Ch.

1 Introduction and Constitution

Ch 1 INTRODUCTiON AND CONSTiTUTiON

Why tax: ?

(A Family of 5 to 8 members) (A Family of 140 Crores

Run by Parents
Ü If Job-
We Earn salary
Ü If Business (of Goods / Services)-
We Earn Fees / Profit from Sale
Here, Revenue is Salary or profit from sale
etc., which is used by parents for Food /
Clothes / House / Education, Health and
other daily needs of their 5 to 8 family
members.
i.e., Whole India)
Run by Government
* If Job-
We earn salary & pay “Income Tax”
* If Business of Goods / Services- We
Earn Fees / Profit from Sale and pay GST and
Income Tax
Here, Revenue is Taxes & duties on Salary or
profit from sale etc., which is used by
Government to fulfil daily needs of their 130
Crores + family members.

Example
Coaching service
Mr. Raj Student

Particulars Amount In `` Remarks

Value of Service provided 5,000
Add: - GST @ 18% 900
Total Value of service Provided 5,900
Less: - GST paid to Government (900) To Government
(Indirect Tax)
Net Value of service Provided 5,000
Less: -Expenses 2,000
Total Income / Profit 3,000
Less: - Income Tax (on above income) (3000 x 30%) (900) To Government
[Assumption- Rate of Income Tax=30%] (Direct Tax)
Net Income 2,100

Government need fund to fulfill Increasing developmental needs of country or to fulfill Socio
Economic Objectives of the country, that’s why Government impose tax.

CA Rajkumar 1.1
 Introduction and Constitution Ch.1

What is Tax ? A compulsory extortion of money

+
Made under an act / law
+
To support the Nation

Type of Taxes (Levied in India)

Type of Taxes

Direct Taxes Indirect Taxes

The incidence of tax borne by The incidence of tax not borne by the
Incidence of tax- the person on whom it is person on whom it is levied rather it is
levied. borne by ultimate user / End user.

Nature of tax- Progressive in nature (High Regressive (All the consumers equally
Nature of tax- rate of taxes for people bear the burden, irrespective of their
having higher ability to pay). ability to pay)

Types of tax- Income Tax, etc Goods and Service Tax, etc.

Example
Tax Imposed On Tax Borne By Type of Tax Applicable

Mr. Raj Student Indirect Tax

Mr. Raj Mr. Raj Direct Tax

Destination Principle:

India
End User of Goods / services in
India i.e. it is consumed in
India, Then Tax = to Indian
Govt.)
Manufacturer

USA
Manufacturer

End User of Goods / services -

in USA i.e. it is consumed in
USA, Then Tax = to USA Govt.)

1.2 CA Rajkumar
Ch.1 Introduction and Constitution

WHAT IF
Ÿ Goods imported from USA to India and
Ÿ Cleared for Home consumption in India on payment of Import duty,

Ÿ Now exported to Sri Lanka i.e. End User in Sri Lanka,

Ÿ In such case Tax will goes to Government of Sri Lanka.

Ÿ & What about tax paid to Indian Govt.?

According to this principle, if any goods or services, whether domestic or imported

ØConsumed in India: Tax will be levied and collected by Indian Government only
ØConsumed outside India: Tax will be levied and collected by Government outside India only

CREDIT CONCEPT in IDT

Concerned Person Particulars Amount Tax to Govt.

Manufacturer 1- Value = 100

GST @ 18% = 18 `18
Raw Material (Iron) Wire
Total= 118

Manufacturer 2- Value = 1000 Credit=18)

GST @ 18% = 180 `` 180-18
Wire Compressor
Total= 1180 =``162

Manufacturer 3- Value = 10000 Credit=180

GST @ 18% = 1800 `` 1800-180
Compressor AC
Total= 11800 =``1620

End User- Value = 500000 (Credit=1800)

GST @ 18% = 90000 ` 90000
AC Car
Total= 590000 - 1800
= `` 88200

Total = `` 90000

CA Rajkumar 1.3
 Introduction and Constitution Ch.1

FEATURES OF INDIRECT TAXES

I) An important source of revenue :

Indirect taxes are a major source of tax revenues for Governments worldwide and continue to
grow. In India, indirecttaxes contribute more than 50% of the total tax revenues of Central and
State Governments.

ii) Tax on Goods and services:

It is levied on Goods and services at the time of manufacture or purchase or sale or
import/export thereof/provision of services.

(iii) Shifting of burden:

There is a clear shifting of tax burden on end user. For example, GST paid by the supplier of the
goods is recovered from the buyer by including the tax in the cost of the commodity.
(iv) No perception of direct pinch :
Since, value of indirect taxes is generally inbuilt in the price of the commodity, most of the time
the tax payer pays the same without actually knowing that he is paying tax to the Government.
Thus, tax payer does not perceive a direct pinch while paying indirect taxes.
(v) Inflationary:Indirect taxation directly affects the prices of goods and services and leads to
inflationary trend.
(vi) Wider tax base:The indirect taxes have a wide tax base as compare to direct tax. Majority of
the products or services are liable to indirect taxes.
(vii) Regressive in nature:Generally, the indirect taxes are regressive in nature. The rich and the
poor have to pay the same rate of indirect taxes on certain commodities of mass
consumption.
(viii) Promotes social welfare:High taxes are imposed on the consumption of harmful products
(also known as ‘sin goods’) such as alcoholic products, tobacco products etc. This not only
control their consumption but also enables the State to collect substantial revenue.

Difference between Direct Taxes and Indirect Taxes

Basis Indirect Taxes Direct Taxes

The person on whom it is imposed, The person on whom it
1) Burden of Tax c o l l e c t s t h e s a m e f r o m t h e u l t i m a t e is imposed directlybears
consumer. Thus, incidence of tax is shifted to the incidence of tax.
the other person / End User
Regressive (All the consumers equally bear Progressive (High rate of
2) Nature
the burden, irrespective of their ability to taxes for people having
pay). higher ability to pay).

1.4 CA Rajkumar
Ch.1 Introduction and Constitution

CA Rajkumar 1.5
 Introduction and Constitution Ch.1

It has to bear by almost all persons. (i.e., a It has narrow tax base
3) Tax Based i.e.,
bagger buy a matchbox, then he is also comparatively.
PersonAffected
bearing the tax load.) Thus it has wider tax
base.
4) Collection `14 to16 lakh crores. `14 to16 lakh crores.
of Amount

5) Effect on Inflation It Directly affects inflation. It does not affect inflation.

6) Effect on Person It indirectly affects the bearer (Ultimate It directly affects the
consumer). Assessee.

7) Imposed on It is imposed on the person deal in It is imposed on

goods/services i.e., Businessman /Self- Employees /
employed persons. Businessmanand all

8) Examples Goods and Service Tax, etc. Income Tax, etc.

INTRODUCTION TO GST

WHY GST
Basis of difference PRE GST POST GST
Central Excise Duty, VAT, CST, GST (one nation one tax).
Multiple Tax Service Tax, ie Total 17 Taxes.

Separate: Registration, Books of ONE (Procedure).

Multiple Procedure
Account, Invoice etc.

Multiple Taxable Manufacturing , Sales, Entry in SUPPLY

Event other state etc.

Person Manufacturer, Service provider, Taxable PERSON

Trader etc.. (Supplier/Recepient)

Cascading Effect YES. NO (Cascading Effect) upto

99.99%

Double Taxation YES. NO Double Taxation upto 99.99%

Level Intra state, inter state, international Intra state, inter state,
(International will also called as
inter state.)

1.6 CA Rajkumar
Ch.1 Introduction and Constitution

Manufacture = Cen. Excise Duty = C.G.

