Indirect Tax Revision Notes-CS Exe June 23 Lyst3130

CS-Executive
Module 1
• Paper 4: Tax Laws
As applicable for June’23 & December’23 exams
Chapter
Name of the Chapter Page No.
No.
1) Concept of Indirect Tax & GST in India 1 to 3
2) Basics of Goods & Service Tax 4 to 11
3) Concept of Time, Value & Place of Supply 12 to 21
4) Input Tax Credit & Computation of GST Liability 22 to 28
5) Procedural Compliance under GST 29 to 41
6) Overview of IGST, UTGST & GST Compensation to States 42 to 44
7) Overview of Customs Act 44 to 52
8) Summary of Sections under CGST & IGST Act. 53 to 54
Indirect Tax Revision Notes
CHAPTER-1
CONCEPT OF INDIRECT TAXES & GST IN INDIA
Tax:
Tax is a Compulsory payment which every person has to make to the government. The government
collects tax in order to meet public expenditure like health, education, infrastructure, Public security etc..
There are two types of taxes-

➢ Direct taxes
➢ Indirect Taxes
Differences between Direct and Indirect taxes:
Basis Direct Tax Indirect Tax

Incidence & Impact The impact and incidence is on the same The impact and incidence is on different
person persons
Tax Liability It is levied on the Assessee i.e on the It is levied on Supplier of Goods & Services.
person who has earned income.
Nature Progressive in nature Regressive in nature
Goods and Services Tax (GST) was rolled out in India with effect from 1st July, 2017.
➢ GST is a consumption based tax which is levied on the basis of “Destination principle.” The
concept relates to taxing the supply of goods or services at the point of consumption.
➢ It is applicable all over India including Jammu & Kashmir.
➢ It adorns dual taxation model where Union and States levy and collect taxes simultaneously.
➢ It ensures seamless flow of input tax credit to a large extent.
➢ A high powered federal body called GST Council has been established under Article 279A of the
Constitution of India to decide policy matters, formulate principles for administration and
implementation of GST.
➢ The essence of GST is in removing the cascading effects i.e., tax on tax of both Central and State
taxes by allowing setting-off of taxes throughout the value chain.
CA Vikas Gowda Page 1

CONSTITUTION AMENDMENT ACT, 2016:
Significant amendments made by Constitution (101st) Amendment Act are discussed below:
Article 246A ➢ Overrides Article 246
Inserted- ➢ Grants power to Centre and State Governments to make laws with respect to GST
Power to Levy ➢ Only parliament can levy tax on interstate supplies
Article 269A ➢ Parliament to levy IGST on Interstate supply
Inserted- ➢ Import / Export is a deemed interstate supply
Interstate Supply ➢ IGST distributed between Centre & destination State
➢ Parliament to determine Place & Time of supply
Article 279A ➢ GST Council is a federal body constituted by president on 15th September,2016
Inserted- ➢ Union FM- Chairperson; Union minister of state + State FMs- Members. (33 Members)
GST Council ➢ Quorum at meetings: One-half of the total number of Members (17 Members)
➢ Voting Power: Union - 1/3 weightage & all States- 2/3 weightage of total votes cast.
➢ Decision of GST Council: Majority of not less than 3/4th of the weighted votes of the
members present and voting.
The current status of GST Laws Passed in India is as under:

The law Purpose
The Central Goods and Services Tax Act, 2017 (CGST Act) To levy, collect CGST on Intra-state supplies
The Integrated Goods and Services Tax Act, 2017 (IGST Act) To levy, collect IGST on Inter-state supplies
The Union Territory Goods and Services Tax Act, 2017 (UTGST Act) To levy, collect UTGST on Intra-UT supplies
GST (Compensation to States) Tax Act, 2017 To compensate states for the loss of revenue if
any due to introduction of GST
The States Goods and Services Tax Act, 2017 (SGST Act) To levy, collect SGST on Intra-state supplies
Intra-State Supply = CGST + SGST

Intra-Union Territory Supply = CGST + UTGST
Inter-State Supply = IGST
The following taxes have been subsumed under GST:
Central Taxes State Taxes
Central Excise Duty State VAT
Duties of Excise (Medicinal and Toilet Preparations) Central Sales Tax
Additional Duties of Excise (Goods of Special Purchase Tax
Importance)
Additional Duties of Excise (Textiles and Textile Luxury Tax
Products)
Additional Duties of Customs (commonly known as Entry Tax (All forms)
CVD)
Special Additional Duty of Customs (SAD) Entertainment Tax (except those levied by the
local bodies)
Service Tax Taxes on advertisements
Central cesses and surcharges in so far as they relate Taxes on lotteries, betting and gambling
to supply of goods or services
State cesses and surcharges in so far as they relate
to supply of goods or services

Article 366(12A) of the Constitution defines the Goods and Services tax (GST) as a tax on supply of
goods or services or both, except supply of alcoholic liquor for human consumption.
As per Article 279A(5) of the Constitution, five petroleum products viz. petroleum crude, motor spirit
(petrol), high speed diesel, natural gas and aviation turbine fuel have temporarily been kept out and GST
Council shall decide the date from which they shall be included in GST.
The following subject matters kept outside the purview of GST-

➢ Alcoholic Liquor for Human Consumption
➢ Entertainment Tax levied by Local bodies
➢ Motor Vehicles Tax
➢ Property tax such as Stamp Duty.
➢ Electricity
➢ Petroleum crude, Diesel, Petrol, Aviation Turbine Fuel & Natural gas
Tobacco and tobacco products would be subject to GST. In addition, the Centre would have the power to
levy Central Excise duty on these products.

CHAPTER-2
BASICS OF GOODS AND SERVICES TAX
Section 7 Meaning and Scope of Supply

Schedule I Activities to be treated as supply even if made without consideration
[read with section 7(1)(a)]
Schedule II Activities or transactions to be treated as supply of goods or supply of services
[read with section 7(1A)]
Schedule III Activities or transactions which are neither supply of goods nor supply of services.
(Negative list) [read with section 7(2)]
Section 8 Taxability of composite and mixed supplies
Section 9 Charge of GST (Normal Scheme)
Section 10 Composition Scheme
Section 11 Exemptions under GST
MEANING AND SCOPE OF SUPPLY – [Section 7]:
Modes of Supply (Forms of supply)- Section 7(1)(a):
Supply includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal for a consideration in the course or furtherance of business.
Supply of Goods or Services + for Consideration + in the course or furtherance of Business
Supply of
Goods Services Other than goods or

[Section 2(52)] [Section 2(102)] services
Means every kind of Anything other Does not

movable property than goods attract GST
Other than Money & Securities
Activities or transactions, by a person, other than an individual, to its members or constituents or

vice-versa, for cash, deferred payment or other valuable consideration [Section 7(1)(aa)].
Import of services for consideration whether or not in the course or furtherance of business
[Section 7(1)(b)]
Import of Services + for Consideration

Supply without consideration- Deemed Supply [Section 7(1)(c) read with Schedule I]:
As per Schedule I, in the following four cases, supplies made without consideration will be treated as
supply under section 7 of the CGST Act:
1. Permanent Transfer/Disposal of Business Assets where ITC has been availed on such
assets:
Permanent Transfer/Disposal of Business Assets + ITC has been availed on such assets
Note: Transfer of entire business as going concern is not supply.
2. Supply between related person or distinct persons made in the course or furtherance of
business:
Gifts upto 50,000 by employer to employee in a financial year is not supply.
Supply between related person or distinct persons + in the course or furtherance of Business
3. Supply of goods by a principal to his agent and vice-versa without consideration, where the
agent undertakes to supply such goods on behalf of the principal & Invoice is issued in the
name of agent.
Supply of goods by a principal to agent and vice-versa + Invoice is issued in the name of agent
4. Import of services without consideration by a person from a related person or from any of
his other establishments outside India, in the course or furtherance of business.
Import of Services + from a related party/establishment outside India + in course or furtherance
of Business.
Activities to be treated as Supply of goods or Supply of services [Section 7(1A) read with
Schedule II]:
Schedule II to the CGST Act contains the list of activities or transactions which have been classified
either as supply of goods or supply of service which are as follows-
Form of Supply Description Supply of
Transfer of title in goods. Goods
Any transfer of right in goods/ undivided share in goods without Services
Transfer transfer of title in goods.
Any transfer of title in goods under an agreement which stipulates Goods
that property shall pass at a future date
Land & Building Any lease, tenancy, easement, licence to occupy land. Services
Any lease or letting out of building. Services
Treatment or Process Any treatment or process which is applied to another person’s goods. Services
Goods forming part of business assets are transferred or disposed off Goods
by/under directions of person carrying on the business.
Goods held/used for business are put to private use or are made Services
available to any person for use for any purpose other than business,
by/ under directions of person carrying on the business.
Tranfer of business Goods forming part of assets of any business carried on by a person
assets who ceases to be a taxable person, shall be deemed to be supplied by
him, in the course or furtherance of his business, immediately before Goods
he ceases to be a taxable person.
Exceptions:
➢ Business is transferred as a going concern to another person.
➢ Business is carried on by a personal representative.

Immovable Property Renting of immovable property Services
Contruction or sale Construction of building for sale before the construction is
completed. (Sale of Pre-construction building) Services
Intellectual Property Temporary transfer or permitting use or enjoyment of any intellectual Services
Right property right.
Information Development, design, programming, customisation, adaptation, Services
Techonology software upgradation, enhancement, implementation of IT software.
Action Agreeing to obligation to refrain from an act, or to tolerate an act or Services
situation, or to do an act.
Composite Supplies Works contract services. Services
Restaurant Services. Services
Negative list under GST [Section 7(2) read with Schedule III of CGST Act, 2017]:
Activities specified under Schedule III can be termed “Negative list” under the GST regime.
Sl.No. Activities or Transactions which shall be treated neither as a supply of goods nor a
supply of services
1. Sale of Land and sale of constructed building i.e after construction is completed.
2. Actionable claims, other than lottery, betting and gambling.
3. Services of funeral, Burial, crematorium or mortuary including transportation of the deceased.
4. Services by any Court or Tribunal.
5. a) Functions performed by the Members of Parliament, Members of State Legislature,
Members of Panchayats, Members of Municipalities and Members of other local
authorities;
b) Duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
c) Duties performed by any person as a Chairperson or a Member or a Director in a body
established by the Central Government or a State Government or local authority.
6. Services by an Employee to the employer in the course of employment.
7. Supply of goods from a place in the non-taxable territory to another place in the non- taxable
territory without such goods entering into India. (F to F)
8. Supply of warehoused goods to any person before clearance for home consumption. (G/H)

COMPOSITE AND MIXED SUPPLIES [Section 8]:
Goods or services or both are supplied together in combination for a single price and each of them may
attract a different rate of tax but is sold as one package for a single price.
Composite Supply Mixed Supply

Definition Section 2(30) defines “Composite Supply” as a Under Section 2(74), “Mixed Supply”
supply made by a taxable person to a recipient means two or more individual supplies of
consisting of two or more taxable supplies of goods or services, or any combination
goods or services or both, or any combination thereof, made in conjunction with each
thereof, which are naturally bundled and other by a taxable person for a single price
supplied in conjunction with each other in the where such supply does not constitute a
ordinary course of business, one of which is a composite supply.
principal supply.
Example Charger supplied along with mobile phones. Gifts pack comprising of chocolates and
sweets.
Taxability The rate which is applicable to the principal The rate applicable to the supply that
[Section 8] supply. attracts the highest rate of tax from within
the consolidated package.

