imported into the territory of India till they cross the customs frontiers of = or . (ii), supplies made to a tourist referred to in section 15. (3) Supplies in the territorial waters: As per Section 9 of IGST Act, Notwithstanding any contained in this Act— : (@) where the location of the supplier is in the territorial waters, the location of sust™ plier; or 4 (b) where the place of supply is in the territorial waters, the place of supply, shall purposes of this Act, be deemed to be in the coastal State or Union territory nearest point‘of the appropriate haseline is located. F SUPPLIES IN CASE OF COMBINATION SUPPLIES) eg UN t The GST is payable on individual goods or Services or both at the notified rates. For esa A Tooth-paste and Tooth-brush are liable to GST @ 12% and 18% respectively. It means the these items will be calculated accordingly. Sometimes, two or more goods or Services Erp in combination at a Consolidated price. In this case, a question arises about the rate of levied as the goods/services in package may be subjected to different rates of tax. For" j (a) A desktop computer (GST@28%) and a wooden table (GST@18%) are offered by $" a consolidated price of % 52,500. jot (b) Supply of LCD with warranty and maintenance for 1 year again at a consolidated pr4.4.4 On the basis of Geographical location When we consider the movement of Supply geographically, it can be of three State Supply, Intra-State Supply and Supplies in the territorial waters. (1) Inter-State Supply: As per Section 7(1) of IGST Act, Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in types namely Inter- (a) two different States; (b) two different Union territories; (0 a State and a Union territory, shall be treated as a supply of goods in the course of inter-State trade or commerce. Similarly, as per section 7(3), Subject to the provisions of section 12, supply of services, where the location of the supplier and the place of supply are in— (a) two different States; (b) two different Union territories; or (©) a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce. (2) Intra-State Supply: As per Section 8(1) of IGST Act, Subject to the provisions of section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as intra-State supply: Provided that the following supply of goods shall not be treated asintra-State supply, namely:— (a supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit; . (i goods imported into the territor or E ry of India till they cross the customs frontiers of India: (ii, supplies made to a tourist referred to in section 15. (3) Supplies in the territorial waters: As per Section 9 of IGST Act, Notwithstanding anything contained in this Act— (a) where the location of the supplier is in the territorial waters, plier; or (b) where the place of supply is in the territorial waters, the place of supply, shall, for the purposes of this Act, be deemed to be in the coastal State or Union territory where the hearest point‘of the appropriate baseline is located. the location of such sup- N/SUPPLIES” n individual goods or Services or both at the notified rates. For example: The It means the GST on ‘aleulated accordingly. Sometimes, two or more goods or Services are supplied price. In this case, a question arises about the rate of GST to be sc may be subjected to different rates of tax. For example:— ) and a wooden table (GST@18%) are offered by supplier at The GST is payable o aste and Tooth-brush are liable to GST @ 12% and 18% respectivel Tooth-p these items will be c: in combination at a Consolidated Ievied as the goods/services in packag' (a) A desktop computer (GST@28%) ‘a consolidated price of & 52,500. (b) Supply of LCD with warranty and maintenance for 1 year again at a cons solidated price.For the purpose of taxability, the CGST Act, classi (1) Composite Supply (2) Mixed Supply ies these “Combination Suppli 4.5.1 Composite Supply As per section 2(30) of CGST Act, 2017, ‘Composite Supply” means a supply made by a taxable person 10 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 following are the basic features of a composite supply: (@ Itshould be the supply made by taxable person to a recipient. (8) It should consist of two or more taxable supplies of Goods or/services or both. (6) The combination should be naturally bundled and supplied in conjunction with each other in the ordinary course of business. The Supplied in conjunction means that they should be occurring in the same point in time and space. eee (@) Out of two naturally bundled supplies, one should be a principal supply. ‘@ Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply. Principal Supply means supply which forms the predominant element of the composite supply and other parts of the supply are only ancillary or supportive to that predominant part. — gNNVIXWs, — Examples on Composite Supply: Example42 Supply: Prakash buys LCD and also gets warranty and a maintenance contract with the LCD. the principal supply and warranty Comment: This supply is a composite supply. The supply of LCD maintenance services are ancillary. | Example 42 gi a ‘Supply: Samrat Hotel in Shimla, provides 4 day and dinner is provided along with the room ‘Comment: It is composite supply hotel are naturally bundled. a package at 88,000 wherein the of breakfast ommodation, ~ Example 43) : Supply: The Xiaomi Communication Co. Lid, has re *Redmi Note 4”, The company supplies the accesso with the handset. s supply of earphone and charger with the mobile phone handset are naturally bundled, This re suPPl posite Supply.” The Supply of mobile phone isthe principal supply. © with the brand name intly iunched a mobile pho phone and charger alon Comment: supply qual Clarification by CBIC: : CBIC has clarified as to what constitutes the pri incipal supply in the given composite supplies: 1, [Activity/Transaction:_ ‘Supply of printed books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes et address or other contents supplied by the reciplent of such printed goods. L__| printed with design.