What is It is a value added

Sale of Goods = VAT = SG GST t a x h a v i n g

continuous chain of
(Intra) A TAX on “Goods/Services” credit where burden
Sale of Goods = CST = SG
is shifted on END
(Inter)
SUPPLY User

GST: IMPOSED

Origin & Destination NATURE OF SUPPLY Origin & Destination

In Same State / Union in 2 Different States
territory Crux: Any border exists In
in 2 Different Union territories
between then Inter-
in a State & a Union Territory
State otherwise Intra-State
in 2 Different Countries
INTRA STATE
Ie, UP To UP
INTER - STATE (UP to HR)
Value of Goods / Service : XXX
+ C- GST : XXX Value of Goods / Service : 100
+ S – GST (UP) : XXX + I- GST @ 18% : 18
: XXX (A Sum Total of
CGST + HR GST) : 118
What About Daman to Daman?

Inter State Supply: Where origin & destination of supply fall under 2 Different States, UT’s, State
& UT, countries then the supply will be Inter State and IGST would be levied.

Ÿ IGST will be payable to Central Government in IGST Fund and

Ÿ Central Government transferred CGST potion to CGST FUND and
Ÿ Balance Portion (SGST) will be transferred to destination or consuming State’s SGST FUND.
Ÿ Where Destination is an Union Territory then Balance Portion (UT GST) will be transferred
toUTGST FUND.

Intra State: Where origin and destination of supply falls under same State/UT then the supply will
be Intra State & accordingly CGST & SGST/UT GST would be payable
Ÿ CGST will be credited to CGST fund directly and
Ÿ SGST/UTGST will be credited to SGST/UTGST FUND.

CA Rajkumar 1.7
 Introduction and Constitution Ch.1

PRACTICE OF INTER & INTRA IGST Payable to CG in

IGST Fund CG T/F 50%
to CGST fund balance
IGST 50% to UTGST fund by
Along with CG
Import MH MH UP
Duty INTER INTRA INTER INTER

CGST - Payable to IGST - Payable to

Central Govt. Central govt. (18%) & central govt
IMPORT
MH-GST - Payable to retain : 9% &
MH Govt. Balance 50% transfer to UP Govt. DAMAN
USA

IGST : Payable to INTER

CG[IGST Fund]
50% T/F to CGST fund
CHD
No GST and balance 50%
Destination T/F to UTGST Fund
Out of
India EXPORT

ANDMAN
INTRA
ANDMAN
INTER DL DL
INTRA INTER

CGST : To CGST Fund IGST : Central Govt. CGST : Payable to CG[CGST fund] IGST Payable to CG.[IGST
UT-GST to UT GST fund 50% CGST fund DL-GST : Payable to DL-GST fund Fund] 50% T/F to CGST fund
50% UTGST fund & 50% T/F to DL-GST fund

1.8 CA Rajkumar
Ch.1 Introduction and Constitution

TOTAL NUMBERS OF STATES AND UTs

Union Territories [UTs]

Natural States Mixed UT [T ermed as deemed state in the

world of GST]
Pure UT- An UT without
legislature ie no own
Its an UT with legislature ie having its own assembly, no own Chief
assembly, own Chief Minister. Minister.
In simple its having some charecterstick of
State

29 States 2 Mixed UT [Delhi and Puducherry ] 5 Pure UT

De-Merger of J&K 1 Mixed UT [J&K] 1 Pure UT [Ladakh]

Mergerof 2 Pure UT’s Dadar

- (1) Pure UT
and Nagar Haveli, Daman &
Diu
T otal : Natural States = 28 T otal deemed states = 3 T otal Pure UT’s = 5

FINALLY TOTAL NUMBER OF ST ATES (Natural and Deemed states )= 31

GST LAW

Ÿ For Levy and collection of CGST = CGST Act, 2017 (Total 1 Act)

Ÿ For Levy and collection of SGST = SGST Act, 2017 (Total 31 Acts)

Ÿ For Levy and collection of UTGST = UT GST Act, 2017 (Total 1 Act)

Ÿ For Levy and collection of IGST = IGST Act, 2017 (Total 1 Act)

Ÿ For Levy and collection of GST compensation Cess = GST compensation Cess Act, 2017
(Total 1 Act)
Ÿ For constitutional changes = The Constitution Amendment Act, 2016

CA Rajkumar 1.9
 Introduction and Constitution Ch.1

Utilisation of ITC

Inward Supply Outward Supply CGST

SGST
INPUT TAX (GST) OUTPUT TAX (GST) XXX UTGST
IGST
I.T.C. OF

CGST Use ITC XXX

SGST NET GST XXX
UTGST ITC Output GST
IGST
C C

I I

S S

U U

It means:
(I) First of all credit of IGST will be utilised-
- For the payment of IGST
- For the payment CGST / SGST or UTGST (in ANY Ratio and in any sequence)
(ii) After that credit of CGST will be utilised –
- For the payment of CGST
- For the payment of IGST
(iii) Lastly credit of SGST will be utilised –
- For the payment of SGST
- For the payment of IGST
OR
(iii) Lastly credit of UTGST will be utilised –
- For the payment of UTGST
- For the payment of IGST

Note
Credit of SGST can NOT be utilised for the payment of CGST & Vice Versa.
Credit of UTGST can NOT be utilised for the payment of CGST & Vice Versa.

1.10 CA Rajkumar
Ch.1 Introduction and Constitution

EXAMPLE:

Total Output GST= 62,000 Output IGST Output CGST Output SGST
Total ITC = 60,000 15000/- 12000/- 35000/-
(1) ITC of IGST = 20000 (15000) (2000) (3000)
Balance Liability = NIL 10000 32000
(2) ITC of CGST = 10000 - (10000) -
Balance Liability = Nil Nil 32000
(3) ITC of SGST = 30000 - - (30000)
Cash Liability 2000

Finally Concepts of GST based on:

(1) Value added Tax: GST is a value added tax levied on manufacture, sale and consumption of
goods and services.
(2) Continuous chain of Tax credit: GST offers comprehensive and continuous chain of tax credits
from the producer's point/service provider's point upto the retailer's level/consumer’s level
thereby taxing only the value added at each stage of supply chain.
(3) No tax on tax (Cascading): Since, only the value added at each stage is taxed under GST, there is
no tax on taxorcascadingoftaxesunderGSTsystem. GST does not differentiate between goods
and services and thus, the two are taxed at a single rate.
(4) Burden borne by final consumer: The supplier at each stage is permitted to avail credit of GST
paid on the purchase of goods and/or services and can set off this credit against the 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 in the supply chain, with set-off benefits at all the previous
stages.

Which Taxes Subsumed or not to subsumed in GST

Following taxes/duties/cess have been subsumed in GST…

Ÿ Central excise duty,

Ÿ State level VAT,

Ÿ Central Sales Tax,

Ÿ Entry tax / Octroi,

Ÿ Purchase Tax,

Ÿ Service Tax,

Ÿ Tax on betting, gambling, Lotteries

CA Rajkumar 1.11
 Introduction and Constitution Ch.1

Ÿ Luxury Tax on hotels

Ÿ Entertainment Taxes levied by State Govt.

Ÿ Various kind of cess eg. krishi kalyaan cess, swach Bharat cess

Ÿ Etc.

Following taxes have not been subsumed in GST….

Ÿ Import duty

Ÿ Export duty

Ÿ Entertainment Taxes levied by Local bodies.

Ÿ Electricity duty/Tax.

Ÿ Stamp Duty.

Ÿ Road Tax & passenger tax

Ÿ Toll tax

Ÿ Etc.

Old and New Tax

Alcoholic Liquor for human consumption State Excise duty NO GST
Sales Tax
5Petroleum Products Central Excise duty
Sales tax
Tobacco Central Excise duty Yes GST
Sales tax
Rest of the goods
All Services - Yes GST

Need For GST in India/Deficiencies in the existing value added taxation

Multiple taxes:
There are multiple taxes in India in old regime like central excise duty, state level vat, service tax,
various kinds of cesses consequently multiple legislation and multiple taxable events, multiple
procedures and there was no coordination among all taxes.
Cascading effect:
In the old regime, a manufacturer of excisable goods charges excise duty and value added tax (VAT)
on intra-State sale of goods, even vat was charged on cum duty price consequently it creates
cascading effects. Moreover credit of CST not available atall to any one consequently creates
cascading effect and many more examples of cascading effects.

