GST 6th Semester

Most Important
Questions
 Short-Answer Type Questions

Write a Short-Note on the Following:- Write a Short-Note on the Following:-

 What is invoicing  Bill of Supply
 GST Return  Debit Note & Credit Note
 Return of Goods  Composite Dealer
 Exempted Goods  Place of Supply of Service
 Mixed Supply of Goods  Interstate Supply of Goods
 Challan Reconciliation  E-Way Bill
 Input Tax Credit Set Off  GST Council
Q. What is invoicing?
Invoicing is the process of creating and sending a detailed bill (invoice) to a customer for
goods sold or services provided.
An invoice typically includes:
• Name and contact information of the seller and buyer
• Invoice number
• Date of issue
• Description of goods/services
• Quantity and price
• Taxes (if applicable)
• Total amount due
• Payment terms (like due date, late fees, etc.)
Invoicing is important for:
• Tracking sales
• Ensuring timely payments
• Maintaining legal and financial records
Q. What GST Return?
GST Return is a document that a taxpayer registered under the Goods and Services Tax
(GST) law has to file with the tax authorities of India.

A GST return typically includes:

• Details of sales (outward supplies)
• Details of purchases (inward supplies)
• Amount of GST collected and paid
• Claim of input tax credit (ITC)
• Tax liability and payment details

Purpose of GST Return:

 Ensure proper tax compliance
 Claim input tax credit
 Avoid penalties and legal issues
Q. What Return of Goods?
Return of Goods refers to the process of sending goods back to the seller by the buyer due
to various reasons such as:
• Defective or damaged products
• Incorrect items delivered
• Excess quantity received
• Quality not as expected

Types of Return of Goods:

Purchase Return:
When the buyer returns goods to the supplier/vendor.
Reduces the total purchases in the books of the buyer.
Sales Return:
When the customer returns goods to the seller.
Reduces the total sales in the seller’s books.
 Exempted Goods
Exempted Goods are goods that are not liable to be taxed under the GST regime. These
goods attract 0% GST rate, meaning no GST is charged on their supply.

Key Points about Exempted Goods:

• No output GST is charged on exempted goods.
• No Input Tax Credit (ITC) can be claimed on inputs used to manufacture or supply these
goods.
• These goods are different from zero-rated supplies, which allow ITC.

Examples of Exempted Goods:

• Fresh fruits and vegetables
• Unbranded food grains (rice, wheat, pulses)
• Educational and medical services
• Books and printed materials
• Milk and curd
 Mixed Supply of Goods
Mixed Supply refers to a combination of two or more individual goods or services, which
are sold together but can be sold separately, and are not naturally bundled.

Key Features:
• Supplied for a single price.
• Each item is independent, and not related to others.
• Highest tax rate among the items is applicable to the entire mixed supply.

Example:
• A Diwali gift box contains:
• Chocolates (18%)
• Perfume (28%)
• Dry fruits (12%)
 Challan Reconciliation
Challan Reconciliation is the process of matching the tax payments made via
challans (like GST PMT-06) with the liabilities reported in the GST returns (like
GSTR-3B or GSTR-9).

Why is it Important?
• Ensures accuracy in tax payment.
• Avoids interest or penalty due to short payment.
• Helps in tracking excess/short payments.
• Required during audits or assessments.
 Input Tax Credit Set Off
Input Tax Credit Set Off refers to the process of adjusting the GST paid on
purchases (input) against the GST payable on sales (output).

Types of GST and Set Off Rules:

Output Tax Priority of Set Off with Input Tax Credit
IGST 1. IGST → 2. CGST → 3. SGST/UTGST
CGST 1. IGST → 2. CGST
SGST/UTGST 1. IGST → 2. SGST/UTGST
 Bill of Supply
A Bill of Supply is a document issued by a seller when GST is not applicable on a
transaction.

When is a Bill of Supply issued?

• Composition Scheme Dealers – who pay tax at a fixed rate but cannot charge
GST on invoices.
• Suppliers of Exempted Goods/Services – like fruits, vegetables, healthcare,
education.
• Exporters – when goods/services are exported without payment of tax (under
LUT/Bond).
 Bill of Supply
A Bill of Supply is a document issued by a seller when GST is not applicable on a
transaction.