LEVY & COLLECTION OF TAX [Section 9]:
GST is levied at the point of supply, that is at the time and place of supply and that’s when the liability to
charge GST arises.
As explained under Section 15, such GST would be levied on the transaction value.
GST Liability = Value of Supply (transaction value) x GST Rate
LIABILITY TO PAY GST:

The liability to pay GST would depend on the mechanism the transaction aligns to, as under:
a) Forward Charge Mechanism:
Here the supplier is registered with GST, he issues a tax invoice, collects the GST and pays it to
the Government.
b) Reverse Charge Mechanism:
Here the supplier is not registered with GST, hence, he cannot issue a tax invoice, and therefore
the recipient pays the GST on the supply on behalf of the supplier, directly to the Government.
It must be noted although, that Input Tax Credit can be availed in both the above scenarios, subject to the
fulfillment of conditions.
COMPOSITION SCHEME [Section 10]:
Section 10 of the CGST Act, 2017 contains the provisions regarding composition levy.
Section Section 10(1) & 10(2) Section 10(2A)

Eligible Person Manufacturers of Traders of Restaurant Service Suppliers/ Mixed
goods goods Services suppliers not eligible for
10(1)
Aggregate upto Rs.1.5 crore upto Rs.50 Lakhs
Turnover in the OR
preceding FY upto Rs.75 lakh (only for 8 special category states)
Tax rate in Current 1% of the total 1% of the 5% of the total 6% of the total turnover
FY turnover taxable turnover
turnover

For the states namely (i) Arunachal Pradesh (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland,
(vi) Sikkim, (vii) Tripura, (viii) Uttarakhand aggregate turnover limit shall be Rs.75 lakh for section
10(1). (8 out of 11 special category states as per article 279A)
Note: In order to enable Small service providers avail the benefit of composition scheme u/s 10(1), the
following proviso has been inserted:
The proviso permits a registered person opting for composition scheme u/s 10(1) to supply services of a
specified value not exceeding:
a) 10% of the turnover in a State/UT in the preceding financial year
or
b) Rs.5 Lakh,
Whichever is higher
Aggregate turnover = Taxable outward supplies + Exempt supplies + Exports + Inter-State supplies
of persons having same PAN be computed on all India basis excluding GST and Cess [Section 2(6)].
The following persons cannot opt for the composition schemes [Section 10(2) and 10(2A)]:
a) A person engaged in supply of goods or services which are not leviable to tax;
b) A person engaged in making inter-state outward supplies of goods or services; (Sales)
c) A person engaged in making supply of goods or services through electronic commerce operator
who is required to collect tax source.
d) A person who is engaged in the manufacture of ice-cream, pan masala, tobacco products, aerated
water, Fly ash bricks or fly ash aggregate with 90% or more fly ash content; Fly ash blocks, Bricks
of fossil meals or similar siliceous earths, Building bricks, and Earthen or roofing tiles.
e) Casual taxable person and Non-resident taxable person.
Conditions and restrictions:
Person opting for composition levy has to comply with the following conditions:
1) The option to pay tax under composition scheme lapses from the day on which his aggregate
turnover during the FY exceeds the specified limit (Rs.75 lakh /Rs.1.5 Crore/50lakh).
[Section 10(3)]
2) The composition supplier shall not collect any tax from the recipient on supplies made by him and
he shall not be entitled to any credit of input tax paid on inward supply. [Section 10(4)]
3) The recipient of such supplies can't claim any Input Tax Credit (ITC) on supplies from such
suppliers who have opted for Composition Levy.
4) The Composition supplier cannot issue tax invoice. He can issue Bill of supply for the recipient.
5) If goods are purchased from an unregistered supplier, he pays the tax under reverse charge as per
normal rate.
Notes:
a) The conditions and restrictions is applicable for both the scheme available u/s 10(1) and 10(2A).
b) The composition scheme if opted is applicable under one PAN, and then it is applicable for all
businesses under that PAN, or none.

Advantages and Disadvantages of Composition Scheme:
Advantages Disadvantages
No classification of goods are required Composition dealer cannot avail the benefit of ITC
paid on inward supply
Single GST rate is applicable on all supplies made He cannot charge tax on the supplies made by him
No requirement to issue Tax invoice Even the recipient cannot claim ITC
Payment of tax is quarterly and return filing is to be A limited territory of business. The Composition
done annually. Hence reduced compliance burden. dealer is barred from carrying out inter-State
outward supplies.
As per explanation 1 to section 10, while computing aggregate turnover in order to determine eligibility
of a registered person to pay tax under any of the composition schemes the value of supply of exempt
services by way of extending deposits, loans or advances in so far as the consideration is represented by
way of interest or discount, shall not be taken into account.
While computing the threshold limit of 1.5 crore/ 75 lakh / 50 lakh for preceding financial year to
determine eligibility, inclusions and exclusions from ‘aggregate turnover’ are as follows:
Includes Excludes
Value of all outward supplies- ➢ CGST/ SGST/ UTGST/ IGST/ Cess
➢ Taxable supplies ➢ Value of inward supplies on which tax is payable
➢ Exempt supplies under reverse charge.
➢ Exports ➢ Value of exempt supply of services provided by
➢ Inter-State supplies way of extending deposits, loans or advances in
of persons having the same PAN be computed on so far as the consideration is represented by way
all India basis. of interest or discount
Further, explanation 2 to section 10 clarifies that for the purposes of determining the tax payable by a
person under this section, the expression turnover shall not include:
a) Supplies from the first day of April of a FY up to the date when such person becomes liable for
registration under this Act; and
b) Exempt supply of services provided by way of extending deposits, loans or advances in so far as
the consideration is represented by way of interest or discount.
While determining the tax payable by a composition person under section 10 for current financial
year, inclusions and exclusions from ‘turnover’ are as follows:
Includes Excludes
Value of all outward supplies- ➢ CGST/ SGST/ UTGST/ IGST/ Cess
➢ Taxable supplies ➢ Value of inward supplies on which tax is payable
➢ Exempt supplies under reverse charge.
➢ Exports ➢ Value of exempt supply of services provided by
➢ Inter-State supplies way of extending deposits, loans or advances in
of persons having the same PAN be computed on so far as the consideration is represented by way
all India basis. of interest or discount and
➢ Supplies from the first day of April of a FY up to
the date when such person becomes liable for
registration under this Act;

EXEMPTIONS UNDER GOODS & SERVICES TAX [Section 11 of CGST Act, 2017]:
Central Government has the power to grant exemption on goods and / or services in the public interest on
the recommendations of the GST Council, generally or by special order.
Distinctions between General Exemption and Specific Exemption:
General Exemption Section 11(1) Exemption By Special Order Section 11(2)

This is granted by a notification This is granted by a special order
This is goods/ services specific. Any supplier This is person specific and purpose specific. The
supplying these notified goods or services can enjoy goods are generally chargeable but exempted in
the exemption special circumstances and hence not available to all
persons generally
It may be absolute or conditional. If absolute, the No such distinction
supplier has to avail it and he can collect tax only at
effective rates.
It may be partial or total It is always total
Both the exemptions are granted in the public interest and both can be explained within 1 year of issue by
the government. All the exemptions are based on the recommendations of the GST Council.
Difference between Nil Rated, Exempt, Zero Rated and Non-GST supplies:
Supply Type Description

Zero rated Exports
Supplies made to SEZ or SEZ developers.
Nil rated Supplies that have a declared rate of 0% GST and for which ITC cannot be claimed.
Example: Salt, grains, jaggery etc.
Exempt Supplies which do not attract GST and for which ITC cannot be claimed.
Example: Fresh milk, Fresh fruits, Bread etc.
These supplies do not come under the purview of GST law.
Non-GST Example: Alcohol for human consumption, Petrol etc.
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CHAPTER-3
CONCEPT OF TIME, VALUE AND PLACE OF TAXABLE SUPPLY
CONCEPT OF SUPPLY:
Goods and Services Tax (GST) envisages two types of supply, intra state and interstate.
The following supplies shall be treated as Inter-state supply [Section 7 of IGST Act] –
Supply of Goods & Services Nature of Supply
Where Location of the Supplier (LOS) and two different States;
the Place of Supply (POS) are in two different Union territories; or
a State and a Union territory
Import Goods: till they cross the customs
frontiers of India
Inter State
Services: all services imported will be
treated as inter-state supply
Export
To or by a SEZ developer or a SEZ unit
The following supplies shall be treated as Intra- state supply [Section 8 of IGST Act]:
Supply of Goods & Services Nature of Supply
Where Location of the Supplier (LOS) and the Same State or Same Union Territory Intra State
Place of Supply (POS) are in
Supply
Intra-State Inter-State
Supply Supply
Location of the supplier and Location of the supplier and the place
the place of supply of goods of supply of goods or services are in
or services are in the same (i) two different States or
State/Union territory (ii) two different Union Territories or
(iii) a State and a Union territory

The following table illustrates the tax applicable-
SUPPLY TAX / TAXES
Intra State CGST+ SGST
Intra UT CGST+ UTGST
Interstate IGST
Supply in Territorial Waters [Section 9 IGST Act, 2017]:
If the supplier is in territorial waters, the location of supplier or if the supply is in territorial waters, the
place of supply shall be taken as the Coastal State or Union Territory closest to the base line.
PLACE OF SUPPLY:
Place of Supply of Goods [Section 10 & 11 of IGST Act, 2017]:
Section 10 prescribes the provisions for determining the place of supply of goods in domestic
transactions.
Situation Place of Supply of Goods
Where Supply involves movement of Location of the goods at the time at which movement of goods
goods terminates for delivery to the recipient
Where the goods are delivered to recipient Place of supply of such goods shall be the principal place of
or any other person on the direction of business of third party (Deemed Recipient)
third party
Where there is No movement of goods in a Location of such goods at the time of delivery to the recipient
supply
Where the goods are Installed/ assembled Place of such assembly or installation
at site
Where the goods are Supplied on board a Location where such goods are taken on board
conveyance
Place of supply in case of Import/Export of goods [Section 11 of IGST Act, 2017]:
In case of-
➢ Import of goods- Place of supply is location of importer and
➢ Where goods are exported- Place of supply is location outside India.

Place of Supply of Services [Section 12 & 13 of IGST Act, 2017]:
Where Location of Supplier and Recipient both are located in India [Section 12], Place of Supply is
as shown in below table:
Type of Service Place of Supply (POS)
General Principle Recipient Registered: Location of Recipient of service
Recipient Unregistered: Location of Recipient if address on
records exists or Location of Supplier, in other cases
Exception/Special cases –
(a) Directly related to immovable Location where the immovable property is located.
property Provided that if the location of the immovable property or boat or
(b) Lodging accommodation vessel is located outside India, the place of supply shall be the
(c) Accommodation for functions location of the recipient.
(d) Ancillary services to the above If the immovable property is located at more than one state, value
shall be taken proportionately as per contract or as per Rules.
Beauty parlor, fitness, restaurant and Location where the service is actually performed
catering services, plastic/ cosmetic
surgery etc.
Training & Performance Appraisal Recipient Registered: Location of Recipient of service
Recipient Unregistered: Location where the service is actually
performed
Admission to cultural, artistic, sporting, Place where the event is held or where the park or such place is
educational, entertainment, amusement located.
event etc. and ancillary services.
(a) Organization of above events Recipient Registered: Location of Recipient of service.
including conferences, fair exhibition Recipient Unregistered:
etc. i. Place where the event is actually held
(b) Ancillary Services, or assigning of ii. Location of recipient if the event is held outside India
sponsorship of such events. If the activity is in more than one state, it is proportionate
Transportation of goods/ passengers Recipient Registered: Location of Recipient of service
Recipient Unregistered: Location from where transportation of
goods/ passengers starts.
On board a conveyance while in transit. Location of first, scheduled point of departure of that conveyance
Conveyance may be a ship, aircraft, for the journey.
train, vehicle etc.
Banking & Financial services and Stock Location of recipient of service if address exists on records of
broking services supplier or else, location of supplier.
Insurance services Location of Recipient of service
Telecommunication services including data transfer, broad casting, cable TV services etc:
(a) fixed telecom line Place of fixing/installation
(b) postpaid mobile, internet services Billing address of recipient
(c) Prepaid through agent Address of Agent, place of payment/sale of voucher coupon etc.
(d) In other cases Address of recipient as per records.
If address is not available, place of supplier of services

Place of Supply of Service [Section 13 of IGST ACT, 2017]:
Section 13 of IGST Act, 2017 deals with place of supply of services where Location of Supplier or
Location of Recipient is outside India.
Type of Service Place of Supply (POS)
General Principle Location of Recipient of service
Location of Supplier, if location of recipient is not available
Performance based Services Location where the service is actually performed
Services related to immovable property. Location where the immovable property is situated.
Services related to Admission to/ Place where the event is held.
Organization of events etc.
Services as referred above is provided in Location in the Taxable territory
more than one location
Services as referred above is provided in Proportional to value in each state/UT
more than one location & more than one
state/UT
Banking & Financial services, Location of Supplier of service
Intermediary and Stock broking services
Transportation of goods, other than by Place of destination of such goods
way of Courier/mail
Transportation of passengers Place where the passenger embarks on (gets into) the
conveyance for a continuous journey.
On board a conveyance while in transit. Location of first, scheduled point of departure of that
conveyance for the journey.
Online Information and database access or Location of Recipient of service
retrieval services
TIME OF SUPPLY:
Time is the essence of levy. Tax is imposed when the supply is made. Hence it is important to determine
the time of supply. Once time of supply is determined, levy will be made.
Point of taxation means the point in time when goods have been deemed to be supplied or services have
been deemed to be provided.
Under GST the point of taxation, i.e., the liability to pay GST, will arise at the time of supply.
The point of taxation enables us to determine the rate of tax, value, and due dates for payment of taxes.