1.12 CA Rajkumar
Ch.1 Introduction and Constitution

Double taxation:
Double taxation of a transaction as both goods and services as the distinction between goods and
services was often blurred, e.g. software was liable to both VAT and service tax. It was Just because of
lack of proper coordination among various tax laws there was a situation of double taxation eg.
Restaurants services, works contract, etc. liable to both service tax and vat.
No Uniformity:
Because of multiple taxes there were multiple legislation, Multiple Procedure, multiple returns,
registration, invoicing, multiple threshold exemptions and all and was no coordination among all
taxes hence it can be said that there was no uniformity in old taxes.

BENEFITS OF GST
GST brings benefits to all the stakeholders of industry, Government and the consumer. It will lower
the cost of goods and services, give a boost to the economy and make the products and services
globally competitive. GST is a win-win situation for the entire country. The significant benefits of GST
are discussed hereunder:

No multiple taxes (to GST will subsume majority of old indirect taxes levies both at Central and
the extent): State level into one tax i.e., GST which will be leviable uniformly on goods
and services.

No cascading effect By subsuming most of the Central and State taxes into a single tax and by
(to the extent): allowing a set-offof prior-stage taxes for the transactions across the
entire value chain, it would mitigate the ill effects of cascading, improve
competitiveness and improve liquidity of the businesses.
No double taxation GST will make doing business easier and will also tackle the highly
(to the extent): disputed issues relating to double taxation of a transaction as both
goods and services.

Uniformity in GST aims to make India a common market with common tax rates and
provision (to the procedures, common procedure, common valuation system which
extent): provides uniformity in taxation system.
Buoyancy to the GST is expected to bring buoyancy to the Government Revenue by
Government widening the tax base and improving the taxpayer compliance.
Revenue:

Boost to 'Make in GST will give a major boost to the 'Make in India' initiative of the
India' initiative: Government of India by making goods and services produced in India
competitive in the national as well as international market..
Win- Win for all GST is a win-win situation for the entire country. It brings benefits to all
the stakeholders of Industry, Government and the Consumer. It lowers
the cost of goods and services, gives a boost to the economy and makes
the products and services globally competitive.

CA Rajkumar 1.13
 Introduction and Constitution Ch.1

GENESIS OF GST IN INDIA

Year Event

1954 France was the first country to implement GST in the year 1954.

The idea of national Goods and Services Tax (GST) in India was mooted
2004
by Kelkar Task Force in 2004.
2014 NDA Government tabled the Constitution (122nd Amendment) Bill..

2016 Constitution (122nd Amendment) Bill, 2014 received the assent of the
President on 8th September, 2016 and became Constitution (101st
Amendment) Act, 2016.

2017 (March) The Central GST legislations - Central Goods and Services Tax Bill,
2017, Integrated Goods and Services Tax Bill, 2017, Union Territory
Goods and Services Tax Bill, 2017 and Goods and Services Tax
(Compensation to States) Bill, 2017 were introduced in Lok Sabha.

2017 (July) Finally Govt. rolled out GST by 1st July, 2017, by achieving consensus
on all the issues relating thereto.

Goods and Services Network (GSTN)

GSTN is a company Registered under section 8 of Companies Act, 2013 i.e. A company “Not for
Profit”.
- Both the Government provides funding to GSTN.
- GSTN provides GST portal service to Govt. and Tax Payers.
- Facilities offered by GSTN/GST Portal are as follows—
Ÿ Registration,
Ÿ filing of Return,
Ÿ Distribution of IGST Between CG & SG/UT,
Ÿ Matching of Returns,
Ÿ Analysis Tax Payer's profile and provide Various Kinds of Report to Government.

Note: “www.ewaybillgst.gov.in” means the website managed by the National Informatics

Centre, Ministry of Electronics & Information Technology, Government of India.

GSPs/ASPs
- GSTN has selected certain IT, ITeS and financial technology companies, to be called GST
Suvidha Providers (GSPs).
- GSPs develop applications to be used by taxpayers for interacting with the GSTN.
- They facilitate the tax payers in uploading invoices as well as filing of returns and act as a
single stop shopfor GST related services.

1.14 CA Rajkumar
Ch.1 Introduction and Constitution

- They customize products that address the needs of different segment of users.
- GSPs may take the help of Application Service Providers (ASPs) who act as a link between
taxpayers and GSPs.

GST Portal

(GSTR-1/ GSTR-3B- Organised Data)

GST Suvidha Provider (GSP) /

Application Service Provider (ASP)

It is A communicator between Computer of

taxpayer and GST Portal
(Work Mode @ Pull / Push Mode)

All Raw Data

Return

File GSTR -3B

GSTR-2B Computer of Tax Payer File GSTR-1

Input Tax Credit Output GST

404
Invoice Received
ERROR

Invoice Issued
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CONSTITUTION
As we know that Power to levy and collect taxes whether, direct or indirect emerges from the
Constitution ofIndia.
So For Introduction of GST in INDIA, lots of changes were required in constitution of INDIA
.Mainly four Articles in constitution need to be study.
ARTICLE No.: 246A
Ÿ CG & every SG have simultaneous power to make laws with respect to CGST & SGST/UTGST for Intra
State supplies.

CA Rajkumar 1.15
 Introduction and Constitution Ch.1

Ÿ CG has Exclusive power to make law with respect to IGST for Inter State supplies.

Ÿ 5 Petroleum products [Petroleum crude, High Speed Diesel, Motor Sprit, Natural Gas, Aviation
Turbine Fuel] would be covered under the ambit of GST from that date which will be recommended
by GST council.
ARTICLE No.: 269A
Ÿ As stated earlier, CG has Exclusive power to make law with respect to IGST on Inter State supplies.

Ÿ IGST will be payable to CG in IGST FUND. The CG will transferred 50% amount in CGST FUND which
is owned by central Government and Balance 50% shall be transferred to consuming/destination
state Government’ SGST FUND or in Case where destination is an UT then such amount will be
transferred to UTGST FUND which is owned by Central Government.
Ÿ All International Transaction will also be called as Inter-State transaction.

ARTICLE No.: 366

Ÿ GST means : A Tax on Goods/services.
(Excluding Tax on Alcoholic Liquor a human consumption)
Ÿ Goods – Any kind of moveable property will be called as Goods.
Ÿ Service – Anything other than goods will be treated as service.

GST COUNCIL
ARTICLE No. 279AGST Council

GST Council
For any change B GST Council
in law eg. rate Union F.M
C Notification
Exemption,
issued
Proceural
Difficulties etc. If the proposal
&
State Finance Minister accepted by
A Parliament D
GST council
then recomendation
send to parliament Act
Ka Part
Taxable Person OR Discussion over the
Tax Payer OR Passing Criteria
proposal send by Industries
(Industries) 75% or more
E
weight %
Amended Provision Applicable

1.16 CA Rajkumar
Ch.1 Introduction and Constitution

Central Govt. = 1 Vote

State Govt. = 31 Vote

ON A PROPOSAL : Central Government State Government

(Assume CG agreed
And 25 states agreed 1 25
x 100 x 100
on a proposal 1 31
1 2
100% x 80.65% x
3 3

33.33% + 53.77% = 87.1%

1. Where industry demands any change in law it approach GST Council for the same.
2. Such matter is discussed in GST COUNCIL.
3. After discussion if favorable voting percentage is 75% or more (weighted %) then the
proposal/recommendation is sent to the Parliament. Every decision of the Goods and Services
Tax Council shall be taken at a meeting, by a majority of at least 75% of the weighted votes
of the members present and voting, the vote of the Central Government shall have a
weightage of 1/3 of the total votes cast, and The votes of all the State Governments taken
together shall have a weightage of 2/3 of the total votes cast, in that meeting.
4. After that a formal notification is issued for the same.
5. Now the change will be effective for industry and government.
6. 50% of the total number of Members of the Goods and Services Tax Council shall constitute
the quorum at its meetings.

