By

Karuppasamy .A
Gokula Varshan D.K.
 OVERVIEW OF LATEST DEVELOPMENTS
IN INDIRECT TAX LAW RELATING TO GST

 On 01,02.2021, Finance Bill was presented by Honorable Finance

Minister Smt. Nirmala Sitharaman.
 The 51st GST Council meeting took place on Wednesday, 2nd August
2023 via video conferencing. The Council discussed and approved the
rules to implement the 28% GST levy on casinos, race courses and
online gaming.
 The 52nd GST Council meeting took place at Sushma Swaraj Bhawan,
New Delhi on 7th October 2023 and was chaired by the Union FM
Nirmala Sitharaman.
 CHANGES IN GST LAW

1) Section 7 of the CGST Act, 2017: A new clause (aa)in sub-section (1)
inserted retrospectively with effect from 01.07.2017 to ensure levy of
tax on activities or transactions involving supply of goods or services
by any person, other than an individual, to its members or constituents
or vice-versa, for cash, deferred payment or other valuable
consideration.
2) Section 16 of the CGST Act, 2017: A new clause (aa) to sub-section (2)
of the section 16 of the CGST Act has been inserted to provide that
input tax credit on invoice or debit note may be availed only when the
details of such invoice or debit note have been furnished by the
supplier in the statement of outward supplies.
 CHANGES IN GST LAW

3) Section 35 of the CGST Act, 2017: Section 35 (5)is being omitted to

remove the mandatory provision of getting annual accounts audited.
4) Section 44 of the CGST Act, 2017: Section 44substituted to remove the
mandatory requirements of furnishing of reconciliation statement duly
audited by professional and it provide provision of annual return on
self-certification basis.
5) Section 50 of the CGST Act, 2017: The section retrospectively to
charge interest on net cash liability from 01.07.2017.
6) Section 74 of the CGST Act, 2017: Section 74 is being amended to
clear that seizure and confiscation of goods and conveyances in transit
a separate proceeding from recovery of tax.
 CHANGES IN GST LAW

7. Section 75 of the CGST Act, 2017: An explanation to sub-section (12) of

section 75 of the CGST Act is being inserted to clarify that "self assessed
tax" shall include the tax payable in respect of outward 32 supplies, the
details of which have been furnished under section 37. but not included in
the return furnished under section 39.
8. Section 83 of the CGST Act, 2017: It has been amended that provisional
attachment shall remain valid for the entire period starting from the initiation
of any proceeding under Chapter XII ,Chapter XTV or Chapter XV till the
expiry of a period of one year from the date of order made thereunder.
9. Section 129 of the CGST Act, 2017: This section is being amended to delink
the proceedings to detention, seizure and release of goods and transit, from
the proceedings under conveyances section 130 relating to confiscation of
goods or conveyances and levy of penalty.
 CHANGES IN GST LAW

10. Section 130 of the CGST Act. 2017: This section is being amended to
delink the proceedings of section relating to confiscation of goods or
conveyances and levy of penalty from proceedings under section129
relating to detention. seizure and release of goods and conveyances in
transit.
11. Section 151 of the CGST Act, 2017: The section empower the
jurisdictional is being substituted commissioner to call for information
from any person relating to any matter dealt with in connection with
the Act.
12. Section 152 of the CGST Act, 2017: The section is being amended as
to provide no information obtained under sections and 151 shall be
used150 for the purposes of any proceedings under the Act person
without giving an opportunity of being heard to the concerned persons.
 CHANGES IN GST LAW

13. Section 168 of the CGST Act, 2017: The section is being amended to
enable jurisdictional commissioner to exercise powers under section
151 to call for information.
14. The section 7 of the CGST Act, a paragraph 7 of Schedule II to the
CGST Act is being omitted retrospectively, with effect from
the 1st July, 2017.
15. Section 16 of the IGST Act, 2017: (i) Zero rate the supply of goods or
services to a Special Economic Zone developer or a Special Economic
Zone unit only when the said supply is for authorized operations; (ii)
Restrict the zero-rated supply on payment of integrated tax only to a
notified class of taxpayers or notified supplies of goods or services;
and (iii) Link the foreign exchange remittance incase of export of
goods with refund.
 AN INTRODUCTION TO GST

• Introduction of the Value Added Tax (VAT) at the Central and the State
level has been considered to be a major step can important breakthrough
in the sphere of indirect tax reforms in India.