Difference: Bill of Supply vs. Tax Invoice

Basis Bill of Supply Tax Invoice
GST Charged ❌ Not Charged ❌ Charged
Composition dealers or Regular GST-registered
Who Issues
exempt suppliers dealers
Use for ITC ❌ ITC Not Available ❌ ITC Can Be Claimed
 Debit Note & Credit Note
What is a Debit Note?
A Debit Note is a document issued by a buyer to the supplier to inform
about an increase in the amount payable.
It is usually issued when:
• Goods received are of inferior quality or damaged.
• The quantity of goods received is less than ordered.
• There is a need to increase the price of goods or services due to
some reason agreed upon.
• When the buyer returns goods and expects a refund or
adjustment.
 Debit Note & Credit Note
What is a Credit Note?
A Credit Note is a document issued by the supplier to the buyer to
inform about a decrease in the amount receivable.
It is issued when:
• Goods are returned by the buyer.
• Goods are damaged or not up to the mark.
• Prices need to be reduced due to discount or errors in the
original invoice.
• There is any adjustment in GST or tax.
 Composite Dealer
A Composite Dealer is a registered taxpayer who opts for the
Composition Scheme under GST. This scheme is designed to simplify tax
compliance for small businesses by allowing them to pay tax at a
prescribed fixed rate on their turnover, instead of regular GST rates.
Eligibility Criteria:
• Aggregate turnover in the previous financial year should not exceed
₹1.5 crore (may vary as per state rules).
• Only taxpayers engaged in the supply of goods (manufacturers,
traders) and certain service providers are eligible.
• The dealer should not be engaged in inter-state supplies.
• Dealers supplying excluded goods/services like alcohol or who
supply through e-commerce platforms are not eligible.
 Place of Supply of Service
The Place of Supply of Service means the location where a service is
considered to be provided for the purpose of charging GST. Determining
the place of supply is crucial because GST is a destination-based tax, and
tax liability depends on the location of supply.

Importance of Place of Supply

• To determine whether a supply is intra-state or inter-state.
• To decide which state’s GST is applicable — CGST & SGST for intra-
state, or IGST for inter-state supplies

Why is it Important?
GST is destination-based; tax is paid where the service is consumed.
Correct place of supply avoids tax disputes and ensures proper state
revenue distribution.
 Interstate Supply of Goods
An Interstate Supply of Goods refers to the movement of goods from
one state or Union Territory (UT) to another in India. It involves supply of
goods where the place of supply is in a different state or UT than the
place of origin.
Key Characteristics of Interstate Supply
• Goods are supplied from one state/UT to another state/UT.
• Supplier and recipient are located in different states or UTs.
• GST charged is Integrated GST (IGST), which is applicable on interstate
transactions.
Place of Supply of Goods in Interstate Supply
 Generally, the place of supply is the location of the recipient of goods.
 When goods are transported or dispatched by the supplier, place of
supply is the place where goods are delivered.
 E-Way Bill
An E-way Bill (Electronic Way Bill) is an electronic document generated
on the GST portal that authorizes the movement of goods worth more
than a prescribed value from one place to another.

Purpose of E-Way Bill

• To ensure legal movement of goods under GST.
• To prevent tax evasion during transportation of goods.
• To enable real-time tracking of goods movement by tax authorities.

Benefits of E-Way Bill

• Streamlines movement of goods under GST.
• Reduces the chances of tax evasion.
• Facilitates better monitoring and compliance.
• Simplifies interstate and intrastate goods transport.
 GST Council
The GST Council is a constitutional body established under Article 279A
of the Indian Constitution to make recommendations on issues related to
Goods and Services Tax (GST) across India.
Constitution and Formation:
• Formed on 12th September 2016.
• Constituted under Article 279A inserted by the 101st Constitutional
Amendment Act, 2016.
• It is a federal body representing both the Central and State
Governments.
Member Representation
Composition
Chairperson Union Finance Minister (Ex-officio)
of GST Council:
Union Minister of State in charge of Revenue or Finance (Ex-
Members
officio)
Finance Ministers of all States and Union Territories with
State Members
legislatures
 E-Ledger
An E-Ledger is an electronic ledger maintained on the GST portal that records
all the transactions related to GST, including tax payments, input tax credit
(ITC), and refund claims. It replaces traditional manual ledgers with a digital
version for transparency and ease of compliance.