CA Rajkumar 1.17
 Introduction and Constitution Ch.1

1.18 CA Rajkumar
Ch.2 Definitions

ACTIONABLE CLAIM:

Actionable claim means CONTINGENT assets.

For Example:
Ÿ Betting, Gambling, Lottery
Ÿ Pending Litigations
Ÿ Insurance claim
Ÿ Etc.

However under GST-Regime Actionable claim Relating to Lottery, Betting, Gambling ALONE will be
Regarded as supply of Goods.
REST of the forms of Actionable Claim – will NOT be treated as supply of Goods or services. Hence NO
Question of GST.

Reason

Position before Introduction of GST

Particulars Remarks

Lottery, Betting, Gambling One of the tax leviable on it namely- “Tax on

Lottery, Betting and Gambling”, payable to State
Govt.

Other forms of Actionable Claims: Not Liable to Any Tax

-Pending Litigations
-Unsecured Debts
-Insurance Claim
-Others

Position after Introduction of GST

Particulars Goods Supply GST

Lottery, Betting, Gambling Yes Yes Yes

Other forms of Actionable

Claims: Yes No No
-Pending Litigations
-Unsecured Debts
-Insurance Claim
-Others

CA Rajkumar 2.1
 Ch.2

2. AGENT: Agent” means:

Ÿ A person, including a factor, broker, commission agent, arhatia, del credere agent, or any other
mercantile agent, by whatever name called,
Ÿ who carries on the business of supply or receipt of goods or services or both on behalf of another.

Analysis
T1 T2

Transfer of Goods Sale of Goods

Agent
*Invoice Issued= Yes *GST = Yes
Principal (Mr. X)
*Consideration = No *ITC utilised = Yes
(Ambuja
Cement) *Supply=Yes
*GST = Yes

Principal Agent
= =
The person on whose the person who works
behalf agent works on behalf of any other
person (i.e., Principal)

3. PRINCIPAL: Principal” means: a person on whose behalf an agent carries on the business of
supply or receipt of goods or services or both.

4.Aggregate Turnover“Aggregate Turnover” means:

Ÿ the aggregate value of all OUTWARD taxable supplies
(excluding the value of inward supplies on which tax is payable by a person on RCM OR NCM
BASIS),
Ÿ exempt supplies,
Ÿ exports of goods or services or both and
Ÿ inter-State supplies of persons having the same Permanent Account Number,
Ÿ to be computed on all India basis
Ÿ but excludes central tax, State tax, Union territory tax, integrated tax and cess.

2.2 CA Rajkumar
Ch.2 Definitions

Analysis

* Clubbing @ Panwise @ All India

* Old Taxes : Include

Inward Supply All Outward Supply

(Inter State / Intra State / (Inter State / Intra State / NCM

NCM/ RCM/ etc.) / RCM / Taxable/Exempt/Zero
Rated (Export)/etc.)
Raw
Final
Material
Product
Never to be Always to be
included in included in
Aggregate Aggregate
Turnover Turnover

Question: -1 Mr. X has started a business on 1st April 20XX in Haryana. From the following details,
You are required to calculate aggregate turnover of Mr. X.
Value of Nature Old Tax GST Total Aggregate
Outward supply Value Turnover
1,00,000 Inter-State Supply Nil 18,000 1,18000 1,00,000
2,00,000 Intra-State Supply 10,000 37,800 2,37,800 2,10,000
3,00,000 Supply under RCM - - 3,00,000 3,00,000
4,00,000 Export Supply - - 4,00,000 4,00,000
5,00,000 Exempted Supply - - 5,00,000 5,00,000
6,00,000 Non-Taxable Supply
(Petrol) 60,000 - 6,60,000 6,60,000
7,00,000 Not a Supply - - 7,00,000 -
Value of Inward supply
1,00,000 Supply under NCM - 18,000 1,18,000 -
2,00,000 Supply under RCM - 36,000 2,36,000 -
Aggregate Turnover 21,70000

Question: -2 From the following details, find out the aggregate turnover of Mr. Y.

CA Rajkumar 2.3
 Ch.2

Mr. X (Single [T/O = Turnover]

PAN)

Uttar Pradesh Haryana Punjab

Factory 1 Factory 2 Factory 3 Factory 4 Factory 5 Factory 6

T/O = T/O = T/O = T/O = T/O = T/O =
1 Lakh 2 Lakh 3 Lakh 4 Lakh 5 Lakh 6 Lakh

Turnover (All India Based) = 21 Lakhs [Aggregate Turnover]

Turnover (State Based) = 6 Lakhs
= 9 Lakhs
= 6 Lakhs
Turnover (Business Based) = 1 Lakh
= 2 Lakhs
= 3 Lakhs
= 4 Lakhs
= 5 Lakhs
= 6 Lakhs

5. EXEMPT SUPPLY

Exempt Supply” means:

Ÿ Supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt
from tax
Ÿ and includes non-taxable supply
.Note: Exempt supply – shall NOT Include Zero Rated Supply.
Exempt Supply Exempt Supply = GST Free Supply

Inward Supply Outward Supply

ITC = Yes Taxable Supply = GST
ITC = No RM FP Exempt Supply = No GST
ITC = Yes Zero-Rated Supply= No GST
(i.e., Export)

Nil Rated Wholly Exempt Non- Taxable

Supply Supply Supply
(Nil GST rate) (100% E/N-Gate 5) (Liquor/ Petrol etc.))

2.4 CA Rajkumar
Ch.2 Definitions

6. AGRICULTURIST: Agriculturist” means an individual or a Hindu Undivided Family who

undertakes cultivation of land–
Ÿ By own labour, or
Ÿ By the labour of family, or
Ÿ By servants on wages payable in cash or kind or by hired labour under personal supervision
or the personal supervision of any member of the family.

7. FAMILY: Family” means,––

Ÿ The spouse and children of the person, and

Ÿ The parents, grand-parents, brothers and sisters of the person (if they are wholly or mainly
dependent on the said person)

8. AUTHORISED BANK: “Authorised Bank” shall mean a bank or a branch of a bank authorised
by the Government to collect the tax or any other amount payable under this Act.

Role of Authorized Bank:The taxable person required to pay tax on supplies made by him or on
Inward supplies fall under RCM.
Ÿ For making payment of GST the person need to create challan from GST Portal.

Ÿ After that Amount mention in challan need to be deposited in authorized bank & such authorized
bank integrated with GST Portal [GSTN].
Ÿ For above GSTN & Banks are tie upped :

Ÿ & Such Tie upped – Bank or Branch of the Banks called as Authorized Bank & as and when the
person make payment to authorized branch it will be updated in E –Cash Ledger at GST Portal.

9. BOARD : Central board of Indirect Taxes and taxes and Customs [C.B.I.C.]

10. BUSINESS: The Definition is taken from Sales Tax (Vary wide Definition) &cover All the
Transactions that arecurrently subjected to Various TAXES – That are being subsumed in GST

Note: Supply – should be undertaken in the course of or Furtherance of Business

a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit;
b) Any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
c) Any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity orregularity of such transaction;
(d) Supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
(e) Provision by a club, association, society, or any such body (for a subscription or any other

CA Rajkumar 2.5
 Ch.2

consideration) of the facilities or benefits to its members;

(f) Admission, for a consideration, of persons to any premises;
(g) Services supplied by a person as the holder of an office which has been accepted by him in the
course or furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker or activities of
a licensed book maker in such club; and
(I) Any activity or transaction undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities.

SN. 11 Aabhaas Edutech Pvt. Ltd.

