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Syllabus

Unit 1. Basic Concepts of

Indirect Taxes ves
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|1 Unit 2. Levy and Collection -
of GST case

Input Tax Credit ve

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i Practical Questions . “eee

Unit 4. Procedures . te

Unit 5. ‘Special Provisions wee

Unit 6, Customs Law _ ve

Practical Questions a

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 “-. SYLLABUS
- B.Com. (Hons.)
GST AND CUSTOMS LAW
Objective: To provide students with a working knowledge of principles and
provisions of GST and Customs Law.

UNIT I: Introduction
Constitutional framework of Indirect Taxes before GST ‘(Taxation Powers of
Union and State Government); Concept of VAT: Meaning, Variants-:and Methods;
Major Defects in the structure of Indirect Taxes prior to GST; Rationale for GST;
Structure of GST (SGST, CGST, UTGST and IGST); GST Council, GST Network,
State Compensation Mechanism, Registration.
BASIC CONCERTS OF
UNIT IE: Levy and Collection of GST
Taxable event—"Supply” of Goods and Services; Place of Supply: Within state,
:
INDIRECT TAXES
Interstate, Import and Export; Time of supply; Valuation
for GST— Valuation
tules, taxability of reimbursement of expenses; Exemption from GST: Small > 11 Background
supplies and Composition Scheme; Classification of Goods and Services: In any welfare state, .it is.1
Composite and Mixed Supplies. : the increasing developmién' momy and its people by way of
UNIT IT: Input Tax Credit public expenditure. India; veloping economy, has been striving to fulfil
Eligible and Ineligible Input Tax Credit; Apportionments of Credit and Blocked the obligatibns of a welf: with its limited resources; the primary source of
revenue belng levy of. taxes. Though the collection of tax'‘is.to augment as much
Credits; Tax Credit in respect of Capital Goods; Recovery of Excess Tax Credit:
revenue as possible to the Government to provide public services, over the years
Availability of Tax Credit in special circumstances; Transfer of Input Credit
it has been used as.an instrument of fiscal policy to stimulate economic growth.
(Input Service Distribution); Payment of Taxes; Refiind; Doctrine of unjust
Taxes are cbliected to fulfil the socio-economic objectives of the Government.
enrichment; TDS, TCS. Reverse Charge Mechanism, Job work.
> 1.2 Direct and Indirect Taxes
UNIT IV: Procedures
Q. 1. Di/'ferentiate between Direct and Indirect taxes.
Tax Invoice, Crédit and Debit Notes, Returns, Audit in GST, Assessment: siie
Ans, Direct Taxes. A Direct tax is a kind of charge;-which is imposed directly
Assessment, Summary and Scrutiny. on the taxpayer and paid directly to the Government by the person (furistic or
UNIT V: Special Provisions natural) on whom it is imposed. A ditect tax is ohe that cannot be shifted by the
Taxability of E-Commerce, Anti-Profiteering, Avoidance of dual control, E-way taxpayer td someone else. A significant direct tax imposed iin india is Incame tax.
bills, zero-rated supply, Offences and Penalties, Appeals. Indirect Taxes, If the taxpayer is just a conduit and at every stage the tax-
i
incidence is passed on till it finally reaches the consumer, who really bears the
UNIT VI: Customs Law brunt of it, such tax is indirect tax. An indirect tax is one that can be shifted by the
Basic Concepts, Territorial Waters, High Seas, Types of _ Custom Duties, taxpayer td someone else: The significant indirect taxes that were being levied in
Valuation, Baggage Rules and Exemptions. india till June 2017 are excise duty, customs duty, service tax, central sales tax
(CST), valite added tax (VAT), octroi, entry tax, purchase tax arid the like.”
gaoaa In order do away with various Indizect Taxes,.GST was introduced from
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July 1, 2027.

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Different types of direct and indirect.taxes are presented in the figure
indirect taxes
| Goods
1 | Services
Ex cise duty L Service tax
| >] (On manufacture}
Ciistoms-duty af.
(On imports/exports)
CST
[|] (Oni mter-state sale).
Sales tax/VAT
(On sales within the State)
Other/Miscellaneous
(Octroi, Entry tax)
Direct Tax. -
\|, * The person paying the tax,to the
Government directly bears the -
incidence of the tax.
* Progressive in nature. Higher
rate of taxes for people having _
‘higher ability to‘pay.
ES.
rai 4
> 1.3 Constitutional Framework -——-——-
: Q. 2. Which Government bodies control and Administer direct taxes and
TAXES indirect taxes in india? :
7 Ans. India has a three-tier federal structure, comprising the Union
Government, the State Governments and the Local Governments. The power to
Direct taxes levy taxes and duties is: distributed amorig the three tiers of Government in
accordance with the provisionsof the Indian Constitution.
L The Constitution of India is the supreme law of India. It consists of a Preamble,
| | Income tax
|
| [ Other
I
| 22 parts containing 444 Articles and 12Schedules.
[Tax on income Interest tax/
Expenditure tax
' Power to levy and collect taxes whether, direct or indirect emerges from the
Constitution of India, In case any tax law, be it an act, rule, notification or order is
: Indirect Tax :
* The person paying the tax to the not in conformity with the Constitution, it is calléd. ultra vires the Constitution
Government collects the same from - and is illegal and void.
‘ the ultimate customes. Thus, incidence
;
of the tax is shifted ‘to the other person:
_ Thus,-a-study -of the basic. provisions of the Constitution is essential ‘for
* Regressive in nature. Ail the. understanding the genesis of the various taxes being. imposed in India. The
_ consumers equally bear the burden, significant provisions of.the Constitution telating to taxation are:
"irrespective of their ability to pay.
1. Article 265: Article 265 of the Constitution of India prohibits arbitrary collection
of tax. It states that “no tax shail be levied or collected except by authority of law’:
The term authority of law, means that tax proposed to be levied mustbe within the °
legislative competence of the Legislature imposing the tax, :
2. Article 245: Part XI of the Constitution deals with relationship between the
Union and States.:The power for enacting the laws is conferred oni the Parliamient
and on the Legislature of a State by Article 245 of the Constitution: The said
Article provides as under: .
(i) Subject to the provisions of this Constitution, Parliament may make laws
for the whole or any part of the territory of India, and the legislature of a
State may make laws for the whole or any part of the State.
(ii) No law made by the Parliament shall be deemed to be invalid on the
ground that it would have extra-territorial operation.
: . s.
™ s
 3. Article 246: I gives ‘the ‘respective authority ‘to Union -and State Central Excise Duties [Entry 84]
Governments for levying taxes. Whereas Parliament may. -make laws for the Duties of excise on tobacco and
whole of India or any part of the territory of India, the State Legislature may other- ‘goods’ manufactured or
make laws for whole or part of the State. produced. in india except alcoholic
4, Seventh Schedule to Article 246: It contains three lists which enumerate the liquors for human consumption,
matters under which the Union and the State Governments have the authority to1 opium, Indian hemp and other
make laws. narcotic. drugs and narcotics, but .
including - medicinal. and t0ilet-}>-——~+
Pie eal ‘preparations containing alcohol or ON,
It contains the matters
| opium / Indian - hemp / narcotic : a S
It contains the matters It contains the matters
in respect of which the in respect of which the
drulgs / narcotics,
in respect of which
Parliament (Central State Government both the Central and Central Sales Tax [Entry 924]

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Government) has has the exclusive right the State Governments Taxes on the sale.or purchase. of
the exclusive right to to make laws. have power to make laws. goods other than newspapers,
make laws.
where such sale or purchase takes
Entries 82. to place in the course of. inter-state
92C of List I enumerate the subjects where the Central
Government has power to levy taxes. Entries 45 to 63 of List Il enumerate the trade or commerce. /
subjects where the State Governments have the power.to levy taxes: Parliament 5. | Service Tax [Entry.97}.~
has a further power to make any law for: ‘any par, off India not comprised ina Any other! matter not enumerated
State even if such matter is included. iri the StateList." in: List Il or List Ill including: any |
and indirect taxes lavied under various tax not mentioned in either of those
Lists.
* 6. | Entry 92C: : 7
taxes being levied in India under the various entries of the Union and State Lists. Tax on services .
There is no head of taxation in the Concurrent List (Union and the States have no The principal central and state level indirect taxes being levied in India along
concurrent power of taxation). with the relevant statutes are tabulated below:

1. | Income tax [Entry 82] State Level VAT [Entry 34] A tax on the manufacture or
Excise Duty ¢ Central Excise Act, 1944
Taxes on income other than| Taxes on the ‘sale or purchase of [Central Value | * Central Excise Tariff Act, | production of goods in India
agricultural income. goods (excluding newspapers) Added Tiax]- ~ 1985 ; imposed by the Central
except tax on inter state irade | or
(CENVAT) Government.
commerce.
Basic General rate: 12.5%
2. | Customs Duties [Entry 83] State Excise Duties {Entry 51] Customs Duty * Customs Act, 1962 =: ° A duty imposed by the
Duties of Customs including export Duties of excise on alcoholic liquors
* Customs Tariff Act, 1975 Central Government on
duties. | for human consiumption; opium,.
Indian hemp. and other. narcotic °
goods imported = into/
drugs and narcotics. The entry does exported out of India.
not include duties of excise. on ‘Basic General Rate: 10% +
medical and toilet preparations Additional: duty of customs
containing alcohol or opium/ | (CVD) equivalent to the
Indian hemp/ other narcotic drags/ excise duty levied on like
narcotics. goods -produced in India
(12.5%) + Special additional ,
duty of customs @ 4%.
» Service Tax. }
‘ ; Finance Act, 1994- _. «:| Government..on the services
' | (except. the services covered
in the negative list/of services
vand exenipted services)
. - Rate: 14% ;
Central Sales Tax | Central Sales Tax Act, 1956°| A tax on the inter-state sales
a | of goods, imposed by the
Central Government but
appropriated = by the
originating state.
. . > | Rater 2%
Value Added Tax| VAT Acts of respective State | A tax on the intra-state sales
governments of goods, imposed by the
; state governments. 7
Rate generally at 5% and
| 12.5% /13,5%
Besides these, there are other indirect tax a entry tax, luxury tax, Q. 5, How does VAT operate? o
entertainment tax etc. levied b Ans. Value Added Tax (VAT) is levied as a proportion of the value added at
authorities also impose taxes like’ each stage of production or distribution (ie, sales minus purchase) which is
The Department of Ré : equivalent to wages plus interest, other costs and profits. To illustrate, a chart of
respect of matters rel transactions is given below: ; so
namely, the Central Boatd of-Excise and Customs (CBEC). The Board has been
constituted under the Central Board of Reverjue Act, 1963. | ae Manufacturer A Wholesaler B
CBEC deals with the tasks of formulation”6f policy concerning. levy and Sale Price = $390 : Sale Price = 7400
collection of customs and ceniral excise dtities and service tax, prevention of Gross VAT @ 12.5% = 337,50 oe |. Gross VAT @ 12.5% = €50
smuggling and administration of matters relating to customs, ‘central excise, Net VAT = 221, ie, Net VAT = 712.50, he,
narcotics to the extent under CBEC’s purview and service tax. The Board is the [237.50 - (712.50 + 74)] (250 - 737.50)

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administrative authority: for its subordinate organizations, including Custom
Houses, Central Excise and Service Tax Comumissionerates. oo
The State level indirect taxes are administered by Commercial ‘Tax
Departments of the respective states. Product X Product ¥ Retailer C
Sale Price = 7100 Sale Price = 3100
‘= 1.4 Concept
of VAT. Oe . Gross VAT @ 12.5% Gross VAT @ 4%
Sale Price = 7500
Gross VAT @ 12.5%
Q, 4, What is VAT? Explain it with the-help of an example. . » = 212.50 = R4 * 762,50
Ans. Value Added Tax (VAT), as the term suggests, is a tax on the value Net VAT = 212.50 Net VAT = 4 Net VAT = 12.50, te.,
added to the commodity at each stage in production and distribution chain. It is (%62,50 - £50)
a system to collect the tax on the value at the final or retail point of sale. VAT is a
consumption tax because it is borne ultimately by the final consumer. For a inanufacturer. A, inputs are product X and product Y which are
Let us try to understand the concept of purchased from a primary producer, In practice, even’ these producers
use
pe inputs. For example, a farmer would use seeds, feeds, fertilizer, pesticides; etc.
However, for this example, their VAT impact is not considered. B is a wholesaler
and C is a retailer.” : Be
_ The inputs X and Y are purchased at [100 each on which tax is paid @ 12.5%
N, .
and 4% respectively. “After adding wages, salaries and other manufacturing
(excluding value of material) including profits io arrive at the total value
expenses to the cost of inputs, Manufacturer A will also add his own profit.
addition on which the tax rate is applied to calculate the tax. This type of
Assuming that after the addition of all these costs his sale price is 300, the gross
calculation is mainly used with income variant of VAT. A drawback of
tax (at the rate of 12.50%) would be $37.50. As manufacturer A has already paid -
this method is that it does not facilitate matching of invoices for detecting
tax on 2200, he would get credit for this tax (i.e., 712.50 + %4 = 16.50). Therefore,
evasion as tax lability is calculated periodically and not invoice-wise.
his net VAT liability would be ¥21 only (€37.50 minus.%16.50) and because of this,
-(i) Invoice method. This is the most common and popular method for
he would take the cost of his inputs to be only 2200.
computing the tax Hability under VAT system. Under this method, tax is
Similarly, the sale price of %400 fixed by Wholesaler B would have net VAT
imposed at each stage of sales on the entire sale value and the tax paid at
liability of 312,50, Le., (250 - $37.50) and the sale price of $500 by retailer C would
the earlier stage (on purchases) is allowed as set-off, Thus, at every stage,
also have net VAT liability of 712.50, é.e., (762.50 ~ %50). Thus, VAT is collected at
differential tax is being paid. The most important aspect of this method is
each stage of production and distribution process, and ‘in principle, its entire
that at.each stage, tax is to be charged separately in the invoice.
burden fails on the final consumer, who does not get any tax credit. Hence, VAT
This method is very popular in western countries. In India also; this
is a broad-based tax covering the value added by each party to the commodity
tmethod was followed under the State Level VAT-and the Central Excise
during the various stages of production and distribution.
Law before the advant of GST. This method was also called the “Tax
= 1.5 Variants of VAT Credit Method’ or “Voucher Method’. a
Q. 6. Enlist and explain variants of VAT. Example: . !
Ans. Various types of variants of VAT:
(t) Gross Product Variant. The gross product v: t allows deductions for
taxes paid on all purchases of r: nd components, but no
deduction is allowed fo taxes:] iputs, 1. Manufacturet/ First seller in the | 495 oo 125
(ii) Income Variant. riant of VAT on the other hand allows for state sells the goods to distributor we ~
deductions onl for @1,000. Rate: of tax is 12.5%.
ftaw materials and components as well as
Therefore, his tax will be 7125, He *
depreciation on: fal“goods. This method provides incentives to will not get any VAT credit, being
classify purchases ‘as current expenditure to claim set-off. the first seller.
(iii) Consumption Variant. This variant of VAT allows deduction for all
2. Distributor sells the goods toa 150 125 25
‘business: purchases including capital assets. Thus, gross investment is . dealer for €1,200 @ 12.50% and . .
deductible in calculating value added. It neither distinguishes between will get set-off of the tax paid at
capital and current expenditures nor specifies the life of asset or earlier stage ie, %125. Thus, the :
depreciation allowances for different.assets. , tax payable by him will be 725. | 187.50 | 150° 37.50
The consumption variant of VAT is the most widely used variant of the VAT. 3. | Wholesale dealer sells the goods :
Several countries of Europe and other continents have adopted this variant as it _-4\.fo.a retailer at 71,500. Here again,
does not affect decisions regarding investment because the tax on capital goods is he will have to pay the tax on
also available for set-off against the VAT liability. .Hence, the system is tax 31,500. He will get credit of tax
neutral in respect of techniques of production (labour or capital-intensive). It also paid at earlier stage of €150. The ‘
simplifies tax administration by obviating the need to distinguish between tax payable by him will be 237. 50. -{ 250°. | 187.50 62.50
purchases of inputs and capital goods. ~ 4. | Retailer sells the - goods "to
In practice, therefore, most countries use the consumption variant, Also, most consumers at 22,000. Again, he
VAT countries include many services in the tax base. Since the business gets set- will have to pay tax on €2,000. He.
off for the tax on services, it does not cause any cascading effect. will get credit for tax paid at the -
712.50 | 462.50 250
earlier ‘stage .of 187.50, The tax
=» 1.6 Methods of Computation of ‘Tax payable by hirn will be 762.50.
. Q. 7. Write a note on different methods of compttation of VAT. Total ..
Ans. Methods of computation of VAT:
Thus, the Government’
will get tax on the final retail sale price of $2,000.
() Addition method. This method aggregates all the factor payments However, the tax will be paidin instalments at different stages. At each’
‘
 ASIC Pia:
stage, taxx Hability iis worked out on the sale price and credit is also given — : This method is suitable for gross ‘product
on the basis of tax charged in the purchase. invoice. If the first seller is a variant.
' Thus, under this system also, tax is charg
manufacturer, he gets the credit of tax paid. on raw materials, ete: which ed at each stage and the incidence of
tax on the final sale price to the consumer
are used in the manufacturing. remains the same as in the invoice
method. However, this holds good till the
From the above illustration, it is clear that under this method, tax credit time the same rate Of tax is attracted on
all, inputs, including. consumables and servic
cannot be claimed. unless and until the purchase invoice is produced. As es, added at all the stages of
production/ distribution. If the rates are not comm
a result, in a chain, if at any, stage the transaction is kept out of the books, on, then the final tax by the
two methods may differ, This is- explained.through the .examples given
still there is no‘loss of revenue. The Government can recever the full tax below:
All Inputs taxable at ONE Rate
at the next stage, Thus; the possibility.of tax evasion, if not entirely ruled
oo Invoice methad
out, is reduced.to a minimum. However, proper measures are required to
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prevent the production of fake invoices to claim credit of tax ‘paid at an.
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earlier stage.
Inputs for'A . pe
It is said that in this method, the’ beneficiary is the trade and industry _
Product X @ 12.50% 260 234 29
because in:the above example, the total tax collection at all the stages is Product ¥ @ 12,50% ~ 29
$712.50 whereas tax received by the State is only 2250.
450 400 50 - 50
. 710 631 79 — 79
(iii) Cost subtraction method: Under this method, tax is charged. only on the ‘A sells goods to B i 1135 1000 125 79 46
value added at each stage of the sale.of goods. Since the total value of .B selis goods to C 1800 1600 200 125 | 75
goods sold is not taken into account: the question of-grant of ‘claim for C sells goods toD. . * 2250 2000 250
set-off or tax credit does not arise. Furthe D sells goods to E. - 200 50
(der this method tax canriot 2700 2400 300 250 50
be shown separately in invoice scan only be calculated FINAL = 4} 2700 |) 2a00 | 300 300
periodically. Since, tax pi
Substraction method

is simply taken as the difference between

Inputs for A 710
Tax is calculated by the formula = Tx R/100 + R A sells goods te B-
- - 79°
~where [T = Taxable Tiimover and R= Tax Rate 1125 710 415
B sells goods to C~ 46
1800 1125 675
C sells goods to D 75
© 2250 1800 450
D sells goods to# 50
2700 2250 450. 50
FINAL : 2700 tot - - 300
1. |. First seller sells the goods to a]: 1,125 125 Aul Inputs taxable at- DIFFERENT Rates |
distributor. at t1, 125 inclusive of Ce (5,125%12,50) Tiwoice method
tax, a _ (ae ra
2. Distributor sells the goods to-a 225 25
whole-saler at $1,350. Here, taxable [can Inputs for A 7 .
turnover will be 71,350 - %1,125.:- ; 100
+ 12.50 Product X @ 4% 260° -} 250: | 40 - 10
3. | Wholesaler “Sells “the goods to a’ "337,50 37.50 Product Y 12.5% 450 ‘400 50 _ 50°
. retailer at $1,687.50. Here, taxable" [ (337.50x12.50) 710 650 60 ~ 60
turnover will be €1,687.50 -%1,350. = 100 +12.50 A sells goods ta B 1125 1000 ~ 125 60 65
4, "|. Retailer sells the goods at %2,250, “562.50 "62:50 _B sells goods to C 1800 1600
Taxable turnover will be 82,250 - [ See | | C sells goods to D
-D sells goods to E
2250 2000
200
250
125
200
75
50
1687.50, : ~~. 100+12.50 2700 2400 © 300 250 50
I
2,250 250 FINAL | _- 2700 2400 | 300 =
L 300

| $
 taxation powers in the Constitution, neither the: Centre nor : the States can
-apply the tax to such. bundles in a seamless manner. Each Government
: Inputs fefor A
could tax only parts of the bundle, creating overlaps in taxation.
719 . - om 60
AtoB 1125 (vii) Narcow base. Due to different thresholds under different laws as well as
vert) 415 46
Btoc 1800. 1125 675 numerous exemptions and concessions, the tax base under indirect tax
75
CtoD 2250 1800 450 | 50 . was narrow as compared to other countties..
‘DtokE i 2700 2250 450 50 (viii) Muitiple | administrations. Under _the bystem, businessmen were
FINAL 2700 ~— ; - 281 required to visit differerit tax. offices according to the applicable laws to
Thus, on the same consumer price. of 22700, under. invoice method, VAT wotks his business. This increaseed the compliance cost of. businesses and
out to be ¥300 whereas under the substraction method it works out to be 7281. would lead unnecessary complexity.
Therefore, this method is not considered as a good method. > 1,8 Rationale of GST .- .
» 1.7 Major Defects In The Structure of Indirect Taxes Q. 9, Disitiss ‘the rationale of GST.
Q. 8. What are the demerits of indirect system of taxes? Ans. Ratlonale of GST:
Ans. Demerits of VAT System: () GST is a value added tax levied on manufacture, sale and consumption
(i) Cascading effect. The system of multiple levies distributed between of goods’and services: GST offers comprehensive and continuous chain
Centre and -States: results into cascading effect ile, tax on tax). For of tax credits from the producer’ 5s point/ service provider's point upto the
. instance, no credit of State VAT is allowe retailer’s level/consiumer’ 8 level thereby taxing oly the value added at
i
credit paid in the originating Stat each stage of supply chain.
:
State. This results in the increage in {ii} The supplier at each stage is permiitied to avail credit of GST paid on the
of end consum: sat purchase of goods and/or services and can set off this érédit against the
(#) Exemptions & °C GST payable on the supply of goods and services to be made by him.
Thus, only the final consumer bears the GST charged by the last supplier
broke the chain. of VAT-and thus created distortion. Also these kinds of _ in the supply chain, with set-off benefitd ‘at all ‘the previous stages.
benefits do not create a level playing field especially when the same {ii) Since, only the value added at each stage is taxed under GST, there is no
commodity is taxed. at different rates in different jurisdictions. tax on tax or cascading. of taxes under GST systém. GST does not
;
(iii) Lack of transparency. Under excise and service tax law, there was no differentiate between goods and services and thus; the two are taxed ata
mechanism to cross verify the claim of CENVAT credit made by the single rate. -
manufacturer/service provider. Even under State VAT jaws, all ithe = 2.9 Structure of GST (SST, CGST, ‘uTGsT & IcsT)
States in India did not have the mechanism to cross verify the credits, Q. 10. Explain briefly the structure of GST.
(iv) Lack of uniformity in provisions and rates. The VAT structure across ~ Ans, Structure of GST:
the States lacked uniformity which was-not restricted only to the rates of 1. Dual GST. India has adopted a dual GST which is imposed concurrently by
tax but also the credit provisions as well as procedures. the. Centre and States, ie, Centre and States simultaneously tax goods and
(v Multiple points of iaxation. Under the VAT system there were multiple services. Centre has the power.to tax intra-state sales & States are empowered to
=

points of taxation. Excise was levied when goods manufactured were tax services, GST extends to whole of India including the State of Jammu and
cleared from -the factory premises irrespective of the fact. that the
Kashmir.
clearance was on-account of sale or otherwise. State VAT was levied on
2. CGSTyscsT/uT GST/IGST. GST is a destination. based tax applicable on all
the ‘sale of goods. Entry tax was levied on the entry of goods in a transactions involving supply of goods and services for a consideration subject to
particular State.
exceptions thereof. GST in India comiprises of:
(vi Complexity in deterniining the nature of transaction—Goods vs.
pane

(i) Central Goods and Service Tax (CGST) ~levied and collected by Ceniral
Services. The distinction between goods and services found in the Indian
Government. .
Constitution-has. -begome-more complex, Today, goods and services are
{ii} Stale Goods and Service Tax (SGST)—levied' and. collected by the State
being packaged as composite bundles and offered for salé to customers ;
under a variety of supply-chain. arrangements. Under the division of |
Governments or Union Territories with State Legislatures, and -
 (ii) Union Territory. Goods and Service Tax (UTGST)—levied and collected
by Union Territories without State Legislatures, on intra-state supplies of and the States on important issues related to GST, like the goods and services that
taxable goods and/or services. may be subjected or exempted from GST, model GST Laws, principles that
(iv) Integrated. Goods and Service Tax (IGST) levied on Inter-state supplies govern Place of Supply, threshold limits, GST rates including the floor rates with
of taxable goods and/or services. IGST is approxitnately the sum total of bands, special rates for raising additional resources during natural calamities/
CGST and SGST/UTGST ‘and is levied by. Centre on all inter-state disasters, special provisions for certain States, etc.
supplies. ‘The Union Cabinet. under the Chairmanship of Prisne Minister Shri Narendra
3. Legislative Framework. There is . single legislation— CGST Act, 2017 for , Modi approved setting wp of GST Council on:12m September, 2016 and also
setting up its Secretariat as per the following details:.
levying CGST. Similarly; Union Territories without state legislatures [Andaman ~
and Nicobar Islands, Lakshadweep, Dadra
¢ Creation of the GST Council as per Article 279A of the amended
and Nagar Haveli, Daman and Diu
Constitution;
and Chandigarh] are.governed by UTGST Act, 2017 for levying UTGST. States
* Creation of the GST Council Secretariat, with its office at New Delhi;
and Union territories with their own legislatures [Delhi and Puducherry] have
their own GST legislation for levying SGST. * Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the
GST Council;
Though there are multiple SGST legislations, the basic features of. law, such as.
* Inclusion of the Chairperson, Central ‘Board of. Excise and Customs
chargéability, definition of taxable event and: taxable person, classification and
valuation of goods and services, procedure for collection and levy of tax and the (CBEC), as a permanent invitee (non-voting) to all proceedings of the
like are uniform in all-the SGST legislations, as far'as feasible. ‘This is necessary to GST Council;
preserve the essence of dual GST. “ * Create one post of Additional Secretary to the GST Council in the GST
4. Classification of Goods and. Services, Council Secretariat (at the level of Additional. Secretary. to the
(Harmonised System of
Nomenclature) code is used for classify under the GST. A new Government ‘of India), and four posts of Commissioner in the GST
Scheme of Classification’ Council Secreiariat {at the level of Joint Secretary to the Government of
various descriptions hav India). The Cabinet also decided to provide for adequate funds for
groups. Each group cot = Service Codes (Tariff), Chapters referred meeting the recurring and non-recurring expenses of the GST Council
are the Chapters of the Hirst-Schedule to the Customs Tariff Act, 1975. Secretariat, the entire cost for which shall be borne by the Central
5, Composition Scheme. In GST regime, tax (ie., CGST and SGST/UTGST for Government. The GST Council Secretariat shall be manned by officers
intra-state supplies and IGST for inter-state supplies) is payable by every taxable ‘taken on deputation from both the Central and State Governments.
person and in this regard provisions have been prescribed in the law. > 117 GST Network
However, for providing relief to small businesses making intra-state supplies,
Q. 12. Write a short note on the structure of GSTN. .
a simpler method of paying taxes and accounting thereof is also prescribed,
Ans. The Goods ‘and Service Tax Network (or GSTN) is a non-profit, non-
known as Composition Levy. — . government organization. It will manage the entire IT system of the GST portal,
= 1:10 GST Council ' which is the mother database for everything under GST. This portal will be used
Q. 11. Write a short note on GST. Council. by the governrhent to track every financial transaction, and ‘will provide ‘tax-
.
Ans. As per Article 279A (1) of the Amended Constitution, the GST Council payers with all services—from. registration to filing taxes and maintaining all tax
was to be constituted by. the President within 60 days of the commencement ‘of details.
Article 279A. The notification for bringing ‘into force Article 279A with effect Structure of GSTN:
from 12th September, 2016 wasisstied on 10t September, 2016. Private’ players own 51% share in the GSTN and the rest is owned by the
As per Article 279A of the Amended Constitution, the GST Council which will Government. The authorized capital of the GSTN is 10 crore (US $1.6 miliion), of
be a joint foruth of the Centre and the States, shall consist of the- following which 49% of the shares are divided equally between the Central and State
members: governments, and the remaining is with private banks.
;
* Union Finance Minister— Chairperson The GSTN has also been approved for a non-recurring grant of %315
* The Union Minister of State, in- charge of Revenue of Finance— Member crores, The contract for developing this vast technological backend was
* The Minister in-charge of Finance or Taxation or any other Minister awarded to Infosys in September 2015. :
nominated by each State Government —Members The GSTN is chaired by Mr. Navin Kumar, an Indian Administrative Service
As per Article 279A (4), the Council will make recommendations to the Union servant (1975 batch), who served in many senior positions.with the’ ‘Government
of Bihar, and the Central Government. Ms
 * Fot the purpose of calculating the compensation arnount in any financial
Q. 13. What are the salient features of GSTN? : yedr, year 2015-16 is taken as'the base year, from. which. revenue will be
Ans. Salient features of the GSTN: The GSTN is a complex IT initiative. It will
- prdjected. The growth rate of revenue for a state during the five-year
establish a uniform interface for the taxpayer and also-create a common and period is assumed to be 14% per annum. . Loo
shared IT infrastructure between the Centre and States. . * The base year tax revenue shall consist of thé state’s tax revenues from:
(i) Trusted National Information Utility. The GSTN is a trusted National
(}) State Value Added Tax (VAT), Gi) Central Sales Tax,
Information Utility (NIU) providing reliable, efficient and robust IT :
(iif) Entry Tax, Octroi, Local Body Tax, . (iv) Taxes on Luxuries,
backbone for. the smooth functioning of GST in India,
(v) Taxes on Advertisements eter ne .
. Gf) Handles Complex Transactions. GST is a destination based tax. The
However, any revenue. among these taxés arising related to supply of —
adjustment of IGST (for inter-state trade) at the government level (Centre
(i) alcohol for human.consumption, ard a
and various states) will be extremely complex, considering the sheer
(i!) certain petroleum products fo -
volume of transactions all over India. A rapid ‘settlement mechanism
will not be accounted. as part of the base yeat revenue. .
amongst the States and the Centre will be possible only when there is a
‘The compensation payable to a state has to be provisionally calculated
strong IT infrastructure and service backbone which captures, processes

