GST PDF

CS EXECUTIVE CA ROHIT GAMBHIR
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Jai Saraswati Maa
Dedicated to
My Family
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INDEX
Lesson Description Page No

 Introduction to Tax 1
 Indirect Tax Structure (Pre-GST) 2
st
 The 101 Constitution Amendment Act, 2016 3
1. Overview of GST 11
2. GST International Scenario 29
 Models of GST
3. GST in India 35
 History of GST
 GST Council
 Framework of GST
4. Introduction to CGST Act, 2017 47
 Important Definitions
 Levy of GST
 Liability under GST
5. Supply 63
 Characteristic of Supply
 Schedule I under CGST
 Schedule II under CGST
 Activities which are not Supply
6. Composite and Mixed Supply 89
7. Composition levy 95
 Meaning
 Condition & Restriction
8. Time of Supply 103
 Time of Supply of Goods
 Time of Supply of Services
 Time of Supply in case of change in rate of
tax
9. Value of Supply 125
10. Input Tax Credit 135
 Meaning
 Input Tax Credit Restrictions
11. Job Work 149
 Meaning
 Input Credit in case of Job Work
12. Accounts and Records 157
13. Tax Invoice, Credit and Debit Notes 163
 Invoice
 Credit Note & Debit note
14. Registration 171
 Persons liable to register
 Persons not liable to register
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15. Returns 181

16. Payment 187
 Utilisation of ITC
17. Refunds 199
18. Assessment 205
19. Audit 213
20. Inspection, Search, Seizure and Arrest 217
21. Introduction to IGST Act, 2017 233
 Important definitions
22. Nature of Supply 239
 Inter State Supply
 Intra State Supply
 Supplies in Territorial Waters
23. Place of Supply 247
 Place of Supply of Goods
 Place of Supply of Services
24. Union Territory Goods and Services Tax Act, 2017 283
25. Introduction to GST (Compensation to States) Act, 2017 329
“god spent a long time crafting you and god

doesn't make worthless things
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INTRODUCTION to TAX
1. What is Tax??
1. Tax is a compulsory legal extortion of money by the government under the law.
2. Classification of Tax??
2. There are two categories of taxes:
i. Direct taxes
ii. Indirect taxes
Direct and indirect taxes include all the different types of taxes levied by the government. Both direct and
indirect taxes are critical components of governmental revenue and consequently to the economy.
Let us understand the differences between the two:
Direct tax versus Indirect taxes
SN Particulars Direct Tax Indirect tax

1 Meaning When When
(i) liability to pay a tax to the GOVT & (i) liability to pay a tax to the GOVT is on
(ii) the burden of that tax one person &
(ii) the burden of that tax falls on some
other person,
falls on the same person, the tax is called the tax is called an Indirect Tax.
a Direct tax.
2 Nature: Direct taxes are progressive in nature i.e. Indirect taxes are regressive in nature i.e.
Progressive it increases with rise in income and as the amount of tax increases the
or decreases with fall in income. demand for the goods and services
Regressive decreases and vice versa.
It is collected more from the rich and less It is levied on every person equally
from the poor people i.e. based on the whether he is rich or poor i.e. irrespective
ability to pay the tax of being rich or poor.
3 Examples  Income Tax  Excise Duty

(Pre-GST  Service Tax
era)  Central Sales Tax (CST)
 Value Added Tax (VAT), etc.
3 Examples  Income Tax  Goods & Service Tax

(Post-GST
era)
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The 101st Constitution Amendment Act, 2016
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1. The Overview
-CA ROHIT GAMBHIR

-[CA, B.COM (H)]
NOTES:
1) More than 140 countries across the globe has already adopted GST.
2) France happens to be the first country which has implemented GST in

1954.
3) Malaysia is the most recent country to join the bandwagon (1 st Aril

2015).
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29th Mar 2017 12th April 2017

28th Feb 2006 6th May 2015 8th Sept 2016 The CGST Bill 2017 , IGST The CGST Bill 2017, IGST Bill
FM (PC) in his budget Constitution (122nd The Bill received the assent of Bill 2017, UTGST Bill, 2017 2017, UTGST Bill, 2017 and
speech sets 1st April Amendment) Bill, President & become and GST (Compensation to GST (Compensation to
2010 as the deadline for 2014 was PASSED in Constitution (101st States) Bill, 2017 PASSED in States) Bill, 2017 received
GST implementation Lok Sabha Amendment) Act, 2016 Lok Sabha the assent of the President.
INDIA
27th Mar 2017 6th April 2017
GSTfied
19th Dec 2014 3rd Aug 2016
16th July 2004 Constitution (122nd Constitution (122nd
The CGST Bill 2017 , IGST The CGST Bill 2017 , IGST (1st July 2017)
Dr. Kelkar’s Task Bill 2017, UTGST Bill, 2017 Bill 2017, UTGST Bill, 2017
Amendment) Bill, 2014 Amendment) Bill,
force proposed GST and GST (Compensation to and GST (Compensation to
was INTRODUCED in 2014 was PASSED in
on national basis. States) Bill, 2017 States) Bill, 2017 PASSED in
Lok Sabha Rajya Sabha
INTRODUCED in Lok Sabha Rajya Sabha
10th Nov 2009

EC released its First
Discussion Paper (FDP)
on GST
There would be 35 GST laws in

India In GST regime, there would
be:
 1 CGST law
 31 SGST law for each of the
states including two UTs
 1 UTGST Law,
 1 IGST law and
 1 Compensation to States law
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Particulars Excise Duty Sales Tax Service Custom

VAT* CST Tax Duty
Taxable Manufacture Intra- Inter-state Provision I/E of
Event? state sales of Service Goods
sales
Levied by? CG SG CG but CG CG
collected &
retained by
SG (O)
ROT = 10%
OT GST = 13
OT GST = 15
ITC = (XX)
ITC = (13)
NET GST = 13
NET GST =2
Cost = 100 Cost = 130

Profit = 30 Profit = 20
Total = 130 Total = 150
GST = 13 GST = 15
Pay = 143 Pay = 165

Mr.X Mr.Y Mr. Z
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ROT = 10%
OT GST = 13
OT GST = 16.3
ITC = (XX)
ITC = (XX)
NET GST = 13
NET GST =16.3
Cost = 100 Cost = 143

GST = 13 GST = 16.3
Pay = 143 Pay = 179.3

Mr.X Mr.Y Mr. Z
What is GST??
 GST is a single tax on the supply of goods and services, right
from the manufacturer to the consumer.
 Credits of input taxes paid at each stage will be available in

the subsequent stage of value addition, which makes GST
essentially a tax only on value addition at each stage.
 The final consumer will thus bear only the GST charged by the
last dealer in the supply chain, with setoff benefits at all the
previous stages.
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1) Cascading Effect:
 The earlier law faciltates the integration of excise duty and service
tax as the set-off of one against another was allowed.
 However, there is NO integration of VAT with excise duty and service

tax as the set-off of VAT against the liability of Service Tax and Excise
Duty was not allowed & vice versa.
Particulars Output Tax Liability ITC available or Cascading?

Not
Manufacture Excise Duty ED- Yes No
ST- Yes
VAT VAT – Yes
Trader VAT ED- No Yes

ST- No
VAT – Yes
Service Provider ST ED- Yes Yes

ST- Yes
VAT – No
GOODS
[ED = 10
VAT = 5]
GOODS
[ED = 100 - 10 -8 = 82
VAT= 30 – 5 = 25]
Manufacturer
SERVICES
[PRE-GST] No Cascading
[ST = 8]
GOODS
[GST = 15] GOODS
[GST = 130 – 23 = 107]
Manufacturer
[GST]
SERVICES No Cascading
[GST = 8]
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GOODS
[ED = 10
VAT = 5]
GOODS
VAT= 30 – 5 = 25]
Trader
SERVICES
[PRE-GST] Cascading
[ST = 8]
GOODS
[GST = 15] GOODS
[GST = 30 – 23 = 7]
Trader
[GST]
SERVICES No Cascading
[GST = 8]
GOODS
[ED = 10
VAT = 5]
SERVICE
ST = 30 – 10- 8 = 12]
Service Provider
SERVICES
[PRE-GST] Cascading
[ST = 8]
GOODS
[GST = 15] SERVICE
[GST = 30 – 23 = 7]
Service Provider
SERVICES
[GST] No Cascading
[GST = 8]
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1) Cascading Effect: Other reasons
 In case of manufacturer, VAT Illustration:

is payable on the amount Value = 100
inclusive of Excise Duty charged Excise Duty @ 12% = 12
by the manufacturer. = 112
VAT @5% (on 112) = 5.6
Total Value = 117.6
 Under the earlier powers provided in the Constitution, neither the

Centre nor the State can tax such bundles in a seamless manner and
this only leads to double taxation as both CG and SG levies the tax on
the same transaction.
Example:
Transactions like catering services (Restaurant services and outdoor
catering services). This transaction is taxed by both CG and SG which is
creating double taxation.
1) Cascading Effect: Other reasons

Illustration:
Value = 100
ST (40% of 100 * 15%) = 6
VAT @12% = 12
Total Value = 118
 Another contributing factor to tax cascading is the Central Sales tax

on inter-state sales, collected by the Origin State for which no credit
allowed by any State Government.
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ROT = 10%
OT CST = 13
OT VAT = 16.3
ITC = (XX)
ITC = (XX)
NET CST = 13
NET VAT =16.3
Cost = 100 Cost = 143

CST = 13 VAT = 16.3
Pay = 143 Pay = 179.3

Mr.X, UP Mr.Y, Bihar Mr. Z, Bihar
And this becomes the reason for adopting DESTINATIONBased tax

& dropping the ORIGIN Based tax (CST)
Central level State level
• Central Excise Duty, •State VAT,

Additional Excise Duties (Textiles & Textile Luxury Tax,
products),
Entry tax (all forms)
Duties of Excise (Medicinal and Toilet
Preparations) Entertainment & Amusement Tax (except
when levied by the local bodies)
Additional Customs Duty (CVD) and
Taxes on advertisements
Special Additional Duty of Customs (SAD),
Purchase Tax
Service Tax
Taxes on lotteries, betting and gambling
Central Sales Tax
State Surcharges and Cesses so far as they
Central Surcharges and Cesses so far as they relate to supply of goods and services
relate to supply of goods and services
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Elimination of Developing Buoyancy

Multiple taxes unified national (increase) in
market GOVT revenue
Mitigation of Boost ‘Make in

Cascading & India’ initiative
double taxation
25 parts 448 Articles

[22 parts] [395 Articles]
11 part Article 246
Schedule VII
Union List State List Concurrent

(List I) - CG (List II) - SG List (List III)
– CG + SG
ED, ST, VAT, Entry tax, Bankruptcy,

Custom Duty, Luxury Tax, Forest &
CST, etc Entertainment Animal
tax protection, etc
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Consequently, a constitutional amendment was

needed to enable INTEGRATION of Central & State
levies into a comprehensive GST.
And thus amended the Constitution vide Constitution

(101st Amendment) Act, 2016 which enacted on
8th Sept 2016.
Significant amendments made by the Constitution

(101st Amendment) Act, 2016 are as follows:
1) “Goods and Services tax” means any tax on supply

of goods, or services or both except taxes on the
supply of the alcoholic liquor for human
consumption;’ [Article 366 (12A)]
2) Concurrent powers on Parliament and State

Legislatures to make laws governing tax on goods and
services.[Article 246A]
3) Levy of IGST on inter-State transactions of goods

and services to be levied and collected by the Central
Government and apportioned between the Union
and the States in the manner provided by Parliament
by Law as per the recommendation of the GST
Council. [Article 269A]
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4) On the following products, GST shall not be levied

till a date to be notified on the recommendations of
the GST Council:
Petroleum Crude
High Speed Diesel
Motor Spirit (commonly known as Petrol)
Natural Gas
Aviation Turbine Fuel
And till then Excise Duty shall be levied

[Article 279A (5) read with Union List - Entry 84]
5) The Union Government shall retain the power to

levy duties of excise on the aforesaid products along
with tobacco and tobacco products manufactured or
produced in India in addition to GST.
[Union List-Entry 84]
6) Article 279A of the Constitution empowers the

President to constitute a joint forum of the Centre
and States namely, Goods & Services Tax Council.
President constituted the GST Council on 15th

Sept’16.
 The Union Finance Minister is the Chairman of

this Council and Ministers in charge of Finance/
Taxation or any other Minister nominated by each of
the States & UTs with Legislatures are its members.
The function of the Council is to make

recommendations to the Union and the States on
important issues like tax rates, exemptions,
threshold limits, dispute resolution etc. The GST
Council has decided the threshold exemption,
composition threshold, GST rates, GST legislations
including rules and notifications (18 times).
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S N Particulars Description
1 Inter-state a) Location of supplier & Place of Supply is in
transactions  Two different states.
[Section 7  Two different Union territories
(IGST)]  A State and a Union territory
2 Intra-state Location of supplier & Place of Supply is in

transactions  same states or
[Section 8  same Union territory.
(IGST)]
On Intra-State On Inter-State
supplies of goods supplies of goods
and/ or services and/ or services
Central Tax & Integrated Tax

State/UT Tax shall shall be levied by
be levied by the CG the CG.
or SG respectively
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Central Tax State Tax Union Territory Integrated Tax

(CT) (ST) Tax (UTT) (IT)
>> The Structure:
1 Central Tax There is a single legislation- CGST Act, 2017 for levying
(CT) CT.
The CT is has replaced the existing central excise duty

and service tax. CGST would also cover sale
transactions.
CT would be administered by the CG.
2 State Tax States and Union territories with their own
(ST) legislatures [Delhi and Puduchery] have to enact their
own GST legislation for levying SGST.
[29 States +
Though there would be multiple SGST legislations, the
2 UTs
basic features of law, such as chargeability, definition
(Delhi+ of taxable event and taxable person, classification
Puduchery)] and valuation of goods and services, procedure for
collection and levy of tax and the like would be
uniform in all the SGST legislations, as far as feasible.
SGST Acts are mirror image of the CGST Act’17
ST would replace State VAT, Entry tax, Octroi, Luxury

tax, Entertainment tax etc. SGST would be levied on
services as well. To enable taxing of services by the
State, the Act contains suitable proposals.
ST would be administered by the State Governments.
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3 Union Union Territories without State legislatures
Territory Tax [Andaman and Nicobar Islands, Lakshadweep, Dadra
(UTT) and Nagar Haveli, Daman & Diu and Chandigarh] will
[5 UTs + be governed by UTGST Act, 2017 for levying UTGST.
Other
UTT would be administered by the Central
Territories] Government.
UTT is levied on intra Union Territory supplies.

4 Integrated IT (expected to be equal to CT + ST/UTT) would be
Tax (IT) levied on all supplies of goods and/or services In the
course of inter-state trade or commerce. IGST would
be applicable to import of goods or services from
outside country as well.
IT would be administered by the Central Government.
INTRA-STATE SUPPLY:
I. Supply of goods/ services by Mr.A (Lucknow, UP) to Mr.B (Kanpur, UP)
Particulars Amount (in Rs)
Value charged for supply of goods/ services 10,000
Add: CGST @ 9% 900
Add: SGST @ 9% 900
Total price charged by A from B for local supply of 11,800
goods/ services
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INTER-STATE SUPPLY:
I. Supply of goods/ services by Mr.A (Lucknow, UP) to Mr.B
(Dehradun, Uttarakhand)

Add: IGST @ 18% 1,800
Total price charged by A from B for inter-state 11,800
supply of goods/ services
 In the earlier system, import of goods is leviable to Customs

Duties comprising of Basic Customs duty [BCD], Additional duty
of customs equal to Excise duty on like goods manufactured in
India [CVD], Special Additional duty (SAD).
Service tax is leviable on services which are provided from

outside India and received in India and payable by the service
receiver under reverse charge mechanism.
 The import of goods or services would be deemed as inter-State

supply of goods or service and be subjected to the levy of Inter-
state GST (IGST). The import of goods would continue to attract
Basic Customs Duty (BCD) and also IGST.
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 GST would not be charged on goods or services exported from

India. In case, the supply of goods or supply of services qualifies as
export out of India as per the place of supply provisions, the
transaction would be zero rated.
 Under GST, the movement of goods or services from one State

to another on transfer basis would be leviable to IGST [total of
CGST+SGST]. However, it will have issues of increased working
capital.
 The transfer of goods or services within a State with a separate

business vertical would be leviable to SGST and CGST. In case
there is only one registration in the State then there would be
no GST [CGST+SGST] on the stock transfer.
1) Composition Scheme
2) Place of Supply
“POS is the one of the determinant for determining
whether a transaction is inter-state or intra-state”
3) Time of Supply
“TOS determines the point in time whether the supply is
made & therefore defines the time when the tax is to be
paid”
4) Valuation
“Tax is levied as per value determined by the Sec 15”
5) Input Tax Credit
“The Backbone to Value Addition Taxation technique’
6) Registrations
7) Returns filing, & others
Success is NO accident. It is hard work, perseverance,

learning, Studying, sacrifice and most of all, love of
what you are doing
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Models of GST
Australian Model Canadian Model Kelkar Shah Model Bagchi- Poddar Model
[3 Variants]
Tax is collected by the 1) Two ROTs are to be levied 1) Two ROTs are to be
Centre & distributed to by Centre & a State. levied by Centre & a State.
the States
2) The collection is by the 2) The collection is by the
Centre [like CANADIAN HST Centre & the State.
Model]
Federal GST – XXX Federal GST – XXX Federal GST – XXX

(+) PST – XXX (+) PST – XXX (+) QPST - XXX
Total – XXX Total – XXX Total - XXX
Administered/Collection Administered/Collection Administered/Collection by

SEPARATELY FEDERALLY (by CG) Quebec
[Harmonious Sales Tax (HST)]
 Most countries follow a unified GST regime. However, considering the federal nature of Indian Constitution, the
country adopted dual model of GST, where the power to levy taxes would be distributed between Centre and
States. The countries which have adopted DUAL MODEL are:
(Canada) (Brazil)

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2. GST International Scenario
 Introduction:
Internationally, countries are moving towards simplification of tax structures. The adoption of Goods and
Services Tax has been the most important development in several countries over the last half-century. Today,
it is one of the widely accepted indirect taxation system prevalent in more than 140 countries across the
globe. Globally, GST has been structured as a destination based comprehensive tax levied at a specified rate
on sale and consumption of goods and services within a country. It facilitates creation of national tax
standards with consumers paying uniform rates of GST, thereby enabling flow of seamless credit across the
supply chain. GST was first levied by France in 1954. Today, Malaysia is the most recent country to join the
st
bandwagon (wef 1 April 2015). In countries where GST has been adopted, manufacturers, wholesalers,
retailers and service providers charge GST at the specified rate on price of the goods and services from
consumers and claim input credits for GST paid by them on procurement of goods and services (raw
material).
 Broad principles of GST:
SN The Principles:
1) GST is a broad-based tax
2) GST is a DESTINATION based tax
3) GST is technically paid by suppliers but it is actually funded by consumers
4) GST is collected through a staged process i.e. a tax on the value added to goods or services at every
point in the supply chain
5) GST is a tax on the consumption of products from business sources, and not on personal or hobby
activities (in the course of business)
6) Under GST, input tax credit is provided throughout the value chain for creditable acquisition.
 Models of GST:
Although most countries have adopted similar principles of GST, there remain significant differences in the
way it is implemented. These differences result not only from the continued existence of exemptions and
special arrangements to meet specific policy objectives, but also from differences of approaches in the
definition of the jurisdiction of consumption and therefore of taxation. In addition, there are a number of
variations in the application of GST, and other consumption taxes, including different interpretation of the
same or similar concepts; different approaches to time of supply and its interaction with place of supply;
different definitions of services and intangibles and inconsistent treatment of mixed supplies.
Different countries follow different model of GST based upon their own legislative and administrative
structure and their requirements. Some of these models are:
SN Models The Principles:

1) Australian Australian Model wherein, tax is collected by the Centre and distributed to the
Model States.
2) Canadian Model Canadian Model wherein there are three variants of taxes.
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3) Kelkar-Shah Kelkar-Shah Model based on Canada Model wherein taxes are COLLECTED by the
Model CENTRE however, two different rates of tax are to be levied by the Centre and the
States and
4) Bagchi-Poddar Bagchi-Poddar Model which envisages a combination of Central Excise, Service

Model Tax and VAT to make it a common base of GST to be levied both by the Centre and
the States separately wherein taxes are COLLECTED by the CENTRE and the States.
Most countries follow a unified GST regime. However, considering the federal nature of Indian Constitution,
dual model of GST was proposed, where the power to levy taxes would be subjectively distributed between
Centre and States thus, GST will be levied by both, the Centre as well as the States and there will be separate
levies in the form of Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST) and
Integrated Goods and Services Tax (IGST) enabling the tax credit across these three variants of taxes.
Currently, Brazil and Canada also follow dual GST model.
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 Multiple Choice Questions:
Q
1) More than __________ countries in the world have already adopted GST?
a) 120
b) 130
c) 140
d) 160
2) GST was first adopted by a country in 1954. Name that country?

a) USA
b) Australia
c) France
d) Germany
3) France has been the first country to implement GST in _______?

a) 1945
b) 1954
c) 1964
d) 1944
4) _____ is the most recent country to join the bandwagon?

a) Germany
b) Sri Lanka
c) Bangladesh
d) Malaysia
5) GST has been structured as a ________ based comprehensive tax?

a) Origin
b) Destination
c) Both (a) & (b)
d) None of the above
6) Australian Model wherein, tax is collected by the _______ and distributed to the _____?
a) Centre, State
b) State, Centre
c) Both (a) and (b)
7) Canadian Model wherein there are _____variants of taxes?

a) Two
b) Three
c) Four
d) Five
8) Kelkar-Shah Model based on ________ Model?

a) UK Model
b) Canada Model
c) USA Model
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9) __________Model which envisages a combination of Central Excise, Service Tax and VAT to make it a
common base of GST to be levied both by the Centre and the States separately.
a) Canadian Model
b) Australian Model
c) Bagchi-Poddar Model
d) Kelkar Shah Model
10) Currently, _____ and ______ also follow dual GST model.
a) Brazil and Australia
b) Canada and Australia
c) Brazil and USA
d) Brazil and Canada
Q A Q A Q A Q A Q A
1) c 2) c 3) b 4) d 5) b
6) a 7) b 8) b 9) C 10) d
A river is cut through a rock not because of its

power but its persistence
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3. GST in India
 Introduction:
 GST is one of the biggest taxation reforms in India aiming to integrate State economies and boost overall
growth by creating a single, unified Indian market to make the economy stronger. GST is a
comprehensive destination based indirect tax levy of goods as well as services at the national level. Its
main objective is to consolidate multiple indirect tax levies into a single tax thus subsuming an array of
tax levies, overcoming the limitations of existing indirect tax structure, and creating efficiencies in tax
administration.
 GST is a consumption or destination based tax levied on the basis of the “Destination principle.” It is a
comprehensive tax regime covering both goods and services, and be collected on value-added at each
stage of the supply chain. Further, GST paid on the procurement of goods and services can be set off
against that payable on the supply of goods or services. Simply put, Goods and Services Tax is a tax levied
on goods and services imposed at each point of SUPPLY. GST is a national level tax based on value added
principle just like State level VAT which was levied as tax on sale of inter-state goods.
 The essence of GST is in removing the cascading effects of both Central and State taxes by allowing
setting-off of taxes throughout the value chain, right from the original producer and service provider’s
point up to the retailer’s level.
 GST, as a well-designed value added tax on all goods and services, is the most elegant method to
eliminate distortions and to tax consumption.
 Taxes which have been SUBSUMED under GST are as follows:
Central Taxes State Taxes

Central Excise Duty State VAT
CENTRAL SALES TAX Central Sales Tax
Duties of Excise (Medicinal and Toilet Purchase Tax
Preparations)
Additional Duties of Excise (Textiles and Textile Luxury Tax
Products)
Additional Duties of Customs (commonly known Entry Tax (All forms)
as CVD)
Special Additional Duty of Customs (SAD) Entertainment Tax (except those levied by the
local bodies)
Service Tax Taxes on advertisements
Cesses and surcharges insofar as they relate to Taxes on lotteries, betting and gambling
supply of goods or services
State cesses and surcharges insofar as they relate
to supply of goods or services
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Q
1) Goods and Services Tax is a tax levied on goods and services imposed at each point of _____:
a) Sale
b) Service
c) Supply
d) Manufacturing
2) GST is a national level tax based on _______?

a) First point tax principle
b) Value Added principle
c) Last point tax principle
d) All of the above
*3) The following tax has not been subsumed into State GST
a) Electricity Duty
b) Luxury Tax
c) Entertainment Tax (except levied by local bodies)
d) Value Added Tax
4) The following tax has been subsumed into Central GST

a) Central Sales Tax
b) Custom Duty
c) Service Tax
d) All of the above
5) Which of the following taxes have been subsumed in GST?

a) Central Sales Tax
b) Central Excise Duty
c) VAT
d) All of the above
6) List-I of the Constitution contains matters in respect of which ____________ has the exclusive right to
make laws (Discussed in the Chapter 1-Overview)
a) Central Government
b) State Government
c) Both Centre and State Governments
Q A Q A Q A Q A Q A
1) c 2) b 3) a 4) d 5) d
2) a
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 HOW IT ALL WENT??
th
17 July 2000
Constitution of Empowered Committee [EC] with FM of few states as its members.
th
12 Aug 2004
Reconstitution of EC with the FM of all States as its members. Later on registered as
SOCIETY as SOCIETIES REGISTRATION ACT, 1860
2003
Kelkar Task Force on Indirect Tax had suggested a comprehensive GST based on VAT
principle
Feb 2007 (Budget 2007-08)

st
FM (PC) in his budget speech sets 1 April 2010 as the deadline for GST implementation.
Sept, 2009
The EC decided to constitute a Working Group consisting of Principal Secretaries /
Secretaries (Finance / Taxation) and Commissioners of Trade Taxes of all States/UTs.
Nov, 2009
EC released its First Discussion Paper on GST.
Mar, 2011
th
The Constitution (115 Amendment) Bill, 2011 to give concurrent taxing powers to the
Union and States was introduced in Lok Sabha. The Bill was lapsed in 2014 and was
replaced with the Constitution (122nd Amendment) Bill, 2014.
Nov, 2012
A “Committee on GST Design” was constituted.
Mar, 2013
A not for profit, non-Government, private limited company was incorporated in the
name of Goods and Services Tax Network (GSTN) setup by the Government primarily to
provide IT infrastructure and services to the Central and State Government(s), tax
payers and other stakeholders for implementation of the GST.
th
19 Dec 2014
nd
Constitution (122 Amendment) Bill, 2014 was INTRODUCED in Lok Sabha by Mr. Arun
Jaitley.
th
6 May 2015
nd
Constitution (122 Amendment) Bill, 2014 was PASSED in Lok Sabha
May 2015
In Rajya Sabha, Bill was referred to a 21-member Select Committee of Rajya Sabha.
nd
22 July 2015
Select Committee submitted its report to Rajya Sabha on July 22, 2015.
th
14 June 2016
The MOF released draft model law on GST in public domain for views and suggestion.
Page 37
rd
3 Aug 2016
nd
Constitution (122 Amendment) Bill, 2014 was PASSED in Rajya Sabha with certain
amendments
th
8 Aug 2016
The changes made by Rajya Sabha were unanimously passed by Lok Sabha.
Sept 2016
The Bill was adopted by majority of State Legislatures wherein approval of at least
50%of the State Assemblies was required.
th
8 Sept 2016
st
The Bill received the assent of President & become Constitution (101 Amendment)
Act, 2016
th
12 April 2017
The CGST Bill 2017, IGST Bill 2017, UTGST Bill, 2017 and GST (Compensation to States)
Bill, 2017 received the assent of the President.
th
1 July 2017
India GSTfied
Page 38
Q
1) Government of India set up the Empowered Committee of State Finance Ministers on ______:
th
a) 17 June 2000
th
b) 17 July 2000
th
c) 17 June 2001
th
d) 17 July 2001
2) The Kelkar Task Force on Indirect Tax had suggested a comprehensive Goods and Services Tax (GST)
based on VAT principle in ______:
a) 2002
b) 2003
c) 2004
d) 2005
3) Which has been the first target date decided for GST?
st
a) 1 April 2017
st
b) 1 July 2017
st
c) 1 April 2010
st
d) 1 July 2010
4) First target date has been decided for GST under which Budget_______?
a) 2006-07
b) 2007-08
c) 2008-09
d) 2009-10
5) Who decided the first target date?

a) Mr. Pranab Mukherjee
b) Mr. Arun Jaitley
c) Mr. P. Chidambaram
d) Mr. Manmohan Singh
6) Based on inputs from Government(s) of Centre and States, Empowered Committee released its First
Discussion Paper on GST in _______?
a) Nov-08
b) Nov-09
c) Nov-10
d) Nov-11
nd
7) 122 Constitutional Amendment Bill, 2014 was PLACED in Lok Sabha on?
th
a) 19 Dec 2014
th
b) 6 May 2015
rd
c) 3 August 2016
th
d) 8 Sept 2016
nd
8) 122 Constitutional Amendment Bill, 2014 was PASSED in Lok Sabha on?
th
a) 19 Dec 2014
th
b) 6 May 2015
rd
c) 3 August 2016
Page 39
th
d) 8 Sept 2016
9) Select Committee submitted its report to Rajya Sabha on ________?

nd
a) 22 July 2015
th
b) 6 May 2015
rd
c) 3 August 2016
th
d) 8 Sept 2016
10) The Ministry of Finance released draft model law on GST in public domain for views and suggestion on
________?
nd
a) 22 July 2015
th
b) 14 June 2016
rd
c) 3 August 2016
th
d) 8 Sept 2016
11) nd
122 Constitutional Amendment Bill, 2014 was PASSED in Rajya Sabha with certain amendments
on______?
th
a) 19 Dec 2014
th
b) 6 May 2015
rd
c) 3 August 2016
th
d) 8 Sept 2016
12) The changes made by Rajya Sabha were unanimously passed by Lok Sabha, on ________?
th
a) 19 Dec 2014
th
b) 6 May 2015
rd
c) 3 August 2016
th
d) 8 August 2016
nd st
13) 122 Constitutional Amendment Bill, 2014 was assented by PRESIDENT (& thus becomes 101
Amendment Act, 2016) on?
th
a) 19 Dec 2014
th
b) 6 May 2015
rd
c) 3 August 2016
th
d) 8 Sept 2016
nd
14) 122 Constitutional Amendment Bill becomes ______ Constitutional Amendment Act, 2016 was passed
for the implementation of GST?
th
a) 100
st
b) 101
nd
c) 102
rd
d) 103
15) GST was introduced in India on?

st
a) 1 April 2017
st
b) 1 May 2017
c) 1st June 2017
st
d) 1 July 2017
Page 40
Q A Q A Q A Q A Q A
1) b 2) b 3) c 4) b 5) c
6) b 7) a 8) b 9) a 10) b
11) c 12) d 13) d 14) b 15) D
Page 41
 GST Council:
 GST Council is the main decision-making body that has been formed to finalize the design of GST.
 This governing body of GST comprises of Union Finance Minister, the Chairman of the council, the
Minister of State (Revenue) and the State Finance/ Taxation Ministers as its members.
 The duty of the Council is to make recommendations to the Union and the States. It has been provided in
the Constitution (one hundred and first amendments) Act, 2016 that the GST Council, in its discharge of
various functions, shall be guided by the need for a harmonized structure of GST and for the
development of a harmonized national market for goods and services.
 In the GST Council, a decision will be taken by a three-fourth majority with the Centre having a one-third
vote and the states the remaining two-third.
Illustration: In terms of clause (9) of the proposed article 279A, the "weighted votes of the
members present and voting" in favour of a proposal in the Goods and Services Tax Council
shall be determined as under:—
In terms of clause (9) of the proposed article 279A, the "weighted votes of the members
present and voting" in favour of a proposal in the Goods and Services Tax Council shall be
determined as under:—
WT = WC+WS
Where,
WT = WC + WS [(WST/SP) × SF]
Wherein—
WT = Total weighted votes of all members in favour of a proposal.
WC = Weighted vote of the Union = i.e. 33.33% if the Union is in favour of the proposal and be
taken as "0" if, Union is not in favour of a proposal.
WS = Weighted votes of the States in favour of a proposal.
SP = Number of States present and voting.
WST = Weighted votes of all States present and voting i.e. 66.67%
SF = Number of States voting in favour of a proposal.
Example:
Say, for a particular issue in consideration the Centre was in favour of the issue in
consideration and out of 31 States (29 states +2 UTs with legislation i.e. Delhi, Puduchery)
which were present & voting only 22 states voted in favour of an issue. Let’s see whether an
issue can be passed. Minimum requirement is atleast 75% of the votes.
WT = WC+WS
= 33.33% + [66.67%/31*22]
= 33.33% + 47.31%
= 80.64% [More than 75% of the weighted votes, the issue can be passed]
Page 42
 Functions of GST Council:
 Taxes, cesses, and surcharges levied by the Centre, States and local bodies which may be
subsumed in the GST;
 Goods and services which may be subjected to or exempted from GST;
 Model GST laws, principles of levy, apportionment of IGST and principles that govern the place of
supply;
 Threshold limit of turnover below which goods and services may be exempted from GST;
 Rates including floor rates with bands of GST;
 Special provision with respect to Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand (Special
Category States) ;
 Any other matters
 Framework of GST:
A Dual GST was therefore proposed keeping in mind the Constitutional requirement of fiscal federalism.
Along with the amendment in the Constitution, to empower the Centre and the States to levy and collect the
th
GST, four legislations were given assent by the President on 12 April 2017, which are:
 The Central GST Act, 2017
 The Integrated GST Act, 2017
 The GST (Compensation to States) Act, 2017 and
 The Union Territory GST Act,2017
Page 43
Q
1) ______is the main decision-making body that has been formed to finalize the design of GST.
b) State Government
c) Central Board of Excise & Customs
d) GST Council
2) Who is the Chairman of GST Council?

a) Union Finance Minister
b) State Finance Ministers
c) Prime Minister
d) President
3) In the GST Council, a decision will be taken by a three-fourth majority with the Centre having a ______
vote and the states the remaining _____
rd rd
a) 1/3 , 2/3
b) ½,½
th th
c) 1/4 , 3/4
4) Which article of the Constitution outlines the composition and functions of the GST Council?
a) 270
b) 279A
c) 246A
d) 269A
Q A Q A Q A Q A
1) D 2) a 3) a 4) b
a ship is safe in harbor, but that’s not

what ships are meant for
Page 44
Page 45
Page 46
4. Introduction to CGST Act, 2017
 Introduction:
The GST Council in its 11th meeting held on 4th March, 2017 approved the “draft Central GST” bill which makes
provisions for levy and collection of tax on intrastate supply of goods or services or both by the Central
Government.
The Union Government presented the Central Goods and Service Tax Bill, 2017 in Lok Sabha on 27th March, 2017
and the same was passed by Lok Sabha on 29th March, 2017. The Rajya Sabha passed the bill on 6th April, 2017
th
and was assented by the President on 13th April, 2017 12 April 2017.
 Important Definitions:
SN Particulars Description
1 Adjudicating “Adjudicating authority” means any authority, appointed or authorised to pass any
authority order or decision under this Act, but does not include
 the Central Board of Excise and Customs,
 the Revisional Authority,
 the Authority for Advance Ruling,
 the Appellate Authority for Advance Ruling,
 the Appellate Authority and
 the Appellate Tribunal
2 Business “Business” includes –

(a) any trade, commerce, manufacture, profession, vocation (electrician, Hair dresser,
etc), adventure, wager or any other similar activity, whether or not it is for a pecuniary
benefit;
Example:
1) If a charitable medical diagnostic lab provides facilities free of cost, it
would not fall in the ambit of GST as services are being provided without
consideration. However, if the services are provided at subsidized rates so
as to recover only the cost or part of the cost, the activities will fall in the
ambit of GST as the activity need not necessarily be carried out for
pecuniary benefit.
Business –Yes & Consideration – No === No tax
Business –Yes & Consideration – Yes === tax
(b) any activity or transaction in connection with or incidental or ancillary to (a) above;
Example:
1) Supply of goods free of cost to a charitable organization by a business
house for free distribution to meets its CSR obligations will not get covered
as a taxable supply as the same is without consideration. However, this
activity would be in the course of business for the business house as
meeting CSR obligations is an activity ancillary or incidental to its main
business.
2) Sale of scrap, sale of old machinery, sale of old furniture, etc is in the
course of business though as the person is not engaged in the selling
furniture or machinery.
3) Sale of hypothecated/pledged goods by bank.
4) Sale of repossessed goods by insurance company.
Page 47
(c) any activity or transaction in the nature of (a) above, whether or not there is volume,
frequency, continuity or regularity of such transaction;
Example:
1) An activity, which is carried out mainly as a hobby, such as stamp
collecting, or any other personal or private activity is not a business.
However, if you start to sell items you collect, or have made, then your
hobby could become a business for GST purposes.
2) Mr.A took year and a half to make to make a computer program & he sold
it as well. This is a business.
3) Many TV channels advise and request viewers to make video and upload
on their website. The person is paid if the video is ultimately shown on the
TV. Such habits may not be continued, may not have volume or may not be
regular. Even if the video is provided once to the TV channel. It will be
considered as business (Selfeish, My song, etc)
(d) supply or acquisition of goods including capital assets and services in connection
with commencement or closure of business;
 Understanding:
The transaction effected for the COB, though actual activity of business
may be carried on later, have included in the scope of business. Similarly,
the transaction of sale of goods such as stock of goods or fixed assets after
the closure of business will also be considered within the scope of business.
One cannot take a view that they are not effected during the course of
business since the main activity has been closed down. The definition
makes it clear that even if the transaction is in respect of closing down of
business, these activities will also be considered as business.
(e) provision by a club, association, society, or any such body (for a subscription or any
other consideration) of the facilities or benefits to its members, as the case may be;
Example:
1) Club/ Association/ Society and other body corporate operates on the
principle of mutuality – they provide facilities/ benefits to its own
members. Such transaction shall be regarded as business.
2) Some of the facilities/benefits provided by the club, etc are:

i) Sports facilities like swimming pool, badminton, table tennis,
cricket, etc.
ii) Restaurant services
iii) Banquet Hall or open ground
iv) Accommodation facility (rooms)
v) Library
vi) Conference rooms, etc.
(f) admission, for a consideration, of persons to any premises; and
Example:
1) Sale of ticket for providing admission to any premises (like cinema hall,
exhibition, Kingdom of Dreams etc.) will be considered as business.
(g) services supplied by a person as the holder of an office which has been accepted by
him in the course or furtherance of his trade, profession or vocation;
Example:
1) Service provided by the expert as non-executive director of a company
(Speakers are often on the BOD)
Page 48
2) If a CA in practice provides CFO or independent director services, he would

be covered.
(h) services provided by a race club by way of totalisator (the organizers) or a licence to
book maker (agent) in such club;
(i) Any activity or transaction undertaken by the Central Government, a State