Time of Supply of Goods [Section 12 of CGST Act, 2017]:
The liability to pay tax on goods shall arise at the time of supply as determined in terms of the
provisions of this section [Section 12(1)].
Forward Charge Reverse Charge Vouchers Residuary cases

Mechanism [Section 12(2)] Mechanism [Section 12(3)] [Section 12(4)] [Section 12(5)]
Earlier of the following Earlier of the following a) Supply is a) Where a

dates- dates- identifiable at the periodical return
➢ Date of issue of Invoice a) Date of receipt of goods time of issue of is to be filed -
➢ Due date for issue of b) 31st day from the date of voucher- Date of Due-date for
Invoice issue of invoice issue of the voucher. filing such
c) Date of payment periodic returns
b) Supply is not or
identifiable at the
time of issue of the b) In other
voucher- Date of cases- Date of
As per Section 31, Invoice Date of payment, is earlier redemption. payment of GST
must be issued- of the-
a) Supply involves ➢ Date of debit in the bank
movement of the account of the recipient
goods- and
On / before the time of ➢ Date of recording the
removal of the goods. payment in the BOA, by
b) Supply doesn't involve the recipient.
the movement of the
Addition in the value of supply by way of
goods-
On / before the delivery interest, late fee or penalty [Section 12(6)]
of the goods to the
recipient.
c) Continuous supply of
Date on which the supplier receives
goods-
such addition in value
On / before the issuance
of the each statement of
account or each
payment is received.
d) Goods are supplied on
"approval for sale /
return" basis-
On / before the time of
supply or 6 months from
the date of removal of
goods, whichever is
earlier.

Time of Supply of Services [Section 13 of CGST Act, 2017]:
The liability to pay tax on Services shall arise at the time of supply as determined in terms of the
provisions of this section [Section 13(1)].
Forward Charge Reverse Charge Vouchers Residuary cases

Mechanism [Section 13(2)] Mechanism [Section 13(3)] [Section 13(4)] [Section 13(5)]
When invoice has been Earlier of the following a) Supply is a) Where a

issued on time u/s 31: dates- identifiable at the periodical return
Earlier of the following a) 61st day from the date of time of issue of is to be filed -
dates- issue of invoice voucher- Date of Due-date for
a) Date of issue of Invoice b) Date of payment issue of the voucher. filing such
b) Date of receipt of periodic returns
payment b) Supply is not or
identifiable at the
When invoice has not been time of issue of the b) In other
issued on time u/s 31: voucher- Date of cases- Date of
Earlier of the following Date of payment, is earlier redemption. payment of GST
dates- of the-
a) Date of provision of ➢ Date of debit in the bank
service account of the recipient
b) Date of receipt of and
payment ➢ Date of recording the Same as goods
payment in the BOA, by
the recipient.
Addition in the value of supply by way of

As per Section 31, time limit for issue of invoice is as follows-
interest, late fee or penalty [Section 13(6)]
a) Taxable Supply of Services-
Invoice must be issued within 30 days from the date of
supply of service.
(45 days where the supplier is Banking/Insurance Date on which the supplier receives
companies, Financial Institutions & NBFC’s). such addition in value
b) Where the supply involves continuous supply of
services-
Invoice must be issued on / before the-
➢ Due date of payment (where the contract specifies the
due date) OR
➢ Date of receipt of payment (where the due date is not
ascertainable from the Contract) OR
➢ Date of completion of milestone event where the
payment is linked to completion of a milestone event.
The date of receipt of payment would be earlier of-

a) Date of credit in the supplier’s bank account
b) Date on which the receipt of payment is recorded in the BOA of the supplier

Time of Supply in case of Change in Rate of Tax [Section 14 of CGST Act, 2017]:
Time of supply, where there is a change in the rate of tax in respect of goods or services or both.
Taxable goods or services or both has been Taxable goods or services or both has been
supplied before the change in rate of Tax supplied after the change in rate of Tax
Invoice issued – Before Change Invoice issued – Before Change
Receipt of payment – After Change Receipt of payment – After Change
Time of Supply – Date of Invoice Time of Supply – Date of payment
Invoice issued – After Change Invoice issued – Before Change
Receipt of payment – After Change Receipt of payment – Before Change
Time of Supply – Date of Invoice or payment, Time of Supply – Date of Invoice or payment,
Whichever is earlier Whichever is earlier
Invoice issued – After Change Invoice issued – After Change
Receipt of payment – Before Change Receipt of payment – Before Change
Time of Supply – Date of payment Time of Supply – Date of invoice

VALUE OF TAXABLE SUPPLY [Section 15 of CGST act, 2017]:
Section 15 of the CGST Act states that the value of taxable supply is the transaction value.
Section 15 is applicable to interstate supplies under IGST also.
Transaction value means-

➢ Price actually paid or payable for the supply of goods or services or both
➢ Where the supplier and the recipient are not related and
➢ The price is the sole consideration for the supply.
Transaction Value/Value of Supply = Price + Inclusion’s u/s 15(2) – Discount u/s 15(3)
Particulars Amount
Price actually paid or payable for the goods or services XXXX
Add: Inclusions [Section 15(2)]-
a) Any taxes, duties, cess, fees and charges levied under any law other than GST, if charged
separately by the supplier. XXXX
b) Any amount supplier is liable to pay but which has been incurred by the recipient of the supply. XXXX
c) Incidental expenses, charged by the supplier to the recipient and any amount charged for
anything done by the supplier at the time of or before delivery of goods or supply of services. XXXX
d) Interest or late fee or penalty for delayed payment of any consideration; and XXXX
e) Subsidies directly linked to the price excluding subsidies provided by the Central Government
and State Governments. XXXX
Less: Exclusions [Section 15(3)]- XXXX
a) Any discount which is given before or at the time of the supply and has been duly recorded in
the invoice; and (XXXX)
b) Any discount given after the supply has been affected, if - (XXXX)
i. Such discount was known and agreed at the time of supply; and
ii. Input tax credit as is attributable to the discount has been reversed by the recipient.
Value of Supply XXXX
Where the value of the supply of goods or services or both cannot be determined under section 15(1), the
same shall be determined in such manner as may be prescribed i.e as per rules [Section 15(4)].
Reference to Chapter IV: Determination of Value of Supply of the CGST rules is required only in case
where value cannot be determined u/s 15(1) of CGST Act.

VALUATION RULES- CHAPTER IV, CGST RULES, 2017:
Rule 27: Value of supply of Value of the supply shall be –

goods or services where the a) The Open market value of such supply;
consideration is not wholly in b) Consideration in money + Amount equal to consideration not in money, if
money such amount is known at the time of supply;
c) Value of supply of goods or services or both of like kind and quality;
d) The sum total of consideration in money and such further amount in money
that is equivalent to consideration not in money as determined by the
application of rule 30 or rule 31 in that order.
Rule 28: Value of supply of The value of the supply shall be -
goods or services or both a) The open market value of such supply;
between distinct or related b) Value of supply of goods or services or both of like kind and quality;
persons, other than through c) Value as determined by the application of rule 30 or rule 31, in that order
an agent Provided that where the goods are intended for further supply by the recipient, the
value shall, at the option of the supplier, be 90% of the price charged for the
supply of goods by the recipient to his non-related customer.
Provided further that where the recipient is eligible for full input tax credit, the
value declared in the invoice shall be deemed to be the open market value of the
goods or services.
Rule 29: Value of supply of The value of supply of goods shall be-
goods made or received a) The open market value of the goods being supplied, or at the option of the
through an agent supplier, be 90% of the price charged for the supply of goods by the
recipient to his non-related customer, where the goods are intended for
further supply by the said recipient.
b) Where the value of a supply is not determinable under clause (a), the same
shall be determined by the application of rule 30 or rule 31 in that order.
Rule 30: Value of supply of Value of supply shall be 110% of the Cost. (Cost + 10%)
goods or services or both
based on cost
Rule 31: Residual method Value of supply shall be determined using reasonable means consistent with the
for determination of value of principles and the general provisions of section 15 and the provisions of this
supply of goods or services Chapter.
or both Provided that in case of supply of services, the supplier may opt for this rule,
ignoring rule 30.
Rule 34: Rate of exchange of currency, other than Indian rupees, for determination of
Value of Supply
a) The rate of exchange for determination of value of taxable goods shall be the applicable rate of
exchange as notified by the Board under section 14 of the Customs Act, 1962 on the date of time
of supply of such goods in terms of section 12 of the Act.
b) The rate of exchange for determination of value of taxable services shall be the applicable rate of
exchange determined as per the generally accepted accounting principles on the date of time of
supply of such services in terms of section 13 of the Act.

Rule 35: Value of Supply inclusive of GST:
Where the value of supply is inclusive of tax, the tax amount shall be determined in the following
manner-
Tax amount = (Value inclusive of taxes x Tax rate in %) ÷ (100 + Tax rate in %).
Summary of Sections:
Section No. Content
IGST Act
7 Inter-State Supply
8 Intra-State Supply
9 Supply in Territorial Waters
10 Place of Supply of Goods in domestic transactions
11 Place of Supply in case of Import/Export of Goods
12 Place of Supply of Services where Supplier and Recipient both are located in India
13 Place of Supply of Services where LOS or location of recipient is outside India
CGST Act
12 Time of Supply of Goods
13 Time of Supply of Services
14 Time of Supply in case of Change in Rate of Tax
15 Value of Taxable Supply
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CHAPTER-4
INPUT TAX CREDIT AND COMPUTATION OF GST LIABILITY

(Section 16-21)
INPUT TAX CREDIT:
Taxes paid on inward supply of inputs, capital goods and services are called input taxes. These may be
IGST, CGST, SGST or UTGST. Taxes paid under reverse charge mechanism are also input taxes.
The credit of the above taxes is called input tax credit, that is, the taxes paid on inward supply are
available as a set off against the taxes payable on outward taxable supplies.
ELIGIBILITY AND CONDITIONS FOR TAKING INPUT TAX CREDIT [Section 16]:
(1) Recipient should be registered under GST and goods or services should be used or intended to be
used in the business of the Recipient.
(2) Following conditions should be fulfilled by a registered taxable person (Recipient)-

➢ He is in possession of a tax invoice or debit note issued by a supplier
➢ Details of the invoice or debit note has been furnished by the supplier in the statement of
outward supplies (GSTR-1 or Invoice Furnishing Facility IFF).
➢ He has received the goods or services or both.
➢ Tax charged has been actually paid to the Government by the supplier; and
➢ He(Recipient) has furnished the return under section 39 i.e GSTR-3B
Where the goods are received in lots or installments, credit can be claimed upon receipt of the last
lot or installment.
Where a recipient fails to pay to the supplier of goods or services or both, within 180 days from
the date of issue of invoice, the ITC availed by the recipient shall be added to his output tax
liability, along with interest @ 18% p.a.
Exceptions: RCM, Schedule I cases(Deemed supplies) and Additions made as per section
15(2)(b).
(3) If depreciation is claimed on GST component of the cost of capital goods and plant and
machinery under income tax, then ITC shall not be allowed.
(4) A registered person shall not be entitled to take input tax credit after-
➢ 30the November of the following financial year or
➢ Actual date of furnishing the relevant annual return (GSTR 9)
Whichever is earlier.