e
and released at the end of every two months. Further, an annual
. and exchanges information.
calculation of the total revenue will be undertaken, which will be audited
(#i) AIL information wiil be secure. The government will have strategic
by the Comptroller and Auditor General of India. ;
control over the GSTWN, as it is necessary to keep the information of all
GST Compensation Cess may be levied on the supply of certain goods
taxpayers confidential and secure. The Central Government will have
and services, as recommendéd by the GST Council. The receipts from the
control over the’ composition of the Board, mechanisms of Special
cess will be deposited to GST.Compensation Fund. The réceipts will be
Resolution and Shareholders Agreement, arid’agreements between the
used for compensating states for any loss due to the implementation of
GSTN and other state governm
such that the Government
GST. - - . _
shai The cess will be capped at: _
any single priva’ ; ()135% for Pan masala,
(iv) Expenses will b: Ehe-user charges will be paid entirely by the
(i) 7400 per tonne for Coal, -_ . .
Central Govern the State Governments in equal proportion (i.e, (iii)74,170 +. 290% per 1,000 sticks of Tobacco, and |
50 : 50) on behalf of all the users. The state share willbe then apportioned
{iv) 15% for all other: goods and services” including motor cars and
to individual states, in proportion to the number of taxpayers in the state.
‘aerated water. : ;
QO, 14. Write down the functions of GSTN. - * Ariy unutilised moriey in the Compensation-Fund at the. end of the
Ans. Functions of GSTN. GSTN is the backbone of the Common Portal which
is the interface between the taxpayers and the goVertment. The entire process of compensation period will be distributed in the: following manner:
GST is online starting from registration to the filing of returns. () 50% of the fund to be shared between the states in proportion to
It has to support about revenues of the states, and _ os S
3 billion invoices per month and-the subsequent ». (ii) the remaining 50% will bé part of the céntre’s-divisible pool of taxes.
return filing for 65'to 70 lakh tax payers.
! The GSTN wili handle: . 1,13 Registration —~ - a
* Invoices Q. 16. Who is required to be xegistered for GST?
* Various returns ~~ Ans. Every supplier of goods and/or services is required to obtain registration
| * Registrations in the’ State/UT. from. where he makes: the taxable supply if his aggregate
! * Payments and Refunds.
r turnover exceeds 720 lakh ‘during.a Financial: Year. :. ;
‘» 1.12 State Compensation Mechanism However, the limit of 20 lakh will be. reduced. 0.210 lakh if the person is
. . carrying olit businessin the Special Category States —11 Special Category States
Q. 15. Write a short note on State compensation mechanism under
GST, | are specified in Article 279A(4)(g). of the Constitution (States of Arunachal
Ans. The Goods and: Services ‘Tax (Compénsation to’ States): Bill, 2017
was Pradesh, Assam, Jammu’ and Kashmir, Manipur, Meghalaya,. Mizoram,
introduced in Lok Sabha on March 27, 2017. The Bill‘provides for
compensation Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand).
to states for any. loss in-revenue-due to the implementation of GST.
* Compensation will be provided to a state for a period of five years
from
the date on which the state brings its State GST Act into force.
;
 18
Businesses that are required d to get registered under GST irrespective : DE j
of their shall make'a separate application for registration as such
turnover are as follows: - : Input Service
() Every person whois. registered under Distributor. : .
the Pre-GST laws (te, :
Excise, VAT, Service Tax etc.). | 2. Validation of PAN, Mobile no. and e-mail address —
(#) When a business which is registered “ * The Permanent Account Number shall be validated.-online
has been. transferred to by the
someone, the transferee shall take registration with effect from common portal from the database maintained by the Central
the Board of
date of transfer. wo : - Direct Taxes.
eo - ;
(ii) Persons making any ‘inter-state. taxable supply of goods, . *-The mobile number shall be verified through a
‘one-time password sent
(iv) Casual taxable persons. _} to the said mobile number; and .
; .
(?) Non-Resident taxable persons making taxable supply.’ ' © The e-mail address declared shall be verified through
a separate one-
. (vi) Agents of a supplier. : time password sent to the said e-mail address.
. :
(vit) Those paying tax under the Reverse Charge mechanism. . 3, Generation .of Reference number. On successful verification of the PAN,
(viii) Input service distributors. mobile number and e-mail address, a temporary reference number shall be
tes generated and communicated to.the applicant on the said mobile number
(ix) E-commerce dperators or aggregators. and e-
_ (x) Person who supplies via e-commerce aggregator. mail address. ;
, {xi) Person’ supplying 4: Filing of Form: GST REG-01 (Part B). Using the reference number
online information and database access or
retrieval services from a place outside India to a person in India, generated, the applicant shall electronically submit an application in Part B
of
FORM GST REG-01, duly signed or verified through electronic verificati
other than a registered taxable person. on code,
along with the dactiments'specified in the said Form at the common portal,
(xii) Other persons/class of perso iff by the government. either
directly or through a Facilitation Centre notified by the Commissioner,
(ait!) Persons who-are. required‘ t source u/s 51 (TDS 5: Issuance of Acknowledgement. On receipt of an application, an
deductor).-
Acknowledgement shall be isstied electronically to the applicant in FORM
Q. 17. Who is not lia’ J sterec ider GST, GST
REG-02. 7,
Ans. Following persoiiss ble to get registered under GST: we :
6, Application by casual taxable person. A person applying for registrati
()) Any person engaged ‘exclusively, in the business of supplying goods on as
or a casual taxable person shall be given a temporary reference number
by the
services that are not liable to tax or wholly exempt from tax.
: common portal for making advance deposit of tax in accordance with
{ii} An agriculturist, to the extent of supply of produte out of.cuitivation the
of provisions of Section 27 and the acknowledgement shall be issued
electronically
land. ~ a ; only after the said deposit.
Q. 18, Describe the process of getting registered under GST? |
Q. 19. Write a short note on the following: .
Ans. Application for-registration: |. - oe (a) Verification of the application and approval [Rule 9]
1. Filing of form GST REG-01 (Part A). Every person (other
than a non- _ (b) Issue of registration certificate [Rule 10]: _
resident taxable person, a- person required to deduct tax. at . ;
source under {c) Separate registration for multiple business verticals within a State
Section 51, a person required to collect tax at.source under or a
Section 52 and a ’ Union territory [Rule 11]
person supplying online information and database access or
retrieval services’ ¢ (4) Grant of registration to persons requiredto deduct tax at source
from a place outside India to a-non-taxable online recipient) who is br or to
liable to be ; collect tax at source [Rule 12}
registered and every. person who is not liable to- be registered but t
seeking ee {2} Grant of registration to non-resident taxable person [Rule 13]
voluntary registration (heréafter in this. Chapter referred to as “the
applicant”) b -(f) Grant of registration to a person supplying online information
and
shail, before applying for regisiration. declare his.PAN,
mobile. number, e-mail k database access or retrieval services from a place outside India to a non-taxable
address, Staté or Union territory in Part A of FORM GST
-REG-01 on the h‘ online recipient [Rule 14]
common portal, either directly or through a Facilitation Centre
notified by the (g) Extension in period of operation by casual taxable person and non-
Commissioner: st : 7 ‘ . ‘resident taxable person [Rule 15}
* Provided that a person having-a unit(s) in a Special Economic
Zone or (4) Suo meto registration [Rule 16] ; oe
being a Special. Economic Zone developer .shall.'make..a separate
._ @) Assignment of Unique Identity Number to cértain special entities
[Rule 17]
application:
for registration as a business vertical: distinct from his other (j) Display of registration certificate and .Goods
units located outside the Special Economic Zone. and Services Tax
. Identification Number on the name board [Rule 18] :
* Provided further that every person being an Input Service
Distributor (x) Amendment of registration [Rule 19}
- Ans. (a). Verification of the application and approval [Rule
9]: ‘ (ii) The registration shall be effective from the date on ;
’ (@) The-application ‘shall be forwarded to the proper officer who shall becomes liabléto registration where the application for registration has
examine the application and the accompanying décuments
and approve been submitted within a period of 30 days from such date.
the grant of registration to the ‘applicant within a period
of 3 working (ii) Where: an application for. registration has. been submitted by the
' days from the date of submission of the application,
if the same are’ applicant. after.the expiryof thirty days from the date of his becoming
found to be in order. ; ar
(i) Where the application submitted under Rule 8 is liable to registration, the effective date of registration shall be the date of
found to be deficient, the grant of registration. under Sub-rule (1) or Sub-rule (3) or Sub-rule (5) of
either in terms of any information or any document require
d to be. Rule9
furnished under the’ said rule, or where the proper officer requires
any (iv) Every certificate of registration shall be-duly signed or verified through
clarification with regard’ to any information or documents,
he may issue ~ electronic verification code by the proper officer-under the Act.
a notice to the applicant electronically in FORM GST REG-03,
within a (v) Where the registration has been granted under Sub-rule (3) of Rule 9, the
period of 3 working days from. the date of submission of
the application’ applicant shall be communicated the registration number, and the
and the applicant shall furnish. such clarification, information
documents electronically, in FORM GST REG-04, within a period or certificate: of registration under Sub-rule (1),.duly signed or verified
working
of 7 through electronic. verification code; shall be made available. to him on
days from the date of the receipt of such, notice. .
(iif) Where the proper officer is satisfied with the clarific the common portal, within a period of three days after the expiry of the
ation, information or period specified in Sub-rule
(5) of Rule 9. ; —
documents furnished by the applicant, he may approve
the grant of (c) Separate registration for multiple business verticals within a State or a
' tegistration to the applicant within a period of 7 workin
g days from the Union territory [Ruie 11]: ; coe - a 7
date of the receipt‘of such clarificati infotmation or documents.
(iv) Where no reply is furnished by (ij) Athy person having multiple business verticals within a State ora Union
t | response. to the notice tetritory, tequiring a separate registration for any of its business verticals
offi aed with the. clarification, under sub-section (2) of Section 25 shall be granted separate registration
é shall, for reasons to be recorded in respect of each of, the verticals ~subjéct- to the following conditions,
oh and inform the applicant electronically amely: ee RS
(@) If the proper officer fails: m . wich person: has: more than oné biisiness vertical as defined in
, ; clause (18) of Section 2; ee
(4) within a period of three working days from the
date of. submissio: * the business vertical of a taxable person shall not be granted
of the application; or ; ; os . registration to pay tax under Section '10:if any one of the other
(6) within a period of seven working days from: the date
of the receipt " ‘business verticals of the’ same person is paying tax under Section 9;
of the clarification, information or documents furnished by the * all separately registéred ‘business verticals of such person shall pay
applicant. uo at
The application for grant of registration shail be deeme tax under the Act on supply éf goods or services or both made to
d to, have been another registered business vertical of such ‘person and issue a tax
appro ved. ; -
(b) Issue of registration certificate [Rule 10]: : an: “invoice for such supply. Oo :
. Tee, Explanation: For the purpose of clause .(b), it is hereby clarified. that
(i) Subject to the provisions of Section 25(12)
, where-the application ‘for
grant of registration has been, approved where any business vertical of a registered person. that has been granted
under Riile 9, a certificate of - a Separate registration becomes ineligible to pay tax under Section 10, all
registration in FORM GST REG-06 showi

ee
ng, the principal place: of othe. business verticals of the said person shall become ineligible to pay
business’ and additional place or places of business shall
available to the applicant on the common ‘porta be made tax under the said section. ; oo
l and a 15-digit Goods (ii) A registered: person eligible to obtain separate registration for business
and Services Tak Identification Number
(GSTIN) shall be assigned verticals may submit a separate application in FORM GST REG-01 in
subject to the following charactets, namely:
; : respect of each such vertical. ee s
* two characters for the State code;
* ten characters for the Permanent Account. : (iti) The provisions of Rule 9 and Rule 10 relating to the verification and the
Number or. the Tax grant of registration. shall, mutatis mutandis, apply to an application
Deduction and Collection Account Ni umber
; submitted under this Rule 4. ;
* two characters-for the entity code; and
* one checksum character.
 B22
ts HAS ssa
. (4) Grant _of registration to persons requived to deduct tax at soyrce or ta () Any. person supplying onliné informatier—and-database access or
collect tax at source [Rule 12}; |,» retrieval services from a place outside India to'a non-taxable online
(i) Any person required to deduct tax in accordance with the provisions of recipient shall electronically submit an application for registration, duly
Section51 (TDS deductor) or a person required to collect tax at source in - signed’or verified through electronic verification ‘code, in FORM GST
accordance with-the provisions of Section 52 shall electronically submit -REG-10, at the common portal, either directly or through a Facilitation’
an application, duly: signed or verified through electronic verification Centre notified by the.Commissioner. . _
code, in FORM'GST REG-07 for the grant of ‘registration through ‘the (#) The applicant ‘shall be granted registration, in FORM GST REG-06,
common portal, either directly or through a Facilitation Centre notified subject to such conditions and restrictions and by such officer as may be.
by the Commissioner. Se : notified by the Central’ Government on the recommendations of the
(ii) The proper officer may grant registration after due verification and issue Council. . :
a certificate of. registration ii FORM GST REG-06 within a period of 3 (g) Extension in period of operation by casual taxable person and non-resident
working days from the date.of submission, of the application. taxable person [Rule 15]: ; ; :
(ii?) Where, upon an enquiry or pursuant to any other proceeding under the () Where a. registered casual taxable person or a non-resident taxable
Act, the proper officer is satisfied that a person to whom a certificate of person intends to extend the period of registration indicated in his
registration in.FORM GST REG-06 hasbeen issued is no ‘longer liable to. application of registration, an application in FORM GST REG<11 shall be
deduct tax at source under, Section 51 or collect: tax at souree. under submitted electronically. through the common.portal, either directly or
Section 52, the. said’ officer may cancel the registration and such through a Facilitation Centre notified by the Commissioner, by such
cancellation shall be communicated to-the said person electronically in person before the end of the validity of registration granted to him.
FORM GST REG-08: Provided that the proper officer shall follow the (iz) The application ‘shall be acknowledged only on payment of the amount
procedure as provided in Rule 22 for.the ¢aricellation of registration. specified in sub-section (2) of Section 27, .
(e) Grant of registration to non-residen son [Rule 13]: {h) Suo moto registration [Rule 16]: a
(i) A non-resident. taxable: sha tronically submit an application, (i) Where, pursuant.to any survey, enquiry, inspection, search or any other
along with a seit-atte ‘of his valid passport for registration, duly proceedings under the Act, the proper officer finds that a person liable to
signed or verifii electronic verification.code, in FORM GST . registration under the Act has failed to apply for such registration, such
REG-09, at least'5days prior to the commencement pf business at the officer may register the said person on a temporary basis and issue an
common portal either directly or through a Facilitation Centre notified by order in FORM GST REG-12.
the Commissioner. Provided that in’ the case of a business entity (ii) The registration granted shall be effective from the date of such order
incorporated or established outside India, the application for registration granting registration. ; ‘os
shail be submitted along with its tax identification number or unique (iii) Every person to whom a temporary registration, has been granted under
. number oni the basis of which the entity is identified by the Government sub-rule (1) shall, within a period of 90 days from the date of the grant of
of that country or its Permanent Account Nurhber, if available. such registration, submit an application for registration in the form and
(ii A person applying for registration as a non-resident taxable person shall manner provided in Rule’ 8 or Rule 12: .
=

be given a temporary reference number by the common portal for making Provided that where the said person has filed an appeal against the grant
an advance deposit of tax iri accordance with the provisions of Section 27 of temporary registration, in such case, the application for registration
anid the acknowledgement under Sub-rule (5) of Rule & shall be issued shall be submitted. within a period .af 30 days from the date of
electronically only after the said deposit in his electronic cash ledger. the
issuance of the order upholding the liability to registration by the
(iit) The provisions of Rule 9 and Rule 10 relating to the verification and the Appellate Authority. . .
grant of registration shal-apphyte an application submitted under this (iv) The provisions of Rule 9 and Rule 10 relating to verification and the issue
rule: ; : of the certificate of registration shall apply to an application, submitted
(i?) The application for registration made by a non-resident taxable person under sub-rule (3). . -
shall be duly signed or verified through electronic verification code by (v) The Goods and Services Tax Identification Number assigned, pursuant
to
his authorised signatory who shall be a person resident in India, having a . the verification under sub-rule (4); shall be effective from the date of the
valid Permanent Account Number. : ; “ ae order granting registration under sub-rule (1). ~
(f). Grant of registration to a person supplying online information and (i) Assignment. of Unique Identity Number to certain special entities [Rule
17]:
database access or retrieval services from a place outside lidia to a non-taxable ' (i) Every person required to be granted a Unique Identity
Number. in
online recipient [Rule 14]: ; accordance .with the provisions of sub-section (9) “of Section 25 may.
N .
7 _
 submit an application electronically in FORM GST REG-13, duly signed .
or verified through electronic verification code, in the manner (b) the change relatingto sib-clause (i) and sub-clause ti
specified of Clause (a) in any
in Rule 8 at the common portal, either directly or through a Facilitati State or Union territory shall be applicable for all registrations of the registered
on
Centre notified by the Commissioner. . person obtained under the provisions of this Chapter:on the same Permanent
The Unique Identity Number granted under sub-rule (1) to a person 7 _ Account Number;
under clause (a) of sub-section (9) of Section 25 5 yall be applicable to the (c) where: the change relates to any particulars other than those specified in
territory of India, Clause (a), the certificate of registration shall stand amended upon submission of
(i) The proper officer may, upon submission of an application in FORM... the application in FORM GST REG-14-on.the common portal;
GST REG-13 or after fillingup the said form or_ after receiving a (d) where a change in theconstitution of any business results in the change of
recommendation from the Miriistry of External Affairs, Government of the Permanent, Account Number of a’ registeretl person;. the said person shall
India, assign a Unique Identity Number to the said person and issue a apply for fresh registration in FORM GST REG-O1:
certificate in FORM GST REG-06, within a period of 3 working days Provided further that any change in the mobile number or e-mail address of
from the date of the submission of the application, the authorised signatory submitted under this-rule, as amended
(f} Display from time to
of registration’ certificate and Goods and Services Tax time, shall. be carried out only after online -verification through the common
Identification Number on the name board [Rule 18]:
portal in the manner provided under sub-rule (2) of. Rule 8.
() Every régistered -person shall display his certificate of registration
in a- Notwithstanding ‘anything contained in. sub-rule’ (1), any. particular of the
prominent location at his principal place of business arid at every.
application for registration shall not. stand amended ‘with effect from a date
additional place or places of business.
. earlier than the.date of submission 6f the application in FORM GST REG-14 on
(if) Every registered person shall display his Goods~and Services Tax the common portal'except with
the order of the Commissioner for-reasons to be
identification Number on the name.board bited at the entry of his recorded in writing and subject to such conditions as the Commissioner may, in
principal place of business and 41 mal place.or places: of
business. the said order, specify. , oe .
. og . ;
(k) Amendinent of reg oF . 2. Where.the proper-officer is of the opinion that the amendment sought under
sub-rule (1) is either not warranted. or the documents furnished therewith are
1. Where there is any of the particulars furnished in the incomplete or incorrect,he may, within a period of 15 ‘working days from the
application for registrati ORM GST REG-Ol-or FORM GST REG-07-or
FORM GST REG-09 or
date of the receipt of the application in FORM GST REG-14, serve a notice in
FORM GST REG-16 or for Unique Identity Number:in
FORM GST-REG-13, either at the time. of obtaining registration or Unique FORM GST REG-03, requiring the registered person-to show cause, within a
Identity Number or as amended from time to time, the registered _ period of 7 working days of the serviceof ‘thé said notice, as to why the
person shall, application submitted under swb-rule (1) shall not be rejected.
within a period of 15 days of such change, submit an application,
duly signed -or 3. The registered person shall furnish a reply to the notice to show cause,
verified through electronic verification code, electronically'in FORM GST
REG- issued under sub-rule (2), in FORM GST REG-04, within a period of seven
14, along with the documents relating to such change at the common
portal, working days from the date of the service of the said notice. ; ‘
either directly or through a Facilitation Centre notified by the Cornmissioner: -
Provided that— 4, Where the reply furnished tinder sub-rule (3) is fourid to be not ‘satisfactory
: : or where no reply is furnished in response to the notice issued under sub-ritle (2)
(2) where the change relates to:
(i) legal name of business; within the period prescribed in sub-rule (3), the proper officer shall reject the
: application submitted under sub-rule (1) and pass an order'in FORM GST REG-
(ii) address of the principal place of business or any additional place(s) ‘of:
business; » 05. !
GH) addition, deletion or retirement of partners a os 5. If the proper officer fails to take any action: a
or directors, Karta, Managing
Committee, Board of Trustees, Chief
Executive Officer or equivalent, (a) within a period of 15-working days from the date of submission of the
tesponsible for the day-to-day affairs application, or - : : : —
of the business, which does not
warrant cancellation of registration under (b) within a period of 7 working days from the date of the receipt of the
Section 29, the proper officer
shall, after due verification, approve the reply to the notice to show cause under sub-rule (3),
amendment within.@ period of
15 working days from the date of the
receipt of the application in FORM
the certificate of registration shall stand amended to the exterit applied for and
GST REG-14 and issue an order in the amended certificate shall be made available to the registered person on the
FORM GST REG-15 electronically
and such amen dmen . commen portal.
shall t
take effect from the date of the
the event watranting such amendment; occurrence ‘of
:
 Section 7(2)] Notwithstanding anything contained tt sub-sect
ion (1)
(2) activities or transactions specified in Schedule I; or
(b) such activities or transactions undertaken by the Central'Govern
ment, a
State Government or any local authority in which ‘they are engaged
as
public authorities, as may be notified by the Governm
ent on the
“recommendations of the Council shall be treated neither as a supply
of
=. goods nor a supply of services. ON ;
«Section 7(3)} Subject to sub-sections (1) & (2), the Government may, on the
récommendations of the Council, specify, by notification, the transactions that
are to be treated as-- — .
° a supply of goods and not as a supply of services; or
* asupply of services and not as a supply of goods. : ——
’" The meaning and scope of supply taxable under‘GST can be understood
in
terms of the. following parameters, which can be adopted to characte
rize a

OF GST
transaction as supply: Supply should be of goods or services. Supply of anythin
g
other than goods or services like money, securities etc. does not attract GST.
* Supply should be made fora consideration
* Supply should be made in the course or furtherance of business.
* Supply should be made by a taxable person.
2.1 Taxable Event * Supply Should be a taxable Supply. ce
The concept of ‘supply’ is soLarchitecture. The provisions Let us analyse the terms goods and services as defined under the Act:
relating to meaning an onta ined in Chapter TI of the CGST
Act read with various
shall be discussed in thi
Section 7
Section § ©
Schedule I
Schedule It |
Schedule IL 1 rors

Q. 1. Briefly explain the meaning of supply.

Ans. Meaning of Supply [Section 7(1) ;
(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 thé Course or furtherance of business.
(b) itnportation of services, for a consideration whether or not jn.the course -
or furtherance of business, .
(c} the activities specified in Schedule I, made or agreed to be made without
a consideration, . : ,
(d) the activities to-be treated as supply of goods or supply of services as
referred to in Schedule U.
 IES:
Anything supplied other than: goods and services is outside
the scope of |
supply. Now, we will analyse the various illustrative modeé af supply
mentioned
in Section 7(1)(a):
_
I. Sale ‘and Transfer. Earlier, VAT was levied by the State
on the sale of
goods which was defined under most State VAT laws as
transfer of
property in goods for consideration. Under the CGST Act,
although sale
has been treated as a form of supply leviable to GST, the definiti
on of -
‘sale’ has not been provided. _ Co
Further, the term ‘transfer’, which has also been included.as a form of
supply, is also not defined. , :
Il, Barter and Exchange. While ‘barter may deal with a transaction which
only includes an exchange of goods/services, exchange may
cover a
situation where the goods are partly paid for in goods and
partly in
money. When there is a barter of goods or services, same
activity -
constitutes supply as well as consideration.
By making a specific inclusion in the definition of supply, all
barters and o a:
exchange would be leviable to GST.- et
Vi. Supply bya Taxable Person. A supply to attract GST should be made by
a taxable person. Hence,’ supply between two non-taxable persons does
not constitute taxable supply under GST.” : 7
The restriction of being a-taxable person is only on the supplier whereas
the recipient can be either taxable. or nori-taxable: Further,
' there is no
condition that supply needs to be made. to another person i.e., supplies
: mide to self are also taxable. . . .
Ti. Licence, Lease;, Ren
ae Q. 2. Who is a taxable person? . : : ;
. eases and rentals of "goods were Ans. A “taxable person” is a'person who is registered or liable to be registered
earlier treated as. services where the goods were
transferred without under Section 22 or Section 24. oo .
transfer of right to use (effective possession and
control over the. Hence, even an unregistered person who is Hable to be registered is a taxable
goods) and were treated as sales where the goods'were
transferred with person. Similarly, a person riot liable to be registered, but has taken voluntary
transfer of right to use. :
Under the GST regime, such licenses, leases and rentals registration and got himself registered is also a taxable person.
of goods with‘ or Q. 3, What is taxable supply? Poe,
without transfer of right to use are covered under
the supply of service © ‘Ans. Taxable supply, For a supply to attract GST, the supply must be taxable.
because there is no transfer of title in such supplies.
Such transactions are Taxable supply has been broadly defined and means ‘any supply of goods or
specifically treated as supply of service in Schedule II of
CGST Act. services or both, which is leviable to tax-under the GST Law. Exemptions may be
IV. Consideration. One of the essential conditions
for the supply of goods provided to the specified goods or services or to a specified category of persons/
and/or services to fall within the ambit of GST is that
a supply is made entities making supply. : :
for a consideration. However, consideration does not always means
money. It covers anything which might be possibly.don «> 2,2 Place of.Supply (POS)
e, given or made
in exchange for something else. Further, a consideration need Q. 4. Briefly explain the concept of place of Supply. . .
not always
flow
from the recipient of the supply. It can also be made by_a -Ans. In GST, the concept ‘of a place of supply has been made relevant not only
third: person.
V. In Course or furtherance of Business. GST is for the supply of services but-also for the transaction.of goods.
essentially a tax only on
commercial transactions. Hence, only those supplies Which tax is to be levied: (IGST or CGST and SGST/UTGST) will depend. on
that are in the course
or furtherance_of business qualify as supply under ' whether ‘a particular trarisaction-is an Inter-state supply. or: Inira-state supply.
GST. Resultantly, any

orlxa teroenet eee

supplies made by an individual in his personal: Hence, every transaction will have to go through the test. of provisions relating to .
capacity do. not come.
under the ambit of GST unless they fall within the the place of supply in order to determine which tax is to be levied.
definition of business,
 Y: SEBI :
The purpose of the placeof supply provisions is two-fold:
1. In case of cross-border transactions, to determine wheiher tax is to be
levied on a particular transaction. ;
2. In the case of domestic transactions, to detérmine whether a particular
transaction is an inter-state supply or an intra-state supply.-
Place of Supply (POS) for Imports and Exports (Section 11): -
* Imports. The’place of supply‘of goods imported into India shall be the
location of thé importer, . ,
* Exports, The place of supply of goods exported frorn India shall be the
location outside India.‘
Transactions other than laport or Export (Section 10)
1. Movement of Goods, Section 10(1}(a) states that “where the supply involves
movement of goods, whether. by the supplier or the recipient or by-any other person, the
place of supply of such goods shall be the location of the goods at the time at which the
movement of goods terminates for delivery to the recipient”.
This implies that place of supplier or receiver is of no consequence to
determine the place of supply when it comes to. those transactions which involve °
the movement of goods, The place where delivery terminates i.¢, where
the
ownership is passed on shall be critical to determine:the place of supply.
Let us understand this with few exampil. :
wSEx Re :

y ehalf ; of another (Bill To Ship To Transactions}. Section

:
10(1)(b) states “where the. goods are delivered by the supplier to a'recipient
or any other
person on the direction of a third person, whether acting as an agent or otherwise, before
or
during the movement of goods, either by way of transfer of documents of title to the
goods
or otherwise, it shall be deemed that-the said third person has received the goods
and the
place of supply of such goods shall be the principal place of business af such pérson”.
When. goods are delivered to a party on‘ the direction of a third person
the
place of supply will be the loca’ tion of such third person and not where
the
delivery terminates, °
 4, When Goods ‘are Installed, Section 10(J)(d) states .“where the goods are
assembled or installed at site, the place of supply shall be the place of such installation or
‘assembly.”