Government or any local authority in which they are engaged as public authorities shall
be deemed to be business.
3 Business “Business vertical” means a distinguishable component of an enterprise that is engaged

Vertical in the supply of individual goods or services or a group of related goods or services
which is subject to risks and returns that are different from those of the other business
verticals.
Explanation.––For the purposes of this clause, factors that should be considered in

determining whether goods or services are related include––
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including banking,
insurance, or public utilities;
 Example:
ITC is a conglomerate which into the business of Cigarrettes and into Apparrels (John
Players) and into Stationary as well. Since these are the distinguishable components
hence are the business verticals of ITC.
4 Consideration “Consideration” in relation to the supply of goods or services or both includes––
(a) any payment made or to be made, whether in money or otherwise, in respect of, in
response to, or for the inducement of, the supply of goods or services or both, whether
by the recipient or by any other person but shall not include any subsidy given by the
Central Government or a State Government;
 Made or to be made:
This is to be discussed with TOS provisions
 Money or otherwise (exchange offers):

i) When you go to buy a new television set, you are offered
two bargains. You can pay money and take television home.
Alternatively, you may exchange your old television set and pay lesser
money to the extent of value determined for old television set. Here
money equivalent value of old television will also be part of
consideration on which GST will need to be paid.
ii) A flat given in consideration for redeveloping a house into a multi

storeyed house.
 Flow of Consideration- from anyone but it shall not come from the GOVT:
i) Holding company may pay for supply of services or goods that are
provided to its associated companies (Bill to Ship to Model).
ii) In case of service during warranty, the service is provided by the

authorised dealer to buyer of the motor cycle but the payment is made
to the authorised dealer by the manufacturer.
Page 49
iii) R orders A, a flowers bouquet supplier, to deliver a bouquet to B on

his/her birthday.
iv) A new brand of perfumes asking its dealers to sell at below their
purchase price and the company shall compensate the loss .Therefore
in this case also the consideration for taxable sumpplies being paid
partly by a third person (perfume company).
 Shall not include any subsidy given by the Central Government or a State
Government
In order to subsidize the sale price of fertilizer. The manufacturer of fertilizer
are entitle to receive the subsidy on the sale of fertilizer made by them.
In view of the specific provision of Sec 2(31) and Sec 15(2), subsidy provided by
Govt will not form part of Consideration and also Transaction Value.
(b) the monetary value of any act or forbearance, in respect of, in response to, or for
the inducement of, the supply of goods or services or both, whether by the recipient or
by any other person but shall not include any subsidy given by the Central Government
or a State Government:
 Act/forbearance:
1) Mr.X went to a Chartered Accountant and asked for the preparation of
books of accounts for his company. He charges Rs.1 lakhs & Mr.X paid
the amount.
2) Mr.Y went to a Chartered Accountant and asked for the preparation of

books of accounts for his company. He charges Rs.1 lakhs & in return
Mr.X designed his house (being architect).
3) Mr.Z went to a Chartered Accountant and asked for filing his ITR. He
charged Rs.1,000 & in return CA requested to close the tea stall right
in front of his office where he desires to install the GENSET or park his
car.
PROVIDED that a deposit given in respect of the supply of goods or services or both
shall not be considered as payment made for such supply unless the supplier applies
such deposit as consideration for the said supply;
 Understanding:
The landlord receives the security deposit from the tenant in connection with
renting the flat. The security deposit is refundable. This security deposit is not
‘consideration for supply of service’ and hence shall not be taxable. However if
in the future, if in future, if it is adjusted towards the services supplied, then
this security deposit shall be treated as consideration.
5 Capital goods “Capital goods” means

 goods, the value of which is capitalized in the books of account of the person
claiming the input tax credit and
 which are used or intended to be used in the course or furtherance of business
(future lines of business);
Page 50
6 Continuous “Continuous supply of goods” means a supply of goods which is provided, or agreed to
supply of be provided,
GOODS  continuously or on recurrent basis,
 under a contract, whether or not by means of a wire, cable, pipeline or other
conduit, and
 for which the supplier invoices the recipient on a regular or periodic basis and
includes supply of such goods as the Government may, subject to such
conditions, as it may, by notification, specify;
 Examples:
i) Supply of gas from IOC to Hindustan Petroleum through a pipeline with a
fortnight billing schedule.
ii) Ready Mix Concrete (RMC) supplied to the Site
iii) Water is supplied
iv) Coal is supplied from mines to the factory.
v) Electricity is goods but it is just that it is outside the ambit of GST.
7 Continuous “Continuous supply of services” means a supply of services which is

supply of  provided, or agreed to be provided,
SERVICES  continuously or on recurrent basis,
 under a contract, for a period exceeding three months with periodic payment
obligations and
 includes supply of such services as the Government may, subject to such
conditions, as it may, by notification, specify;
 Examples:
i) Annual Maintenance Contract (AMC).
ii) Internal Audit.
iii) Telecommunication services (Internet services), &
iv) The Government may notify.
8 Exempt supply “Exempt supply” means supply of any goods or services or both which attracts
[Detailed  nil rate of tax or
Discussion]  which may be wholly exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act, and
 includes non-taxable supply;
9 Fixed “Fixed establishment” means a place (other than the registered place of business)
establishment which is characterised by a sufficient degree of permanence and suitable structure in
terms of human and technical resources to supply services, or to receive and use
services for its own needs;
 Understanding:
The activity carried from the fixed establishment are also in the nature of
activities ordinarily carried out by the business. Therefore, fixed establishment
can also be considered as POB. However, the definition of fixed establishment
specifically provides that it is a POB other than REGISTERED PLACE OF
BUSINESS. The better interpretation of the definition appears to be that the
Fixed establishment is ‘other than the principal POB”.
10 Goods “Goods” means every kind of movable property
 other than money and securities
 but includes
actionable claim,
growing crops, grass and things attached to or forming part of the
land which are agreed to be severed before supply or under a
Page 51
contract of supply;
 Understanding:
Goods are generally tangible. They can be possessed, stored, delivered,
transferred, bought and sold. Services are generally intangible.
However, some intangibles, like electricity, trade-mark, copy right, technical
know-how have also been interpreted by Courts as ‘goods’ as they are capable
of being possessed, stored, delivered & thus movable.
Growing Crops:
Very often when the contract is for sale of crop, grass, etc is entered into, the
owner agrees to severe these items from the land before the sale of the same.
The buyer also intends to buy all the crops, grass, etc. Once these items are
severed they become movable property which can be purchased and sold. In
order to avoid confusion, the definition of goods specifically includes such items
which are agreed to be severed before their supply. Thus inclusion of these
items expands the meaning of movable property.
Actionable Claim:
Actionable claims have been included in the definition of goods with a
limited purpose of taxing ‘lottery, betting and gambling’.
Schedule III provides that activities or transactions in actionable claims,

other than lottery, betting and gambling shall be treated neither as a
supply of goods nor a supply of services
11 Input “Input” means any goods OTHER THAN CAPITAL GOODS used or intended to be used by
a supplier in the course or furtherance of business;
 Example:
Q. Whether Input tax credit is available in respect of Input tax paid on use of mobile
phones/laptops/as given to employees?
A. Yes, provided that the mobile phones/ laptops as given to employees is used for
providing taxable supply used in or in relation to the supply of taxable goods.
12 Input service “Input service” means any service used or intended to be used by a supplier in the
course or furtherance of business;
 Example:
Say ‘X’ manufacturer has provided ‘Y’ machinery to job worker called ‘Z’. The said
machinery require repair. The manufacturer deputes the representative of company
‘A’ for repairing of machinery ‘Y’. Company ‘A’ repairs machinery and charges to
manufacturer ‘X’ for repair. The services are received at the premise of job worker
‘Z’, which is not the place of business of manufacturer ‘X’ but the services are used
in the course or furtherance of business as the machines are used for manufacture
of goods supplied by ‘X’. Therefore, credit of such tax paid will be available to
manufacturer ‘X’.
13 Input Service “Input Service Distributor” means an office of the supplier of goods or services or both
Distributor which receives tax invoices issued under section 31 towards
 the receipt of input services and
 issues a prescribed document for the purposes of distributing the credit of

central tax, State tax, integrated tax or Union territory tax paid on the said
services to a supplier of taxable goods or services or both
 having the same Permanent Account Number as that of the said office;
Page 52
 Example:
i) Advertisement services
ii) Accounting services
iii) Audit services
iv) Software license & maintenance services
v) Security services
NOTE:
 Why the concept of ISD only in respect of Services??
 Concept of input service distributer is applicable only for services. It is not
required for goods that are procured centrally and distributed for use in various
registrations as credit would automatically get distributed when goods are
stock transferred to other registrations for actual use on payment of GST.
14 Inward supply “Inward supply” in relation to a person, shall mean receipt of goods or services or both
whether by purchase, acquisition or any other means with or without consideration
(Branch transfer)
15 Outward “Outward supply” in relation to a taxable person, means supply of goods or services or
supply both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any
other mode, made or agreed to be made by such person in the course or furtherance of
business;
 Made or agreed to be made:
Even if u agree by virtue of receipt of payment (going with the provisions of TOS) it
is an outward supply
 Levy of GST:
1) Levy of GST? GST is levied on supply of all goods or services or both except supply of alcoholic liquor
for human consumption.
2) Fate of Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel,
Petroleum natural gas and aviation turbine fuel have temporarily been kept out and GST Council
products shall decide the date from which they shall be included in GST.
3) Electricity Electricity has also been kept out of GST.

Duty - GST
4) Dual Model  The structure provided under GST is dual in nature and under this, the Centre and
the States simultaneously levy tax on a common base.
 The GST levied by the Centre on intra-State supply of goods and / or services is
called the Central GST (CGST) and that levied by the States/ Union territory is called
the State GST (SGST)/ UTGST.
 Similarly, Integrated GST (IGST) is levied and administered by Centre on every inter-
state supply of goods and services. GST
INTRA-STATE INTER-STATE
IGST
CGST SGST
Page 53
 Liability under GST:
1) Liability to pay Under the GST regime, liability to pay tax arises when a person crosses the turnover
GST threshold of Rs.20 lakhs (Rs. 10 lakhs for North Eastern & Special Category States)
except in certain specified cases where the taxable person is liable to pay GST even
though he has not crossed the threshold limit.
Liability to pay TAX [REGISTRATION]
Threshold Based Mandatory
Other than SCS SCS
Agg T/O > 20 lacs Agg T/O > 10 lacs 12 Cases
2) Special
Category SN States SN States
States (SCS) 1) Arunachal Pradesh 7) Tripura
2) Assam 8) Sikkim
3) Manipur 9) Himachal Pradesh
4) Meghalaya 10) Jammu & Kashmir
5) Mizoram 11) Uttarakhand
6) Nagaland
3) Composition A Composition Scheme, which is mainly devised for small taxpayers, provides
Scheme concessional rate of tax and filing of quarterly returns instead of monthly return.
To be eligible for registration under Composition scheme it is required that the aggregate
turnover of a registered tax payer should not exceed Rs. 75 lakhs in the preceding
financial year.
(The limit is Rs. 50 lakhs for North Eastern & CERTAIN Special Category States)
SN States SN States
1) Arunachal Pradesh 7) Tripura
2) Assam 8) Sikkim
6) Nagaland
Page 54
ABC Ltd.
Uttarakhand Uttar Pradesh

(Manufacture
of RG)
7 lakhs
Lucknow, Kanpur,
(Trading of Laptops) (Manufacturing of
Plastic toys)
2 lakhs 6 lakhs
Aggregate Turnover = 15 lakhs
ABC Ltd.

(Manufacture
of RG)
7 lakhs
Lucknow, Kanpur,
Plastic toys)
2 lakhs 6 lakhs
Turnover in State (UK) = 7 lakhs

Turnover in State (Lucknow, UP) = 2 Lakhs
Turnover in State (Kanpur, UP) = 6 Lakhs
Page 55
4) Aggregate “Aggregate turnover” means the aggregate value of all

Turnover  taxable supplies (excluding the value of inward supplies on which tax is
payable by a person on reverse charge basis),
 exempt supplies,
 exports of goods or services or both and
 inter-State supplies
of persons having the same Permanent Account Number, to be computed on all India
basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
5 Turnover in “Turnover in State” or “Turnover in Union territory” means the aggregate value of all
a State / UT  taxable supplies (excluding the value of inward supplies on which tax is
payable by a person on reverse charge basis) and
 exempt supplies made within a State or Union territory by a taxable person,
 exports of goods or services or both and
 inter-State supplies of goods or services or both
MADE FROM THE STATE or UNION TERRITORY by the said taxable person but excludes
central tax, State tax, Union territory tax, integrated tax and cess;
Page 56
 Reverse Charge Mechanism (RCM):
i) Forward Charge Mechanism:
SG
SGST = 08
CGST = 12
Value = 100
CGST = 12
X, Supplier SGST = 08 Y, Recipient
Total =120
ii) Reverse Charge Mechanism:
SG
SGST = 08
CGST = 12
Value = 100
CGST = XX
X, Supplier SGST = XX Y, Recipient
Total =100
Page 57
 Important Discussion:
SN Particulars Leviable/not leviable? Taxable/ not taxable?

1 Supply of Not leviable to tax Hence, non taxable
Alcoholic liquor
for human Source – CAA, 2016
consumption Article 366 (12A)-
“Goods and Services tax” means any tax on supply of
goods, or services or both except taxes on the supply of
the alcoholic liquor for human consumption.
Sec 9(1) [CGST] & Sec 5(1) [IGST] -

….CGST on all intra-State supplies of goods or services or
both, except on the supply of alcoholic liquor for human
consumption…
2 Supply of Not leviable to tax Hence, non taxable

petroleum crude,
high speed diesel, Source – CAA, 2016
motor spirit Article 279A (5)
(commonly The GST Council shall recommend the date on which the
known as petrol), GST be levied on petroleum crude, high speed diesel,
natural gas and motor spirit (commonly known as petrol), natural gas
aviation turbine and aviation turbine fuel.
fuel
Sec 9(2) [CGST] & Sec 5(2) [IGST] -

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 Supplies Not leviable to tax Hence, non taxable

mentioned in
Schedule III (As Schedule III specifies activities or transactions which
shall be treated NEITHER as a supply of GOODS NOR a
supply of SERVICES)
4 Supply Leviable to tax Hence, taxable

Chargeable at Nil
rate of tax (Charging Sec 9 is applicable though the rate of nil)
5 Supply exempt Leviable to tax Hence, taxable

through
exemption (Charging Sec 9 is applicable though the effective rate of
notification Nil)
6 Supplies under Leviable to tax Hence, taxable
Reverse charge
mechanism [Charging Sec 9(3), 9(4) & 9(5)
{CGST} & Sec 5(3), 5(4) & 5(5) {IGST} is applicable means
the tax is payable by the recipient]
Page 58
Leviable?
s
YES NO
1) Nil rated supply (tax rate – Nil )- Leviable 1) Supply of Alcoholic liquor for HC – Not leviable
[Section 9 {CGST} attracted, though the tax rate is [Article 366(12A) + Sec 9(1) {CGST} + Sec 5(1)
NIL] {IGST}]
[Section 5 {IGST} attracted, though the tax rate is
NIL] 2) Supply of petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural
2) 100% exempt- Leviable gas and ATF - Not leviable
[Section 9 {CGST} attracted, though the effective [Article 279 A(5) + Sec 9(2) {CGST} + Sec 5(2) {IGST}]
rate of tax is NIL –Section 11 {CGST}]
[Section 5 {IGST} attracted, though the effective 3) Schedule III - Not leviable
rate of tax is NIL –Section 6 {IGST}] [Not being Supply – Sec 7(2)(a)]
3) Supplies under RCM - Leviable

[Section 9 (CGST) attracted, though the tax is
Non- taxable
payable by the recipient of supply]
[Section 5 (IGST) attracted, though the tax is
payable by the recipient of supply]
Taxable
Exempt Supply Nil rate of tax + 100% (wholly) exempt +

Non Taxable Supply
*Exempt supply does not include supplies *Implication of Exempt supply –

made under Reverse Charge Mechanism. No ITC is available in respect of exempt supply.
Taxable supply “Taxable supply” means a supply of goods or services or both which is LEVIABLE to tax
under this Act;
Non- taxable “Non-taxable supply” means a supply of goods or services or both which is NOT LEVIABLE
supply to tax under this Act or under the Integrated Goods and Services Tax Act;
Page 59
Q
1) Does GST applies for Alcoholic liquor for Human Consumption?
a) Yes
b) No
c) May be
d) Can’t say
2) Five petroleum products viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and
aviation turbine fuel have _______ been kept out?
a) Permanently
b) Temporarily
c) Both of the above
3) Electricity has also been kept _______GST.

a) Under
b) Out of
-
4) Aggregate Turnover under GST does not include:
a) Exempt Supplies
b) Export of goods and/or services
c) All taxable services
d) Value of inward supplies on which tax has been paid under Reverse Charge
5) GST is levied on supply of all goods and services except:

a) Alcoholic liquor for human consumption
b) Tobacco
c) Health care services
d) All of the above
6) On Petroleum Crude, High Speed Diesel, Motor Spirit (commonly known as Petrol), Natural Gas, and
Aviation Turbine Fuel:
a) GST is not levied at all
b) GST will be levied from a date to be notified on the recommendations of the GST Council
c) GST is levied, but exempt
Q A Q A Q A Q A Q A
1) b 2) b 3) b 4) d 5) b
6) b
A diamond is a coal that did well under pressure
Page 60
Page 61
SUPPLY
All forms of supply Import of SCHEDULE I

such as sale, transfer, SERVICES
barter, exchange,
license, rental, lease Activities without
or disposal. CONSIDERATION
CONSIDERATION
CONSIDERATION
Schedule II- Clarification
Whether or NOT in the Schedule III - SUPPLY
in the course or
furtherance of course or furtherance
business of business
Sale Transfer Barter Exchange
License Rental Lease Disposal
Consideration + Business
Supplier Recipient
Importation of Services:
i)
Consideration
ABC Inc, USA Mr.X, India
Business
ii)
Consideration
ABC Inc, USA PQR Ltd, India
Business
Page 62
5. Supply
 PRE-GST INDIRECT TAX STRUCTURE:
Particulars Excise Duty Sales Tax Service Tax Custom Duty

VAT CST
Taxable Event? Manufacture Intra-state sales Inter-state sales Provision of I/E of GOODS
service
 GST REGIME INDIRECT TAX STRUCTURE:
Particulars
GST
Taxable Event? SUPPLY
 Scope of supply:
1 Supply For the purposes of this Act, the expression “supply” includes––
includes
(a) all forms of supply of goods or services or both such as sale, transfer, barter,
exchange, licence, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of
business;
(c) the activities specified in Schedule I, made or agreed to be made without a

consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in

Schedule II.
 Understanding:
(a) Section 7 uses the word “inclusive”, this means the activities or transactions
mentioned in this section are only examples or say the list is illustrative not
exhaustive.
i) Sale and Transfer:

Though these are not defined under the law but this is term used in the
context of goods (as for services it is provision of services). Under the VAT
laws sale of goods is defined as transfer of property for consideration
(transfer of risk and reward).
Transfer is NOT defined under the Act but it has massive implications as it
makes the branch transfer taxable. This is because the GST law considers the
persons with separate registration as distinct persons (even though registered
with the same PAN).
Page 63
ii) Barter and Exchange:

While barter may deal with a transaction which only includes an exchange of
goods/services.
Example:
Mr.A, CA agrees to audit the accounts of Restaurant B. It is agreed between
Mr.A & B that B will provide the free food to Mr.A as consideration audit
services. Thus, Mr.A is providing audit services & B is providing the services of
supply of food to Mr.A. In Barter, two way supply takes place. Tax is payable
by both.
Exchange may cover a situation where the goods are partly paid for in goods
and partly in money.
Example:
1) When you go to buy a new television set, you are offered two bargains.
i) You can pay money and take television home.
ii) Alternatively, you may exchange your old television set and pay
lesser money to the extent of value determined for old television
set. Here money equivalent value of old television will also be
part of consideration on which GST will need to be paid.
2) Buying a new car in exchange of the old car.
Q. In respect of exchange, will the transaction be taxable as two different

supplies or will it taxable only in the hands of the main supplier?
Ans. Taxable as two different supplies. Exchange from point of each party will
need to be examined if it attracts the requirements of levy of tax.
iii) Licence, Lease, Rental etc.

Licenses, leases and rentals of goods are presently treated as services where
the goods are transferred without effective possession and control and
treated as sales where the goods are transferred with effective possession
and control.
Under the GST regime, such licenses, leases and rentals of goods would be
covered under the supply of service as per Schedule II to the CGST Act. [Para
5-clause f]
iv) Disposal:
Disposal is where there articles are being cleared up and not necessarily as
the main object of the business.
Q. What are examples of ‘disposals’ as used in supply?

Ans. Sale of old furniture by a garment manufacturer.
v) In the course of business:

Let’s have a look what will not construe supply in the course of business.
Mr.X sells his motor cycle for Rs.20,000. This will not attract GST as this supply
made is not in the course of his business.
Exception to above:
The import of service will qualify as supply even if it is not in the
course or furtherance of business meaning thereby import of
services are taxable even if it is personal purpose (this is to bring
parity with the taxation on goods if imported for personal use as the
import of goods for personal use attracts BCD) [Section 7(b)]
Page 64
vi) Furtherance of business

Word ‘furtherance’ intends to allow credit of tax even for new or future lines
of businesses.
Example:
ABC Ltd is engaged in the manufacture of Cement. It has been selling huge
quantity in North India and now planning to acquire cement manufacturing
unit in South India as well. It appoints an XYZ Ltd (AGENCY) for feasibility
analysis. It may be possible that none of the unit is found suitable for
acquisition by ABC Ltd. But the appointment of XYZ Ltd (AGENCY) is in the
furtherance of business of ABC Ltd.
(b) Importation of service (Detailed discussion):

The import of service will qualify as supply even if it is not in the course or
furtherance of business meaning thereby import of services are taxable even if
it is personal purpose (this is to bring parity with the taxation on goods if
imported for personal use as the import of goods for personal use attracts BCD)
[Taxing import of goods or service is necessary so that indigenous suppliers are
not put to a disadvantageous situation vis-à-vis overseas supplier]
Example:
Mr.X is availing the interior decoration services from Mr.John, USA for his house
(Office). Such supply of service is not in the course or furtherance of business
but by the virtue of Sec 7(1)(b), this qualifies to be supply.
is not in the course or furtherance of business
Import of service
Major points
Inter-state supply: RCM: Mandatory REG:

IGST Act - Sec 7(4) IGST Act - Sec 5(3) CGST Act - Sec 24(iii)
COI - Exp to Article (Recipient is liable [read with Sec 20-
269A(1) to pay tax to GOVT) IGST Act)]
2 Negative List Notwithstanding anything contained in sub-section (1), ––

(a) activities or transactions specified in Schedule III; or
-Schedule III
(b) such activities or transactions undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities, as
may be notified by the Government on the recommendations of the Council, shall be
treated neither as a supply of goods nor a supply of services.
3 Notification Subject to the provisions of sub-sections (1) and (2), the Government may, on the
over recommendations of the Council, specify, by notification, the transactions that are to be
treatment of treated as—
supply (a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
Page 65
 Characteristics of Supply:
SN Description
To characterize a transaction as supply following points need to be kept in mind:
  Supply means supply of goods or services.
 Supply of anything other than goods or services doesn’t amount for supply under GST.
 Goods as well as services have been defined in the GST Law.
 Both securities and money is excluded from the definition of goods as well as services, however,
activities relating to the use of money or its conversion by cash or by any other mode, from one
form, currency or denomination, to another form, currency or denomination for which a separate
consideration is charged are included in services.
 Supply should be a taxable supply

 Supply should be made by a taxable person
 Supply should be made within taxable territory
Page 66
SCHEDULE I
[See1 Section 7]
 Background:
If there is a consideration to the transaction then it becomes a supply {Sec 7(1)(a)}
There are certain transaction listed in Schedule I which are considered as supply even if it is without
consideration {Sec 7(1)(c)}. Therefore, GST is attracted on these transactions.
 Question- On what value the GST is charged?
 Answer- The value for the same is as per valuation rules.
 ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION:
1 Permanent Permanent transfer or disposal of business assets where input tax credit has been
transfer of asset availed on such assets.
 Example:
(i) Goods sent on job work or goods sent for testing or goods sent for
certification would not qualify as ‘supply’ under this clause since there is no
permanence in transfer.
[No supply, No GST]
(ii) Donation of used business assets (say furniture) or scrapping or disposal in

any other manner (other than as a sale) would qualify as ‘supply’ under this
clause.
[Yes supply, Yes GST]
(iii) Transfer of company laptop to orphanage for the education of the children
after certain years of use with no consideration is a supply,
[Yes supply, Yes GST]
(iv) In case of cars purchased by the company for use by directors would not
qualify for input tax credit and such input tax credit would therefore, not
have been claimed. Say, after a few years, the same car is transferred to
such hospital on a free of cost basis - this would not be treated as a supply
for the purpose of Schedule I as no input tax credit was availed on such car
{Blocked credit u/s 17(5)}
[No supply, No GST (as no ITC has been availed]
(v) Mr.X owns the showroom of electronic items and gives the washing
machine free of cost to one of his childhood friend Mr.Y. This transaction will
constitute supply & GST is chargeable on the value as determined under the
valuation rules.
Q. A dealer of air-conditioners permanently transfers an air conditioner

from his stock in trade, for personal use at his residence. Will the
transaction constitute a supply?
A. Yes. As per Sl. No.1 of Schedule-I, permanent transfer or disposal of
business assets where input tax credit has been availed on such assets
shall constitute a supply under GST even where no consideration is
involved.
Page 67
2 Supply b/w Supply of goods or services* or both between related persons or between distinct
Related persons persons as specified in section 25, when made in the course or furtherance of
or business: (*Services – Services by one Bank Branch to another Bank Branch)
Distinct persons
as per Sec 25
(Detailed PROVIDED that gifts not exceeding fifty thousand rupees in value in a financial year
discussion) by an employer to an employee shall NOT be treated as supply of goods or services or
both.
 Background to the PROVISO:

Many employers in order to encourage employees provide gifts for various
reasons.
For example: some employers provide gifts to employees successfully completing
10 years or 25 years of in the job. Many employers provide gifts for better
performance of the employees. If the total value of the gift does not exceed
Rs.50,000 in a financial year, it will not be considered as supply of GOODS made
by employer to employee. Therefore, no GST is charged on the same.
Related persons
Employer to Others
Employee Cases6
Gifts upto Rs.50K Gifts > Rs.50K Any Value
No Supply, Supply, thus Supply, thus

No Tax Taxable Taxable
Reversal of ITC No Reversal of No Reversal of

u/s 17(5) (h) ITC ITC
\
 Examples:
1) An employer gives Holi Gifts to employees worth Rs. 25,000/-.
Though the employer- employee are related persons but this transaction
shall not be considered as supply under Schedule I & thus not leviable to GST
as the amount of gifts are upto Rs.50,000.
2) An employer gives Holi Gifts to employees worth Rs. 65,000/-.

Since an employee and employer are related persons, such transaction shall
be considered as supply under Schedule I & thus would be leviable to GST.
3) Mr.X is in the business of trading of laptops gifts one of the laptop of

Rs.30,000 to his dependant brother (related persons). This shall constitute
supply under Schedule I & thus would be leviable to GST.
Page 68
3 Principal-Agent Supply of GOODS—

Relationship
(a) by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or
 Example 1A:
A company employs an agent in the city to undertake sales on behalf of the
company. Goods transferred by the company to the premises of the agent
would qualify as a ‘supply’.
(b) by an agent to his principal where the agent undertakes to receive such goods on
behalf of the principal.
 Example 1B:
A company employs an agent in the small town nearby to undertake
purchases on behalf of the company. Goods procured and transferred by the
agent to the company would qualify as a ‘supply’.
 Example 2:
XYZ Motors Ltd. engages India Cars Ltd. as an agent to sell cars on its behalf.
For the purpose, XYZ Motors Ltd. has supplied 20 cars to the showroom of
Indian Cars Ltd. located in Haryana.
Supply of cars by XYZ Motors Ltd. to Indian Cars Ltd. will qualify as supply.
4 Importation of Import of services by a taxable person from a related person or from any of his other
services* establishments outside India, in the course or furtherance of business.
 Example:
1) PQR Inc. is incorporated in the Australia by A Ltd and B Ltd in India, for
its operations in the Australia. A Ltd. together with B Ltd. in India, holds
PQR Inc. Where IT support services are imported by B Ltd from ABC Inc.
in the Australia without consideration, the importation will be deemed
to be a supply for Schedule I.
2) MNO Associates received legal consultancy services from its head office
located in New York, USA. The head office has rendered such services
free of cost to its branch office. Since MNO Associates and the branch
office are related persons, services received by MNO Associates will
qualify as supply even though the head office has not charged anything
from it.
*IMPORT OF SERVICES
With CONSIDERATION Without CONSIDERATION
In the course or NOT in the course Related Person/ Distinct Other Cases
furtherance of or furtherance of person + In the course or
business business furtherance of business
[Sec 7(1)(b)] [Sec 7(1)(b)] [Sec 7(1)(c) + Schedule I (IV)]
TAXABLE NON- TAXABLE
Page 69
SCHEDULE II
[See1 Section 7]
 ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES:
1 Transfer (a) any transfer of the title in goods is a supply of goods;
 Understanding:
Sale is nothing but transfer of title in goods, where the ownership is
transferred from one person to another. The transferor is no longer
remains the owner of the Goods.
 Example:
Mr.A sells Laptop to Mr.B [as it includes transfer of title in goods (Change
of ownership)].
Transfer of title in GOODS
With Consideration Without Consideration
Supply of Goods
Check Schedule I:
=
Entry 1 – XXX (Goods cannot be
GST
business asset)
Entry 2 – XXX (Sale is NOT made
to related persons
or deemed distinct
persons)
Entry 3 – XXX
Entry 4 – XXX
No Supply = No GST
(b) any transfer of right in goods or of undivided share in goods without the transfer
of title thereof, is a supply of services;
This clause is applicable only when the transfer is made without transfer of
title.
It has been discussed in two limbs:
i) Transfer of Goods:
Understanding:
This can be better understood if we study the Para 5 (f)
simultaneously and try to identify the difference between the two.
Page 70
Example:
Let say the you went to Tent decorator asked for shamiana, pandal,
carpets, cooler, fans (farrata),buckets, pipes, etc. for the marriage in
the family.
Now there can be two sort of understanding of transaction between
you and the Tent decorator.
1A) Tent decorator takes care of entire set up that is fixing of

pandal, placing of carpets, cooler, fans, crockeries, etc. The effective
control and possession (risk & rewards) will be in the hands of tent
decorator. It is the tent decorator who will be responsible for any
damage of any tent material, for any repairs & maintenance.
Therefore this is transfer of right in goods without transfer of title and
without transfer of effective control and possession.
[Supply of Service - Para 1 (b)]
1B) Tent decorator simply gives the tent material that is pandal,
placing of carpets, cooler, fans, crockeries, etc and allow you to use
the material the way you want. tent decorator basically transfers the
effective control and possession (risk & rewards) to you. It is you who
will be responsible for any damage of any tent material, for any
repairs & maintenance. Therefore this is transfer of goods without
transfer of title but with transfer of effective control and possession.
[Supply of Service- Para 5 (f)]
2A) Say you hire a taxi. Now you want to driver to take you to
Malviya Nagar he take you there. The effective control and possession
(risk & rewards) will be in the hands of taxi owner. You are not
responsible for any damage, any repairs and maintenance of taxi
means this is transfer of right in goods without transfer of title and
without transfer of effective control and possession. [Supply of
Service - Para 1 (b)]
2B) Say you hire a taxi for 3 days. Now you want to driver to take you
to Dilshad Garden he takes you there, you want driver to take you to
Malviya Nagar he takes you there, you want to take it to Amritsar he
takes you there. The effective control and possession (risk & rewards)
will be in the your hands and its you who is responsible for any
damage, any repairs and maintenance of taxi means this is transfer
of right in goods without transfer of title and with transfer of
effective control and possession.
[Supply of Service- Para 5 (f)]
ii) Transfer of undivided share in Goods

(Undivided share in GOODS refers to those goods which are owned
by 2 or more persons).
Example:
Let say a CAR is owned by 2 persons Mr.A & Mr.B. Say Mr.A has
transferred his share in CAR to Mr.C. This is supply of services.
Therefore, if one of the co-owner/ joint owner is transferring his

share in goods = Supply of Services
And, if all the co-owner/ joint owner is transferring the goods =
Supply of GOODS.
Page 71
(c) any transfer of title in goods under an agreement which stipulates that property in
goods shall pass at a future date upon payment of full consideration as agreed, is a
supply of goods (Hire-purchase or Instalment system).
Example:
Mr.X purchased Car on Instalment or hire purchase basis. The title to Car will
pass to Mr.X shall pass on the payment of final or last instalment due after 5
years. This is supply of goods.
2 Land & Building (a) any lease, tenancy, easement (right to passage), licence to occupy LAND is a
(Immovable supply of services;
property)
Example:
Mr.X gives on lease its vacant land for the purpose of setting up an exhibition.
In such a case this is a supply of service.
(b) any lease or letting out of the building including a commercial, industrial or
residential complex for BUSINESS or COMMERCE, either wholly or partly, is a supply of
services.
Example:
Renting of shop or building. This is supply of services.
3 Treatment or Any treatment or process which is applied to another person's goods is a supply of
process services.
 Example:
Cello company manufactures Pen & sent the Pens to its job worker to imprint
“CELLO” on its cap.
This is supply of service.
4 Transfer of (a)
business assets Where goods forming part of the assets of a business
are transferred or disposed of by or under the directions of the person
carrying on the business
so as no longer to form part of those assets,
whether or not for a consideration,
such transfer or disposal is a supply of goods by the person;
 Example:
i) TV installed at the Office of Mr.X sold for Rs.8,000.
Supply of Goods – Schedule II (4)(a)
iii) GST registered retailer is in the business of supplying mineral water. His family
is consuming 100 bottles of mineral water regularly every month. The disposal
of the mineral water for his family’s consumption is a supply of goods and
subject to GST.
iv) Star Furniture Enterprise, a sole proprietor, is in the business of selling

furniture. Its owner took a set of furniture to furnish his bedroom
permanently. The transfer of the furniture by the owner, whether or not for a
consideration, is a supply of goods and subject to GST.
Page 72
(b)
Where, by or under the direction of a person carrying on a business,
goods held or used for the purposes of the business are put to any private use
or are used, or
made available to any person for use, for any purpose other than a purpose of
the business,
whether or not for a consideration,
the usage or making available of such goods is a supply of services;
 Example:
i) Mr.X, a sole proprietor, is in the business of selling furniture. Its owner took
a set of furniture to furnish his house’s verandah temporarily for 3 months.
The personal use of the furniture by the owner, whether or not for a
consideration, is deemed as a supply of services by the company to him.
(c) where any person ceases to be a taxable person, any goods forming part of the
assets of any business carried on by him shall be deemed to be supplied by him in the
course or furtherance of his business immediately before he ceases to be a taxable
person, unless—
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed to

be a taxable person.
 Understanding:
When a person ceases to be registered under GST, the person may be holding
goods such as raw materials, products, trading stocks, land, plant and machinery at
the time of deregistration where input tax on these goods has been claimed. As a
result, the deregistered person is holding goods which are free from GST. In line
with the GST principles, the person is deemed to be making a supply of goods
which formed part of his business asset at the time of deregistration. The person is
required to account and pay for the GST on the supply if the supply of goods is a
standard rated supply.
 Example:
Mr X is a GST registered sundry store owner. As his business has
substantially reduced over the last year, he has decided to close the
business and retire. At the time of deregistration he has goods on hand
valued at Rs.5,000. Mr. X final GST return will therefore show his
supplies made during the last taxable period plus the Rs. 5,000 value of
the goods on hand during the deregistration.
 EXCEPTION:
a) A transfer of business as a going concern (TOGC) means a transfer or sale of a
business either wholly or partly, together with the assets of the business, from
one taxable person (transferor) to another person (transferee) who is a taxable
person or becomes a taxable person as a result of that transfer.
TOGC does not attract GST.
b) There can be circumstances where the business of the taxable person is

carried on by the personal representative in the event of his (taxable person)
death or where the taxable person becomes bankrupt or incapacitated, or
gone into liquidation.
Page 73
5 Supply of The following shall be treated as supply of service, namely:—

services
(a) Renting of immovable property; (Refer point II)
 Renting of land – Schedule II [2][a] + Schedule II [5][a]