• If the VAT is a major improvement over the pre-existing central excise

duty at the national level and the sales tax system at the State level, then
the Goods and Services Tax will indeed be a further significant
improvement - the next logical step towards a comprehensive indirect
tax reforms in the country.
 AN INTRODUCTION TO GST

• Goods and Services Tax is a part of the proposed tax forms that center
round evolving an efficient and harmonized consumption tax system in
the country.
• Presently, there are parallel systems of indirect taxation at central and
state levels.
• Each of the systems needs tor reformed to eventually harmonize them.
In the Union budget for the year 2006-2007, Finance Minister proposed
a India should move towards national level Goods and services Tax that
should be shared between the Centre and States. He proposed to set
April 1, 2010 as the date for introducing GST.
 AN INTRODUCTION TO GST

• Goods and Services Tax (GST) is proposed to be a comprehensive

indirect tax levy on manufacture, sale and consumption of goods as well
as services at a national level.
• Integration of goods and services taxation would give India a world
class tax system and improve tax collections.
• Could end the long standing distortions of differential treatments of
manufacturing and service sector.
 AN INTRODUCTION TO GST

• Introduction of goods and services tax will lead to abolition of taxes

such as octroi, central sales tax, sales tax, entry tax, stamp duty, telecom
fees, turnover tax, tax on consumption or sale of electricity, taxes on
transportation of goods and services, and eliminate the cascading effects
of multiple layers of taxation.

• GST will facilitate seamless credit across the entire supply chain and
across all states under common tax base.
 CONSTITUTIONAL ASPECTS OF
GST

• Introduction of the GST required amendment in the constitution so as to

enable integration of the central duty including additional duties
of customs.
• State VAT and certain State Specific Taxes and Service Tax levied by the
Centre into a comprehensive Goods and Services Tax and to empower
both Centre and the States to levy and collect it.
• Consequently, Constitution (101"Amendment Act), 2016 (here in after
referred to as Constitution Amendment Act) was, passed. Power to levy
Goods & Services Tax (GST) has been conferred by Article 246A
through the 101 Constitution Amendment Act, which was promulgated
on 8h September, 2016.
 SIGNIFICANT PROVISIONS OF 101ST
CONSTITUTION AMENDMENT ACT

Significant
Provisions of
101
Constitution
Amendment Act

Other Important
Article 246(A) Article 269(A) Article 279(A) Amendments in
Existing Articles
 ARTICLE 246(A)

This is a new article inserted in the constitution.

It says that –
i) Notwithstanding anything contained in Articles246 and 254,
Parliament and subject to clause (2).the Legislature of every State,
have power to make laws with respects to Goods and Services Tax
imposed by the Union or by such State.

ii) ii) Parliament has exclusive power to make laws with respect to goods
and Services Tax where the supply of goods, or of services, or both
takes place in the course of inter-State trade or commerce.
 NOTABLE POINTS FROM ARTICLE
246A

i) Both Union and States in India now have "concurrent powers" to make
law with respect to Goods and Services.

ii) The intra-state trade now comes under the jurisdiction both Centre and
State; while inter-state trade and commerce is “ exclusively ” under
central government jurisdiction.
 ARTICLE 269A

i) Goods and Services Tax on supplies in the course of inter-state trade or

commerce shall be levied and collected by the Government of India and
such tax shall be apportioned between the Union and the States in the
manner as may be provided by Parliament bylaw on the
recommendations of the Goods and Services Tax Council.
ii) The amount apportioned to a State under clause(1) shall not form part of
the Consolidated Fund of India.
iii) Where an amount collected as tax levied under clause (1) has been used
for payment of the tax levied by a State under article 246A, such amount
shall not form part of the Consolidated Fund of India.
iv) Where amount collected as tax levied by an State under article 246A has
been used payment of the tax levied under clause (1),such amount shall
not form part of the Consolidated Fund of the State.
 ARTICLE 279-A

This article provides for constitution of a GST council by president within

sixty-days from this act coming into force. The GST council will constitute
the following members:

i) Union Finance Minister as Chairman of the Council.

ii) Union Minister of State in charge of Revenue or Finance.

iii) One nominated member from each state who is in charge of Finance or
Taxation.
 ARTICLE 279-A