3. No Movement of Goods. Section “10(4)fe). states that where the supply does
not involve tnovement of goods, whether, by the supplier or the recipient, the place of
supply shall be the location of such goods at the time of the delivery to the recipient.”
When goods are of such nature which does not require any movement, place
of supply shall be the location of such goods. :
arat ‘Limited registered: in “Maharashtra,
5. Goods on Board «a | conveyance. Section 10(1)(e) states “where the goods: are
supplied on board a conveyance, including a vessel, ans aircraft, a train or a motor vehicle,
the place of supply shall, be the location at which such goods are taken. on board.”
This provision includes those purchases. which are done while travelling on a
conveyance.

: “This isissan intra-state supply, a and: Cost. and Sas

> 2.3 Time of Supply

Q. 5. For the purpose of paying tax liability, point ¢of taxation is required.
Time of supply is nothing but point of taxation: Briefly explain the concept of
time of subply.
Ans. Point of taxation is the point of time when goods are deemed to be
Maharashty However, Patil Blectronics, has agreed supplied or services are deemed to be provided. It helps to determine value, rate
from: Rath of tax and due date for tax payment. Under GST, the liability to pay tax arises at
the time when goods or services are supplied. Thus, time of supply is nothing but
‘the: cell phones to Patil Electronics takes place: at‘t
“Rathi: Limit od, te, inh Jaipur. Hence. the” ‘Place of suppl point of taxation.
There are some general provisions and some specific provisions for
: Rajasthan. Coen . - : determining time-of supply. Timé of supply is different for goods and services. If
specific provisions are applied to determine the time of supply then general
provisions are irrelevant. :

t
ik
Hi
 34

To determine time of supply of goods and services, four categories are pravided 2. Time of Issue of Invoice for Services:
as below: i oo. . (i) Before or after the provision of service but within 30 days:
1. Time of Supply of Goods & Services under Forward Charge: * 45 days in case of banking and financial institutions from the date
of
supply of services.
, [ Time of Supply of Goods and Services | , ‘ (if) In case of continuous supply of services:
* Due date of payment can be identified from the contract, The
invoice will be issued before or after the payment is to be made by
In case of Goods— ~
the recipient but within 30 or 45 days of due date of payment.
_In case of Services ~—
Earlier of the following: ° * Due date of payment cannot be identified from the contract. The
Earliest of the following:
invoice shali be issued before or after each time when the’ supplier
of service receives the payment but within 30 or 45 days ‘of receipt
Date of issue of Invoice Date of issue of Invoice
by the supplier or the i of payment .
— by the supplier
last date by which he Payment is linked to the completion of an event. The invoice shall
is required to issue :
. ‘be issued before or after the time of completion of that event but
the invoice i
Date of Provision of i within 30 or 45 days of completion of event.
service if invoice is not t
: —
Supply of services ceases under a contract before the completion
issued within the :
Date on which the prescribed period A of the supply. The invoice shall be issued at the time when the
supplier receives the ,
payment:
: supply ceases and such invoice shall be issued to the extent of the
| service provided before stopping,
~ Date on which [fhe :
—|. supplier receiveg the- 3. The supply shall be deemed to have been made to the extent it is covered by
:
: payment 4, the invoice or, as the case may be, the payment.
4. Optional Time of supply. 1f amount tp to 21,000 in excess of invoice amount
“Dateon receipt of ~ is received then the supplier has the option to take the time of supply as the date
.
payment shall be | of invoice issued for such excess or advance received.
earlier of:

Date on which Date on which

_payment is entered payment is credited
inte books of accounts \_to bank account
1. Date of Issue of Invoice for Goods: ; ;
(7) When movement of goods is involved in supply, then before or at the
E
- time of removalof goods.
;
(i) When-no movement of goods is involved in supply, then before
or at the
time of delivery of goods or making available to the recipient.
(ii) lf continuous supply of goods (Example, Supply of Oil), then
earliest of
the following: © ~ cL. : , ; :
* Time when each statement is issued,
* Time when each payment is received:
' (iv) If goeds are sent for approval then earlier of the following:
* Time when it becomes known that supply has taken place.
* Six months from the date of removal. ,
‘suply of goods
i.e., earl ier of the following: |<
18 August, 2017764 0 EL
-10'August,
2017, 0000
 @ gi
Thus, GST shall be payable by the registered person.
(i) supplier of the goods or services or both are located in non-taxable territory.
(iit) supply of goods or services in an unorganised sector, such as, te a person
whose agpregate turnover is less.
(iv) indirect levy of tax on a sector generally exempt from tax.
. will Rave no-impact. °° Time of Supplyof Gogds and
Services under Reverse Charge

“I
In case of Goods | \In case of Service’
4 Earliest of the following:,

' The date of the receipt

Associated Ent ise — ‘Other than Aassociated
of the goods 12 THETPTIses
; Earlier of the following: Enterprises — Earlier of
the following: |
The date on which
The date of entry
payment is made The date on which
in the books
of the receipent, payment is made

30 days from the

date invoice issued . Date of Payment 60 days from the
by the supplier date of ihvoice issued
by the supplier

If time’of supply cannot be determined with the help of above provisions then
the time of supply shall be the date on which entry in the books of the recipient of
goods and services is made.

on 34 August, 2017, where provisia

ig to be completed: wo a
le paytnent on- 15h Augiist 2017; where p

: under Reverse Charge:

; When the receiver beconites tiabte to pay the tax instead
of supplier of goods, it
is known as reverse charge. Reverse charge applies when—
 IV. Residuary Clause

Residuary. Clause
;
In case where a periodical In any other case, the date on
return has to be filed, which the CGST/SGST/IGST/
the date on Which such” UTGST is paid
return is to be filed

Time of supply in case of change in rate of tax:

Invoice Issuéd/ _ No activity Date of receipt

Payment Received of Payment; or
Date of issue of
invoice, whichever
is earlier,
Invoice Issued/ Supply of Goods NA Date of receipt
Payment Received & Services of payment; or
Date of issue of
invoice, -whicever
is earlier.
Invoice issued Payment Received Date of Invoice Date of receipt of
payment
Payment Received Invoice Issued Date of receipt of Date of Invoice
payment

* Date of Receipt of the payment by supplier. Payment is entered into the

* books of the account or credited in his bank account, whichever is earlier.
* Provided, the date of receipt of payment shail be the date of credit in the
bank account if such credit in the bank account is after four working days
Ill. Time of Supply o: Vou ers s for Goods & Services: _ from the date of change in \ the: rate of tax.

“Time of Supply c
. Vouchers-fo
‘Goods & Services: :

Date of issue of voucher,

|
Date of redemption
if the supply is of voucher, in
" identifiable at that point all other cases
 > 2.4 Valuation for GST
GST will be levied ontthe value of supply. In other words to levy GST, correct
value of sutpply is required. What can be part of the value.of supply or what does
not form part of the value of supply is very important. :
Q. 6. What is Value of supply?
Ans. Meaning. In general value of supply means consideration charged for the
supply from recipient

‘invoice o1on 1 2pth December. 2017 and payment is credite

+. 6n30t December 2017. What iis the. time of supply in
“Answer: Definition. The “value ‘of supply ‘off goods ‘or services or both ‘shall be
Following Events have taken place before the change in éffective ; the transaction value, which is the price actually. paid or payable for the said
. ‘Invoice Issued. . * Payment. Received . supply of goods or services or both where the supplier and the recipient of the
supply are iiot ‘related and the price is the sole consideration for the supply
[Section 15(1)].
We need to understand four important terms involved in the definition.
Transaction Value. Transaction value is the consideration charged from the
recipient for supply. i
Consideration in relation to the supply of goods or services or both includes —
(a) arty payment made or to be made, whether in money or otherwise, in
Tespect of, in resporise to, or for the inducement of, the supply of goods
or services or-both, whether by the recipient or by any other person but
shiall not include any. subsidy given by the Central Government or a
State Government;
(b) the monetary value of any act or forbearance, ini respect of, in response
to, or for the inducement of, the supply of goods or setVices or both,
 42.8 SHIVAL ” CHAPTER 2: LEVY AND COLLECTION OF GET @-43
whether by the recipient or by any other }person, but shall not include {b} Any amount which:
any subsidy giver! by the Central Government or a State Government. : (bY Discount given after the supply
> .— the supplier is liable to pay if:
Provided that a deposit: given in respect of the supply of goods or
— but incurred by Recipient; and —'Such discount is established
services or both -shall not be considered as payment macle. for such
Sake
NEALE Sn TTSEE

— not included in the price in terms of. an agreement

supply unless the supplier applies such deposit as. consideration for the
actually paid or payable for entered into at or before the
said supply;
such supply : time of such
Price actually paid or payable, It means the consideration paid or to be paid supply and
(c) Incidental expenses such as
AT RS Rn Satanae Ney

by the supplier for the supply. specifically linked to relevant

packaging, commission etc. and invoices.
CONDITION 1: Supplier and Recipient of the supply aré not related any amount charged for anything — Input tax credit relating to
Supplier and recipient should not be related parties. Definition of related party ; done by the supplier in telation such discount’is reversed by
is as below: to supply of goods or services at the recipient.
Persons shall be deemed to be “related persons” if— the time or before their delivery.
* Such persons are officers or ditectors of one another's businesses; @ Interest, late fee or penalty for ”
* Such persons are legally recognized partners in business; | delayed payment.
« Such persons are employer and employee; (e} Subsidies directly linked to the
* Any person directly or indirectly owns, controls or ‘fiolds twenty-five per
- price excluding subsidies pro-
cent or more of the outstanding voting stock or shares of both of them;
vided by the state or Central
« One of them directly or indirectly controls the other;
Government.
* Both of them are directly or indirectly controlled by a third person;
* Together they directly or indirect third person; or
* They are members of the same famil ;

means if the price charg ich is equivalent to Open Market Value or Fair
Market Value then the same will be the sole consideration,
One important aspect is that both the conditions will apply simultaneously.
It means if only one condition is dissatisfied, then the actual consideration
will be the value of supply.
If the above ‘conditions are not satisfied then value of supply will be.

ipply-t 2 value of taxable supply. ins

shall be. <8, G00 for the Purpose of.
(2) Any taxes, duties, cesses, fees & (a) Discount given before or. at the
charges levied under any law time of supply through invoice.
other than GST law if charged
separately by the supplier;
 ; eupplving ‘constructio
: Determine Value of Serply re) eye of GST? ne

Q. 7. What is the value of supply of goods or services where consideration is

not solely in money [Rule 27]? :
Ans. If supplies are made against barter exchange or partially in1 money and
partially in exchange of goods and services, then the consideration is not wholly
in money. In such a case value of supply shall be:
()} Open market value of such supplies, or
(fi) If open market value is not available thery monetary consideration plus
money value of consideration net paid in money. .#
(iii) If the value of supply. isi not ‘determinable as above, value of supply of . 'f
like kind and quality:
(iv) If the value of supply is not determinable as above; monetary
consideration plus amount in money equivalent to the consideration not
Q. 8. What is value of supply of goods or services or both between distinct
in money as per Rule 30 or Rule 31. ;
Rule 30—If the value of supply of goods and services are not determined with or related persons, other than through an agent [Rule 28]?
the help of Rule 27 to Rule 29, then the value of supply shall be 110% of the cost of Ans, Distinct Persons: If a person has obtained more than one registrations
such supply. whether in one.state or more than one state shall, in respect of each such
;
Rule 31—If the value of supply of goods and services are not determined with registration, be treated as distinct person.
the help of Rule 27 to Rule 30, then value of supply shall be determined using Value. of supply between distinct persons ‘ox where the supplier and
reasonable means consistent with the principles and general provisions of this recipient are related (other than where supply is made through an agent, shall
chapter. be) will be—
(2) Open market value of such supplies
(b) If open market value isnot available then the value of supply of goods or
services or both of like kind and quality
(c) If the'value of supply i is not determinable as above, value of supply shall
be determined as per Rule 30 or Rule 31.
If the goods are intended for further supply as such by the recipient then the
value shall, at the option of the supplier, 90% of the amount chatged for supply
of like kind and quality from the customer (unrelated party) by the recipient.
i
4
:

* At the option of the supplien 00% of the amount charged for supply ofo
like kind and quality from the customer (intélated party) by the
recipient.
« If the value of supply is not determinable as above, value shall be
determined asa per Rule 30 or Rule 31.

Q. 10. How. to determine of value in respect of certain specified supplies

[Rule 32]? :
Ans. The value of certain supplies, as specified below, shall be determined in
the following manner, at the option of the supplies:
1, Value of supply of service relating to sale of foreign currency including
money changing:
(a) Currency when exchanged from or to Indian” Rupees.

“(Buying/ Selling rate—RBI refer- (Gross amount of Indian Rupees)

ence rate) x No. of units of | x 1% provided/received,
currency...
Neither of currencies exchanged is Indian Rupees: 1% of lesser of the two
amounts received by converting any of the two currencies into Indian
Rupees at RBI Reference Rate.
(b) Person can also opt to ascertain value’ in the following manner for a F.Y,
and such option shall not be withdrawn during any part of FY.

Value 1% of gross 1,000 + 0.5% | %5,500 + 0.1% of

amount subject of gross--- - gross amount
to minimum %250 amount subject to maxi-°
mum %60,000
ro 9, How is the value of supply of goods made or received through an agent 2. Value of Supply for Air Travel Agent:
determined [Rule 29}? : « In case of Domestic Bookings: 5% of the Basic Fare
Ans. The value of supply of goods between the principal and his agent shall ‘* In case of International Bookings: 10% of the Basic Fare
be: Basic Fare means patt of fair on which commission is normally paid to the air
* Open market value of such supplies; or travel agent by the airlines.
 “48 8 BAC 4 UNIVERSITY. SERIES ©”
3. Value of supply of services ‘in relation to life insurance business: Pure Agent: Following conditions are required to be satisfied —
(e) Gross premium charged less any aimount allocated for investment or * Contractual agreement with therecipient
savings on behalf of the policyholder, if such amount is intimated; * No title on the goods or services : .
@ In case of single premium annuity policies other than above, 10% of * No use of goods or services for his own interest
=single premium charged from the policy holder; * Receives only the actual amount incurred to procure such goods or
(c) In all other cases: . services.
* 25% of the first year premium
* 12.5% of the subsequent year premium
The above provisions are not applied if entire premium paid is only towards
the risk cover. : ,
4. Value of supply in case of second hand goods. Difference between selling
price and purchase price. No input tax credit is available to the buyer of second
hand goods.
Value of goods repossessed froma defaulting borrower not registered
for the
purpose of recovery of loan/debt: Purchase price of goods reduced by
5% for
each quarter or part thereof between purchase date and disposal date by person
sine
making such repossession. Q, 12. How to determine MRP Based Product [Rule 35]? ‘
Latin en

Ans. Where MRP of a product is inclusive of GST the value of supply shall be
5. Value of a token/voucher/coupon/stamp (other than postage stamp}
which determined as follows: ene f :
is redeemable against a supply of goods or services or both: Money value
of the
“goods or services or both redeemable against such tokén, voucher, coupon, or MRPx
~ 100
stamp ; : ; ; : (100 + Tax Rate)

Q. 13. Define the following:

(a) Frée Supplies
(6) Input Tax Credit relating to free samples
(c) Free Promotional Item with Taxable Product ; a
Ans. (4) Free Supplies. Schedule I of the CGST Act provides certain activities
to be treated as supply even if made without,consideration: ;
1. Permanent transfer or disposal of business assets where ITC has been availed on
Q. 11. What is the value of supply of services in case of sucht asset. In case ITC has not been availed, it does not fall into the criteria.
pure agent [Rule 33]? 2. It covers‘supplies of Goods or Services or both between related persons or
Ans. Any cost incurred by the supplier on behalf of the recipien
t as a pure between distinct persons as specified in Section 25, when made in the course or
agent shall not form part of value of supply if following.
conditions are satisfied:
* The supplier acts as an authorized pure agent of the recipien furtherance of business without consideration. . a
t of supply; Hence Free Samples to unrelated persons are not covered under the definition
* Cost incurred as pure agent should’ be separately mentio
ned in the of supply. Criteria of taxable supply is not fulfilled in case of free samples. If
invoice; :
* Supplies of puxe.agent shall be in addition to the services supply has not been done, taxable event will not arise. .
he supplies on Thus, Free Samples are not liable to GST as the same is not a supply.
his own account, ;
 COLLECTION OF GST. 51.
Free samples to related or distinct persons are. taxable and value (vii) The supplier recovers from the recipient 6Fsiippty only such amount as
of supply
will be determined in accordaned with Rule 28 (as above). : has been paid by him to the third party,
(b} Input Tax Credit relating to free samples. Section 17(5)(h) of
the IGST Act (viit} The services procured by the strpplier from the third party as a pure
poe

provides that no input tax credit is available if goods are lost, stolen, agent of the recipient of supply are in addition to the supply he provides
destroyed ,
ie

written off or disposed off by way.of gift or free sample. on his own account..
ee

Hence input tax credit on inputs and services used in free samples Q. 15. Define the Term Pure Agent.
should be
reversed. Ans. Pure agent means a person who: sO
a

(c} Free Promotional Item with Taxable Product. If a free promoti (a) Enters into a contractual agreement with the recipient of supply to act as
onal item is
Ue

provided along with the taxable product then the corisideration his pure agent to incur expenditure or costs in the course of supply of
for the taxable
product only will be charged from the consumer. goods or services or both.
:
For the purpose of input tax credit on the promotional item, there is (b) Neither intends to hold nor holds any title to the goods or services or
no
restriction in the law. Hence, input tax credit on Promotional-item both so procured or provided as pure agent of the recipient of supply.
along with
taxable product is available. , (c) Does not use for his own interest such goods or services so procured and
(d) Receives only the actual amount incurred to procure such goods or
services :

‘ 2.5 Taxability of Re imbursemeé Expenses to a:

Pure Agent =.
Q. 14. Enlist the con. eed to be fulfilled to act as a Pure agent.
1 by the supplier of goods or services or both
and reimbursed by the recipient would be inéluded in the transaction value of
supply for the purpose of levy and collection-of GST. However if
the supplier of (Q. 16, Explain various exemptions provided in GST under the composition
. Services merely acts as 4 pure agent then such expenses reimbursed
would not be scheme. a :
included in the transaction value. .
As per Rule 33 the expenditure or costs incurred by the supplier as : Ans. Composition Scheme. A scheme which is made for the benefit of small
a pure dealers, small manufacturers and small service providers by. reducing their
agent of the recipient of supply of services shall be excluded from the value
of burden of compliances through less number of returns, less maintenance of books
supply if: . : , ;
(}} The supplier acts as a’pure agent of the recipient of the supply, and records as compared to general dealer.
when he ’Who can opt for Composition scheme?
makes payment to the third party for the services procured
as the : Dealers and manufacturers, who are supplying goods and whose aggregate
contract.for supply made by third party is between third party
and the turnover does not exceed 71 crore in the preceding financial year can opt for
recipient of supply. » :
(ii) The recipient of supply uses the Composition scheme. In case of North-Eastern States and Himachal Pradesh
services. so procured by the supplier
service provider in hiscapacity-as (Special category states) the limit is 75 lakh. A non-resident taxable person is not
pure agent of the recipient of supply.
(i) The recipient of supply is liable’to eligible to opt for this scheme. .
make payment to the third party.
(t») The recipient of : Aggregate Turnover means the aggregate value of
supply authorizes the supplier to make payment on his
behalf. (i) All taxable supplies (excluding the value of inward supplies on which
oo tax is payable by a person on Reverse charge basis).
(v) The recipient of supply knows that the services for which payment has
been made by the supplier shall be (ii) Exempt supplies including non-taxable supplies.
provided by the third party.
(vi) The payment made by the supplier (ii) Export of goods or services or both, . ;
on behalf of the recipient of supply
has been separately iridicated in the (iv) Inter-state supplies’ of person having the same Permanent Account
invoice issued by the supplier to the
recipient of service. Number, to be computed on all India basis.
 However, Aggregate turnover, excludes Central tax, State tax, Union
tax, Integrated tax and Cess [Section 2(6)].
The definition of aggregate turnover is very wide. The definition of exempt
supply includes Non-taxable supply also. So every. supply whether covered
under GST or not, is included in the definition of aggregate turnover. Also the
aggregate turnover is for all businesses registered under single PAN.
Following tegistered persons shail not be eligible to opt for composition
scheme: : to collect tax from the appointed day-if-the application is filed after the
* Supplier engaged in making inter-state outward supply.
Supplier engaged in making any supply of goods. which are not leviable
to tax urider the Goods and Service Tax Act...
The supplier shall not make any supply through an _ e-commerce
operator.
Supplier is not engaged in the manufacturing of Ice cream, Pan masala
and Tobacco products.
No benefit is given to the service providers but there is an exception
given to the restaurant service providers as mentioned in Clause (b) of
paragraph 6 of Schedule H. If a restaurant service provider is providing
‘services and aggregate turnover does not exceed?1 crore in the preceding
financial year then he is entitled to ‘opt fo ar position scheme.
supplier isi required to sinétmal dealer. In this case the Composition
supplier is required to fil ORM GST. CMP-04 within 7 days.
Details of stock and capital goods, as on the day when the Composition dealer
is becoming a normal dealer, are required to file in FORM GST ITC-01 within 30
days to take the credit of input on the same.
Terms and Conditions to opt for Composition scheme:
(2) Composition scheme wil! be available for.all businesses registered under
single PAN. A supplier is required to opt for Composition scheme for all
businesses xegistered under his PAN.
{b) The supplier is required to mention “Composition Taxable person not
eligible to collect tax on supplies” on the Invoice.
{c) The supplier is required to mention “Composition Taxable Person” on
every notice, signboard displayed at all places of his business.
(4) The supplier should not be a Casual Taxable Person or Non- resident
Taxable Person.
(2) The supplier will-have to pay tax under Reverse charge if any of his
inward supplies is covered under Reverse charge mechanism.
(f Stock as on appointed day has not been purchased in the course of—,
* Inter State Trade or commerce '_
* Imported from a place outside India
* received from-hbis branch situated outside the state
territory * If the supplier has stock as on appointed day. which is purchased
form unregistered dealer then the supplier is required to pay tax
‘under Reverse charge according to sub-section 4 of Section 9°
otherwise he is not entitled to opt for Composition scheme. -
(g) All registered persons having the same PAN shall: have to opt for
Composition scheme.
(4) If the supplier has opted for Composition scheme then he is ‘not eligible
appointed day but shall issue bill of ‘supply for supplies made after the
said day.
(jj If you are supplying goods to a registered..dealer then Composition
Scheme is not beneficial for you as the Registered dealer is not entitled
for Input tax credit: ; -
(j) IGST dealers are not eligible to take the benefit of Composition scheme.
(k) If you are a normal dealer and want to opt for Composition scheme, all
credit in your ledger will lapse and will be included in the cost of goods
[Section 18(4)].
(2} If you are‘opting for Composition scheme then you are not entitled for
Input Tax credit which becomes cost of your product. Now you will add
margin and. Composition tax, credit of which is not available to the
buyer. So for the purpose of opting for Composition scheme, one should
take decision after considering competition as the. cost of product will
‘increase.
(m) If any registered person wants to withdraw from the Composition
scheme he shall file an application in FORM GST CMP-04, electronically
before the date of such withdrawal.
Quarterly Return. A person who is, paying tax under Composition scheme has
to file quarterly return in Form GSTR-4 on or before 18! day of the month
succeeding the quarter for supplies made during that quarter. Example, for
supplies mliade during : 1st July to 30th September, return is required to be filed up
to 18th October.
Rate of Tax: Composition scheme dealers shall pay tax on their turnover in
state or Union territory at following rates:
For Manufacturers other than 1% 1% . 2%
manufacturers of notified goods
Services referred to inclause (by 2.5% 2.5% — 5%
of paragraph 6 of Schedule IT .
Other Suppliers | 0.5% | 0.5% 1%
* If you are registered as composition dealer under some previous law, t.e.,
VAT/ Excise then also you need to apply for Composition Scheme in GST
eid ti

in FORM GST CMP-01, duly signed within 30 days from the appointed
* received from his agent or principal outside the state
day. However, once the option.is exercised u/s 10 it shall remain valid so’
 - CHAPTER a LEVY:AND GOLLECTION OF GST. 8.55 :
“Tong. as he-satisfies all the conditions mentioned in Section 10 and
Composition Rules. :
* He is also required to furnish the details. of stock, including the inward
supply of goods received from unregistered persons, held by him on the -
day preceding the date from which he opts for Composition scheme,
electronically in FORM GST. CMP-03 within 60 days of the date from
which Composition scheme is opted.
* Hany registered person, i.e, normal dealer wants to opt for Composition _
‘scheme, he shal] electronically. file intimation inFORM GST CMP. :
02 prior to the commencement of financial year. He is also required to
furnish FORM GST ITC-3 within 60 dayys from the commencement of the
relevant financial year.
In addition to the above, he shall pay an amount, by way of debit in the
electronic credit ledger or electronic cash ledger, equivalent to the credit of input .
5 tax in respect of inputs held in stock and inputs contained in semi-finished goods
or finished goods held in stock and'on capital goods, reduced by such, percentage
points as prescribed in ITC rules on the day immediately preceding the date of
exercising such option,

“9. 17. Explain the exemption provided to ‘smail service _ providers under
GST.
’ Ans. Simail supplier. A business entity with an aggregate turnover of up to %20
lakhs would not be required to get itself registered under the GST regime, unless
here voluntarily chooses to do so.
 a 57
Ans. A composite supply comprising of two or more supplies, one of which is
a principal supply, shall be treated as a supply of such principal su
te

Special Category States Under GST

Below is the list of states which are assigned special status under
Goods and
Services Tax Law:
:
1. Arunachal Pradesh 2. Assan
3. Jammu & Kashmir 4, Manipur
5. Meghalaya 6. Mizoram
7. Nagaland 8. Sikkim a.
9. Tripura : 10. Himachal Pradesh
11. Uttarakhand | : _— :
The threshold limit of aggregate turnover for all'the above
states has been kept
at 710 lakh. So the same example will-apply here too, but the
numbers will get
ze

Q. 19. How to determine whether the services are bundled in the ordinary
course of business? -
Ans. Whether the services are bundled in the ordinary course of business,
would depend upon the normal or frequent practices followed in the area of
business to which services relate. Such normal and frequent practices adopted in
a business can be ascertained from several indicators some of which are listed
below: : : ,
Composition, Composite supply means a supply made 3 * The perception of the consumer or the service receiver. If large number of
by a taxable person. to
a recipient that: sevice receivers of such bundle of services reasonably expect such
comprises two or more taxable supplies of goods or services services to be provided as a package, then such a package could be
or both, or treated as naturally bundled in the ordinary course of business.
any combination thereof. ; i Majority of service providers in a particular
are naturally bundled and supplied in conjunction with each area of business provide
other, in the
ordinary corse of business similar bundle of services.
: For example, bundle of catering on board and transport by air is a bundle
one of which is a-principal supply [Section 2(30) of the
CGST Act]. offered by a majority of airlines.
This means that in a composite supply, goods or service : .
s or both are bundled
owing to natural necessities. The elements in a composite THe nature of the various services in a bundle of services will also heip in
supply are dependent
*

& determining whether the services are bundled in the ordinary course of
on the ‘principal supply’
Principal supply means the supply of goods or services business. If the nature of services is such that one of the services is the
which constitutes the
predominant element_of a composite supply and to main service and the other services combined with such service are in the
which any other supply
forming part of that composite supply is ancillary [Section nature of incidental or ancillary. services which help in better enjoyment
2(90} of CGST Act]. .
Q. 18. How to determine the tax liability on compos of a main service.
ite supplies?
 For. example, service of stay in a hotel is often combined with a service or
laundering of 3-4 items of clothing | free of cost per day. Such service is an
“ancillary service to the provision of hotel accommodation and the
resultant package would be treated as services naturally bundled in the
ordinary course of business.
Other illustrative indicators, not determinative but indicative of bundling of
services in the ordinary course of business are: ‘
+ There is a:single price or the customer pays the same amount, no matter
how much of a package the customer actually receives or tises
* The elements are normally advertised ‘as a package.
* The different elements are not available separately.-: :
* The different elements are integral to one overall supply. Hf one or more
is removed, the nature of the supply would be affected:
No straight jacket formula can be laid down.to determine whether a service is
naturally bundled ‘in the ordinary course of business. Each case has to be on § Perens
individually examined in the backdrop. of several factors some of which are
outlined above. The above principles explained in the light of what constitutes a
naturally bundled service can be gainfully adopted to determine whether a
particular supply constitutes a composite uinder GST and if so what
constitutes the principal supply so as. to ethezright classification and
rate of tax of such composit suppl :

Ans. Mixed supply me

* two or more individual supplies of goods or services, ora any combination
thereof, made in conjunction with each other by a tdxable person.
© for a single price where such supply does not constitute a composite
supply..{Section 2(74) of the CGST Act] ,
The individual supplies are independent of each other and are not naturally
bundled.
Q. 21. How to determine ifa particular supply is a mixed supply?
Ans. In order to identify if the particular supply is a mixed supply, the first
requisite is to rule out that the supply is a composite supply.
A supply can be a mixed supply only if it is not a composite supply. As a
corollary it can be said that if the transaction consists of supplies not naturally
bundled in the ordinary course-of-business then it-would be a mixed supply.
Once the amenability of the transaction as a composite supply is ruled out, it
would be a mixéd- supply,. classified in terms. of supply of goods or services
attracting highest rate of tax.
Q. 22, How to determine the tax liability on0 mixed supplies?
Ans. A mixed supply comprising of two or more supplies shall be treated as <
supply of that patticular supply that attracts highest rate of tax.
 Q. 2. Deseri
Ans. Cases where ITC is unavailable under GST—
1. On inward supplies used for non-business purpose. When a registered
person is using input goods or services for both business.as well as non-business
purposes, credit of GST paid on goods and services used for non-business
purpose shail not be available.