Types of E-Ledgers:
• Electronic Cash Ledger: Records all cash deposits made by the taxpayer for
GST payments.
• Electronic Credit Ledger: Records the Input Tax Credit (ITC) available to the
taxpayer.
• Electronic Liability Ledger: Tracks tax liabilities including output tax and
interest payable.
Q. Define GST. Explain its salient features and benefits.
Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-
based indirect tax that is levied on every value addition of goods and services.
It replaced multiple indirect taxes like VAT, Service Tax, Excise Duty, etc., and
aims to unify the entire country into a single common market.
 Q. Define GST. Explain its salient features and benefits.

Feature Explanation
Comprehensive Tax GST subsumes almost all indirect taxes like excise, VAT, service tax, etc.
Tax is collected at the place where goods or services are consumed, not where
Destination-Based Tax
they are produced.
GST is levied both by the Central and State Governments (CGST and SGST) on
Dual GST Structure
intra-state supplies, and IGST on inter-state supplies.
GST is charged at every stage of the supply chain from manufacturer to consumer,
Multi-Stage Taxation
but with credit for taxes paid at previous stages (input tax credit).
A common tax rate across all states and union territories for the same goods or
Uniform Tax Rate
services.
Mechanism to avoid cascading effect of taxes by allowing credit for taxes paid on
Input Tax Credit (ITC)
inputs.
Common return filing and standardized procedures simplify tax compliance for
Simple Compliance
businesses.
Technology Driven GST operations and compliances are done online via the GST Network (GSTN).
 Q. Define GST. Explain its salient features and benefits.
Benefit Explanation
Avoids tax on tax by allowing input tax credit throughout
Elimination of Cascading Tax
the supply chain.
Creates one national market by removing state barriers
Unified Indian Market
and multiple taxes.
Simplifies the tax structure and compliance, reducing
Ease of Doing Business
business costs.
Expands the tax base, reduces evasion, and increases
Increase in Revenue
government revenue.
Zero-rated GST on exports makes Indian goods more
Promotes Export Competitiveness
competitive globally.
Online system reduces corruption and enhances
Transparency and Accountability
transparency in tax collection.
Encourages formalization of the economy and investment
Boost to Manufacturing and Economy
in manufacturing.
Q. Discuss the taxes subsumed under GST. Highlight the
key concepts introduced with GST.
GST is a comprehensive indirect tax that has replaced multiple central and state taxes to
create a single unified tax system across India. The following taxes have been subsumed
under GST:
1. Central Taxes Subsumed: 2. State Taxes Subsumed:
• Value Added Tax (VAT) / Sales Tax
• Central Excise Duty • Central Sales Tax (CST)
• Additional Excise Duty • Entertainment Tax (except those levied by local
• Service Tax bodies)
• Luxury Tax
• Additional Customs Duty (Countervailing Duty) • Entry Tax (all forms)
• Special Additional Duty of Customs (SAD) • Purchase Tax
• Central Surcharges and Cesses related to supply • Octroi and Local Body Tax
• Taxes on advertisements
of goods and services • State Surcharges and Cesses related to supply
of goods and services
 Key Concepts Introduced with GST
Concept Explanation
GST is administered both by the Central Government (CGST) and State Governments (SGST) on intra-state
Dual GST Structure supplies; IGST is applied on inter-state supplies.
Input Tax Credit (ITC) Allows businesses to claim credit for taxes paid on inputs (goods or services), preventing cascading taxes.
Determines the state/UT where the supply is considered to take place for taxation purposes, crucial for
Place of Supply deciding CGST, SGST, or IGST applicability.
Composition Scheme Simplified scheme for small taxpayers to pay tax at a fixed rate on turnover without claiming ITC.
Reverse Charge Mechanism Liability to pay tax is shifted from the supplier to the recipient in specified cases.
E-Way Bill Electronic way bill system for tracking movement of goods to prevent tax evasion during transport.
Defines when the supply is considered to be made, which is important for determining the due date for tax
Time of Supply payment.
GST is levied on the supply of goods and/or services. Supply includes sale, transfer, barter, lease, or
Taxable Event disposal.
GST Council Constitutional body responsible for making recommendations on GST rates, exemptions, and policies.
Harmonized System of
Standardized codes for classification of goods to ensure uniform taxation.
Nomenclature (HSN) Codes
Reverse Charge Mechanism where recipient pays tax instead of supplier in certain notified cases.