APPORTIONMENT OF CREDIT AND BLOCKED CREDITS [Section 17]:
Below is a list of situations where Input Tax Credit will not be available:
(1) Where the goods or services or both are used partly for business and partly for other purposes
(Personal), the amount of credit available shall be restricted to input tax as is attributable to the
purposes of business.
(2) Where the goods or services or both are used partly for effecting taxable supplies including zero-
rated supplies and partly for effecting exempt supplies, the amount of credit shall be restricted to
input tax as is attributable to the taxable supplies including zero-rated supplies.
(3) The value of exempt supply under sub-section (2) shall include supplies on which the recipient is
liable to pay tax on reverse charge basis, transactions in securities, sale of land and sale of
constructed building.
(4) A banking company or a financial institution including a NBFC, engaged in supplying
services by way of accepting deposits, extending loans or advances shall have the option to either
➢ comply with the provisions of sub-section (2), or
➢ avail every month, an amount equal to 50 % of the eligible input tax credit in that month and
the rest shall lapse:
Provided that the option once exercised shall not be withdrawn during the remaining part of the
financial year:
Provided further that the restriction of 50% shall not apply to the tax paid on supplies made by one
registered person to another registered person having the same Permanent Account Number.
Blocked Credits [Section 17(5)]:
Input tax credit shall not be available in respect of the following, namely:
a) Motor vehicles for transportation of persons having approved seating capacity of not more than 13
persons (including the driver), except when they are used for making the following taxable
outward supplies-
i. further supply of such motor vehicles; or
ii. transportation of passengers; or Credit is Available
iii. imparting training on driving such motor vehicles;
aa) Vessels and aircraft except when they are used –
i. for making the following taxable outward supplies -
➢ further supply of such vessels or aircraft; or
➢ transportation of passengers; or
➢ imparting training on navigating such vessels; or Credit is Available
➢ imparting training on flying such aircraft;
ii. for transportation of goods;
bb) Services of general insurance, servicing, repair and maintenance in so far as they relate to motor
vehicles, vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services shall be available -
i. where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are
used for the purposes specified therein;
ii. where received by a taxable person engaged –

➢ in the manufacture of such motor vehicles, vessels or aircraft; or
➢ in the supply of general insurance services in respect of such motor vehicles, vessels
or aircraft insured by him;
(b)
i. The following inward supply of goods or services or both-
➢ Food and beverages,
➢ Outdoor catering,
➢ Beauty treatment,
➢ Health services,
➢ Cosmetic and Plastic surgery,
➢ Leasing, Renting or hiring of Motor vehicles, vessels or aircraft referred to in clause
(a) or clause (aa) except when used for the purposes specified therein,
➢ Life insurance and
➢ Health insurance:
Provided that the input tax credit shall be available where an inward supply of such goods
or services or both is used for making an outward taxable supply of the same category;
ii. membership of a club, health and fitness centre; and
iii. travel benefits extended to employees on vacation such as leave or home travel concession
Input tax credit shall be available, where it is obligatory for an employer to provide the same
to its employees under any law for the time being in force.
(c) Works contract services(Capital Expenditure) when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service for further supply
of works contract service;
(d) Goods or services or both (Capital Expenditure) received by a taxable person for construction of
an immovable property (other than plant or machinery) on his own account.
(e) Goods or Services or both on which tax has been paid under section 10 (Composition scheme);
(f) Goods or Services or both received by a non-resident taxable person except on goods imported
by him;
(g) Goods or Services or both used for personal consumption;
(h) Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples
However, where the activity of distribution of gifts or free samples falls within the scope of
"supply" as per Schedule I, the supplier would be eligible to avail the ITC.
(i) Any tax paid in accordance with the provisions of sections 74, 129 and 130 (Recovery Sections).

AVAILABILITY OF INPUT TAX CREDIT IN SPECIAL CASES [Section 18]:
(1) Subject to such conditions and restrictions as may be prescribed -

Case Persons eligible Goods entitled as on Conditions
1. Person who has applied for He can claim the ITC on inputs held in
registration within 30 days from the form of Raw Materials / WIP/
the date on which he becomes Finished Goods as on the day ITC must be availed
liable immediately preceding- within 1 year from the
➢ the date from which he becomes date of issue of tax
liable to pay tax invoice by the supplier.
Person obtains voluntary ➢ the date of grant of registration [Section 18(2)]
2.
registration u/s 25(3)
3. Registered person who He can claim the ITC on inputs held in ITC on Capital Goods
switches from composition the form of Raw Materials/ WIP / will be reduced by 5%
levy to regular scheme Finished Goods & Capital Goods as on per quarter of the year /
Section 10 to 9 the day immediately preceding - part thereof of usage
➢ the date from which he becomes from the date of invoice.
liable to pay tax under the regular
scheme (Section 9) ITC must be availed
Registered person whose ➢ the date from which the exempt within 1 year from the
4.
exempt supplies become date of issue of tax
supply becomes taxable
taxable invoice by the supplier.
Exempt to Taxable [Section 18(2)]
(3) In case of transfer of business on account of sale, merger, demerger, amalgamation, lease, the
transferor shall be allowed to transfer the ITC which remains unutilised in his electronic credit
ledger to transferee.
(4) Where any registered person who has availed of ITC opts to pay tax u/s 10 or, where the goods or
services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit
in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in
respect of inputs held in stock and on capital goods, reduced @ 5% for every quarter or part
thereof, on the day immediately preceding the date of exercising of such option or the date of such
exemption.
The reversal amount is added to the output tax liability of the registered person.
Provided that after payment of such amount, the balance of unutilized ITC, if any, lying in his
electronic credit ledger shall lapse.
(6) In case of supply of capital goods or plant and machinery, on which ITC has been taken, the
registered person shall pay an amount-
➢ equal to the ITC taken reduced @ 5% for every quarter or part thereof OR
➢ the tax on the transaction value determined u/s 15,
Whichever is higher
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the
taxable person may pay tax on the transaction value of such goods determined under section 15.

GOODS SENT TO JOB WORKER [Section 19]:
Section 2(68): “Job Work” means any treatment or process undertaken by a person on goods belonging to
another registered person.
The person who undertakes the job of treatment or process for another person is called job worker.
Section 143 of CGST Act, 2017 states that a Principal can send inputs or capital goods to a job worker
without payment of tax for further process or treatment and from there subsequently to another job
worker(s) and shall either-
1. bring back such inputs/capital goods after completion of job work or
2. supply such inputs/capital goods after completion of job work from the place of business of a job
worker on payment of tax.
Inputs should be brought back to the Principal OR alternatively sold from the job worker’s premises on
behalf of the Principal:
➢ Within 1 year (+1year) in case of normal goods and
➢ Within 3 years (+2years) in case of capital goods
Capital Goods excludes moulds and dies, jigs and fixtures, or tools.
If the goods are not sold / brought back within the stipulated time, the supply between the Principal and
the job worker is treated as “deemed supply” and tax is payable thereon by the Principal including
interest.
Any waste and scrap generated during the job work may be supplied by the job worker directly from his
place of business on payment of tax, if such job worker is registered, or by the Principal, if the job worker
is not registered.
As per Section 19, Principal can claim ITC on Inputs / Capital Goods and can send these to the Job
Worker for further processing without payment of GST but where these are not either sold by the job
worker OR returned by the job worker within 1 or 3 Years as above, then the supply between them is
construed as Deemed Supply and tax with interest has to be paid by the Principal.
ITC can be availed even if inputs or capital goods are directly sent to the job worker.
Provided that where the inputs or capital goods are sent directly to a job worker, the period of 1year/3
years shall be counted from the date of receipt of inputs or capital goods by the job worker.
Manner of distribution of Credit by Input Service Distributor [Section 20]:
A company may have a number of units and the GST paid by it on input services received can be
distributed to the beneficiary units on the basis of their previous year turnover or previous quarter
turnover.
The office of the company which distributes the credit is called Input Service Distributor.

UTILIZATION OF ITC:
Input Tax Credit (ITC) is credited to a person’s electronic credit ledger. The person may use this to pay
his output tax liability.
Order of utilization of input tax credit is as under:

Input Tax Credit Output Tax Liability on account of -
on account of- IGST CGST SGST/UTGST
Integrated tax (IGST) (I) (II) – In any order and in any proportion
(III) IGST Credit should be utilized completely first before using CGST & SGST credit
Central tax (CGST) (V) (IV) Not permitted
State tax/ Union (VII) Not permitted (VI)
Territory tax
(SGST/UTGST)
Therefore, it is clear that there is no offset available between the CGST and the SGST.
COMPUTATION OF GST LIABILITY:
Every registered person is required to compute his tax liability on a monthly basis by setting off the Input
Tax Credit(ITC) against the Outward tax liability. If there is any balance tax liability the same is required
to be paid to the government in cash.
There are 3 ledgers that is required to be maintained by every registered tax payer –
Dr. Electronic Liability Ledger (Form GST PMT-01) Cr.
Particulars Amount Particulars Amount
To Amount payable towards tax, (1) By Electronic Credit ledger OR (2)
interest, late fee or any other amount (for ITC adjusted against output tax)
(Liability) By Electronic Cash ledger (3)
(for liability discharged in cash)
Dr. Electronic Credit Ledger (Form GST PMT-02) Cr.

To Electronic Liability ledger (2) By Amount of Input tax credit eligible (1)
(for adjusting ITC against GST
payable on outward supply)
To Electronic Cash ledger (3) By Electronic Cash ledger (4)
(for refund of ITC claimed) (if refund is rejected)
The amount available in electronic credit ledger may be used for making any payment towards output tax.
The Input Tax Credit credited to electronic credit ledger cannot be used for making payment of tax under
RCM, or interest, penalty, fee.

Dr. Electronic Cash Ledger (Form GST PMT-05) Cr.
To Electronic Liability ledger (2) By Amount deposited (1)
(for GST paid in Cash)
To Electronic Credit ledger (4) By Electronic Credit ledger (3)
(if refund is rejected) (for refund of ITC claimed)
The Electronic Cash Ledger contains a summary of all deposits and payments made by a taxpayer.
The amount payable on reverse charge basis, or the amount payable u/s 10, any amount payable towards
interest, penalty, fee shall be paid by debiting the electronic cash ledger.
Money can be deposited into the Cash Ledger by different modes, namely-
➢ E-Payment (Internet Banking, Credit Card, Debit Card);
➢ Real Time Gross Settlement (RTGS)/ National Electronic Fund Transfer (NEFT);
➢ Over the Counter Payment in branches of Banks Authorized (for deposits upto Rs.10,000 per
challan per tax period, by cash, cheque or demand draft).
The chronological order of discharge of liabilities of a taxable person would be:

a) Self-assessed tax and other dues for the previous tax periods
b) Self-assessed tax and other dues for the current tax periods
c) Any other amount payable under this Act or the rules made thereunder including the demand
determined u/s 73 or section 74
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CHAPTER-5
PROCEDURAL COMPLIANCE UNDER GST
REGISTRATION:
Registration of any business entity under the GST Law implies obtaining a unique number from the
concerned tax authorities for the purpose of collecting tax on behalf of the government and to avail Input
Tax Credit for the taxes on his inward supplies.
The registration under GST is Permanent Account Number (PAN) based and State-specific.
GST Identification Number (GSTIN) is a 15-digit number and a certificate of registration, incorporating
the GSTIN is made available to the applicant upon registration.
Every Registered person shall display his GSTIN on the name board exhibited at the entry of his principal
place of business and at every additional place or places of business.
Registration under GST is not tax specific, which means that there is single registration for all the taxes
i.e. CGST, SGST/UTGST, IGST and cesses.
Following Sections of CGST Act shall be discussed in this chapter:

Section 22 Persons liable for registration. (Conditional Registration)
Section 23 Persons not liable for registration (No Registration)
Section 24 Compulsory registration in certain cases (Compulsory Registration)
Section 25 Procedure for registration
Section 26 Deemed registration
Section 27 Special provisions relating to casual taxable person and non-resident
taxable person (CTP & NRTP)
Section 28 Amendment of registration
Section 29 Cancellation or surrender of registration
Section 30 Revocation of cancellation of registration
Persons liable for Registration [Section 22]:
(1) Every supplier shall be liable to be registered in the State or Union territory, if his aggregate
turnover in a financial year-
➢ >Rs.10 Lakhs- In case of Manipur, Mizoram, Nagaland, and Tripura (MMNT),
➢ >Rs.20Lakhs- In case of all other states and Union territory
➢ >Rs.40Lakhs- In case of exclusive supply of goods within the state (as per Notification)
(2) Every person who, on the day immediately preceding the appointed day (01/07/2017), is registered
or holds a license under an existing law (Previous to GST).
(3) Where a business carried on by a taxable person registered under this Act is transferred, to another
person as a going concern, the transferee or the successor, shall be liable to be registered with effect
from the date of such transfer or succession.