The GST council will be empowered to take decisions on the following

i. The taxes, cesses and surcharges levied by the Union, the States and the
Local bodies which may be subsumed in the Goods and Services Tax.
ii. The Goods and Services that may be subjected to, or exempted from, the
Goods and Services Tax.
iii. Model Goods and Services Tax Laws, principles of levy, apportionment
of Integrated Goods and Services Tax and the principles that govern the
place of supply.
iv. The threshold limit of turnover below which exempted from Goods and
Services may Goods and Services Tax.
v. The rates including floor rates with bands goods and services tax.
 OTHER IMPORTANT AMENDMENTS
IN EXISTING ARTICLES

The other important amendments in existing articles are as follows.

i. The residuary power of legislation of Parliament under Article 248 is
now subject article 246A.
ii. Article 249 has been changed so that if 2/3majority resolution is
passed by Rajya Sabha, the Parliament will have powers to make
necessary laws with respect to GST in national interest.
iii. Article 250 has been amended so that parliament will have powers to
make laws related to GST during emergency period.
iv. Article 268 has been amended so that excise duty on medicinal and
toilet preparation will be omitted from the state list and will be
subsumed in GST.
 MEANING OF GOODS AND
SERVICE TAX (GST)

• The full form of GST is Goods and Services Tax.

• Goods and Services Tax or GST is actually an indirect tax which is applied
when a customer buys any goods or uses any service.

• This tax is an individual tax for the whole country.

• This tax aims to make India a united market.

• The main theme of this tax is to apply a single tax on the supply of goods
and services. Goods and services tax will remove different layers of
taxation which are purchase tax, VAT, entertainment tax, etc.
 FEATURES OF GST

1) GST would be applicable on "supply" of goods or services as against the

present concept of tax on the manufacture of goods or on sale of goods or
on provision of services.

2) GST would be based on the principle of destination based consumption

taxation as against the present principle of origin based taxation.

3) It would be a dual GST with the Centre and the States simultaneously
levying it on a common base. The GST to be levied by the Centre would
be called Central GST (CGST) and that to be levied by the States
(including union territories with legislature) would be called State GST
(SGST).Union territories without legislature would levy Union Territory
GST (UTGST).
 FEATURES OF GST

4. An Integrated GST (IGST) would be levied on inter-state supply

(including stock transfers) of goods or services. This would be collected
by the Centre so that the credit chain is not disrupted.

5. Import of goods would be treated as inter-state supplies and would be

subject to IGST in addition to the applicable customs duties.

6. Import of services would be treated as inter-state supplies and would be

subject to IGST.

7. CGST. SGST/UTGST and IGST would be levied at rates to be mutually

agreed upon by the Centre and the States under the aegis of the GSTC.
 OBJECTIVES OF GST

1) Ensuring that the cascading effect of tax on tax will be eliminated.

2) Improving the competitiveness of the original goods and services,
thereby improving the GDP rate too.
3) Ensuring the availability of input credit across the value chain.
4) Reducing the complications in tax administration and compliance.
5) Making a unified law involving all the tax bases, laws and
administration procedures across the country.
6) Decreasing the unhealthy competition among the states due to taxes
and revenues.
7) Reducing the tax slab rates to avoid further clarification issues.
 RATES OF GST IN INDIA

The GST rates in India in 2023 are categorized into four different GST
slabs: 5%, 12%, 18%, and 28%.
 BENEFITS OF GST

Benefits to the Economy:

i) Creation of a unified common market.

ii) Increase in manufacturing processes.
iii) Enhancement of exports and investments.
iv) Generation of more jobs through enhanced economic activity.
 BENEFITS OF GST

Benefits to Citizens:

i) Simpler tax system.

ii) Reduction in prices of goods and services due to elimination of
cascading
iii) Uniform prices throughout the country.
iv) Transparency in taxation system.
v) Increase in employment opportunities.
vi) Increased competition between manufacturers and businesses will
benefit consumers.
 BENEFITS OF GST

Benefits to Trade/Industry:

i) Reduction in multiplicity of taxes.

ii) Mitigation of cascading/double taxation.
iii) More efficient neutralization of taxes especially for exports.
iv) Development of common national market.
v) Simpler Tax regime-fewer rates and exemptions.
vi) Uniform procedures for registration, filing of returns, payment of
taxes, and tax refunds.
 BENEFITS OF GST

Benefits to Central/State Government:

i) A unified common national market to boost Foreign Investment and

“Make in India” campaign.
ii) Boost to export/manufacturing activity, generation of more
employment, leading to reduced poverty and increased GDP growth.
iii) Improving the overall investment climate in the a country which will
benefit the development of states.
iv) Uniform SGST and IGST rates to reduce the incentive for tax evasion.
v) Reduction in compliance costs as no requirement of multiple record-
keeping.
 LIMITATIONS OF GST

Higher Tax Burden for Manufacturing SMEs:

Small businesses in the manufacturing sector will bear most of the impact of GST
implementation. Under the existing excise laws only manufacturing business with a
turnover more than 1.50 crore have to pay excise duty. However, under GST there
the turnover limit has been reduced to 20 lac thus increasing the tax burden for
many manufacturing SMEs.