 Renting of Building – Schedule II [2][b] + Schedule II [5][a]
 Renting of other immovable Property – Schedule II [5][a]
(b) Construction of a complex, building, civil structure or a part thereof, including a

complex or building intended for sale to a buyer, wholly or partly, EXCEPT where the
entire consideration has been received after issuance of completion certificate, where
required, by the competent authority or after its first occupation, whichever is earlier.
[Refer Schedule III (5)]
Explanation - For the purposes of this clause—

(1) the expression "competent authority" means the Government or any
authority authorised to issue completion certificate under any law for the time
being in force and in case of non-requirement of such certificate from such
authority, from any of the following, namely:—
(i) an architect registered with the Council of Architecture constituted

under the Architects Act, 1972; or
(ii) a chartered engineer registered with the Institution of Engineers

(India); or
(iii) a licensed surveyor of the respective local body of the city or

town or village or development or planning authority;
(2) the expression "construction" includes additions, alterations,

replacements or remodelling of any existing civil structure;
Understanding:
a) Construction Contract (Pure labour Contract)
Schedule II [5][b]
b) Construction Contract (Material + labour Contract)
(Qualifies to be Works Contract)
Schedule II [6][a]
(c) Temporary transfer or permitting the use or enjoyment of any intellectual property
right; (Like Copyright, Trademarks, Patents, Designs, etc)
 Understanding:
IPR is deemed to be movable property & since this is a movable property
hence qualifies to be GOODS u/s 2(52) CGST Act, 2017.
Transfer of IPR
Temporary Transfer Permanent Transfer
Supply of Services Supply of Goods

Schedule II-5(c) Schedule II-1(a)
Page 74
(d) Development, design, programming, customisation, adaptation, upgradation,

enhancement, implementation of information technology software (customized
development of software);
 Understanding:
IT Software is deemed to be movable property & since this is a movable
property hence qualifies to be GOODS u/s 2(52) CGST Act, 2017.
Supply - IT Software
Customised Software Pre-packed software
Supply of Services Supply of Goods

Schedule II-5(d) Schedule II-1(a)
(e) Agreeing to the obligation

 to refrain from an act, or
 to tolerate an act or a situation, or
 to do an act;
Understanding:
1) Agreeing to the obligation to refrain from an act:
Example:
 A agrees not to open dry clean shop in B’s neighborhood for Rs.5
lakhs. Rs.5 Lakhs is subject to GST.
Schedule II (5)(e)
2) Agreeing to the obligation to tolerate an act or a situation:

Example:
 Vodafone charges late fee from subscribers instead of
disconnecting services.
Schedule II (5)(e)
 HDFC charges for not maintaining the minimum balance in the

account.
Schedule II (5)(e)
 Cancellation charges by the IRCTC not cancellation of travel

ticket.
Schedule II (5)(e)
(f) Transfer of the right to use any goods for any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable consideration. (Dealt
with relate with Point I (b) Ist limb)
Page 75
6 Composite The following composite supplies shall be treated as a supply of services, namely:—
supply
(a) Works contract as defined in clause (119) of section 2; and
 Definition:
“Works Contract” means a contract for building, construction, fabrication
(moulding, piping, shaping) , completion, erection, installation, fitting out,
improvement, modification, repair, maintenance, renovation, alteration or
commissioning of any IMMOVABLE PROPERTY wherein transfer of property in
goods (whether as goods or in some other form) is involved in the execution of
such contract;
(Works Contract is a composite contract for material and labour)
Two Cases
Repairs of BUILDING Repairs of AC
Supply of Services Will be dealt as per the

Schedule II-6(a) concept of COMPOSITE
and MIXED Supply
(b) Supply, by way of or as part of any service or in any other manner whatsoever, of
goods, being food or any other article for human consumption or any drink (other than
alcoholic liquor for human consumption), where such supply or service is for cash,
deferred payment or other valuable consideration.
Restaurant Business
Without Alcohol With Alcohol

(Out of GST net)
Supply of Services
[Schedule II-6(b)] Supply of Services
[Schedule II-6(b)]
Restaurant to ensure that
Alcohol is billed separately with
VAT/CST as the case may be.
7 Supply of Goods The following shall be treated as supply of goods, namely:—
Supply of goods by any unincorporated association or body of persons to a

member thereof for cash, deferred payment or other valuable consideration.
Notes:
1) Association of persons’, must be one in which two or more persons join
in a common purpose or common action, and the association must be
one the object of which is to produce income, profits or gains.
(i) Two or more persons join;
(ii) Voluntarily for;
(iii) A common purpose or common action with object to produce profit or
gains.
Page 76
2) Sec 2(17) (e) of CGST Act ’17

“Business” includes-
….(e) provision by a club, association, society, or any such body (for a
subscription or any other consideration) of the facilities or benefits to its
members;
3) Sec 2(84) (f) of CGST Act ’17

“Person” includes-
… (f) an association of persons or a body of individuals, whether
incorporated or not, in India or outside India;
Supply by AOP/BOI
Supply of Goods Supply of Services
Supply of Goods Supply of Services

[Schedule II (7)] [Schedule II (7)]
Meaning & Scope of Supply
is wide enough to cover this
as supply of services
Page 77
SCHEDULE III
[See1 Section 7]
 ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR

A SUPPLY OF SERVICES:
1 Employer- Services by an employee to the employer in the course of or in relation to his
employee employment.
relationship
 Understanding:
Clause 1 of Schedule III of GST Act specifies the services by employee to employer
in the course or in relation employment as neither supply of goods nor supply of
service.
Thus the amount earned by the employee for providing the services to the
employer in the course or in relation to employment will not be considered as
supply of service by employee to employer.
In common parlance a contract of service or employer-employee relationship,

generally exists when a worker agrees to work for an employer, on a full-time or
part-time basis, for a specified or indeterminate period of time, in return for
wages or a salary. The employer has the right to decide where, when and how the
work is to be done.
A contract for service, generally exists when a worker agrees to perform work
personally in return for payment. The self-employed worker is not normally
required to perform the services personally.
Imp Notes:
a) Services provided by employee in the course of employment are only
excluded. However, in addition to employment, the employee provides other
services and it will be considered as service.
For example,
i) If the employee procures orders for the employer for which he gets
commission, the commission received by employee will be taxable.
ii) Tuition to employer’s children for Rs.5,000 per month.
b) Services provided on contract basis by person will not be considered as

service provided by employee in the course of employment. The services are
provided on principal-to-principal basis and not in the course of
employment.
c) Services provided by casual workers to employer will be considered as

services provided in the course of employment.
Q. Would amounts received by an employee from the employer on premature

termination of contract of employment be chargeable to service tax?
Ans. No. Such amounts paid by the employer to the employee for premature
termination of a contract of employment are treatable as amounts paid in relation to
services provided by the employee to the employer in the course of employment.
Hence, amounts so paid would not be chargeable to GST.
However any amount paid for not joining a competing business would be liable to be
taxed being paid for providing the service of forbearance to act.
Page 78
Q. Casual workers are employed by a contractor or a security services agency, who

deploys them for execution of a contract or for provision of security services to a
clients.
Ans. Services provided by the workers to the contractor are services in the course of
employment and hence not taxable. However, services provided by the contractor to
his client by deploying such workers would not be a service provided by the workers to
the client in the course of employment. The consideration received by the contractor
would therefore be taxable if other conditions of taxability are present.
 VERY IMP:
Q. Will recovery towards food and conveyance from employees be liable to tax as
supply by the employer to the employee?
Ans. Yes, as the exclusion in Schedule-III is only in respect of services ‘by
employee’ to the employer and not other way around.
[As per Schedule I, proviso to Entry, Gifts not exceeding fifty thousand rupees in
value in a financial year by an employer to an employee shall not be treated as
supply of goods or services or both.]
2 Services Services by any court or Tribunal established under any law for the time being in
provided by force.
Court
Explanation –
For the purposes of paragraph 2, the term "Court" includes District Court, High Court
and Supreme Court.
 Understanding:
The COI provides for setting up of subordinate courts for each Districts, High Court
for each State and the Supreme Court of India.
Further, COI provides for setting of Tribunals (Customs, Excise, Service Tax
Appellate Tribunal) for adjudication or trial by Tribunals of any dispute,
complaints, or offences under the respective laws.
The Court or Tribunal Supplies judicial services to the applicants who files appeals.
Fees is charged normally as filing fee at the time of filing of application. Therefore
no tax is payable on amount received by these institutions.
3 Services (a) the functions performed by the Members of Parliament, Members of State
provided by MP, Legislature, Members of Panchayats, Members of Municipalities and Members of
MLA other local authorities;
 Understanding:
MPs are elected by the people of India normally for 5 years. The
members so elected constitute the Lok Sabha. Members of the State
Assembly elect representatives who constitute the Rajya Sabha.
Members to Lok Sabha & Rajya Sabha are also nominated by the
President of India.
The members also elected to State Legislative Assembly generally once

in 5 years. They constitute State Assembly. Similarly the persons are also
elected for District Panchayats, Village Panchayats. The services provided
by such elected persons or nominated persons are excluded from the
definition of supply.
(b) the duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or
Page 79
 Understanding:
1) Chief Justice of India, Comptroller & Auditor General of India, etc are
the constitutional posts. Any remuneration received by the post holder
shall not be liable to pay GST on the same.
2) The Constitution of India provides for various authorities to be

constituted like
i) Election Commission of India
ii) Central Vigilance Commission (CVC)
iii) Central Water Commission (CWC)
iv) Competition Commission of India
v) Law Commission of India
vi) National Commission for Minorities (NCM)
vii) National Commission for Scheduled Castes (NCSC)
viii) National Commission for Scheduled Tribes (NCST)
ix) National Commission for Women (NCW)
x) National Commission on Farmers
xi) National Commission on Population
xii) Planning Commission
xiii) Union Public Service Commission (UPSC)
Various persons are appointed to these Commissions who provide the

services for the functioning of the Commission.
The members receiving remuneration for supply of any service to the said
Commission will not be liable to pay GST. They are excluded from the
purview of supply as per clause 3 of Schedule III.
(c) the duties performed by any person as a Chairperson or a Member or a Director
(Part Time Director) in a body established by the Central Government or a State
Government or local authority and who is not deemed as an employee before the
commencement of this clause.
 Understanding:
1) TRAI is a body established by the CG.
2) Maharashtra Government has constituted Maharashtra State Board of

Technical Education to regulate the technical education provided by
various colleges to the students.
The Delhi Government has also constituted Delhi Development
Authority (DDA) for developing the city of Delhi.
The constitution of these bodies provides inter alia for the

appointment of various members. It also provides for allowance being
paid to such members for the supply of services by these members to the
body. These members for the supply of services by these members to the
body. These members can be either government officials or experts in
trade and industry in the particular field. The amount received by these
persons for supply of services to such bodies will not be liable for
payment of GST as the same is excluded from the definition of supply.
4 Funerals , etc Services of funeral, burial, crematorium or mortuary including TRANSPORTATION of

the deceased.
 Understanding:
FUNERAL:
The ceremonies for a dead person prior to burial or cremation
Page 80
BURIAL:
The act or ceremony of burying a dead body
CREMATORIUM:
A building in which the bodies of dead people are burned
MORTUARY:
A room or building in which dead bodies are kept, for hygienic storage or for
examination, until burial or cremation.
5 Sale of land and Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
building
 Understanding:
As GOODS have been defined u/s 2(52) and it includes only movable property so
question comes whether the transaction of immovable property falls under the
ambit or scope of SERVICES and this may lead to the levy of GST but this has not
been the intent of the GOVT as the stamp duty has not been subsumed and the
deliberate insertion of Para 5 to Schedule III clarifies the picture in regard to the
transactions of immovable property and specifies that the sale of land and
building shall neither be treated as supply of GOODS nor as supply of SERVICES
and thus, remain out of the GST net.
IMMOVABLE PROPERTY
Sale of LAND Sale of BUILDING
NEITHER supply of
Goods nor Services ENTIRE CONSIDERATION ENTIRE or PART
is received after the CONSIDERATION is
issue of COC or after the received before the issue
No GST first occupation, EARLIER of COC or before the first
occupation, EARLIER
NEITHER supply of
Supply of Services
Goods nor Services
No GST
GST
6 Actionable Actionable claims, other than lottery, betting and gambling.

claims
 Understanding:
Section 2(52) of CGST Act, 2017 defines Goods which includes Actionable Claims.
Page 81
Supply of Actionable Claims
Supply of Actionable Supply of Other

Claims being - Lottery, Actionable Claims
Betting & Gambling
Supply of GOODS NEITHER supply of

Goods nor Services
GST
No GST
 Understanding of Actionable Claim:

Section 2(1) of CGST Act, 2017 says “Actionable claim” shall have the same
meaning as assigned to it in section 3 of the Transfer of Property Act, 1882;
Actionable claim-
---a claim to any debt, other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of moveable property, or
---to any beneficial interest in moveable property not in possession either actual
or constructive, of the claimant,
---which the civil courts recognize as affording grounds of relief whether such debt
or beneficial interest be existent, accruing or conditional or contingent.
Actionable Claim- in brief:

1) A claim to any unsecured debt.
 Example:
A borrows Rs. 50,000/- from B at 12% per annum interest on 1st April,
2006 and promises to pay back the amount with interest on 1st July,
2006. It is an actionable claim.
2) A claim to any beneficial interest in movable property not in possession of the

claimant.
 Example:
A has sold fifty bags of wheat to B but the bags of wheat are still lying in
the godown of A. B’s right to take possession of the bags of wheat from
the godown of A is his (B’s) Actionable claim.
CBEC’s Education Guide:
 What are actionable claims?

 As per section 3 of the Transfer of Property Act, 1893 actionable claims means a
claim to any debt, other than a debt secured by mortgage of immovable property
or by hypothecation or pledge of movable property or to any beneficial interest in
movable property not in the possession, either actual or constructive, of the
claimant, which the Civil Courts recognize as affording grounds for relief, whether
such debt or beneficial interest be existent, accruing, conditional or contingent.
Page 82
 Illustrations of actionable claims are –

• Unsecured debts
• Right to participate in the draw to be held in a lottery.
 Imp note:
As per the Sunrise Associates case law, it has been summarised that a lottery
ticket has no value in itself. It is a mere piece of paper. Its value lies in the fact
that it represents a chance or a right to a conditional benefit of winning a prize of
a greater value than the consideration paid for the transfer of that chance. It is
nothing more than a token or evidence of this right. There can be no doubt that
on purchasing a lottery ticket, the purchaser would have a claim to a conditional
interest in the prize money which is not in the purchaser's possession. The right
would fall squarely within the definition of an actionable claim.
Page 83
This is sale of Immovable

property out of GST ambit.
Schedule III (5)
>> Construction Service:
60% 40%
Certificate of First Occupation

Completion
This is sale of Immovable

property out of GST ambit.
Schedule III (5)
60% 40%
First Occupation Certificate of

Completion
This is supply of
Construction service
20% 50% 30%
Certificate of First Occupation

Completion
This is supply of
20% 50% 30%

Completion
Page 84
This is supply of
20% 50% 30%

Completion
This is supply of
20% 30% 50%

Completion
This is supply of
50% 20% 30%

Completion
Page 85
Q
1) What are different types of supplies covered under the scope of Supply?
a) Supplies made with consideration
b) Supplies made without consideration
2) What are the taxes levied on an intra-State Supply?

a) CGST
b) SGST
c) CGST and SGST
d) IGST
3) Which of the following taxes will be levied on Imports?

a) CGST
b) SGST
c) IGST
d) Exempt
4) Which of the following is not a supply as per section 7 of the CGST Act?
a) Management consultancy services not in course or furtherance of business
b) Import of service for consideration not in course or furtherance of business
c) Both (a) and (b)
5) _____________ specifies the activities to be treated as supply even if made without

Consideration
a) Schedule I of CGST Act
b) Schedule II of CGST Act
c) Schedule III of CGST Act
d) All of the above
6) Which of the following activity is outside the scope of supply and not taxable under GST?
a) Services by an employee to the employer in the course of or in relation to his employment
b) Services of funeral
c) Actionable claims, other than lottery, betting and gambling.
d) All of the above
7) Which of the following activities is a supply of services?

a) Transfer of right in goods/ undivided share in goods without transfer of title in goods
b) Transfer of title in goods
c) Transfer of title in goods under an agreement which stipulates that property shall pass at a
future date
d) All of the above
Q A Q A Q A Q A Q A
1) c 2) c 3) c 4) a 5) a
6) d
Page 86
Page 87
2 or more SUPPLIES
COMPOSITE SUPPLY MIXED SUPPLY
Page 88
6. Composite and Mixed supply
 Tax liability on composite and mixed supplies:
1 Composite and The tax liability on a composite or a mixed supply shall be determined in the following
Mixed Supply manner, namely: —
(a) a composite supply comprising two or more supplies, one of which is a principal
supply, shall be treated as a supply of such principal supply; and
(b) a mixed supply comprising two or more supplies shall be treated as a supply of
that particular supply which attracts the highest rate of tax.
 Understanding:
2(30) Composite “Composite supply” means a supply made by a taxable person to a recipient
supply consisting of two or more taxable supplies of goods or services or both, or any
combination thereof, which are naturally bundled and supplied in conjunction with
each other in the ordinary course of business, one of which is a principal supply;
Illustration: Where goods are packed and transported with insurance, the supply of
goods, packing materials, transport and insurance is a composite supply and supply of
goods is a principal supply.
Understanding:
Three important limbs to the definition:
(i) Two or more supplies
(ii) Naturally bundled
(iii) Principal supply
(iv) The ancillary supply becomes necessary only because of the acceptance of
the predominant supply.
(v) The method of billing, assignment of separate prices etc. may not be
relevant.
 Examples:
1) Supply of Laptop (Dell) with a carry bag (Dell) - Composite Supply
1a) Supply of Laptop (Dell) with a carry bag (Skybags) - Mixed Supply]
SN Composite Supply Mixed Supply

1 Laptop (Dell) + Bag (Dell) Laptop (Dell) + Bag (Skybags)
2) Supply of AC & installation of the same. Therefore, the value attributable

to erection and installation and warranty thereto will also be taxable as if
they are supply of the goods therein.
3) Laptop of Mr.X stopped working. Now Mr.X wants to get his laptop to be
in working condition. He took the services from Mr.Y .Now there was also
part of a laptop that has been changed. This is supply of repair services
instead of GOODS because the pre-dominant or the paramount, or the chief
or the cardinal element is to receive repair services along with requisite
parts. Therefore this is supply of SERVICES.
Page 89
3)a) In the above example, laptop’s screen apparently needs to changed

(broken). So, the pre-dominant or the paramount, or the chief or the cardinal
element is to replace the laptop screen & hence this is to be deemed as
Supply of Goods.
4)a) Healthcare services + Medicine = Healthcare services

The predominant supply is supply of health care services and ancillary supply
is the medicaments consumed.
5) XYZ Hotel provides a 4-D/3-N package with the facility of breakfast. This is
a natural bundling of services in the ordinary course of business. The service
of hotel accommodation gives the bundle of essential character & would,
therefore, be treated as service of providing Hotel accommodation.
6) Laptop + OS (Windows) = Composite Supply

6a) Laptop + AS (MS Office) = Mixed Supply

6) & 6)a) Laptop + OS (Windows) Laptop + AS (MS Office)
2(90) Principal supply “Principal supply” means the supply of goods or services which constitutes the
predominant element of a composite supply and to which any other supply forming
part of that composite supply is ancillary;
 Understanding:
If the ancillary supply were offered on a stand-alone basis, the same would
not be accepted by the recipient.
The ancillary supply becomes necessary only because of the acceptance of
the predominant supply.
The method of billing may not be relevant.
Even if separate prices were assigned to each of the supplies involved, the
one that is ancillary would not become predominant.
2(74) Mixed supply “Mixed supply” means two or more individual supplies of goods or services, or any
combination thereof, made in conjunction with each other by a taxable person for a
single price where such supply does not constitute a composite supply;
Illustration: A supply of a package consisting of canned foods, sweets, chocolates,

cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a
mixed supply. Each of these items can be supplied separately and is not dependent on
any other. It shall not be a mixed supply if these items are supplied separately.
 Understanding of the Example (law):

Assuming aerated drinks attracts GST @ 28% and dry fruits attracts GST @ 5%. As
per law, the entire supply will be considered as supply of aerated drinks & will
attract GST @ 28%.
 Understanding of the Concept:

Two important limbs to the definition:
(i) First identify whether the supplies qualify Composite Supply if not,
identify the grounds for the same.
(ii) Two or more supplies
(iii) Single Price
 Examples:
1) If a tooth paste (say for instance it is liable to GST at 12%) is bundled
along with a tooth brush (say for instance it is liable to GST at 18%)
Page 90
and is sold as a single unit for a single price, it would be reckoned as

a Mixed supply.
This would therefore be liable to GST at 18% (higher of 12% or 18%
applicable to each of the goods therein).
Yes, they are naturally bundled but both are principal as neither
toothpaste nor toothbrush is ancillary. The supply of one is not
dependent on another. Therefore this is a Mixed Supply – None of
goods is principal (you can go & only buy toothbrush or you can go
& only buy toothpaste)
2) In the above example, Supply of toothpaste (12%) and brush(18%)

& toothbrush (FOC)= 18%
Now Govt has a belief nothing in this world is free unless otherwise
proved in case of NGO’s. This would therefore be liable to GST at
18% (higher of 12% or 18% applicable to each of the goods therein).
3) Wheat & honey (say, If wheat is exempt my life is miserable…) –

Mixed Supply - Not naturally bundled
And Also – Mixed Supply - None of goods is principal (You can go &
only by Wheat or you can go & only buy to Honey).
4) Supply of laptop & the printer –

Though this is not naturally bundled.
This is Mixed Supply - None of goods is principal (You can go &
purchase only laptop & only printer)
5) Vehicle + extended warranty

Mixed Supply - This is not naturally bundled.
6) Supply of garments in a suit case

Mixed Supply - This is not naturally bundled.
Let us assume garments are taxed @ of 12 % whereas suit case is
taxed @ of 18 %. Tax will be charged on whole consideration at the
rate of 18 %.
7) Supply of coaching services and monthly trip. The two services are
not naturally bundled in the ordinary course of business.
Therefore, this supply is a mixed supply.

1 Laptop (Dell) + Bag (Dell) Laptop (Dell) + Bag (Skybags)
3 & 3A Laptop + OS (Windows) Laptop + AS (MS Office)
Page 91
Q
1) What are the factors differentiating Composite Supply & Mixed Supply?
a) Nature of bundling i.e. artificial or natural
b) Existence of Principal Supply
2) Which of the following supplies are naturally bundled?

a) Rent deed executed for renting of two different floors of a building-one for residential and another
for commercial purpose to same person
b) Pack of watch, tie and belt
c) Package of canned food such as burger, chocolates, sweets, cake etc.
3) A _______________ supply comprising of two or more supplies shall be treated as the supply of
that particular supply that attracts highest rate of tax.
a) Composite
b) Mixed
c) Both (a) and (b)
Q A Q A Q A Q A Q A
1) c 2) d 3) b
Work hard in silence let success make the noise
Page 92
Page 93
Page 94
7. Composition Levy
 Composition Scheme:
SN Description
1) Section 10 of the CGST Act states that notwithstanding anything to the contrary contained in this Act
but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose
aggregate turnover in the preceding financial year did not exceed seventy five lakh rupees, may opt
to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but
not exceeding particular amount of percentage of the turnover in State or turnover in Union territory
for following specified category subject to such conditions and restrictions as may be prescribed:
2)
Rate of Tax Assessee
1% + 1% = 2% Manufacture
2.5% + 2.5% = 5% Supply, by way of or as part of any service or in any other manner
whatsoever, of goods, being food or any other article for human consumption
or any drink (other than alcoholic liquor for human consumption), where such
supply or service is for cash, deferred payment or other valuable
consideration.
0.5% + 0.5% = 1% Traders
3) A reduced limit of 50 lakhs rupees have been kept for certain special category states.
SN States SN States
2) Assam 8) Sikkim
6) Nagaland
(V.IMP)
4) The threshold limit may be increased to such higher amount, not exceeding one crore rupees, through
a notification by Government on recommendation of Council.
 Conditions & restrictions:
SN Conditions & restrictions

a) The scheme is not available for services sector, except restaurants.
b) Supplier who is supplying the goods which are not leviable to tax under the CGST Act/SGST Act/UTGST
Act is not eligible to register under this scheme.
c) Tax payers making inter- state supplies of goods is not eligible for composition scheme.
d) Tax payer making supplies of goods through ecommerce operators who are required to collect tax at
source shall not be eligible for composition scheme.
e) Tax Payer who is not a manufacturer of such goods as may be notified by the Government on the
recommendation of the council is also not eligible for composition scheme
Page 95
 Other Implications:
SN Other Implications
1) Section 10 (4) states that a registered person under composition scheme is not permitted to collect
tax and neither he will be eligible for any input tax credit.
2) All registered persons having same PAN must opt to pay tax under composition scheme.
ABC Ltd

(Manufacture of RG)
Lucknow, Kanpur,
Plastic toys)
 Example:
1) A taxable person has the following business verticals separately registered:
 Sale of footwear
 Sale of mobiles
 Franchisee of McDonalds
In the above scenario, the composition scheme would be applicable for all the 3
business verticals. Taxable person will not be eligible to opt for composition scheme say
for sale of footwear and sale of mobiles and opt to pay taxes under the regular scheme
for franchisee of McDonalds.
2) Mr.X is registered in Mumbai, Maharashtra and in Ahmedabad in Gujarat. He must avail the
payment under the Composition Scheme both in Maharashtra and Gujarat.
3) Section 17(5)(e) also states that notwithstanding anything contained in sub-section (1) of section 16
and subsection (1) of section 18, input tax credit shall not be available in respect goods or services or
both on which tax has been paid under section 10.
d) The composition scheme is optional and the option availed of by a registered person under sub-section
10(1) shall lapse with effect from the day on which his aggregate turnover during a financial year
exceeds the specified limit.
 Example:
Say the aggregate turnover during the period 2017-18 is 57 lakhs of Mr.X, thereby he is entitled
to avail the benefits of Composition Scheme for the year 2018-19. Say on 24-12-2018 his
aggregate turnover exceeds Rs.75 lakhs. As per the provisions, the permission to avail the
composition scheme granted to him will automatically lapse on 24-12-2018.
Page 96
Q
1) Which of the following persons can opt for composition scheme?
a) Person making any supply of goods which are not leviable to tax under this Act;
b) Person making any inter-State outward supplies of goods;
c) Person effecting supply of goods through an e-commerce operator liable to collect tax at source
d) All of the above
e) None of the above
2) What is the threshold limit of turnover in the preceding financial year for opting to pay tax under
composition scheme?
a) Rs.30 lacs
b) Rs.10 lacs
c) Rs.75 lacs
d) Rs.50 lacs
3) What is the rate applicable under CGST to a registered person being a manufacturer opting to pay taxes
under composition scheme?
a) 2.50%
b) 1%
c) 0.5%
4) What is the rate applicable under CGST to a registered person being a hotelier opting to pay taxes under
composition scheme?
a) 1%
b) 0.50%
c) 2.50%
d) No Composition for Hotelier
5) What is the rate applicable under CGST to a registered person opting to taxes under composition
scheme, not being a manufacturer or a hotelier?
a) 1%
b) 2.50%
c) 0.50%
d) No Composition available
6) Can a registered person opt for composition scheme only for one out of his 3 business verticals having
same Permanent Account Number?
a) Yes
b) No
c) Yes, subject to prior approval of the Central Government
d) Yes, subject to prior approval of the Board
7) Can Composition scheme be availed if the registered person effects interstate supplies?
a) Yes
b) No
c) Yes, subject to prior approval of the Central Government
d) Yes, subject to prior approval of the Board
Page 97
8) Can a registered person under Composition Scheme claim input tax credit?
a) Yes
b) No
c) Input tax credit on inward supply of goods and/or services can be claimed
9) Can a registered person opting for composition scheme collect tax on his outward supplies?
a) Yes
b) No
c) Yes, if the amount of tax is prominently indicated in the invoice issued by him
d) Yes, subject to the approval of the Central Government
10) Which of the following will be excluded from the computation of ‘aggregate turnover’?
a) Value of Taxable supplies
b) Value of Exempt Supplies
c) Non-taxable supplies
d) Value of inward supplies on which tax is paid on reverse charge basis
11) What will happen if the turnover of a registered person opting to pay taxes under composition scheme
during the year 2017-18 crosses Rs.75 lakhs?
a) He can continue under composition scheme till the end of the financial year
b) He will be liable to pay tax at normal rates of GST on the entire turnover for the financial year 2017-18
c) He will cease to remain under the composition scheme with immediate effect.
d) He will cease to remain under the composition scheme from the quarter following the quarter in which
the aggregate turnover exceeds Rs.75 lacs.
12) What is the minimum rate of tax prescribed for composition scheme?
a) 4%
b) 2%
c) 1%
d) 5%
13) For certain Special category States, the reduced limit of Rs.50 lakhs for opting composition scheme is
available. Out of 11 Special category States, the reduced limit of Rs.50 Lakhs is not available for?
a) Sikkim
b) Assam
c) Uttarakhand
d) Nagaland
14) For certain Special category States, the reduced limit of Rs.50 lakhs for opting composition scheme is
available. Out of 11 Special category States, the reduced limit of Rs.50 Lakhs is not available for?
a) Manipur
b) Meghalaya
c) Himachal Pradesh
d) Jammu & Kashmir
15) A person having ____business verticals in a State ____obtain a separate registration for each business
vertical.
a) Single, shall
b) Multiple, shall
c) Multiple, may
Page 98
16) Can a person apply for registration to pay tax under Composition Scheme for any of his business
verticals at his choice?
a) Yes, irrespective of the registration status of other business verticals.
b) No all of his other business verticals also should have obtained registration for paying tax under
Composition Scheme
c) Yes, provided majority of the business verticals are paying under Composition Scheme
Q A Q A Q A Q A Q A
1) e 2) c 3) b 4) c 5) c
6) b 7) b 8) b 9) b 10) d
11) c 12) c 13) c 14) d 15) c
16) b
One day or day one. YOU decide
Page 99
Page 100
Page 101
Page 102
8. Time of Supply
 Introduction:
Point of taxation means the point in time when goods have been deemed to be supplied or services have
been deemed to be provided. The point of taxation enables us to determine the rate of tax, value, and due
dates for payment of taxes. Under GST the point of taxation, i.e., the liability to pay CGST / SGST, will arise at
the time of supply as determined for goods and services. CGST Act, 2017 states provisions to determine time
of supply of goods under section 12 and time of supply of services under section 13 of the Act.
12. Time of supply of goods:
1 Relevance of The liability to pay tax on goods shall arise at the time of supply, as determined in
Time of supply accordance with the provisions of this section.
2 Time of Supply The time of supply of goods shall be the earlier of the following dates, namely:—
Earlier of : (a) the date of issue of invoice by the supplier or

i) Invoice or
ii) Payment (b) the last date on which he is required, under sub-section (1) of section 31, to issue
received the invoice with respect to the supply; or
(c) the date on which the supplier receives the payment with respect to the supply:
PROVIDED that where the supplier of taxable goods receives an amount upto one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess amount shall, at the option of the said supplier, be
the date of issue of invoice in respect of such excess amount.
Understanding of Proviso:
 RECEIPT OF AMOUNT OF LESS THAN 1,000 In EXCESS:

It specifies that the supplier of taxable goods has received the amount in
excess upto Rs.1,000 than the amount indicated in the invoice at the time of
supply to the extent of such excess, at the OPTION to the supplier, is the date
of issue of INVOICE. This proviso provides the option to the supplier to
consider the TIME OF SUPPLY as a date of invoice. He can also consider the
date of receipt of payment as the Time of Supply to the extent of the excess
amount received.
 Example:
Company XYZ receives an advance of Rs.1,00,000 on 30th April, against which
it despatches goods worth Rs. 99,200 under invoice dated 5th May.
In this example, Company X has received Rs. 800 in excess, which cannot be
considered as payment for the present invoice, in terms of Explanation 1 to
section 12(2). Company X will adjust this excess amount against the next
supply.
The time of supply for Rs.800 can be taken as the date of the next invoice if
the supplier so chooses, though the payment was received earlier.
Page 103
 Sec 12: Time of Supply- Goods:
1) Supply involves movement of goods -- Section 12(2) r/w Section 31(1)(a):
SN Invoice Removal of Delivery of Receipt of Time of

Date Goods Goods Payment Supply
th th th th th
1 26 Oct 20 Oct 26 Oct 26 Oct 20 Oct
th th th th
2 10 Oct 20 Oct 26 Oct 10 Oct
2) Supply otherwise than involving movement of goods -- Section 12(2) r/w Section 31(1)(b):
SN Invoice Removal of Delivery of Receipt of Time of

Date Goods Goods Payment Supply
th th th th th
1 30 Oct 5 Nov 26 Oct 10 Nov 26 Oct
th th th th th
2 20 Oct 10 Nov 26 Oct 10 Nov 20 Oct
3) Supply involves movement of goods -- Section 12(2) r/w Section 31(4):
SN Invoice Removal of SOA/Payments Receipt of Time of

Date Goods due date Payment Supply
st th th st st
1 1 Nov 15 Oct 5 Nov 1 Nov 1 Nov
th th th th th
2 11 Dec 8 Nov 5 Dec 11 Dec 5 Dec
th th th st st
3 8 Jan 14 Dec 5 Jan 1 Jan 1 Jan
4) Reverse Charge Mechanism – Section 12(3):
SN Invoice Removal of Receipt of Payment Time of

Date Goods Goods By recipient supply
st st th th th
1 31 Oct 31 Oct 20 Nov 30 Nov 20 Nov
st st th th th
2 31 Oct 31 Oct 20 Nov 5 Nov 5 Nov
st th th th
3 31 Oct 30 Dec 5 Jan 30 Nov
st
(31 day)
5) Sale on Approval Basis – Section 12(2) r/w Section 31(7):
SN Removal of Issue of Accepted by Receipt of Time of

Goods Invoice Recipient Payment supply
st th th th th
1 1 Nov 25 Nov 15 Nov 25 Nov 15 Nov
st th th th th
2 1 Nov 25 Nov 15 Nov 12 Nov 12 Nov
st th th nd st
3 1 Nov 15 May-NY 15 May-NY 2 May-NY 1 April-NY
(6 months)
Page 104
Explanation 1.––For the purposes of clauses (a) and (b), “supply” shall be deemed to
have been made to the extent it is covered by the invoice or, as the case may be, the
payment.
Explanation 2.––For the purposes of clause (b), “the date on which the supplier
receives the payment” shall be the date on which the payment is entered in his books
of account or the date on which the payment is credited to his bank account,
whichever is earlier.
3 Reverse Charge In case of supplies in respect of which tax is paid or liable to be paid on reverse charge
Mechanism basis, the time of supply shall be the earliest of the following dates, namely:—
(a) the date of the receipt of goods; or
 Understanding:
The person is said to have received the goods when he accepts the goods
delivered to him. Acceptance of goods to a person CANNOT be considered as
received by him. The liability to pay tax arises only when the person accepts
the goods and NOT merely when the goods are received by him. Thus, date
on which person accepts the goods shall be considered as date of receipt of
goods.
Example:
The goods are delivered to the person say Mr.X on 10/07/2018. He examines
the quality and quantity of goods and provides the acceptance note to the
supplier on 15/07/2018 .Therefore the date of receipt of goods can be
construed as 15/07/2018.
(b) the date of payment as entered in the books of account of the recipient or the
date on which the payment is debited in his bank account, whichever is earlier; or
(c) the date immediately following thirty days from the date of issue of invoice or any
st
other document, by whatever name called, in lieu thereof by the supplier [31 Day]:
.Example:
Say the invoice dated 5/7/2018 raised by supplier Y is received by the
recipient X. As per clause (b) date on which payment is made is one the event
for determining the Time of Supply. Clause (c) provide that, if the payment is
not made within 30 days from the date of invoice, the date immediately
th
following the 30 day will be considered as date under clause (c) . Therefore
in the example above, if the invoice is not made by 4/8/2018, the 5/8/2018
will be considered as one of the date under clause (c).
PROVIDED that where it is not possible to determine the time of supply under clause
(a) or clause (b) or clause (c), the time of supply shall be the date of entry in the
books of account of the recipient of supply.
Page 105
6) Time of Supply for Vouchers - Section 13(4):
SN Issue of vouchers First Service/ Issue of Redemption Last date Time of