(4) In a case of transfer pursuant to amalgamation or demerger of two or more companies pursuant to
an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with
effect from the date on which the Registrar of Companies issues a certificate of incorporation.
Compulsory Registration in certain cases [Section 24]:
Notwithstanding anything contained in section 22(1), the following categories of persons shall be
required to be registered under this Act,–
a) Persons making any inter-State taxable supply;
b) Casual taxable persons making taxable supply; r/w section 23
c) Persons who are required to pay tax under reverse charge; (Recipient)
d) Non-resident taxable persons making taxable supply;
e) Person who are required to pay tax under section 9(5) i.e electronic commerce operator; (HAT)
f) Every electronic commerce operator who is required to collect tax at source under section 52;
g) Persons who supply goods, through electronic commerce operator who is required to collect tax at
source under section 52;
h) Persons who are required to deduct tax u/s 51;
i) Persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise;
j) Input Service Distributor;
k) Every person supplying online information and database access or retrieval services from a place
outside India to a unregistered person in India;
Persons not liable for Registration [Section 23]:
(1) The following persons shall not be liable to registration, namely: -

(a) any person engaged exclusively in supplying goods or services or both that are not liable to
GST or wholly exempt from tax;
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
(2) Following category of persons have been notified by the Government as being exempted
from obtaining registration under GST law:
a) Persons (suppliers) engaged only in making taxable outward supplies, the total tax on which
is liable to be paid on reverse charge basis by the recipient u/s 9(3).
b) The persons making inter-State supplies of taxable services and having an aggregate
turnover of ≤ Rs.20 lakh/10 lakh in a F.Y.
c) A person (including Casual taxable person) making inter-State supplies of goods have
been exempted from obtaining registration:
➢ Persons making inter-State taxable supplies of notified handicraft goods.
➢ Persons making inter-State taxable supplies of products, when made by craftsmen
predominantly by hand even though some machinery may also be used in the process.
Conditions to be fulfilled:
i. The aggregate value of such supplies ≤ Rs.20 lakh/10 lakh in a FY.
ii. Such persons have obtained a PAN and have generated an e- way bill

Threshold limit for registration for those engaged in exclusive supply of goods enhanced to Rs.40
lakhs vide Notification except-
➢ Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Meghalaya,
Sikkim, Uttarakhand, Mizoram, Manipur, Nagaland, Tripura, Puducherry and Telangana.
[Section 10- 8 States + PT]
➢ Persons required to take compulsory registration under section 24
➢ Suppliers of-
i. Ice cream and other edible ice, whether or not containing cocoa;
ii. Tobacco and manufactured tobacco substitutes;
iii. Pan masala;
iv. Fly ash bricks or fly ash aggregate with 90% or more fly ash content; Fly ash blocks,
v. Bricks of fossil meals or similar siliceous earths, Building bricks, and
vi. Earthen or roofing tiles. [ITPBT]
➢ Persons taking voluntary registration under section 25(3).
Threshold limit for registration for service providers would continue to be Rs.20 lakhs and in case of
special category States Rs.10 lakhs (MMNT).
Threshold Limit for Registration for Exclusive Suppliers of Goods within state (Intra State)
Rs.10 Lakhs Rs.20 Lakhs Rs.40 Lakhs
1. Manipur 1. Arunachal Pradesh Remaining 21 States and 5 Union
2. Mizoram 2. Meghalaya Territories.
3. Nagaland 3. Puducherry
4. Tripura 4. Sikkim
5. Telangana
6. Uttarakhand
Threshold Limit for Registration for Suppliers of-

➢ Services,
➢ ITPBT
➢ Both Goods and Services
Rs.10 Lakhs Rs.20 Lakhs
Manipur, Mizoram, Nagaland & Tripura Remaining 27 States and 5 Union Territories

Procedure for Registration [Section 25]:
Every person who is liable to register under the CGST Act, 2017 must do so within 30 days from the date
when he becomes first liable or 5 days prior to commencement of business in case of Casual /Non-
resident taxable person.
Application is made within Application is either accepted within Reply for Notice Accept or Reject
within 30days 7days Or Notice for Clarification 7days within 7days the application
REG-01 REG-06/ REG-03 REG-04 REG-06/ REG-05
If the proper officer doesn’t take any action within 7 days of submission of application or within 7 days of
receiving the clarifications so solicited, the application for grant of registration is deemed to be approved.
Permanent Account Number is mandatory to be eligible for grant of registration. (Except NRTP)
Registration needs to be taken State-wise, i.e. there are no centralized registrations under GST. A business
entity having its branches in multiple States will have to take separate State-wise registration for the
branches in different States.
A person having a unit in a SEZ or being a SEZ developer shall have to apply for a separate registration,
as distinct from his place of business located outside the Special economic Zone in the same State or
Union territory
A person who has obtained more than one registration, whether in one State/ Union territory or more than
one State/Union territory shall, in respect of each such registration, be treated as distinct persons.
The effective date of registration is: (Rule 10)

1. In case the application is submitted within 30 days: the date on which the person becomes
liable for registration.
2. If the application is submitted after 30 days: the date of grant of registration.
Bank Account details may be furnished after obtaining registration certificate [Rule 10A]:
A registered person has an option to give his bank account details after obtaining registration, within 45
days from the date of grant of registration or the due date of furnishing first return u/s 39, whichever is
earlier.
Deemed registration [Section 26]:
Grant of registration/UIN under any SGST Act/ UTGST Act is deemed to be registration/UIN granted
under CGST Act.
Further, rejection of application for registration/UIN under SGST Act/UTGST Act is deemed to be
rejection of application for registration under CGST Act.

Grant of Registration in case of Casual Taxable Person (CTP) and Non-Resident Taxable
Person (NRTP) [Section 27]:
a) Registration granted for Casual taxable person or a Non-resident taxable person is valid for a
period of 90 days (Can be extended by maximum 90days) or for the period which is mentioned in
the registration certificate, whichever is shorter.
b) CTP and NRTP shall make an advance deposit of tax for an amount equivalent to the estimated
tax liability at the time of submission of application for registration.
c) CTP and NRTP will make taxable supplies only after the issuance of the certificate of registration.
Casual Taxable Person: Section 2(20) defines “Casual taxable person” as a person who occasionally
undertakes transactions involving supply of goods or services or both in the course or furtherance of
business, whether as principal, agent or in any other capacity, in a State or a union territory where he has
no fixed place of business.
Thus, a casual taxable person is someone who has a business in a different state, but comes to a different
state for a business purpose temporarily.
Application for Registration is made in GST REG-01, 5 days prior to commencement of business and
return to be filed is GSTR-1.
Non-Resident Taxable Person: Section 2(77) defines “Non-Resident taxable person” as any person who
occasionally undertakes transactions involving supply of goods or services or both, whether as principal
or agent or in any other capacity, but who has no fixed place of business or residence in India.
Hence, a non-resident taxable person is someone who has a business outside India, but comes to India for
a business purpose temporarily.
Application for Registration is made in GST REG-09, 5 days prior to commencement of business and
return to filed is GSTR-5.

SUMMARY OF FORMS:
Form No. Submitted/Issued by Reason Time Limit
FORM GST Applicant willing/ liable An application for the grant of registration Within 30days of
REG-01 to register under GST to be submitted electronically becoming liable for
(Including CTP- 5 days) registration
FORM GST On receipt of an application, an
REG-02 acknowledgement shall be issued
electronically to the applicant
FORM GST Proper officer Where the application submitted is found to within 7 working days
REG-03 be deficient or where the proper officer from the date of
requires any clarification submission of application.
FORM GST Applicant Applicant shall furnish such clarification, within 7 working days
REG-04 information or documents sought by Proper from the date of receipt of
officer electronically. such intimation.
FORM GST Proper officer Where no reply is furnished by the
REG-05 applicant or where the proper officer is not
satisfied with the clarification, information
or documents furnished, he shall reject such
application and inform the applicant
electronically.
FORM GST Proper officer Approval of the grant of registration i.e within 7 working days
REG-06 issue of Registration Certificate from the date of
submission of application
or from the date of receipt
of clarification
FORM GST Any person required to An application for the grant of registration
REG-07 deduct tax u/s 51 or a to be submitted electronically
collect tax at source u/s
52
FORM GST Proper officer Communication of Cancellation of
REG-08 Registration
FORM GST Non-resident taxable An application for the grant of registration at least 5 days prior to the
REG-09 person to be submitted electronically commencement of
business
FORM GST Any person supplying An application for the grant of registration
REG-10 online information and to be submitted electronically
database access or
retrieval services from a
place outside India to a
unregistered recipient
FORM GST Registered CTP or Application for extension of the registration
REG-11 NRTP period

TAX INVOICES, DEBIT & CREDIT NOTES:
Summary of various documents:

Document Issued by & to When & How?
whom
Tax Invoices Issued by a supplier to For outward taxable supplies made.
recipient
Consolidated Issued by Registered It is issued when-
Tax Invoice person ➢ The value of supply is < Rs.200
[Section 31(3)] ➢ Recipient is unregistered; and
➢ Recipient doesn’t require Tax invoice.
at the close of each day for all such supplies
Revised Tax Issued by Registered Revised Tax Invoice is issued for the below period within 1 month
Invoices person from the date of grant of registration
[Section 31(3)]
r/w Sec 25 and Rule
10 Effective date of Reg Date of Grant of Reg
Bill of Supply Issued by the Registered person-
[Section 31(3)] registered person ➢ making exempt outward supplies, or
➢ paying tax under Composition scheme u/s 10(1) or 10(2A)
Delivery Issued by Supplier of Supply of liquid gas where the quantity at the time of removal
Challan Goods- from the place of business of the supplier is not known or
transportation of goods for job work or transportation of goods for
reasons other than by way of supply.
Note: The supplier is required to issue a tax invoice after delivery
of goods where tax invoice could not be issued at the time of
removal of goods.
E-Way Bill Issued by every For movement of goods if consignment value is > Rs.50,000
registered person who (including GST) whether for supply or otherwise.
causes movement of
goods through the
transporter.
Payment Issued by the Recipient shall issue an invoice in respect of the goods/ services
Voucher Recipient, paying tax so received by him from the unregistered supplier and he shall
[Section 31(3)] under RCM issue a payment voucher at the time of making payment.
Receipt Issued by the When an advance payment is received with respect to any supply
Voucher registered person to of goods or services or both.
[Section 31(3)] the person who had
made the payment
Refund Issued by the If no supply is made and no tax invoice is issued after the issue of
voucher registered person to receipt voucher for advance payment
[Section 31(3)] the person who had
made the payment
Credit Notes Issued by the ➢ Where the taxable value in the invoice is > the taxable value
[Section 34(1)] registered person to of supply;
the recipient ➢ the tax charged in invoice is > the tax payable in respect of
such supply;
➢ where the goods so supplied have been returned by the
recipient; (Sales Returns)