| Jogo, name,Principal Supply: 2 Supply of service: In the case of printing of books, pamphlets, brochures, ann is supplied by the publisher or the person who owns the us ee the physical inputs including paper used for printing belong Ce mabe content supplied by the recipient of supply] is the principal supply am constitute supply of service. | Supply of goods: 5 II | Incase of supply of printed envelopes, letter cards, printed boxe: tissues, napkins, wall paper et ny the rite using its physical inputs including paper Lo print the design, logo ete. suppl by rep of goods, predominant supply is supply of goods and the supply of printing of the ae {spn ied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods. (Circular No. 11/11/2017 GST dated 20-10-2017] s reports, and the like, where ony cong ights to the intangible inputs whit supply of printing fof yy efore such supplies woul, 2. | Activity/Transaction: z i Activity of bus body building Principal Supply: ae a ae 3 fa i The principal supply may be determined on the basis of facts and circumstances of each case [Circular No. 34/8/2018-GST dated 01-03-2018] 3. | Activity/Transaction: Retreading of Tyres Principal Supply: Rete idee Gaine Supply of service: | Pre-dominant element is process of retreading which isa supply of service. Rubber used for retreading is an ancillary supply. Supply of goods: Supply of retreaded tyres, where the old tyres belong to the supplier of retreaded tyres, sa suppl | goods. [Circular No. 34/8/2018-GST dated 01-03-2018) | .2 Mixed Supply per Section 2(74), “Mixed supply means two or more individual supplies of goods or services any combination thereof, made in conjunction with each other bya taxable person fang nay le price where such supply does not constitute a composite supply." The essence Af the Atunens dal there should be supply of two or more individual goods or services or any comin nie yal in conjunetion with each other. In fact, in case of mixed supplies, the poodsIon nee nha supplied to the recipient at one price can be supplied individuall ly. In other words, the individual supplies are independent of each other and are not naturally bundled. In nutshell, a supply of more than one goods and/or servic supply if the following conditions are fulfilled: 8. bundle will be reckoned as mixed (i) Such goods/or services are supplied for-a single price, (i) They are not naturally bundled together and (ii) Tt does not qualify as composite supply.Examples on Mixed Supply: Example 4.4 Supply: A gift pack comprising of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices supplied for a single pric Comment: It is an example of mixed supp all these goods can be sold independently. Example 4.5 = Supply: Rent deed executed for renting of the different floors of a building, one for residence and another for commercial purpose to the same person, Comment: It will be treated as mixed supply as the two floors could have been rented independently. Example 4.6 a a Supply: A supply of a package Comprising of shirt, trouser, tie and belt for a single price. Comment: It is a mixed supply. The reason being each of these items can be supplied separately and is not dependent on any other. Note: The provisions relating to determination of tax liability on mixed supplies have been discussed in Para 5.11 of Chapter 5. ‘Works Contract and Restaurant Services 1. As per section 2(119) of CGST Act, 2017, “Works contract means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable proy perty wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract 2. Works contract and restaurant services are the classic example of composite supplies. However. the GST law identifies both as supply of services [as per Schedule I] Composite and Mixed Supply ~ gNNVIVXVL, [_-(Comprising two or more supplies of goods or services or any LG combination thereof) Naturally Bundled 1 Artificially Bundled Comprising two or more supplies, one pone ing Wo or more individual - 7 i 4 suppl Of which is a Principal Supply uppli 's, made for a single price, which is not Composite Supply [_ | not Composite Suppl ‘Composite Supply ‘Mixed Supply.A ‘taxable person’ under GST, is a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as a taxable person. ‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/ BOI, any corporation or Government company, body corporate incorporated under laws of foreign country, co-operative society, local authority, government, trust, artificial juridical person.The GST payment process Indian businesses are in for a learning curve — the payment process under Goods and Services Tax (GST) differs drastically from current procedures. Namely, each step of the process — like all other aspects of GST — now occur online within the GST portal. Section 49 of the Central Goods and Services Tax Act, along with rules published by the Central Board of Excise and Customs (CBEC), govern the new payment procedures. This whitepaper provides an overview of what they entail and looks at the following: ¢ Electronic ledgers ¢ Manner of utilization and cross-utilisation of input tax credit (ITC) ¢ Interest on delayed payments ¢ Electronic