2. On inward supplies used for'exempt goods. When a registered person is

INPUT TAX CREDIT

‘using goods or services for making taxable as well as exempt supplies, Credit of
GST paid on goods and services used for making exempt supplies shall not be
available. :
» 3.1 Definitions
Input means any goods other than capital goods used or intended to be used
by a supplier in the course or furtherance of business. — - Example Mr
Input service means any service used or intended‘to:be used by a supplier in
the course or furtherance of business.
Inward supply in relation to a person, shail.meari receipt of goods or services
or both whether by purchase, acquisition or any other means with or without
consideration. a ey fe os oy eas SEER HESEES ‘
Output tax in relation to-a taxable person, means.the tax chargeable under this vehicles and other conveyance. ITC is not available on
Act on taxable supply of $dods or services or both made by him or by his agent purchase of motor vehicles and other conveyance.
but excludes tax payable by hini on reverse charge basis. There are few exceptions to this: . a
Outward supply in‘relation to a taxable person, means supply of goods or * When motor vehicles and other conveyance are
services or both, whether by sale, transfer, barter, exchange, licence, rental, used for further
lease providing supply of such vehicles or conveyances.-
or disposal or any other mode, made or agreed to be made by such person in the
+
course or furtherance of business. :
Works Contract means a contract for building, construction, fabrication,
completion, erection, installation, fitting out, improvement, modification, repair, ae
maintenance, renovation, alteration or commissioning of any immovable * When motér vehicles and other conveyance are used for further
property wherein transfer of property in goods (whether as goods or in some providing services of transportation of passengers.
other form) is involved in the execution of such contract. ; a oe, :
Capital Goods means goods, the value of which is capitalized in the books of*
accounts of the person. claiming the input tax credit and which are used or
intended to be used in the course or furtherance of business, * When motor vehicles and other conveyance are used for imparting
training on-drivi flying, navigating such vehicles or conveyances.
GST Capital Goods Input Rule-43
3.2 Eligible and Ineligible Input Tax Credit
Q. 1. What is Ineligible ITC? '* When motor vehicles and other conve
Ans. Ineligible Input Tax Credit (GTC) means situations where input of gbods.
tax credit
under GST is not available, . ,
 4. On’ services such as food and beverages, outdoor catering, beauty 2. Avail of, every month, an amount equal tefifty per cent of the eligible
treatment, health services, cosmetic and plastic surgery, except when they are input tax credit on inputs, capital goods and input services in that month
used as inputs for providing the same category of goods or services. andthe rest shall lapse: _
5. Membership of a club, health or fitness centre. ' Provided that if Option 2 is exercised, it shall not be withdrawn during
the
6. Rent a cab, life insurance and health insurance services except— " temaining part of the financial year. °
* When they are mandatorily required to-be provided by the employer to Provided further that the restriction of 50% shall not apply to
the tax paid
the employee under any law. ; on supplies made by one registered person to another registe
red person having
* When they are used as inputs for providing the same category of goods the same PAN. . : .
or services. : . ; Q, 4. State the eligibility and conditions for taking input
tax credit.
7. Travel benefits extended to ‘employees on vacation such as leave or home Ans. Eligibility and- conditions for taking input tax credit
[Section 16]:
travel concession, . : : (i) All Registered Persons shall take credit of input tax admissibl
; ; e as per the
8. GST paid on works contract services, goods and services used in relation to a terms and conditions specified in Section 49 on all goods
and supplies
an Immovable Property (other than Plant and Machinery) except when they are’ or both used, intended to be used in the course
[| of furtherance of his
used for further supply of works contract service. business.and the said amount shall be credited to his ECL
[Electronic
“Construction”. includes re-construction, renovation, .additions or alterations or Credit Ledger].
repairs, to the extent of capitalisation, to the said immovable property; Furnish such detail in Form GSTR-2]}
“Plant and Machinery” means apparatus, equipment, and machinery fixed to earth (#) A Registered person can claim credit only if he—
by foundation or structural support that are.used for making outward supply of goods or * possess Invoice or Debit note;
services or both and.includes such foundation and structuval:. supports but excludes — _* received the goods or services;
* Land, building or any other civil strij * tax charged on such supply has been paid to Government either
in
* Telecommunication | : : cash or through credit utilization; and
* Pipelines laid outst * person has filed the Return u/s 39.
9, Composition sche (di) Where the goods are received in instalments or lots,
ITC shall be
under composition schefle = ; available at the time of receiving of final instalment or lot.
10. Non-resident taxable person. Goods or services or both received by a non- (fe) Recipient shall make the payment to the supplier of goods
or services
resident taxable person except on goods imported by him; : ; (except tax payable under reverse charge) along with tax payable
within
11. Personal consumption. Goods or services used for personal consumption. 180 days from the date of invoice otherwise.the ITC taken shall be
added
12. Goods lost, stolen, destroyed, written off dr disposed off by way of gift or to his output tax liability with interest [Furnish such detail
in Form
free samples. . - GSTR-2}. _
13, Any tax paid in accordance with the -provisions of Sections 74, 129 and 130 Same IFC can be claimed after the payment to supplier along with
tax
of CGST Act (These-sections are Telated to assessment payable thereon, .
Rule 2 provides that such TTC shall be added to output tax Habilit
“Examnp the month after the passing of 180 days. Registered person need
y
for
to pay
interest as per Section 50 of the Act from the date of taking ITC
to the
date of adding to output tax liability,
Similarly, input tax credit cannot be used for payment of any interest or (0) Where the registered person has claimed depreciation as per Income
penalty levied in this act. _ Tax
Act on tax component of cost of capital goods and plant and
machinery,
Q. 3. State the provisions pertaining to mode of claiming ITC by Banking ITC shall be denied on the said tax component. .
companies. 7 . (vi) ITC shall not be allowed after the due date of furnishing the return
u/s 39
Ans, A banking company or a Financial institution including a Non-banking for the month of September following the end of financial year to which
Financial Company (NBFC), engaged in supplying services by way of accepting fF invoice/ debit note relates or furnishing of the Annual Return whicheve
deposits, extending loans or advances shall have the following two options—
r
i is earlier.
1. Comply with the provisions u/s 17(2),-i.¢, avail of ITC attributable to i '. Q. 5. What.is the Order of utilization of ITC available in the Electronic
taxable supplies (including zero rated supplies) and nat on exempt L Credit Ledger?
supplies, or ;
 “64 A. SHIVA DELHI UNIVERSITY.
SERIES 62°
Ans. As per Section 49(5), the following shall be the order in which the Input
tax credit available in the Electronic credit-ledger shall be utilized for tax
payment: 2. Avail of, every month, an amount equal to 50% of the eligible input tax
: :
crédit on inputs, capital goods and input services in that month and the
Input tax:Credit.on Unpiit tax:-Credit-on Input tax Crediton’: rest shall lapse: ;
account.of IGSE.: account of CGST. | accointof SGST/UTGST Provided that if Option 2 is exercised, it shall not be withdrawn during the
First for payment of | First for payment of ; FFirst for payment of, remaining part of the financial year. a,
IGST, CGST. SGST/UTGST. Provided further that the restriction of fifty per cent shall not apply to the tax
Then for payment of | Then for payment of | Then for payment of paid on supplies made by one registered personto another registered person
CGST, IGST. having the same PAN. we
IGST.
And then if balance is | *In case there is further | “In case there is further 3.4 Tax Credit in respect of Capital Goods .
there for payment of | balance it will be | balance it will be carried _Q. 7. Explain the manner in which Input Tax Credit on capital goods can be
SGST or UTGST. carried forward to the | forward to the next _ determined.
next period and shall | period and shall not be Ans. Subject to the provisions of Sub-section (3) of Séction 16, the input tax
not be utilized for pay- ! utilized for payment of credit in respect of capital goods, which attract the provisions of Sub-sections (i)
ment of SGST/UTGST. | CGST. ; and (2) of Section 17, being partly used for the purposes of business and partly
* CGST and SGST. are mutually exclusive which means that these cannot be adjusted against for other purposes, or partly used for the purposes of business and partly for
each other.
other purposes, or,partly used for effecting taxable supplies including zero rated
= 3.3 Apportionment of Credit.and Blocked Credits supplies and partly for effecting exempt supplies, shall be attributed to the
Q. 6. Explain the concept of Apportionment of Credit and Blocked Credit. purposes of business or for effeeting taxable supplies in the following manner,
Ans. Apportionment. of Credit and: Blocked Credit: namely: :
1. Where the goods or.services or both are used by the registered person— (a) The amount Of input tax in respect of capital goods used or intended to
-be used: exclusively for non-business or used or intended to be used
* partly for the purposé. of any business, and
exclusively for effecting exempt supplies shall be indicated in Form
* partly for other purposes
* the amount of credit shall be restricted to the input tax attributable to the GSTR-2 and shall not be credited.to his electronic credit ledger.
purposes of his business. (b) The amount of input tax in respect of capital goods used or intended to
. be used exclusively for effecting supplies other than exempted supplies
2. Where the goods or services ot -both aré used by the registered person
— but including zero-rated supplies shall. be indicated in Form GSTR-2
* partly for effecting taxable supplies including zero-rated supplies under
CGST Act or under the IGST Act, and and shall be credited to the electronic credit ledger.
* partly for effecting exempt supplies under the said Acts, (c) The amount of input tax in respect of capital goods not covered under
. Clauses (a) and (b), denoted as ‘A’, (Le. capital goods are not exclusively
* the amount of credit shall be restricted to the input tax attributable
to the used for.aforesaid purposes) shall be credited to the electronic credit
said taxable supplies including zero-rated supplies.
The value of exempt supply shall be as prescribed by government— ledger and the useful life of such goods shall-be taken as five years from
* include supplies on which the recipient ig liable to pay tax on the date of the invoice for such goods. ;
reverse Provided that ITC shall not be available for the tax component of cost of
charge basis
° include transactions in securities capital goods on which depreciation
has been claimed
* include'sale of land and, subject to clause (b) of paragraph:5 of Schedule Provided further that where any capital goods earlier covered uncer
I, sale of building. Clause (a) (i.e., exclusively used for specified purposes) is subsequently
; not exclusively used for aforesaid purposes, the value of ‘A’ shall be
Abanking company or a Financial institution including a non-bank
ing arrived at by reducing the input tax at the rate of five percentage points
financial company, engaged in supplying services by way of acceptin
g deposits, for every quarter.or part thereof and the amount ‘A’ shail be crédited to
extending loans or advances shall have the following two options
— the ECL; ;
1. Comply with the provisions u/s 17(2), ie, avail of ITC attributa
ble to Explanation. An item of capital goods declared under Clause (a) on its
taxable: supplies (including zero rated supplies) and not on
exempt receipt shall not attract the provisions of Sub-section({4) of Section 18, if
supplies, or .
it is subsequently covered under this clause.
 SH FY SERIE “2° OMABTER B: INCOME
TAX GREDIT
Ee

2 67: |
_ (a) The aggregate of the amounts of “A’ CGST Act, 2017 is entitled to ITC of input tax in respect of goods held in
ctedited to the electronic credit
ledger under Claus e (c), to be denoted as ‘Te’, shall be stock (inputs as such and inputs contained im semi-finished or finished
the common credit
in respect of capital goods for a tax period. goods) on.the day, immediately preceding the date of registzation.
.. -
Provided that where any capital goods earlie (Gi) A person switching over to normal.scheme from composition scheme
r covered undey Clause (b)
is subsequentlycovered under Clause (c),-the value of ‘A’ arriv : under Section 10 is entitled to ITC in respect of goods held in stack
reducing the input tax at the rate of ed at b
five percentage points for overy (inputs as such and inputs contained in semi-finished or finished goods)
quarter or part thereof shall be added to the aggregate and capital goods on the day immediately preceding the date from which
(e} The amount of input tax credit attrib value ‘Te’; ”
utable to a tax period on common he becomes liable to pay tax as normal taxpayet. ;
capital goods during their’ useful life, be denot . (iv) Where an.exempt supply of goods or services or both become taxable, the
ed as ‘Tm’ and calculated
as— : person making such supplies shall be entitled to take ITC in respect of
;
Tm = Te/60 (5 Years). . goods held in stock (inputs as such and inputs contained in semi-finished
(A The amount of tax-ctedit, at the begining or finished goods) relatable to. exempt supplies. He shall also be entitled
of a tax period,on all common
_ capital goods whose useful life remai to take credit on capital goods used exclusively for such exempt supply,
ns during the tax period, be
denoted as ‘Tr’ and ‘shall be the aggregate subject to reductions for the earlier usage as prescribed in the rules,
of ‘Tim’ for all sttch capital
goods; . : » (v) ITC, in all the above cases, is to be availed within 1 year from the date of
{g) The amount of commen credit attributab issue of inveice by the supplier.
le towards exem pted supplies,
be denoted as ‘Te’ and calculated as— . (vt) In case of change of constitution of a registered person on account of sale,

Where
_
[e is the aggregate value of exem
Te (G/F) * Tr merger, demerger etc.
transferred to the transferee.
the unutilised ITC shall be allowed to be
t supplies, ‘made, during the tax period,
; F’ is the total turnover of the r and
on during the
tax period ‘ Wii) A person switching over from composition scheme to normal scheme or
Provided, that where the registered -per.
have any turnover during where a taxable supply become exempt, the ITC availed in respect of
the said tax period:or t fe ‘Not available the value of ‘E fF goods held in stock (inputs as such and inputs contained in semi-finished
shall be calculated by ta of: E" and ‘F’ of the last six period for
which or finished goods) as well as capital goods will have to be paid.
the details of such turnon available, previous to the month during which
4 (viii) In case of supply of capital goods or plant and machinery, on which ITC
the said value of ‘E/ F’ is “to be calculated;
is taken, an amount equivalent to ITC availed minus the reduction as
Explanation. For the ‘purposes of this clatise
, it is hereby clarified that the -prescribed in rules (5% for every quarter or part thereof) shall have to be
aggregate value of of exemp
e t supplies and the total shall exclude the
] am. ount of an paid. In case the tax on transaction value of the supply is more, the same
duty tax or tax"levied under Entry 84 of
List 1 of the Seventh Schedule to the would have to be paid.
Constitution and Entry 51 and. 54 of List IT of the said schedule.
() . ™ 3.6 Transfer of Input Credit (Input Service Distribution)
1. The amount “Te” along with the appli
cable interest shall, during
- every tax period of-the useful life of the Q. 9. Define input service distributor and recipient of credit. . :
concerned capital goods, be
added to the output tax liability of the Ans. Input Service Distributor (ISD) is défined u/s 2(61) as an office of the
person making such claim of
credit. . ; . supplier of goods or services or both, which receives tax invoices issued under
2. the amount-"Te’ shall be computed separ Section 31 towards receipt of input services and issues a prescribed document
ately for Central tax, State
Tax, Union tax and Integrated Tax. for the purposes of distributing the credit of CGST, SGST, IGST or UTGST paid
on the said services to a supplier of taxable goods and/or services having the
> 3.5 Availability of TaxCreditin Special
Circumstances same PAN as that of the office referred to above. coe -
OQ. 8, Explain the availability of Tax credit Once a person gets registered as ISD in the GST regime, he would be eligible to
in special circumstances
Ans. Availability of Tax credit in special transfer or distribute credit as per the provisions of Section 17.
circumstances:
(i) A person who has applied for registrati Recipient of credit means the supplier of goods or services or both having the
on within 30 days of becomin
liable for registration is entitled to ITC same PAN as that of the ISD.
of input tax in respect of goods
held in stock (inputs as such and input ' Q, 10. Describe the Duties of ISD.
s contained im semi-finished or
finished goods ) on the day immediately preceding the date Ans. As per this provision, an Input Service Distributor (ISD) would be able ta:
he becomes liable to pay tax. from which * Distribute credit of CGST/SGST and IGST io the supplier to whom such
(1) A person who has taken voluntary services may be attributed. .
registration under Section 2.3(3) of the
 *
6B: a. “SHIVA: ‘DELH ‘UNIVERSITY SEHIES”
* In case of inter-state transfer of input credit, where ISD and recipient are
located in different States:
(2) under the CGST law, components of CGST and IGST can be trans-
ferred asIGST. _ way of a prescribed document, the recipients to whom such credit is
(6) under the SGST law, components of SGST and IGST can be trans-
ferred as IGST.
Note: It is important to note that ITC of CGST cannot be utilized for payment of SGST. However,
for inter-state transfer of input credits, there could be-no other mechanism because SGST of one State
cannot be transferred and used in thé other State. Further, if it is presumed that the distribution by
ISD to its own supplier unit constitutes a taxable supply, the appropriate tax would have been IGST
‘only, against which the distributor would have been in a position to claim input credit of CGST/
SGST/iGST, In other words, ITC of CGST, SGST as well as that of [GST can be distributed as ITC of
IGST.
recovered? .
* In case of intra-state transfer of input credit where ISD and recipient
(business verticals having obtained separate registrations in the same State):
{a) under the CGST law, components of CGST and IGST can be
transferred as CGST. ‘ recipient. To take care of this situation, Section 18 of the MGL contains
(b) under the SGST law, components of SGST and IGST can be
transferred as SGST. ws
Note: Distribution of credit through ISD would be required within the same State when the
taxable person is having more than one tax registrations within,theState which is possible only if the
taxpayer has opted for separate registrations for separate’ business: verticals under the provisions of
Section 19(2) of the MGL. In other -words,.ITC of <CGST and IGST can be distributed as ITC of CGST
while ITC of SGST and IGST can be ‘distributed as IC of SGST.
Q. 11, Write down the conditions and manner of distribution of credit by ISD.
Ans, The conditions and manner of distribution of credit by ISD ave same as
are there in the present Service tax regime, and the same are summarized as
follows:
1. The credit would be distributed through tax invoice or other document
as prescribed.
2. The amount of credit distributed shall not exceed the amount of credit
available for distribution.
3. If the credit is attributable to one supplier, it shall be distributed only to
that.supplier.
4. The credit of tax paid on input services attributable to more than one or.
all recipients of credit shall be distributed only amongst such recipients
to whom given input service is attributable. The manner of allocating the
amount shall be as follows:
(a) the ‘distribution shall be on pro-rata, on the basis of turnover in a
state on union territory of such recipient, to the aggregate of turn-
over ‘of all such recipients to whom such input service is
attributable.
. Apart from the above payments a dealer is required to make these payments:
(b) for the purpose of computing distribution ratio, the turnover of
respective suppliers for preceding year ig to be taken. In case any of
the suppliers was not operational in. the preceding year, the
turnover of immediately preceding quarter from the month of
distribution is to be taken’ as basis, (as per ‘explanation’ to Section
AX CREDIT .8 68
20 of the CGST Act, ‘relevant period’ has been defined in this
manner). ; :
{c) Once the credit is distributed by an ISD in the prescribed marmer by
distributed get credit in their Electronic Credit Ledger and can usc it
for payment of their output taxes, .
(d) An ISD is required to file its Return in Form GSTR 6 by 13t of the
month succeeding the month in “which the credit has been
distributed. When ISD files his return,;.the amount of credit gets
credited in Electronic Credit Ledger of th: recipient.
Q. 12. How credit distributed in excess by Input Service Distributor asp) is
Ans. Manner of recovery of credit distributed in excess (sD):
* There could be a situation of. distribution/use of excess credit in
comparison to what is available or allowed under the jaw to the
provisions for recoveryof excess credit distributed by the ISD.
» It provides that in case the credit distributed by an ISD is more than the
credit available to him, the excess credit may “be recovered from ISD by
initiating Action under tle provisions of Section 51 of the MGL.
Section 18(2),of the MGL provides that in case the credit distributed by
“ISD is in contravention of Section 17 (which could be distribution of
“more than available credit or distribution of credit in incorrect ratio or
distribution of credit to a supplier not entitled to it or it could relate to
the type of tax distributed), theexcess credit may be recovered from the
recipient by initiating action under, the provisions of Section 51 of the
ML.
e 3.7 Payment of Taxes
Q. 13. What are the payments to be made under GST?
Ans. Under GST the tax to be paid is mainly divided into—
* IGSTTo.be paid when inter-state supply-is made (paid to the Centre).
* CGST—To be paid when making supply within the state (paid to the
Centre).
. SGST— To be paid when making supply within the. state (paid to State).
Goods sold from. Dethi to Bombay ; td . YES
Goods sold within Bombay
Goods sold from Bombay to Pune
* Tax Deducted at Source: (TDS). TDS iis a mechanism by which tax is
h :
_ builder, The cont
pre
 ‘CHAPTERS-INCO
TAK Cheat:ME
w 74,
- Types of
* Tax Collected at ource (TCS). TCS Electronic Ledgers”
is mainly for e-commerce agerega-
tors. It means that any dealer sellin
g through e-commerce will receive
payment after deduction of TCS @ 2%.
This provision is currently relaxed
— ,
and will not be applicable till notified
4
[Cash Ledger . Credit Ledger
_|
Liability Ledger
by the government, This Ledger will ITC as self-assessed
Reverse Charge. The liability of paym ' reflect all deposits in’ monthly returns
The Total tax liability
ent of tax shifts from the supplier made in Cash, and
‘of a taxpayer (after
of goods and services: to the will be reflected here, netting)
receiver under certain specified TDS or (and} TCS for the’
circumstances. The credit in this particular month will
; . made on account of ledger can be used to
Q. 14: How payment to be made is calculated be shown automa-
the Taxpayer. This
under GST? - make payment of tically displayed on a
Ans. Usual ly,
the Input Tax Credit should be reduced ledger can be used for TAX ONLY and no
Liability to calculate. the total GST paym from Outward Tax making any payment other amounts such
GST payer's dash-
ent to be made. board,
TDS/TCS will be reduced fram the | onaccount of GST. as interest, panelty or
total GST to arrive at the net payab Taie fee. .
figure, Interest and late fees (if any) le
will be added to arrive at the final
Also, ITC cannot be claimed on intere amount. : Q. 18. What are the different ways in
st and late fees. Both Interest and late which GST payment can be made?
fees are required to be paid in cash. ‘ Ans. GST payment can be made in two
The way the calculation is ta be done = . ways: .
is-different for different types of dealers: : * Payment through Credit Ledger. The
* Regular Dealer. A regular, dealer; credit of ITC can be used by
is to-pay GST on the outward dealers for GST payment. The credit can
supplies made,and:. be taken only for payment of
can also’ clain niput, Tax Credit (TC)
Tax. Interest, penalty and late fees canno
t be paid by utilising ITC,
purchases mad, on the
ae . * Payment through Cash Ledger. GST
payment can be made online or
The GST paya , yea-regular dealer is the difference offline. The challan has to be generated
between the on GST Portal for both online and
outward tax liability and the ITC. : offline GST payment.
_ : :
Composition Dealer. The GST payment Where tax liability is more than 10,000,
e