Section 13(4) [or Delivery Voucher of voucher For acceptance supply
Section 12(4)] of goods of voucher
st st th th st
1 Voucher issued to a 1 Nov 1 Nov 14 Dec 30 Oct 1 Nov
recipient after
supply
of a service [or
specific goods], for
the same service -
valid for 1 year
st st th th st
2 Voucher issued to a 1 Nov 1 Nov 14 Dec 30 Oct 1 Nov
recipient of
machinery along at
the time of
delivery, for
availing repair
services [or specific
goods] worth Rs.
5,000 - valid for 1
year
st st th th th
3 Voucher issued to a 1 Nov 1 Nov 14 Dec 30 Oct 14 Dec
recipient after
supply of a service,
for any other
services or
goods across India,
-
valid for 1 year)
Page 106
4 Supply of In case of supply of vouchers by a supplier, the time of supply shall be—
Voucher (a) the date of issue of voucher, if the supply is identifiable at that point; or
 Examples:
 Mr. A buys vouchers from Levi’s of worth Rs. 1,000/- for a shirt dated
st
December 01 . Mr. A gifts such vouchers to Mr. B who redeems such
st
vouchers on January 31 – Time of supply is the date of issue of vouchers
st
viz., December 01 .
 With each purchase of a large Burger during the Christmas week from
Burger Point, one can buy a voucher for Rs. 20 which will be redeemable
till 5 Jan for a small burger.
As the supply against which the voucher will be redeemed is known on the
date of the sale, the time of supply is the date of issue of the voucher.
(b) the date of redemption of voucher, in all other cases.
 Examples:
 Mr.A buys a voucher for Rs.500 from Shoppers Stop or say Reliance
st th
Trends on December 1 & redeemed the same on 15 Jan .Now at the
time of issuance there is no idea that whether the voucher will used
against readymade garments or Shoes or Cosmetics or Jewellery or
gadgets or watches, etc. So here the supply against the voucher gets
unidentifiable and therefore the Time of Supply happens to be the date
th
of redemption of voucher i.e. 15 Jan.
 Sodexo Limited sells food coupons to a company, which gives these to its
employees as part of the agreed perquisites. The coupons can be
redeemed for purchase of any item of food /provisions in the outlets that
are part of the program.
As the supply against which the coupon will be redeemed is not known
on the date of the sale of the coupon, the time of supply of the coupon
will be the date on which the employee redeems it against food /
provision items of his choice.
5 Residual Rule Where it is not possible to determine the time of supply under the provisions of
subsection (2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such
return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
 Example:
Investigation on XYZ Ltd reveals clandestine removal of goods by a supplier
who is not registered under GST. The supplier voluntarily pays tax during the
investigation, to close the case. The time of supply will be the date on which
the tax is paid, as being unregistered, the supplier is not required to file
periodical returns.
Page 107
 Some Illustrations:
1) An elevator has to be supplied at site. It is done by sourcing various components from vendors and
assembling the machine at site. The details of the various events are:
17th September Purchase order with advance of Rs. 70,000 is received for goods worth Rs. 12 lakh and
entry duly made in the seller’s books of account
20th October The elevator is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
4th November Balance payment of Rs. 11,30,000 received
Determine the time of supply(ies) in the above scenario.
1) The time of supply of goods to the extent of Rs. 70,000 is 17th September, as this payment was received
before the date of invoice [Section 12(2)(b)]. The time of supply of goods to the extent of the balance amount
th
of Rs. 11,30,000 is 20 October which is the date on which the goods were made available to the recipient as
per section 31(1)(b), and the invoice should have been issued on this date [Section 12(2)(a)].
2) GAIL supplies gas to XYZ Ltd by a pipeline. Monthly payments are made by the recipient as per contract.
Every quarter, invoice is issued by the supplier supported by a statement of the goods dispatched and
payments made, and the recipient has to pay the differential amount, if any. The details of the various events
are:
August 5, September 5, Payments of Rs 3 lakhs made in each month

October 6
October 3 Statement of accounts issued by supplier, with invoice for the quarter July – Sept
October 17 Differential payment of Rs. 56,000 received by supplier for the quarter July –
September as per statement of accounts
Determine the time of supply.
2) As per section 31(4), in the case of continuous supply of goods, the invoice should be issued before or when the
statement of accounts is issued; hence October 3 is the correct invoice date.
Time of supply will be August 5, September 5 respectively for goods valued at Rs. 3 lakh each, as the date of
payment is earlier than the date of invoice. [Invoice is yet to be issued for payment made on October 6].
Time of supply will be October 3 for goods valued at Rs. 3,56,000, as the date of invoice is earlier than the date
of payment.
3) Determine the time of supply from the given information (Reverse Charge Mechanism).
May 4 Supplier invoices goods taxable on reverse charge basis to Roadster & Co. (30 days from the
date of issuance of invoice elapse on June 3)
May 12 Roadster & Co receives the goods
May 30 Roadster & Co makes the payment
3) Here, May 12 will be the time of supply, being the earliest of the three stipulated dates namely, receipt of
goods, date of payment and date immediately following 30 days of issuance of invoice [Section 12(3)]. (Here,
date of invoice is relevant only for calculating thirty days from that date.)
Page 108
6 Interest, late fee The time of supply to the extent it relates to an addition in the value of supply by way
or penalty of interest, late fee or penalty for delayed payment of any consideration shall be the
TOS - Date on date on which the supplier receives such addition in value.
which the
supplier receives  Understanding:
such amount The clause (d) of section 15 (2) of the Act specifies that Interest, late fee or
penalty or delayed payment of any consideration for any supply will be
included in the Transaction value.
In many cases supplier of goods & services specifies the credit period within
which the recipient is required to make the payment. In case the recipient
makes the payment beyond stipulated in the invoice, the supplier will charge
separate charges.
These charges are mainly in the nature of INTEREST. Sometimes the rate of
interest is so heavy that it looks in the nature of PENALTY.
This section provides the TOS for such payment. The TOS shall be the date on
which the supplier receives the Interest, late fee or penalty. In case the
amount is not received, the tax on the same shall not be payable.
Practically, most of the suppliers raise the Debit Note for Interest, late fee or
penalty payable by the recipient by the recipient. In case where the supplier
has waived the recovery no tax will be payable on the said amount even if the
Debit Note for the recovery of the amount have been accounted for in the
BOA. The receipt of payment is essential to attract levy of tax.
3A) Determine the time of supply from the given information (Reverse Charge Mechanism).
May 4 Supplier invoices goods taxable on reverse charge basis to Tunnel & Co. (30 days from the date
of issuance of invoice elapse on June 3)
June 12 Tunnel & Co receives the goods;
July 3 Tunnel & Co makes the payment
3A) Here, June 4, 31st day from the date of supplier’s invoice, will be the time of supply, being the earliest of the
three stipulated dates namely, receipt of goods, date of payment and date immediately following 30 days of
issuance of invoice [Section 12(3)].
Page 109
Page 110
13. Time of supply of services:
 Background:
Section 31(2) of the GST Act provides that a taxable person supplying taxable services shall, before or after
the provision of service but within a period of 30 days, issue a tax invoice from the date of provision of
services. The period of 30 days is specified in Rule 1(2) of the INVOICE RULES.
Where the supplier of service is BANKING COMPANY or a FINANCIAL INSTITUTION, including NBFC, the
period of issuing the invoice is 45 days as against 30 days from the date of supply of service.
1 Relevance of The liability to pay tax on services shall arise at the time of supply, as determined in
Time of supply accordance with the provisions of this section.
2 Time of Supply The time of supply of services shall be the earliest of the following dates, namely:—
(a) the date of issue of invoice by the supplier, if the INVOICE IS ISSUED WITH THE
PERIOD PRESCRIBED under sub-section (2) of section 31 or the date of receipt of
payment, whichever is earlier; or
(b) the date of provision of service, if the INVOICE IS NOT ISSUED WITH THE PERIOD
PRESCRIBED under sub-section (2) of section 31 or the date of receipt of payment,
whichever is earlier; or
(c) the date on which the RECIPIENT shows the receipt of services in his books of
account, in a case where the provisions of clause (a) or clause (b) do not apply:
 Understanding:
Inspection shows that XYZ & Co carried out service of cleaning and repairs of
tanks in a Hotel, for which the Hotel showed a payment in cash on 4th April
to them against work of this description. The dates of the work are not clear
from the records of XYZ & Co. XYZ & Co have not issued invoice or entered
the payment in their books of account.
Page 111
 Sec 13: Time of Supply- Services:
1) Based on due date for invoicing Section 13(2) r/w Section 31(2):
SN Date of Commencement Completion of Receipt of Time of

Invoice of service service payment Supply
th th th th th
1 26 Dec 20 Oct 16 Nov 28 Jan 16 Nov
2) Reverse Charge Section 13(3):
SN Reverse charge Date of Date of Payment Entry of Time of

Section 13(3) Invoice completion of by receipt of supply
service Recipient services
in recipient'
s books
st st th st th
1 ___ 31 Oct 31 Oct 20 Nov 30 Nov 20 Nov
st st th st th
2 ___ 31 Oct 31 Oct 5 Nov 31 Oct 5 Nov
st st th st st
3 ___ 31 Oct 31 Oct 10 Jan 31 Oct 31 Dec
(60 days)
th th th
4 Service by 30 Nov 5 Dec 5 Dec
unregistered
person, no
payment made
st th th st st
5 Service received 31 Oct 30 Nov 5 April 31 Mar 31 Mar
from associated
enterprise located
outside India
st th th st st
5A Service received 31 Oct 30 Nov 5 April 31 Mar 31 Dec
from NON-
associated
enterprise located
outside India
Page 112
PROVIDED that where the supplier of taxable service receives an amount upto one
thousand rupees in excess of the amount indicated in the tax invoice, the time of
supply to the extent of such excess amount shall, at the option of the said supplier, be
the date of issue of invoice relating to such excess amount.
 Understanding:
Vodafone company receives Rs. 10,000 against an invoice of Rs.9,800. The
excess amount of Rs. 200 can be adjusted against the next invoice. The
company has the option to take the date of the next invoice as the time of
supply of service in relation to the amount of Rs. 200 received in excess
against the earlier invoice.
Explanation.–For the purposes of clauses (a) and (b)––

(i) the supply shall be deemed to have been made to the extent it is covered by the
invoice or, as the case may be, the payment;
(ii) “the date of receipt of payment” shall be the date on which the payment is
entered in the books of account of the supplier or the date on which the payment is
credited to his bank account, whichever is earlier.
3 Reverse In case of supplies in respect of which tax is paid or liable to be paid on reverse charge
Charge basis, the time of supply shall be the earlier of the following dates, namely:
Mechanism
[Eg – Importation (a) the date of payment as entered in the books of account of the recipient or the
of Service] date on which the payment is debited in his bank account, whichever is earlier; or
(b) the date immediately following sixty days from the date of issue of invoice or any
st
other document, by whatever name called, in lieu thereof by the supplier [61 Day]:
 Understanding:
(Keep in mind that in the above list there is no mention of the Invoice)
Example:
Say a person Mr.X has received the invoice on 15-07-2018 and has made the
payment of invoice of Rs.5 lakhs on 20-08-2018. The TOS would be 20-08-
2018. However in case of any reason he does not pay by 13-09-2018 (within
60 days), then the TOS would be the date immediately following the date of
60 days i.e. 14-09-2018. Hence, the time of supply would be 14-09-2018.
PROVIDED that where it is not possible to determine the time of supply under clause
(a) or clause (b), the time of supply shall be the date of entry in the books of account
of the recipient of supply:
 Example:
Investigation shows that XYZ & Co renders GTA services to PQR Ltd. It was
agreed between the parties that the consideration shall be settled in cash
which will NOT be shown in the books & there will be no invoice issued for
the same services. But the date when the PQR Ltd (the recipient) records the
th
same in its books is 17 Aug which happens to be time of supply for the same
service & the PQR Ltd (the recipient) will dispense the liability of GST
accordingly as the GTA services attracts RCM.
PROVIDED FURTHER that in case of supply by associated enterprises, where the

supplier of service is located outside India, the time of supply shall be:
 the date of entry in the BOA of the recipient of supply or

 the date of payment,
whichever is earlier.
Page 113
1) Determine the time of supply from the following particulars:

th
6 May Booking of Meeting hall, sum agreed Rs. 25,000, advance of Rs. 3,000 received
th
15 Sept Meeting held in hall
th
17 Sept Invoice issued for Rs. 25,000, indicating balance of Rs. 22,000 payable
3rd Nov Balance payment of Rs. 22,000 received
1) As per section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply of
service. In the given case, the invoice is issued within the prescribed time limit. As per section 13(2)(b), in a case
where the invoice is issued within the prescribed time, the time of supply of service is the date of issue of
invoice or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of Rs. 3,000 is 6th May as the date of payment of Rs. 3000
is earlier than the date of issue of invoice. The time of supply of service to the extent of the balance Rs. 22,000
th
is 17 September which is the date of issue of invoice.
1A) Determine the time of supply from the following particulars:

th
6 May Booking of Meeting hall, sum agreed Rs. 25,000, advance of Rs. 3,000 received
th
15 Sept Meeting held in hall
th
27 Oct Invoice issued for Rs. 25,000, indicating balance of Rs. 22,000 payable
3rd Nov Balance payment of Rs. 22,000 received
1A) As per section 31 read with rule 47 of CGST Rules, the tax invoice is to be issued within 30 days of supply of
service. In the given case, the invoice is NOT issued within the prescribed time limit. As per section 13(2)(b), in a
case where the invoice is not issued within the prescribed time, the time of supply of service is the date of
provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of Rs. 3,000 is 6th May as the date of payment of Rs. 3000
is earlier than the date of provision of service. The time of supply of service to the extent of the balance Rs.
th
22,000 is 15 September which is the date of provision of service.
2) Determine the time of supply from the given information (Reverse charge Mechanism)
th
4 May The supplier of service issues invoice for service provided.
th
15 June Payment made to the supplier of service
2) Here, June 15 will be the time of supply, being the earliest of the two stipulated dates namely, date of payment
and date immediately following 60 days since issue of invoice.
2A) Determine the time of supply from the given information (Reverse charge Mechanism)
th
4 May The supplier of service issues invoice for service provided.
th
24 Aug Payment made to the supplier of service
2A) Here, July 4 will be the time of supply, being the earliest of the two stipulated dates namely, date of payment
and date immediately following 60 days since issue of invoice.
Page 114
4 Voucher for In case of supply of vouchers by a supplier, the time of supply shall be––
supply of
services (a) the date of issue of voucher, if the supply is identifiable at that point; or
 Example:
 Say Restaurant XYZ has issued a voucher of Rs.1 lakh to Mr.A on 10-07-
2018. The voucher may encashed or used by the Mr.A till August 2018,
but the TOS would be 10-07-2018 as the voucher is identifiable with
particular supply.
 The EXCELLENT Hospitality Services enters into agreement with XYZ

Marketing Ltd by which XYZ Marketing Ltd. markets The EXCELLENT
Hospitality Services for stay in hotel rooms and sells coupons / vouchers
redeemable for a discount against stay in the hotel.
As the supply against which the voucher will be redeemed is identifiable,

the time of supply of the voucher will be its date of issue.
(b) the date of redemption of voucher, in all other cases.

 Example:
Say XYZ Ltd is into airline business and owns a hotel as well which provides
restaurant services as well as accommodation services. The airlines issues a
voucher of Rs.50,000 which can be encashed by the passenger either by
purchasing a ticket or for having food in the restaurant or for staying in the
hotel. Here the voucher is NOT identifiable with any particular supply of
service. Hence, the date of encashment or availment will be Time of Supply.
5 Residual Rule Where it is not possible to determine the time of supply under the provisions of
subsection (2) or sub-section (3) or sub-section (4), the time of supply shall––
(a) in a case where a periodical return has to be filed, be the date on which such
return is to be filed; or
(b) in any other case, be the date on which the tax is paid.
 Understanding:
(Same in case of GOODS)
6 Interest, late fee The time of supply to the extent it relates to an addition in the value of supply by way
or penalty of interest, late fee or penalty for delayed payment of any consideration shall be the
TOS - Date on date on which the supplier receives such addition in value.
which the
supplier receives  Understanding:
such amount (Same in case of GOODS)
Page 115
 Supply by:
 Associated Enterprise + Located outside India
 Non-Associated Enterprise + Located outside India
 FAQs (Modified):
Q. Time of supply of services under reverse charge mechanism where the supplier of service is
associated enterprises?
A. In case of associated enterprises located within India, the time of supply in terms of Section 13(3)
shall be the earliest of the following:
(a) Date of payment as per books of accounts; or
(b) Date on which payment is debited in the bank account of the supplier; or
(c) Sixty days from the date of issuing invoice by the supplier; or
Where associated enterprises is located outside India, the time of supply shall be the earliest of the
following dates:
(a) Date of entry in the books of accounts of the recipient; or
(b) Date of payment.
Particulars Non-associated Associated

Enterprises Enterprises
Date on which payment is December 15, 2017 December 15, 2017
entered in BOA
Date on which payment is December 17, 2017 December 17, 2017
debited to bank account
Date of issuance of invoice December 10, 2017 December 10, 2017
Sixty days from the date of February 09, 2018 February 09, 2018
issuing invoice
Date of entry in the books of December 10, 2017 December 10, 2017
accounts of the recipient
Time of supply December 15, 2017 December 10, 2017
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 Change in rate of tax in respect of supply of goods or services:
Supplied Issue of Invoice Receipt of Time of Supply Rate of Tax

payment
Before After After Date of invoice or Receipt of New
payment, whichever is Earlier
Before Before After Date of issue of Invoice Old
Before After Before Date of receipt of payment Old
After Before After Date of receipt of payment New
After Before Before Date of invoice or Receipt of Old
payment, whichever is Earlier
After After Before Date of issue of Invoice New
 TEST:
Q. If 95% of the work is complete before the change in rate of tax but invoice can be raised only after
completion of supply then what is the rate of tax to be applied?
Ans. Assuming the supply is completed after the change in rate of tax, new rate will apply.
Understanding of PROVISO:
st
Say, Change of rate: 1 April 2018
Particulars Scenario 1 Scenario 1

th th
Bookish Entry 30 March 2018 30 March 2018
st st
Rate change 1 April 2018 1 April 2018
th th
Date of Credit 20 April 2018 4 April 2018
Date of Payment 20th April 2018 30th March 2018
Example:
Some examples assuming change in rate of tax in respect of supply of services is w.e.f. 01.07.2018 (old rate 15%
& new rate is 18%):
Cases Date of Date of Date of Time of Rate of

providing invoice by Payment by Supply tax
service supplier recipient
1 12.05.2018 12.05.2018 15.07.2018 12.05.2018 15%
2 20.07.2018 12.06.2018 26.07.2018 26.07.2018 18%
3 10.06.2018 15.06.2018 18.07.2018 15.06.2018 15%
4 26.07.2018 08.06.2018 11.06.2018 08.06.2018 15%
5 21.06.2018 21.07.2018 12.06.2018 12.06.2018 15%
6 28.07.2018 28.07.2018 12.06.2018 28.07.2018 18%
Page 118
14. Change in rate of tax in respect of supply of goods or services:
1 Notwithstanding anything contained in section 12 or section 13, the time of supply,
where there is a change in the rate of tax in respect of goods or services or both, shall
be determined in the following manner, namely: ––
If the service has (a) in case the goods or services or both have been supplied before the
been provided change in rate of tax, –
before the
change in ROT (i) where the invoice for the same has been issued and the payment is also received
after the change in rate of tax, the time of supply shall be the date of receipt of
payment or the date of issue of invoice, whichever is earlier; or
(ii) where the invoice has been issued prior to the change in rate of tax but payment
is received after the change in rate of tax, the time of supply shall be the date of issue
of invoice; or
(iii) where the payment has been received before the change in rate of tax, but the
invoice for the same is issued after the change in rate of tax, the time of supply shall
be the date of receipt of payment;
If the service has (b) in case the goods or services or both have been supplied after the change
been provided in rate of tax,––
after the change
in ROT (i) where the payment is received after the change in rate of tax but the invoice has
been issued prior to the change in rate of tax, the time of supply shall be the date of
receipt of payment; or
(ii) where the invoice has been issued and payment is received before the change in
rate of tax, the time of supply shall be the date of receipt of payment or date of issue
of invoice, whichever is earlier; or
(iii) where the invoice has been issued after the change in rate of tax but the
payment is received before the change in rate of tax, the time of supply shall be the
date of issue of invoice:
PROVIDED that the date of receipt of payment shall be the date of credit in the bank
account if such credit in the bank account is after four working days from the date of
change in the rate of tax.
Explanation.–For the purposes of this section, “the date of receipt of payment” shall
be the date on which the payment is entered in the books of account of the supplier
or the date on which the payment is credited to his bank account, whichever is
earlier.
Page 119
Date of receipt of payment:
i) General Part:
Within 4 WD
Entry in BOA Change in ROT Date of Credit

28-3-2018 01-04-2018 03-04-2018
(Cheque received)
Date of payment receipt

28-03-2018
ia) General Part:
Within 4 WD
Change in ROT Entry in BOA Date of Credit

01-04-2018 02-04-2018 03-04-2018
(Cheque received)

02-04-2018
ii) Special Part:
More than 4 WD
Entry in BOA Change in ROT Date of Credit

28-3-2018 01-04-2018 10-04-2018
(Cheque received)

10-04-2018
iia) Special Part:

More than 4 WD
Change in ROT Entry in BOA Date of Credit

01-04-2018 02-04-2018 10-04-2018
(Cheque received)

10-04-2018
Page 120
Q
1) What is time of supply of goods under CGST Act, 2017?
a) Date of issue of invoice
b) Date of receipt of consideration by the supplier
c) Date of despatch of goods
d) Earlier of (a) & (b)
2) What is time of supply of goods liable to tax under reverse charge mechanism?
a) Date of receipt of goods
b) Date on which the payment is made
c) Date immediately following 30 days from the date of issue of invoice by the supplier
d) Earlier of (a) (b) (c)
3) What is the time of supply of vouchers when the supply with respect to the voucher is identifiable?
a) Date of issue of voucher
b) Date of redemption of voucher
c) Earlier of (a) & (b)
d) Any of the above
4) What is the time of supply of vouchers when the supply with respect to the voucher is not identifiable?
a) Date of issue of voucher
b) Date of redemption of voucher
d) Any of the above
5) What is date of receipt of payment?

a) Date of entry in the books
b) Date of payment credited into bank account
c) Earlier of a and b
d) Any of the above
6) Mr. A supplies goods worth Rs. 24,300 to Mr. B and issues an invoice dated 25.7.2017 for Rs. 24,300 and
Mr. B pays Rs. 25,000 on 30.7.2017 against such supply of goods. The excess Rs. 700 (being less than Rs.
1,000) is adjusted in the next invoice for supply of goods issued on 5.8.2017. Identify the time of supply
and value of supply:
a) Rs. 25,000 – 30.7.2017
b) For Rs. 24,300 – 25.7.2017 and for Rs. 700 – 30.7.2017
c) Rs. 25,000 – 25.7.2017
d) Both (b) or (c) is available
7) What is the time of supply of service if the invoice is issued within 30 days from the date of provision of
service?
b) Date on which the supplier receives payment
c) Date of provision of service
8) What is the time of supply of service if the invoice is NOT issued within 30 days from the date of
provision of service?
b) Date on which the supplier receives payment
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c) Date of provision of service

d) Earlier of (b) & (c)
9) What is the time of supply of service for the supply of taxable services up to Rs.1000 in excess of the
amount indicated in the taxable invoice?
a) At the option of the supplier – Invoice date or Date of receipt of consideration
b) Date of issue of invoice
c) Date of receipt of consideration
10) How is the date of receipt of consideration by the supplier determined?

a) Date on which the receipt of payment is entered in the books of account
b) Date on which the receipt of payment is credited in the bank account
d) (a) & (b) whichever is later
11) What is the time of supply of service in case of reverse charge mechanism?
a) Date on which payment is made to the supplier
b) Date immediately following 60 days from the date of issue of invoice
c) Date of invoice
12) What is the time of supply of service in case an associated enterprise receives services from the service
provider located outside India?
a) Date of entry in the books of account of associated enterprise(recipient)
b) Date of payment
d) Date of entry in the books of the supplier of service
13) Value of services rendered is Rs. 2,00,000/. Date of issue of invoice is 5th August 2017.Advance Received
is Rs. 1,25,000/- on 20th July 2017. Balance amount received on 7th August 2017. What is the time of
supply for Rs. 2,00,000/-
a) 5th August 2017 for Rs. 2,00,000/-
b) 20th July 2017 for Rs. 2,00,000/-
c) 20th July 2017- Rs. 1,25,000/- and 5th August 2017 for Rs. 75,000/-
d) 20th July 2017- Rs. 1,25,000/- and 7th August 2017 for Rs. 75,000/-
14) There was increase in tax rate from 20% to 24% w.e.f. 1.6.2018. Which of the following rate is applicable
when services are provided after change in rate of tax in June 2018 but invoice issued and payment
received, both in April 2018?
a) 20% as it is lower of the two
b) 24% as it is higher of the two
c) 20% as invoice and payment were received prior to rate change
d) 24% as the supply was completed after rate change
when services provided and invoice raised after change in rate of tax in June 2018, but payment
received in April 2018?
c) 20% as payment (being one of the factors) was prior to rate change
d) 24% as invoice was issued in the period during which supply is completed
Page 122
when invoice was issued after change in rate of tax in June 2018 but payment received and goods
supplied in April 2018?
c) 20% as payment was issued in the period during which the supply was effected
d) 24% as invoice being one of the factors was issued after rate change
17) There was decrease in tax rate from 24% to 20% w.e.f. 1.6.2018. Which of the following rate is
applicable when invoice was issued after change in rate of tax in June 2018 but payment received and
goods supplied in April 2018?
c) 24% as two of the three factors occurred prior to rate change
d) 20% as one of the factors occurred after rate change
Q A Q A Q A Q A Q A
1) d 2) d 3) a 4) b 5) c
6) d s7) d 8) d 9) a 10) C
11) d 12) c 13) c 14) c 15) D
16) c 17) c 18) 19) 20)
don’t give up.
The beginning is always the hardest
Page 123
Page 124
9. Value of Supply
 Meaning of “Consideration”:
“Consideration” in relation to the supply of goods or services or both includes––
(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not
include any subsidy given by the Central Government or a State Government;
 Made or to be made:
This is to be discussed with TOS provisions
 Money or otherwise (exchange offers):

i) When you go to buy a new television set, you are offered
two bargains. You can pay money and take television home.
Alternatively, you may exchange your old television set and pay lesser money to the extent of value
determined for old television set. Here money equivalent value of old television will also be part
of consideration on which GST will need to be paid.
ii) A flat given in consideration for redeveloping a house into a multi storeyed house.
 Flow of Consideration- from anyone but it shall not come from the GOVT:
i) Holding company may pay for supply of services or goods that are provided to its associated
companies (Bill to Ship to Model).
ii) In case of service during warranty, the service is provided by the authorised dealer to buyer of the
motor cycle but the payment is made to the authorised dealer by the manufacturer.
iii) R orders A, a flowers bouquet supplier, to deliver a bouquet to B on his/her birthday.
iv) A new brand of perfumes asking its dealers to sell at below their purchase price and the company
shall compensate the loss .Therefore in this case also the consideration for taxable sumpplies being
paid partly by a third person (perfume company).
 Shall not include any subsidy given by the Central Government or a State Government
In order to subsidize the sale price of fertilizer. The manufacturer of fertilizer are entitle to receive the
subsidy on the sale of fertilizer made by them.
In view of the specific provision of Sec 2(31) and Sec 15(2), subsidy provided by Govt will not form part of
Consideration and also Transaction Value.
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply
of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given
by the Central Government or a State Government:
 Act/forbearance:
1) Mr.X went to a Chartered Accountant and asked for the preparation of books of accounts for his
company. He charges Rs.1 lakhs & Mr.X paid the amount.
2) Mr.Y went to a Chartered Accountant and asked for the preparation of books of accounts for his
company. He charges Rs.1 lakhs & in return Mr.X designed his house (being architect).
Page 125
3) Mr.Z went to a Chartered Accountant and asked for filing his ITR. He charged Rs.1,000 & in return
CA requested to close the tea stall right in front of his office where he desires to install the GENSET
or park his car.
PROVIDED that a deposit given in respect of the supply of goods or services or both shall not be considered as
payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
 Understanding:
The landlord receives the security deposit from the tenant in connection with renting the flat. The security
deposit is refundable. This security deposit is not ‘consideration for supply of service’ and hence shall not be
taxable. However if in the future, if in future, if it is adjusted towards the services supplied, then this security
deposit shall be treated as consideration.
Page 126
SUBSIDY
NOT DIRECTLY DIRECTLY linked

linked to price to price
By GOVT By Private Enterprises

If you go and invest Rs. 5 Crores in Subsidies received from Private
North Eastern states, Govt will give Enterprises on procurement of Eco
the subsidy or say grant amounting Friendly capital goods.
to Rs.1 Crore.
 Can the same be called as  Can the same be called as
subsidy DIRECTLY linked to subsidy DIRECTLY linked to
price?? price??
 NO, therefore the same will not  NO, therefore the same will not
be included in the Value. be included in the Value.
By GOVT By GOVT
So as to support farmers, the GOVT offers subsidy to So as to reduce pollution, the Private Enterprises to
the manufacturer on the sale of fertilizers like Urea. encourage paper bags over polythene bags offers subsidy to
the manufacturer
Price per Kg = 10
Subsidy @ 10% = 1 Price per Kg = 10
Customer pays = 9 Subsidy @ 10% = 1
Customer pays = 9
In this case the customer have to pay Rs.9 per kg &
Re.1 per kg shall be paid by the GOVT. In this case the customer have to pay Rs.9 per kg & Re.1 per
 Can the same be called as subsidy DIRECTLY linked kg shall be paid by the GOVT.
to price??  Can the same be called as subsidy DIRECTLY linked to
 YES, but the same will not be included in the Value price??
because on one hand we are providing subsidy and  YES, and the same will be included in the Value because
on the other hand we want to add it to the value this not given by the GOVT. Therefore that is to be
of goods. Not done!! added to the value & therefore tax is to be levied.
Page 127
VALUE of taxable supply:
1 Transaction The value of a supply of goods or services or both shall be the transaction value,
Value which is
 the price actually paid or payable for the said supply of goods or services or
both
Understanding:
The word “paid” has been used in the reference of Cash sales. The word
“payable” is used in the reference of Credit sales.
 where the supplier and the recipient of the supply are not related and
Understanding:
If the supplier & recipient are related then there are chances that the
price for the supply of goods & services may get influenced.
 the price is the sole (ek lota, single) consideration for the supply.
Understanding:
Examples on when the price is not consideration:
(i) Let say a CA has been hired for the audit of some electronic
company. The fees that CA have charged is Rs.1 lakhs .After handing
over the audit report CA is given with Rs.1 lakhs and an Air
Conditioner. In this case, the price is not the sole consideration and
the value for such Air Conditioner shall be added to the TV so as to
arrive at the Value on which tax is to be levied.
(ii) Mr. X makes supply of Rs. 2 Lakhs to Mr. Y. The contracts provides
that Mr. Y will pay Rs. 50,000 to Mr. X and Rs. 1,50,000 to Mr. Z to
settle the debt of Mr. X. In this case, the price of Rs. 50,000 is not
the sole consideration for sale. The amount of Rs. 1,50,000 payable
by Mr. Y to Mr. Z is part of consideration for supply of goods.
Therefore, GST will be payable on the entire amount of Rs. 2 lakhs
and not only on Rs. 50,000.
2 The inclusion The value of supply shall include–––

Part:
(a) any taxes, duties, cesses, fees and charges levied under any law for the time being
in force other than this Act, the State Goods and Services Tax Act, the Union
Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation
to States) Act, if charged separately by the supplier;
 Example:
In the rent contracts, along with rentals the tenant is required to pay local tax
[electricity charges + electricity duties] to the owner of the premise. Such
local tax [electricity duty] shall form part of the Transaction Value.
(b) any amount that the supplier is liable to pay in relation to such supply but which
has been incurred by the recipient of the supply and not included in the price actually
paid or payable for the goods or services or both;
 Example:
Say a CA have been hired by XYZ Ltd. to represent the case of the client at UP
Tribunal. CA fees is Rs.2 lakhs. A day before CA travelled to Lucknow, UP.
Though the fees charged was inclusive of everything but still the client XYZ
Ltd has arranged fooding & lodging facility for the CA amounting to Rs.
20,000. Therefore by virtue of this clause the Rs.20,000 shall be added to Rs.2
lakhs so as to arrive at the value for supply of services. Therefore, the value
on which tax is to be levied is Rs. 2,20,000.
Page 128
(c) incidental expenses, including commission and packing, charged by the supplier to
the recipient of a supply and any amount charged for anything done by the supplier in
respect of the supply of goods or services or both at the time of, or before delivery of
goods or supply of services;
 Example:
1) X Company appoints agent Y to procure orders. Y procures order from A
for supply of 100 Kg. of B goods at a price of Rs. 10 per Kg. X supplies the
goods to A and charge him only Rs. 9.50 per Kg , with the instruction that
50 paise shall be directly paid to Y by him. Payment by A to Y is in
connection with the supply of goods made by X to A. Therefore, 50 paise
will be considered as part of transaction value for the purpose of section
15 and GST will be payable on the commission amount paid by A to Y.
2) It is often seen whenever the person intends to gift any article to other
person, he requests the supplier to pack the goods in a particular packing
to give beautiful look to the gift. The amount for the special packing is
separately paid by the recipient to the supplier. As per clause (c) the cost
of such packing will be included in the value of goods being supplied
even if the cost of packing is separately paid by the recipient.
3) Very often when the company intends to dispose of plant and machinery
in installed condition, they advertise sale of plant and machinery on ‘as is
where is basis’. It means that the person intending to buy the plant and
machinery shall quote the price considering the fact that the machinery
will have to be dismantled before being transported. Mr.X has
approached the company for the purchase of the same machinery and
quoted Rs. 2 lakhs. The deal has been agreed by the both the parties.
Mr.X requested the company to uninstall the machinery & company
asked for additional Rs.10,000 for uninstalling the same & Mr.X has
agreed for the same. Now the Rs.10,000 to be added to Rs. 2 lakhs.
Therefore, it is Rs.2,10,000 on which tax is to be levied.
(d) interest or late fee or penalty for delayed payment of any consideration for any
supply; and
 Understanding:
Time of supply of interest, late fees or penalty for delayed payment of
consideration for goods or services:
As per the valuation provisions, the taxable value of any supply includes
interest, late fees or penalty paid for delay in payment of consideration.
However the time of supply for such interest, late fees or penalty has been
segregated from the original supply. If time of supply of the original supply
was retained, interest would become payable on tax paid on such payments.
As per the GST law, the time of supply to the extent it relates to an addition
in the value of supply of goods or services or both by way of interest, late
fees or penalty for delayed payment of any consideration shall be the date on
which the supplier receives such addition in value.
 Example:
M/s. X has supplied goods to M/s. Y on a credit period of thirty days. The
contract provides that the interest will be charged at the rate of 18% for the
delay in making payment of supply. It is specifically provided that such
interest will be value in itself and GST will be payable on same.
Page 129
(e) subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments.
Explanation – For the purposes of this sub-section, the amount of subsidy shall be
included in the value of supply of the supplier who receives the subsidy.
 Understanding:
Government gives subsidy on supply of cooking gas cylinders to poor families.
Now-a-days, the subsidy is directly transferred to the account of the poor family.
The company making supply of gas cylinder sells the goods at a fixed price and
not at the subsidized rate. The amount of subsidy is directly credited to the
account of poor family and not received by company making the supply.
Therefore, such subsidy will not be considered as part of transaction value as it is
not received by the person making the supply.
Going by the explanation, the subsidy is not received by the Company. Therefore,
no point to get the subsidy amount included in the Value to levy tax. Moreover, in
this case the subsidy is given by the Govt and therefore not to be included in the
Value.
3 Discount shall The value of the supply shall not include any discount which is given––
not be included (a) before or at the time of the supply if such discount has been duly RECORDED in
in TV the INVOICE issued in respect of such supply; and
(b) after the supply has been effected, if—
(i) such discount is established in terms of an agreement

entered into at or before the time of such supply and specifically
linked to relevant invoices; and
(ii) input tax credit as is attributable to the discount on the basis of

document issued by the supplier has been reversed by the recipient
of the supply.
 Understanding:
As per this clause the TV will not include any discount allowed before or at the
time of supply if such discount is allowed in the course of normal trade practice
and SHOWN in the INVOICE.
Sec 15(3)(b)(i) specifically allows discount which has been provided to the
customers after the supply has been made if it is established in terms of the
AGREEMENT before the time of supply and SPECIFICALLY LINKED TO THE
INVOICES. The purpose is to ensure that the discount is known to the customer at
or prior to the supply of goods or services so he can ask for such discount from
the supplier of goods & services and might be this is the reason that he was
purchasing maximum qualifying quantity so as to be eligible for discount (Eg:
quantity discounts). Therefore even this amount of discount should not form part
of the value on which tax is to be levied.
SPECIFICALLY LINKED TO THE INVOICES:

POST SUPPLY DISCOUNTS are offered by way of CREDIT NOTES to the recipient.
Currently, credit notes are given lumpsum amount of discount. The invoice-wise
details are not mentioned in the Credit Note. But now as per Sec 15(3)(b)(i), the
deduction of discount will be permitted only when it is linked to the invoice. It
means the reference number of the original invoice number should be reflected in
the Credit Note.
Page 130
REVERSAL OF CREDIT BY THE RECIPIENT:

Sec 15(3)(b)(ii) provides that the post supply discount shall be allowed as
deduction for determination of value of supply, when the ITC has been reversed
by the recipient of supply as it is attributable to the discount. This condition will
be applicable only when the recipient has taken the credit of GST paid by the
supplier on the supplies made to him. If the recipient has marked the credit as
ineligible or has reversed the credit for any reason, the above condition need not
be complied with.
Sec 43 also provides that the reduction in the OTL of the supplier due to credit
note will be permitted only when his reduction in OTL is matched with ITC of the
recipient of supply.
TIME LIMIT for issue of CREDIT NOTE:

30-9-…. or 31-12-…. of the following year, whichever is EARLIER.
Example (Very Imp):