payment forms ¢ Unique identification number for each transactionTo initiate a payment, taxpayers generate a challan online using form GST PMT-06, which will be valid for a period of 15 days. Payment can then be remitted through any of the following modes: ¢ Internet banking (authorized banks only) © Credit or debit card (authorized banks only) © National Electronic Fund Transfer (NEFT) or real-time gross settlement (RTGS) (any bank, authorized or unauthorized) * Over-the-counter (OTC) payment (authorized banks only) for deposits up to ten thousand rupees per challan and per tax period The taxpayer is responsible for any commission due on the payment. The payment date shall be recorded as the date the payment is credited to the appropriate government account. The date, the payment is debited from the taxpayer's account is not relevant. Unregistered taxpayers needing to make a tax payment will still use the online GST portal but with a temporary identification number generated through the portal.Electronic ledgers In the GST portal, a taxable person can track his tax liabilities across three ledgers, each maintained in real-time: 1. Electronic liability ledger (also known as electronic tax liability register): Accounts for < taxpayer’s gross tax liability — form GST PMT- 01 on the GST portal 2. Electronic credit ledger (also known as electronic input tax credit ledger): Records the tax payments already made during the supply chain e. every claim of ITC is recorded here — form GST PMT-02 3. Electronic cash ledger: All amounts paid by the taxpayer are reflected here — form GST PMT-05Manner of utilization and cross- utilisation of ITC The input tax credit available in the electronic credit ledger shall be utilized in the following manner: Input tax Utilisation (in the order on shown) | IGST | IGST, CGST, SGST/UTGST CGST | CGST, IGST SGST/UTGST | SGST/UTGST, IGST From the above table, it is evident that central tax shall not be utilized towards payment of state tax or union territory tax; and state tax or union territory tax shall not be utilized towards payment of central tax.Interest on delayed payments Per Section 50 of the CGST Act, interest will start accruing on a delayed payment the day after the payment was due. This applies to both missed payments and payments not made in full. The payment of interest is automatic and should be made voluntarily, even without a demand. The interest rate, not to exceed 18 percent, will be determined by the Government on the recommendation of the GST Council. In the case of undue or excess claim of ITC, or undue or excess reduction in output tax liability, interest shall be paid at a higher rate, not to exceed 24 percent, to be notified by the Government.GST payment forms Sr. ho. Form no. GST PMT- 01 GST PMT- 02 Short description Electronic tax liability register Electronic credit ledger Purpose Any tax, interest, penalty, late fee, or any other amount will be debited to this register Every claim of ITC shall be credited to this ledgerGST PMT- 03 GST PMT- 04 Refund to be recredited Discrepancy in electronic credit ledger Refund if rejected the amount debited from the electronic credit ledger or electronic cash ledger, as the case may be, will be recredited by order of a proper officer Discrepancy in electronic credit ledger, communicated to an officer through this formGST PMT- 05 GST PMT- 06 Electronic cash ledger Challan for deposit of tax Any tax, interest, penalty, late fee, or any other amount to be deposited in cash are credited to this ledger Generate and pay a challanGST PMT- 07 Application for intimating discrepancy relating to payment The application is meant for the tax payer where the amount intended to be paid is debited from his account but CIN has not been conveyed by bank to Common Portal or CIN has been generated but not reported by concerned bank (within 24 hours of debit)”16 PROCEDURE FOR REGISTRATION [SECTION 25 READ WITH RULES 8, 9 AND10 [OF CGST RULES, 2017] Ms ‘The following process of registration has been pres: Rules: (1) Application for Registration [Rule 8] ribed under CGST Act and the corresponding (a) Declare PAN and State/UT: Every person liable to get registered and person secking vol- untary registration shall, before applying for registration, declare his Permanent Account Number, mobile number-e-mail-address, State or Union territory in Part A of FORM GST REG-01 on the common portal, either directly or through a Facilitation Centre notified by the Commissioner. Note: @ The words ‘mobile number, e-mail address,” have been omitted vide Notification No. 26/2022 -CT dated 26-12-2022. The above procedure is: = Applicableto person paying tax under composition levy, person seeking voluntary registration and a casual taxable person. = Not applicable to a non-resident taxable person, a person required to deduct/ collect tax at source under section 51/52 and a person supplying online infor- mation and database access or retrieval services from a place outside India to a non-taxable online recipient referred to in section 14 of the IGST Act. (b) Validation/Verification of PAN, Mobile and email-ID: The Rule 8(2) stipulates that the Per- manent Account Number (PAN) shall be validated online by the common portal from the 2 database maintained by the Central Board of Direct Taxes and shall also be verified through separate one-time passwords sent to the mobile number and e-mail address linked to the PAN. (© Generation of TRN: On successful verification of the Permanent Account Number, mobile number and e-mail address, a Temporary Reference