Increase in Operating Costs:

Most small businesses do not employ professionals and prefer to pay taxes and file
returns on their own to save costs. For GST, though, as it is a completely new tax
system they will require professional assistance. While this will benefit the
professionals, so the small businesses will have to bear the additional costs of
hiring experts. Also, businesses will need to train their employees in GST
compliance increasing their overhead expenses.
 LIMITATIONS OF GST

Change in Business Software:

Most business use accounting software or ERPs for filing tax returns which
have excise, VAT, and service tax which already incorporated in them. The
change to GST will require them to change their ERPs too leading to
increased costs of purchasing new software and training employees.

Increase in Taxes will Increase Prices:

Currently some sectors like the textile industry are exempted from taxes or
pay low tax. GST has only 4 proposed tax rates of 5%, 12%. 18%, and
28%. Thus, for many sectors the tax burden will increase which in return
will increase the price of the final goods.
 LIMITATIONS OF GST

Registration in Multiple States:

GST requires businesses to register in all the states they are operating in.
This will increase the burden of compliances.

Problems in E-Commerce:

Nowadays, many SMEs operate through their own online shopping

Websites or through third party websites to sell to different parts of India.
 STRUCTURE OF GST

India has adopted a Dual GST model in view of the -federal structure of the
country Consequently, Centre and States simultaneously levy GST on
taxable supply of goods or services or both which, takes place within a
State or Union Territory.

There are three well-known types/components of GST models in India:

1) GST at Union Government Level only (Central GST)

2) GST at State Government Level only (State GST)
3) GST at both, Union and State Government Levels (Concurrent GST)
 THREE PRIME MODELS OF GST

Three Prime
Models of GST

Central GST State GST Dual GST

GST to be Levied by
GST to be Levied by GST to be Levied by
the Centre the Centre and the
the States
States Concurrently
 CGST (CENTRAL GOODS AND
SERVICES TAX ACT, 2017)

Under CGST, both Central and State government combine their levels to
bring into existence a single unified taxation system at the center level,
with appropriate revenue sharing arrangement among them and leaving no
room or very little for tax levy by state government.

Features of CGST
1) CGST on supply of goods or services or both will be charged for
within the state transactions.
2) Tax revenue is meant for Central Government and tax rates will be
common all over India.
3) The expected rate of CGST is around 9%.
 SGST (STATE GOODS AND
SERVICES TAX ACT, 2017)

Under SGST, only States alone levy GST and the Centre withdraws power
to levy the tax completely on goods or services. This would significantly
enhances the revenue generating power of states and the centre offsets its
revenue loss by reducing its fiscal transfer benefit to the states or by
suitable revenue sharing arrangement if required. State GST increases the
compliance cost to business houses as it will have to comply with tax laws
of each state within same country and brings unhealthy competition among
the states.

Features of SGST
1) Tax revenue is meant for State Government and the tax rates will be
decided by each State.
2) The expected rate of SGST is around 9%.
 IGST(INTEGRATED GOODS AND
SERVICES TAX ACT, 2017)

The Integrated Goods and Services Tax Bill was introduced in Lok Sabha
on March 27, 2017. The Bill provides for the levy of the Integrated Goods
and Services Tax (IGST) by centre on inter-state supply of goods and
services.