Threshold Limits Exemption limits based on turnover under which small taxpayers are not required to register or pay GST.
Q. Explain the dual GST model in India. How does it function in
intra-state and inter-state transactions?
Under the Dual GST model, GST is levied simultaneously by both:
• The Central Government: Central GST (CGST)
• The State Government (or Union Territory): State GST (SGST) or Union
Territory GST (UTGST)
In the case of inter-state transactions, a single tax called Integrated GST
(IGST) is levied by the Central Government.
Types of GST Components
Type Levied By Applicable On
CGST Central Government Intra-state supply of goods/services
SGST State Government Intra-state supply of goods/services
UTGST Union Territory Intra-UT supply (in place of SGST)
IGST Central Government Inter-state supply and imports/exports
 Q. Explain the dual GST model in India. How does it function in
intra-state and inter-state transactions?
Functioning of Dual GST Model Inter-State Supply (From one state to
Intra-State Supply (Within the same state): another):
When goods/services are sold within the same When goods/services are sold from one
state: state to another:
• IGST is levied and collected by the
• CGST is collected by the Central
Central Government
Government • The receiving state gets its share from
• SGST is collected by the State Government the Centre.
❌ Example: ❌ Example:
If a product is sold in Delhi for ₹1,000 with 18% A supplier in Maharashtra sells goods to a
GST: buyer in Gujarat for ₹1,000 at 18% GST:
• CGST = 9% (₹90) • IGST = 18% (₹180)
• SGST = 9% (₹90) The buyer pays ₹1,180. The Centre collects
₹180 and later distributes the SGST share to
The buyer pays ₹1,180 and the amount is split
Gujarat.
between Centre and State.
Q. Explain the dual GST model in India. How does it function in
intra-state and inter-state transactions?
Key Features of Dual GST Model
Feature Description

Dual Levy Both Centre and State levy GST simultaneously.

Centre shares IGST with states in inter-state

Revenue Sharing
transactions.
Credit available across CGST/SGST/IGST under
Seamless Input Tax Credit (ITC)
rules.
Ensures financial autonomy of both Centre and
Federal Balance
States.

Simplified Structure Replaces multiple overlapping indirect taxes.

Q. Who is required to register under GST? Describe the registration
procedure and threshold limits.
Under the Goods and Services Tax (GST) Act, the following persons are
mandatorily required to obtain GST registration:
Mandatory Registration (Irrespective of Turnover):
Category Description
Persons making inter-state taxable supply of goods (except some exemptions for
Inter-State Supplier
services).
Casual Taxable Person Occasional suppliers not having a fixed place of business.

Non-Resident Taxable Person Persons residing outside India supplying goods/services in India.

E-Commerce Operator Entities like Amazon, Flipkart, etc., facilitating online sales.
Persons Supplying via E-
Sellers supplying goods/services through e-commerce platforms.
commerce
Reverse Charge Mechanism Persons liable to pay tax under RCM.
Input Service Distributor (ISD) Offices distributing credit of GST paid on input services.

TDS/TCS Deductors Government departments or agencies deducting TDS/TCS under GST.