➢ where the goods/services have been found to be deficient
➢ Discount u/s 15(3)(b)
Debit Notes Issued by the ➢ Where the taxable value in the invoice is < the taxable value
[Section 34(3)] registered person to of supply;
the recipient ➢ the tax charged in invoice is < the tax payable in respect of
such supply.
Declaration:
Any registered person, who has issued a credit note, must declare the details of such credit note, in the
return for the month during which such credit note was issued, but not later than:
a) 30the November of the following financial year OR
b) Date of furnishing the relevant annual return
Whichever is earlier.
Any registered person who has issued a debit note, in relation to supply of goods/services/both, must
declare the details of such debit note, in the return for the month during which such debit note was issued.
The tax liability can be adjusted upwards appropriately.
E-Invoicing:
All registered persons with an aggregate turnover (based on PAN) in any preceding financial year from
2017-18 onwards > Rs.10crore (notified persons) will be required to issue e-invoices.
Presently, invoices, credit notes and debit notes when issued by notified persons (to registered persons
(B2B) or for the purpose of exports) are covered under e-invoice.
Thus, presently such notified persons are not required to report B2C invoices. Further e-invoicing is also
not applicable to invoices issued by Input Service Distributor (ISD) and for Import of goods.
Applicability of Dynamic Quick Response (QR) code:
All B2C invoices issued by a registered person whose aggregate turnover in any preceding financial year
from 2017-18 onwards exceeds Rs.500 crores are mandatorily required to have a Dynamic QR code from
December 1, 2020.

ACCOUNTS & RECORDS:
Accounts and other Records [Section 35]:
Section 35 states that every registered person shall maintain books of accounts at his principal place of
business and where more than one place of business is specified in the certificate of registration, at every
such place of business too and these records could be electronic or manual.
Period of retention of accounts [Section 36]:
Every taxpayer shall maintain the books of accounts and ancillary records, until the expiry of 72 months,
from the due date of furnishing the annual return for the year to which the records relate.
For example:
BOA relates to F.Y 2020-21. Due date to file annual return for F.Y 2020-21 is 31st December 2021. BOA
of F.Y 2020-21 has to maintained for 72 months from 31st December 2021 i.e till 31st December 2027.
However, a registered person who is party to an appeal, shall have to maintain the accounts and books /
records, pertaining to the matters of such appeal for a minimum period of 1 year after disposal of such
appeal / revision as the case may be.
RETURNS:
As per law, a taxpayer is required to file a document with the administrative authority which is commonly
known as a “return”. If a business is done from offices in multiple states, the number of returns will go up
accordingly.
Return Particulars Frequency Due Date

Form
GSTR-1 Filed by Registered person providing the details of Monthly 11th of the next month
outward supplies
GSTR-3B Simple Return in which summary of outward supplies Monthly 20th of the next month
along with Input Tax Credit is declared and payment of
tax is affected by taxpayer
GSTR-4 Return for a taxpayer registered under the Composition Annually 30th April of next financial
scheme u/s 10(1) & 10(2A) year
GSTR-5 Return for a Non-Resident Taxable Person Monthly 20th of the next month
GSTR-6 Return for an Input Service Distributor Monthly 13th of the next month
GSTR-9 Annual Return for a Normal Taxpayer Annually 31st December of next
financial Year
GSTR-9A Annual Return for a taxpayer registered under the Annually 31st December of next
composition levy anytime during the year financial Year

PAYMENTS:
Under GST regime, all the registered persons get three electronic ledgers namely E-cash Ledger, E-credit
Ledger & E-liability Ledger through their GST profile.
Interest is payable when:

➢ There is a delay in payment of tax within the prescribed period- 18% p.a
➢ There is undue or excess claim of ITC- 24% p.a
➢ There is undue or excess reduction of Output Tax Liability- 24% p.a
There are 3 ledgers that is required to be maintained by every tax payer –

Dr. Electronic Liability Ledger (Form GST PMT-01) Cr.
To Amount payable towards tax, (1) By Electronic Credit ledger OR (2)
interest, late fee or any other amount (for ITC adjusted against output tax)
(Liability) By Electronic Cash ledger (3)
(for liability discharged in cash)
Dr. Electronic Credit Ledger (Form GST PMT-02) Cr.

To Electronic Liability ledger (2) By Amount of Input tax credit eligible (1)
(for adjusting ITC against output tax)
To Electronic Cash ledger (3) By Electronic Cash ledger (4)

(for refund of ITC claimed) (if refund is rejected)
The amount available in electronic credit ledger may be used for making any payment towards output tax.
The Input Tax Credit credited to electronic credit ledger cannot be used for making payment of tax under
RCM, or interest, penalty, fee.
UTILIZATION OF ITC:
Order of utilization of input tax credit is as under:

Input Tax Credit Output Tax Liability on account of -
on account of- IGST CGST SGST/UTGST
Integrated tax (IGST) (I) (II) – In any order and in any proportion
(III) IGST Credit should be utilized completely first before using CGST & SGST credit
Central tax (CGST) (V) (IV) Not permitted
State tax/ Union (VII) Not permitted (VI)
Territory tax
(SGST/UTGST)
Therefore, it is clear that there is no offset available between the CGST and the SGST.

Dr. Electronic Cash Ledger (Form GST PMT-05) Cr.
To Electronic Liability ledger (2) By Amount deposited (1)
(for GST paid in Cash)
To Electronic Credit ledger (4) By Electronic Credit ledger (3)
(if refund is rejected) (for refund of ITC claimed)
To Refund Claimed (5) By Refund Rejected (6)

(of unutilized amount in the E-Cash (of unutilized amount in the E-Cash
ledger) ledger)
The Electronic Cash Ledger contains a summary of all deposits and payments made by a taxpayer.
The amount payable on reverse charge basis, or the amount payable u/s 10, any amount payable towards
interest, penalty, fee shall be paid by debiting the electronic cash ledger.
Money can be deposited in the Cash Ledger by different modes, namely-

➢ E-Payment (Internet Banking, Credit Card, Debit Card);
➢ Real Time Gross Settlement (RTGS)/ National Electronic Fund Transfer (NEFT);
➢ Over the Counter Payment in branches of Banks Authorized (for deposits upto Rs.10,000 per
challan per tax period, by cash, cheque or demand draft).
The chronological order of discharge of liabilities of a taxable person would be:

d) Self-assessed tax and other dues for the previous tax periods
e) Self-assessed tax and other dues for the current tax periods
f) Any other amount payable under this Act or the rules made thereunder including the demand
determined u/s 73 or section 74
The amount available under any head in the Electronic Cash Ledger (SGST / CGST / IGST) cannot be
utilised for discharging the liability under any other head.
Summary of Various Forms:

Form No. Purpose
GST PMT-01 Maintenance of Electronic Liability Ledger (read with Rule 85)
GST PMT-02 Maintenance of Electronic Credit Ledger (read with Rule 86)
GST PMT-03 Rejection order by proper officer for refund of Unutilized ITC
GST PMT-04 Communication of any discrepancy in Ledgers
GST PMT-05 Maintenance of Electronic Cash Ledger (read with Rule 87)
GST PMT-06 Generate challan on the common portal to enter the details of the amount
to be deposited

REFUNDS:
Refund refers to an amount that is due to the tax payer from the tax administration.
Refund of tax [Section 54]:
As per Section 54 of the CGST Act, 2017, any person claiming refund of any tax and interest paid by
him, may make an application before the expiry of 2 years from the relevant date.
If there is any balance in the electronic cash ledger or electronic credit ledger may claim such refund in
the return furnished u/s 39.
Refund of unutilized input tax credit:
A registered person may claim refund of any unutilised input tax credit at the end of any tax period, in the
following cases:
a) Zero rated supplies made without payment of tax;
b) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of
tax on output supplies (other than nil rated or fully exempt supplies)
However, refund of unutilized input tax redit shall not be allowed in the following cases:
a) Where the goods exported out of India are subjected to export duty:
b) If the supplier of goods or services or both avails of drawback in respect of central tax or claims
refund of the integrated tax paid on such supplies.
Application for Refund:
Section 54 states that any person claiming a refund may file an application in form GST-RFD-01
electronically through the GST portal.
After receipt of the application or declaration, if the proper officer is satisfied that the whole or part of the
amount claimed as refund is refundable, he shall make an order in form GST-RFD-06 within 60 days
from the date of receipt of application and the same will be credited to the account of the applicant.
Where the proper officer is satisfied that amount so refundable is not payable to any applicant, he shall
make an order in form GST-RFD-06 and the same will then be credited to the Consumer Welfare Fund.
Interest on delayed refunds [Section 56]:
Section 56 states that if any tax ordered to be refunded u/s 54 is not refunded within 60 days from the date
of receipt of application interest at such rate not exceeding 6% p.a shall be payable from the date
immediately after the expiry of 60 days from the date of receipt of application till the date of refund of
such tax.
Where any claim of refund arises from an order passed by an adjudicating authority or Appellate
Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within
60 days from the date of receipt of application filed consequent to such order, interest shall be 9% p.a.

AUDIT:
Audit under Goods & Services Tax can be of two types, as discussed under-
General Audit [Section 65]:
Section 65 states that the Commissioner or any officer so authorised by him, by way of a general or
specific order, may undertake the audit of any registered person.
Timelines:
A notice of 15 days is required to be given prior to the conduct of the audit, by the proper officer.
The audit is required to be completed within 3 months from the date of commencement of such audit.
This period is extendable for another 6 months (maximum) by the Commissioner. (3+6 = 9months)
The proper officer shall within 30 days of completion of audit, informs the registered person, about the
findings.
Special Audit [Section 66]:
Section 66 states that where any officer not below the rank of Assistant Commissioner having regard to
the complexity of the case and in the interest of revenue, is of the opinion that the liability has not been
correctly declared or the ITC is availed in excess, he may, with prior approval from Commissioner, issue
a direction to the registered person to get his accounts / records audited by a Chartered Accountant / Cost
Accountant, as nominated by the Commissioner.
Timelines:
The Chartered Accountant / Cost Accountant shall submit an audit report duly signed and certified by
himself, within 90 days from the date of commencement of such audit, to the Assistant Commissioner.
This period is extendable for another 90 days (maximum) by the Assistant Commissioner on reasonable
and sufficient grounds upon application. (90+90 = 180 days)
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CHAPTER-6
BASIC OVERVIEW ON IGST, UTGST & GST COMPENSATION TO STATES

ACT
INTEGRATED GOODS & SERVICES TAX ACT, 2017:
The Integrated Goods and Services Tax Act, 2017 [IGST] was passed by the Parliament for levy and
collection of tax on inter-state supply of goods or services or both by the Central Government.
Under Article 269A of the Constitution, IGST on supplies in the course of inter-state trade or commerce
is levied and collected by the Government of India and such tax shall be apportioned between the Union
and the States.
IGST (Integrated Goods & Services Tax) Act, 2017 deals with supplies interstate, import into India and
supplies made outside India.
The following table illustrates the same-

SUPPLY TAX / TAXES
Intra State CGST+ SGST
Intra UT CGST+ UTGST
Interstate/Import/ SEZ IGST
IGST is applicable all over India including the state of Jammu & Kashmir.
The IGST rate is broadly equal to CGST rate plus SGST rate.
IGST rate= CGST rate + SGST rate
Levy and Collection under IGST, ACT 2017 [Section 5]:
Section Particulars
5
(1) IGST shall be levied on all inter-State supplies, except on the supply of alcoholic liquor for human
consumption, on the value determined u/s 15 and at such rates, not exceeding 40%.
(2) The IGST on the supply of Petroleum crude, High speed Diesel, Motor spirit (commonly known as
petrol), Aviation turbine fuel and Natural gas (PHDMAN) shall be levied with effect from such date
as may be notified by the Government.
(3) The Government may by notification, specify categories of supply of goods or services or both, the
tax on which shall be paid on reverse charge basis by the recipient.
(4) The Government may by notification, specify a class of registered persons(recipient) who shall, in
respect of supply of specified categories of goods or services or both received from an unregistered
supplier, pay the tax on reverse charge basis.
(5) The Government may by notification, specify categories of services the tax on inter-state supplies of
which shall be paid by the Electronic Commerce Operator if such services are supplied through it.