Q. Quantity discounts are not recorded on the face of the invoice. Can the
Quantity discounts be claimed as deduction while computing GST?
Ans. Quantity Discounts are allowed based on the volume / value of purchases
made by the customer for a particular period. The discount is allowed at the end
of a particular period based on the pre agreed rates entered into between the
supplier and the recipient. The supplier is in a position to link discount with each
invoice and hence the same will be allowed as a deduction. However, the
recipient needs to reverse credit to the extent of such discount.
4 Value cannot be Where the value of the supply of goods or services or both cannot be determined
ascertained under sub-section (1), the same shall be determined in such manner as may be
prescribed.
5 Value for certain Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of
supplies as such supplies as may be notified by the Government on the recommendations of the
prescribed by the Council shall be determined in such manner as may be prescribed.
Govt Explanation - For the purposes of this Act,––
(a) persons shall be deemed to be “related persons” if––
(i) such persons are officers or directors of one another’s businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are EMPLOYER and EMPLOYEE;
(iv) any person directly or indirectly owns, controls or holds twenty-five per
cent or more of the outstanding voting stock or shares of both of them; (v)
one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third persons; or
(viii) they are members of the same family;
Page 131
Q
1) The value of supply of goods and services shall be the
a) Transaction value
b) MRP
c) Market Value
d) Any of the above
2) The value of supply should include

a) Any non-GST taxes, duties, cesses, fees charged by supplier separately
b) Interest, late fee or penalty for delayed payment of any consideration for any supply
c) Subsidies directly linked to the price except subsidies provided by the Central and State Government
d) All of the above
3) When can the transaction value be rejected for computation of value of supply.
a) When the buyer and seller are related AND price is not the sole consideration
b) When the buyer and seller are related OR price is not the sole consideration
c) It can never be rejected
4) What deductions are allowed from the transaction value

a) Discounts offered to customers, subject to conditions
b) Packing Charges, subject to conditions
c) Amount paid by customer on behalf of the supplier, subject to conditions
d) Interest, late fee or penalty for delayed payment of any consideration for any supply
5) If the goods are supplied to related persons then how should the taxable person ascertain the value of
supplies?
a) Seek the help of the GST officer
b) Use the arm’s length price as required under the Income Tax law
c) Refer the Rules which will be prescribed for this purpose
6) Which of the following shall not be included in value of supply?

a) GST
b) Interest
c) Late fee
d) Commission
7) Which of the following statement(s) is/are correct?

a) Section 15 of CGST Act prescribes different provisions for valuation of goods and Services
b) CGST Act and IGST Act have different provisions for valuation of supply
c) Section 15 of CGST Act prescribes same set of provisions for valuation of goods and services
d) (a) and (b)
8) Discount given after the supply is deducted from the value of taxable supply, if –
a) such discount is given as per the agreement entered into at/or before the supply
b) such discount is linked to the relevant invoices
c) proportionate input tax credit is reversed by the recipient of supply
d) all of the above
Page 132
Q A Q A Q A Q A Q A
1) a 2) D 3) b 4) a 5) c
THE key to success is to start
before you are ready
Page 133
 Supply of Exempt & Taxable Supply:
UP
>> Therefore,
PQR Ltd, =>CGST+SGST+IGST= 3,60,000 shall
Supplier be added to the Cost of Supply.
Value = 10,00,000
CGST = 90,000
SGST = 90,000 UP
Total = 11,80,000
Value = 23,60,000
Value = 10,00,000 CGST = 2,12,400
IGST = 1,80,000 SGST = 2,12,400
Total = 11,80,000 Total = 27,84,000
Punjab POS= UP
Exempt Supplies
MNO Ltd,
Supplier
>> Therefore,
=>CGST+SGST+IGST= 3,60,000 shall
be eligible for Input Tax Credit
UP (means shall not be added to the

Cost of Supply)
PQR Ltd,
Supplier
Value = 10,00,000
CGST = 90,000
SGST = 90,000 UP
Total = 11,80,000
Value = 20,00,000
Value = 10,00,000 CGST = 1,80,000
IGST = 1,80,000 SGST = 1,80,000
Total = 11,80,000 Total = 23,60,000
Punjab Taxable Supplies
MNO Ltd,
Supplier POS= UP
Page 134
10. Input Tax Credit
 Introduction:
Input Tax Credit (ITC) is considered as a cornerstone of GST. In the previous tax regime, there was a non-
availability of credit at various points of supply chain, which led to a cascading effect of tax and increased the
cost of goods and services. This flaw has been removed under GST and a seamless flow of credit throughout
the value chain will be provided which will help in reducing the cascading effect of tax.
To avail the benefit of ITC it is required that the person availing such benefit is registered under GST. An
unregistered person is not eligible to take the benefit of ITC.
Section 155, of the CGST Act, 2017 states that where any person claims that he is eligible for input tax credit
under this Act, the burden of proving such claim shall lie on such person.
 What is INPUT TAX:
“Input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax
charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services
Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and
Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and
Services Tax Act,
but DOES NOT INCLUDE the tax paid under the composition levy;
Page 135
Conditions for availing ITC
He (Recipient) is in He (Recipient) has Tax on such supply He (Recipient) has

the possession of received the should have been furnished the
invoice or other tax supply of goods or paid to GOVT return u/s 39
paying document. services or both
Sec 16 (2): Ist Proviso- Lot Basis Sec 16 (2): IInd Proviso- Pay in 180 days
Supply of Goods & Services
Ist LOT received = 15-10-2018
Payment =< 180 days

IInd & final LOT received = 15-12-2018
Mr.X Mr.Y
Supplier Recipient
NO ITC on 15-10-2018
Supply of Goods & Services
Entire ITC on 15-12-2018
Payment > 180 days

If separate invoice is issued for each of the lots then credit can
be taken on receipt of each lot. Mr.X Mr.Y
Reverse ITC and reclaim the

same on payment.
Copyright CA ROHIT GAMBHIR 10 Copyright CA ROHIT GAMBHIR 10
Cost of asset = 100 Sec 17: Apportionment of credit and

Tax @ 10% = 10 blocked credits
Total =110
Sec 17 (1):
Use of Goods
or Services
For Business For Other

If Dep. charged If Depreciation purpose purposes
on Rs.100 charged on Rs.110
ITC ITC NOT
Available Available
ITC Available ITC not Available

Copyright CA ROHIT GAMBHIR 14
Page 136
 Eligibility and Conditions for taking Input Tax Credit:

 Section 16 of the CGST Act, 2017, states the condition and eligibility to obtain ITC. Following four
conditions are required to be fulfilled by a registered taxable person:
SN Description
(a) He (the recipient) should be in possession of tax invoice or debit note or such other tax paying
documents (like Bill of entry, supplementary invoice, etc) as may be prescribed;
(b) He (the recipient) should have received the goods or services or both;
Explanation — For the purposes of this clause, it shall be deemed that the registered person has
received the goods where the goods are delivered by the supplier to a recipient or any other
person on the direction of such registered person, whether acting as an agent or otherwise,
 W before or during movement of goods, either by way of transfer of documents of title to goods or
h otherwise;
e
Example:
r Mr.X may direct that the goods shall be delivered to his Job worker Mr.A. The goods received by
e Mr.A will be considered as received by Mr.X only.
t(c) The supplier should have actually paid the tax charged in respect of the supply to the government; and
h
(d)
e He (the recipient) should have furnished the return under section 39.
 Goods against an invoice are received in lots or instalments, the registered person shall be entitled to
take credit upon receipt of the last lot or instalment.
 Availability of ITC to recipient has been made dependent on payment of tax by supplier. Thus, even if the
receiver has paid the amount of tax to the supplier and the goods and/or services so procured are
eligible for ITC, no credit would be available, till the time tax so collected by the supplier is deposited
to the Government.
 Also if a recipient fails to pay the amount of supply along with tax payable thereon within 3 months
within 180 days from the date of issue of invoice, the recipient will be liable to pay along with the output
tax liability an amount equal to the input tax credit availed by the recipient along with interest thereon.
Page 137
Page 138
 Input Tax Credit Restriction:
Goods and Services Tax aims at providing seamless flow of credit throughout supply chain. However, below is
a list of few situations as mentioned in section 17 of Central GST Act, 2017 where input tax credit will not be
available:
a) Goods or  The Act specifically states that input tax credit can only be taken for the amount
services partly of input tax paid on goods or services or both used for the purpose of business.
used for
business  Thus, if goods or services or both are used partly for purpose of business and
purpose partly for other purpose,
 only that amount of input tax which is attributable to the purpose of business
will be allowed as credit.
b) Zero rated and  Where Goods or services or both are used partly for taxable supplies including
Exempted zero rated supplies under IGST or under CGST Act, and partly for exempted
Supplies supplies,
 only that amount of input tax which is attributable to the taxable supplies
including zero rated supplies will be allowed as credit.
c) Motor Vehicle  Input tax credit is not available on motor vehicle and other conveyance.
and other
conveyance  However, if motor vehicle and other conveyance are used for taxable supply of
transportation of such vehicles/conveyances, transport of passengers or
imparting training on flying, driving and navigating such vehicles or conveyances
or for transportation of such goods, Input Tax Credit will be allowed.
 Examples:
(a) further supply of such vehicles or conveyances ; or
Example:
(i) Tax paid on cars by the manufacturer will be available as ITC to
a Car dealer (the purchaser) as Car dealer will further sells the
cars to the customer.
(ii) There are many organization who are engaged in purchase and
sale of used cars. These dealers purchase used car from
individual/companies. If GST is paid on purchase of car by the
dealer dealing in used car, the credit of GST paid will be
available to such dealers. The used car will be sold by him and
he will be liable to pay GST.
(iii) Tour travels agency purchased a Motor Vehicle & agency

further rents it to customer. Therefore the ITC for the
conveyance is allowed.
(b) transportation of passengers; or

Example:
(i) There are number of motor vehicle /buses which runs from one
point to another point like Mumbai-Pune or Mumbai-
Vadodara. The company providing such journey will be
considered as providing the services of transportation of
passenger. The GST paid on motor vehicle/buses purchased by
them will be available as credit in view of exceptions made in
Page 139
section 17(4)(a).
(ii) Very often, the company hires buses for the purpose of
bringing the employees to their factory. This become essential
when the factories are located outside City. Such
transportation shall also be considered as transportation of
passengers.
(c) imparting training on driving, flying, navigating such vehicles or

conveyances;
Example:
(i) Any persons who wants to learn driving a vehicle joins one
another institute which provides training on motor driving skill.
Such institute prepare the person by imparting training to drive
the motor vehicle. As per clause 17(5)(a) such institute will also
be entitled to the credit of input tax paid on motor vehicle.
Such institute uses the motor vehicle for the purpose of
providing services.
(ii) There are many training center to train Pilot in flying

commercial aircrafts. GST paid on aircraft purchased by such
training institution will also eligible as credit.
(ii) for transportation of goods;

Example:
There are many manufacturers who buys motor vehicle like lorry,
tempo, etc. for transportation of goods manufactured by them
(Tent Decorators/ Courier Agency)
d) Food and  Input tax credit is not available on supply of above mentioned services
beverages,
outdoor  EXCEPT where an inward supply of goods or services or both of a particular
catering, category is used by a registered person for making an outward taxable supply of
beauty the same category of goods or services or both or as an element of a taxable
treatment, composite or mixed supply.
health
services,
cosmetic and  Example:
plastic surgery (i) Many Kirana shops (Wholesalers) buy various beverages like Pepsi, Coca
Cola, Frooty, Appy, Maaza, etc. GST will be payable by them at the time
of purchase of these beverages. They make supply of these items to their
customers. Since these shops are engaged in supply of beverages, credit
of GST paid on beverages by these shops will be available to them.
(Wholesalers will get the credit)
(ii) Lays (Chips) purchase by the Office or the company to welcome the guest
at the company. No credit available.
(iii) The outdoor caterer supplies variety of foods, which includes supply of
ice creams, chat, fruits, sweet dish, etc. Now-a-days, even in food,
different counters can be seen for Punjabi food, Rajasthani food, South
Indian food, Mexican food, Italian food, Chinese food etc. The outdoor
caterer may not be expert in preparation of different type of food.
Therefore, he sub-contact these counters to various persons. Such sub-
contractors will charge to the main contractor GST under the category of
outdoor catering, GST charged by such sub-contractors will be available
to the main contractor as both are providing the services falling under
Page 140
the same category, viz. outdoor catering.
(iv) Company A organizes meeting of various distributors and dealers and

provides meal during meeting to distributors and dealers. The supplier of
food will charge the company GST under the category of outdoor
catering. The credit of GST paid on such outdoor catering will not be
available, although such services are used for business purpose.
(v) In case of making of a movie, beautification of actor/actress is required

to be made. The producer may employee such beautician in their pay roll
in which case no GST is payable; but, if the producer hire beautician,
beautician will charge GST. The GST paid on such services will not be
available. The producer does not supply the service under same
category.
(vi) Services of a beautician taken by a beauty parlor or as an element of a

taxable composite or mixed supply.
(vii) There are many persons like Bollywood actors/actress, players, who
receive personal services for upkeep of their health or to shape body in a
particular shape. These trainers will charge GST on the services provided
by them. The output services of famous personalities will not be taxable
under health services and accordingly credit of GST paid will not be
available.
(viii) Many health and fitness center employ health experts like
dietician in their center. These dieticians regularly advice the members
on health and fitness with regard to habit of eating. The trainers also
advise the members regarding the nature of exercise to be undertaken
considering their age and body. The dietician and trainers will charge GST
under the category of health services to the health and fitness center.
The credit of the same will be available to health and fitness center as
both are providing health care services.
e) Membership Input tax credit is not available on supply of membership of a club, health and
of a club, fitness centre.
health and
fitness centre  Understanding:
The exclusion given over here specifically provides that services are primarily
used for personal use and consumption of an employee. Therefore, it appears
that the intent of specifying the services in negative list is that these services are
predominantly used for personal purpose.
f) Rent-a-cab,  Input tax credit is not available on supply of services of rent-a-cab, life
life insurance insurance and health insurance.
and health
insurance  However, where the Government notifies the services which are obligatory for
an employer to provide to its employees under any law for the time being in
force or
 Example:
Call centers work 24 hours in a day. Therefore, various Governments have
created obligation on the employer to provide facility of pick up and drop.
The female employees are required to be picked up and dropped to their
residence. The vehicle shall have security guard. The call center hires the
services of rent-a-cab operator for providing such services of pickup and
drop to the employees of the company.
Page 141
 such inward supply of goods or services or both of a particular category is used

by a registered person for making an outward taxable supply of the same
category of goods or services or both or as part of a taxable composite or
mixed supply, input tax credit will be available.
 Example:
Let say travel company hires a cab in urgency from Ola Cabs. The travel
company will get the credit as they both carry the same category of
business.
g) Travel benefits Input tax credit is not available on travel benefits extended to employees on
extended to vacation such as leave or home travel concession.
employees on  Understanding:
vacation such The terms of employment provide certain number of leave in a year to the
as leave or employee. It also provides for providing travel benefits to employee when
home travel he avails such holidays i.e. when he goes on vacation. The employer pay for
concession such benefits like airfare, hotel accommodation, conveyance etc. The
provider of service will also charge GST. This clause excludes availment of
credit on such travel benefits extended to employees while on vacation.
h) Works  Input tax credit is not available on works contract services when supplied for
contract construction of an immovable property (other than plant and machinery).
services
 However, Input Tax Credit will be allowed when it is an input service for further
supply of works contract service.
 Understanding:
Tax paid by sub-contractor for construction of a factory administration
building is available as credit to the main contractor for payment of its
liability, however the tax paid by the main contractor will not be available to
the factory owner / manufacturer.
i) Construction Input tax credit on goods or services by a person for construction of immovable
on own property, other than plant and machinery, is not allowed.
account
 Example:
If the XYZ Ltd purchases the construction material & avails labor services for
the construction of new building for administrative works. The ITC on the
same material & on the services is not allowed.
Say if you hire DLF to construct that building the credit on the same services
is not allowed to XYZ Ltd (by virtue of above clause)
But if DLF purchases building material & avails services to render the works
contract services to the XYZ Ltd, in that case DLF is entitled to get that ITC
on the same building material & labour services used in the rendering of
works contract services.
j) Tax paid under If tax has been paid under composition scheme on supply of goods or services or
Composition both, input tax credit is not allowed.
Scheme
 Understanding:
As per section 17(5) that input tax credit will not be available on goods or
services which are procured from a person who has opted to pay tax on
composition basis. Thus, person opting for composition scheme will be put
to great disadvantage as recipient of goods or services will not entitled to
the input tax credit of tax paid by him.
Page 142
k) Goods or Input Tax Credit is not allowed when goods or services or both are received by a non-
services or resident taxable person, however, if goods are imported by such non-taxable
both received person, input tax credit will be allowed.
by a non-
resident  Who is Non-resident taxable person?
taxable person  “Non-resident taxable person” means 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;
 Understanding:
Section 17(5) of the GST Act specifically excludes the availment of credit by
a non-resident taxable person of input tax paid on any goods or services
received by him. The only exception in IGST paid on goods imported by
him.
l) Goods or Input tax credit is not allowed for goods or services or both used for personal
services or consumption.
both used for
personal  Understanding:
consumption Section 17(5) (g) propose to disallow the credit to the extent of input or
input services is not used for business purposes.
m) Goods lost, Input tax credit is not allowed with respect to goods lost, stolen, destroyed or
stolen, written off as well as on goods given as gifts or free samples will also be not
destroyed, allowed.
written off or
disposed of by  Understanding:
way of gift or Credit of GST paid on input or capital goods is permitted when input or
free samples capital goods are used in the course or furtherance of business. The use of
goods is essential condition for the purpose of availment of credit. If for
any reason, input is not used and is destroyed by natural calamities like fire,
flood, earthquake etc. credit on such input cannot be permitted.
Clause (h) disallows credit in respect of goods which are lost, stolen,
destroyed, written off. Credit of input tax paid on goods distributed by way
of gift or free sample is also sought to be disallowed.
In the instances where goods are lost, stolen, destroyed, input or capital
goods is not available, but in the case of written off, the input or capital
goods is available, but value of it is written off in the books of account.
However, clause (h) specifically provide REVERSAL OF CREDIT in such case
also.
In case where goods are disposed of by way of gift or free sample, there is
no consideration for sale of goods and tax is not payable on output supply.
Therefore, clause (h) requires that the input tax credit availed on such
goods shall be reversed.
ATTENTION PLEASE:
Goods disposed of by way of gifts are in the negative list. Credit of tax paid
on purchase of diaries, calendars or other goods which are disposed of as
free gifts would not be available.
Page 143
>> Some Examples:
S No IF… THEN…
1 Cement is used for No. Building is Immovable Property.
construction of administration
building
2 Cement is used for foundation Yes as such structural support for plant and machinery is included in
of pillars supporting a boiler definition of plant and machinery.
3 Works contract services is Yes. Works contracts service is excluded except when used for
provided by sub-contractor to providing work contract service.
a contractor
4 Health insurance for factory Yes. Apart from being statutorily

workers if it is statutorily mandated, credit is not allowed unless permitted by Government by
mandated to take such notification.
insurance
5 Goods are used for running a Yes as guest house is used for furtherance of business. (dispute cannot
guest house in a factory be ruled out)
6 Car used by a factory for No. Car or any conveyance is in negative list, except when it is intended
personal use for use in further supply or for making taxable supply of transportation
of passenger service.
7 Steel and other structural are No. Telecommunication towers is Immovable Property.
used for setting up a
telecommunication tower
Page 144
Q
1) Whether definition of Inputs includes capital goods
a) Yes
b) No
c) Certain capital goods only
d) Notified capital goods
2) Is it mandatory to capitalize the capital goods in books of Accounts?

a) Yes
b) No
c) Optional
d) Yes, subject to conditions
3) Whether credit on capital goods can be taken immediately on receipt of the goods?
a) Yes
b) No
c) Anytime
d) After capitalizing in books of Accounts
4) Under section 16(2) of CGST Act how many conditions are to be fulfilled for the entitlement of credit?
a) All the conditions
b) Any two out of four conditions
c) Conditions not specified
5) Whether credit on inputs should be availed based on receipt of documents or receipt of goods?
a) Receipt of goods
b) Receipt of Documents
c) Both
*6) In case supplier has deposited the taxes but the receiver has not received the documents, is receiver
entitled to avail credit?
a) Yes it will be auto populated in recipient monthly returns
b) No as one of the conditions of 16(2) is not fulfilled
c) Optional
7) Input tax credit on capital goods and Inputs can be availed in one installment or in multiple installments?
a) In thirty six installments
b) In two installments
c) In one installment
d) In six installments
8) The time limit to pay the value of supply with taxes to avail the input tax credit?
a) Four months
b) Six Months
c) One hundred and eighty days
d) Till the date of filing of Annual Return
9) What is the time limit for taking input tax credit by a registered taxable person?
Page 145
a) No time limit
b) 2 years from the date of invoice
c) Due date of furnishing of the return under section 39 for the month of September following the end of
financial year to which such invoice or invoice relating to such debit note pertains
d) Due date of furnishing of the return under section 39 for the month of September following the end of
financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the
relevant annual return, whichever is earlier
*1 Can the recipient avail the Input tax credit for the part payment of the amount to the supplier within one
0) hundred and eighty days?
a) Yes on full tax amount and partly value amount
b) No he can’t until full amount is paid to supplier
c) Yes but proportionately to the extent of value and tax paid
11) Whether credit can be availed without actual receipt of goods where goods are transferred through
transfer of document of title before or during the movement of goods?
a) Yes
b) No
c) Can be availed only after transfer of document of title after movement of goods
12) Whether depreciation on tax component of capital goods and Plant and Machinery and whether input tax
credit is Permissible?
a) Yes
b) No
c) Input tax credit is eligible if depreciation on tax component is not availed
d) Any of the above
13) What is the maximum time limit to claim the Input tax credit?
a) Till the date of filing annual return
b) Due date of September month which is following the financial year
c) Earliest of (a) or (b)
d) No limit
14) Proportionate credit for capital goods is allowed

a) for business and non-business purpose
b) for business or non- business purpose
c) both of the above
d) no proportionate credit allowed
15) Which of the following is included for computation of taxable supplies for the purpose of availing credit?
a) Exempted supplies
b) Zero-rated supplies
c) Both
16) In which of the following situations, taxpayer needs to reverse the credit already taken?
a) If payment is not made to the supplier within 45 days from the date of invoice
b) If payment is not made to the supplier within 90 days from the date of invoice
c) If payment is not made to the supplier within 180 days from the date of invoice
17) What is the time limit for taking ITC?
Page 146
a) 180 days
b) 1 year
c) 20th October of the next financial year or the date of filing annual return, whichever is earlier
d) No limit
18) If the goods are received in lots/installment, ------------------------------

a) 50% ITC can be taken on receipt of 1st installment and balance 50% on receipt of last installment.
b) ITC can be availed upon receipt of last installment.
c) 100% ITC can be taken on receipt of 1st installment.
d) Proportionate ITC can be availed on receipt of each lot/installment.
19) A supplier takes deduction of depreciation on the GST component of the cost of capital goods as per
Income- tax Act, 1961. The supplier can-
a) avail only 50% of the said tax component as ITC
b) not avail ITC on the said tax component
c) avail 100% ITC of the said tax component
d) avail only 25% of the said tax component as ITC
20) Which of the following inward supplies are not eligible for ITC in case of a company manufacturing shoes?
a) Food and beverages
b) Outdoor catering
c) Health services
d) All of the above
21) Which of the following statement is true for a composition tax payer?
a) A composition tax payer can avail only 50% of ITC on capital goods
b) A composition tax payer can avail 100% ITC on inputs
c) ITC is not available on inward supplies made by a composition tax payer
d) Composition tax will be available as ITC to the recipient only if the tax is mentioned separately in the invoice
raised by the composition tax payer
Q A Q A Q A Q A Q A
1) b 2) a 3) b 4) a 5) C
6) b 7) c 8) c 9) d 10) B
11) a 12) c 13) c 14) a 15) B
16) c 17) c 18) b 19) b 20) D
21) c
Success consists of Going from failure to

failure without loss of enthusiasm
Page 147
Page 148
11. Job Worker
 Introduction:
A large number of industries depend upon outside support for completing manufacturing activity.
 Meaning of Job Work:

Job work means undertaking any treatment or process by a person on goods belonging to another registered
taxable person. The person who is treating or processing the goods belonging to other person is called ‘job
worker’ and the person to whom the goods belongs is called ‘principal’.
 Job work procedure (Sec 143):
1 Sending goods  Section 143 of CGST Act, 2017 states that a Principal under intimation [intimation
to Job worker to the Jurisdictional Officer under the cover of a Delivery Challan] and subject to
without such conditions as may be prescribed can send inputs or capital goods to a job
payment of worker without payment of tax for further process or treatment and from there
taxes subsequently to another job worker(s) and
 shall either bring back such inputs/capital goods after completion of job work or
otherwise within 1 year/3years of their being sent out or
 supply such inputs/capital goods after completion of job work or otherwise within
1 year / 3 years of their being sent out, from the place of business of a job worker
on payment of tax within India or with or without payment of tax for export.
2 Moulds and Capital Goods exclude moulds and dies, jigs and fixtures, or tools.
dies, jigs and [Means the period of 3 years (and also 1 year) shall not apply to moulds and dies, jigs
fixtures, or and fixtures, or tools]
tools
3 Supply of Further, a principal can supply goods from the place of business of job worker if the
GOODS from principal declares the place of business of the job worker as his additional place of
the POB of job business [if located in the same state], except in following two conditions:
worker  where the job worker is registered under section 25; or
 where the principal is engaged in the supply of such goods as may be notified by
the Commissioner.
4 Who is The responsibility for keeping proper accounts for the inputs or capital goods shall lie
responsible? with the principal.
The PRINCIPAL
 Understanding:
Principal is responsible for payment of taxes even if the supply is made from the Job
worker premises.
5 Treatment of Any waste and scrap generated during the job work may be supplied
waste and  by the job worker directly from his place of business on payment of tax, if such
scrap job worker is registered, or
 by the principal, if the job worker is not registered.
Page 149
6 If not received Under GST regime, when goods are sent from a taxable person to a Job worker it shall
back or be treated as supply and will be liable to GST if the goods so sent are NOT RECEIVED
supplied BACK within 1 year or 3 years in case of inputs or capital goods as the case may be.
therefrom
within 1 years
/3 years-
Deemed that
Inputs or CG
were supplied
 Explanation For the purposes of job work, input includes intermediate goods arising from any
treatment or process carried out on the inputs by the principal or the job worker.
 Understanding #1*:
 As per Section 25 of the Act, the taxable person is required to obtain registration for each state
separately. The registration certificate will mention the principal POB. In addition to this, all
establishments of a taxable person in a STATE are required to be declared as an Additional POB.
 These establishments which are declared as an additional POB should be located in the same state.
Thus, if a person has a principal POB in Mumbai, he can declare his establishment in Pune, Nasik,
Aurangabad, etc. as an additional POB.
 But he cannot declare Ahmedabad located in Gujarat as an additional POB for registration obtained
in Maharashtra.
 In view of the above, it appears that the Job worker will be able to dispatch the inputs after
processing to any POB located in the SAME STATE in which principal POB is located.
 Understanding #2:
th
 Say X person has supplied inputs to Job worker Y on 25 July 2018. These inputs are not received
th
back by 24 July 2019 by Mr.X after processing. As per this sub-section, principal will be required to
th th
pay the tax on supply of inputs. The TOS is 25 July 2018. If the tax liability arises on 24 July 2019
he will have to pay tax with interest of one year.
th
 Say a principal X has sent inputs to the Job worker Y from the stock held by him on 25 July 2018.
This sub section provides that the Job worker shall either return the inputs after processing to any of
his POB or shall clear the inputs on payment of tax in India or export the goods outside India without
th
payment of tax within one year. In this case, one year expires on 24 July 2019. Hence, the activities
th
by the Job worker must be completed by the 24 July 2019.
 In case where the goods are sent directly by the Supplier to the Job worker, the period of one year
will be counted from the date of receipt of inputs by the Job worker and not from the date of
th
dispatch of goods by the Supplier. Assuming that the goods are cleared by the supplier on 25 July
th
2018 and received by the Job- worker on 30 July 2018. The period of one year shall be counted by
th th
from 30 July 2018 not from 25 July 2018. However, if the goods are cleared from the stock of the
th th
principal on 25 July 2018 and received by the Job- worker on 30 July 2018, the period will be
th th
counted from 25 July 2018 not from 30 July 2018. On similar basis, the period of 3 years will be
counted for Capital Goods [Refer sub-section (4)].
Page 150
 FAQs:
Q. Whether the goods of principal directly supplied from the job-worker’s premises will be included in the
aggregate turnover of the Job Worker?
A. No. Since the responsibility of accountability of inputs and/or capital goods lies with principal, it will be
included in the aggregate turnover of the principal as enumerated in section 143 of the CGST Act,
2017.
Q. 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. This will be included in the
Aggregate Turnover of Principal or Job worker?
A. This will be included in the Aggregate Turnover of Job Worker.
 Input Credit in case of Job Work:
1 Principal shall Section 19 of the CGST Act, 2017 states that the principal shall, subject to such
be allowed for conditions and restrictions as may be prescribed, be allowed input tax credit on inputs
ITC sent to a job worker for job work.
2 Principal shall  Although section 16 of the CGST Act, 2017 specifically states that ITC will be
be allowed for provided only when goods are actually received,
ITC even if
directly sent  but under Job work this condition is exempted and ITC can be availed even if inputs
to the J/W or capital goods are directly sent to the Job Worker without being first brought to
(Already the place of business of Principal.
discussed in
ITC)
Page 151
Q
1) The time limit beyond which if goods are not returned, the inputs sent for job work shall be treated as
supply:
a) One year
b) Three years
c) Six months
d) Seven years
2) The time limit beyond which if goods are not returned, the capital goods sent for job work shall be
treated as supply
a) One year
b) Six years
c) Three Years
d) Seven years
3) Principal entitled for input tax credit on inputs sent for job work
a) If goods sent are returned within one year
b) If goods sent are returned within three years
c) If goods sent are returned within six months
d) If goods sent are returned within seven months
4) Principal entitled for input tax credit on capital goods if sent for job work
a) If goods sent are returned within one year
b) If goods sent are returned within three years
c) If goods sent are returned within six months
d) If goods sent are returned within seven months
5) Is the principal entitled for credit of goods though he has not received the goods and has been sent to
job worker directly by vendor
a) Yes
b) No
c) Yes vendor should be located in same place
d) All of the above
6) The job workers are allowed to send such goods to other

a) Manufacturers
b) Traders
c) Job workers
d) Service Providers
7) Who will undertake responsibility and accountability for any contravention under this section?
a) Principal
b) Manufacturer
c) Job worker
d) Government
8) What is the time limit within which inputs return to principal?

a) 365 days (One Year)
b) 180 days
c) 270 days
d) 3 years
Page 152
9) What is the time limit within which Capital goods have to be returned to principal?
a) One Year
b) Two Years
c) Three years
d) Four years
10) Should the principal be registered?

a) Yes
b) No
c) Can’t say
11) Which section provides tax-free movement for sending inputs and/or capital for job-worker?
a) 20
b) 55
c) 123
d) 143
*12) When will the inputs and/or capital goods sent to job-work become a supply?
a) When the inputs and/or capital goods sent to job-worker are not received within 1 year or 3 years
respectively
b) When the inputs and/or capital goods sent to job-worker are not supplied, with or without payment of
tax, from the job-workers place within 1 year or 3 years respectively
c) Both under (a) or (b)
*13) From when will the period of one or three years be calculated under Section 143?
a) The day when such inputs and/or capital goods sent to job-worker
b) The day when the job-worker receives the said goods, in case the job-worker receives the goods directly
c) Option (a) and (b)
14) Whether any time limit for moulds, dies, jigs, tools and fixtures has been prescribed in case this is
removed from principal place to job worker’s place
a) 1 year
b) 3 years, if not received within time limit
c) No time limit.
15) GST is applicable on__ ___

a) Inputs and/or capital goods sent to job-worker (Satisfying conditions u/s 143)
b) The job-worker charges and additional material added by the job-worker on the inputs sent by the
principal
d) Not applicable
16) When should a job-worker take registration?

a) Mandatory
b) Only if his aggregate turnover exceeds the threshold limits specified under Section 22 of the Act
c) Never
*17) Can a principal supply inputs and/or capital goods from the job-worker’s premises?
Page 153
a) Yes, only when the job-worker is registered

b) Yes, even if the job-worker is unregistered by declaring the job-worker’s premises as his additional place
of business
c) Yes, irrespective of whether the job-worker is registered or not, principal is engaged in the supply of goods
which are notified by the Commissioner on this behalf
d) All of the above
18) Mr. X has sent his goods to Mr. Y on job-work on 07-05-2018. From when it will be considered as
deemed supply if not received back within one year?
a) 06-05-19
b) 07-05-18
c) 03-11-19
d) Not Taxable
19) If the inputs are not received back within the prescribed limit by the principal then, who is responsible
to pay the GST?
a) Job worker
b) Principal
c) Job worker is responsible when sending such inputs and Principal needs to reverse the ITC taken earlier.
d) No one
20) If the inputs or capital goods are considered as deemed supply in the hands of principal then, whether
ITC of such output tax charged by the principal can be claimed by the Job worker?
a) Yes
b) No
c) Can’t say
21) Will the inputs and/or capital goods supplied from the job-worker’s premises be considered for
calculating the aggregate turnover of the job-worker?
a) Yes
b) No
c) Can’t say
22) Which section specifies the conditions to be fulfilled for claiming ITC on inputs and/or capital goods sent
to job-worker?
a) 19
b) 55
c) 143
d) 177
23) Can principal take input tax credit on the inputs and/or capital goods sent directly to job-worker?
a) Yes
b) No
c) Yes subject to section 143
24) If the job-worker is eligible to claim ITC on the goods received from the principal, is there a time limit
within which such ITC shall be availed/claimed by the job-worker?
a) Within September 30th of following year
b) Filing the annual return for the period
c) Option (a) or (b), whichever is earlier
d) No time limit
Page 154
25) How can the principal move goods to the job-worker?

a) Job-work challan
b) Tax invoice
c) Delivery challan containing the details as specified in the Tax invoice, credit and debit note rules.
d) Any other document
26) If the inputs and/or capital goods are not received or returned within the prescribed time limit:
a) It shall be deemed to be a supply on the day such inputs and/or capital goods are sent to job-worker and
the principal to discharge the GST along with interest.
b) No consequences
c) The job-worker to discharge GST on expiry of the prescribed time limit.
27) Who is responsible for accountability for any contravention under this Act?
a) Principal
b) Job-worker
c) Manufacturer
d) Government
28) Who should discharge the liability of GST on the scrap generated during job-work?
a) Job-worker, if registered
b) Principal, if job-worker is not registered
c) Always Job worker
d) Option (a) or (b)
Q A Q A Q A Q A Q A
1) a 2) c 3) a 4) b 5) a
6) c 7) a 8) a 9) c 10) a
11) d 12) c 13) c 14) c 15) b
16) b 17) d 18) b 19) b 20) a
21) a 22) a 23) c 24) c 25) c
26) a 27) a 28) d
SucceSSful people don’t heSitate.
They spot a great opportunity and swiftly seize it
Page 155
Retention of BOA:
1)
17 18 19 20 21 22 23 24 25
Last date of Expiry of 72

filing AR months
(31-12-2018) (31-12-2024)
2)
17 18 19 20 21 22 23 24 26
25
Last date of Disposal of 1 year from disposal

filing AR Appeal of Appeal
(31-12-2018) (30-06-2024) (29-06-2025)
Expiry of 72
Appeal filed iro months
FY 2017-18 (31-12-2024)
(31-12-2018)
LATER
Page 156
12. Accounts and Records
 Accounts and other records:
1 Maintenance of  Section 35 of the CGST Act, 2017 states that a registered person is required to
records maintain proper accounts and records and keep it at his registered, principal place
of business.
 If there is more than one place of business specified in the certificate of

registration, the accounts relating to EACH place of business is required to be kept
at such places of business.
 To facilitate digitisation, there is a facility to maintain accounts and other records

in electronic form under GST.
 List of accounts required to be maintained are as follows:

(a) production or manufacture of goods;
(b) inward and outward supply of goods or services or both;
(c) stock of goods;
(d) input tax credit availed;
(e) output tax payable and paid; and
(f) such other particulars as may be prescribed:
2 Maintenance of Owner or operator of warehouse or godown or any other place used for storage of
records by the goods and every transporter, irrespective of whether he is a registered person or not,
owner or shall maintain records of the consigner, consignee and other relevant details of the
operator of goods in such manner as may be prescribed.
warehouse
3 Additional The Commissioner is empowered to notify a class of taxable persons to maintain

Accounts additional accounts or documents for specified purpose or to maintain accounts in
other prescribed manner.
Page 157
2)a)
17 18 19 20 21 22 23 24 25
Last date of 1 year from disposal

filing AR Disposal of
Appeal of Appeal
(31-12-2018) (24-05-2024)
(25-05-2023)
Appeal filed iro Expiry of 72

FY 2017-18 months
(31-12-2018) (31-12-2024)
LATER
Page 158
 Period of retention of accounts:
36 Period of Every registered person required to keep and maintain books of account or other
retention of records in accordance with the provisions of sub-section (1) of section 35 shall retain
accounts them until the expiry of SEVENTY TWO MONTHS from the due date of furnishing of
annual return for the year pertaining to such accounts and records:
PROVIDED that a registered person, who is a party to an appeal or revision or any other
proceedings before any Appellate Authority or Revisional Authority or Appellate
Tribunal or court, whether filed by him or by the Commissioner, or is under
investigation for an offence under Chapter XIX, shall retain the books of account and
other records pertaining to the subject matter of such appeal or revision or
proceedings or investigation
 for a period of one year after final disposal of such appeal or revision or
proceedings or investigation, or
 for the period specified above (seventy two months),
 whichever is later.
Example to the Main Section:

If the annual return for the FY 2018-19 is filed on say 30.11.2019, then the books of
account and other records are to be maintained till 31.12.2025.
[Books of Accounts in entirety].
Example to the Proviso:

If the annual return for the FY 2018-19 is filed on say 30.11.2019 but certain issues
have been taken to the court which got finalized on 30.06.2025 then the books of
account and other records pertaining to the subject matter of such appeal are to
be maintained till 30.06.2026.
[Books of Accounts pertaining to the subject matter of such appeal].
Page 159
Q
1) The books and other records U/S 35 are to be maintained at
a) Place where the books and accounts are maintained
b) Place of address of the Proprietor/ Partner/Director/Principal Officer/Managing Director
c) Principal place of business mentioned in the Certificate of Registration
d) Any of the above
2) In case, more than one place of business situated within a state specified in the Registration Certificate,
the books and Accounts shall be maintained at
a) Each place of business pertaining to such place alone
b) Place where the books of accounts are maintained for all places situated within a state
c) At principal place of business covered mentioned in the Registration Certificate for all places of business in
each state
d) All of the above
3) Accounts are required to be maintained in

a) Manual form
b) E- form
c) Manual and E- form
d) Manual or E- form
4) Who of the below, even if not registered, is required to maintain records:

a) Owner of warehouse
b) Owner of godown
c) Owner of any other place used for storage of goods
d) All of the above
5) If a turnover during a financial year exceeds the prescribed limit, then accounts get audited by
a) Chartered Accountant
b) Cost Accountant
c) Comptroller & Auditor General of India
d) Either (a) or (b)
6) What accounts and records are required to be maintained by every registered taxable person at his
principal place of business
a) Account of production or manufacture of goods
b) Inward or outward supply of goods and/or services
c) Stock of goods
d) ITC availed
e) output tax payable and paid
f) All of the above
7) Can all the records be maintained in an electronic form?

a) Yes
b) No
c) Notified records
d) Yes, if authenticated by digital signature
Page 160
8) Taxable person has to maintain his records for a period of

a) expiry of seventy two months from the last date of filing of Annual Return for the year
b) expiry of forty five months from the last date of filing of Annual Return for the year
c) expiry of thirty months from the last date of filing of Annual Return for the year
d) expiry of ninety months from the last date of filing of Annual Return for the year
9) The time period prescribed for maintenance of accounts and records if the taxable person is a party to
an appeal or revision shall be-
a) Two year after final disposal of such appeal or revision or proceeding, or until the expiry of thirty-six
months from the last date of filing of Annual Return for the year pertaining to such accounts and records,
whichever is later.
b) Five years after final disposal of such appeal or revision or proceeding, or until the expiry of sixty months
from the last date of filing of Annual Return for the year pertaining to such accounts and records,
whichever is later.
c) One year after final disposal of such appeal or revision or proceeding, or until the expiry of seventy two
months from the last date of filing of Annual Return for the year pertaining to such accounts and records,
whichever is later.
d) One year after final disposal of such appeal or revision or proceeding, or until the expiry of forty months
from the last date of filing of Annual Return for the year pertaining to such accounts and records,
whichever is later
Q A Q A Q A Q A Q A
1) c 2) a 3) d 4) d 5) d
6) f 7) d 8) a 9) c 10)
Less talk, more do. No one cares about about your

elegantly expressed intensions. Only your
brilliantly executed results.
Page 161
Page 162
13. Tax Invoice, Credit and Debit Notes
 Introduction:
Whenever a transaction takes place, different kinds of documents are issued under different circumstances,
like invoice, credit note, debit note and bill of supply.
1) Invoice:
1 Introduction  An invoice indicates what must be paid by the buyer to the seller.
 On every sale/purchase an invoice is issued by the supplier i.e., person making the
sale.
 An invoice provides a detailed account of the products or service along with details
of supplier, purchaser, tax charged and other particulars such as discounts, terms of
sale etc.
2 Supply of Section 31 of the CGST Act, 2017:

GOODS A registered person supplying taxable goods shall, before or at the time of,—
[General
provision] (a) removal of goods for supply to the recipient, where the supply involves movement of
goods; or
“Removal’’, in relation to goods, means -

(a) despatch of the goods for delivery by the supplier thereof or by any other
person acting on behalf of such supplier, or
(b) collection of the goods by the recipient thereof or by any other person acting
on behalf of such recipient;
 Example:
Machine tools on display at an exhibition in Delhi agreed to be purchased by
executives an engineering company from Indore attending the exhibition, is a
case of ‘supply involving movement’ even though the transportation is
undertaken by representatives of the purchaser on their own.
In the same example, if the executives were to place an order at the exhibition
with instructions for delivery to be assured within six weeks, this would also
be a
case of ‘supply involving movement’ and the transportation being organised
by the supplier through an independent transport agency from the factory to
the customer location.
(b) delivery of goods or making available thereof to the recipient, in any other case,
 Example:
When an Agent who is in possession of some goods decides to buy the goods
on his account, there will be a delivery without any movement of the goods.
issue a tax invoice showing the description, quantity and value of goods, the tax charged
thereon and such other particulars as may be prescribed
Page 163
>> Other cases:
re
Other Issues
GOODS SERVICES
Goods sent on “SALE Supply of services

ON APPROVAL BASIS” ceases before
COMPLETION of Supply
Before/At the time:

 It becomes known that the
At the time when
supply has taken place
(Before/At the time of EARLIER Supply ceases
supply).
 6 months from the date of
removal
Page 164
3 Supply of  In case of continuous supply of GOODS, where successive statements of accounts or

GOODS successive payments are involved,
[Continuous
Supply of  the invoice shall be issued before or at the time each such statement is issued or, as
GOODS] the case may be, each such payment is received.
 Example:
M/S GAIL supplies gas continuously to Company PQR Ltd. The contract for supply
st
provides that the statement of supply shall be made by 1 of the subsequent
th
month and shall be paid by 8 of the subsequent month. Thus in such cases
where the supply is made in the month of August-2018, the statement will be
provided by 01-09-2018 and the payment will be made by 08-09-2018. The
invoice shall be issued either before 01-09-2018 or on 01-09-2018. If the
payment is issued prior to 01-09-2018, the invoice shall be issued at the time of
payment.
4 Goods sent Notwithstanding anything contained in sub-section (1), where the goods being sent or
on approval taken on approval for sale or return are removed before the supply takes place, the
basis invoice shall be issued
 before or at the time of supply or
 six months from the date of removal,
 whichever is earlier.
5 Supply of In case of taxable supply of services, invoice shall be issued within a prescribed period [30
SERVICES days – Invoice Rules] from the date of supply of service.
[General
provision]
6 Continuous In case of continuous supply of services,––
supply of
SERVICES (a) where the due date of payment is ascertainable from the contract, the invoice shall
be issued on or before the due date of payment;
 Understanding:
Say the purchaser of the premise enters into a contract with the builder and the
contract specifies the payment schedule by specifying the particular date. Say
the agreement for purchase of the premise specifies the consideration of Rs.40
Lacs and the various dates on which the payment is to be made are also to be
specified. Hence the invoice shall be prepared on or before these dates.
(b) where the due date of payment is not ascertainable from the contract, the invoice
shall be issued before or at the time when the supplier of service receives the payment;
 Understanding:
In our example given above, if the due dates are NOT specified, the invoice shall
be issued as and when the payments are received by the builder.
(c) where the payment is linked to the completion of an event, the invoice shall be issued
on or before the date of completion of that event.
 Understanding:
In the above example, if the agreement links the payment on completion of
th
certain slab. For example, the agreement provides that the 5% is payable on 5
th
Slab, the invoice shall be payable on or before the date when the 5 slab is
casted.
Page 165
7 Supply ceases In a case where the supply of services ceases under a contract before the completion of
under the the supply, the invoice shall be issued at the time when the supply ceases and such
contract invoice shall be issued to the extent of the supply made before such cessation.
 FAQs:
Q. I had a contract for supplying manpower for 28 days for Rs. 28,000/-. However,
after 10 days, the service has stopped. When shall I raise the invoice?
th
A. Invoice has to be issued at the time when the supply ceased, i.e., on the 10 day.
The invoice shall be for that much of service, which is provided.
8 Other Points  “Tax invoice” shall include any revised invoice issued by the supplier in respect of a
supply made earlier.
 The Government may, on the recommendations of the Council, by notification,

specify the categories of goods or services in respect of which a tax invoice shall be
issued or any other document issued in relation to the supply shall be deemed to be
a tax invoice.
2) Credit Note and Debit Note:

A registered person is required to issue credit note or debit note under certain circumstances.
Following table summarizes such situations:
RTP shall issue
Credit Note Debit Note
 Value of supply or the tax charged  Value of supply or the tax charged
previously is HIGHER THAN correct previously is LESS THAN correct value
value or the correct tax applicable. or the correct tax applicable.
 Goods supplied returned by the
recipient (Sale Return).
 Goods or Services supplied are
deficient.
Page 166
Q
1) Tax invoice must be issued by________ on supplies made by him
a) Every supplier
b) Every taxable person
c) Registered persons not paying tax under composition scheme
d) All the above
2) An invoice must be issued:

a) At the time of removal of goods
b) On transfer of risks and rewards of the goods to the recipient
c) On receipt of payment for the supply
3) In case of goods sent on sale on approval basis, invoice has to be issued:

a) While sending the goods; another Invoice has to be issued by the recipient while rejecting the goods;
b) When the recipient accepts the goods or ten months from the date of supply whichever is earlier
c) When the recipient accepts the goods or six months from the date of supply whichever is earlier;
d) When the recipient accepts the goods or three months from the date of supply whichever is earlier.
4) If Supply of Services has ceased under a contract before the completion of supply:
a) Invoice has to be issued within 30 days from the date of cessation;
b) Invoice has to be issued at the time of cessation to the extent of the supply effected;
c) Invoice has to be issued for the full value of the contract after deducting a percentage thereof as
prescribed;
5) The tax invoice should be issued _______the date of supply of service:

a) Within 30 days from
b) Within 2 months from
c) Within 15 days from
d) On
6) A credit note is issued by ________ and it is a document accepted for GST purposes:
a) Supplier, for reducing the tax/ taxable value;
b) Recipient, for reducing the tax/ taxable value;
c) Supplier, for increasing the tax/ taxable value
d) Recipient, for increasing the tax/ taxable value.
e) Any of the above
7) For an increase in the tax/ taxable value, a debit note for GST purposes:
a) Should be issued by the supplier;
b) Should be issued by the recipient;
c) May be issued by the supplier;
d) May be issued by the recipient.
e) None of the above
8) In case of taxable supply of services, invoice shall be issued within a period of ____________ from the
date of supply of service.
a) 30 days
b) 45 days
c) 60 days
d) 90 days
Page 167
9) In case of taxable supply of services by an insurer, invoice shall be issued within a period of __________
from the date of supply of service.
a) 30 days
b) 45 days
c) 60 days
d) 90 days
10) In case of continuous supply of services, where due date of payment is ascertainable from the contract,
invoice shall be issued:
a) before or at the time when the supplier of service receives the payment
b) on or before the due date of payment
c) Either (a) or (b)
11) In case of continuous supply of services, where due date of payment is not ascertainable from the
contract, invoice shall be issued:
a) before or at the time when the supplier of service receives the payment
b) on or before the due date of payment
c) Either (a) or (b)
12) Where the goods being sent or taken on approval for sale or return are removed before the supply takes
place, the invoice shall be issued:
a) before/at the time of supply
b) 6 months from the date of removal
c) Earlier of (a) or (b)
Q A Q A Q A Q A Q A
1) c 2) a 3) a 4) b 5) a
6) a 7) a 8) a 9) b 10) a
11) a 12) c
Every champion was once a contender who

refused to give up
Page 168
Page 169
 Basic Introduction:
REGISTRATION
WHO? WHERE? WHEN?
EVERY PERSON IN EVERY STATE FROM WITHIN 30 DAYS

COVERED UNDER WHERE HE MAKES
Chapter REGISTRATION. TAXABLE SUPPLY
 Registration- When?
30 days
10 lacs/20 lacs
REGISTRATION
Page 170
14. Registration
 Introduction:
 In any tax system, registration is the most fundamental requirement for identification of tax payers
ensuring tax compliance in the economy.
 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.
 Without registration, a person can neither collect tax from his customers nor claim any input Tax
Credit of tax paid by him.
 Persons liable to register:

Section 22 of the CGST Act, 2017 specifies the list of persons liable for registration and section 24 of the CGST
Act, 2017 lists categories of persons who are required specifically to take registration even if they are not
covered under section 22 of the Act. Following is a summarised list:
1 Supplier Supplier of taxable goods or services or both exceeding the specified threshold limit
of Rs. 10 lakhs (for special category States) and Rs. 20 lakhs for other states and
Union territories.
 Example:
Mr. P has a furniture business in the State of Uttar Pradesh. Value of supplies of
business did not exceed Rs. 18 lakhs in the financial Year. Mr. A does not have
any other business establishment in any of the other States. He will not be liable
to seek registration under GST.
In next year, Mr. A opens another branch in the State of Uttarakhand (one of
the category States for which prescribed threshold limit is Rs. 10 lakh). As the
branch was opened at the end of the financial year, he could achieve turnover of
one lakh rupees only in that State. Along with the supplies of Rs. 18 lakhs from
the business in Uttar Pradesh.
Since value of supplies in Uttar Pradesh and Uttarakhand put together exceeds
ten lakh rupees, he will be liable to seek registration in both the States.
 Conclusion:
A person, who makes supplies from both Special Category States and Other
States shall become liable to registration if his aggregate turnover in a financial
year exceeds ten lakh rupees.
 Special Category States:
SN States SN States
2) Assam 8) Sikkim
6) Nagaland
Page 171
 Aggregate Turnover:
SN Particulars Amount (Rs.)

Taxable supplies XXX
(+) Exempt supplies XXX
(+) Exports of goods and/or services XXX
(+) Inter-State supplies XXX
Sub Total XXX [A]
(+) Supply by Agent on behalf of the principal XXX [B]
(+) Supply from the premises of the registered J/W XXX [C]
AGGREGATE TURNOVER XXX
2 Licensee Every person who is a registered licensee or holds a license under an existing law, on
[Existing the day immediately preceding the appointed day i.e 1st July 2017.
assessees on
the AD = liable
to be
registered] [Assessees under Central Excise Act, Service Tax Law, VAT Law, etc]
3 Transferee Where a business, which is carried by a taxable person is transferred as a going

[Fresh concern shall be liable to be registered with effect from the date of such transfer or
Registration succession.
in case of
Transfer or (Registration is not transferable)
Succession]
4 Transferee Transfer pursuant to sanction of a scheme or an arrangement for amalgamation or,
under a as the case may be, demerger of two or more companies pursuant to an order of a
scheme High Court, Tribunal or otherwise,
the transferee (company) shall be liable to be registered, with effect from the date
on which the Registrar of Companies issues a certificate of incorporation giving
effect to such order of the High Court or Tribunal.
5 Interstate An interstate supplier is compulsorily required to get registered under GST.

supplier  Generally:
The transaction in which the location of supplier & place of supply are in
two different states is in the nature of inter-state supply.(Detailed
discussion)
6 Casual A person who occasionally undertakes transactions involving supply of goods or

Taxable services or both in the course or furtherance of business, whether as principal, agent
person or in any other capacity, in a State or a Union territory where he has no fixed place
of business is termed as a casual taxable person. Such persons if making taxable
supply of goods or services or both comes under the ambit of taxable persons
(Like: Architects, Makeup artists, Fashion designers, Trainers, Musicians, etc)
Example:
1) A person may have a fixed establishment in Maharashtra where his total
turnover is Rs.6 Lakhs. Therefore, he need not to obtain registration. He
goes to Ahmedabad, Gujarat and sells certain garments to many customers.
Such person will be considered as a Casual Taxable person even if turnover
in Gujarat is only Rs.50,000 as his aggregate turnover is Rs.6,50,000. He will
required to take registration in Gujarat.
2) A Jeweller who has a showroom in Mumbai participates in exhibition-cum-

sale in Delhi would fall under Casual Taxable Person in Delhi. However, if he
sends the consignment from Mumbai Store, then it will inter-state sale.
Page 172
7 Payer of Persons who are required to pay tax under reverse charge shall get registered under
Reverse GST. (Refer notified RCM transactions)
charge
8 Person under As stated in section 9(5) of CGST Act,2017, the Government may, on the
Sec. 9(5) of recommendations of the Council, by notification, specify categories of services, the
CGST Act, tax on intra-State supplies of which shall be paid by the electronic commerce
2017 operator if such services are supplied through it, and all the provisions of this Act
shall apply to such electronic commerce operator as if he is the supplier liable for
paying the tax in relation to the supply of such services
9 Non-resident A non-resident taxable person making taxable supply.
Non-resident taxable person:

“Non-resident taxable person” means 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;
10 Deductor of Persons who are required to deduct tax under section 51, whether or not separately
tax at source registered under this Act.
 Section 51:
1 Who will Notwithstanding anything to the contrary contained in this
deduct Act, the Government may mandate,––
TDS?
(a) a department or establishment of the Central
Government or State Government; or
(b) local authority; or
(c) Governmental agencies; or
(d) such persons or category of persons as may be

notified by the Government on the recommendations
of the Council,
(hereafter in this section referred to as “the deductor”), to

deduct tax at the rate of one per cent from the payment made
or credited to the supplier (hereafter in this section referred
to as “the deductee”) of taxable goods or services or both,
where the total value of such supply, under a contract,
exceeds two lakh and fifty thousand rupees:
11 Supplier on Persons who make taxable supply of goods or services or both on behalf of other
behalf of taxable persons whether as an agent or otherwise.
another
person  Example:
Clearing & Forwarding agent receives the goods on behalf of the principal.
He makes supply of goods to the customer as an agent of the principal. The
agent can make registration in his name as agent will be liable to obtain
registration.
Page 173
12 Input Service Whether or not separately registered under this Act

Distributor
Input Service Distributor:
“Input Service Distributor” means an office of the supplier of goods or services or
both which receives tax invoices issued under section 31 towards
 the receipt of input services and

 issues a prescribed document for the purposes of distributing the credit of
central tax, State tax, integrated tax or Union territory tax paid on the said
services to a supplier of taxable goods or services or both
 having the same Permanent Account Number as that of the said office;
 Example:
i) Advertisement services
ii) Accounting services
iii) Audit services
iv) Software license & maintenance services
v) Security services
 FAQs:
Q. Why the concept of ISD only in respect of Services??

A. Concept of input service distributer is applicable only for services. It is not
required for goods that are procured centrally and distributed for use in
various registrations as credit would automatically get distributed when
goods are stock transferred to other registrations for actual use on payment
of GST.
Q. Will ISD be required to be separately registered other than the existing

taxpayer registration?
A. Yes. The ISD registration is for one office of the taxpayer which will be
different from the normal registration irrespective of the threshold.
Q. Can a taxpayer have multiple ISDs?

A. Yes. Different offices of a taxpayer can apply for ISD registration.
13 Supplier Persons who supply goods or services or both (other than supplies specified under
through ECO sub-section (5) of section 9), through such electronic commerce operator who is
required to collect tax at source under section 52.
 Section 52:
1 When to Notwithstanding anything to the contrary contained in this
Collect Act,
TCS???  every electronic commerce operator (hereafter in
this section referred to as the “operator”),
 not being an agent,
 shall collect an amount calculated at such rate not

exceeding 1 %., as may be notified by the
Government on the recommendations of the
Council,
 of the net value of taxable supplies made through

it by other suppliers where the
Page 174
 consideration with respect to such supplies is to

be collected by the operator.
 Example:
ABC stationers supplying stationery through Flipkart. Flipkart requires to deduct
TCS & pay the rest of the amount to ABC Stationers.
14 Electronic Every Electronic Commerce Operator

Commerce
Operator
15 Supplier of Every person supplying online information and database access or retrieval services
online from a place outside India to a person in India, other than a registered person
information [Importation of Service]
16 Notified Any other person or class of persons as notified by the Government on

persons recommendations of the Council.
 Persons not liable for registration:

The following persons have been specifically kept out of the purview of registration under GST:
Particulars Description
Exemption (1) The following persons shall not be liable to registration, namely:–
from
registration (a) any person engaged exclusively in the business of supplying goods or services or
both that are not liable to tax or wholly exempt from tax under GST
 Example:
Retail shop is selling seeds which are exempt from payment of GST. They are also
selling soap, tomato ketchup, chips which are not exempt from payment of GST.
Thus the retailer is selling both exempted goods as well as taxable goods. In such
case, in computing the aggregate value, turnover of exempted supplies viz seeds
will also be computed.
However, there can be other retailer shop who is exclusively dealing in seeds which
are exempt from GST. Therefore, in computing the aggregate turnover, this value
shall not be included as retail shop does not deal in taxable supplies. As per sec
23(1), such retail shop will not be liable for obtaining registration.
(b) an agriculturist, to the extent of supply of produce out of cultivation of land.
Page 175
 Example on REGISTRATION:
ABC Ltd

(Manufacture of RG)
Lucknow, Kanpur,
Plastic toys)
Registration requirements:
 In the above situation, ABC limited is required to obtain registration in all the three states.
 Any transaction between these three states would be considered as supply made to distinct persons.
(Example: Supply made from Andhra Pradesh’s unit to Delhi unit would be considered as supply
between distinct persons)
 As far as registration in Uttar Pradesh is concerned, ABC limited has two options:
 One registration for both the units (i.e. Lucknow & Kanpur)
(Example: Supply made from Lucknow unit to Kanpur unit would NOT be considered as supply
 Separate registration for each line of business (being different business vertical)
(Example: Supply made from Lucknow unit to Kanpur unit would be considered as supply
Page 176
Q
1) How the aggregate turnover is calculated?
a) Aggregate value of all taxable supplies, exempt supplies, export of goods/services and interstate supplies
of a person having same PAN computed on all India basis.
b) Aggregate value of all taxable supplies, exempt supplies, export of goods/services and interstate supplies
of a person computed for each state separately.
c) Aggregate value of all taxable intrastate supplies, export of goods/services and exempt supplies of a
person having same PAN computed for each state separately.
d) Aggregate value of all taxable supplies, exempt supplies, export of goods/services and interstate supplies
of a person having same PAN computed on all India basis and excluding taxes if any charged under CGST
Act, SGST Act and IGST Act.
2) Which one of the following is true?

a) A person can’t collect tax unless he is registered.
b) Registered person not liable to collect tax till his aggregate turnover exceeds Rs.20 lakhs/ Rs.10 Lakhs as
the case may be.
c) A person can collect the tax during the period of his provisional registration.
d) None of the above.
3) An E-commerce operator should get registered irrespective of his threshold limit?

a) Yes
b) No, required to register only if his aggregate turnover exceeds the threshold limit.
c) He is required to register if he is liable to collect tax at source and his aggregate turnover exceeds the
threshold limit.
4) What is the validity of the registration certificate?

a) One year
b) No validity
c) Valid till it is cancelled.
d) 5 years
5) Which of the following require compulsory registration, irrespective of threshold limit:

a) Casual taxable person
b) Non Resident taxable person
c) Person liable to pay under Reverse Charge Mechanism
d) All of the above
6) A person not required to obtain registration if he is required to pay tax under reverse charge and there
are no taxable supplies made by him.
a) Incorrect, if person who are required to pay tax under reverse charge, irrespective of threshold shall
obtain registration.
b) Incorrect, if person who are required to pay tax under reverse charge obtain registration only if such value
of supplies under reverse charge exceeds the threshold limit.
c) Above statement is correct
d) A person is required to obtain registration if he is required to pay tax under reverse charge and also he is
also making taxable supplies irrespective of the threshold limit.
7) Mr. A has started supply of goods in Delhi. He is required to obtain registration, if his aggregate turnover
exceeds ____________ during a financial year.
a) Rs. 10 lakh
b) Rs. 20 lakh
Page 177
c) Rs. 30 lakh
d) Rs. 50 lakh
8) Aggregate turnover includes:

a) Taxable supplies
b) Exempt supplies
c) Exports
d) All of the above
9) Which of the following persons are compulsorily required to obtain registration?

a) Persons making any inter-State taxable supply
b) Non-resident taxable persons making taxable supply
c) Casual taxable persons making taxable supply
d) All of the above
*10) Which of the following persons are not liable for registration?
a) Any person engaged exclusively in supplying services wholly exempt from tax
b) Casual Taxable Person
c) Both (a) and (b)
11) Rohan Toys is a registered supplier of goods in Delhi. It intends to attend a 7 days’ Business Fair
organised in Mumbai (next month) where it does not have a fixed place of business. Examine which of
the following statements are true for Rohan Toys:
a) Rohan Toys is not required to obtain registration in Mumbai for attending a 7 days’ Business Fair.
b) Rohan Toys has to obtain registration as a casual taxable person for attending the Business Fair.
c) Rohan Toys has to obtain a Unique Identification Number for attending the Business Fair.
Q A Q A Q A Q A Q A
1) d 2) a 3) a 4) c 5) d
6) a 7) b 8) d 9) d 10) a
11) b
Page 178
Page 179
 Flow of Returns:
Flow of Returns:
GSTR-2A GSTR-1A
Actions of Accept, •Rejections,
Data will be auto Reject or Modify
Upload details of modifications and
populated in GSTR- have to be taken. additions in GSTR-
outward supply
Additions can be 2 will be made
on or before 10th 2A and
communicated to made. available to
of following
month. Recipient tax supplier in GSTR-
payer. Return needs to be 1A.
GSTR-1 filed after 10th and
on or before 15th of Supplier has to
following month. take action by
GSTR-2 17th.
GSTR-3
•Auto-populated
return will be
available for
submission along
with the payment
on 20th.
Flow of Returns (Summary):
SUPPLIER RECIPIENT
GSTR-1 GSTR-2
3 1 2
GSTR-1A GSTR-2A
GSTR-3
Page 180
15. Returns
 Introduction:
 As per law, a taxpayer is required to file a document with the administrative authority which is
commonly known as a “return”.
 There are various types of returns under GST like the

 Monthly return,
 Return for Composition Scheme,
 TDS return,
 Return for Input Service Distributor,
 Annual return and
 Final return.
 Under GST, everything will be online and will be updated regularly.
 The entire procedure of filing returns can be divided into 5 parts as follows:
Rectification of Matching of claim

Submission of Matching of Final Acceptance
discrepancies in in reduction in
return ITC of ITC
ITC output tax liability
 Returns:
SN Applicability Type Timeline

1) Every registered person Outward Supplies On or before 10th of next month
[other than an
 ISD, Inward Supplies After the 10th day but on or
 a non-resident taxable before the 15th day of the month
person and succeeding the tax period
 a person paying tax
under the provisions of Monthly return On or before 20th of next month
section 10 (Composition
Supplier) / Section 51
(TDS Deductor)/ Section
52 (TCS deductor)]
2) Registered Composition Quarterly Return Within 18 days after the end of each
Supplier quarter
3) Every Registered non- Return  Within 20 days after the end of a

resident Taxable Person calendar month or
 Within 7 days after the last day of the
period of registration,
whichever is earlier
Page 181
4) Every Input Service Details of Tax invoices Before 13th of next month
Distributor (ISD)
5) Every Registered Person Details of TDS Within 10 days after the end of the month
deducting tax at source in which deductions is made
(section 51)
6) Every E-commerce operator Details of TCS Within 10 days after the end of the month
required to collect tax in which collection is made
(section 52)
7) Every Registered Person Annual Return 31st December of the following Financial
[Except Year
 ISD,
 Non resident taxable
person,
 Section 10
(Composition Supplier)
/ Section 51 (TDS
Deductor)/ Section 52
(TCS deductor)] and
 Casual Taxable Person
8) Taxable Person whose Final return Within three months of

registration has been  the date of cancellation or
cancelled or surrendered  date of order of cancellation,
whichever is later
Page 182
Q
1) The details of outward supplies of goods or services shall be submitted by
a) 10th of the succeeding month
b) 18th of the succeeding month
c) 17th of the succeeding month
d) 20th of the succeeding month
2) The details of inward supplies of goods or services in Form GSTR 2 shall be submitted by
b) 18th of the succeeding month
3) A registered taxable person other than ISD, non-resident tax payer & a person paying tax under section
10, 51 or 52, shall file its periodical by
a) 18th of the month succeeding the quarter
b) 16th of the month succeeding the quarter
4) Every tax payer paying tax under section 10 (Composition levy) shall file the return by:
a) 18th of the month succeeding the quarter
d) 20th of the month succeeding the quarter
5) Which of the following is correct?

a) Non-Resident taxable person shall file the return by 20th of succeeding month
b) Input Service Distributor shall furnish the return by 13th of the succeeding month
c) The person deducting tax at source shall furnish the return by 10th of the succeeding month
d) All the above
6) The e-commerce operator collecting tax under section 52 shall file its monthly return by
*7) State which is a true statement

a) The last date for payment of taxes to the appropriate government is the last date on which the registered
taxable person is required to furnish the return
b) Every person who is required to furnish return under 39(1) and 39(2) shall furnish return for every tax
period whether or not supplies have been effected during such period.
c) Both (a) and (b)
d) Both (a) or (b)
8) The due date for furnishing the annual return for every financial year by every registered taxable person
other than ISD, non-resident tax payer, a person paying tax under section 10, 51 or 52 and a casual
taxable person is
a) 30th of September following the end of the financial year
b) 20th of October following the end of the financial year
c) 31st of December following the end of the financial year
Page 183
d) 31st of June following the end of the financial year
9) The final return shall be filed by the registered taxable person within
a) 3 months of the date of cancellation
b) Date of order of cancellation
c) LATER of the (a) or (b)
d) Earlier of the (a) or (b)
Q A Q A Q A Q A Q A
1) a 2) c 3) d 4) a 5) d
6) d 7) c 8) c 9) c
Please remember amazing takes time. And

legendary requires patience
Page 184
Page 185
CREDIT
AVAILABLE CT ST UTT IT
Ist - CT Ist - ST Ist - UTT Ist - IT

UTILIZATION
AGAINST IInd -IT IInd -IT IInd -IT IInd -CT
IIIrd –ST/UTT
Note :
The ST would not be allowed to be adjusted to the CT and
vice versa.
The UTT would not be allowed to be adjusted to the CT and
vice versa
Where there is an OTL of ST there will NOT be ITC of UTT and
vice versa.
Page 186
16. Payment of Taxes
 Introduction:
 As India is moving towards digitization, GST has provided an easy and simple way of payment of
taxes.
 Under GST regime, all the taxpayers will get three electronic ledgers namely
 E-cash Ledger,
 E-credit Ledger &
 E-liability Ledger
through their GST profile.
 Three E-ledgers:
1) E-cash ledger  The electronic cash ledger shall be maintained for each person, liable to pay
TAX, INTEREST, PENALTY, LATE FEE or any OTHER AMOUNT, on the Common
Portal
 for crediting the amount deposited and
 debiting the payment there from towards TAX, INTEREST, PENALTY, LATE FEE or
any OTHER AMOUNT.
 Thus, Payment can be made in cash by debiting the e-cash ledger maintained on
the common portal.
 WAYS to DEPOSIT MONEY in E-CASH LEDGERS:

1) E-Payment (Internet Banking, Credit Card, Debit Card)
2) Real Time Gross Settlement (RTGS)
3) National Electronic Fund Transfer (NEFT)
4) Over the Counter Payment*
*Over the Counter Payment can be made in branches of Banks authorized (for
deposits up to TEN THOUSAND RUPEES per CHALLAN per TAX PERIOD, by cash,
cheque or demand draft) to accept deposit of GST.
 MODES of depositing cash to the E-Cash Ledger:
E-Payment RTGS
Ways to deposit NEFT

OTC
money in cash
ledger
2) E- debit or The electronic credit ledger shall be maintained by each registered person who is
credit ledger eligible for input tax credit under the Act on the Common Portal and every claim of
input tax credit under the Act shall be credited to the said Ledger.
Page 187
3) E- Liability  Every registered taxable person is required to record and maintain an electronic
ledger liability ledger and all amounts payable will be debited in the said register.
 Payment of every liability by a registered taxable person can be made by

debiting the e- credit ledger or e- cash ledger.
 Any amount of demand debited or amount of penalty imposed or liable to be

imposed in the electronic tax liability register shall stand reduced to the extent
of relief given by the appellate authority or Appellate Tribunal or court or
 if the taxable person makes the payment of tax, interest and penalty [through
E-Cash ledger or E-Credit ledger] specified in the show cause notice or demand
order, the electronic tax liability register shall be credited accordingly.
 Payment made pending GSTIN:

Any payment required to be made by a person who is not registered under the Act, shall be made on the
basis of a temporary identification number [provisional registration number] generated through the
Common Portal.
 Sequence in which the payment of tax is made:

Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in
the following order, namely:––
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand
determined under section 73 or section 74;
 Rate of Interest:
 If a person liable to pay tax, fails to pay such tax or any part thereof shall for the period for which the tax
or any part thereof remains unpaid, is liable to pay, on his own, interest not exceeding 18%.
 Whereas if a taxable person who makes an undue or excess claim of input tax credit or undue or excess
reduction in output tax liability, shall pay interest at such rate not exceeding 24%.
 The Credit Utilization:
SN Input tax Output tax

Cross utilisation of CGST
1 IGST 1) IGST and SGST is not available
2) CGST
3) SGST
2 CGST 1) CGST
2) IGST
3 SGST 1) SGST
2) IGST
4 UTGST 1) UTGST
2) IGST
Page 188
INTRA-STATE SUPPLY:
I. Supply of goods/ services by A (UP) to B (UP)
Add: CGST @ 9% 900
Add: SGST @ 9% 900
goods/ services
II. Supply of goods/services by B (UP) to C (UP) – Value addition @ 20%

Value charged (Rs 10,000 x 120%) 12,000
Add: CGST @ 9% 1,080
Add: SGST @ 9% 1,080
goods/ services
Computation of CGST, SGST payable by B to Government

CGST payable 1,080
Less: Credit of CGST 900
CGST payable to Central Government 180
SGST payable (UP GOVT) 1,080

Less: Credit of SGST 900
SGST payable to State Government 180
Page 189
INTER-STATE SUPPLY:
I. Supply of goods/services by X (UP) to A (UP)
Add: CGST @ 9% 900
Add: SGST @ 9% 900
Total price charged by X from A for intra-State 11,800
supply of goods/services
II. Supply of goods/services by A (UP) to B (UK)– Value addition @
20%
Value charged (Rs 10,000 x 120%) 12,000
Add: IGST @ 18% 2,160
Total price charged by A from B for inter-State 14,160
Computation of IGST payable to Government (CG)

IGST payable 2,160
Less: Credit of CGST 900
Less: Credit of SGST 900
IGST payable to Central Government 360
Page 190
III. Supply of goods/services by B (UK) to C (UK) – Value addition @ 20%

Value charged (Rs.12,000 x 120%) 14,400
Add: CGST @ 9% 1,296
Add: SGST @ 9% 1,296
Total price charged by B (UK) from C (UK) for local 16,992
Computation of CGST, SGST payable to Government

CGST payable 1,296
Less: Credit of IGST 1,296
CGST payable to Central Government Nil
SGST payable 1,296
Less: Credit of IGST (Rs.2,160 - Rs.1,296) 864
SGST payable to State Government (UK) 432
Page 191
GSTIN- XXXX
Legal Name – XXXX
Tax period - XXXX
Page 192
Page 193
Q
1) A person is entitled to take credit of input tax as self-assessed in the return and credited to Electronic
credit ledger on
a) Final basis
b) Provisional basis
c) Partly Provisional and partly final basis
d) All of the above
2) Provisional Input tax credit can be utilized against

a) Any Tax liability
b) Self Assessed output Tax liability
c) Interest, Penalty, Fine
d) Late fee
3) Matching of Input Tax credit on inward supply by recipient is undertaken with

a) Monthly return filed by the supplier
b) Outward supply filed by the supplier
c) Invoices maintained by the supplier
d) No matching is required
4) Is it mandatory that the tax on the supply has to be paid by the supplier so that the recipient can claim
credit?
a) No
b) Yes
c) Optional
5) Input Tax credit as credited in Electronic Credit ledger can be utilized for
a) Payment of Interest
b) Payment of penalty, fine
c) Payment of late fees
d) Payment of Taxes
6) Deposits towards tax, penalty, interest, fee or any other amount are credited into the ---- -----------of a
taxable person:
a) Electronic Credit Ledger
b) Electronic Tax Liability Ledger
c) Electronic Cash Ledger
d) All of the above
*7) The Input Tax Credit as self-assessed by a taxable person is credited into the
a) Electronic Credit Ledger
b) Electronic Tax Liability Ledger
c) Electronic Cash Ledger
d) All of the above
8) Cross-Utilization of credit of available IGST after utilization towards payment of IGST is done in the
following chronological order:
a) CGST then SGST/UTGST
b) SGST/UTGST then CGST
c) CGST, UTGST and SGST simultaneously
d) Only IGST
Page 194
9) Which of the following Statements is true?

a) ITC of CGST is first utilized for payment of CGST and the balance is utilized for payment of SGST/UTGST
b) ITC of SGST is first utilized for payment of SGST and the balance is utilized for payment of CGST
c) ITC of CGST is first utilized for payment of CGST and the balance is utilized for payment of IGST
d) All of the Above
10) Interest is payable on :-

a) Late payment of tax
b) Undue/excess claim of Input Tax Credit.
c) Undue/Excess reduction in output tax liability
d) All of the above
11) Interest is calculated:

a) From the date following the day on which tax becomes due to be paid
b) Last day such tax was due to be paid
c) No periods specified
d) Last day of the month in which such tax was due to be paid
12) Which of these registers/ledgers are maintained online?