for.a
sition dealer is compo it is mandatory to pay taxes On-line.
comparatively simpler. A dealer who . Q.19. What is the penalty for non-paym
has Opted for composition ent or delayed payment of GST?
Scheme has to pay a fixed percentage - Ans. If GST is Short
of GST on the total outward paid, unpaid or paid late, interest at a rate of 18% is
suppl
ies made. a, . : required to be paid by the dealer.
Q. 15, Who shall be liable-to make the : Also, a penalty is to be paid. The penal
Payment under GST laws? . ty is higher of ¥10,000 or 10% of the tax
Ans. These dealers are required to make short paid or unpaid, whichever is higher.
GST payment:
* A Registered dealer is required to . Procedure to pay tax in cash
make GST payment if GST liability
. :
exists, : : Step 1: Calculate tax payable in cash.
* Registered dealer required to pay : Step 2: Generate CPIN number in
tax under Reverse Charge Mechanism FORM GST PMT-4 on common portal
(RCM). ~ . ;
_ entering the details of amount of tax by
(CGST, IGST & SGST), interest, fees,
* E-commerce operator is required to penalty etc. payab and
collect and pay TCS. le:
“* Dealers specified by the-government (2) Generated challan shail have
required to deduct TDS. 14 digit CPIN number (Common
Q. 16. What is the time limit for payme identification Number). portal
nt of GST? Do
Ans. GST payment is to be made when (b) This challan shall be valid for 15 days .
GSTR:3 is filed, ie, by 20 of the next from the date of generation).
month, (c) Taxpayer can partially fff in the chall
Q. 17. What are electronic ledgers? . an form and temporarily “save” the
challan for completion at a later stage.
Ans. These ledgers are maintained electr ; A saved challan can be “edited”
onically on the GST Portal,’ before finalization. ,
(2) Challan generated online may not be modif
ied after
submission.
Step3; Now make payment with reference
to above challan (CPIN) by (Net-
banking/Card /RTGS/ NEFT) or any other mode as specified
Step 4: After successful payment of Tax, a CIN by the Government.
{Challan Identification Number
 OME TAX CREDIT @ 73
72.8 SHIVA DELHI UNIVERSITY SERIES - ae Se Cit sie SS 8 Judgement/Decree/order/ direction of | Date of communication of such
having 17 digits—14 CPIN and 3 digit Bank Code} shall be
generated, which is Court or Appellate Authority/Tribunal. | Occurence.
actual proof of Tax payment.
: : ITC accumulates as output is tax | Last date of financial year to which
‘» 3.8 Refund of Taxes exempt or nil-rated. the credit belongs.
Q. 20. What is GST refund? Finalisation of provisional assessment. | Date on which tax is adjusted.
:
Ans. Usually when the GST paid is more than the GST liability, Also if refund is paid with delay, an interebt @ 24% p.a. is payable by the
a situation of
claiming GST refund arises. Uncer GST the process of claiming a refund is government. ; _
standardized to avoid confusion. The process is online and Q. 24. Hbw can a person claim GST réfiiid“and what is the time limit for
time limits have also
been set for the same. claiming refund? . : . : _
: ;
Q. 21. What are the circumstances under which refund
of GST can be claimed? Ans. Thd refund application has tobe made in Form GST RED 01 within 2
Ans. A claim of refund may realise on account of:
: years from the relevant date. ; \ :
(@) Export {including deemed export} of goods/services The fornt. should also be certified by a Chartered Accountant.
under claim at
rebate or Refund
(#) ITC accumulation due to output tax being exempt or
nil-rated.
> 3.9 TDS - |
(Hf) Refund of tax paid on purchases made by Embassies
or UN bodies.
Certain categories of registered persons shall be required to deduct taxes while
(i) Tax Refund for International Toutists. inaking payments to the suppliers, 12, TDS and deposit it with the government.
(v) Finalization of provisional assessment. Let's try to understand TDS related procedures under the law.
(vi) Refund of pre-deposits. Q. 25. What is the rate of TDS under GST and who shall collect it?
(wii) Excess payment due to mistake. Ans. TDS is to be deducted at the rate of 1 per cent on payments made to the
(viii) Refund of CGST/SGST paid by treating the supply supplier of taxable goods and/or services, where the total value of such supply,
as inter-state supply
which is subsequently found to be inter-state supply and under an itdividual contract, exceeds ¥2,50,000.
vice-versa.
(ix) Refund on account of issuance of refund vouchers There shall be no tax deduction where the locationof supplier and place of
for taxes paid on
advances against which goods or services have not been supply is different from the State of the registration of the recipient.
supplied.
Q. 22. How is GST refund calculated? As per GST law following people/entities need to. deduct TDS:
;
Ans. Let's take a simple case of éxcess QA clepartment or establishment of the Central or State Government, or
tax payment made.
Mr. B’s GST liability for the month of Septe (ii) Lodal authority, or ;
mber is 50,000. But due to mistake,
Mr, B made a GST payment of 25 lakh: (i) Governmental agencies, or
Now Mr. B has made an excess GST (v7) Persons or category of persons as may be notified; by the Central or a
payment of 4.5. lakh which can be
claimed asa refund by him, State Government, ;
The time limit for claiming the refund is {v) An authority or a board or any other body which has been set up by
2 years from the date of payment.
Q. 23. What is the time limit for claiming refund? Patliament-or a State Legislature or by a government, with 51% equity
Ans. The time limit for claiming (cohtrol) dwned by government, .
a refund is 2 years fromthe relevant date.
The relevant date is different in every {vi) A society established by the Central or any State Government ora Local
case.
Here are the relevant dates for some Authority and the society is registered under the Societies Registration
cases —
Ack, 1860.
Relevant Date: {vii) Pubic sector undertakings.
_Excess payment of GST.
Date of Payment Q. 26. What should be the value of supply on which TDS shall be deducted?
Export or deemed export of goods
or | Date of dispatch by post/ship or. Ans. For the purpose of deduction of TDS, the value of supply is to be taken as
serv ices.
the amount excluding the tax indicated in the invoice. This means TDS shall not
be deducted on the CGST, SGST or IGST component of invoice.
_Deemed export of goods. - _ Q. 27. Té whom is TDS paid and what is the time limit for paying TDS. Also
| Date of r furnishing of Return.
Export of Services state the compliancés required under TDS? | i ; os
. Supply completed before pay-
Ans. TDS shall be paid within 10 days from the end of the month in which tax
ment — Date of receipt of payment.
is deducted. The payment shall be made to the appropriate government which
* Payment received before issue of
A eect tran means:
n_f.tnveice— Date
- of invoice.
 * The Central Government in case of the IGST and the CGST. CHAPTER, 8: INCOME-TAX CREDIT #75
* The State'government in case of the SGST. threshold limit to register (like iff Otter-tases on €20 lakh). In other
» Further, deductors need to follow these listed procedural compliances: words, every e-commerce operator as well as the supplier who supplies
(i) Such deductor needs to get compulsorily registered under Section
23, through e-commerce operator has to get itself compulsorily registered
(ii) Obtaining TAN issued under income tax act is MANDATORY. under GST irrespective of its turnéver.
(ii) They need to remit such TDS collected by the 10% day ol the month Any person required to collect tax at source, shall electronically submit
succeeding the month in which TDS was collected and teported in GSTR an application, duly signed or verified through electronic verification
7.
(iv) The amount deposited as TDS will be reflected in the electronic cash code, in FORM GST REG-O07 for the grant.of registration through the
‘ledger of the supplier. — common portal, either directly or through a Facilitation Centre notified
(v) They need to issue a certificate of such TDS to the deductee within by the Commissioner [Rule 12(1) of CGST Rules, 2017].
5 days
of deducting TDS mentioning therein the contract value, rate of 3, Credit to be claimed. The tax which is collected by e-commerce operator
deduction, amount deducted, the amount paid to the appropria shall be credited to the supplier who supplies goods or services or both
te
Government and such particulars as may be prescribed. through the operator in his‘electronic cash ledger and can be claimed by
(vi) Non-deduction/short deduction/ non-payment or short payment the supplier of which is reflected in the statement of the operator.
of TDS
is on offence under the Act for which a minimum penalty of %10,000 Q. 30, Explain the Statements to be furnished by e-commerce
is operator.
. prescribed under the act. Ans. Following two statements are to be furnished by the e-commerce operator:
Q. 28. How can the deductee claim benefit of TDS? 1. Monthly Statement. Every operator who collects tax, shall furnish a
Ans. The deductee shali claim credit, in Kis electronic cash ledger, of ‘statement, electronically, containing the details of outward supplies of goods
the tax or
deducted and reflected in the return of the deductor furnished services or both effected through it, including the supplies of goods or services
in the manner or
prescribed. Any amount ‘deducted as DS .and-reported in both returned through it, and the amount collected within 10 days after
GSTR-7 will the end
automatically get reflected in Electronic cash ledger, . “” -of such month.
Refund of the excess amount deducted: “2.000: Rule 67: Form and manner of submission of statement of supplies through ax
* Incase the am is‘claimed'by deductee in Electronic cash ledger: fe-commerce operator:
Refund to ded not possible in such case, However, déductee can (} Every electronic commezce operator required to collect tax at source
claim a refund ubject to Refund provisions of the Aci, Practically u/s 52 shall furnish a statement in FORM GSTR-8 electronically on the
it is not possible to claim any erroneous deduction of TDS by common portal, either directly or froma Facilitation Centre notified by
the
deductor., the Commissioner, containing details of supplies effected through such
In case the amount is not so claimed by deductee: . operator and the amount of tax collected as required.
. Refund of erroneous exaess TDS deducted is possible to
dedyctor, subject (ii) The details furnished by the operator above, shall be made available
to refund provisions and procedure of the Act.
electronically to each of the suppliers in Part C of FORM GSTR-2A on
> 3.10 Tax Collected at Source (TCS) the common portal after the due date of filing of FORM GSTR-8,
In layman’s language, the one who collects tax at source is known 2. Annual Statement. Every operator who collects tax, shall furnish an annual
as Tax: :statement, electronically, contamning
collector. Under~GST, every electronic commerce agsregator the details of outward supplies of goods or
(or ‘operator’) has :Services or both effected through it, including the supplies of goods or services
been assigned the role of Tax Collector. or
; ‘both returned through it, and the amount collected during the financial -year,
Authorization to collect tax
. "before 318 December following the end of such financial year.
As per Section 52(1) of CGST Act, 2017 only electronic commeyc
e operator Rule 80(2) Annual return. Every electronic commerce operator required to
(not being an agent), shall collect an amount of tax in respect of taxable
supplies ‘ collect tax at source under Section
of goods or services or both Wadé through it or through other suppliers 52 shall furnish annual statement in FORM
. " GSTR-9B. .
Q. 25, Explain the statutory provisions of TCS under GST.
Ans. Following are the statutory provisions of TCS under GST: Q..31. How are the details of supplier matched with the details furnished by
1. Rate of Tax-to be collected. - the e-commerce operator?
The rate of tax to be collected by an Ans. Mechanism of matching of details.
commerce operator shall not exceed one per cent, as may be notifi :
edby () The details of suppliers furnished by e-commerce operator (Form
the Government on the recommendations of the Council, of the-net
value GSTR-8) shall be matched with the concerned supplier (GSTR-1). -
of taxable supplies. — ;
2, Registration. (if) Tf the details do not match, the same shall be communicated to both of
As per Section 24(x) of CGST Act, 2017, there is no them (Supplier in Form GST MIS-3 & e-commerce in Form GST MIS-4).
 76 SHIVA DELHLUNIVERSITY SERIES. 0 02:
(iif) If the discrepancy is not rectified by the supplier in his valid return or the sea ane ee

operator in his statement for the month in which discrepancy is Q. 35. Ts a job worker eligible to obtain the be mefits of Composition
communicated, it shall be added to the output tax ‘liability. of the said . Scheme?
supplier, where the value of outward supplies furnished by the operator Ans. Benefits of composition scheme are not available to certain categories of
is more than the value of outward supplies furnished by the supplier. persons, siuch as one— - :
(i) Such supplier shall pay the tax payable in respect of such supply along « who is engaged in the supply of services, or .
with interest as specified under Section 50(1). : * who makes any supply of goods which are not leviable to tax under the
Section 50(1): Interest on delayed payment of tax. Interest shall be at such GST, or : . ;
rate, not exceeding 18%, as may he notified by the Government on the recomm- ° who makes any inter-State outward supplies of goods.
endations of the Council. Accordingly, if the process undertaken by the jok worker amounts to
Serving of Notice to the operator. Any authority not below the rank of manufachure/ deemed manufacture of goods (except as may bé restricted by the
Deputy Commissioner may serve a notice, requiring the operator to furnish such Governmeng), then such job worker is eligible-to opt for composition scheme. In
details relating to:
case any jprocess does not amount to manufacture/deemed manufacture, or
° supplies of goods or services or both effected through such operator services only, then such job werker is not eligible for composition scheme. Thus
during any period; or of : a job worker is eligible to opt for composition scheme if he statisfies the eligibility
* stock of goods held by the suppliers making supplies through such
criteria laid down u/s 10 of CGST. Act. : :
operator in the godowns or warehouses, by whatever narne called,
Q. 36, Whatis the threshold limit for registration in case of Jab Work? .
managed by such operator and declayed as additional places of business
Ans. AS job work is a service, the job worker would be required to obtain
by. such suppliers, as may be specified in the notice. ~
registration if his aggregate turnover exceeds the prescribed threshold.
= 3.11 Job Work "> The suzlply of goods, after completion of job-work, by a registered job worker
. 32. What is Job Work? shall be treated as the supply of goods by the principal and the value of such
Ans. Job Work: te goods shali not be included in the aggregate turnover of the registered job
kel,
* Activities undértake by. small/medium industries on inputs/semi- worker, :
finished inputs as'per the directions of the principal manufacturer are Q. 37. Enlist the criteria to determine the place of supply in case of Job Work.
known as job works. ; Ans. Criteria to determine the place of supply in case of Job Work:
* The person who undertakes the job work is commonly known as job 1. In the case of job work, the supply of goods, after completion of job-
worker, generally in small sector. work, by a registered job worker shall be treated as the supply of goods
Q. 33. Define the term Principal. : by the principal. : ; . :
Ans. For the purpose of job work, the ‘principal’ means:a registered person 2. Goods sent by a taxable person (principal) to a job worker and liable to
who sends any inputs or capital goods, without payment of tax, to a job worker GST will be treated as a supply as supply includes all forms of supply
for job-work and from there subsequently sends to another job worker such as sale, transfer, etc. : ;
and
likewise or return to principal. - the registered taxable person (the principal), under intimation
3. However,
:
Examples of common job works are slitting, machining, welding, painting, arid fulfilment of specified conditions sends any inputs and/or capital
electroplating, assembly, powder coating etc. Job works are also widely resorted gdods, without payment of tax, to a job.worker for job work.
to in textiles, agri-processing, printing, gems and jewellery sectors, ete. 4. From there, those can be subsequently sent to another job worker(s}.
:
Q. 34. Define the term taxable person. 5. Principal can either-bring back such ‘inputs/capital goods after comple-
Ans. Taxable person means a person who is registered or liable to be registered: tion of job work or otherwise, within 1 year/3 years of their being sent
* An establishment or person who has. obtained or is required to obtain :
out or a fo. i
registration in a State and any of his other establishments in another State 6. Sdpply such inputs/capital goods ‘after completion of job work or
shall be treated as distinct persons for the purposes of GST law.
: otherwise within 1 year/3 years of their being sent out.
* Therefore, transactions, such as stock transfer, transfer of capital goods 7. From the piace of business of a job worker on payment of tax within
eic., between two processing units or administration, offices of the same
India or with or without payment of tax for export.
job worker, shall be treated as supply. Since such transaction is made
Q. 38. Describe the procedure/provisions followed under job work.
between two distinct persons, therefore, such supply would be subject to
levy of GST. Ans. Job work Procedures: -
: 1.4 principal (registered person) may under intimation and subject to’
 prescribed conditions, send any inputs or capital DT 7a
goods to a job worker
for job-work and from there subsequently, send (f) thé duplicate copy being marked as ‘duplicate
to another job worker for Transporter’; and
without payment of tax. (iil) the triplicate copy being marked as ‘triplicate for
Consignor’.
2, After completion of job work or otherwise, Q, 40. When do Job Work provisions became applicable?
principal shall—
(i) bring back inputs or capital goods (other than Ans. (i) The provisions relating to job work are
moulds and dies, jigs applicable only when a
and fixtures, or tools), within one year registered taxabie person intends to send taxable goods.
and three years, respectively, In other words,
of their being sent. out, fo any of his place these provisions are not applicable to exempted
of bisiness, without or non-taxable goods or
payment of tax, or when the sender is a person other than a registered taxable
; person.
(#) supply such inputs ‘or capital goods (other Gi) It is not compulsory that job work provisions should
than moulds and dies, be followed by the
jigs and fixtures, or tools), within one principal. The principal can send the inputs or
year and three. years, capital goods after
respectively, of their being sent out from payment of GST without following the special procedure.
the place of business of a In such a case,
job worker on payment of tax within india, the job-worker would take the i put tax credit
or with or without and supply back the
payment of tax for export, as the case may be." processed goods (after completion of job-work) on
payment of GST.
3. Itis important to note that there is no time ; Q. 41. Is GST payable on job work?
limit for bringing back moulds
, and dies, jigs and fixtures, or tools. Ans, GST’ on service charges of job worker, GST
: willbe payable on the job
work charges including on any material used by the
Se

. The goods shall not be permitted to be job worker at his own level.
He

supplied from the place of

business of a job worker unless the ‘princi Principal willbe entitled to take tax-credit of the same
pal declares the place of subject to usual
business of the job-worker as his additional conditions.
place of business except in a
case ,where the job worker is registered. Transitional provision. In case any inputs or semi-finished
2". goods had been
5. ITC shall be allowed to the principal: temoved before the appointed date from the factory of the
iputs sent to job worker even manufacturer and sent
though they sell them dixectly.from job to.a job worker for carrying further processing, testing, repair or for a similar
orks ‘premises.
purpose, and the same is received on or after the appointed
date, no tax shall be
payable if the following conditions are satisfied:
* Underlying goods are returned tothe factory within 6 mouths
from the
jigs and fixtures, or tools) sent for job-work are not appointed date (extendable for a maximum period of 2 months).
received back by the
principal
after completion af job work of otherwise,,or * Declaration of the goods held by job worker is done in specified
are not supplied form
from the place of business of the job worke and manner. .
r within a period of one or
» three year(s} respectively of their being sent * Supply of semi-finished goods or finished goods is done only on
out, it shall_be deemed that
such inputs or capital goods had been suppli payment of tax in India. ;
ed by the principal to the
job-worker on the day when the said inputs
or capital goods were sent we 3,12 Reverse Charge Mechanism
out.
8. Any waste and scrap generated during the Q, 42. What is Reverse Charge Mechanism under GST?
job work may be supplied by Ans. Generally, the supplier of goods or services is liable
the job worker directly from his place of busine to pay GST.
ss on payment of tax, if However, in specified cases like imports and other notified supplies, the liability
such job worker is-registered, or by the princi
pal, if the job worker is not may be cast on the recipient under the reverse charge mechanism. Reverse
registered. aon 4
| 9. It is important -tonote that for the purposes of
; Charge means. the liability to pay tax is‘on the recipient of supply of goods or
job work, the input services instead of the supplier of such goods or services in respect of notified
includes intermediate~goeds- -azising from any treatment
or process categories of supply.
carried out on the inputs by the principal or the
job worker. Two types of Reverse charge scenarios provided in law:
Q. 39. What kind of invoice is required to be
issued in case of Job Work? First is dependent on the nature of supply and/or nature of supplier. This
Ans. For the. purposes of transportation of goods
for job work, the Consignor scenario is covered by Section 9(3) of the CGST/ SGST/UTGST. Act and Section
may issue’a delivery challa n, serially numbered, instead of tax invoice at the
of removal of goods for transportation. time 5(3} of the IGST Act.
- As per the provisions of Section 9(3) of CGST/SGST/UTGST Act, 2017 or
The delivery challan shall be prepared in triplic
ate, in the case of supply of Section 5(3) of IGST Act, 2017, the Government may notify specify categories of
goods, in the following manner:
; supply of goods or services or both, on which the tax shall be paid on Reverse
(}) the original copy being marked as “original
for Consignee’, charge basis by. the recipient of such goods or services or both. All the provisions
of this Act shall apply to such recipient as if he is the person 1 Hable for paying
p the * the date immediately following 60 days from the date of issue of invoice
tax in relation to the supply of such goods or services or both.
or similar other document.
Second scenario is covered by Section 9(4) of the CGST/SGST (UTGST) Act
Where it is not possible to determine time of supply using above methods,
and Section 5(4} of the IGST Act where taxable supplies by any unregistered
time of supply would be the date of entry in the books of account of the recipient.
person to’ a’registered person is covered.
Q. 46, Enlist the various compliances in respect of supplies under reverse
Section 9(4) of CGST/ SGST/UTGST Act, 2017 or Section 5(4) of IGST Act, charge mechanism?
2017 provides that the tax in respect of the supply of taxable goods or services or
Ans, Conipliances in respect of supplies under Reverse charge mechanism:
both by a supplier, who is not registered, to a registered person shall be paid by
(1) Merition in invoice. As per Section 31 Of the CGST Act, 2017 read with
such person on reverse charge basis as the recipient and all the provisions of this
Rule 46 of the CGST Rules, 2017, every tax” invoice has to mention
Act shall apply to such recipient as if he is the person liable for paying the tax in
whether the tax in respect of supply in the invoice is payable on reverse
relation to the supply of such goods or services or both. Accordingly, wherever a
charge. Similarly, this also needs to be mentioned in receipt voucher as .
registered person procures supplies from an un-registered supplier, he needs to
wellas refund voucher, if tax is payable on reverse charge.
pay GST on reverse charge basis. However, supplies where thé aggregate value
(ii) Maintenance of accounts by registered persons. Every registered person
of such supplies of gocds or service or both received by a registered person from
* is required to keep and maintain records. of all supplies attracting
any or all the unregistered suppliers is less than %5,000 in a day are exempted.
payment of tax on reverse charge.
However, All categories of registered persons are exempted from: the provisions of
(iii) Payment only be e-cash ledger. Any amount payable under reverse
reverse charge fill 31.03.2018. This exemption is available only till 31.03.2018.
charge shail be paid by debiting the electronic cash ledger. In other
The provisions of Section 9(4) of the CGST Act, 2017, will not be applicable to
words, reverse charge liability cannot be discharged ‘by using Input iax
supplies made to a TDS deductor in terms of Notification No. 9/2017 Central Tax
ctedit. However, after discharging reverse charge liability, credit of the
(Rate) dated 28.06.2017. .Thus, Governmierif’ entities who are TDS Deductors
under Section 51.of CGST Act, 2015, need not pay GST under reverse charge in
same can be taken by the recipient, if he is otherwise eligible.
(iv) Invoice level information in respect of all supplies attracting reverse charge,
case of procurements from unregistered, suppliérs.
rate wise, are to be furnished separately in the Table 4B of GSTR-1.
Q. 43, When a person i required to’get registered under RCM?
{v) Advance paid for reverse charge supplies is also leviable to GST. The
Ans. Any person whois required to pay tax under Reverse charge has to
person making advance payment ‘has to pay. tax on reverse charge basis.
compulsorily register under GST and the threshold limit of ¥20 lakh (710 lakh for
Q. 47. Enlist the various supplies of goods under Reverse charge
special category states except J&K) is not applicable to them.
mechanism, .
Q. 44. Can a person paying tax under RCM claim ITC?
Ans. A supplier cannot take ITC of GST: paid on goods or services used to
Ans. Supplies of goods under Reverse charge mechanism
make supplies on which recipient is liable to pay tax. .
Q. 45. Explain the provisions regarding Time of Supply under RCM.
Ans. The time of supply is the point when the supply is liable to GST. One of 4. | Cashewnuts, not shelled | Agriculturist Any registered person
the factors relevant for determining time of supply is the person who is liable to or peéled= -~ ; ;
pay tax. In Reverse charge, recipient is liable to pay GST. Thus time of supply for 2. | Bidi wrapper leaves |. Agriculturist Any registered person
supplies under reverse charge is different from the supplies which are under (tendu) ‘ ;
forward charge. 3. | Tobacco leaves Agriculturist! Any registered person
In case of supply of goods, time of supply is earliest oft
4. 1) Silk Yarn Any person whoj Any registered person
* date of receipt of goods; or manufactures silk or
* date of payment as per books of accounts or date of debit in bank
silk worm cocoons for
account, whichever is earlier; or
‘supply of silk yarn.
the date immediately following 30 days from the date of issue of iinvoice
or similar other document.
5. | Raw cotton Agriculturist Any registered person
In case of supply of services, time of supply is earliest of: 6. | Supply of lottery State Government, | Lottery distributor or
* date of payment as per books of accounts or date of debit in bank Union territory or | selling agent.
account, whichever is earlier; or any local authority.
 a2) 8
7. Used. vehiclés, seized Central Government, Any registeed person, 2. services specified below:
and confiscated goods, i State Government,
old and used
() service by the
goods, Union territory or a
waste and scrap. Department of posts
_local authority. by way of speed
Supplies of services under Reverse charge mecha post, express parcel
nism:
post, life insurance,
aices . and agency services
Any service supplied. by Any person located in provided te a person
Any person ldcated in
any person who is a non-taxable other than . Central
terri- the ‘taxable territory
located in a non-taxable tory. Government, State
other than nontaxable
territory to any person Government or
online recipient.
other than non-taxable Union territory or
online recipient. local authority;
Goeds Transport Agency Gif) services in relation
GTA who has not
Nn

Any factory society, to an aircraft or a

(GTA) Services. paid integrated tax at cooperative society, vessel, inside or out-
the rate of 12%. registered person, body side the precincts of
corporate, partnershp a port or an airport;
| firm,. casual taxable (iii) transport of . goods
person; located in the or passengers.
taxable territery Reverse
Charge Mechanism in Services’ supplied by a A director of a The company or a
director of a company or company or a body body corporate located
GST.
Legal Services by adi a body corporate to the corporate . in the taxable territory.
ion)

An individual. advocate Any business entity said company or the

including a senior located in the taxable body corporate,
advocate or firm of territory.
advocates, Services supplied by an An insurance agent. Any person carrying
Services supplied by an insurance agent to any on insurance business,
An arbitral tribunal. Any business entity person carrying on located in the taxable
arbitral tribunal . toa located in the taxable
business entity. _ insurance business. territory. _
territory,
Services provided by way Services supplied by a A recovery agent. A banking company
a

Any person. Any body corporate

of sponsorship to . any recovery’ agent to a or a financial insti-
or. partnership firm banking company or a tition or a non
body corporate" or located in the taxable financial institution or a banking financial
partnership firm. ~ territory. non-banking financial company, located in
Services supplied
by the Central Government, Any business entity company. the taxable territory.
Ceniral Government] State >
State Government, Union
Government, located. in the taxable “70. Services supplied by a ‘A person located in Importer, as defined
Union territory or territory. person located in non- non-taxable territory.
territory or in clause 26 of Section
local local authority.
authority to a business taxable territory by way 2 of the Customs Act,
entity excluding — of transportation of goods 1962 (52 of 1962), lo-
1. renting of immovable by a vessel from a place cated in the taxable
property, and
outside. India up to the territory.
customs station of
clearance in India.
 11. Supply of servicés by an
author, music composer,
Author or
composer photograph
music Publisher, music
company, producer or :
Practical Questions cccou: :
photographer, artist or her, artist, or the like. the like, located in the : Q. 1. Mr. S a supplier of goods, pays GST under regular scheme. He has
the like by way of made the following outward taxable supplies in the month of December, 2017:
taxable territory Reverse:
transfer or permitting the Charge Mechanism. in: Particulars Amount (%)
use or enjoyment of a GST. Intra-state supply of goods 12,00,000 GST @ 12%
copyright covered under Intet-state supply of goods 10,00,000 GST @ 12%
Section 13(1)fa) of the He has also furnished the following. information in respect of purchases
Copyright Act, 1957 made by hiin duririg the same tax period: an
relating to original Patticulars Amount (@
literary, dramatic, musical Intra-state purchase of goods. 6,00,000 (Exclusive of GST} “ GST @ 12%
or artistic works to a inter-state purchase of goods 2,00,000 (Exclusive of GST) GST @ 12%
publisher, music company, Mr. S bas the following ITCs with him as on 1-12-2017:
producer or the like. CGST SGST - - IGST :
12. Supply of services by-the Members of
=70,000 %60,000 %45,000
Over- Reserve Bank of India.
members of Overseeing seeing Compute the net GST payable by Mr. S for the month of December, 2017.
Committee
Committee to Reserve Sel. Computation of GST payable by Mr. S on outward supplies
constituted by the
Bank of India. Reserve Bank of India.
oi ae Particulars EGST SGSTS) WIGST @e|:-GST (2)
Intra-state supply of goods |. . ;
GST ‘@ 12% on! #12,00,000 . 72,000 72,000 _ 1,44,000
inter-state supply of goods : .
IGST.@ 12% on 10,060,000 1,20,000 1,20,000
Total GST Payable 2,64,000
; Computation of Total ITC
oN Pakei@idlars PEGS
@ 6%H2)( SC (2) | IGST-@.12% (F
Openinih ITC 70,000 . 60,000 45,000
Aad: ITC on Intra-state purchases of goods :
: valuing £600,000 @ 12% =~ 36,000 36,000 Nil
Add: ITC on persia purchases of goods
~ valuing / 2,00,000 @ 12% Nil . Nit 24,000
Total available credit 1,06,600 96,000 . 69,000
Computation of GST payable from Electronic credit ledger —
articular GST-@'64 IGST @:12%
asm
Total ITC available 4,06,000: 96,000 69,000
Less: GST pajable 72,000: 72,000 1,20,000
Balaneé ITC, available 34,000 - : 24,000 (51,000)
Less: Utilizedfor |GST 34,000 ° 17,000" 51,000
Net GST Payable . soo NIL Li NiL NIL
* Unutilised ITC on 01-01-2018 is 77,000 (SGST).
Q. 2. Greysham & Co., a registered manufacturer is engaged in taxable
supply of goods. It procured the following goods during the month of January.
Determine the amount of Input Tax Credit available by giving necessary
explanations for treatment of various items.
 a ue a cE Ue | daput Tax paid (2): Sol.” Computation of Liability of Everest I faders
‘Laptops used in office within the factory i : 30,000 se Particulars 2 : : CGST (€) SGST (%} |. IGST (%)
Truck used for transportation of inputs within the factory 2,210,006 inter. State Sale:
- Capital goods used exclusively for non business purposes 44,000 Product A scold to dealer in Anmedabad
Electric Motars obtained from an Unregistered supplier on which tax ’ (IGST @ 12% on %50,000) _ —- - . 6,000
has been paid by Greyshyam & Co. on Reverse charge basis 7 2,500 Product B sold to dealer in Ahmedabad .
Building Material used in the construction of Office building “44,520 (IGST @ 18% on %30,000) — ~ 5,400
“Capital Goods used exclusively for making outward supplies to SEZ unit 24,500 Less; Eligible ITC on purchase from, Ludhiana ; .
Sol. Computation of Input Tax. Credit available to Greysham & Co. (%82,600 « 18 + 118) _ _ (12,800}
Unutilised ITC (1,200)
Particulars 0: eae SHE EAE era kee eee oe Intra-state Sale:
Laptops used in office within the factory 30,000 Product 0 soid within Haryana
Truck used for transportation of inputs within the factory’, Bees 2,20,000 (CGST/SGST @ 9% each on $40,000). 3,600 3,600
Capital goods used exclusively for non-business purposes", . NIL Less: Eligible [TC on local purchase
Electric Motors obtained from an ‘Unregistered supplier on which tax [850,400 x 12 + 112], ie, 75,400 : 2,700 2,700
has been paid by Greysham & Co. on Reverse charge basis* 3 2,500 Net amount of CGST/SGST/IGST $00 900
Building Material used in construction of office building’, Nil Less; \GST used to set-off payment liability of
Capital Goods used exclusively for making outward supplies to SEZ unit*s 24,500 CGST and SGST in order . 800 300 1,200
Total Input Tax Credit available to Greysham & Co. 2,77,000 Net CGST Payable NIL 600 Nil
Working notes:
Q. 4. The following are details of purchase and sales effected by M/s Crown
*, As per Section 17(5)(a) (Hi), Input tax credit’ is available: as “the Motor vehicles and other
conveyances are being used for transportation: of: inputs with in the factory. Associates, a registered manufacturer under CGST Act, 2017:
*, As per Section 17(5),ns aut tax credit shall be admissible in
i case of capital goods not being (i) Purchased Raw Material ‘x’ from a local dealer for %86,100 (inclusive
used for Business. of GST @ 5%).
an “Unregistered supplier on which tax has been paid by (ii) Purchased Raw Material ‘Y’ from a local dealer for %1,12,000 (inclusive
charge basis is eligible for Input tax credit.
*, As per Section 17(5)(d), TTC is not available on goods o:or services used in construction of an of GST @ 12%).
immovable property. (iii) Purchased capital goods from within ‘the state to be used in the
*5 Input tax credit of tax paid on capital goods used for "making taxable supplies to SEZ is manufacture of taxable goods for €1,96,000 {inclusive of GST @ 12%).
admissible even though it is a zero rated supply. (iv) Other Direct and Indirect expenses €58,000.
Q. 3. Everest Traders, a registered dealer in Ambala, furnishes the following (v) Take Profit margin @ 5% on total cost.
details of purchase and sales pertaining to » the month of November; (vi) During the month of October, 70% of the production is sold within the
state. It attracts GST @ 12%.
Calculate the amount of CGST and SGST payable after utilising Input tax
Product A purchased from local market (including GST @ 12%) . . 50,400
Product D purchased from Ludhiana (inchiding IGST @ 18%)
credit for the month of October, assuming that no opening balance of Input tax
82,600 credit is available.
Sales made during the month to a Dealer of Ahmedabad
ProductA. . ‘ Sol. Computation of Invoice Value
50,000
Product D ™“ . 30,000 “Particulars 0.0. an one Tid)
Sales of product D toa Dealer of Kamal 40,000 Purchase of Raw material 'X’ from a local dealer (eas 100 « 100 + 705) 82,000
All the above amounts of sales are exclusive of GST, Compute the GST Purchase of Raw material ‘Y’ from a local dealer {%1,12,000 = 100 = 112) 1,00,000
Liability of Everest Traders, if any, for the month of November. Other direct and indirect expenses 58,000
Total Cost of goods manufactured . 2,40,000
i Cost of goods sald (70% of goods produced were sold Le., 70% of $2,40,000) 1,68,000
, Add: Profit margin @ 5% of Cost 8,400
: Total Sale Value . 1,76,400
88 Om “SHIVA DELHI UNNERSITY
sees
Computation ofo f Tax Liability
“Particulars. CCST RY:
Output tax liability for the month of October @1 12%
(being CGST 6% and SGST 6%) [%41,76,400 * 12%, ie, 21,168) 10,584 10,584
Less: Eligible Input tax credit in respect of purchases of — ,
Raw material ‘A’ [%82,000 x 5%), ie., 74,100 (2,050) (2,050)
Raw material 'B’ [21,00,000 x 12%], ie., $12,000 (6,000) (6,000)
Capital Goods (21,96,000 x 12 + 112], ie, 224,000 ‘(40,500) (10,500)
CGSTISGST credit to be carried forward (7,966) {7,966)

