CGST & SGST Act 2017

• Under erstwhile taxation laws, Central Government levied taxes on, manufacture of certain
goods in the form of Central Excise duty, provision of certain services in the form of service
tax, inter-State sale of goods in the form of Central Sales tax.
• Similarly, the State Governments levied taxes on retail sales in the form of value added tax,
entry of goods in the State in the form of entry tax, luxury tax and purchase tax, etc.
Accordingly, there is multiplicity of taxes which are being levied on the same supply chain.
• Difficulties were being faced under erstwhile taxation laws.
• In view of such difficulties, all the above mentioned taxes are subsumed in a single tax called
the Goods and Services Tax which will be levied on supplies which includes goods and
services at each stage of supply chain starting from manufacture or import and till the last
retail level.
• So any tax which were levied by the Central Government or the State Governments on the
supply of goods or services has now been converged in goods and services tax, which is a
dual levy where the Central Government will levy and collect tax in the form of central goods
and services tax (CGST Act 2017) and the State Government will levy and collect tax in the
form of state goods and services tax (SGST Act 2017) on intra-State supply of goods or
services or both.
 Salient Features of CGST Act 2017

• The features of Central Goods and Services Tax Act, 2017, are as follows :
– to levy tax on all intra-State supplies of goods or services or both
– to broaden the base of the Input Tax Credit by making it available in respect of
taxes paid on supply of goods or services or both used or intended to be used in
the course or furtherance of business;
– to impose obligation on electronic commerce operators to collect tax at source, at
such rate not exceeding one per cent of the value of taxable supplies(net), out of
payments to suppliers supplying goods or services through their portals;
– to provide for self assessment of the taxes payable by the registered person;
– to provide for conduct of audit of registered persons in order to verify compliance
with the provisions of the Act;
– to provide for recovery of arrears of tax using various modes including detaining
and sale of goods, movable and immovable property of defaulting taxable person;
– to provide for powers of inspection, search, seizure and arrest to
the officers;
– to establish the Goods and Services Tax Appellate Tribunal by
the Central Government for hearing appeals against the orders
passed by the Appellate Authority or the Revisional Authority;
– to make provision for penalties for contravention of the
provisions of the proposed Legislation;
– to provide for an anti-profiteering clause in order to ensure that
business passes on the benefit of reduced tax incidence on
goods or services or both to the consumers; and
– to provide for elaborate transitional provisions for smooth
transition of existing taxpayers to goods and services tax regime.
 Taxonomy of CGST Law
• The CGST Act, 2017 comprises of 174 Sections in 21 Chapters
and three Schedules on supplies without consideration,
treatment of activities as to goods or services and activities
which shall be considered as neither goods or services.
• These Schedules are as under :
– Schedule I. Activities to be treated as supply even if made without
consideration
– Schedule II. Activities to be treated as supply of goods or supply of
services
– Schedule III. Activities or transactions which shall be treated
neither as a supply of goods nor a supply of services.
 State Goods and Services Tax (SGST)
• The SGST full form is State Goods and Services Tax. Like CGST and IGST,
SGST is also an element of GST. The State Goods and Service Tax Act 2017
looks after the Tax to be imposed by state. So, with the introduction of
SGST, the other indirect taxes levied by the state government in the
previous taxation system got subsumed under GST. Moreover, all the tax
collected under SGST remains within the hands of state governments.
• State Goods and Service Tax Act 2017 (SGST) is a tax levied only on Intra
State supplies of goods and services by the State government. Intra-state
supply is a nature of supply where the supplier’s location and the
recipient are in the same state. In this class of supply, the supplier
collects both CGST and SGST. The value received under CGST is deposited
with the Central government, whereas the tax collected under SGST is
submitted with the state government.
 Features of SGST

• Here are some of the significant SGST features :

– SGST is applicable when gathered by the states on all goods and
services provided for consideration.
– The tax accumulated is deposited into the accounts of the
particular state.
– Each state has its separate SGST act under its State Goods and
Service Tax Department. However, the basic features of the GST
law for all the states, like the charges, valuation, taxable event,
measure, classification, etc., would remain the same across the
respective act of each state.
• All States passed their respective SGST Acts by 30th June
2017.