a) E-Tax liability register
b) E-Credit ledger
c) E-Cash ledger
d) All of them
13) Payment made through challan will be credited to which registers/ledgers?

a) E- Tax liability register
b) E- Credit ledger
c) E- Cash ledger
d) All of them
14) Balance in electronic credit ledger can be utilized against which liability?
a) Output tax payable
b) Interest
c) Penalty
d) Late fee
15) Balance in electronic credit ledger under IGST can be used against which liability?
a) IGST Liability only
b) IGST and CGST liability
c) IGST, CGST and SGST liability
d) No sequence prescribed
16) Balance in electronic credit ledger under CGST can be used against which liability?
a) GST Liability only
b) CGST and IGST liability
c) CGST, IGST and SGST liability
17) Balance in electronic credit ledger under SGST can be used against which liability?
a) SGST Liability only
b) SGST and IGST liability
c) SGST, IGST and CGST liability
Page 195
18) A Company has head office in Bangalore and 4 branches in different states, all registered under GST and
one ISD registered unit in Delhi. How many electronic cash ledgers will the company have?
a) 1
b) 2
c) 5
d) 6
19) A taxable person failed to pay tax and/or file returns on time. He should pay interest on?
a) Gross tax payable
b) Goss tax payable & input credit claimed
c) Net tax payable
d) No interest payable, if reasonable cause is shown
*20) From which date interest is liable in case of excess input tax credit claimed?
a) From the late date of the month in which credit is claimed
b) From the due date for filing Inward Return [GSTR-02] of the month in which credit is claimed
c) From the due date for filing periodic return [GSTR-03] of the month in which credit is claimed
d) From the date of utilization of credit
21) Over the Counter Payment can be made in branches of Banks Authorized for deposits up to
Rs.__________ per challan per tax period?
a) 5,000
b) 10,000
c) 20,000
d) 40,000
22) If a person liable to pay tax, fails to pay such tax or any part thereof shall for the period for which the
tax or any part thereof remains unpaid, is liable to pay, on his own, interest not exceeding___
a) 6%
b) 12%
c) 18%
d) 24%
23) If a taxable person who makes an undue or excess claim of input tax credit or undue or excess reduction
in output tax liability, shall pay interest at such rate not exceeding____.
a) 6%
b) 12%
c) 18%
d) 24%
24) Utilization of Integrated GST would be in order of

a) IGST, CGST, SGST
b) IGST, SGST, CGST
c) CGST, SGST, IGST
d) SGST, IGST, CGST
25) Which of the following items are debited to electronic credit ledger?
a) Output tax
b) Interest
c) Penalty
d) All of the above
Page 196
26) Which input tax credit cannot be claimed against which output tax liability?
a) IGST, SGST
b) CGST, IGST
c) SGST, IGST
d) CGST, SGST
27) Which of the following shall be discharged first, while discharging liability of a taxable person?
a) All dues related to previous tax period
b) All dues related to current tax period
c) Demand raised under section 73 and 74
d) No such condition is mandatory
Q A Q A Q A Q A Q A
1) b 2) B 3) b 4) b 5) d
6) c 7) A 8) a 9) c 10) d
11) a 12) D 13) c 14) a 15) c
16) b 17) B 18) c 19) a 20) c
21) b 22) C 23) d 24) a 25) a
26) d 27) a
Page 197
>> Interest on delayed refunds:
2 years Interest
RD =22-10-18 21-10-20 Date of Refund

25-03-21
Application filed 14-11-20

15-09-20
NOTES:
1) Period between 15-09-20 to 14-11-20 is 60 days.
2) Interest shall be paid from 14-11-20 till 25-03-21.
Page 198
17. Refunds
 Introduction:
Refund refers to an amount that is due to the tax payer from the tax administration.
 Time limit for applying for Refund:
1) Apply within 2 According to section 54 of the CGST Act, 2017, any person claiming refund of any
years from the tax and interest, if any, paid on such tax or any other amount paid by him, may
relevant date make an application before the expiry of two years from the relevant date.
If there is any balance in the electronic cash ledger or electronic credit ledger
after payment of tax, interest, penalty, fee or any other amount payable may
claim such refund in the return furnished under section 39
2) Refund of tax  A specialised agency of the United Nations Organisation or

paid on inward  any Multilateral Financial Institution and Organisation notified under the
supplies United Nations (Privileges and Immunities) Act, 1947,
 Consulate or Embassy of foreign countries or any other person or class of
persons, as notified under section 55,
entitled to a refund of tax paid by it on inward supplies of goods or services or

Claim within both, may make an application for such refund, in such form and manner as may
Six months be prescribed, before the expiry of six months from the last day of the quarter in
which such supply was received.
 Example:
th
Say the supply is received on 20 July 2018, six months shall be computed
th st
from 30 September, 2018 onwards. Six months will therefore expire on 31
March 2019. The refund claim for supply made in July 2018 shall be made on
st
or before 31 March 2019.
 Refund of unutilised input tax credit:
Section 54(3) of CGST Act, 2017 states that, subject to the provisions of section 54(10), a registered person
may claim refund of any unutilised input tax credit at the end of any tax period. Section 54(10) provides for
recovery of any penalty, tax or interest from any refund due.
1) Exports A registered person may claim refund of any unutilised input tax credit at the
(Export Duty) + end of any tax period:
Zero rated
supplies + ROT
tax on inputs PROVIDED that no refund of unutilised input tax credit shall be allowed in cases
being higher other than––
than the ROT on
output supplies (i) zero rated supplies made WITHOUT payment of tax;
(ii) 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), except supplies of goods or services or
both as may be notified by the Government on the recommendations of
the Council:
Page 199
PROVIDED FURTHER that no refund of unutilised input tax credit shall be allowed
in cases where the goods exported out of India are subjected to EXPORT DUTY:
PROVIDED also that no refund of input tax credit shall be allowed, 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.
2) Application with The application shall be accompanied by—

documentary
evidences (a) such documentary evidence as may be prescribed to establish that a
Indicating that refund is due to the applicant; and
incidence has
not been passed (b) evidence to establish that the amount of tax and interest, if any, paid
on such tax or any other amount paid in relation to which such refund
was collected from, or paid by, him and the incidence of such tax and
interest had not been passed on to any other person.
Refunds < 2 PROVIDED that where the amount claimed as refund is less than two lakh
lakhs------ rupees, it shall not be necessary for the applicant to furnish any documentary and
Declaration will other evidences but he may file a declaration, based on the documentary or
suffice other evidences available with him, certifying that the incidence of such tax and
interest had not been passed on to any other person.
3) Order of PO After receipt of the application or declaration as the case may be, the proper
within 60 days - officer is satisfied that the whole or part of the amount claimed as refund is
if found refundable, he may make an order within sixty days from the date of receipt of
refundable- application and the amount so determined shall be credited to the Consumer
credited to the Welfare Fund. (Section 54(5) & (7))
Fund
4) Credit to Refund is normally credited to the Consumer Welfare Fund constituted by the
Consumer Government EXCEPT if amount is relatable to:
Welfare Fund &
credit to the  refund of tax paid on zero-rated supplies of goods or services or both or
applicant on inputs or input services used in making such zero-rated supplies;
 refund of unutilised input tax credit under sub-section (3);
 refund of tax paid on a supply which is not provided, either wholly or

partially, and for which invoice has not been issued, or where a refund
voucher (payment) has been issued;
 refund of tax in pursuance of section 77;
 the tax and interest, if any, or any other amount paid by the applicant, if
he had not passed on the incidence of such tax and interest to any other
person; or
 the tax or interest borne by such other class of applicants as the

Government may, on the recommendations of the Council, by
notification, specify (Section 54(8))
5) Consumer Section 57 of the CGST Act, 2017 states that the following amounts will be
Welfare Fund credited in the Consumer Welfare Fund
(a) the amount referred to in sub-section (5) of section 54 [General Credit to the
CWF];
(b) any income from investment of the amount credited to the Fund; and
(c) such other monies received by it
Page 200
 Utilisation of Fund:
 All sums credited to the Fund shall be utilised by the Government for the
welfare of the consumers in such manner as may be prescribed.
 The Government or the authority specified by it shall maintain proper

and separate account and other relevant records in relation to the Fund
and
 Prepare an annual statement of accounts in such form as may be

prescribed in consultation with the Comptroller and Auditor-General of
India.
 Interest on Delayed Refunds:
1) 60 days- Section 56 of the CGST Act, 2017 states that if any tax ordered to be refunded
processing time under section 54 is not refunded within sixty days from the date of receipt of
from date of application interest at such rate not exceeding six per cent. as may be specified
receipt of in the notification issued by the Government on the recommendations of the
application Council shall be payable in respect of such refund from the date immediately
after the expiry of sixty days from the date of receipt of application under the
said sub-section till the date of refund of such tax.
 Example:
X Ltd has filed a refund claim of excess tax paid with all the documents and
records on 19.06.2018. The department sanctioned the refund on
30.09.2018. In such a case, interest has to be paid for the period from
18.08.2018 to 30.09.2018.
2) Order of Where any claim of refund arises from an order passed by an adjudicating
Appellate authority or Appellate Authority or Appellate Tribunal or court which has
Authority = attained finality and the same is not refunded within sixty days from the date of
Order of PO receipt of application filed consequent to such order, interest at such rate not
exceeding nine per cent. as may be notified by the Government on the
recommendations of the Council shall be payable in respect of such refund from
the date immediately after the expiry of sixty days from the date of receipt of
application till the date of refund.
Where any order of refund is made by an Appellate Authority, Appellate

Tribunal or any court against an order of the proper officer under sub-section (5)
of section 54, the order passed by the Appellate Authority, Appellate Tribunal or
by the court shall be deemed to be an order passed under the said sub-section
(5).
 Example:
A Ltd has filed a refund claim of excess tax paid with all the documents and
records on 19.06.2018. It was rejected by refund sanctioning authority. On
Appeal the Appellate Authority passed the order for refund based on which
the department sanctioned the refund on 30.07.2019. In such a case interest
has to be paid for the period from 18.08.2017 to 30.07.2018.
Page 201
Q
1) What is the relevant date in case of refund on account of excess payment of GST due to mistake or
inadvertence?
a) Date of payment of GST
b) Last day of the financial year
c) Date of providing of service
d) Due date of payment of GST
2) Refund of accumulated input tax credit at the end of any tax period is eligible in cases of?
a) Due to purchase of huge stocks
b) Credit cannot be used for any reason
c) Due to Exports and input tax rate being higher than output tax rate (Inverted duty structure)
d) Due to Exports only
3) Interest U/s 56 is applicable on delayed payment of refunds issued under?

a) Section 54
b) Section 44
c) Section 34
d) Section 45
4) Interest U/s 56 has to be paid for delayed refunds, if the refund is not granted within ……….
a) 90 days
b) 3 months
c) 60 days
d) 120 days
5) In cases where the application of refund is found to be in order, the refund amount shall be credited to
…………………. Fund.
a) Investor Protection and Education Fund
b) Refund Claim Fund
c) Consumer Welfare Fund
6) The overall objective of the Consumer Welfare Fund is

a) To facilitate a simplified refund mechanism.
b) To promote and protect the welfare of the consumers and strengthen the consumer movement in the
country.
c) To boost the overall growth of the economy
d) Both a and b
*7) Proper and separate account and other relevant records in relation to the Fund in prescribed form in
consultation with the Comptroller and Auditor-General of India shall be maintained by ……………….
a) the Government
b) the authority specified by the Government
c) (a) and (b)
d) (a) or (b)
8) Refund application is to be filed before the expiry of ____________ from the relevant date.
a) Two years
b) One year
c) 180 days
d) 360 days
Page 202
9) A specialised agency of the UNO can claim refund of tax paid on_________
a) Intra-State supply of goods and/or services
b) Inter-state supply of goods and/or services
c) Inward supply of goods and/or services
10) What is the time limit for filing of refund application by a specialised agency of the UNO?
a) Before the expiry of nine months from the last day of the quarter in which such inward supply received
b) Before expiry of nine months from the last day of the month in which such inward supply received
c) Before expiry of six months from the last day of the MONTH in which such inward supply was received.
d) Before expiry of six months from the last day of QUARTER in which such inward supply was received
11) A registered person claiming refund of balance in electronic cash ledger may make such a claim in:-
a) Application for refund
b) Annual Return
c) Returns filed at the end of tax periods
d) Any of the above
12) The applicant is not required to furnish documentary evidence if the amount of refund claimed is
a) Rs 6 lacs
b) Rs 2 lacs
c) Rs 5 lacs
d) Rs 10 lacs
13) The time limit to proper officer to pass final order after accepting the refund application is -
a) Within sixty days from the date of receipt of application.
b) Within seventy days from the date of receipt of application.
c) Within ninety days from the date of receipt of application
d) Within thirty days from the date of receipt of application.
14) Interest on refund amount is required to be paid after expiry of ………. from the date of receipt of the
application
a) 60 days
b) 70 days
c) 90 days
d) 30 days
15) What is the rate of interest to be payable in case of delay in sanctioning the refund claimed?
a) Not exceeding 6%
b) Not exceeding 9%
c) Not exceeding 12%
d) Not exceeding 18%
Q A Q A Q A Q A Q A
1) a 2) c 3) a 4) c 5) c
6) b 7) d 8) a 9) c 10) d
11) c 12) b 13) a 14) a 15) a
The hours that ordinary people waste,

extraordinary people leverage
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Page 204
18. Assessment
 Introduction:
Assessment means determining tax liability under the CGST Act, 2017 and includes the following types of
assessment:
SN Types of Assessment
1) Self assessment
2) Provisional assessment
3) Re Assessment
4) Best Judgement Assessment
5) Assessment of unregistered persons
6) Summary assessment
 Types of Assessment:
1) Self Section 59 of the CGST Act, states that every registered person is required to
assessment  self-assess the taxes payable under this Act and
 furnish a return for each tax period.
2) Provisional A provisional assessment is done when the taxable person is unable to determine
assessment
 the value of goods or services or both or
 determine the rate of tax applicable thereto, and
request the proper officer in writing giving reasons for payment of tax on a
provisional basis and the proper officer shall pass an order, within a period not
later than 90 days from the date of receipt of such request, allowing payment of
tax on provisional basis at such rate or on such value as may be specified by him.
(Section 60 of the CGST Act, 2017).
The proper officer is required to pass final assessment order within 6 months from
the date of the communication of order.
The period specified may, on sufficient cause being shown and for reasons to be
recorded in writing, be extended by the
 Joint Commissioner or Additional Commissioner for a further period not

exceeding six months and
 Commissioner for such further period not exceeding four years.
3) Assessment of  Assessment of unregistered persons is done where a taxable person fails to

unregistered obtain registration even though liable to do so or whose registration has been
persons cancelled under sub-section (2) of section 29 but who was liable to pay tax,
 the proper officer may proceed to assess the tax liability of such taxable person
to the best of his judgment for the relevant tax periods and issue an
assessment order within a period of five years from the date specified under
section 44 for furnishing of the annual return for the financial year to which the
tax not paid relates:
Principle of Provided that no such assessment order shall be passed without giving the person
Natural Justice an opportunity of being heard.
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Page 206
4) Summary Section 64 of the CGST Act, 2017 states that a Summary Assessment can be done by
Assessment a proper officer,
 on any evidence showing a tax liability of a person coming to his notice, with
the previous permission of Additional Commissioner or Joint Commissioner if
the officer believes that any delay in assessment can adversely affect the
INTEREST OF REVENUE.
Example:
Insolvency, instances of defaulting, absconding etc.
Q
1) Provisional assessment under the GST law is permitted to be
a) At the instance of the taxable person
b) At the instance of the tax authorities on a best judgment basis in absence of adequate details or response
from registered person
c) Either of (a) and (b)
d) No such provision
2) On the grounds of sufficient reasons being provided by proper officer the time period for passing final
assessment order can be extended by Joint/ Additional Commissioner for further period of not exceeding
a) 2 months
b) 3 months
c) 6 months
d) 9 months
3) On the grounds of sufficient reasons being provided by proper officer the time period for passing final
assessment order can be extended by Commissioner for further period of
a) 6 months
b) 4 years
c) 2 years
d) 6 years
4) A taxable person may apply for provisional assessment:

a) when the taxable person is not able to determine the value of goods and/or services
b) when the taxable person is not able to determine the rate of tax
c) (a) or (b)
5) Proper officer shall pass an order, within a period not later than _______ from the date of receipt of such
request, allowing payment of tax on provisional basis:
a) 30 days
b) 60 days
c) 90 days
d) 120 days
6) The provisional assessment sought by a taxable person can be used by:

a) The taxable person who has sought the provisional assessment.
b) The friends and relatives of the taxable person who has sought the provisional assessment.
c) The holding/subsidiary company of the taxable person who has sought the provisional assessment.
d) Any of the above
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Page 208
*7) What is the time period within which the final assessment order should be passed?
a) Six months from the date of the provisional assessment.
b) Nine months from the date of the provisional assessment.
c) Ten months from the date of the provisional assessment.
d) One year from the date of the provisional assessment.
8) If final order is not passed within six months, time period specified in 60(1) may, on sufficient cause being
shown and for reasons to be recorded in writing, be extended:
a) by the Joint/Additional Commissioner for a further period of six months and by the Commissioner for such
further period not exceeding four years.
b) by the Commissioner for a further period of seven months.
c) by the Joint/Additional Commissioner for a further period of two years.
d) by the Joint/Additional Commissioner for a further period of one year and by the Commissioner for a
further period of six months
9) Section 63 deals with

a) Assessment of taxable persons who have failed to file the returns.
b) Assessment of registered taxable person who have filed returns as per the law.
c) Assessment of unregistered taxable persons
d) Assessment of any taxable person, whether registered or unregistered
10) What is the time limit for passing order u/s 63?
a) 5 years from the date due date for filing of the annual return for the year to which tax not paid relates.
b) 6 years from the date due date for filing of the annual return for the year to which tax not paid relates.
c) 5 years from the end of financial year in which tax not paid relates to
d) No time limit
11) No Notice is required to be given before passing assessment order under section 63?
a) True
b) False
c) Can’t say
12) What is the consequence, where a taxable person fails to obtain registration even though liable to do so?
a) PO may assess the tax liability to the best of his judgement.
b) Issue a SCN and pass assessment order after providing opportunity of being heard.
c) (a) or (b)
d) (a) and (b)
13) What are the pre requisites for proper officer to pass assessment order under Section 63?
a) Period selected for assessment has to be within 5 years from the end of due date for filing annual return of
relevant period.
b) Show cause notice has to be issued before passing assessment order.
c) Opportunity of being heard has to be given before passing assessment order.
d) All of the above.
14) What is the time period within which a person can apply to the Additional/ Joint Commissioner for
withdrawal of such order of Summary Assessment?
a) 30 days
b) 45 days
c) 60 days
d) 90 days
Page 209
15) Whether proper officer can proceed Suo-moto in assessing the tax liability of a taxable person on
possession of relevant evidence?
a) No, the proper officer has to obtain prior permission of [Additional/Joint Commissioner] to proceed to
assess the tax liability.
b) No, the proper officer has to obtain prior permission of Chief Commissioner to proceed to assess the tax
liability.
c) No, the proper officer has to obtain prior permission of Principle Chief Commissioner to proceed to assess
the tax liability.
d) No, the proper officer has to obtain prior permission of Principle Chief Commissioner to proceed to assess
the tax liability
16) Whether summary assessment can only be initiated on previously filed return (u/s 39 and u/s 45)?
a) Summary assessment can be initiated on a person who has previously filed the return.
b) Summary assessment can be initiated on a person who has previously not filed the return
c) (a) or (b). Submission of return u/s 39 and u/s 45 is not prerequisite.
d) Only (a)
17) The order u/s 64 may be withdrawn:

a) On an application made by taxable person
b) If the Additional/Joint Commissioner considers that such order is erroneous.
c) (a) or (b)
d) One of the above as the order passed u/s 64 cannot be withdrawn.
Q A Q A Q A Q A Q A
1) a 2) c 3) b 4) c 5) c
6) a 7) a 8) a 9) c 10) a
11) b 12) d 13) d 14) a 15) a
16) c 17) c
juSt becauSe you took longer than otherS. doeSn’t

mean you failed. remember that.
Page 210
Page 211
 Types of Audit:
Commissioner or
General By way of General
Officer authorised
Audit or Special order
by commissioner
AUDIT
Regard to nature or
Officer not below
Special complexity of the
the rank of Assistant
Audit case & the interest
Commissioner
of revenue
 Audit by Tax Authorities:
15-09-18 30-09-18
15 days 3M+EXT (6M)
Notice to be 06-10-18
atleast 15 days in
Notice for
advance before
AUDIT
commencement
Page 212
19. Audit
 Introduction:
Audit of records of tax payers is the essence to ensure the proper functioning of a self assessment based tax
system. This provision provides for audit of the business transactions of any registered person. It is an
important tool in the tax administration to ensure compliance of law and prevent revenue leakage.
 Types of Audit:
1 Types of Audit under GST can be of following two types:
Audit i) General Audit
ii) Special Audit
i) General Section 65 of the CGST Act, 2017 states that the Commissioner or any officer
Audit authorised by him,
 by way of a general or a specific order,
 may undertake audit of any registered person for such period,
 at such frequency and in such manner as may be prescribed.
Intimation A prior notice of not less than fifteen working days will be sent to the registered
atleast 15 person before the audit is conducted.
prior to
audit
Time limit The audit needs to be completed within a period of three months from the date of
for COA- 3 commencement of the audit, but a further extension for a period of six months may
(+6) months be provided by the Commissioner for the reasons recorded in writing.
Intimation On conclusion of audit, the proper officer shall, within thirty days, inform the
of findings registered person, whose records are audited, about the findings, his rights and
to RP obligations and the reasons for such findings.
Cooperation During the course of audit, the authorised officer may require the registered person,—
from the RP i) to afford him the necessary facility to verify the books of account or other
documents as he may require;
ii) to furnish such information as he may require and render assistance for
timely completion of the audit.
ii) Special  If at any stage of scrutiny, inquiry, investigation or any other proceedings before
Audit him, any officer not below the rank of Assistant Commissioner, having regard to
the
 nature and complexity of the case and

 the interest of revenue,
is of the opinion that the value has NOT been correctly declared or the credit availed is
NOT within the normal limits, he may, with the prior approval of the Commissioner,
direct such registered person by a communication in writing to get his records
including books of account examined and audited.
Reporting
within 90  A report of audit signed and certified by the appointed Chartered Accountant or
(+90) days Cost Accountant is required to be submitted within 90 days although this period
can be further extended to 90 days.
Page 213
Opportunity
of being  The registered person shall be given an opportunity of being heard in respect of
heard any material gathered on the basis of special audit which is proposed to be used
in any proceedings against him under this Act or the rules made thereunder.
Detection of
irregularities  Where the special audit conducted results in detection of tax not paid or short
paid or erroneously refunded, or input tax credit wrongly availed or utilised, the
proper officer may initiate required action.
Q
1) Who is authorised to undertake the audit of a registered person?
a) The Commissioner of CGST/Commissioner of SGST
b) any officer authorised by Commissioner of CGST/Commissioner of SGST by way of a general or a specific
order.
c) Only (b)
d) (a) or (b)
2) Whether any reason to believe or evidence is required for initiation of audit u/s 65?
a) Reason to believe is a prerequisite for initiation of audit u/s 65.
b) Proper evidence is a prerequisite for initiation of audit u/s 65.
c) (a) or (b)
d) No, Sec 63 does not specify any such requirements.
3) Prior to the conduct of audit u/s 65 the registered person shall be informed, by way of a notice,
sufficiently in advance
a) not less than fifteen working days
b) not less than thirty working days
c) not less than forty working days
d) not less than sixty working days
4) The time limit for completion of the audit u/s 65(1) is:
a) six months from the date of commencement of audit
b) three months from the date of commencement of audit
c) One year from the date of commencement of audit.
d) Fifteen months from the date of commencement of audit
5) Where the [Commissioner] is satisfied that audit in respect of such taxable person cannot be completed
within three months from the date of commencement of audit the time limit can be extended:
a) by a further period not exceeding six months
b) by a further period not exceeding seven months
c) by a further period not exceeding eight months
d) No extension of time limit is permissible
*6) During the course of audit, the authorised officer may require the registered person:
a) to afford him the necessary facility to verify the books of account or other documents as he may require
b) to furnish such information as he may require and render assistance for timely completion of the audit.
c) (a) and/or (b)
d) Only (b)
*7) Special audit u/s 66 can be directed at any stage of scrutiny, enquiry, investigation or any other
proceedings having regard to nature and complexity of the case if, any officer not below the rank of
Page 214
[Assistant Commissioner]:
a) is of the opinion that the value has not been correctly declared
b) the credit availed is not within the normal limits.
c) At the discretion of the officer
d) (a) or (b)
8) Who can direct the registered person to get his records audited u/s 66?
a) An officer not below the rank of [Assistant Commissioner], with the prior approval of the [Commissioner]
b) An officer not below the rank of [Joint/Additional], with the prior approval of the [Chief Commissioner]
c) An officer not below the rank of [Chief Commissioner], with the prior approval of the [Principle Chief
Commissioner]
d) All of the above.
9) Who is authorised to conduct the audit including books of account u/s 66?
a) Chartered Accountant as may be nominated by the [Commissioner].
b) Cost Accountant as may be nominated by the [Commissioner].
c) (a) or (b)
d) Comptroller and Auditor General of India.
10) The time limit to submit a report of the audit u/s 66 is:
a) within the period of ninety days without any extension of time.
b) within the period of thirty days without any extension of time.
c) within the period of ninety days. The proper officer may, on an application made to him in this behalf or for
any material and sufficient reason, extend the said period by another ninety days.
11) The expenses of audit u/s 66 is determined and paid by:

a) the [Commissioner]
b) the [Deputy/ Assistant Commissioner] with prior approval of the Commissioner.
c) the registered person.
d) Central Government
Q A Q A Q A Q A Q A
1) d 2) d 3) a 4) B 5) a
6) c 7) d 8) a 9) C 10) c
11) a
Believe in yourself is the first secret to success
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Page 216
20. Inspection, search, seizure, arrest
 Understanding of the Terms :

Let’s have an understanding of the terms:
1) Inspection This provision enables officers to access any place of business of a taxable person and
also any place of business of a person engaged in transporting goods or a person who
is an owner or an operator of a warehouse or godown.
“Inspection” means, careful examination or scrutiny. (Study Material)
2) Search It is a harder provision than Inspection. The term ‘search’, in simple language, denotes
an action of a government machinery to go, look through or examine carefully a place,
area, person, object etc. in order to find something concealed or for the purpose of
discovering evidence of a crime. The search of a person or vehicle or premises etc. can
only be done under proper and valid authority of law.
3) Seizure In Law Lexicon Dictionary, ‘seizure’, is defined as the act of taking possession of
property by an officer under legal process.
Seizure is defined as taking of something by force. (Study Material)
 Introduction:
1 Inspection  Under Goods and Services Tax (GST), there is a provision of inspection which acts
as deterrent for tax evasion. These provisions help restricting tax evaders gain
unfair advantage over authentic tax payers.
 Chapter XIV of the Central Goods and Services Tax Act, 2017 deals with the
provisions of Inspection, Search, Seizure and Arrest.
 Section 67 of CGST Act,2017 read with Rules states that where the proper officer,
not below the rank of Joint Commissioner, has reasons to believe that:
A taxable person Any person engaged in the business of

 transporting goods or
 an owner or operator of a warehouse or a
has suppressed any transaction
godown or any other place.
relating to supply of goods or
services or both or the stock of
goods in hand  Keeping goods which have escaped
payment of tax or
has claimed input tax credit  has kept his accounts or goods in such
a manner as is likely to cause evasion
in excess of his entitlement
of tax payable under this Act
has indulged in contravention of

this Act or Rules made thereunder
to evade tax
The officer may authorise in writing any other officer of Central tax or State tax to
Page 217
INSPECT any places of business of the taxable person or the persons engaged in the
business of transporting goods or the owner or the operator of warehouse or
godown or any other place.
2 Authorisation The authorisation to conduct the inspection or search or, as the case may be, seizure
in GST INS- of goods, documents, books or things liable to confiscation will be in form GST INS-
01 01.
(Very Imp)
3 Seizure Section 67 of Central Goods and Services Tax Act, 2017, read with respective rules
states provisions relating to seizure. The salient points of SEIZURE are as follows:
A proper officer not below the rank of Joint

Order of Commissioner or an officer authorised by such
Seizure proper officer can make an order of seizure in form
GST INS-02.
Where goods cannot be seized (due to its volume,

weight or other physical characteristics or due to
its being of a dangerous nature) the proper officer
Order of or the authorised officer may serve on the owner
Prohibition or the custodian of the goods, an order of
prohibition in FORM GST INS-03 that he shall not
remove, part with, or otherwise deal with the
goods except with the previous permission of such
officer.
When goods are seized the officer is required to

prepare an inventory of such goods or books or
Preparation documents seized containing, inter alia,
of Inventory description, quantity or unit, make, mark or
model, where applicable, and get it SIGNED by the
person from whom such goods or documents or
books or things are seized.
 Bond for release of seized goods:

 Goods seized by a proper officer or an authorised officer can be RELEASED
ON A PROVISIONAL BASIS upon execution of a bond for the value of goods
and furnishing of a security.
 The bond so executed will be in Form GST INS-04 and the security in the
form of a bank guarantee equivalent to the amount of applicable tax,
interest and penalty payable.
 In case the person to whom the goods were released provisionally FAILS TO
PRODUCE the goods at the appointed date and place indicated by the proper
officer, the security shall be encashed and adjusted against the tax, interest
and penalty and fine, if any, payable in respect of such goods. (VERY IMP)
 Procedure in respect of seized goods:

 If the goods so seized are of perishable or hazardous nature, such goods can
be released by an order under Form GST INS-05 only after the taxable person
pays an amount equivalent to
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 the market price of such goods or things or

 the amount of tax, interest and penalty that is or may become
payable by the taxable person,
 whichever is lower and produce the proof of payment.
 If the taxable person doesn’t pays the amount, the Commissioner has the
power to dispose of such goods or things and the amount realized thereby
will be adjusted against the tax, interest, penalty, or any other amount
payable in respect of such goods or things.
4 Arrest Section 69 of the CGST Act, 2017 grants power to a Commissioner to authorise any
officer of Central Tax to arrest such person who has committed offence discussed
below:
5 Offence a) supplies any goods or services or both without issue of any invoice, with the
(Section 132) intention to evade tax.
b) issues any invoice or bill without supply of goods or services or both leading to
wrongful availment or utilisation of input tax credit or refund of tax.
c) avails input tax credit using such invoice or bill without receipt of supply of
goods or services or both.
d) collects any amount as tax but fails to pay the same to the Government beyond a
period of three months from the date on which such payment becomes due.
 Punishment [Section 132 (1)]:

 First time Offence:
When a person commits any of the offences stated above the punishment
will be as follows:
Where the amount of tax evaded or the amount of input tax credit
wrongly availed or utilised or the amount of refund wrongly taken
exceeds [Value of an OFFENCE]
500 lakh Rupees 200 to 500 lakh Rupees
imprisonment for a term which imprisonment for a term which
may extend to 5 years and with may extend to 3 years and with
fine fine
 Second & every subsequent time Offence:

Where any person convicted of an offence under this section is AGAIN
convicted of an offence under this section, then, he shall be punishable for
the second and for every subsequent offence with imprisonment for a term
which may extend to 5 years and with fine.
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Q
1) Initiation of action under section 67 is by a Proper Officer not below the rank of …………..
a) Superintendent
b) Assistant Commissioner
c) Joint Commissioner
d) Commissioner
2) Which are the places of business / premises which can be inspected by the proper officer under this
section?
a) Any places of business of a taxable person
b) Any places of business of a taxable person engaged in the business of transporting goods
c) Any places of business of an owner or an operator of a warehouse or godown
d) Any other place
e) All of the above
3) Is it mandatory that ‘reasons to believe’ must exist before issuing authorization for Inspection or Search
and Seizure by the proper officer?
a) Yes
b) No
c) No such requirement
4) Can the seized goods be released on provisional basis upon execution of a bond and furnishing of
security or on payment of applicable tax, interest and penalty?
a) Yes
b) No
c) At proper officer’s discretion
5) The authorisation to conduct the inspection or search or, as the case may be, seizure of goods,
documents, books or things liable to confiscation will be in form _____.
a) GST INS- 01.
b) GST INS- 02.
c) GST INS- 03.
d) GST INS- 04.
6) Seizure is defined as taking of something by____

a) Being liberal
b) Force
c) Coercion
d) Influence
7) Proper officer not below the rank of Joint Commissioner or an officer authorised by such proper officer
can make an order of seizure in form ______
a) GST INS-01
b) GST INS-02
c) GST INS-03
d) GST INS-04
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8) Where Goods cannot be seized (due to its volume, weight or other physical characteristics or due to its
being of a dangerous nature) the proper officer or the authorised officer may serve on the owner or the
custodian of the goods, an order of prohibition in FORM ________ that he shall not remove, part with, or
otherwise deal with the goods except with the previous permission of such officer
a) GST INS-01
b) GST INS-02
c) GST INS-03
d) GST INS-04
9) Goods seized by a proper officer or an authorised officer can be released on a provisional basis upon
execution of a bond in Form _______ for the value of goods and furnishing of a security in the form of a
bank guarantee equivalent to the amount of applicable tax, interest and penalty payable
a) GST INS-01
b) GST INS-02
c) GST INS-03
d) GST INS-04
10) If the goods so seized are of perishable or hazardous nature, such goods can be released by an order
under ________
a) Form GST INS-02
b) Form GST INS-03
c) Form GST INS-04
d) Form GST INS-05
11) For the offences mentioned, where the value of the offence exceeds 200 to 500 lakh Rupees, the
imprisonment may extend to ________and with fine?
a) 2 years
b) 3 years
c) 4 years
d) 5 years
12) For the offences mentioned, where the value of the offence exceeds 500 lakh Rupees, the imprisonment
may extend to ________and with fine?
a) 2 years
b) 3 years
c) 4 years
d) 5 years
13) Where any person convicted again (second or every subsequent time) of an offence under this section,
then, he shall be punishable for the second and for every subsequent offence with imprisonment for a
term which may extend to ________and with fine.
a) 2 years
b) 3 years
c) 4 years
d) 5 years
Q A Q A Q A Q A Q A
1) c 2) e 3) a 4) a 5) a
6) b 7) b 8) c 9) d 10) d
11) b 12) d 13) D
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The Integrated Goods & Services

Tax Act, 2017
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21. Introduction to IGST Act, 2017
 Introduction:
The GST Council in its 11th meeting held on 4th March, 2017 approved the “draft Integrated GST” bill to
make a provision for levy and collection of tax on inter-State supply of goods or services or both by the
Central Government and for matters connected therewith or incidental thereto.
The Union Government presented the Integrated Goods and Service Tax Bill, 2017 in Lok Sabha on 27th
March, 2017 and the same was passed by Lok Sabha on 29th March, 2017. The Rajya Sabha passed the bill
on 6th April, 2017 and was assented by the President on 13th April, 2017 12th April, 2017.
 Important Definitions:
Section 2 of the IGST Act, 2017 contains the definitions of various terms used at several places in the
Act. Some of the important definitions are reproduced as follows:
1 Continuous “Continuous journey” means a journey for which

journey a) a single ticket or invoice is issued or
b) more than one ticket or invoice is issued at the SAME TIME, either
i) by a single supplier of service or

ii) through an agent acting on behalf of more than one supplier of
service, and
which involves no stopover between any of the legs of the journey for which one or
more separate tickets or invoices are issued.
Explanation––For the purposes of this clause, the term “stopover” means a place
where a passenger can disembark either to
i) transfer to another conveyance or

ii) break his journey for a certain period in order to resume it at a later point of
time.
Notes:
>> HALT in the journey dose not result in Stopover and no breakage in Continuous
journey.
2 Export of “Export of goods” with its grammatical variations and cognate expressions, means
GOODS taking goods out of India to a place outside India.
3 Export of “Export of services” means the supply of any service when,––

SERVICES
i) the supplier of service is located in India;
ii) the recipient of service is located outside India;
iii) the place of supply of service is outside India;
iv) the payment for such service has been received by the supplier of service in
convertible foreign exchange; and
v) the supplier of service and the recipient of service are not merely
establishments of a distinct person in accordance with Explanation 1 in
section 8
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4 Fixed “Fixed establishment” means a place (other than the registered place of business)
establishment which is characterised by a
 sufficient degree of permanence and
 suitable structure in terms of human and technical resources to supply services
or to receive and use services for its own needs
5 Import of ‘‘Import of goods” with its grammatical variations and cognate expressions, means
goods bringing goods into India from a place outside India.
6 Import of ‘‘Import of services” means the supply of any service, where––

services i) the supplier of service is located outside India;
ii) the recipient of service is located in India; and
iii) the place of supply of service is in India.
7 Location of “Location of the recipient of services” means,––

the recipient a) where a supply is received at a place of business for which the registration
of services has been obtained, the location of such place of business;
b) where a supply is received at a place other than the place of business for
which registration has been obtained (a fixed establishment elsewhere), the
location of such fixed establishment;
c) where a supply is received at more than one establishment, whether the

place of business or fixed establishment, the location of the establishment
most directly concerned with the receipt of the supply; and
d) in absence of such places, the location of the usual place of residence of the
recipient.
8 Location of “location of the supplier of services” means,––

the supplier a) where a supply is made from a place of business for which the registration
of services has been obtained, the location of such place of business;
b) where a supply is made from a place other than the place of business for
which registration has been obtained (a fixed establishment elsewhere), the
location of such fixed establishment;
c) where a supply is made from more than one establishment, whether the
place of business or fixed establishment, the location of the establishment
most directly concerned with the provision of the supply; and
d) in absence of such places, the location of the usual place of residence of the
supplier
9 Non-taxable “Non-taxable online recipient” means any Government, local authority,

online governmental authority, an individual or any other person not registered and
recipient receiving online information and database access or retrieval services in relation to
any purpose other than commerce, industry or any other business or profession,
located in taxable territory.
Explanation.––For the purposes of this clause, the expression “governmental

authority” means an authority or a board or any other body,––
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government,
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with ninety per cent. or more participation by way of equity or control, to carry out
any function entrusted to a municipality under article 243W of the Constitution
10 Online “Online information and database access or retrieval services” means services
information whose
and database  delivery is mediated by information technology over the internet or an
access or electronic network and
retrieval
services  the nature of which renders their supply essentially automated and
involving minimal human intervention and impossible to ensure in the
absence of information technology and
 includes electronic services such as,––