 Q. Who is required to register under GST? Describe the registration
procedure and threshold limits.
Threshold Limits for GST Registration

Threshold for Threshold for

Type of Supply State/UT
Goods Services
Normal Category
All major states ₹40 Lakhs ₹20 Lakhs
States
Special Category
States (like NE states,
Uttarakhand, As notified ₹20 Lakhs ₹10 Lakhs
Himachal Pradesh,
etc.)
👉 Note: Threshold limits may vary based on type of business and notification by the government.
Q. Who is required to register under GST? Describe the registration
procedure and threshold limits.
Documents Required for GST Registration
• PAN Card of the business or applicant
• Aadhaar Card
• Proof of business address
• Bank account details
• Digital Signature (for companies/LLPs)
• Passport-size photograph
• Business constitution proof (e.g.,
partnership deed, incorporation certificate)
Q. What is the Composition Scheme under GST? Discuss its
eligibility criteria, benefits, and limitations.
The Composition Scheme under GST is a simplified tax scheme introduced
for small taxpayers to reduce their compliance burden. Instead of charging
GST at standard rates, businesses under this scheme pay tax at a fixed
percentage of turnover.
Objective of the Scheme:
• To help small businesses by:
• Reducing tax compliance
• Simplifying return filing
• Allowing easier maintenance of records
Q. What is the Composition Scheme under GST? Discuss its
eligibility criteria, benefits, and limitations.
Eligibility Criteria for Composition Scheme:
Criteria Details
Aggregate turnover up to ₹1.5 crore (₹75 lakhs for
Turnover Limit
North Eastern and hill states).
Type of Dealer Only intra-state suppliers of goods and/or services.
Allowed if turnover is up to ₹50 lakhs (under
Service Providers
Composition for Services).
No Inter-State Supply Cannot supply goods outside the state.
Cannot supply through e-commerce platforms like
No E-commerce
Amazon/Flipkart.
Not Manufacturer of Notified Certain manufacturers (like ice cream, pan masala,
Goods tobacco) are excluded.
Q. What is the Composition Scheme under GST? Discuss its
eligibility criteria, benefits, and limitations.
Tax Rates Under Composition Scheme:

Type of Business GST Rate

Traders/Manufacturers 1% (0.5% CGST + 0.5% SGST)
Restaurants (not serving alcohol) 5% (2.5% CGST + 2.5% SGST)
Service Providers (Optional
6% (3% CGST + 3% SGST)
Scheme)
Q. What is the Composition Scheme under GST? Discuss its
eligibility criteria, benefits, and limitations.
Benefits of Composition Scheme:
• Lower Tax Rate
• Reduced Compliance (Quarterly returns, no need for invoice-
wise details)
• Simplified Record Keeping
• Easier Business Operations for small businesses
Limitations of Composition Scheme:
Limitation Description
❌ No Inter-State Supply Cannot make inter-state outward supplies.
❌ No Input Tax Credit (ITC) Not allowed to claim ITC on purchases.
❌ Not for E-commerce Sellers Cannot sell through online platforms.
Cannot issue a tax invoice or collect GST
❌ Cannot Collect GST
from customers.
❌ Limited to Small Businesses Threshold limits restrict growing firms.
Q. Differentiate between composite supply and mixed supply. Provide suitable examples.

Basis Composite Supply Mixed Supply

A combination of two or more
A combination of two or more individual
goods/services that are naturally bundled
Meaning goods/services that are not naturally bundled
and supplied together in the normal course
and are supplied together for a single price.
of business.
Tax Rate The tax rate of the principal supply is applied The highest tax rate among the items in the
Applicability to the entire supply. package is applied to the entire supply.
Nature of Naturally bundled – the items are usually Artificially bundled – the items can be sold
Bundling sold together. separately.
- Supply of a mobile phone with charger and - Gift pack containing chocolates, juice, and
earphones (main supply: mobile phone) - Air toys sold together at one price during Diwali. -
Example
travel with in-flight meals (main supply: air Combo of shampoo, soap, and face cream
travel) offered at a discount.
GST is charged as per the main/principal GST is charged as per the item with the highest
GST Implication
item. GST rate in the bundle.
Q. Explain the Input Tax Credit mechanism. What are the conditions for availing ITC?
Input Tax Credit (ITC) means claiming the credit of GST paid on purchase of goods or services
that are used for further supply or business purposes.
In simple terms, it helps to avoid double taxation by allowing businesses to deduct the tax
they’ve already paid on purchases from the tax they have to pay on sales.