Background
Inward Supply Coaching Service
GST= Yes
* Camara / I Pad / Furniture
* Stationary
* Renting of office
* Other inward supplies Raw Material Final Product

* Other inward supplies

CAPITAL GOODS
Meaning Goods – the Value of WHICH
is Capitalised in the Books of
Account of the person
claiming I.T.C.
+
Use Such goods are used or
Intended to be used in the
course or furtherance of
Business.
INPUTS INPUT SERVICE
Any goods other than ANY SERVICE
CAPIT AL goods.
+ +
Used or Intended to be Used or Intended to be
used by a supplier in the used By a Supplier – IN
course or furtherance of the course or furtherance
Business. of Business.

12. CASUAL TAXABLE PERSON

Kent RO Delhi Trade Fare Mr. X

(Haryana Office) Kent RO Business- (Reg) (Delhi)

Transfer of Sale of
Goods (RO) Goods (RO)

Estimate:
Registration = Yes Book ITC = 10,000 Output GST = 50,000
Assumption = Kent RO has Less: ITC = 10,000
It is a Supply
no branch office in Delhi. Cash = 40,000
(GST = Yes)

2.6 CA Rajkumar
Ch.2 Definitions

Note: 1- 10Lakhs / 20 Lakhs limit not applicable

(i.e., Mandatory Registration required)
Note: 2- Registration 5 days in advance
Note: 3- Payment 5 days in advance in E-cash ledger(i.e., `40,000)
Registration = Temporary (i.e., With Expiry Date)
Validity of registration certificate
= Maximum 90 days + Extension of maximum 90 days

“Casual Taxable person” means:

Ÿ A person who occasionally undertakes transactions involving supply of goods or services or
both in the courseor furtherance of business,
Ÿ in a State or a Union territory where he has no fixed place of business (Branch office).

13. NON-RESIDENCE TAXABLE PERSON: Non-Resident Taxable Person” means:

Ÿ Any person who occasionally undertakes transactions involving supply of goods or services or
both,
Ÿ who has no fixed place of business or residence in India.

14. COMMON PORTAL: Means the common goods and services tax electronic portal.
* Common portal means GST Portal
* It is owned by GSTN
* GSTN is a company Registered under Companies Act. 2013 (Sec : 8 ) ie Not for profit
* GSTN Provide service to Government & Government Fund to GST on Actual/Cost basis.
* All work like Registration, Return, Payment, Computation & settlement of – IGST & Other
functions etc. done by GSTN.

15. CONSIDERATION:
As we know that to be a supply of goods/service : All the 3 conditions must be satisfied:
Ÿ These should be an activity ie sale, lease etc.
Ÿ In the Course of furtherance of business
Ÿ For a consideration.
Ÿ However : Some notified activities will be called as supply even if No Consideration)
Ÿ More over Consideration is liable to GST ie Consideration is equal to transaction value & liable to
GST

CONSIDERATION INCLUDES:
The person who is liable
Supply of Goods/Service
to pay Consideration.
Supplier (Passive/ACTIVE) OR
Recipient
Something in Return in * The person to whom
Any Form (Monetary or Non-monetary) Delivery is made
Security Deposit OR
“NOT a PART of Consideration
to whom Service is
(Unless Adjusted as Consideration)” Govt. Subsidy Rendered
“Shall NOT be treated as a PART of Where no consideration
consideration.” Subsidy from is payable
Any other Including Agent
“Includible as A PART of Consideration

CA Rajkumar 2.7
 Ch.2

Example

Supplier Rent out Commercial Building for 5 years

Recipient
Mr. Raj
(Land Lord)

Consideration = Rent - 1,00,000 PM + GST

= Security Deposit= 6,00,000 As security deposit is
Refundable, so it shall not
Later on: - be Treated as consideration
at this moment. Hence No GST.
Year 0 Year 5

* In last 6 months, Security Deposit of `

6,00,000 will be adjusted against rent@
1̀,00,000 per month.

* Now, it becomes consideration, andThis

activity shall be treated as supply,& GST
shall be liable on security
deposit.(Converted as rent in last 6
months)

16.Credit and Debit Note

(Supplier) Supply (1000 units @ 5̀0)
RM FP

Invoice:
Value = 50,000
GST = (9,000)
Total = 59,000

Under Invoice Over Invoice

+ -
+ -
-
+
-
+
To be increased To be decreased

Supplier shall issue DEBIT NOTE Supplier shall issue CREDIT NOTE
“Mote Hone Ki Dawa” “Patle Hone Ki Dawa”

2.8 CA Rajkumar
Ch.2 Definitions

Basis CREDIT NOTE DEBIT NOTE

CREDIT Note is issued by supplier
ONLY. (IFissued by Recipient for
Issued Accounting purpose – than – NOT A
Relevant Documents)
ebit NOTE issued by Supplier ONLY (IF
issuedby Recipient for Accounting
purpose then NOT a Relevant Documents)
[Note: Debit note also called as
supplementary INVOICE]

Reason of It can be issued only IN Following It can be issued ONLY in following

Issuing situations:— situations:
In terms of Value In terms of Value
* Over Invoice In terms of TAX. * Under Invoice In terms of TAX
(OR)
Deficient Supply
* Under Supply Return Supply

GST Portal GST Portal

GSTR-2B
GSTR- 1 = 9,000 GSTR : 3B
By 11th may
E- liability Register
Supplier Recipient
(Reg.) Invoice Issued (Reg.)
Value = 50,000
GST = 9,000 (Output GST)
Total = 59,000

DEBIT NOTE
Ÿ Debit note/Supplementary Invoice is issued by the supplier of goods/services will only be
relevant
Ÿ Reasons of issuing debit note may be: Under invoicing in terms of charging lower value or
lower GST in main invoice, one more reasons
Ÿ So to supplement main invoice supplier need to issue a debit note.

Treatment of Debit Note GST – With the help of Example

CA Rajkumar 2.9
 Ch.2

Example

Mr. X

Sale of 110 Unit @ Rate Rs. 50/- per unit

But Invoice Issued only of 100 Unit By Mistake.

Main Invoice: 12/3/20XX Value (100 Unit * 50) = 5000

GST @ 18% = 900
Supplier 5900

Treatment on the basis of main Invoice

Ÿ Mr. X Supplier file GSTR: 1 By 11th April.
Ÿ E – Liability Register of Mr. X – Updated by ` ` 900 as output GST.
Ÿ On 20th April Mr. X Paid GST of ` ` 900 to Government.
Ÿ On the other side recipient will book ITC of `900/
Ÿ Now Later on suppose on in June 20XX it was found that invoice issued on 12th march was a
case of under invoicing

Now What to do:

Ÿ Supplier need to issue a debit note of Rs 500 as value & GST thereon
Ie. Debit Note/Supplier Invoice (In June: 20XX)
Value (10 Unit * 50 ) = 500
GST 18% = 90
590

Ÿ Now supplier will file GSTR: 1 Including Detail of above Debit Note on 11th of July &
pay GST ON 20th July.

CREDIT NOTE: (JUST OPPOSITE OF DEBIT NOTE)

= Credit note issued by supplier will only be relevant.
= Reason of issuing credit note: Over Invoicing etc.