Number (TRN) shall be generated and linked to the PAN communicated to the applicant on the said mobile number and e-mail address. (@ Apply in Part B of GST REG-01: Using TRN, the applicant application in Part B of FORM GST REG-01, duly signed or verified through electronic veri- fication code, along with the documents specified in the said Form at the common portal (©) Biometric-based Aadhaar authentlcation: If the person making above application opts for f Aadhaar number and is identified on the common portal (based on parameters), then it shall be followed by biometric-based Aadha ticatjon.It will be followed by taking photograph of the applicant (if applicant is an individual or of persons notified under section 25(6C) (if applicant is not an individual), along with the Verification of the original copy of the documents uploaded with the application in FORM GST REGO} at onc of the Facilitation Centres notified by the Commissioner for the purpose of this sub-rule and the application shall be deemed to be complete only after completion of the process laid down under this sub-rule, submit an. (P Issue of Acknowledgement: On receipt of such an application, an acknowledgement shall be issued electronically to the applicant in FORM GST REG-02. Note: A Casual Taxable Person (CTP) gets a TRN for making an advance deposit of tax in his aNNVIXVL electronic cash ledger and an acknowledgement is issued only after said deposit.(2) Verification of the Application and approval [Rule 9] The application shall be forwarded to the proper officer who shall examine the application and th accompanying documents. 7 (a) If application and documents are found to be in order: The proper officer approves the grant of registration to the applicant within a period of 7 working days from the date of submission of the application. Note: If person does not opt for or fails to undergo for authentication of Aadhaar number the registration shall be granted within 30 days of submission of application, after physical verification of the place of business in the presence of the said person, in the manner pro. vided under rule 25 and verification of such documents as the proper officer may deem fit, However, this will be with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner. (b) Where the application submitted is found to be deficient: © Notice by Proper Officer: If deficiency is found in terms of any information /document required to be furnished OR where the proper officer requires any clarification with regard to any information provided /documents furnished, the Proper Officer may issue a notice to the applicant electronically in FORM GST REG-03 within 7 working days from the date of submission of the application. Note: ™ The notice in FORM GST REG-03 may be issued not later than 30 days from the date of submission of the application, in the cases as mentioned in the above Note given under (a) above. = The expression ‘clarification’ as regards this sub-rule includes modification or correction of particulars declared in the application for registration, other than Permanent Account Number, State, mobile number and e-mail address declared in Part A of FORM GST REG-01. © Response of applicant: The applicant shall furnish such clarification, information or documents electronically, in FORM GST REG-04, within 7 working days from the date of the receipt of such notice. @ Where the proper officer is satisfied: with the clarification, information or documents furnished by the applicant, he may approve the grant of registration to the applica within 7 working days from the date of the receipt of such clarification/information documents. : © Rejection: where no reply is furnished by the applicant in response to the notice oF where the proper officer is not satisfied with the clarifi tion information/documer furnished, the proper officer may, for reasons to be recorded in writing ree application and inform the applicant electronically in FORM GST REG:FORMAT OF GSTIN tate Code Permanent Account Number (PAN) Entity Code Check Sum a Toe Character he following is the description: (@ The first 2 digits will represent the State code. (b) The next 10 digits will be the PAN number of person or firm engaged in Business or the Tax Deduction and Collection Account Number. (0) The 13th would repr esent the number of registrations an entity has with in a state under the same PAN. It will be an alpha-numeric number (first 1-9 and the: n A-Z) and will be assigned ‘on the basis of a number of registrations a legal entity (having the same PAN) in the same state. (d) The 14th digit would be alphabet Z by default. It has been kept for future use. (&) The last digit will be a checksum digit. Example 3.24: 3 oat ‘The Taxmann Publications Private Limited is the leading publisher of tax and corporate laws in India with its head office in Delhi. The state code of £ Delhi is 07, PAN Number of the company is “AAACT2774P" and company has only one business vertical. ‘Accordingly the GSTIN is the following: (Name of Entity [TAXMAN PUBLICATIONS PRIVATE LIMITED \[estiN [z [O7AAACT2774P1ZT Example 3.25: The 3th digit of GSTIN is very important to know the m ber of registrations, For example if the company has only one registration in the same state then number 1" will be assigned as the 13th digit of GSTIN. But if, due to many business verticals, the same company ‘obtains one more number "2" will be assigned as the 13th digit of GSTIN. Tfitis 10th this manner, up to 35 business verticals of any egal entity can be regis istration in same state, will be assigned. In