How ITC Mechanism Works:

Tax on Sales (Outward Supply) – Tax on Purchases (Inward Supply) = GST Payable
🔹 Example:
 Tax on sales = ₹10,000
 Tax paid on purchases = ₹6,000
 Final GST payable = ₹10,000 – ₹6,000 = ₹4,000
The ₹6,000 is claimed as Input Tax Credit.
Q. Explain the Input Tax Credit mechanism. What are the conditions for availing ITC?
Conditions for Availing ITC:
As per Section 16 of the CGST Act, the following conditions must be fulfilled:
Condition Explanation
You must have a valid tax invoice or debit note issued by a registered
1. Possession of Tax Invoice
supplier.

2. Receipt of Goods or Services You must have actually received the goods or services.

3. Tax Paid to Government The supplier must have paid the tax to the government.

4. Filing of Return (GSTR-3B) You must have filed your GST returns (Form GSTR-3B).

5. Matching in GSTR-2B ITC must be reflected in GSTR-2B (auto-generated purchase return).

6. Use for Business Purpose The goods/services must be used for business and not for personal use.

Payment must be made to the supplier within 180 days from the invoice
7. Payment to Supplier within 180 Days
date.
Q. Explain the Input Tax Credit mechanism. What are the conditions for availing ITC?
Blocked Credit (Where ITC is Not Allowed):

Type of Expense Reason

Motor vehicles (except certain Not used for transport or commercial
conditions) purposes.
Personal use items Not related to business.
Free samples and gifts Not used for taxable supply.
Works contract services for
Not eligible in most cases.
construction
Q. Differentiate between a tax invoice and a bill of supply. What are their contents?
Difference Between Tax Invoice and Bill of Supply

Basis Tax Invoice Bill of Supply

A document issued when supplying
A document issued by a registered dealer
Meaning exempted goods/services or by
when supplying taxable goods/services.
composition dealers.
When the supply is exempt from GST or
When Issued When the supply is taxable under GST.
by a Composition Scheme dealer.

GST Charged GST is charged and shown separately. No GST is charged.

Eligible for ITC Buyer can claim Input Tax Credit. Buyer cannot claim Input Tax Credit.

Regular registered dealers supplying taxable Composition dealers or dealers supplying

Who Issues
goods/services. exempted goods/services.
Q. Differentiate between a tax invoice and a bill of supply. What are their contents?
Contents of a Tax Invoice: Contents of a Bill of Supply:
As per Rule 46 of CGST Rules, a tax invoice must contain
the following: As per Rule 49 of CGST Rules, a bill of supply
• Supplier’s name, address, and GSTIN must contain:
• Invoice number (unique for each year) • Supplier’s name, address, and GSTIN
• Date of issue • Bill of supply number
• Recipient’s name, address, and GSTIN (if • Date of issue
registered) • Recipient’s name, address, and GSTIN (if
• HSN/SAC code of goods/services registered)
• Description of goods/services • HSN/SAC code of goods/services
• Quantity and unit (for goods) • Description of goods/services
• Total value of supply • Value of supply
• Taxable value (after discount) • Declaration: "Composition taxable person,
• Rate and amount of CGST, SGST/UTGST, IGST not eligible to collect tax on supplies" (if
• Place of supply and name of state (if inter-state) issued by composition dealer)
• Signature or digital signature of the supplier • Signature or digital signature of supplier
Q. What is an e-way bill? Discuss its applicability, generation process, and exemptions.
An E-Way Bill (Electronic Way Bill) is a document generated online under the GST
system for tracking the movement of goods.
It is mandatory for transporting goods valued more than ₹50,000 (either per invoice or
cumulative) over inter-state or intra-state routes.