Provisions for levy are similar for both under CGST (Section 9) & IGST (Section 5) Act. Section 15 of
CGST Act, 2017 is common to both for valuation. CGST is for intrastate supply and IGST for interstate
supply.
CGST rate is 20% maximum whereas under IGST it is 40%.
Zero-rated supply [Section 16]:
Exports and supplies to SEZs are considered as ‘Zero rated supply’ on which no tax is payable.
However, ITC is allowed, and refunds in respect of such supplies may be claimed by following either of
these options:
a) Supply made without the payment of IGST under Bond/LUT and claim refund of unutilised ITC
or
b) Supply made on payment of IGST and claim refund of the same
UNION TERRITORY GOODS & SERVICES TAX ACT, 2017:
The Union Territory Goods & Services Tax Act, 2017 intends to make a provision for levy and collection
of tax on intra-State supply by the Union Territories.
UTGST Act, 2017 would be applicable in the following Union Territories:

➢ Andaman and Nicobar Islands
➢ Chandigarh
➢ Daman and Diu & Dadra and Nagar Haveli
➢ Lakshadweep
➢ Ladakh
Delhi, Puducherry and Jammu Kashmir are the other Union Territories but this Act will not be applicable
there as they have their own State Legislature and Government. State GST would be applicable in their
case.
Levy and Collection of UTGST [Section 7]:
As per Section 7 of the UTGST Act, 2017, Union territory tax shall be levied on all intra-State supplies
of, except on the supply of alcoholic liquor for human consumption, on the value determined under
section 15 of the Central Goods and Services Tax Act, 2017 and at such rates, not exceeding 20%.
However, the Union territory tax on the supply of Petroleum crude, High speed Diesel, Motor spirit
(commonly known as petrol), Aviation turbine fuel and Natural gas (PHDMAN) shall be levied with
effect from later date as may be notified by the Government.
All other provisions with respect to Reverse charge, E-Commerce Operator, Supply, Payment of Tax,
Input Tax Credit etc is same as CGST Act.

THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) ACT, 2017:
Goods and Service Tax (Compensation to States) Act, 2017 extends to the whole of India.
The GST(Compensation to States) Act,2017 provides for the manner of ascertaining the amount of
compensation that shall be payable to states during the transition period of 5 years by the Centre on
account of revenue loss attributable to levy of Goods and Services Tax in India.
It involves the following steps:

➢ Ascertaining the base year which is financial year 2015-16
➢ Identifying the revenue of base year under previous indirect tax regime which is now subsumed
under GST.
➢ Projected revenue under GST
➢ Computation of compensation
➢ Release of compensation
The compensation shall be met out from compensation cess for which the provisions in relation to
collection, payment return, refund etc. have been provided for in the GST(Compensation to States)
Act,2017.
Summary of the Act:
1. It provides for the compensation of loss to the states arising due to implementation of GST.
2. The financial year 2015-16 shall be taken as base year for the purpose of calculating
compensation amount payable to the states.
3. The revenue to be compensated consists of revenues from all the taxes that are levied by the
states which have subsumed under GST, as audited by the Comptroller and Auditor General of
India.
4. The projected growth rate of revenue during transition period shall be 14% p.a.
Illustration – If the base year revenue for 2015-16 for a concerned State is 100 rupees, then the
projected revenue for financial year 2018-19 shall be as follows –
Projected Revenue for 2018-19 = 100 x (1+0.14)3 =148.1544
5. Total compensation payable= Projected revenue - Actual revenue of the State in that year.
6. The compensation shall be released at the end of every 2 months period on a provisional basis
and final adjustment shall be made after getting audited accounts of the year from the
Comptroller and Auditor General of India.
7. The proceeds of the cess shall be credited to GST Compensation Fund and all the compensation
payable to the states as GST compensation shall be paid from this fund.
8. However, no such Cess shall be leviable on supplies made by a taxable person who has opted for
composition levy u/s 10 of the CGST Act, 2017.
9. Where the Cess is chargeable on value of supply as determined u/s 15 of the CGST Act for all
intra- State and inter-State supplies of goods or services or both.

CHAPTER-7
OVERVIEW OF CUSTOMS LAW
OVERVIEW OF CUSTOMS LAW:
Customs Duty is an indirect tax, imposed under the Customs Act formulated in 1962. The Customs Act,
1962 is the basic statute which governs entry or exit of different categories of vessels, aircrafts, goods,
passengers etc., into or outside the country.
The Act extends to whole of India and, save as otherwise provided in this Act, it applies also to any
offence or contravention thereunder committed outside India by any person.
Rules & Regulations:
Parameter Rules Regulations

Section Section 156 Section 157
Power to make Vests with Central Government Vests with CBIC
Consistent Rules must be consistent with the Regulations must be consistent with the
provisions of the Act. provisions of the Act as well as the rules.
Levy of Customs Duty:
Section 12 of the Customs act, 1962 is the charging section, which is the basis for levy of tax.
As per section 12, customs duty is imposed on goods imported into or exported out of India as per the
rates provided in Customs Tariff Act, 1975 or any other law for the time being in force.
Customs Tariff Act, 1975 has two schedules:
Schedule I: Tariff rates for imported goods known as Import Tariff
Schedule II: Tariff rates for exported goods known as Export Tariff
TYPES OF CUSTOMS DUTIES:
Basic Customs Duty ➢ Levied as a percentage of transaction value as determined u/s 14(1)
(Always) ➢ Could be levied at "Standard" OR "Preferential Rates"
Social Welfare Surcharge It is levied @10% of Basic Customs Duty on every good imported into India.
(SWS) (Always)
IGST (Always) The goods imported into India, are now subject to IGST and not CVD or SAD.
However, petroleum products and alcoholic liquor is outside the scope of GST,
and hence CVD and SAD are applicable to them.
GST Compensation Cess Any goods imported into India shall in addition to IGST, be liable to the GST
compensation cess at such rate, as is leviable on a like article on its supply in
India.
Protective Duty In order to protect any industry established in India, a duty may be imposed on
imported goods on the recommendation of Tariff Commission.
Anti-Dumping duty Anti-Dumping duty is a duty paid on import of goods into India at lower prices.
It is levied to promote the local industry and to curb imports, and to ensure that
India is not used as a dumping ground.

The central government levy ADD not exceeding the margin of dumping.
Margin of Dumping = Normal Selling price – Export price
Safeguard Duty The Central Government may impose safeguard duty on specified imported goods,
if the goods are being imported in large scale and they are causing injury to the
industry in India.
This is levied on goods imported into India, when such goods are already
manufactured in India, but the manufacturing costs are higher as compared to
import prices.
Road and Infrastructure It is levied as duty of custom @ rupee 8 per litre on motor spirit (petrol) and high
Cess on Imported goods speed diesel(HSD) imported into India for the purpose of financing infrastructure
projects.
Introduction of Health Finance Act 2020 has imposed a Health Cess @ 5% on the assessable value on
Cess (Finance Act, 2020) import of medical equipment classified in 4th schedule for augmenting and
financing health infrastructure and related services.
Salient features are below-
➢ Medical devices which are exempt from Basic Customs duty would not be
subjected to Health Cess; and
➢ Credit of Health Cess is not available to the importer
VALUATION FOR CUSTOMS DUTY:
Valuation for Customs Duty begins with determination of “Transaction Value”. Transaction Value
includes the price paid / payable as consideration.
In case of transaction between related parties, price should be at arm’s length price.
Valuation Rules:
The Customs Value fixed as per Section 14 is the value that would be used for calculating the Customs
Duty Payable. This is also called Assessable Value.
For Exports:
Price paid / payable for delivery at the time and place of Exportation i.e F.O.B. Value.
For Imports:
Price paid / payable for delivery at the time and place of Importation i.e C.I.F. Value.
Value of Imported Goods shall be the Transaction Value adjusted in accordance with provisions of rule
10 as under:
C.I.F. = F.O.B. + Cost of Transport (Freight) and Insurance
Price referred above shall be calculated with reference to the Rate of Exchange, as determined by Central
Board of Indirect Taxes (CBIC) as on the date of-
a) Presentation of a Bill of Entry in case of Import or
b) Presentation of Shipping bill or Bill of export in case of Export

If the valuation as above cannot be determined, then sequentially the following rules will be
applied-
Identical Goods / Comparison Method [Rule 4]:
Transaction Value (TV) of identical goods will be used in determining the value of imported goods, only
when such identical goods are sold at the same commercial level, and these goods are substantially the
same quantity as the goods being valued.
In applying this rule, if more than one transaction value of identical goods is found, the lowest of such
value shall be used to determine the value of imported goods.
TV of goods exported would be based on the transaction value of the goods of like kind and quality
exported at or about the same time to the same destination country, or in absence, another destination
country.
Similar Goods for Imports and Computed Value Method for Exports [Rule 5]:
The TV for Imported Goods would be based on that of the similar goods (i.e., like characteristics &
country of production).
The TV of goods exported, would be taken at computed value, i.e., Cost of Production + Charges for
design/brand + Reasonable profit.
Residual Method [Rule 6]:
For exports, the TV would then be arrived at by reasonable and consistent means by Customs Officer.
For Imports, Rule 7 and 8, as below would be invoked.
Deductive Value [Rule 7]:
Unit price (Selling Price) at which the imported goods (or) identical (or) similar imported goods are sold
in the greatest aggregate quantity
Less: Commission, Selling Expenses, and Profit made, Transport & Insurance & Taxes within India.
Computed Value [Rule 8]:
This would be the cost of materials used in producing the imported goods, including fabrication costs, and
usual profits commensurate with sale of goods of same class in India, including specific additions as per
Rule 10 (i.e., Insurance, Freight and Landing Charges).

VALUATION TERMINOLOGIES:
FOB: This is also known as “Free on Board” OR “Freight on Board”. It signifies the cost of delivering
the goods to the nearest port and thereafter the Buyer is responsible to ship from there to the buyer’s
address.
CIF: This is known as “Cost, Insurance & Freight” Value.