eee SS

| PROCEDURES
> 4.1 Tax Invoice
Q. 1. What is Tax invoice? Explain the types of tax invoices under GST.
Ans. GST invoice or tax-inveice is a commercial dogument that must be issued
by a seller to a buyer. Entities registered under, GS in st issue GST invoice for
every taxable supply of goods and servic a ioices also serve as legal
documents, demanding paynient for oods: rvices, Once payment is made on
an invoice by the buy: Ould ‘serve as a legal document showing
title to the property pur¢
There ave mainly 3 types’ of Invoices under GST:
(i) Tax Invoice, For taxable supplies either within state or outside state and
the person is required to collect and pay the tax on such. supplies.
(#) Bill of Supply. The supplies on which the person is not required to
collect and pay the tax. These are mainly issued by Composition Dealers
arid Exporters.
(ii) Payment Voucher. This voucher is required. to be issued when the tax is
payable by the receiver of goods or services or both. It covers Importers
and Reverse Charge Mechanism of paying taxes.
Q. 2. What details are required to be mentioned on a, GST Invoice?
Ans. Detailed rules and guidelines for issue of invoice and GST invoice format
has been provided for in the GST Tax Invoice, Credit and Debit Notes rules. As
per the GST invoice rules, all GST invoices issued in India must have the
following details mandatorily: .
1. Name, address and GSTIN of the supplier of goods or services.
2. Invoice number, unique for each financial yéar which is a consecutive
serial number not exceeding sixteen characters, in one or muliiple series,
cdntaining alphabets or numerals or special characters— hyphen or dash
ene ee a nine
arid slash, . .
 Oe 0s CHAPTER 4: PROGEDUBES aS
. Invoice date -- Sample GST Tax Invoit@Format—
Ga
~ . Name, address and GSTIN ofthe recipient of goods or services. In case
the recipient is not registered undet GST, then name and address of the VERVE Financial Services Pvt. Lid. TAX INVOICE
recipient and the address of delivery must be mentioned on the invoiceif 6Spurtank
Dhannamal
Road, Street,
Chetpet Invoice Number : 2017-40
purtank Road, Chetpet,
the value of the taxable supply is more than ¥50,000. Chennai-8000 31. . i
Invoice Date :+ 20-07-2017
20-07-
5. If an invoice value is less than %50,000 then name and address of the TAMIL NADU Payment Due Date : 20-07-2017
recipient and the address of delivery can be mentioned; if required or GSTIN : 33AABCL398G27H
requested by the recipient of goods and service.
6. HSN Code or SAC Code for the goods or service. The requirement for Customer : Ajeeth Kumar
mentioning HSN Billing Address Shipping Address
code or SAC code on tax invoice has been relaxed for
Ajeeth Kumar Ajeeth Kumar
taxpayers whose turnover is below €1.5 crores.
6 Dhannamal Street, 6 Dhannamal Street,
. Description of the goods or services.
won}

Spurtank Road, Chetpet, Spurtank Road, Chetpet,

. Quantity and unit-of measurement. . Chennai-600031. Chennai-600031,
. Total value of supply of goods or services. TAMIL NADU TAMIL NADU, INDIA
Go

. Taxable value of the supply of goods or services taking into account

discount or abatement, if any.
Taxable
11. GST rate applicable along with the amount of CGST, SGST, IGST and No, Name Qty.| Rate) Disc.| Amount; % | Amt/% | Amt | % | Amt | Cess
GST Compensation Cess payable by the recipient. : 1. | GST Registration- | 1 | 4152/ 0 4152 Q Q 9 i 373,68 | 9 | 373.68) 0
12. Place of supply along with the name of the State, in the case of a supply Standard Package |
in the course of inter-State trade or comimerce..*-
13. Address for delivery ofgoods and: Services, if it is different from the Taxable Value ‘ 4152
place of supplyai® & ee
14, Whether tax is payable’ on’teverse charge basis. Central Goods and Services Tax {GST) * 373.68
15. Signature or ‘digital’ signature of the supplier or authorised State Goods and Services Tax (SGST) 373.68
representative. ; : |
Q. 3. Explain the manner of issuing Invoicesin GST. Integrated Goods and Services Tax (IGST) o-
Ans. The manner of issuing Invoices in GST is as follows: , GST Cornpensation Cess GQ
1. Tax Invoice for Supply of Goods is to be issued in 3 copies as:
* Original Copy for the Recipient Total Payable 4899.36
* Duplicate Copy for the Transporter
* Triplicate Copy for the Supplier | . Thank you for your business!
2. Tax Invoice for Supply of Services is to be issued in 2 copies as:
* Original Copy for the Recipient Q. 4, When should a tax Invoice be issued under GST?
* Duplicate Copy for the Supplier Ans. Time of supply for goods or service is when GST becomes payable.
3. Bill of Supply for both godds and services can be issued as: Issuance of tax invoice is an important element in determining time of supply. In
* Original Copy for the Recipient most scenarios, time of supply of goods or service is the date of issuance ‘of an
* Duplicate Copy for the Stippiter- invoice or receipt of payment, whichever is earlier. If goods or services have been
supplied, then invoice must be issued within a period of 30 days. Hence, GST
invoice should ideally be issued when payment for goods or services is
reasonably assured or if the goods or services have been supplied to the recipient.
It is very important to note that the supplier becomes liable for remittance of
GST to the government on the issuance of tax invoice, even if payment has not
been received from the customer. Hence, if payment is not reasonably assured
and goods or services have not been delivered, an estimate can be issued by the
supplier. .
,
 “928 SHIVA DELHMUNIVERSITY
SERIES BAe at OCEDLIRES’ m-92
> 4.2 Credit and Debit Notes Ans. Details to be covered in Debit Note and Credit Note:
name, address, and GSTIN of the supplier; :

°
Q. 5. When are Debit notes and Credit notes issued? : nature of the document;
Ans. When goods supplied are returned or when there is a revision in the
a Gonsecutive serial number containing only alphabets and/or numerals,

*
invoice value due to goods (or services) not being up to the mark or extra goods
urlique for a financial year;
being issued a Debit Note or Credit Note is issued by the supplier and receiver of
date of issue of such document, - ;
goods and services.
name, address and GSTIN/Unique ID Number, if registered, of the

a
A debit note or a Credit Note can be issued in two sttuations — : recipient; . ne ace pe
1. When the amount payable by buyer to seller decreases. There can be a
name and address of the recipient and the.address of delivery, along
change in the value of goods after the goods are delivered and invoice is issued
with the name of State and its code, if such recipient is unregistered;
by the seller. This can be due to a return of goods or due to the bad quality of the
setial number and date of the corresponding’ tax invoice or, as the case
goods delivered, etc. In this case, the value of goods decreases due to which a may be, bill of supply; ° .
Debit Note is issued by the purchaser to the seller. The Debit Note provides
the taxable value of goods or services, rate of tax_and the amount of the
details of the amount of money debited from the sellers’ account and also states

e
tak credited or, as the case may be, debited ‘to the recipient; and
the reason for the same. The reason behind this is that in the purchaser's books of
signature or digital signature of the supplier or his authorized
account the seller will have a credit balance. When a debit-note is isstied the
representative.
credit balance of the seller’s account decreases, thus reducing the seller’s balance.
Debit Note or Credit Note can be issued anytime i.e, there is no time limit for
Tt means that that lesser amount is required to be paid by the buyer to the seller
issuing the Debit ,Note. Also, Debit Notes and Credit Notes issue have to be
to settle his liability. Thus debit note reduces the lability for the buyer. The seller declared iis the GST Returns filedin the following month for the month in which
issues a Credit Note as a response or acknowledgmentto the Debit Note
document is issued % .
” 2. When the amount payable by buyer to seller increases. When the value of
The details have to be declared on earlier of the following dates:
invoice increases due to extra godds beingdelivered or the goods already * by the 30th of September following the end of the year in, which such
delivered have been charged at ari incorrect lesser value, a Debit Note is required supply was made, : :
to be issued. The Debit Noite,
‘in this case, is issued by the seller to the buyer and
* the date of filing of the relevant annual return.
the buyer as an acknowledgment to the receipt of Debit Note issues a Credit
Note. The reason behind this is that in the seller’s books of account the buyer will Note: The tax liability willbe adjusted but no reduction in output tax liability of the supplier
will be permitted if the incidence of tax and interest on such.supply has been passed on to any
have a debit balance. When a debit note is issued the debit balance of the buyer's other person. .
account increases. It means that more amount is required to be paid by the buyer
to the seller to settle his liability. Thus, credit note from the buyer increases his 4.3 Return
liability. . Q. 9. Explain different types of returns under GST.
Q. 6. In which cases a Debit Note is issued under GST? Ans. Different type of returns
Ans, Cases where Debit note has to be issued by the supplier:
Rete ih Bij in?
() Original tax invoice has been issued and taxable value in the invoice is
less than actual taxable value. Be
(ii) Original tax invoice has been issued and tax charged in the invoice ig less GSTR-1 | Details of outward supplies of | Registered Taxable| 10% of the
than actual tax to be paid. taxable goods and/or services| Supplier. next month.
Q. 7. In which cases a Credit Note is issued under GST? effected, ; .
Ans, Cases when Credit note is ta be issued by supplier: GSTR-2 | Details of inward supplies of | Registered Taxable| 15% of the
(i) Original tax invoice has. been issued and taxable value in the invoice taxable goods and/or services | Person. next month.
exceeds actual taxable value. “| effected claiming input tax credit.
(i) Original tax invoice has been issued arid tax charged jn the invoice GSTR-3 | Monthly return on the basis of | Registered Taxable| 20 of the
exceeds actual tax to be paid. ‘ finalization of details of outward | Person. next month.
(iii) Recipient returns the goods to the supplier. supplies and inward supplies .
(iv) Services are found-te-be-deficient. . . along with the payment of
Q. 8 What are the details to. be covered in Debit Note and Credit Note? amount of tax.
 Quarterly return for composition Composition
ae _ CHAPTER 4; PROCEDURES a 95
sup-| 18" of the * a reconciliation statement, reconciliitg THE Vaneof
“| taxable person. ‘ plier. supplies declared in
month succ- the return with the audited annual financial statement,
_
eeding qua- * and other particulars as prescribed.
. : rter. Jf any taxable person, after furnishing a return discovers
GSTR-5| Return for Non-Resident foreign | Non-reside any omission/
nt Tax-| 20% of the incorrect details (from results of audit), he can rectify subject to
taxable person. payment of
able person. next month. irtterest. However, no rectification will be allowed after
the due date for filing of
GSTR-6 | Return for Input — Service | Input return for the month of September or second quarter, {as
Service| 13! of the the case may be),
Distributor. — Distributor. following the end of the financial year, or the actual date of filing
next month. | of the relevant
GSTR-7 | Return fot authorities deducting
| Tax’Deductor.
annual return, whichever is‘earlier ,
10% of the
tax at source,
next month.
GSTR-83 | Details of supplies effected |-E-commerce oper-; 70# of the
through — e-commerce operator'| ator/tax colléttor: | next month.
and the amount of tax collected.
GSTR-9 Annual-Retum Registered Taxable} 318¢ Dec. of
Person. next financial
This rectification will not be allowed where results are from scrutiny
year /audit by
GSTR-10] Final Return the tax authorities. :
Taxable... person | Within 3 Q. 11. What is Audit by Tax Authorities? .
W, registration| months of Ans. Audit by Tax Authorities:
en-surrend-| the date of
* The Commissioner of CGST/SGST (or any officer authoriz
‘e3.ered or cancelled. | cancellati
on ed by him)
~ may conduct audit of a taxpayer. The frequency and manner
cy date of of audit
shall be as prescribed,
cancellation * A notice will be sent to the auditee at least 15 days before.
order, which- .
—_ * The audit shall be completed within 3 months from date of commenc
: ce ever is later. e-
GSTR-11 | Details of inward supplies to be ment of the audit.
| Person having | 28. of the * The Commissioner can extend the audit period for a further
furnished. by a person having | UIN and 6 months
claiming; month follo- with reasons recorded in writing.
UIN, . refund, :
wing the Obligations of the auditee:
month for The taxable person will be required to
! which state- * provide the necessary facility to verify the books of accounts/ other
. ment is filed. ° doeuments as required, : ;
* to give information and assistance for timely completion of the audit.
Findings of Audit: ;
On conclusion of an audit, the officer wiil inform the taxable person within
30
days of: .
* the findings,
Every registered taxab
le person whose turmover during * their reasons, and
exceeds the prescribed limit [As per the latest a financial year
GST Rules, the turnover limit is * the taxable person’s rights and obligations
above %1 crore] shallget his accounts audited by a Chartered if the audit results in detection of unpaid/ shortpaid tax or wrong refund
Cost Accountant. He shall electronically Accountant or a or
file: _ wrong input tax credit availed, then demand and recovery actions will be
* an annual return using the Form GSTR initiated.
9B alongwith the reconciliation
statement by 31%¢ December of the next Financial
Year,
* the audited copy of the annual accou
nts,
 furnish a return for each tax period. This means GST continues to promote self-
Q. 12. When can a special audit be initiated? assessment just like it was in the Excise, VAT and Service Tax.
Ans. The Assistant Commissioner may initiate special audit, considering the Q. 19. What is Provisional Assessment under GST?
aah el Me

nature and complexity of the case and in the interest of revenue. If during any Ans. An assessee can request the officer for provisional assessment if he is
stage of scrutiny/enquiry/investigation he is of the opinion that the value has
esa at MananAPL ROSIE Me Tila Pk ar een Caen

unable to determine value of goods and services or rate of tax applicable.

not been correctly declared or the wrong credit has been availed then special Unable to determine value due to difficultyiin—
27:

audit can be initiated. _® Calculating the transaction value,

Special audit can be conducted even if the tax payer’s books have already been ¢ Understanding whether certain receipts.3 should be included or not.
audited before. Unable io determine rate of tax due to difficultyiin—
Q. 13. Who will order and conduct special audit? * Classifying the goods or services.
Ans. The Assistant Commissioner (with the prior approval of the » Identifying whether any notification is applicable or not.
Commissioner) can order for special auctit (in writing). The special audit will be Provisions of Provisional Assessment— :
carried out by a Chartered Accountant or a Cost Accountant nominated by the * Requests for provisional assessments will be given in writing.
Commissioner. The proper officer can allow paying tax on provisional basis at a rate or
Q. 14. What is the time limit for conducting special audit? on a value specified by him.
Ans. The auditor will have to submit the report within 90 days. This may be Order will be passed within 90 days from date of request.
further extended by the tax officer for 90 days on an application made by the The-taxable person has to issue a bond with a security promising to pay
taxable person or the auditor. the difference between provisionally assessed tax and finally assessed
Q. 15. Who will bear the cost of special audit? | tax, '
Ans. The expenses for examination. and audit including the auditor's Provisional assessment will be followed by final assessment. The proper
remuneration will be determined and paid by the Commissioner. officer can ask for information before final assessment.
Q. 16. What steps neéd to -be takeri-on findings of special audit? 'Q. 20, What is the time limit for final assessment?
Ans. The taxable persén will be given an opportunity of being heard on the Ans. The final assessment will be done within 6 months of the provisional
findings of the special audit. assessment. This can be extended for 6 months by the Joint/Additional
If the audit results in detection of unpaid/shortpaid tax or wrong refund or Commissioner. However, the Commissioner can extend it for further 4 years as
input tax credit wrongly availed then demand and recovery actions will be he deems fit. ,
initiated. Q. 21. How are interest on additional tax payable and refunds calculated?
= 4.4 Assessment Ans. The tax payer will have to pay interest on any tax payable under
provisional assessment which was not paid within the due date. Interest period
Assessment means determination of tax liability under GST law. Below are the
various types of assessments under GST. will be calculated from the day when tax was first due on the goods/services
(and not the date, of provisional assessment) till. the. actual payment date,
Q. 17. Explain the different types of assessments under GST,
Ans. Tijpes of assessments under GST: irrespective of payment being made before or after final assessment. Rate of
Self-assessment interest will be maximum 18%.
Provisional assessment If the tax as per final assessment is Jess than the provisional assessment, the
Scrutiny assessment taxable person will get a refund as well as ‘interest on refund.
Best judgment assessment Rate of iriterest will be maximum 6%.
Assessment of non-filers of returns Q. 22. Whatvis scrutiny of returns under GsT?
Assessment of unregistered persons Ans. The proper officer can scrutinize the return to verify its correctness. Itis a,
*

Summary assessment non-compulsery pre- adjudication process. In simple words, it is not mandatory
;
Only self-assessment is done by the taxpayer himself. All the other assessments for the officer to scrutinize.a return. Scrutiny of returns is not a legal or judicial
are done by the tax authorities. proceeding, i.e, no order can be passed: The officer will only ask for explanations
Q. 18. What is self-assessmentit under GST? on discrepancies noticed.
Ans. Every registered. taxable person shall himself assess the taxes payable and Q. 23. What steps. are taken by the proper officer in case explanation is
satisfactory or when explanation is not satisfactory?
 Ans. When Explanation is Satisfactory. lf the officer
finds the explanation
satisfactory, the taxable person will be informed and
no further action will be
taken,
When Explanation is not Satisfactory:
The proper officer will take action—
‘
* If the taxable person does not give a satisfactory.
explanation within 30
days; or .
° He does not rectify the 4 iscrepancies within a reaso
nable time (not yet
prescribed),
The officer may —
* Conduct audit of the tax payer u/s 65.
° Start Special Audit procedure u/s 66,
* Inspect and search the places of business of
* Start Demand and Recovery provisions.
the tax payer.
SPECIAL PROVISIONS
we 5.1 Taxability of E-commerce
Q. 1. What is E-commerce? 5
‘Ans. Electronic Commerce or E-Commerce is detined under Section 2(44) of
CGST Act, 2017 as the supply of goods or services or both, including digital
products over digital or electronic network,
‘Q, 2. Who is an E-Commerce operator? -,
-Ans, Electronic Commerce Operator, or E-Commerce operator is defined as
any person who owns, operates or manages digital or electronic ‘facility or
platform for electronic cofinerce.
‘E-commerce includes all services or goods sold over the internet or any other
digital network. Jt includes even services sold online. E-commerce operator is
defined as any person who operates the platform, For example, Flipkart, Amazon
are few of the operators which will fall under the definition of E-commerce
operator. They own the platform for allowing traders to sell their products
online, ‘
Q. 3. Is GST registration compulsory for an e-commerce operator?
Ans, Whether one has just started their portal or own an existing e-commerce
portal, GST registration is compulsory. |
Section 24 af CGST Act, 2017 defines the suppliers who are required to obtain
registration regardless of applicability of Section 22,
Clause(x) of Section 24, specifies every e-commerce operator to take
registration.
GST has introduced the concept of Tax Collection at Source for e-commerce
operators. Every e-commerce operator is required to collect Tax at source from
the payment made to their sellers selling goods or services through portals
operated by them.
As per Section 52 of CGST Act, every electronic commerce operator, not being
 : SHIVA DECH! UNIVERSITY SERIES © 0,
an agent, shall collect an amount calculated at such rate not exceeding 1%, as operator in the godowns or warehouses, by whatever mame called,
may be notified by the Government on the recommendations of the Council, of mahaged by such operator and declared as additional places of business
the net value of taxable supplies made through it by other suppliers, Where the by such suppliers, as may be specified in the notice.
consideration with respect to such supplies is to be collected by the operator: Operator to whom notice is served is required to provide the details within 15
* Every e-commerce operator is required to collect tax at source (TCS) days from the date of service of notice. ;
regardiess of turnover or supply made through the portal. If details are not provided, then penalty which may extend to 725,000 may be
* [tis not applicable if the operator is operating as an agent. imposed ori operator. a
The rate is not specified but it will not be more than 1%.
TCS is applicable only when the payment from customer is received. by > 5.2 Anti-Profiteering .
the portal and then passed on to the seller, when the seller directly Q. 4. What do you mean by Anti-profiteering? , 5
receives payment from the customer, this provision is not applicable. Ans. Anti Profiteering is a check against profiteering —something which ought
* The TCS should be made on the net value of taxable supplies, net value is to be ethical but is now a legal issue in Goods and Service Tax. -
the total value of sales mace on the portal minus sales returns during the As per Section 171 of the CGST/SGST Act, any reduction in rate of tax on any
month. supply of goods or services or the benefit of input tax credit shall be passed on to
Due date of payment. The due date to pay the TCS to government is 10"? of the recipient by way of commensurate reduction in prices. An authority may be
every month following the taxable month. For example, Tax collected in the month constituted by the government to examine whether input tax credits availed by
of October should be deposited by 104 November. any registered person or the reduction in the tax rate have actually resulted in a
Monthly return. Every operator is required to file a monthly return (regarding commensurate reduction in the price of the goods or services or both supplied by
details of supplies) within 10 days after completion of month, the return contains him. ce
information such as details of outward supplies-of goods or services or both Q. 5. Write a note on Anti-profiteering authority.
effected through it, including the:supplies of goods or services or both returned Ans, Anti-profiteering Authority. The power has been given to Central
through it, and the amount collected. as TCS. ; Government to constitute an authority to oversee whether the commensurate
The monthly return ‘can bé revised any time before filing of return for the benefit of allowance of input tax credit or reduction in the tax rates have been
month of September or filing of annual return, whichéver is earlier. If there is any passed on to the final customer. Section 171(2) of the GST Act provides for
mistake in return, and output tax was paid less, the return should be revised establishment of an authority for an. anti-profiteering clausein order to ensure
along with payment of interest. that business passes on the benefit of reduced tax incidence on goods or services
For example, return filed for the month of January can be revised before the or both to the consumers. _ .
operator files the return for the month of September or annual return. If annual Object. The National Anti-profiteering Authority shall be responsible for
return is filed on 15h August then return of January can be revised before - applying ariti-profiteering measures in the event of a reduction in rate of GST on
15% Aupust. : supply of goods or services or, if the benefit of input tax credit.is not passed on to
Annual return. Every operator also needs ‘to file an annual statement the recipients by way of commensurate reduction in prices.
containing the details of outward supplies of goods or services or both effected Coustitution. Tie National Anti-profiteering Authority shall be headed by a
through it, including the supplies of goods or services or both returned through it senior officer of the level of a Secretary to the Government of India and shall
and the amount collected during the financial year. Due date to file annual have four. technical members from the Centre and/or the States.
statement is 31st December every year. The Authority under section 171 of the GST Act shall have the following
Details uploaded by E-commerce operator should be matched with details monitoring functions: , '
uploaded by online sellers. If any discrepancy is found in details, (q} Input tax credit availed by taxpayer have actually resulted in
return should
be revised after paying the extra tax and interest as commensurate reduction in price of goods/ services.
applicable as per Section
52(8) of CGST Act. (b) The reduction in prices on account of reduction in tax rates have actually
:
Any officer not below the rank of De puty Commissioner may resulted in a commensurate reduction‘in the price of goods/services.
serve a notice
to an operator for following details: The Government has notified anti-profiteering authority (APA) which will
.
1. Supplies of goods or services or both effected throug check any undue increase in prices of products of companies under GST. The
h such operator
during any period;
or : APA will work to check any undue increase in ptices of products by taxpayer
2. Stock of goods held by the suppliers making supplies companies linder the GST regime.
q through such
.
HW
 1028. W ySHIVADELHH LINER:
mone RIES
_ Various authorities. under GST law for anti- _o UCHAPTER. SeSPECIAL PROVISIONS “403

de etl Seana:
profiteering shall, thus fromprise
of the following: 2 with an 18% interest, reduce prices and if the consumer
. is not
iable, identif
"+ Natio nal Anti-Profiteering Authority, deposit the amount in a Consumer Welfare Fund.
* Stancing Committee on Anti-Profiteering, In yet another move, CBEC has issued an advisory to major
and consumer product
* State level Screening Committee. manufacturers to ensure that price reduction should take

wii alas odie

‘ place wherever rates
The powers to take action are also listed have been lowered so that. benefits may go to consume
as duties whereby it can order price rs. Restaurants are one of
reduction, refund of profit, recovery, such examples where there are complaints of non-pas
penalty or even cancellation of CST sing of the benefit to
registration. Theauthority constituted by Central Government consumers. Except restaurants in big hotels, GST has
will have powers been lowered from 18% to

Ee
to Lmpose a penalty in case it finds that the just 5% with no input tax credit benefit.
price being charged has not been . :
reduced consequent to reduction in'rate of tax or allowance Companies will have to ensure that retailers and distribu
tion chain pass on the

lS
of input tax credit,
During the two years of initial transition GST cut benefit to consumers with immediate effect, No
into GST regime, Anti-Profiteering delay will be allowed. It
Authority (APA) will step in and may ask is the company’s responsibility to ensure that its
businesses that have not passed on full entire retail chain follows its
benefits of reduced tax burden to consumers directives on pricing, If a trader is not selling-a good at
to make up for such benefit, with revised MRP, then it is the

aan
interest, . responsibility of the company. It will have to respond
to the Anti-proftiteering
Anti-Profiteering Authority (APA) shall act as Authority. In this action can only be taken against organiz
a monitoring and regulatory ed players as they are