Features of IGST
1) Inter-State supply of goods and services
2) Imports and exports, and
3) Supplies to and from special economic zones.
 UTGST (UNION TERRITORY GOODS
AND SERVICES TAX ACT, 2017)

A union territory is directly under the governance of the Certral

Government. This differentiates them from the states. which have their own
elected governments there are 7 union territories in India Currently,

1) Chandigarh
2) Lakshadweep
3) Daman and Diu
4) Dadra and Nagar Haveli
5) Andaman and Nicobar Islands
6) Delhi
7) Pondicherry
 BENEFITS OF DUAL GST

1) Simple and Transparent Tax: Dual GST is the best solution for
countries like India because it will reduce the number of taxes at
central and state level. This will also be easy to implement and create
accountability for.
2) Decreasing Tax Rate: Dual GST will also result in reduction in the
effective tax rates for many goods.
3) Removal of Cascading Effect of Taxes: The implementation of GST
will reduce the cascading effects of the present taxation system.
4) Simplified Tax Compliance: By reducing the transaction costs of
taxpayers, dual GST will bring about simplified tax compliance.
5) Increase in the Amount of Tax Collection: Better compliance and a
wider tax base will lead to increased tax collections.
 LEVY AND COLLECTION OF GST

Taxable event for GST is SUPPLY. Under GST, supply has been divided
into two categories:
1) Sale within the state (known as Intrastate Supply)
2) Sale from one State to another State (known as Interstate Supply)

Which type of GST will levied, it depends on type of supply, i e. whether

supply is an intrastate supply interstate supply.
3) In case of intrastate supply, there will be levied two taxes: CGST and
SGST- Section 9 of CGST ACT,2017.
4) In case of inter-state supply there will be levied only one tax: IGST
Section 5 of IGST Act, 2017.
 LEVY AND COLLECTION UNDER
CGST ACT, 2017 [SECTION 9]

1) Levy of Central Goods and Service Tax:

Subject to the provisions of sub-section (2), there shall be levied a tax
called the central goods and services tax on all intra-State supplies of goods
or services or both, except on the supply of alcoholic liquor for human
consumption. on the value determined under section 15 and at such rates,
not exceeding 20%., as may be notified by the Government on the
recommendations of the Council and collected in such manner as may be
prescribed and shall be paid by the taxable person
 LEVY AND COLLECTION UNDER
CGST ACT, 2017 [SECTION 9]

2. Central Tax on Petroleum Products to be Levied from the Date to be

Notified [Section 9(2)]: The central tax on the supply of petroleum crude,
high speed diesel, motor spirit (commonly known as petrol), natural gas
and aviation turbine fuel shall be levied with effect from such date as may
be notified by the Government on the recommendations of the Council.

3. Tax Payable on Reverse Charge Basis [Section9(3)]: The Government

may, on the recommendations of the Council, 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 of such goods or services
or both and all the provisions of this Act shall apply to such recipient as if
he is the person liable for paying the tax in relation to the supply of such
goods or services or both.
4) Tax Payable on Reverse Charge if the Supplies are made to a
Registered Person by Unregistered Person [Section 9(4)]:

The Government may, on the recommendations of the Council, by

notification, specify a class of registered persons who shall, in respect of
supply of specified categories of goods or services or both received from an
unregistered supplier, pay the taxon reverse charge basis as the recipient of
such supply of goods or services or both, and all the provisions of this Act
shall apply to such recipients if he is the person liable for paying the tax in
relation to such supply of goods or services or both.
 LEVY AND COLLECTION UNDER
IGST, ACT 2017 [SECTION 5]

The provisions under section 5 of the IGST Act are similar to section 9 of
CGST Act except:1) The word CGST has been substituted by IGST under
IGST Acta2) Under IGST Act, tax called integrated tax is to be levied on all
inter State supplies and on goods imported into India.3) Maximum rate
under section 5(1) of the IGST Act is 40% (i.e. 20%
CGST + 20% UTGST).
 REVERSE CHARGE MECHANISM (RCM)
ON INTER STATE TRANSACTIONS

• In case, service provider (Advocate, Director, Author is from out of

India), it will be import of service' and IGST will be payable under
Reverse Charge Mechanism(RCM).

• The confusion arises, where supplier of service is from different state in

India.

• Technically IGST is to be charged as in case of reverse charge, the

service recipient is only discharging the liability of supplier of service.
If the supplier of service was liable to pay tax, obviously he would have
paid IGST as both supplier and recipient are in different states.
 LEVY AND COLLECTION UNDER
UTGST ACT, 2017 [SECTION 7]

The provisions under section of the UTGST Act are similar to section 9 of
CGST Act except:

1) The word CGST has been substituted by the word UTGST under the
UTGST Act.

2) Under UTGST Act, tax called UT tax is be levied on all intra-State

supplies,

3) Maximum rate 7(1) of UTGST Act is 20%.