Eg. Unit Sold = 100 Unit

But invoice issued for110 Unit

Eg. Value : 110 Unit * 50 = 5500

12/3/20XX GST = 990
= 6490
SUPPLIER RECIPIENT
Output Liability = 990 ITC = 990
+Later on suppose in JUNE : 20XX Value : 500
credit note issued GST : 90

2.10 CA Rajkumar
Ch.2 Definitions

Now Supplier need to file GSTR , 1 including the detail of credit note by 10th of July, resulting
thereof output liability of supplier – Decrease by `` 90/-

THUMB RULE: Output GST @ Supplier = ITC to Recipient

17. E - LIABILITY REGISTER / E - CREDIT LEDGER /E-CASH LEDGER:

Liability as per Return filed (Part-1)

E- Liability Register Liability as Demanded by officer (Part-2)
GST Portal
E- Credit Ledger

E- Cash Ledger (Like paytm wallet)

Mr. X
(Registered)

Update in E-Credit Ledger Update in E-Liability Ledger

(``8,000) (``18,000) (Part-I)

GSTR-2B GSTR-1- By 11th of Next Month

Abhaas Edutech
Invoice Received Pvt. Ltd. Invoice Issued
For Supply Received For Supply Made
GST = 8̀,000 GST = 1̀8,000

Now, Deposit `` 10,000 [18,000 – 8,000]

In E-cash ledger by creating challan

& then payoff Govt. dues : as shown in

E-liability register by using E-credit ledger
& E-cash Ledger

Now file GSTR-3B by 20th of Next month

CA Rajkumar 2.11
 Ch.2

18. INDIA: India” means:

Ÿ The territory of India as referred to in article 1 of the Constitution,
Ÿ its territorial waters, seabed and sub-soil underlying such waters,
Ÿ continental shelf, exclusive economic zone or any other maritime zone as per Maritime Zones Act,
1976, and
Ÿ the air space above its territory and territorial waters.

[Air space = India]

[TWI= India]

200NM 12 NM
India
188NM Area=Exclusive Economic
Zone (EEZ)
[Seabed /
Continental Shelf Subsoil
Oil Rigs = India]

[=Deemed India]
i.e., Oil Rigs Area in EEZ
will be treated as Deemed India [All States & UTs = India]

Some Background for next 3 Points :

Inward Supply Outward Supply

Mr. X
(Supplier [Supply received, i.e., sale / GST= Yes
of Raw exchange etc. with consideration
Material) or free of cost in 4 specified cases]

[Input Tax (GST) = Either payable

under NCM by supplier (Mr. X), or
under RCM by Recipient (Mr. Y)]

Further, GST is to be paid on Import of Goods

which is paid under Customs Laws provisions
along with Import Duty

2.12 CA Rajkumar
Ch.2 Definitions

19. INWARD SUPPLY:

Inward Supply” in relation to a person, shall mean:
Ü Receipt of goods or services or both
Ü whether by purchase, acquisition or any other means
Ü with consideration or without consideration.

20. INPUT TAX: Input Tax” in relation to a registered person, means :

Ü NCM SUPPLIES: The CGST, SGST, IGST or UTGST charged on any supply of goods or services or
both made to him and
Ü RCM SUPPLIES: The tax payable under Reverse charge mechanism under CGST/SGST/
UTGST/IGST/ACT.
Ü NEITHER NCM NOR RCM: The IGST charged on import of goods
However tax paid by composite dealer out of his pocket will not be input tax for recepient.
21. INPUT TAX CREDIT: Means the Credit of INPUT TAX

Note: For a Tax to qualify as INPUT Tax Credit, it must first be “INPUT TAX”.

22. OUTWARD SUPPLY:

Ü Supply of goods/service provided/given by supplier by any mode as sale/ transfer/barter etc.
Ü with consideration and without consideration only in selected cases
Ü Made during the course of business/further hence of Business
.
23. OUTPUT TAX: Output Tax” in relation to a taxable person, means:
Ü The tax chargeable under this Act
Ü on taxable supply of goods or services or both made by him or by his agent
Ü but excludes tax payable by him on reverse charge basis;

24. JOB WORK: Job Work” means:

Ü Any treatment or process undertaken by a person
Ü on goods belonging to another registered person and
Ü the expression “job worker” shall be construed accordingly.

Mr. X Job Worker

Out Source any one or more process

Multiple Processes Job Worker

Ÿ Any treatment or process under taken by a person (Job Worker whether registered or not)
– on goods belonging to another person ( Mr. X)
Ÿ & the person doing job work is called as job worker.

CA Rajkumar 2.13
 Ch.2

Job Work V/s GST :

Mr. X Independent Person [Job Worker]

[T1]Transfer of Goods Worth `5 Lakh

(Principal) Job Worker

T₂
T₃ Return of Goods after Job Work Labour + Material
Job Charges = `15000/-
= SERVICE
[T1]
*We are talking about goods.
*But transfer of goods to job worker is not a supply therefore no question of GST at all @ T1

Activity
+
Business Not a SUPPLY
+
No Consideration
More over T1 does not fall under 4 specified cases.

[T2] Return of Goods

Here we are talking about goods
It is not a Supply.
Activity ü
Business ü
Consideration of Goods û
So No Question of GST

[T3]
Supplier [Job Worker] & Recipient [ Principal]
Here we are talking about service ie job work service
It is a Supply. : A ü
B ü
Cü Consideration of service : `` 15000/-
Taxable person in this case will be Mr. Job Worker.
GST Computation. : `` 15000 * 18% = 2700/-

2.14 CA Rajkumar
Ch.2 Definitions

25. MONEY: Money” means:

Ÿ The Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of
credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other
instrument recognised by the Reserve Bank of India
Ÿ when used as a consideration to settle an obligation or exchange with Indian legal tender of
another denomination
Ÿ but shall not include any currency that is held for its numismatic value.

As we know that definition of goods/service excludes moneyie. Money is neither Goods nor service.
Hence no GST on Money.
However: When person exchange money for a consideration (commission) then such activity is called
as service & liable to GST for example: Activity of forex dealer liable to GST as a Service.
So we need to know: What is money…
INR /$/Cheque/DD/Bill of Exchange Money = YES all are money
Old outdated currency = NOT A money (eg. 500/1000 Note)
Shares/Gold etc. = NOT a money.
Money: Market price & face Price equal.

26. Non-Taxable Supply” Means:

Ÿ A supply of goods or services or both

Ÿ which is not leviable to tax under this Act or under the IGST Act.

27. Taxable supply Means a supply of goods or services or both which is leviable to tax under
this Act.

Taxable Supply of Non-Taxable Supply Whether included in

Question:
Goods/service of Goods/services Aggregate Turnover
* Goods/SERVICE Goods/SERVICE
Meaning
+ +
* Supply * Supply
+ +
* Leviable to GST * NOT Leviable to GST
I. Sale of Money/ No – as it is NOT NO – as it is NOT
Security goods/Service No
goods/Service

ii. Sale of Alcoholic No - As it is goods & Yes – It is Goods & also

Liquor for also fall order the fall under the Definition Yes
H u m a n Definition of Supply – of supply. BUT it is
Consumption/fi But is Excluded from excluded from charging
ve Petroleum charging section – section hence NOT
Product. therefore Not liable to liable to GST-
GST Therefore it is called –
Non-Taxable Supply”.

No 2.15
CA Rajkumar
 Ch.2

i i i . T r a n s f e r o f No, as it is goods But it NO - as it is goods But it

Goods to Job does not Amount to does not Amount to No
Worker supply. Hence CAN supply. Hence CAN
NOT be called as NOT be called as “Non
“Taxable Supply.” Taxable Supply.”

28. Non-Taxable Territory” Means: the territory which is outside the taxable territory.

29. “Taxable Territory” Means: the territory to which the provisions of this Act apply.

TERRITORY

Taxable Territory Non Taxable Territory

The territory to which Rest of the Area.
Provisions of particular GST Law
are Applicable.