Coe
authority to curb anti-profiteering practices of the ones who decide MRP.
tax payers under GST regime. ;
The APA shall have powers to: The: setting up of NAA has been expedited in view
of the fact that many
* Make company reduce the prices. traders and businesses have failed to pass on the
benefit to consumers. Activation
* Make company refund the money to the of this provision in the law might have been avoided
consumer along with interest.@ , had trade and industry
18% p.a. ves, passed on the eliminated cascading of taxes to consumers
Ae : by way of lower prices.
* Order company to deposit the refund ‘amountin the Consumer Welfare » 5,3 Avoidance
Fund (in case the: buyer: is not identifiable’: of Dual Control
* Impose
; A taxable person is required
monetary penalty;:equivalent to amount involved to pay both CGST and SGST. Thus, for same
in undue transaction, he will have to face two authorities.
profiteering. So This will make his life miserable
* Cancel registration’ of the assessee, as two authorities may take different view on same transactions. He will
~. face
Orders of authority may be for any of the follow with dual assessments, dual audits, dual demands etc. There will be two
ing:
* Reduction in prices. revisions, two rectifications and two appeals.
* Returning money to the customer along with Such dual control is unworkable. A taxable person
the interest, should be under one
° Depositing money in customer welfare fund authorit — either
y Centre or State. This has been agreed upon in GST
in case the customer does Council.
not claim it or is not identifiable. Principle of avoiding dual control is laudable. Howeve
. r, how bifurcation of
* Imposition of penalty equivalent to the amoun taxable persons will be made between State and Centre is not clear,
t of profiteering.
* Cancellation of registration. It Seems such bifurcation will be done on random
. basis. If so, this will lead to
Union Cabinet has. on 16 November, 2017 cleared chaos, In case of taxable persons having multi-state businesses, they’
the setting up of GST may be
National Anti-profiteering Authority (NAA). The -assessed by State Government authorities. in some States and by
post of Chairman and members Central
of the authority have been ‘created. paving the Government authorities in some’ other States, ‘This will lead
way for authority to be functional to different
soon, Ideally Government sheuld. have set up authorities taking different view on same transactions. Ideally,
NAA much earlier as consumers taxable persons
are the ultimate sufferers of price.hike, inflation having multi-state businesses (including telecom,
and undue profiteering. insurance) and those
O. 6. How is: anti-profiteering authority, an author predominantly in export and import field should
ity to benefit corsiumers? be under control of Central
Ans. Authority to benefit Consumers. The National Government.
Authority is an assurance to consumers, rofiteering Anti-P
If any consumer feels the benefit of tax Industries and businesses restricted to one State should
rate cuts is not being passed on, he can compla be under control of
in to the authority. Thé body is State ‘Government. This will ensure avoidance of
conflicting views by tax
mandated to ensure that the benefits of GST authorities on same issue.
rate reduction
on to is passed . .
consumers. .
The five-member anti-profiteering authority will have => 5.4 E-way Bills
power to ask those not Applicability, Every registered person who, causes
passing on the tax benefit to return the undue profit movement of goods of
earned to consumers along consignment value exceeding %50,000 (however the
registered person or, as the
 (VISIONS 105
104. SHIVA DEL UNIVERSIFY. SERIES
case may be, the transporter may, at his option, generate and carry the e-way bill kilometres within the State or Union territory from the place of business of the
even if the'value of the consignment is less than 50,000). transporter finally to the place of business of the consignee, the details of
; conveyance may not be updated in the e-way bill.
Provided also that where the goods are transported for a distance of less than
ten kilometres within the State or Union territory fromthe place of business of wenn FORM GST EWB-02 | remmomannsmnasccmanitcswins.
the consignor to the place of business of the transporter for further are intended to be transported in one
6.In case of multiple consignments
transportation, the supplier or the transporter may not furnish the details of indicate the serial number of e-way bills
conveyance, the transporter may
conveyance in Part B of Form GST EWB-01.
generated’ in respect of each such consignment electronically on the common
: « FORM GST EWB-01 portal and a consolidated e-way bill in FORM GST EWB-02 may be generated
Form GST EWB-01 contains two parts as follows: by him on the said common portal prior to the movement of goods.
1. PART A: INFORMATION ABOUT THE GOODS commer FORM GST EWB-01 BY TRAN SPORTER sopsuearenmnecrtit
* GSTIN of Recipient * Place of Delivery _ 7. Where the consignor or the consignee has not generated FORM GST EWB- O1
* Invoice or Challan Number * Invoice or Challan Date " in accordance with the provisions of sub-rule.(1) and'the value of goods carried
* Value of Goods , « HSN Code in the conveyance is more than fifty. thousand rupees, the transporter shall
* Reason for Transportation * Transport Document Number generate FORM GST EWB-01 on the basis of invoice or bill of supply or delivery
Every registered person who causes movement of goods of consignment - challan, as the case may be, and may also generate a consolidated e-way bill in
value exceeding 750,000— FORM GST EWB-02 on the common portal prior to the movement of goods.
{i) In relation to’a supply; or
(} For reasons other than supply; or 7 CANCELLATION OF E-WAY BILL we.
(iii) Due to inward supply from an unitegistered ‘person,
‘ps 8. Where an e- way bill has been ‘generated under this rule, but goods are either
shall, before commenceinent. “of such: movement, furnish information not transported-or are not transported as per the details furnished in the e-way
relating to the said. goods iint art A ‘of Form GST EWB-0i, electronically, bill, the e-way bill may be cancelled electronically on the common portal, either
on the common portal. directly or through a Facilitation Centre notified by the Cominissioner, within 24
2, PART B: INFORMATION RELATING TO TRANSPORTER hours of generation of the e-way Bill.
Providetl that an e-way bill cannot be cancelled if it has been verified in transit
(VEHICLE NUMBER)
Where the goods are transported by the registered person as a consignor or the in accordance with the provisions of Rule 138B.
recipient of supply as the consignee, whether in his own conveyance or a hired ‘VALIDITY OF E-WAY. BILL
one or by railways or by air or by vessel, the said persori or the recipient may
generate the e-way bill in Form GST EWB-01 electronically on the common 1. Upto 100 km ; one day
portal after furnishing information in Part B of Form GST EWB-01, 2. For every 100 km or part thereof thereafter one day
3. Where the e-way bill is not generated under swb-rude (2) and the goods are
handed over to a transporter for transportation by road, the registered person Under circumstances of an -~ exceptional nature, the goods cannot be
shall furnish the information relating to the transporter in Part B of Form GST transported within. the validity period of the e-way bill, the transporter may
t
generate another e-way bill after updating the details in Part B of FORM GST
EWB-01 on the common portal and the e-way bill shall be generated by the
EWB-O1.
transporter on the said portal on the basis of the information furnished by the
registered person in Part'A of Form GST EWB-01. Note: For the purposes of this rule, the “relevant date” shall mean the date on which the e-way
; bill has been generated and the period of validity shall be counted from the time at which the esvay
4, Upon generation of the e-way bill on the common portal, a unique e-way bill

PO
bill has been generated and each day shall be counted as twenty-four hours.
number (EBN) shall be made available to the supplier, the vecipient and the
transporter on the common portal. wane ACCEPTANCE OF E-WAY BY RECEIPIENT OF GOODS ..

Cm
5, Any transporter transferring goods from one conveyance to another in the
9. The- details of e-way bill generated under sub-rule (1) shall be made
course of transit shall, before such transfer and further movement of goods,
available to the recipierit, if registered, on the common portal, who shail

en reeene NRPS SI TRATES PEI

update the details of conveyance in the e-way bill on the common portal in
communicate his acceptance or rejection of the consignment covered by the e-
FORM GST EWB-01.
way bill.” |
Provided that where the goods are transported for a distance of less than ten
 10. Where the recipient referred to in sub-rule es 2 CHAPTE
5: SPECia
R l PROVISIONG!
‘acceptance or tejection within seventy two
(11) does not communicate his As already seen, the concept of
zero rating of supplies requires
107
hours of the details being made well as the inputs or input servic the supplies as
available to him: on then commo
portal, it shall be deemed es used in supplying the suppi
accepted the said details. that he has GST. This is done by employing ies to be free of
the following means:
11. Notwithstanding anything contained in (@) The taxes paid on the supplies
this ruie, no e-way bill is which are zera rated are refunded;
required to be generated — - (5) The credit of inputs/ input
; — services is allowed;
(a) Where the goods being transported are specif (c) Wherever the supplies are
ied in Annexure of Rule exempted, or the supplies are
made without
138 14); payment of tax, the taxes Paid
on the inputs or input services
(2) Where the goods are being transported by a non-m unutilised input tax credit is refun he, the
oiorised conveyance; ded.
(©) where the goods are beirig transported from the The provisions for the refund
port, airport, air cargo of unutilised input credit are
explanation to Section 54 of the CGST contained in the
compiex and land customs station to an inland contai Act, 2017, which defines refund as below
ner depot or a “Refund” includes refund of tax :
container freight.station for clearance by Customs; paid on zero-rated supplies of goods
and boih or on inputs or input services or services or
(i) in respect of movement of goods within such areas used in making such zero-rated Suppli
as aré notified under tax on the supply of goods regarded as es, or refund of
clause (d) of sub-rule (14) of rule 138 of the Goods deemed exporls, or refund of unutilised
and Services Tax Rules credit as provided under sub-section input tay
-of the concerned State, G3),
‘ ; Thus, even if a supply is exempted, the credit
«» 5.5 Zero-Rated Supply of input tax may be availed for
making zero-rated supplies. A registered
person making Zero rated supply can
As per Section 2(47) of the CGST Act, 2017,
a supply is said to be exempt, claim refund under either of the following options, namely:
when it attracts nil rate of duty or is specifically (2) he may supply goods or services or
exempted by a notification or both under‘bond or Letter of
kept Gut of the putview of tax (i.¢.,, a non-GS Undertaking, subject to such conditior’s;
pply)But if a good or service is safeguards and procedure as
exempted from payment of tax, itcannot may be prescribed, without payment of integ
tits zero rated. The reason rated tax and claim refund
is not hard to find. The inputs and put services Which go into the making of the of unutilised input tax credit; or
good or provision of service ha: y suffered tax and only the final product is (6) he may supply goods or services. or both,
subject to such conditions,
leichtleienieaeniantetaelenten a

exempted, Moreover, the*output is éxempted, tax laws do not allow safeguards and procedure as may be
prescribed, on payment of
availment/utilisation of Gédit on the inputs and integrated tax and claim refund of such tax
input services used for supply paid on goods or services or
of the exempted output. Thus, in a true sense the both supplied in accordance with the provi
entire supply is not zero rated. sions of Section 54 of the
Though the output suffers no tax, the inputs and CGST Act, 2017 or the rules made
input services have suffered tax thereunder,
and since availment of tax credit on input side As per Section 54(3) of the CGST Act, 2017,
is not permitted, it becpmes a.cost any unutilised input tax credit in
to the supplier. The concept of zero’ rating zero'rated supplies can be refunded, where
of supplies aims to correct this ver such supplies are made by using
anomaly. ; the option of Bond/LUT. :
Q. 7, What is Zero Rating? Q. & What is the difference between
zero-rated supplies and exempted
Ans. By zero rating it is meant that the entire value chain of the supply is | supplies? _
exempt from tax. This means that in case of zero Ans. Difference between zero rated supplies
rating, not only is the output and exempted supplies
exempt from payment of tax, there is no bar Exempted supplies
on taking/availing credit of taxes - 1: Zeto-rated supplies.
paid on the input side for making/ providing
the output supply. Such an “Exempt supply” means supply of | “Zero-rate
approach would in true sense make the goods or d supply” shall have the
services zero rated. any goods or services or both which
As per the GST Law exports_are.meant to meaning assigned to it in Section 16.
be zero rated. The zero rating attracts nil rate of tax or which may
principle is applied in. letter and spirit for export
s and supplies to SEZ. The be wholly-exempt from tax under
relevant provisions are contained in Section 16(1)
of the IGST Act, 2017, which Section li of CGST Act or under
States that “zero rated supply” means any of the follow
ing supplies cif goods or Section 6 of the IGST Act, and
services or both, namely:
; ineludes non-taxable supply.
(a). export of goods or services or both; or
(b} supply of goods or services or both No tax on the outward exempted | No
to a Special tax on the outward supplies; Input.
Economic Zone supplies, however, the input supplies | suppli
developer or a Special Economic Zone unit, es also to be tax free.
used for making exempt supplies to
be taxed.
 ips

ADA
S Sata aa
REECE

Credit of inprit tax needs’ to. be | Credit of input tax may be availed for
reversed, if taken. making zero-rated.
2, Issuing an invoice without making supply; _.
supplies, even if
No. ITC on the exempted supplies. such supply is an exempt supply ITC 3. Not paying tax collected for a period exceeding 3 months;
allowed on zerorated supplies. 4. Not paying tax collected in contravention of the CGST/SGST.Act for a
period exceeding 3 months;
Value of exempt supplies, for ; Value of zero rated supplies shall be
5. Noh deduction or lower deduction of tax deducted-at source or not
apportionment of ITC, shall include | added along with the taxable sirpplies depositing tax deducted at source under Section 51;
supplies on which the recipient is | for apportionment of ITC.
6. Noth collection, or lower collection of ornon-payment of tax collectible at
liable to pay tax on reverse charge
basis,
source under Section 52; TN,
transac-tionsin sécurities, 7. Availing/utilizing input tax credit without achial receipt of goods and/
sale of land and, subject to clause
or services; “ :
(b) of paragraph 5 of Schedule II, 5
. Fratidulently obtaining any refund; . .

ie)
sale of building.
9. Availing/ distributing input tax credit by an Input Service Distributor in
Any person engaged exclusively in | A person: exclusively making . zero violation of Section 20; ,
the business of supplying goods or | rated supplies may have to register as
10. Furnishing false information or falsification of financial records or fur-
services or both that are not [| refunds of unutilised ITC or ‘inte . . nishing of fake accounts/ documents with intent to evade payment of tax;
liable to tax or wholly exempt from | grated tax paid shall have to be 11, Failure to register despite being liable to pay tax; ‘
tax under ‘the CGST or IGST Act | claimed. : 12, Furnishing false information regarding registration particulars either at
shall not be liable to registration. ’ the time of applying for registration or subsequently;
A registered person” supplying | Normal tax invoice shall be issued. 13. Obstructing ot preventing’ any official in discharge of his duty;
exempted goods or services or both are : 14. Transporting goods without prescribed documents;
shall issue, instead. of. a tax 15. Suppressing turnover leading to tax evasion; :
invoice, a bill of supply. 16. Failure to maintain accounts/documents in the manner specified in the
Provisional refund. As per Section 54(6) of the CGST Act, 2017, 90%
Act or failure to retain accounts/documents for the period specified in
of the
total amount of refund claimed, on account of zero-rated supply of goods or the Act; . ~
services or both made by registered persons, may be sanctioned ona provisional 17. Failure to furnish information/deocuments required by an officer in terms
basis. The remaining 10% ‘can be tefunded later after due verification of of the Act/Rules or furnishing false information/ documents during the
documents furnished by the applicant. course of any proceeding; : .
:
Q. 9. Is the Principle of Unjust Enrichment applicable in case of zero-rated 18. Supplying/transporting/ storing any goods liable to. confiscation;
supplies? 19. Issuing invoice or document using GSTIN of another person;
‘ . :
Ans. The principle of unjust enrichment shall not be applicable in case of 20. Tarnpering/destroying any material evidence;_-
tefund of taxes paid wherever such refund is on accounts of zero tated supplies, 41. Disposing 6f/ tampering with goods detained /seized/ attached under the
As per Section 54(8) of the CGST Act, 2017,
Act.
the refundable amount, if such
amount is relatable to refund of tax paid on zero-rated supplies Q. 11. What is meant by the term penalty? State the general disciplines to be
of goods or
“services or both or on inputs or input services used in making such
followed while imposing, penalties. he
zero-rated
supplies, shall instead of being credited to thé Fund, be paid to the applicant. Ans. The word “penalty” has net been defined in the CGST/SGST Act but
judicial pronouncements and ‘principles of jtirisprudence have laid down the
= 5.6 Offences and Penalties nature of a perialty as: . :
Q. 10. Discuss the offences listed u/s 122(1). : * a temporary punishment or a sum of money imposed by statute, to be
.
Ans. The CGST/SGST Act codifies the offences and penalties in Chapter pail as punishment for the commission of a certain offence;
XVI.
The Act lists 21 offences in Section 122(1), apart from.the penalty * a punishment imposed by law or contract for doing or failing to do
prescribed
under Section 10 for availing compounding by a taxable person who something that was the duty of a party to do.
is. not a
eligible for it. The said offences are as follows: : The general disciplines to be followed while imposing penalties: . -
: .
1. Making a supply without invoice or with false/incorrect invoice; The levy of penalty is subject to a certain disciplinary regime which is based on
jurispruderlce, principles of natural justice and principles governing international
 110
“OHAPTER 8! Sbtoian PROVBION Ye 1411:
trade and agreements. Such general discipline is enshrined in Section 126 of the Q, 14. Is any penalty prescribed for any. person other than the taxable
Act. Accordingly— — , _ person?
* no penalty is to be imposed without issuance’ of a show cause notice and Ans. Yes, Section 122(3) provides for levy of penalty extending to
€25,000 for
proper hearing in the matter, affording an opportunity to, the person any person who—
proceeded against to rebut the allegations levelled against him, * aids or abets any of the 21 ‘offences u/s 122(1),
the penalty is to depend on the totality of the facts and circumstances of deais in any way (whether receiving, supplying, storing or transporting)
the case, : with goods that are liable to confiscation, me .
the penalty imposed is to be commensurate with the degree and severity knowingly receives or deals with supply of services in contravention
of
of breach of the provisions of the law or the rules alleged, the Act, os oot
the nature of the breach is to-be specified clearly in the order imposing fails to appear before an authority who has issued a summon,
the penalty, : a fails to issue any invoice for a supply or account for any invoice in his
the provisions of the law under which the penalty has ‘been imposed is to books of accounts, a
be specified. . Q. 15. What shall be the penalty for a person who contravenes any provision
Q. 12. What are the circumstances under which no substantial penalty has of CGST Act, or Rules for which no separate penalty has been imposed?
been imposed under the GST law? Ans. Section 125 of the CGST/SGST Act provides that any person who
Ans. Section 126 specifies that, in particular, no substantial penalty is to be contravenes any provision of the Act or the rules made under this Act for
which
tnposed for: i no separate penalty has been prescribed shall be punishable with a penalty
that
* amy minor breach (minor breach has been defined as a violation of the may extend to 725,000. — ~ .
provisions in a case where the tax involved is less than &5,000), or Q. 16. What is the penalty imposed under the CGST Act-on transporters or
* a procedural requirement of the law. : persons who stores goods in transit in contravention of the Act? :
* an. easily rectifiable mistake/omission: in, ‘documents (explained in. the Ans, If any person transports any goods or stores any such goods while in
law-as an erro: ‘ej cord) that has been made without fraud- transit without the documents prescribed under the Act (ie, invoice and a
ulent intent or { neg ence. . ‘ declaration) or supplies or stores any goods that have not been recorded in the
Further, wherever perialty ‘of a fixed amount or a fixed percentage has been books or accounts maintained by him, ‘or in contravention of any of the
provided in the CGST/SGST Act, the same shail-apply. 7 provisions of the Act, then such goods shall be liable for detention or seizure
Q. 13. What are the penalties imposed- under GST Act? ' : along with any vehicle on which they are being transported.
Ans. The quantum of penalty provided for in the.CGST /SGST Act are as Where owner comes forward. Such goods shall be released on payment of the
follows: applicable tax'and penalty equal to 100% of tax or upon furnishing of security
For the offences mentioned in Section 122(1), penalty shall be higher of the equivalent to the said amount. : ;
following amounts: - In case, of exempted goods, penalty is 2% of value of goods or 725,000
* The amount of tax evaded, fraudulently obtained as refund, availed as whichever is lesser.
credit,.or not deducted or collected or short deducted or short collected, Where owner does not come forward. Such gocds shail be released on
or . . Payment of the applicable tax and penalty equal to 50% of value of goods or
* A sum of £10,000. upon furnishing of security equivalent to the said amount.
Further Section 122(2) provides that any registered person who has not paid In case of exempted goods, penalty is 5% of value of goods or &25,000
tax, or makes a short payment_of taxon supplies, or to whom tax has been whichever is lesser. ‘ ;
errernously refunded, or availed / utilised ITC wrongly shall be Hable to a penalty
which will be the higher of: we 5.7 Appeals : .
; Q. 17, State the
For reason other fraud, witful misrepresentation or suppression of facts: levels of appellate authority under goods and service tax
* 10% of the tax not paid or short paid, or act.
* 710,000. Ans. The levels of appellate authority in GST can be described through a
.
For reason of fraud, witful misrepresentation or suppression of facts: diagram: .
* equal to tax due from such person
* %10,000
 provided if tHe appellate authority is
by sufficient cause [Section 107(4)]. :
Q. 20. Whd is the Appellate Authority in case of first appeal by the person
agexieved or bfficer? : :
Ans. Any tlerson aggrieved by any decision or order passed under CGST Act/
SGST Act/UTGST Act or an officer directed may appeal to:
wis cio 2 Appellate Tribunal (2) The Commissioner (Appeals) where such decision or order is passed by
“Itconsist of National‘or regional bench and state be the Additional or Joint Commisstoner-——---
y Appeal can be filed ‘against the order of Adjudicatng aut li (b) The Additional Commissioner (Appeals) ‘where such decision or order
is padsed by the Deputy or Assistant Commissioner ‘or Superintendent.
Q. 21. What is. the pre-requisite condition under which an appeal can be
eB Bigh Court & filed with the Appellate Authority? ‘ .
-_-Anvorder ‘passed by state bench or area Lxinch can be appealed in the: - Ans. No appeal shall be filed with the Appellate Authority by the person
aggrieved unless he pays: i .
(a) In full, such part of the amount of tax, interest, fine, fee and penalty
arising from the impugned order, as is admitted by him; and
(b) A sun equal to 10% of the remaining amount of tax in dispute arising
ae oes 4: Supreme Court (00.0: a2 o
Orders passed by national bench shail directly be appealed in the. from the said ‘order, in relation to which the appeal has been filed.
“supreme court more ron eos: . yeas : Where the appellant pays thé Said amount, the recovery proceedings for the
Orders passedby the high court shall be appealed in the supreme & balance amount shall be deemed to’be stayed.
Q. 22. Can an appeal.be adjourned by the Appellate Authority?
APPEAL TO ADJUDICATING AUTHORITY Ans. As per Section 107(8), the Appellate Authority may, if sufficient cause is
shown at any stage of hearing of an appeal, grant time to the parties or any of
Q. 18. Who can file an appeal under the GST Act?
' Ans. Following persots can file an appeal under the GST Act: them. and adjourn the hearing of the appeal for reasons to be recorded in writing.
;
1. Any person aggrieved by the order passed under CGST Act, SGST Act or No such adjournment shall be granted more than ihree times to a party during
hearing of the appeal. :
UIGST Act or adjudicating authority may appeal to the prescribed appellate
authority. Q. 23. What order can be passed by Appellate Authority?
: Appellate Authority shall, after making necessary inquiry, pass
2. The commissioner may, Ans. 1. The
such order, ds it thinks just and proper, confirming, modifying or annulling the
* on his own motion, or
decision or order appealed against. It shall not refer the case ‘back ‘to the
* upon request from the Commissioner of State tax or the Commissioner of °
Union, territory tax,
adjudicating, authority that passed the said decision or order.
call for and examine the record of
2. An order enhancing any fee or penalty or fine in ljeu of confiscation or
any proceedings in which an
adjudicating authority has passed any decision or order to satisfy himself confiscating goods of greater value or reducing the amount of refund or input tax
of legality or propriety of the said decision or order, credit shall not be passed unless the appellant has been given a reasonable
to satisfy himself of legality or propriety of the said decision or order. He opportunity of showing cause against the proposed order. .
may direct any officer subordinate to him applyly to to th the Appellate
uthority 3. The orHer of the Appéllate Authority disposing of the appeal shall be in
writing and shall state the points for determination, the decision thereon and the
the Q.Appellate
19, What Autheuity ? limi
is the time mit Prescribe
I d under the Act for filing
reasons for such decision..’ :
ili an appeal to
4, The Appellate Authority. shall, where it is possible to do so; hear and decide
Ans, The person aggrieved has to file an appeal within 3 months from the every appeal within a period of one year fromthe date on which it is filed.
date of comununication of such order. The officer can file an appeal within 6 APPEAL TO APPELLATE TRIBUNAL
months from the date of communication of the said decision ot order for the
~Q. 24. Who can file an appeal to the Appellate Tribunal?
determination of suti-potrts-artsing out of the said decision or order as may be
Ans. According to Section 112(1) and 2- . ;
specified by the Commissioner in his order. An extension of 2 month may be
1. Any person aggrieved by the order of Appellate Authority shall file an
 appeal to the appellate tribunal. If the amount invoiv * with such directions as it may think-fit-fer-a-fresh adjudication or
ed is less than ¥50,000, the
appeilate tribunal may refuse to accept the appeal. decision after taking additional evidence, if necessary.
2. The Commissioner may, on his own motion, Rectification of order. The Appellate Tribunal may amend any order passed
or upon request from the
Commissioner of State tax or Commissioner of Union ‘by it so as to rectify any apparent error, if such error is noticed by it, or is brought
territory tax, call for and
examine the record of any ordér passed by the to its notice by the Commissioner or the Commissioner of State tax or the
Appellate Authority or the
Revisional Authority, to satisfy himself as to the legalit Commissioner of the Union territory tax or the other party to the appeal within a
y or propriety of the said
order. He may order, direct any officer subordinate period of 3 months from the date of the order.
to him to apply to the .
Appellate Tribunal. . ~ nO, . Q. 30. What is the Period of disposing of appeal by the Appellate Tribunal?
Q. 25. What is the time limit prescribed under the Act Ans. The appellate tribunal shall, as far as possible, hear and decide every
to file an appeal to the
Appellate Tribunal? : appeal within a period of 1 year form the date on which it was filed,
: .
Ans. Person Aggreieved.can file an appeal with Q, 31, Can additional evidence be produced before the Appellate Authority
in 3 months from the date of
communication of such order.
ot : or the Appellate Tribunal?
Officer can file an appeal within 6 months from the daonte Ans. 1. The appeliant shall not be allowed to produce before the Appellate
order has been passed for determination of such
which the said
points arising out of the said Authority or the Appellate Tribunal any evidence, whether oral or documentary,
order as may be specified by the Commissioner in his other than the evidence produced by him during the course of the proceedings
order.
An extension of 3 months may be provided to the person before the adjudicating authority or, as the case may be, the Appellate Authority
aggrieved. But, no
extension is allowed to a commission for filing an appeal.
except in the following circumstances, namely:
Q. 26. What is meant by Memorandum of cross object
ion? (a) where the adjudicating authority or, the Appellate. Authority has refused
Ans. On receipt of notice that an appeal has been. preferr
ed the party against to admit evidence which ought to have been admitted; or
whom the appeal has been preferred may, notwithstand
ing that he may not have (») where the appellant was prevented by sufficient cause from producing
appealed against such order file,:a. memorandum
‘of ‘cross-objections, within 45 . the evidence which he was called upon to produce by the adjudicating
days of the receipt of notice, ied in the prescribed manner, against any part of authority or, Appellate Authority; or
Sxtension of 45 days after,the expiry of the (ce) where the appellant was prevented by sufficient cause from producing
said
éappellate authority is satisfied that the appell before the adjudicating authority or,
was preven ted by sufficient ant the Appellate Authority any
cause. *. oo evidence which is relevant to any ground of appeal; or
Q. 27, What is the fees for filing an appeal to the ; .
appellate tribunal? (d) where thé adjudicating authority or, the Appellate Authority has made
Ans. Fees for filing appeal or restoration of appeal shall
be # 1000 for every €1 the order appealed against without giving sufficient opportunity to the
jakh of amount involved subject to maximum of %
25,000. appellant to adduce evidence relevant to any ground of appeal.
Q. 28. What is the pre-requisite condition under
which an appeal can be 2. No evidence shall be admitted unless the Appellate Authority or the
filed with Appellate Tribunal?
‘ Appellate Tribunal records in writing the reasons for its admission.
Ans. No appeal shall be filed unless the person aggrieved
pays: 3. The Appellate Authority or the Appellate Tribunal shall not take any
(@) In full, such part of the amount of tax, interes
t, fine, fee and penalty evidence produced unless the adjudicating authority or an officer authorised in
arising from the impugned order, as is admitted
(b) A sum equal to 20%
by him; and this behalf by the said authority has been allowed a reasonable opportunity —
of the remaining amount of tax in dispute, in (2) to examine the evidence or documient or to cross-examine any witness
addition to the-amount paid to the Appellate Author
ity arising from the produced by the appellant; or
said order, in relation to which the appeal has been
filed. (b) to produce any evidence or any witness in rebuttal of the evidence
Where the appellant has pa theid
amount, the recovery proceedings for
balance amount shall be deemedto be stayed. the _ produced by the appellant.
Q. 29. What Order can by passed by appellate tribun 4. Nothing contained in this rule shail affect the power of the Appellate
al? Authority or the Appellate Tribunal to direct the production of any document, or
Ans, The Appellate: Tribunal, after giving the
parties to the appeal an the examination of any witness, to enable it to dispose of the appeal.
opportunity of being heard:
. .
* may pass orders.of confirming, modifying or APPEAL TO HIGH COURT
annulling the decision or
order appealed against, or Q. 32. Who can file the appeal in the High Court u/s 117?
;
* may refer the case back.to the Appellate Authority, Ans. Any person aggrieved by any order passed by the State Bench or Area
or the Revisional
Authority or to the original adjudicating authority, Benches of the Appellate Tribunal may file an appeal to the High Court and the .
 4116" SHIVA DELHI UNIVERSITY SERIES: eee . Serre
High Court may admit such appeal, if it is satisfied that the case involves a
substantial question of law. Loo
* An appeal to the High Court shall be filed in FORM GST APL-08.
* The grounds of appeal and the form of verification as contained in
FORM GST APL-08 shall be signed in the manner specified. :
Q. 33. What is the Time limit for filing of appeal in the high court? Le
Ans. Appeal shall be filed within 180 days of from the date on which the ofder
appealed against is received by the aggrieved person. It shall be in such farm,
verified in such manner as may be prescribed. The High Court may entertain an
appeal after the expiry of the said period if it is satisfied that there was sufficient
cause for not filing it within such period.
APPEAL TO SUPREME COURT
Q. 34. Who can file an appeal.to the Supreme Court u/s 118?
Ans, An appeal shall lie to the Supreme Court+
| |
CUSTOMS LAW,
(a) from any order passed by the National Bench or Regional Benches of the
Appellate Tribunal; or ; > 6.1 Customs Law
(6) from any jadgment or order passed by the High Court in an appeal made Definitioris
under Section 117 in any case which, on its own motion or on an Goods [Section 2(22)]. Goods include:
application made by or on behalf of. thé party. aggrieved, immediately. (i) Vessels, aircrafts and vehicles
after passing of the judgment or order; the HighCourt certifies to be a fit (iii) Baggage
one for appeal to the Supreme:Court... (iv) Currency and ne