C.I.F. = F.O.B. + Cost of Transport (Freight) and Insurance
Format for Computation of Assessable Value & Custom Duty Payable

Particulars Amount
Ex-Factory Price XXXX
Add: Expenses incurred by Seller outside India before exporting XXXX
FOB Value XXXX
Add: Adjustments under Rule 10(1)-
Expenses incurred by Importer in India XXXX
Customs FOB XXXX
Add: Adjustments under Rule 10(2)-
a) Transportation, Loading, Unloading & Handling Charges XXXX
b) Insurance Charges XXXX
CIF being Assessable Value XXXX
A CIF being Assessable Value XXXX

B Basic Custom Duty (BCD) u/s 12 of CA,1962 [A x 10%] XXXX
C Safeguard Duty XXXX
D Social Welfare Surcharge (SWS) [B x 10%] XXXX
E Landed Cost of Import (A+B+C+D) XXXX
F Anti-Dumping Duty [E x ___%] XXXX
G Value for Levy of IGST XXXX
H IGST u/s 3(7) [G x 18%] XXXX
I GST Compensation Cess u/s 3(9) [G x ___%] XXXX
J Total Cost of Imported goods [G+H+I] XXXX
Total Taxes and Duties Payable [B+C+D+F+H+I] XXXX

Adjustments under Rule 10(2):
a) Cost of freight in case of imports:

Mode of Transportation By Air Any other mode
Actual Freight Ascertainable Actual Freight; or Actual Freight
20% of FOB value,
Whichever is less
Actual Freight Not Ascertainable 20% of FOB value
b) Cost of insurance in case of imports:

If Actual cost of insurance available Actual cost of insurance
If Actual cost of insurance not available 1.125% of the FOB value
Relevant date for rate of duty on - Imported Goods (Section 15):

Section Types of Goods Relevant Date
15(1)(a) Goods cleared for home Rate prevailing on the:
consumption under section 46 a. Date of presentation of bill of entry; or
b. Date of entry inwards of the vessel/ aircraft/ vehicle
whichever is later
15(1)(b) Goods cleared from a warehouse Rate prevailing on the date of presentation of bill of entry
under section 68 for home consumption
15(1)(c) In case of any other goods Rate prevailing on the date of payment of duty
Relevant date for rate of duty on - Exported Goods (Section 16):

Section Types of Goods Relevant Date
16(1)(a) Goods entered for export under Rate prevailing on the date on which proper officer
section 50 makes an order permitting clearance and loading of the
goods for exportation under section 51
Note: Provisions of both section 15 and 16 are not applicable to baggage and goods imported/exported by
post.
Exemptions under the Customs Act:
If the Central Government is satisfied that it is necessary in the public interest to do so, it may, by
notification in the Official Gazette, exempt generally or subject to such conditions, from the whole or any
part of the duty of customs.
It may, by special order, exempt from duty, any goods, on which duty is leviable only under exceptional
circumstances.
Further, no duty is to be collected, if the amount of duty leviable is ≤ INR 100.
An exemption notification cannot be withdrawn with retrospective effect.

Power of Customs Officers:
The Customs Officers are authorised to:

a) Declare warehousing stations
b) Allow setting up warehouses (Public / Private)
c) Power to search any vessel /conveyance /person
d) Power of Seizure of Goods
e) Power to Arrest
TRANSIT AND TRANSHIPMENT:
Transit Transhipment
Goods remain in the same vessel at the intermediate Goods are transferred to a different vessel at the
port intermediate port
Only import manifest has to be submitted for entry Bill of Transhipment / declaration is also required to be
submitted
No supervision is required at the Intermediate Port Transhipment process is conducted under the
supervision of the Customs Officer
The same vessel reaches the destination port A different vessel reaches the destination port
BAGGAGE RULES:
Section 77 provides that the owner of any baggage shall for the purpose of clearing it makes a declaration
of its contents to the proper officer. Baggage includes unaccompanied baggage but excludes motor car,
alcoholic drink (beyond certain limit) and goods imported through courier.
Baggage Rules, 2016 provide for duty free clearance, up to a certain limit, of articles such as used
personal effects, travel souvenirs and other articles when carried on the person or in the accompanying
baggage of the passenger arriving in India.
Personal effect means things required for satisfying daily necessities but does not include jewellery.
Rule Passenger Passenger arriving Amount of Duty Free

from countries Baggage Allowance
Rule 3 An Indian resident or a foreigner
residing in India or tourist of Other than Nepal, Rs.50,000
Indian origin Bhutan or Myanmar
Proviso to rule 3 Tourist of foreign origin Rs.15,000
Rule 4 An Indian resident or a foreigner Nepal, Bhutan or Rs.15,000
residing in India or any tourist Myanmar
Rule 5 Any passenger residing abroad Any country Gold Jewellery:
for more than 1 year a. Gentlemen– 20 grams
with a value cap of
Rs.50,000
b. Lady – 40 grams with a
value cap of Rs.1 lakh

DUTY DRAWBACK:
Central Government is empowered to grant duty drawback (Section 74 & Section 75).
Section 74 Section 75
Refund of the Import Duties paid on the import of Refund of the Import Duties paid on the import of
goods when the same goods are re-exported Raw materials/Input which is used in the
manufacture of exported goods.
All goods are eligible for drawback subject to their Drawback is available only in respect of notified
identification. goods.
Duty Drawback shall be allowed even if imported If the good manufactured from imported materials
goods are used in India and then Exported. are used in India and subsequently exported, then
no Duty drawback shall be allowed.
Where the goods are not put into use after import, Duty drawback is allowed as per the All Industry
98% of Duty Drawback is admissible. Rate (AIR) notified by the Drawback Directorate.
In cases where the goods have been put into use after In case if no rate is notified, then the exporter can
import, Duty Drawback is granted on a sliding scale apply for Brand rate.
basis depending upon the extent of use of the goods.
These goods should be entered for export within 18 months.
No Duty Drawback shall be admissible where:

a) The Duty Drawback amount is < Rs.50/-.
b) The Duty Drawback amount exceeds one third of market price of the export product.
c) The Duty Drawback amount is < 1% of FOB value of export (except where the amount of Duty
Drawback per shipment exceeds Rs.500/-).
d) Where value of export goods is less than the value of imported material used in their manufacture.
Application for Duty Drawback is required to be made within 3 months from the date of export of goods,
which can be extended up to 12 months.
The duty drawback needs to be paid within 1 month, and if not paid, interest is payable to the claimant, at
a specified rate.
Also, where drawback has been paid to the claimant in excess, the claimant has a time period of 2 months,
to repay the excess, else, interest would be charged on the exporter from the date of payment of drawback
until the date of recovery.
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REFUND:
Refund of Export Duty:
Where on the export of goods; any duty has been paid, such duty shall be refunded if –
a) the goods are returned to such person otherwise than by way of re-sale;
b) the goods are re-imported within 1 year from the date of exportation; and
An application for refund of such duty is made within 6 months from the date on which the proper officer
makes an order for the clearance of the goods when they are imported back.
Refund of Import Duty:
Where on the import of any goods, duty has been paid upon clearance for home consumption, such duty
can be refunded, if –
a) The goods are found to be defective or not in conformity with the specifications
b) The importer does not claim any duty draw back with respect to these goods
c) If the goods are exported back / importer relinquishes his title to the goods / they are destroyed in
the presence of the proper officer
An application for refund of duty is to be made within 6 months from the relevant date.
ALL THE BEST

Summary of Sections under CGST Act, 2017
Section Topic/Content
1 Short title, Extent and Commencement
2 Definitions
3 to 6 Administration (Officers, Appointment of Officers, Powers of Officers) (Not Covered)
7 Meaning and Scope of Supply:
7(1)(a) All forms of supply of goods or services or both made for a consideration by the person in
the course of furtherance of business
7(1)(aa) Activities or transactions, by a person, other than an individual, to its members or
constituents or vice-versa for a consideration
7(1)(b) Import of services for the consideration whether or not in course of furtherance of business
7(1)(c) The activities specified in Schedule I made or agreed to be made without consideration
7(1A) Supply of goods or supply of services as specified in Schedule II.
7(2) Neither supply of goods nor supply of services as specified in Schedule II (Negative list).
8 Taxability of Composite and Mixed supplies
9 Levy and Collection of GST (Normal Scheme)
10 Composition Scheme
11 Exemptions under GST
12 Time of Supply of Goods
13 Time of Supply of Services
14 Change in rate of tax in respect of supply of goods or services
15 Value of Supply
16 Eligibility and Conditions for taking Input Tax Credit
17 Apportionment of credit and Blocked Credit)
18 Availability of Credit in Special circumstances
19 Input Tax Credit on Inputs and Capital Goods sent for job work
20 Manner of distribution of credit by Input Service Distributor
21 Manner of recovery of credit distributed in excess
22 Persons Liable for Registration
23 Persons not Liable for Registration
24 Compulsory Registration in certain cases
25 Procedure for Registration
26 Deemed Registration
27 Special provisions relating to Casual taxable person and Non-resident taxable person
28 Amendment of Registration
29 Cancellation (or Suspension) of Registration
30 Revocation of Cancellation of Registration
31 Tax Invoice
32 Prohibition of Unauthorised collection of tax (Not Covered)
33 Amount of Tax should be indicated in the Invoice (Not Covered)
34 Credit and Debit Notes
35 Accounts and Records
36 Period of retention of accounts
37 Furnishing Details of Outward supplies
38 Furnishing Details of Inward supplies
39 Furnishing of Returns
40 First Return (Not Covered)

41 Claim of Input Tax Credit and provisional acceptance thereof (Not Covered)
42 Matching, Reversal and reclaim of Input Tax Credit (Omitted)
43 Matching, Reversal and reclaim of reduction in output tax liability (Omitted)
44 Annual return
45 Final return
46 Notice to Return Defaulters (Not Covered)
47 Levy of Late fees (Not Covered)
48 Goods and Service Tax Practitioners (Not Covered)
49 Payment of Tax, Interest, Penalty and Other Amounts
50 Interest on Delayed Payment of Taxes
51 Tax Deducted at Source (Not Covered)
52 Tax Collected at Source (Not Covered)
53 Transfer of Input Tax Credit (Not Covered)
54 Refund of tax
55 Refund in certain cases (Persons having UIN)
56 Interest on delayed refunds
Summary of Sections under IGST Act, 2017

Section Topic/Content
1 Short title, extent and commencement
2 Definitions (Not Covered)
3&4 Administration (Appointment of Officers, Authorization of officers) (Not Covered)
5 Levy and Collection of GST (Similar to section 9 of CGST Act)
6 Exemptions under GST (Similar to section 11 of CGST Act)
7 Inter-State Supply
8 Intra-State Supply
9 Supplies in Territorial waters
10 Place of Supply of Goods other than supply of goods imported into, or exported from
India
11 Place of Supply of Goods imported into, or exported from India
12 Place of Supply of services where location of supplier and recipient is in India
13 Place of Supply of services where location of supplier or location of recipient is
outside India
14 Online Information and database access or retrieval services (Not Covered)
15 Refund of IGST paid on supply of goods to tourist leaving India
16 Zero Rated Supply

Indirect Tax Revision Notes-CS Exe June 23 Lyst3130

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Indirect Tax Revision Notes-CS Exe June 23 Lyst3130

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As applicable for June’23 & December’23 exams

CONCEPT OF INDIRECT TAXES & GST IN INDIA

There are two types of taxes-

Differences between Direct and Indirect taxes:

Basis Direct Tax Indirect Tax

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The current status of GST Laws Passed in India is as under:

Intra-State Supply = CGST + SGST

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The following subject matters kept outside the purview of GST-

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BASICS OF GOODS AND SERVICES TAX

Section 7 Meaning and Scope of Supply

MEANING AND SCOPE OF SUPPLY – [Section 7]:

Modes of Supply (Forms of supply)- Section 7(1)(a):

Goods Services Other than goods or

Means every kind of Anything other Does not

Other than Money & Securities

Activities or transactions, by a person, other than an individual, to its members or constituents or

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Composite Supply Mixed Supply

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LIABILITY TO PAY GST:

COMPOSITION SCHEME [Section 10]:

Section Section 10(1) & 10(2) Section 10(2A)

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Conditions and restrictions:

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Distinctions between General Exemption and Specific Exemption:

General Exemption Section 11(1) Exemption By Special Order Section 11(2)

Supply Type Description

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CONCEPT OF TIME, VALUE AND PLACE OF TAXABLE SUPPLY

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Supply in Territorial Waters [Section 9 IGST Act, 2017]:

Place of Supply of Goods [Section 10 & 11 of IGST Act, 2017]:

Place of supply in case of Import/Export of goods [Section 11 of IGST Act, 2017]:

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Forward Charge Reverse Charge Vouchers Residuary cases

Earlier of the following Earlier of the following a) Supply is a) Where a

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Forward Charge Reverse Charge Vouchers Residuary cases

When invoice has been Earlier of the following a) Supply is a) Where a

Addition in the value of supply by way of

The date of receipt of payment would be earlier of-

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Section 15 is applicable to interstate supplies under IGST also.

Transaction value means-

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Rule 27: Value of supply of Value of the supply shall be –

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INPUT TAX CREDIT AND COMPUTATION OF GST LIABILITY

INPUT TAX CREDIT:

(2) Following conditions should be fulfilled by a registered taxable person (Recipient)-