Act TT NTT
For IGST Act : Whole of India. Any place except India.
For DL – GST Act DL Any place except DL
For UP GST UP Any place except UP (Say HR, USA)
For CGST All India Any location Except India.
For UT GST UT Any place except UT

STATES AND UT
30. “State” includes Delhi and Puducherry, J&K
31. “Union territory” means the territory of-
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and Diu
(d) Ladakh;
(e) Chandigarh; and
(f) Other territory

32. OTHER TERRITORY- Includes territories other than

Ÿ Delhi and Puducherry, J&K
Ÿ Andaman and Nicobar Islands;
Ÿ Lakshadweep;
Dadra and Nagar Haveli and Daman and Diu
Ÿ Ladakh;
Ÿ Chandigarh

2.16 CA Rajkumar
Ch.2 Definitions

33. PERSON: - Person” includes–

(a) An individual;
(b) A Hindu Undivided Family;
(c) A company;
(d) A firm;
(e) A Limited Liability Partnership;
(f) An association of persons or a body of individuals, (whether incorporated or not, in India or
outside India)
(g) Any corporation established by or under any Central Act, State Act or Provincial Act or a
Government company.
(h) Any-body-corporate incorporated by or under the laws of a country outside India;
(i) A co-operative society registered under any law relating to co-operative societies;
(j) A local authority;
(k) Central Government or a State Government;
(l) Society
(m) Trust; and
(n) Every artificial juridical person, not falling within any of the above.

Includes: Company, Firm, LLP, AOP (Incorporated/Unincorporated), Govt. Company, Foreign

Company, Co-operative Society, CG, SG, Local Authority, Society, TRUST etc.

Note: Every Person is understood to have a separate Identity. eg. A TRUST SETUP By a
Company – Now Company AND TRUST – have separate Identity/Both are separate
persons.

34. PRINCIPAL PLACE OF BUSINESS:The place as specified in ‘Registration Certificate’ as principal

place (Generally Head Office/Corporate office) registered Address under Company Act/Address
specified in partnership deed/Billing Address.

35. PRINCIPAL SUPPLY: means:

Ÿ The supply of goods or services which constitutes the predominant element of a composite supply
and
Ÿ to which any other supply forming part of that composite supply is ancillary.

What is Principle Supply: - A supply which constitutes predominant element of a composite

supply.
For Example: * Laptop + Carry case = LAPTOP
* Split AC + INSTALLATION = AC
* Goods + Transportation = Goods
* etc.

36. QUARTER: Quarter shall mean:

Ÿ A period comprising 3 consecutive calendar months,

Ÿ ending on the last day of March, June, September and December of a calendar year.

CA Rajkumar 2.17
 Definitions Ch.2

Means: 3 Consecutive Calendar months

JAN to March, April to June, July to Sept., Oct. to Dec
For Example: Any Activity Start ie. March & Complete in April = How Many Quarter = 2

37. REGISTERED PERSON: Registered person” means:

Ÿ A person who is registered under GST

Ÿ but does not include a person having a Unique Identity Number.

*Who is Registered U/S 25 (i.e. AT the movement Registration is granted to the person)
*Excluding: person having UIN (Awarded to UN, International organization, embassy etc.)
Why to get UIN? - For certain purposes eg. Refund of TAXES on the Notified supply of Goods/
Services received by them.

38. REMOVAL: in relation to goods, means-

Ÿ Dispatch of the goods for delivery by the supplier thereof or by any Agent on his behalf or

Ÿ Collection of the goods by the recipient thereof or by any agent on behalf of such recipient;

39. RETURN: Means any return prescribed or otherwise required to be furnished by or under this Act
or the rules made thereunder.
40. REVERSE CHARGE MECHANISM: “Reverse charge” means:
Ÿ The liability to pay tax by the recipient of supply of goods or services or both

Ÿ instead of the supplier of such goods or services or both

41. TAX PERIOD: The period of which RETURN [Monthly/Quarterly] is required to be furnished.
42. TURNOVER IN A STATE: Turnover in State” or “Turnover in Union Territory” means:
Ÿ the aggregate value of all outward taxable supplies

(excluding the value of inward supplies on which tax is payable by a person on RCM OR NCM
BASIS)and
Ÿ exempt supplies made within a State or Union territory by a taxable person,

Ÿ exports of goods or services or both and

Ÿ inter-State supplies of goods or services or both made from the State or Union territory by the said
taxable person
Ÿ but excludes central tax, State tax, Union territory tax, integrated tax and cess;

2.18 CA Rajkumar
Ch.2 Definitions

It is a Replica of “Aggregate Turnover” But limited to STATE & All INDIA BASIS.
Note: T/O in a State – Required in the concept of Composition Scheme.

43. VALID RETURN: Valid Return” means a return furnished under section 39 (1) on which self-
assessed tax has been paid in full.
44. WORKS CONTRACT means:

Ü A contract for
Ÿ Building,
Ÿ construction,
Ÿ fabrication,
Ÿ completion,
Ÿ erection,
Ÿ installation,
Ÿ fitting out,
Ÿ improvement,
Ÿ modification,
Ÿ repair, maintenance, renovation, alteration or commissioning
Ü of any immovable property wherein transfer of property in goods (whether as goods or in some
other form) is involved in the execution of such contract.

In simple Wordings:
* [Goods + Service] @ Single PRICE [Which will be classified as SERVICE]
BUT LIMITED TO IMMOVABLE PROPERTY
What about (Goods + Service) @ Single PRICE & Resultant Property is an movable property –
then Depend: eg. Service/Goods cannot be called as works contract.

CA Rajkumar 2.19
 Ch.2

2.20 CA Rajkumar
Ch.3 Chargeability of GST - Goods and Services

Section: 1 Short title, extent and commencement

1. (1) This Act may be called the Central Goods and Services Tax Act, 2017.
(2) It extends to the whole of India.
(3) It came into force on 1/07/2017.

Section 9: Charging Section/Provision

Main provision (1) There shall be levied a tax called the CGST
Ÿ On all intra-State supplies of goods or services or both, except on the
supply of alcoholic liquor for human consumption,
Ÿ On the value determined under section 15 and
Ÿ At such rates, not exceeding 20 %, as may be notified by the
Government on the recommendations of the Council and
Ÿ Collected in such manner as may be prescribed and
Ÿ Shall be paid by the taxable person.

5 Petroleum (2) The CGST on the supply of petroleum crude, high speed diesel, motor
Products spirit (commonly known as petrol), natural gas and aviation turbine fuel
shall be levied with effect from such date as may be notified by the
Government on the recommendations of the Council.

Reverse charge (3): Notified Goods/Services: RCM - The Government may, by

Mechanism on notification, specify
notified supplies, Ÿ Categories of supply of goods or services or both,
where supplier is Ÿ the tax on which shall be paid on reverse charge basis by the recipient
unregistered 4) Unregistered person make supply of GOODS/SERVICES to a
Registered Person: RCM-The Government may, by notification,
specify
Ÿ A class of registered persons who shall,
Ÿ in respect of supply of specified categories of goods or services or
both
Ÿ received from an unregistered supplier,
Ÿ pay the tax on reverse charge basis

E- Commerce (5) On notified services CGST shall be collected from E-commerce

Operator operator having place of Business in India But where Ecommerce
operator has No Place of Business in India then he need to setup a
place of Business in India or to appoint any person as agent.

CA Rajkumar 3.1
 Chargeability of GST - Goods and Services Ch.3

E- Commerce Notified Services and their provisions are as follows:

Operator
Hotel E-Commerce Operator However if the real
Accommodation will be the deemed s u p p l i e r ( H o t e l ) i s
Service:(eg OYO) supplier and liable to crossing the limit of 10
pay GST. Lakh or 20 Lakh then
Hotel Liable to Pay GST.

Misc. Utilities E-commerce operator However if Real

(e.g. urban clap): i.e. (Urban Clap) will be Supplier of service
deemed supplier and crossing the limit of `10
Liable to Pay GST. lakh/20 lakh then Real
supplier liable to pay
GST.
Passenger E-commerce operator
Transportation (e.g. Uber/OLA) will be
Service by a Radio deemed supplier of
taxi, motor cab, Maxi service and Always
cab, motor cycle, liable to pay GST.
omnibus or any other
motor vehicle (eg.
OLA/UBER)

Supply of restaurant E-commerce operator However, Real supplier

service will be deemed supplier liable to pay GST on the
of service and Always services supplied by
liable to pay GST restaurant, eating joints
etc., located at the
premises providing
hotel accommodation
service having declared
tariff of any unit of
accommodation above
7̀,500 per unit per day
or equivalent.