a
* which are chargéable to duty; and__
* on which duty has not been paid.
Duty [Section 2(15)]. Duty means, “a duty of customs leviable' under Customs
£” : :

export goods. It means, “any goods which are to be taken out of India fo a place
outside India— Goods brought near Customs area for export purposes will be. export
goods”. ; oo
Imported goods..lt means, “any goods brought into India from a place ou tside
India, but dods not include goods which have been cleared'for home consumption”. Thus,
once goods are cleared by Customs Authorities from Customs area, these are no
longer imported goods. “India” includes the territorial waters of India. Territorial
waters of India which’ extend. to 12 nautical miles into the sea from the
appropriate base line. Goods are deemed to have been imported, if the vessel
enters the territorial waters of India. India includes not only the surface of sea in
the territorial waters, but also the air-space above and-the ground or at the
bottom of the sea. : : mo,
Customs area. “It means. the area of a Customs station and includes any area in
which tmported goods or export goods are ordinarily kept before clearance by Customs
authorities. ;
 118 SHIVA DELHI UNIVERSITY SERIES BE Es
Customs station. “It means any Customs port, Customs airport or oS LS Ses
land Customs ~_ CGHART
8: CUSTO
ERMS Law 24118
“station. : oe - . and.preferential rate of duty in respe
ct of imports in respect of imports
“Coastal goods. Coastal goods means, “goods other than certain preferential areas. from
imported goods trans-
ported in @ vessel from one port of India to another port of India”. 2. Additional duty of Customs. It is
often called Countervailing duty (CVD
India. India includes the territorial waters of India Additional duty is levied u/s 3(1} of Cust ).
(ie., a portion of sea, which oms Tariff Act.
is adjacent to the shores of India; 12 nautical miles from 3. Special additional duty of Cust
the base line. Export is oms [Section 3(5) of the Customs
complete when goods cross territorial waters and Import Act]: This duty is known as Special CVD Tariff
is complete as soon as (Countervailing duty). It is in addition
goods enter territorial waters. Sovereignty of India to-the basic Customs duty and CVD
extends to the territorial leviable u/s 3(1) and 3(3) of the Cust
waters and to the seabed and subsoil underlying
and the air-space over the Tariff Act, 1975, oms
waters. - ‘ CVD and special CVD were earlier ,
imposed to countervail excise duty
Indian Customs waters. It means, “the waters extending VAT/Sales Tax respectively. Now, and
into the sea upto the limit these duties have been replaced
of contiguous zone of India and includes any bay, gulf harbour, except on items which are subject to by IGST
creek or tidal river”. excise duty.
Customs waters include territorial waters as well as According to Section 3{7) of the
contiguous zone. Indian Customs Tariff Act, any article whic
territorial waters extend up to 12 nautical miles from the imported into India shall be liable to IGST at h is
base line whereas such rate which is leviable u/s 5 of
contiguous zone extends toa further 12 nautical mites IGST Act on a like article on its supply in
from the outer limit of India.
territorial waters. It means the Indian Customs waters IGST shall be calculated on the ager
extend to a total of 24 egate of:
nautical miles from the base line. [1 nautical mile = 1.1515 * Assessable value
miles = 1.853 kms]
Exclusive economic zone. It extends up to 200 nautical miles * Basic customs duty’
from the base
line. In this zone, India has exclusive rights to exploit: * Education cess and secondary and
it for economic purposes higher education cess.
(like oil exploration, power, generation, fishing; minera 4. Safeguard Duty Section 8B of the
l resources and scientific Customs Tariff Act,
research}, Beyond 200 nautical“miles, the area is (a) revue Government can impo
known as high seas, All se the safeguard duty if it is satis
countries have equal rightsin ‘high seas, a that— fied
Prohibited goods. it'tieans, “any-goods the import or export * any article is imported in large quant
of which is subject to ities; and
any prohibition under thi or any other law for the time being in force, but it does not * such increased importation is causi
include any such goods in respect of which the conditions subject ng or threatening to cause
to which the goods are serious injury to domestic industry.
permitted to be imported or exported have been coinplied (b) This duty is applicable only for
with”. certain articles in respect of which it
High Seas Sale (HSS)}..It means, “sale of goods by transfer imposed. is
of documents before
clearance of goods from Customs”. (c) This duty is in addition to any
Customs duty being imposed on the
In case of high seas sales, price charged by the importe goods. .
r to buyer would form
the assessable value. The invoice issued by the foreign (d) Central Government may also impose
supplier to the importer in a provisional safeguard duty till
such a case is not relevant. : final determination
of safeguard duty which shall remain
Taxable Events. Goods become liable to import duty or maximum of 200 days. in force for
export duty when—
* import is complete as soon as goods enter into the
territorial waters; and (e) The duty, once imposed, is valid for
* export is complete.only when goods cross territor
four years, unless revoked earlier,
ial waters. This can be extended by the Central
Government, but total period of
“ “safeguard” duty cannot be more than
6.2 Types of Customs Duties No safeguard duty in certain cases:
10 years,
Q. 1. What are the different types of Customs duties? :
; * Unless specifically made applicable
Ans, 1. Basic customs duty..It is levied under the provisio in the notification, the articles
ns of Section 12 of imported by a 100% Export Oriented
the Customs Act and Section 2 of the Customs Tariff Act. Normall Unit or units in a Free Trade Zone
y, it is levied or a Special Economic Zone shall not
be liable for safeguard duty.
as a percentage of value as determined u/s 14(1).
. . No such duty shall be imposed on
Rates of basic customs duty. The rates at which Customs articles imported from a developing
duty shall be levied country if the share of import of that
article does not exceed 3%, or if the
under the Customs Act 1962 and specified in the First and Second Schedule
s of article is imported from more than
Customs Tariff Act. one countries, then aggregate of
, imports from all such countries does not
Preferential rate of duty. If the goods are imported from exceed 9% of total imports of
the preferential area, that article into India.
the preferential rate is applicable. Central Government
notifies preferential area Specific safeguard duty on imports
from China. Central Government
impose the transitional product safeguard can
duty if it is satisfied that—
 2420: iss ‘SHIVA: pede UNIVERSITY SERIES
* any article is imported into India in increased quantities from
People’s Republic of China;
* such increased import ts causing or threatening to cause harm to
domestic industry. [Section 8C(1}]
5. Protective Duties. These duties are imposed by the Central Government on
_ the recommendation of the Tariff Commission. The purpose of this levy is to
protect the interest of Indian industry. This duty is imposed u/s 6 of Customs
Tariff Act.
6. Anti-Dumping Duty
Dumping. When a country dumps its goods in another country at a much
cheaper price than the normal price thereby underwriting the price of the goods
in the domestic country and sells these goods, it is called dumping. The intention
behind dumping is to cripple the domestic industry of importing country or to
dispose off the excess stock by the exporting country. It is considered an unfair
trade practice and not an act of protection.
Anti-dumping Duty. This duty can be imposed by the Central Government
under Section 9A of Customs Act. The purpose of this duty is to avoid dumping
and to protect the domestic industry. This duty is in addition to any other duty
chargeable under this Act or any other law for the time, being in force.
The anti-dumping duty shall not be leviable:on articles imported by a 100%
EOU or a unit in a Free Trade Zone or Special: Economic Zone,
notification specifically, makes it, applicable for such units. . not exceed 20% of FOB value.
Quantum of dumping duty. The quantum of anti-dumping duty will be
dumping margin or injury margin, whichever is lower.
Margin of dumping. Tt means the difference between normal value and export
price (i.e., price at which goods are exported).
Injury margin. It means difference between fair selling price in domestic
industry. and landed cost of the imported product. . Notes:
Anti-dumping action can be taken only when there is an Indian industry
producing “Like articles” when compared to the alleged dumped imported
goods. ;
‘ 6.3 Valuation
the ¢ price is the sole consideration for the sale.
In case of imported goods, the transaction value shall be—
* the price actually paid or payable for the goods when sold for impert to
India;
* for delivery at.the time and place of importation;
* where the buyers and sellers of the goods are not related; and.
* price is the sole consideration for the sale.
Additions to transaction value. Such fransaction value shail also include in
addition to the price as aforesaid — No
(i) Cost of container, cost of packing and commission {except buying
conunission) which was obligation cf seller but paid by buyer.
(fi) Any obligation of seller but paid by buyer.
(iii) Cost of any material, components, tools, dies, moulds, jigs and design
and engineering sketches provided by buyer.
(iv) Royalties and licence fee related to import payable by buyer as a
condition of sale.
(v) Value shall not include post importation.
(vi) Value of itmported goods shall also include. cost of transportation,
loading, unloading, handling charges and cost of insurance.
(vil) If cost of transportation/ freight is not ascertainable, it shall be 20% of
unless the free on board value (FOB). However, if goods are imported by air, it shail
(viii) Landing charges includes all charges tot bring the goods from board of a
ship or aircraft to land mass. of India. It shall be 1% of Cost insurance
Freight (CIF) value. -
(ix) If cost of insurance is not ascertainable, it shall be 1.125% of FOB value of
goods. :
(8 Only those expenses which are related to imported goods alone can be added. .
(i) For price determination, the rate of exchange as in force on the date on which bill of entry
is presetned u/s 46 or shipping bill or bill of export is presented u/s 50 is to be considered.
(i) Rate of éxchiinge will be determined by CBEC from time to time or ascertained in such
manner as CBEC may direct. -

Customs duty is imposed on “value” often called assessable value or Customs

value on percentage basis.
Section 14(2) empowers CBEC (Central Board of Excise and Customs) to fix
Tariff values of imported goods or export goods by issuing a notification.
Customs Valuation on the basis of transaction value. Section 14(1) of
Customs Act states that “value of exported and imported goods shall be the
“transaction value of such goods”.
In case of export goods, transaction value shall be—

eee
* the price actually paid or payable for the goods;
* when sold for.exportfrom India;

Saute AER
* for delivery at the time and place of exportation;
« where buyers and sellers of the goods are not related; and

:+
a
ry
 122. a. SHIVACDELHTUNK
" CHAPTER'S: CUSTOMS LAW & 123°
. Sol.
= 6.5 Customs Procedur
-- Import
e and Export
wd Ey ee Japanese Yen|Amonit
in: =
Import. It means, “bringing of goods from any place ouiside India into India’.
FOB value of equipment . *4,00,000 2,00,000
Add: Freight Charges Customs area, It means, “the aren of customs station and includes any area
- ; 40,000 20,000 where
Add: Transit Insurance imported goods ar export goods are ordinarily kept pending clearance by
: * 30,006 Customs
Add: Selling Expenses : soo
authorities”. [Section 2(11}j
; 30,000
Total CIF Cost 7 - Imported goods [Section 2(25}]. It means, “any goods brought into India from
ae ents et ST

‘ 2,80,000 a
Add; Landing Charges (1% of CIF value) ~ 2,800 place outside India but does not include goods, which have béen cleared
for home
Assessable value : . 2,82,800 consumption”. :
Importer. Section 2(26) in relation to any goods at any time between
Notes: their
importation and the time when they are cleared for home consumption,
(i) Freight charges have been included. includes
(i) Development charges paid in India excluded. any Owner or any person holding himself out to be the importer.
(ii) Insurance charges for trarisportation from Japan is included. Bill of Lading. Bill of Lading given by the carrier of the goods is the importer’s
(iv) Selling expenses (commission payable to Agent) included. document of title to the goods. The Bill of Lading covers all the details
(v} Landing charges @ 1% of CIF included. of the
_ goods imported with full description.
uw 6.4 Self-Assessment of Customs Duty Warehousing Stations. Imported goods can be’ stored in public
or private
warehouses pending payment-of duty. Imported goods can be cleared
Self-Assessment of Customs duty was introduced in 2011 by the Finance-Act. on
payment of duty in instalments up to one year. oy
It is applicable for both import and export and the procedure is the same for both Tt may be a Public warehouse u/s 57 which is licensed by commissioner
respectively. oe So : or
proper officer for depositing dutiable goods and are managed by
Self-Assessment procedure: a wee public bodies.
Private warehouses. are managed by individual importers.
() Importer importing..goods:has to submit:bill of entry u/s 46 of the
Customs Act. Exporter: equired to'submit shipping bill at the time of °6.6 Import Procedure .
export u/s 50 oF tha;Customs Act. Bill of Entry. Importer importing the goods is required to
submit the Bill of
(i) Bill of entry shou}d:be electronically submitted in all cases. Entry electronically giving details of goods to be cleared
from Customs
(iit) The importer/exporter should self-assess.-the duty leviable on such (Section 46). Bill of Entry is noted by Customs Officer.
goods, : mo, ; When the Bill of Entry is filed electronically, it is in four copies:
(iv) The self-assessment may be verified by examining of the goods by.a (2) Original—meant for-Customis authorities for assessment and
collection
proper officer.. The officer may examine the contract, insurance policy, of duty. :
broker's note or any other document whereby the duty payable may be (b) Duplicate—intended as an authority to the custodian of the cargo to
ascertained. . : ; release cargo to the importer from his custody.
(v) The proper officer may re-assess the bill of entry after such verification. (c) Triplicate—as a copy for record for the importer; and :
(vi) If the importer/ exporter accepts in writing the re-assessment made by (2) Quadruplicate—as a copy to be presented to the Bank or RBI
for the
proper officer about classification/ valuation/ exemption/ concession, no purpose of making.remittance for the imported goods.
question of issuing any formal order arises. If not, the officer shal] pass a Submission of other documents. Documents required by Customs authorities
speaking order within 15. days from re-assessment of bill of entry. are required to be submitted by the importer to enable them to:
(vii) If goods are not taken for_verification, the goods will be allowed to be (@) check the goods;
cleared from Customs. Later the duty assessment may be audited by the (6) decide value;
proper officer. (c) classification of goods; and
(viit) In cases importer/exporter is unable to determine the-duty, ie, make a (d) to ensure that the import is legally permitted.
self-assessment, a request shall be made to proper officer for assessment Import General Manifest (IGM) or import Report, Person-in-charge of
vessel
of the same u/s 18(a) of the Customs Act. . or aircraft has to submit an import manifest to the proper officer
prior to its
(ix) In both case where sélf-assessment is done and when self-assessment is arrival, Whereas the person-in-charge of vehicle has to submit import
report
done but requires re-assessment the importer/exporter may opt for within 12 hours of its arrival. This report has detailed information
for the
provisional assessment by the proper officer. Customs about the goods in the vessel /aircraft. ' *. ;
 Passenger and crew arrival manifest. The person-in-charge has to submit
in case of a “vessel or aircraft.an export manifest and in the case of a vehicle, an
passenger and crew arrival manifest and name record information of the arriving export report, in the prescribed form.
passengers before arrival in case of vessel or aircraft and after arrival in case of a Entry Outward. Export goods are not to be loaded‘on vessel until entry
vehicle alongwith import manifest or import report. outward is granted by the Customs Officer.
Grant of Entry Inwards by Customs Officer. After delivery of import As per Section 40, the goods can be taken on board only if they are
manifest/import report or if the Customs Officer is satisfied that there is accompanied by the following documents:
sufficient reason for not submitting the import manifest, Customs Officer shall () In case of export goods other than baggage and mail bags the goods shall
grant “entry inward” u/s 31, It is a permission of unloading the cargo from the be accompanied by
vessel. * Shipping Bills (at seaports / airports) oN,
Entry inward is. not required for loading baggage, mail bags, animals, * Bill of export (at land Customs stations)’ oT +
perishable goods and hazardous goods. + Bill of Transshipment (for transshipment of goods)
Unloading. Unloading of cargo can start only after the “Customs Officer” All duly passed by the proper officer.
grants “Entry Inwards”. Section 32 of Customs Act provides that only the goods {ii) In case of baggage and mail bags, they should be permitted by Customs
mentionéd in the import manifest can be unloaded. Such unloading can be only of export.
at approved places and under the supervision of “Customs Officer”. No conveyance to leave ‘without written order (Section 42). The person in
Payment of duty. Now Customs duty is paid electronically. It should be paid charge of the conveyance which has loaded any export goods at a Customs
within one working day (excluding holidays) after the “Bill of Entry” is returned station shall not cause or permit-the conveyance to depart from that Customs
to the importer for payment of duty. station until a written order to that effect has beeri given by the proper officer.
If duty is not paid within one working oe. interest payable at 15%.
Clearance of goods for exportation (Section 51). After the Customs Officer is
satisfied that the goods are not prohibited and the exporter has paid the duty, if
‘> 6.7 Export Procedure any, he makes the order for shipment on the duplicate copy of the shipping bill.
Export. It means, “takin, s goods: ova place outside India”. This is known as “Let Export” order.
Export goods. It mean ay: “g00d8;>which are to be taken out of India to a Difference between transit and transshipment of goods., Difference between
place outside India”. transit and transshipment ¢are given below:
Exporter. In relation to’dny goods at any time between their entry for export
and the time when they are exported, includes any owner or any person holding (i) Section 53 of Customs ‘Act, 1962] (i) Section 54 of Customs Act, 1962
himself out to be the exporter. provides for transit of goods. provides for transshipment of
Entry of Goods for exportation. The exporter u/s 50 of Customs Act is required : goods.
to present electronically to a proper officer of Customs, a shipping bill in case of
export by a vessel or by air and a Bill of export in case of export by: vehicle. (i) In case of transit of goods, goods | (i) In case of transshipment of goods,
The Shipping Bill and Bill of Export (Forms) Regulation Act 1991 prescribed are allowed to remain on the same the conveyance changes. The goocis
forms of shipping bills: ” conveyance. ----. are unloaded from a conveyance
: and loaded in another conveyance.
These forms are as follows:
(i) For dutiable goods Yellow colour (iii) No separate document is required | (iif) Separate. document called bill of
(ii) For duty-free goods White colour fox goods to be transitted further. transshipment is to be filed.
(iii) With duty-drawback claim Green colour Only miention.in IGM. - ‘
(iv) Duty-free ex-bond : Pink colour
The colour scheme Of shipping bills has now become “redundant as now ™» 6.8 Baggage
shipping bill has to be submitted electronicaily. Definitions
Export declaration. As per Rule 7 of. Customs Valuation Rules 2007; the Baggage. ‘As per the term baggage includes “unaccompanied bageage, but does
exporter has to file declaration about full “value” of goods. not include motor vehicles”. [Section 2(3)]
Export manifest /Export Report, Section 41(2) of the Customs Act provides Baggage is a very comprehensive term which means the luggage of a
that the person incharge ofconveyance carrying export goods shall, before the passenger accompanied or unaccompanied’ and comprises trunk or bags and the.
departure of the conveyance from a Customs station deliver to the proper officer, personal belongings of the passenger, It is mot only limited up to bonafice
baggage as defined in Clause 3 of Tourist Baggage Rule 1958.
 oS aap oT o i Told Ww 127 :
Passenger arriving by land
Nepal, Bhutari Only used personal effects
or Myaminar
Indian passenger residing Anywhere
abroad for > 1 year [Rule 5] Jewellery
igh the green
he can be penalised for “false” declaration. * Gentlemen: 20 gms value
arties dutiable items, he should pass cap of %50,000
through the
* Lady: 40 gms value cap of
71,00,000
in his baggage, attract _an effective Passenger of 18 years and
tariff rate of - Anywhere One laptop computer/note
). Baggage is exempt from CVD, above book computer
Transfer of Residence. A Pers
on who is engaged in professi
ivansferring his residence to India on abroad or
, shall be allowed duty free
addition to Rule 3 and Rule 4) clearance (in
of personal and household artic
@ under Section 79(1) of the Cust les (other than
oms Apt refers to is of his stay abroad. :
pect of baggage. It states, that
the proper officer : Articles allowed Saf . ey Conditions
€ under Sub-section (2), pass -
free of duty: free of duty’:
Fromm 3 months up to an ageregate value Indian passenger
up td 6 months
of 760,000 7
Frora 6 months up to up to an ageregate value
agpage ofa Passetinige
resperct af which the officer is 1 year Indian passenger
: of €1,00,000
forthe use of the passenger or his family
enir, provided or is a Minimum stay of 1 year | up to an aggregate value
that the value of each such article during preceding 2 years} of Indian passenger who has not
and the total valué‘6f all such €2,00,000
articles does not exceed such availed the concession in prec-
be specified in the rule. t limits as may a
. .
| | eding 3 years
Exemption to Laptop compute 7. Minimum stay of 2 years;
One laptop computer brought as bagg up to an aggregate value
(@)) Minimum stay of 2 years
*@ pelson over 18 years of age (othe age by or more of %5,00,000
r than member of crew) is fully abroad immediately prece-
customs duty. exempt from
; ding the date of his arrival,
Customs Duty Free Allowanc e (Bag
gage Rule 2016) [Rule 3 and Rule 4] (i) Total stay in India on short
visit during the two
* Indian Residents Duty free allowance preceding years should not
Other than Articles up to value ‘of 50,000 exceed 6 months.
* Foreigners residing in India
Nepal, Bhutan (i) Passenger has not avail
* Tourist of Indian Origin. ed
or Myammar this concession in prece-
(Not being an infant).
ding 3 years.
Tourists of foreign origin, Provision regarding unaccompa
‘Other than nied baggage. These rules shall
Articles up to value of also apply to
Wepal, Bhutan -¥15,000 (Not being an infant)
or Myammar
* Indian Residents Beage may land in India up
Nepal, Bhutan. | Articles up to value pf 15,000 xceeding 1 year,if allowed
* Foreigners residing in India nation
or Myammar 2 USA
* Any Tourist
(Not being an infant)
 STOMS LAW? & 129
Practical QuestiONS secces ou lomesaienenei
Q. 1. Find out the assessessable value in the following case:
. Price charged by exporter (FOB) 745,00,000
Cost of transportation to India by air’ _ - 212,060,000
Cost of insurance from exporting country to India 60,000
Loading/ unloading charges an 73,000
Sal. , Computation of Assessabte-Value
ae count eee eee
Transaction value (FOB) 45,00,000
Cost of transportation + Loading/Unloading charges -
{subject to maximum 20% of FOB since goods are transported by air} 9,00,000
Cost of insurance-(Actual) - -L__ 60,000
Assessable Value (CIF) of the Consignment o '54,60,000
Q. 2. Find the assessessable value in the following case:
Amount charged by exporter (FOB) %90,50,000
Cost of transportation (not available) ; -
Cost of insurance (not available) , _
Exemptions from Customs duty are provided through provisions of: Sol. ' Computation of Assessable Value
(i) Customs Act Tae : ie omar d
: onan
(ii) Customs Tariff Act; and _ FOB price of goods ; Oy 90,50,060
(i) Notifications. Ada: Cost of transportation.
(not available, therefore, 20% of FOB price) 18,10,000
1020) us. a Add: Cost of insurance. (not ascertainabie, therefore, 1.125% of FOB)
Special exemptions, If.the Central Government is. satisfied that it is 1,01,813
necessary Assessable Value - . . 1,08,61,813
in the public interest to do so, it may, by Special Order exempt from
payment of Q. 3. Find the Assessessable value from the following information:
duty, any goods on. which duty is leviable only under circumst
ances of Amount charged by exporter (FOB) and cost of insurance | %30,00,000
exceptional nature to be stated in such order. {Section
25(2)]
General exemptions. General exemptions have been granted in Cost of transportation by air : 76,00,000
various cases. Cost of loading, unloading and handling charge
Some of these are being given below: %10,00,000
. Sol. Computation of Assessable Value
Imports by UN Agencies, Governors, Ford Foundation, Vice President of _ :
India, specified equipment by a foreign news agency, personal wa edd Oa fe : Se
effects of a
deceased person and Gifts imported by CARE have been granted FOB and cost of insurance 30,00,000
exemption. Add: Cost of transport, loading, unloading and handling charges
Certain imports. by the Government are also exempt from the payment
of (6,00,000 + %410,00,000) or 20% of %30,00,000 whichever is lower
Customs duty.
(Godds are imported by air therefore maximum transportation cost can
Commercial samples are also exempt from Customs duty. be 20% of FOB price). a 6,00,000
Add. Cost of insurance (already included in FOB) =.
Assessable. Vaiue (CIF) : - 36,00,000
a pe
Q. 4. Find the assessessable value in the given case;
Price charged by exporter (FOB) %68,00,000
Cost of transportation to India by Sea %2,00,000
Loading/ unloading charges in India .- %10,000
Cost of insurance from exporting country to India Not available
 130. SHIVA RSITY: SEHIES _ CHAPB:TE
CUSTO
RMS LAW.:131°:
Sal. - Computation of Assessable Value
Sol. Computation of Assessable Value ~
ee Se 2 Tg i LE EUS OE ‘ Pa
Transaction vatue (FOB: $65,000 x 358}
Transaction value (FOB)
68,090,000 : (Buying commission paid-to an agent to represent
Add: Cost of transportation by sea + Loading: and unloading charges
© the importer in the
foreign
. country cannot be included}
(%2,00,000 + %10,000) i 2,10,006 Add: Cost of transport + Loading and unloadi 37,70,000
Add Cost af insurance cover (not available, therefore, 1.125% of FOB} ng charges, handling charges + Demurrage
Assessable Value (CIF)
76,500 (37,20,000 + %10,000 + %23,000} €7,53,000,
it cannot exceed 20% of FOR .
: 70,836,500 Add: Cost of insurance cover (Actual) 7,53,000
: .
Q.5. CIF Value oe Assessable Value 30,000
mo %14,20,000 ;
Air transportation cost (included in CIF) 45,53,000
%5,00,000 Computation of Tax Payable
Insurance cost - Not ascerainable
Find out ‘assessessable value.
-Assessable value © :
Sol. Let the FOB value = ¥x. CIF value = %14,20;000 45,53,000
Ada: Basic Customs Duty (50% of %45,53,000)
Insurance Cost = 1.125% of FOB = 0,01125x Ado: Education Cess (3% of %22,76,500) 22,76,500
We know that . Assessable value and customs duty 68,295
FOB = CIF - Amount of Freight - Insurance Cost . Add: IGST (12% of %47,87,480) 68,97,795
=> x = %14,20,000 - %5,00,000 - 0.01125x Total : 827,735
= 1.01125x = 9,20,000 |_77,25,530
Q. 7. Find out the customs duty from the given information
= FOB value (x) = %9,09,765 goods imported by Z Ltd: in respect of
Computatation of Assessable-Value
; usp @)
Free on board value of plant imported (FOB)
Transaction value (FOB} 95,000
‘Add: Cost of transportation. 9,09,765 Air fare paid to Air Cargo Germany
of: oods ‘int 20,000
(20% of FOB or %5,00,000:.whicheveris Cost of package borne
by Z Ltd. in USA
les ) 1,814,953 .
Ada. Cost of insurance covei scertainable, therefore, 1.125% of FOB) (not included in FOB) ‘
10,235 750
Assessable Value (CIF) .
Demurrage paid by Z Lid. to Air Cargo
| 14,07,953
Germany for not lifting goods in time in India
Q. 6. Find out the customs duty from the following information in 45,000
respect of Insurance Charges .
goods imported by ABC Lid: 1,35,000
Loading/ unloading charges, handling charges
. 9,000
usD (2) Basic custom duty
- + 10%
Free on board (FOB) value: 65,000 - IGST ; 12%
Buying commission paid by ABC Ltd. to an Exchange rate notified. by Central Board of Excise
agent in USA for representing X Ltd. in the . and Customs. on the duty of loading of aircraft
' purchase of goods \ 900 Exchange rate notified by Central Board of Excise 60 ©
Air‘fare . a and Customs on the duty of presentation of
7,20,900
Demurrage paid by ABC Lid; to airlines bill of entry
23,000
insurance charges so Sol. 58
30,000 . Computation of assessable value
Loading/ unloading chargeé-handling. charges a ee aan
10,000 Pause ee
Basic Customs duty oo 50% Transaction value [FOB: $(95,000 + 750) x $58]
IGST : : , 55,53,500
12% Add: Cost of transportation of imported goods {o
India by air
SBI buying rate of 1 USD . ; . ($20,000 « 258 + £45,000 + 3,000) £42,10,000 but not more than 20% .
60 of FOB 11,10,760
SEI selling rate of 1 USD ' ; Add: Cost of insurance cover (Aciual}
62
Exchange rate notified by Central Board of Excise Assessable Value (CIF) 1,35,000
and Customs a 67,99,200
. 58
 iFUNIVER
a
ERIES
Coniputation of Tax Payable
BX oie
Assessable value 67,99,200
Add: Basi¢ Customs Duty (10% of €67,99,200) 6,793,920
Add: Education Cess (3% of %6,79,920)
20,398
Assessable value and customs duty 74,99;'518
Add: IGST (12% of 374,99,518) 8,99,942
Total ae 83,99,460

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