Applicability of E-Way Bill:

Condition Applicability
Movement of goods Inter-state and intra-state
Value of goods Exceeds ₹50,000 (in most cases)
Mode of transport Road, rail, air, or ship
- Supplies - Return of goods - Inward supply from an
Type of supplies
unregistered person
Q. What is an e-way bill? Discuss its applicability, generation process, and exemptions.
An E-Way Bill (Electronic Way Bill) is a document generated online under the GST
system for tracking the movement of goods.
It is mandatory for transporting goods valued more than ₹50,000 (either per invoice or
cumulative) over inter-state or intra-state routes.
Who Must Generate the E-Way Bill?
Category Responsibility
Registered Supplier When goods are sent by the supplier
Registered Recipient If goods are received on their own transportation
If neither supplier nor recipient generates the e-way
Transporter
bill
If supplying to a registered person (recipient will
Unregistered Person
generate it)
Q. What is an e-way bill? Discuss its applicability, generation process, and exemptions.
An E-Way Bill (Electronic Way Bill) is a document generated online under the GST
system for tracking the movement of goods.
It is mandatory for transporting goods valued more than ₹50,000 (either per invoice or
cumulative) over inter-state or intra-state routes.
Exemptions from E-Way Bill:
No e-way bill is required in the following cases:
• Goods of value less than ₹50,000
• Transport of exempted goods (e.g., vegetables, milk)
• Non-motorized transport (handcart, bicycle, etc.)
• Customs movement (from port to ICD/CFS)
• Goods under Schedule III (not treated as supply)
• Transport within 10 km (intra-state, for business-to-
transporter)
Q. Explain the transitional provisions under GST for input tax credit. List the offences
under GST and the corresponding penalties.
When the Goods and Services Tax (GST) was implemented on 1st July 2017, businesses were
allowed to carry forward eligible input tax credits from the old tax regime (Excise, VAT, Service
Tax) to the new GST system. These are known as transitional provisions.
Provision Explanation
Credit reflected in the last return filed under old law (like Excise or VAT) could be carried
Carry forward of CENVAT/VAT Credit
forward in GST by filing TRAN-1 form.

Credit on goods held in stock (and inputs in process/finished goods) as on 30th June
Credit on Closing Stock
2017, was allowed if the duty was paid and invoices were available.

Unavailed Credit on Capital Goods Unclaimed credit of capital goods under old laws could be transitioned into GST.

Traders who were not registered under old law but became registered under GST could
Input Credit for Dealers not registered earlier
claim ITC on stock held as of 30th June 2017.

Businesses had to file TRAN-1 (for registered persons) and TRAN-2 (for unregistered
Declaration Forms (TRAN-1 & TRAN-2)
persons who later registered) within a prescribed time.
Q. Explain the transitional provisions under GST for input tax credit. List the offences
under GST and the corresponding penalties.
Offences and Penalties under GST:
Under the GST law, various actions are considered offences, and strict penalties are prescribed
for them.
List of Major Offences under GST:
No
Offence
.
1 Supplying goods/services without issuing an invoice or issuing a false invoice
2 Issuing invoice without actual supply (fake invoice)
3 Collecting GST but not depositing it with the government
4 Availing or utilizing ITC fraudulently
5 Failure to register under GST when required
6 Falsifying financial records or documents
7 Obstructing an officer from doing his duties
8 Transporting goods without proper documents
9 Not filing returns for more than 3 consecutive periods
10. Tampering or destroying evidence
Q. Explain the transitional provisions under GST for input tax credit. List the offences
under GST and the corresponding penalties.
Penalties under GST:
Type of Offence Penalty
₹10,000 or the amount of tax involved,
General Offence (Section 122)
whichever is higher
₹100 per day per Act (CGST + SGST =
Failure to File Returns (Late Fee)
₹200/day) up to a maximum of ₹5,000
100% of wrongly availed ITC or ₹10,000,
Wrong ITC claim
whichever is higher
Penalty up to ₹1 lakh and imprisonment
Fraudulent Activities
depending on amount of tax evasion
No penalty, only interest or late fees may
Minor Errors (No Fraud)
apply
Minimum penalty of ₹10,000 or tax payable –
Transport without E-way Bill
whichever is higher