”What about Rest of Section 9(5) Always Real supplier

the Services and not applicable Liable to pay GST
Goods

Radio Taxi” Radio Taxi” means a taxi including a radio cab, by whatever
name called, which is in two-way radio communication with
a central control office and is enabled for tracking using
Global Positioning System (GPS) or General Packet Radio
Service (GPRS);
Motorcab Motorcab means having seating capacity @ upto 6 + Driver
Maxicab Maxicab means having seating capacity @ 7 to 12
persons. + Driver
Omni bus Carry more than 6 passengers + Driver
Motor cycle Motor cycle means - 2 wheeled with or without sidecar,

3.2 CA Rajkumar
Ch.3 Chargeability of GST - Goods and Services

Analysis
Charging Section: Section 9

Ÿ Section 9(1) Levy of GST (Normal Charge)

Ÿ Section 9(2) i.e., GST shall be paid by Supplier to Govt.
Ÿ Section 9(3) Levy of GST (Reverse Charge)
Ÿ Section 9(4) i.e., GST shall be paid by Recipient to Govt. directly
Ÿ Section 9(5) Neither Normal Charge nor Reverse Chargei.e.,
GST shall be paid by Any other person

Section 9 (1) (2): Supplier liable to pay GST:

Goods or services Except

Alcoholic Liquor For There must be The supply should
human Consumption a supply be INTRA State
and 5 Petroleum Products

Value under section 15

or as per valuation Rules The supply should It should be made by
Maximum Rate: 20% not be Exempted taxable person

Collected in prescribed
manner based on time Paid by supplier
of supply

Section 9(3) of CGST Act 2017

GST under Reverse Charge

On Notified Supply of
Goods and Services
Ex: Insurance Agent Service,
Supplier Goods Transport Agency Service, Recepient
Advocate Service

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 Chargeability of GST - Goods and Services Ch.3

Section 9(4) of CGST Act 2017

GST under Reverse Charge (Construction Sector)

1 2

3
Any Unregistered A Registered
Person
Supply of Construction Builder or
(Supplier)
related Goods and Services Promotor
Ex: Cement Supply, (Recipient)
Cement Concrete Mixer
Architect Service Etc.

Builder is
liable to pay
GST under RCM

Section 9(5) of CGST Act 2017

Neither Normal Charge nor Reverse Charge

Notified Services Covered Under Section 9(5)
Hotel Accommodation Miscellaneous Utilities Transportation of Passenger

H M T

Hotel Customer Parlour Customer Driver Customer

Hotel Accommodation Beauty Treatment Service Passenger Transportation

Service (or Painter/ Drycleaners Service
Service Etc.)

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Ch.3 Chargeability of GST - Goods and Services

Real Supplier = Hotel Real Supplier = Beauty Parlour Real Supplier = Driver
Deemed Supplier = OYO Deemed Supplier = Urban Deemed Supplier = Uber
Recipient = Customer Clap Recipient = Customer
Recipient = Customer

Big Hotel: (Aggregate Big Parlour: (Aggregate Big Driver: (Aggregate

Turnover above 10Lakhs/ Turnover above 10Lakhs/ Turnover above 10Lakhs/
20Lakhs, i.e., Registered) 20Lakhs, i.e., Registered) 20Lakhs, i.e., Registered)

Person liable to pay GST Person liable to pay GST Person liable to pay GST
=Supplier = Hotel =Supplier = Parlour =Deemed Supplier = Uber

Small Hotel: (Aggregate Small Parlour: (Aggregate Small Driver: (Aggregate

Turnover Below 10Lakhs/ Turnover Below 10Lakhs/ Turnover Below 10Lakhs/
20Lakhs, i.e., Not Registered) 20Lakhs, i.e., Not Registered) 20Lakhs, i.e., Not Registered)

Person liable to pay GST Person liable to pay GST Person liable to pay GST
=Deemed Supplier = OYO =Deemed Supplier=UrbanClap =Deemed Supplier =Uber
[ Note: In case of other E-Commerce Operators, Real Suppliers shall be liable to pay GST
(Under Normal Charge)]

Analysis of Restaurant Service: (Like- Swiggy, Zomato etc.)

Contact 2 1 Book Food &

Restaurants Make payment
For booking
Restaurant Customer
3
Provision of Service
Who is liable to pay GST?
Ist Choice: Deemed Supplier= Swiggy
IInd Choice: Real Supplier = Restaurant
(If it is located in a hotel, whose rent is 7̀,500
PLUS per unit/ per day)

Circular No. 167/23/2021- Related to Restaurant Services

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 Chargeability of GST - Goods and Services Ch.3

Relevant Extract from section 5 of IGST Act ON IMPORT OF GOODS:

The integrated tax on goods imported into India shall be

Ÿ Levied and collected in accordance with the provisions of custom law,
Ÿ on the value as determined under the said Act
Ÿ at the point when duties of customs are levied on the said goods under section 12 of the Customs
Act, 1962.

Import of Goods

Mumbai Custom Port

Import of Goods
Import Duty on import of goods= Yes
IGST on import of goods= Yes

Lateron, Customs Department shall

transfer IGST to GST Department & then
GST Dept. will share it as 50% to Central
Govt & 50% to State Govt

Provisions under this section are same as given under the charging section of CGST Act,
Subject to following differences….

Basis Section 9 of CGST Section 5 of IGST

Nature of supply Intra state Inter state

Maximum Rate of GST 14% 28%

Special provision for IGST ON IMPORT OF GOODS: The IGST on goods

import of goods imported into India shall be
Ÿ Levied and collected in accordance with the
provisions of section 3 of the Customs Tariff Act,
1975
Ÿ on the value as determined under the said Act
Ÿ at the point when BASIC CUSTOM DUTY levied on
the said goods.

3.6 CA Rajkumar
Ch.3 Chargeability of GST - Goods and Services

Gate : 1

GOODS AND SERVICES

Definition of Goods/Service is very important as GST is levied on goods and/or service:-
Goods: Every kind of moveable property will be called as goods.

Ÿ Moreover things attached to earth or any immovable structure will also be

treated as goods e.g. Signage, Growing Crops, trees etc

Ÿ Lastly, Actionable claims i.e. contingent Assets like lottery/Betting/ Gambling,

unsecured debtors will also be treated as goods..

Service: Ÿ Anything other than goods will be treated as Service.

Ÿ Service can be of two types – one is Active (do something) and another is
passive i.e. (Not to do something e.g. Non-Competence contract, any kind
of deal cancellation charges etc.)

Neither Goods Ÿ Money & securities will neither be treated as goods Nor service.
Nor Services:
Ÿ However Activities Related to money or securities FOR A CONSIDERATION
will be treated as service e.g. Forex charges, Demand Draft Commission,
Brokerage etc.

Questions Item Goods / Service

1 Table FAN, Ceiling FAN, Exercise Machines. Goods
2 Standing Crops / Tree Goods
3 Crop / Tree : After Cutting Goods
4 Signage (eg. Pole of Indian Oil) Goods
5 Commercial Coaching Activity, P.C.A.,[Practicing Charted Service
Accountant]Activity, Non-Competence Activity etc.
6 Money (eg. ,̀ $ etc.) Nothing
7 Activities Related to Money with Consideration Service
8 Security (eg. Share, Debenture, Mutual Fund UNITS etc.) Nothing
9 Security Related Services Service
10 Sale of Immovable Property, eg. Land, Building etc. Nothing
11 Actionable Claims. eg. Betting, Gambling etc. Goods
12 Sale of Running Business Service
13 Design making of a phone Service
14 Sale of Phone Goods
15 Sale of Under Construction Property Service
16 Sale of Gold Goods
17 Manufacturing from Gold @ job work Service

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3.8 CA Rajkumar