(i) advertising on the internet [E.g. Google- pop-up ads];
(ii) providing cloud services [E.g. Amazon Web Services];
(iii) provision of e-books, movie, music, software and other intangibles
through telecommunication networks or internet [Gaana.com];
(iv) providing data or information, retrievable or otherwise, to any person in
electronic form through a computer network [E.g. Taxindiaonline.com]; (v)
online supplies of digital content (movies, television shows, music and the
like); [E.g. Set-max online, YouTube]
(vi) digital data storage; [E.g. Amazon] and
(vii) online gaming [E.g. Zapak.com];
 Understanding:
a) Deliver through IT:
To qualify the services as OIDAR, it is essential that the services are
delivered through internet or computer. There are number of websites
which has huge database on variety of subjects. Normally, members of
website can access to such database which is stored on the website. The
access is provided through internet or electronic network.
Example: www.taxguru.com
b) Supply essentially automated and involving minimal human

intervention impossible to ensure in the absence of IT:
The second condition is that the nature of supply of services shall
essentially be automated and involving minimal human intervention. It
appears that there should not be SIGNIFICANT human intervention in
supply of services. In the example given above, the members of website
can have an access to the database WITHOUT ANY INTERVENTION
FROM THE OWNER OF THE WEBSITE. Another example is that of legal
websites. The various judgements of the Tribunal, High Courts or
Supreme Court are stored in the database of the website. The members
can have the access to the information without the intervention of the
owner of the website and the judgements can be downloaded by the
members.
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22. Nature of Supply
 Introduction:
GST is a destination based tax i.e., consumption tax, which means tax will be levied where goods and
services are consumed and will accrue to that state thus, it is of immense importance that the place of
supply of any transaction is determined correctly.
To determine the correct place of supply, it is important that the nature of supply be understood first.
Following table list provisions as contained in IGST Act, 2017, to know whether a supply will be treated as
Inter State or Intra State supply.
1) Inter State Supply (Sec 7):

The following services shall be treated as inter-state supply-
Inter State Supply (Sec 7)

Supply of Goods Services
Where location of the supplier  two different States;
and the place of supply are in  two different Union territories; or
 a State and a Union territory
Import till they cross the customs No specific requirement

frontiers of India (all services imported will be
treated as inter-state supply)
 Example:  Example:
Say Mr.A has imported certain Annual maintenance contract
goods from US & before entered by a Company
clearance from the Custom outside India for maintenance
Authorities, Mr.A supplies the of goods located in India.
same goods to Mr.B by virtue
of transfer of title. IGST shall
be paid by the person filing
Bill of Entry i.e. Mr.B.
Following supply of goods or services or both will be treated as inter-State trade or commerce:
 supplier located in India and the place of supply is outside India
 Understanding:
This will cover the transaction which seems to be like export of goods or export of services (but
may not be technically as per definition given in the law).Thus on clearance the person have to
execute bond and letter of undertaking to the extent of IGST payable on such transaction or pay
tax to this extent.
 TO or BY a Special Economic Zone developer or a Special Economic Zone unit

 Example:
Say SEZ in Noida supplies goods or services to ABC Ltd in Kanpur OR say XYZ Ltd of Varanasi
supplies to SEZ in Noida, these transactions will NOT be considered as Intra-state supply
although both the parties are located in one state. These will be considered as Inter-state
transactions and thus liable for IGST.
 in the taxable territory, not being an intra-State supply and not covered elsewhere in this section
 Example:
Sec 8(1) defines intra-state supply, but the proviso specifically provide that supply made to
tourist referred under section 15 will not be considered as intra-State supply of goods or
services. Clause (c) of Sec 7 (5) further provides that if the transaction is NOT an intra-state
transaction and NOT covered under section 7(1) to section 7(4) will be considered as inter-state
transaction under clause (c) of Sec 7 (5).
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2) Intra State Supply (Sec 8):

The following supplies shall be treated as intra state supply:
Intra State Supply (Sec 8)

Supply of Goods Services
Where location of the supplier same State or same Union territory
and the place of supply are in
Following supplies will not be considered as Intra State Supply

supply of goods to or by a Special supply of services to or by a
Economic Zone developer or a Special Economic Zone developer
Special Economic Zone or a Special Economic Zone
goods imported into the territory

of India till they cross the customs
frontiers of India
supplies of goods made to a

tourist as referred to in Section 15
(Refer Below)
 Refund of integrated tax paid on supply of goods to tourist leaving India:
15 IGST shall be The integrated tax paid by tourist leaving India on any supply of goods taken out
refunded if goods of India by him shall be refunded in such manner and subject to such conditions
are taken out of and safeguards as may be prescribed.
India
Explanation––For the purposes of this section, the term “tourist” means a person
not normally resident in India, who enters India for a stay of not more than six
months for legitimate non-immigrant purposes.
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 Establishments of distinct persons:
1 Establishments  Following will be treated as establishments of distinct persons:
of distinct  an establishment in India and any other establishment outside India;
persons
 an establishment in a State or Union territory and any other
(Discussed in establishment outside that State or Union territory; or
Schedule II)  Example:
HO in Mumbai and Branch in Bhopal. The office in Mumbai and Branch
in Bhopal shall be treated as an establishment of a distinct person.
 an establishment in a State or Union territory and any other

establishment being a business vertical registered within that State or
Union territory
 Example:
If separate registration is obtained for different business
verticals by any person within the State or the UT, the business
verticals will be considered as distinct persons.
 A person carrying on a business through a branch or an agency or a

representational office in any territory shall be treated as having an
establishment in that territory.
 Understanding:
If the X Ltd’s branch or an agency or a representational office is
located in one country (say, USA) and the main office is located
in another country (say, India). X Ltd shall be treated as having
an establishment in USA and going with the clause (a) of
Explanation 1 , the Branch or an agency or a representational
office in USA and the Main Office in India shall be treated as
establishments of distinct persons.
 Supplies in territorial waters (Sec 9):
1 LOS = TW Notwithstanding anything contained in this Act,––
POS = TW (a) where the location of the supplier is in the territorial waters, the
location of such supplier; or
Be deemed to (b) where the place of supply is in the territorial waters, the place of supply,
be in the
Nearest Coastal shall, for the purposes of this Act, be deemed to be in the coastal State or Union
State or UT territory where the nearest point of the appropriate baseline is located.
 Example:
If repair services are provided by a company in Delhi on a ship moored off the
coast of Kochi for a shipping company from United Kingdom, the place of
supply being the location of the ship will create doubt about the applicability
of GST. Now, by the provisions in section 9, it is clear that the place of supply
of the repair services will not be the waters but Kochi. With this doubt having
been resolved, it would be an inter-State supply albeit to the UK company.
Another example: lease of ocean exploration equipment by a company in

Chennai to a company incorporated in Mumbai to carry out oil exploration
off the coast of Andhra Pradesh. The location of supplier being guided by
location of goods at the time of supply can create doubt. With the application
of section 9, the location of supplier will be Andhra Pradesh.
Page 243
Q
1) Which of the following is an inter-State supply?
a) Supplier of goods located in Lucknow, UP and place of supply of goods SEZ located in Lucknow, UP
b) Supplier of goods located in Lucknow, UP and place of supply of goods in Jaipur
c) Supplier of goods located in Lucknow, UP and place of supply of goods SEZ located in Chandigarh
d) All the above
2) Which of the following is an intrastate supply?

a) Supplier of goods located in Lucknow, UP and place of supply of goods SEZ located in Lucknow, UP
b) Supplier of goods located in Lucknow, UP and place of supply of goods in Jaipur
c) Supplier of goods located in Lucknow, UP and place of supply of goods in Lucknow, UP
d) All the above
3) Which of the following transaction is inter-state supply of goods?

a) Location of supplier is in Lucknow, UP and location of recipient is in Mumbai.
b) Location of supplier is in Lucknow, UP and place of supply is Mumbai
c) Location of supplier and place of supply is Lucknow, UP
4) Supply of goods in the course of import of territory of India is:

a) Intrastate supply
b) Inter-State supply [Inter-state trade or commerce]
c) Export
5) The maximum rate of IGST can be:

a) 20%
b) 30%
c) 40%
6) IGST is levied on:

a) Inter-State supplies
b) Intra-State Supplies
c) Both (a) and (b)
7) _________________ is levied on the import of goods and/or services.

a) IGST
b) CGST and SGST
c) CGST and UTGST
Q A Q A Q A Q A Q A
1) d 2) c 3) b 4) b 5) c
6) a 7) a
Work until your idols become your rivals
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 POS-Sec Summary:
PLACE OF SUPPLY
GOODS SERVICES
Other than Imported Imported or Exported Location of Supplier & Location of Supplier OR
or Exported Goods Goods Recipient is in INDIA Recipient is outside INDIA
Section 10 Section 11 Section 12 Section 13

(IGST) (IGST) (IGST) (IGST)
 Domestic Supply:
Domestic Supply
Movement Bill to Ship to Movement NOT Assembly/ Supply on

involved Model involved Installation Board
Place where Person on whom Location of the Place of such Place where goods
movement the Bill is raised. Goods at the time Assembly/ are taken on
terminates for of delivery. Installation Board.
delivery.
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23. PLACE OF SUPPLY
 Background:
‘Place of supply’ is not a phrase of common understanding, it is a legal term and as in all such cases, their
common understanding must not be applied and the meaning assigned in the law prevails. Place of supply,
as in the case of time of supply, is that which the legislature has appointed.
 GST a destination based consumption tax??

GST is understood as a ‘destination based consumption tax’ but there is no provision that declares this fact
convincingly.
It is here that we find that the destination principle of GST is fully captured. The law maker has declared, in
each case of supply, its destination of supply.
 Place of supply. Why?

Place of supply is important to determine the nature of sale (inter-state, intra-state, import or export) and
the State where State component of GST will accrue.
SN Particulars
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
10. Place of supply of goods other than supply of goods imported into, or exported from India:
The phrase ‘location of supplier of goods’ has not been defined in the IGST Act and this must be deliberate. Two
very important phrases are relevant, namely:
 Location of supplier – the word ‘location’ in this phrase refers to the site or premises(geographical
point) where the supplier is situated with the goods in his control ready to be supplied; (VERY VERY
IMP)
 Place of supply of goods – this is a legal phrase which the Section decides to be the site or premises
(geographical point) as its ‘place of supply’.
1 The place of supply of goods, other than supply of goods imported into, or exported
from India, shall be as under,––
POS= (a) where the supply involves movement of goods, whether by the supplier or the
Location of the recipient or by any other person, the place of supply of such goods shall be the
goods where the location of the goods at the time at which the movement of goods terminates for
movement delivery to the recipient;
terminates for
delivery  Example:
1) Say X company located in Maharashtra receives an order from Y in Gujarat for
supply of 100 Chairs. The price quoted by Mr.X is including freight amount.
Therefore, X company arranges for transportation of goods to Y in Gujarat.
The movement of goods terminate at Gujarat. Accordingly, the POS happens
to be in Gujarat.
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 Bill to Ship to Model:

 Ist limb to Bill to Ship to Model:
Mr.Z, J/W or Agent

of Mr.Y, Gujarat
Goods
Mr.Y gave direction to Mr.X to

transport goods to Mr.Z
Mr.X, Supplier, Mr.Y, Real Purchaser
Uttar Pradesh (Third Person),
Maharashtra
POS= MAHARASHTRA
(Principal POB of Mr.Y)
LOS = UP
POS = Maharashtra Inter-State Transaction IGST
 Bill to Ship to Model:

 IInd limb to Bill to Ship to Model:
Mr.Z, J/W or Agent

of Mr.Y, Gujarat
Goods
Mr.Y gave direction to Mr.X to

transport goods to Mr.Z
Mr.X, Supplier, Mr.Y, Real Purchaser

rd
Uttar Pradesh (3 Person),
Maharashtra
POS= Gujarat
Mr.Y, Supplier,
(Location of Goods at the
Maharashtra
time of delivery)
LOS = Maharashtra
POS = Gujarat Inter-State Transaction IGST
Page 248
2) In the above example, let say the price quoted by X Company is ex-works
(risk & reward has been transferred at the factory of X company) . Thus, the
transportation is arranged by him & cost for same is also bourne by Y.
Therefore, the movement of goods terminates for delivery in Maharashtra
itself. Accordingly, the POS happens to be in Maharashtra.
POS= Principal (b) where the goods are delivered by the supplier to a recipient or any other person
place of business on the direction of a third person, whether acting as an agent or otherwise, before or
of third person during movement of goods, either by way of transfer of documents of title to the
(Bill to ship to goods or otherwise, it shall be deemed that the said third person has received the
model) goods and the place of supply of such goods shall be the principal place of business
of such person;
 Understanding:
Where goods are delivered by the supplier to the recipient but at the instruction
of a third party, then the place of supply will be determined to be the place of
supply will be the principal place of business of such third party and not of the
recipient. It is important to identify the two supplies involved – by supplier to
third party and by third party to recipient. This provision deals only with the first
limb of supply, that is, supply by supplier to third party. Now, the place of supply
will not be dependent on whether the movement of goods is from one State to
another (if the supplier and recipient are in two different States) but as declared
by the section to be dependent on the principal place of business of such third
party
POS= Location of “Principal place of business” means the place of business specified as the
the goods at the principal place of business in the certificate of registration
time of delivery
(c) where the does not involve movement of goods, whether by the supplier or the
recipient, the place of supply shall be the location of such goods at the time of the
delivery to the recipient;
Q. What is the place of supply where movement of goods is not involved?

A. Where supply does not involve movement of goods, the place of supply
will be will be the location of goods at the time of delivery to the recipient.
Neither in the CGST Act nor in the IGST Act, the ‘location of supplier of
goods’ has not been defined.
Therefore, the location of goods where they are ready to be supplied can
be understood to be the location of supplier.
 Example:
1) A generator that is bolted to the concrete floor in the basement of a building
purchased by the tenant and being left behind at the time of rejecting the
tenancy, the supply of the generator by the tenant to the landlord for an
agreed price is a case of ‘supply that does not involve movement of the
goods’. In such cases, the place of supply will be where the generator stands
bolted to the concrete floor and without requiring any movement the
landlord (recipient) confirms satisfactory completion of delivery.
2) The job worker develops a mould for the production of goods for the
principal and retains the mould in his place itself for production of goods. The
mould developed by the job worker is sold to the principal but the same are
retained by the job worker without causing the movement of mould from job
worker premise to principal premise. In this case the place of supply would
be job worker premise.
Page 249
>> Assembly:
IGST = 18
POS = Bihar
Supply of (M+B+R)
Value = 100
IGST = 18
Total =118
Mr.X, Supplier (UP) Mr.Y, Recipient (Bihar)
LOS = UP Inter-State Transaction IGST

POS = Bihar
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3) The second limb of Bill to Ship to Model-supply by the third party to the
recipient, where the goods having already reached their destination under
the first supply are supplied – is a supply that does not involve movement of
goods. And the place of supply would be where the equipment is located
(with the recipient) at the time of confirmation of satisfactory completion of
delivery. (Concept explained in diagram)
4) Normally in financial leasing, the agreement provides that the property in

goods will pass on to the lessee at the end of the lease period at a very
NOMINAL AMOUNT. Therefore when a sale take place at the end of the lease
period, there is no movement of the goods from one place to another.
Therefore place of supply is the location of the goods for delivery.
Considering that location of supplier will be location of goods in this type of

transaction, there will not be any inter-State supply since the location of
supplier and place of supply will be in the same State.
POS= Location (d) where the goods are assembled or installed at site, the place of supply shall be
where goods are the place of such installation or assembly;
installed
 Example:
1) Company A in Delhi want to get a printing machine installed at its office in
Delhi from supplier B located in Haryana. Since the printing machine will be
assembled or installed at Delhi, the place of supply is Delhi.
2) XYZ Ltd. company located in Mumbai places an order on Mr. A in Maharashtra

for installation of generator in his factory located in Gujarat. Mr. A procures
the generator, set of chimneys, electrical cables, distribution boards & other
items, etc. The generator is assembled in Gujarat. The POS happens to be
Gujarat although both XYZ Ltd & Mr. A are located in Maharashtra. Therefore,
Mr.A will charge IGST on the invoice raised by him on XYZ Ltd.
POS =Location at (e) where the goods are supplied on board a conveyance, including a vessel, an
which goods are aircraft, a train or a motor vehicle,
taken on board The place of supply shall be the location at which such goods are taken on board.
 Example:
1) If an aircraft departs from Delhi to Chennai after taking onboard food for
consumption on board, the place of supply will be Delhi.
2) A train starts from Delhi for Mumbai. On the way water bottle cartons are
boarded at Agra that are purchased by passengers during the journey from
Agra to Mumbai. The place of supply of water bottles is Agra.
2 Other cases Where the place of supply of goods cannot be determined, the place of supply shall
be determined in such manner as may be prescribed.
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11. Place of supply of goods imported into, or exported from India:
Export of Goods “Export of goods” with its grammatical variations and cognate expressions, means taking
goods out of India to a place outside India.
Import of Goods “Import of goods” with its grammatical variations and cognate expressions, means bringing
goods into India from a place outside India.
 Notes:
1) It is important to recognize that payment in convertible foreign exchange is not at all a criterion for
determining whether it is export or import.
2) Imports will be liable to IGST in addition to basic customs duty and exports will be zero-rated with benefit
of refund of input tax credit or rebate of tax paid.
3) VERY IMP:
The supplies to SEZ unit or developer are guided through under this section.
11 The place of supply of goods,––
Import (a) imported into India shall be the location of the importer;
 Example:
Mr.John, New York, USA supplies certain goods to ABC Ltd, Delhi, So, the
place of supply is Delhi, India.
Export (b) exported from India shall be the location outside India.
 Example:
ABC Ltd, Delhi supplies certain goods to Mr.John, New York, USA. So, the
place of supply is New York, USA.
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12. Place of supply of services where location of supplier and recipient is in India:
1 Applicability The provisions of this section shall apply to determine the place of supply of services
where the location of supplier of services and the location of the recipient of services is
in India.
2 Supply to The place of supply of services, except the services specified in sub-sections (3) to (14),–
registered –
person (a) made to a registered person shall be the location of such person;
POS = Location
of Recipient (b) made to any person other than a registered person shall be,––
(i) the location of the recipient where the address on record exists
[Address on record exists means the address of the recipient as available in
the records of the supplier] and
 Understanding:
Say, a CA provides services to his client regularly. He bills to the client
at the address given by them and receives payment in consideration of
providing services.
(ii) the location of the supplier of services in other cases.

 Understanding:
Mr.X approached the watch repairer to repair his watch. He hands over
the watch over the counter to the repairer. The watch after repairing is
done is returned to the recipient of the service. The shop owner
collects the payment. In this case, the address of the recipient might
not be available in the records of the supplier. As per this clause, the
location of the supplier shall be the POS of service.
 Example:
a) If ABC Ltd in UP provides repair services of laptop to a customer (not
registered under GST laws) residing in Mumbai, Maharashtra and the
customer's address on record exists, the place of supply shall be the
location of the recipient i.e., Customer in Mumbai, Maharashtra - IGST
will be payable in UP.
b) If ABC Ltd in UP provides repair services of laptop to a customer (not

registered under GST laws) residing in Mumbai, Maharashtra and the
customer's address on record does not exist, the place of supply shall
be the location of the Supplier i.e., ABC Ltd in UP - CGST / SGST will be
payable in UP.
3 POS in case The place of supply of services,––

services
rendered in (a) directly in relation to an immovable property, including services provided by
relation to architects, interior decorators, surveyors, engineers and other related experts or
Immovable estate agents, any service provided by way of grant of rights to use immovable property
property= or for carrying out or co-ordination of construction work; or
Location of the
immovable  Example:
property 1) Mr. Y took the architects and Interior decorating services from Mr. X from UP
located or for Villa in Mumbai, Maharashtra.
intended to be Place of Supply is Maharashtra & therefore IGST is payable in UP.
located
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2) The CG very often invites bid from different entrepreneurs for selling the
right to extract the coal or other minerals from defined area. The
Entrepreneurs normally survey the area in order to estimate the quantum of
mineral available in the specified area. The bid for obtaining the right of
exploration is made on this basis. For example, say Central Government
invites bids for extraction of coal in the area in the State of Jharkhand, The
expert surveyor Mr. Y located in Mumbai is hired by M/s X Company located
in Delhi. Since the immovable property i.e. land is located in Jharkhand, the
place of supply of service will be in Jharkhand and the person Mr. Y in Mumbai
will have to charge IGST as he has made inter-state supply of service.
3) Say, for example, Company X who is engaged in providing the property

management service enters into a contract for managing property located in
Chennai, Tamil Nadu. Since, the services are provided in relation to property
located in Chennai, the place of supply of service will be Chennai, Tamil Nadu.
[PMS - Tenant Screening, Leasing, Rent collection, Maintenance, Inspections,
Eviction, etc.]
4) Mr. Y took the services of Mr. X from UP, the real estate agent for renting or
sale of Villa in Mumbai, Maharashtra.
Place of Supply is Maharashtra & therefore IGST is payable in UP.
(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or
campsite, by whatever name called, and including a house boat or any other vessel; or
 Example:
If services are provided in a house boat in Goa, then place of supply will be the
location of house boat i.e., Goa. IGST is not applicable: CGST/SGST is applicable.
(c) by way of accommodation in any immovable property for organising any marriage
or reception or matters related thereto, official, social, cultural, religious or business
function including services provided in relation to such function at such property; or
 Example:
If services are provided say in Hotel ITC Maurya at Delhi for a marriage reception,
then the place of supply will be Delhi. IGST is not applicable: CGST/SGST is
applicable.
(d) any services ancillary to the services referred to in clauses (a), (b) and (c), shall be
the location at which the immovable property or boat or vessel, as the case may be, is
located or intended to be located:
 Example:
The ancillary services in respect of organizing any marriage function can be
arrangement of DJ system, decorators, beautician, etc. The POS would be
governed by this section.
PROVIDED that if the location of the immovable property or boat or vessel is located or
intended to be located outside India, the place of supply shall be the location of the
recipient.
 Example:
Mr.X (Recipient) located in India hires an Architect Mr.Y (Supplier) located in
India for designing of a building to be located in New York, USA. As per the Ist
proviso, the POS of service will be location of Mr.X. Since, Mr.X is located in
India, the POS will be India.
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Explanation––Where the immovable property or boat or vessel is located in

more than one State or Union territory, the supply of services shall be treated as
made in each of the respective States or Union territories, in proportion to the
value for services separately collected or determined in terms of the contractor
agreement entered into in this regard or, in the absence of such contract or
agreement, on such other basis as may be prescribed.
 Example:
OYO Rooms, based out of Mumbai, takes reservation for accommodation in its
hotels across India from INDIGO airlines, based out of New Delhi, for overnight
stay of its crew members. The place of accommodation services shall be the
location of the hotel where the crew members have stayed.
In case, the agreement between OYO rooms and INDIGO airlines is per night per
room basis, then the value of service separately collected for each hotel shall be
treated as the value of service for the respective state. In case, the agreement
between YOYO rooms and ABC airlines is on a lump sum basis for a month then
the place of supply shall be determined as may prescribed in rules.
4 POS for The place of supply of restaurant and catering services, personal grooming, fitness,
which beauty treatment, health service including cosmetic and plastic surgery shall be the
physical location where the services are actually performed.
presence is
required =  Example:
Location 1) Eating out at say Taj Mahal at Delhi, the place of supply will be Delhi - CGST /
where the SGST will be payable in Delhi.
services are
performed 2) If a beautician from VLCC , Mumbai (Maharashtra) carries out a beauty treatment
for a model at Kolkata in West Bengal, then the place of supply would be Kolkata
(West Bengal) - IGST will be payable in Maharashtra.
3) Mr X, resident of Delhi, goes to Mumbai for plastic surgery then the place of
supply of plastic surgery services shall be Mumbai.
Q. What is the place of supply of service where a restaurant provides catering

service at the premise of the customer?
(a) Address of the restaurant from where the food is supplied
(b) Customer premise where catering service is provided
A. (b) Customer premise where catering service is provided.
5 POS in The place of supply of services in relation to training and performance appraisal to,––
relation to (a) a registered person, shall be the location of such person;
training &
performance (b) a person other than a registered person, shall be the location where the services are
appraisal = actually performed.
Location of
the SR or  Services of training and performance appraisal supplied to a registered person
where the will be the location of the recipient. When the recipient is not registered, the
services are place of supply will be the location where services are actually performed.
actually
performed
 Recipient here being the ‘payer of the consideration’ is not to be misconstrued
to be the ‘trainee’ or ‘person appraised’.
 E.g.: Staff of a CA firm are sent for training, the recipient of the services here is
the CA firm and not the staff all though the staff improve their skills from this
training.
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 Example on TRAINING:
1) If Oracle India Limited, Bangalore conducts a training program for Infosys India
(registered person at Delhi), the POS shall be Delhi. IGST payable in Karnataka.
2) If Oracle India Limited, Bangalore conducts a training program for XYZ

Enterprises (unregistered person in Mumbai), the place of supply shall be
Mumbai. IGST is payable in Mumbai. (The training program held in Mumbai).
3) If Mr. X, a resident of Mumbai, conducts training for employees of Software Ltd,

a company based out of New Delhi, in Nainital Resort located in Nainital, then
the POS shall be New Delhi if Software Ltd is a registered person. If Software
Ltd is not a registered person, then to POS of training service shall be Nainital.
Q. Mr. X a resident from Pune conducts training for employees of P Ltd. being
a registered person under GST based out in Chennai at a resort in
Darjeeling. The place of supply in this case is
(a) Chennai
(b) Pune
(c) Darjeeling
A. (a) Chennai
 Example on PERFORMANCE APPRAISAL:

1) In many organizations performance appraisals of senior employees are
undertaken by the outside agency to avoid biasness towards the employees.
Say, XYZ Ltd located in Jaipur (Receiver) hires Mr. A (Supplier) located in
Mumbai for performance appraisal of senior employees. The said services are
performed at Mumbai. Mr. Y evaluates the records in Mumbai and interviews
employees at Mumbai. In such case, the performance appraisal is made in
Mumbai. The POS will be Jaipur if XYZ Ltd is registered and if XYZ Ltd is NOT
registered the POS will be Mumbai, Maharashtra.
6 Event for The place of supply of services provided by way of admission to a cultural, artistic,
audience sporting, scientific, educational, entertainment event or amusement park or any other
place and services ancillary thereto, shall be the place where the event is actually held
POS = Place or where the park or such other place is located.
where the
event is  Example on admission to an EVENT:
actually held 1) BMT Private Limited, a company based out of Mumbai providing online
ticketing services for admission to various events, sells online tickets for IPL
tournament to be held across India, then the place of supply of services for
admission to each cricket match shall be the location where the match is
actually played.
2) There is a specific mention of amusement park. Say Mr.A had paid Rs.500 as the
entry fees for admission into the park. The price of each of the ride is fixed. The
person can select and enjoy the ride of his choice. Entrance fee normally
permits the person to enjoy the rides upto Rs.400. Mr.A will have to pay
separately for the amount charged for enjoying the ride in excess of Rs.400. The
POS will be where the park is located.
 Example on services ancillary to admission to an EVENT:

3) A service of hiring a specific equipment (binoculars) to enjoy the event at the
venue (against a charge that is not included in the price of entry ticket) is an
example of a service that is ancillary to admission.
4) Ancillary can be washrooms facility.
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7 Organisation The place of supply of services provided by way of,—

and services
ancillary to (a) organisation of a cultural, artistic, sporting, scientific, educational or entertainment
such event including supply of services in relation to a conference, fair, exhibition,
organization of celebration or similar events; or
event:
(b) services ancillary to organisation of any of the events or services referred to in
clause (a) , or assigning of sponsorship (Eg: Lux Cine Awards) to such events,––
(i) to a registered person, shall be the location of such person;
(ii) to a person other than a registered person, shall be the place where the
event is actually held and if the event is held outside India, the place of supply
shall be the location of the recipient.
8 Transportation The place of supply of services by way of transportation of goods, including by mail or
of Goods courier to,––
POS = Location (a) a registered person, shall be the location of such person;
of SR / place
where the (b) a person other than a registered person, shall be the location at which such goods
location at are handed over for their transportation.
which the such
goods are  Understanding on Mail or Courier (Very Imp):
goods are  The courier agency not only transport goods but also carries documents,
handed over cheques, etc. which cannot be considered as goods. The POS for transportation
for of such items will not be determined as per this sub-section rather POS shall be
transportation decided as per sub-section (2) [General Clause].
The courier agency will have to maintain the separate records for
transportation of goods and for transportation of items other than goods.
 Example:
1) IOC, New Delhi (Registered person) is appointing BBR Logistics, Mumbai for
transportation of goods: Place of supply shall be New Delhi. IGST payable in
Mumbai, Maharashtra.
2) BBR Logistics, Mumbai providing transportation of goods to individual Mr. P

for personal use (unregistered person) located in Delhi. Mr.P handing over
goods at Delhi for transportation: Place of supply of services shall be Delhi. IGST
shall be payable in Mumbai, Maharashtra.
3) Express limited, Mumbai provides transportation services to Bikes Limited, an

automobile company based out of Chennai, for movement of their cars from
the warehouse of Bikes Limited at Lucknow to Delhi, then the place of supply of
transportation services shall be Chennai if Bikes Limited is a registered person.
If Bikes Limited is not a registered person, then the place of supply of
transportation services shall be Lucknow.
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9 Transportation The place of supply of passenger transportation service to,—

of Passengers
(a) a registered person, shall be the location of such person;
POS = Location
of SR / place (b) a person other than a registered person, shall be the place where the passenger
where embarks on the conveyance for a continuous journey:
passenger
embarks for a  Example:
continuous 1) ABC Travels (registered in Delhi) providing passenger transportation services to
journey the Mukesh Enterprises located and registered in Mumbai, Maharashtra: Place
of supply of service shall be Mumbai, Maharashtra. IGST payable in Delhi;
2) ABC Travels (registered in Delhi) providing transportation services to

educational institution located in Bangalore (unregistered person) for all India
tour. The tour scheduled to start from Bangalore: Place of supply of service
shall be Bangalore. IGST payable in Delhi;
3) Mr. X, a registered taxable person based out of Kolkata, purchases air ticket
from INDIGO Airlines Ltd, an airline company based out of Chennai, for travel
from New Delhi to NEW YORK via Dubai, then the place of supply of passenger
transportation shall be Kolkata. If Mr. X is not a registered person then the
place of supply of passenger transportation shall be New Delhi.
PROVIDED that where the right to passage is given for future use and the point of
embarkation is not known at the time of issue of right to passage, the place of supply
of such service shall be determined in accordance with the provisions of sub-section
(2).
Q. Suppose a ticket/ pass for anywhere travel in India is issued by M/s

Air India to a person. What will be the place of supply?
A. In the above case, the place of embarkation will not be available at
the time of issue of invoice as the right to passage is for future use.
Accordingly, place of supply cannot be the place of embarkation. In
such cases, the default rule shall apply.
Explanation.––For the purposes of this sub-section, the return journey shall be treated
as a separate journey, even if the right to passage for onward and return journey is
issued at the same time.
Q. What will be the place of supply if a person travels from Mumbai to

Delhi and back to Mumbai (on single air ticket---- Mumbai-Delhi-
Mumbai?
A. If the person is registered, the place of supply shall be the location of
recipient. If the person is not registered, the place of supply for the
forward journey from Mumbai to Delhi shall be Mumbai, the place
where he embarks.
However, for the return journey, the place of supply shall be Delhi as
the return journey has to be treated as separate journey.
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10 POS of services The place of supply of services on board a conveyance, including a vessel, an aircraft, a
on Board = First train or a motor vehicle, shall be the location of the first scheduled point of departure
scheduled point of that conveyance for the journey.
of departure of
that conveyance  Example:
A video game or a movie-on-demand is provided as on-board entertainment
during the Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi flight. The place of
provision of this service will be Bangkok.
If the above service is provided on a Delhi-Kolkata-Bangkok-Jakarta flight during

the Bangkok-Jakarta leg, then the place of provision will be Delhi.
11 POS of Telecom The place of supply of telecommunication services including data transfer,
services broadcasting, cable and direct to home television services to any person shall,—
(a) Location
where the (a) in case of services by way of fixed telecommunication line, leased circuits,
telecom line is internet leased circuit, cable or dish antenna, be the location where the
installed telecommunication line, leased circuit or cable connection or dish antenna is
installed for receipt of services;
 Example:
Mr. A located (unregistered in Bhopal, MP) is receiving dish services from
Airtel Dish Services (registered in Bangalore): Place of supply of service
shall be Bhopal, MP. IGST payable in Bangalore;
(b) Mobile (b) in case of mobile connection for telecommunication and internet services
Connection provided on post-paid basis, be the location of billing address of the recipient of
(Post Paid) = services on the record of the supplier of services;
Location of
Billing address  Example:
of SR Mr. A (unregistered person) has furnished Bhopal, MP address while
obtaining post-paid connection from Vodafone (registered in Chennai).He
has now shifted his place of residence to Bangalore.
Place of supply of service shall be Bhopal, MP.IGST is applicable.
(c) Mobile (c) in cases where mobile connection for telecommunication, internet service
Connection (Pre and direct to home television services are provided on pre-payment basis through
Paid) = Location a voucher or any other means,––
where such (i) through a selling agent or a re-seller or a distributor of subscriber
prepayment is identity module card or re-charge voucher, be the address of the selling
received or such agent or re-seller or distributor as per the record of the supplier at the
vouchers are time of supply; or
sold
(ii) by any person to the final subscriber, be the location where such
prepayment is received or such vouchers are sold;
 Example:
1) Idea India Cellular have appointed Mr. A as a selling agent for supplying
pre-payment voucher to the subscriber. Idea India Cellular will supply
voucher to Mr.A i.e. selling agent who in turn will sell to the final
subscriber. The POS of TELECOMMUNICATION SERVICE by Idea India
Cellular will be address of the selling agent on the record of the Idea India
Cellular. If the agent is located in within the same state as Idea India
Cellular is located, CGST and SGST will be charged and if they are located
in different state, IGST will be charged.
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2) Where Idea India Cellular supplies voucher to any person say Mr.X (other
than selling agent or a re-seller or a distributor). The POS of
TELECOMMUNICATION SERVICE by Idea India Cellular will be the place
Mr.X will receive the amount or voucher is sold i.e. address of Mr.X
(d) Not (d) in other cases, be the address of the recipient as per the records of the
covered – supplier of services and where such address is not available, the place of supply
address of the shall be location of the supplier of services:
recipient
>> Recipient PROVIDED that where the address of the recipient as per the records of the
address-not supplier of services is not available, the place of supply shall be location of the
available- supplier of services:
Supplier
address PROVIDED FURTHER that if such pre-paid service is availed or the recharge is
Net Banking made through internet banking or other electronic mode of payment, the location
of the recipient of services on the record of the supplier of services shall be the
place of supply of such services.
 Example:
If Mr. A , Bhopal has pre-paid mobile connection of Vodafone (registered in
Chennai) and recharges his phone connection by making payment through
net-banking: Place of supply shall be Bhopal (location of recipient on record of
service provider). IGST is applicable.
Explanation.––Where the leased circuit is installed in more than one State or Union
territory and a consolidated amount is charged for supply of services relating to such
circuit, the POS of such services shall be taken as being in each of the respective States
or Union territories in proportion to the value for services separately collected or
determined in terms of the contract or agreement entered into in this regard or, in the
absence of such contract or agreement, on such other basis as may be prescribed.
 Example:
If Software Ltd, a company based out of Chennai procures services of leased
circuit lines for its branches in Mumbai, Calcutta and Chennai from DTH
limited, a company based out of New Delhi, then the place of supply of service
of leased circuit lines shall be proportionately at each branch where the
installation is done. In case, software Ltd pays a lump sum amount for the
latest circuit lines services of all branches, then the apportionment between
states shall be done on reasonable basis as may be prescribed in this regard.
12 Banking + The place of supply of banking and other financial services, including stock broking
stock broking services to any person shall be the location of the recipient of services on the records
services of the supplier of services:
If location of
recipient PROVIDED that if the location of recipient of services is not on the records of the
available = supplier, the place of supply shall be the location of the supplier of services.
Location of SR
in the records  Example on Banking Services :
of SP 1) Mr. A (unregistered person) has furnished his residential address of Chennai,
Tamil Nadu at the time of opening SB account with PNB, Mumbai. He is
receiving services of locker facility from PNB, Mumbai: Place of supply of
services shall be Chennai, Tamil Nadu. IGST payable in Mumbai, Maharashtra;
2) Mr. A of Delhi (unregistered person) during his business travel to Mumbai. He

pays commission to PNB Mumbai for providing services in relation to
obtaining demand draft: Place of supply shall be Mumbai. IGST is not
applicable: CGST/SGST is applicable;
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 Example on Stock broking:

1) Say the Stock broker is located in Mumbai but his clients are spread over in
Kolkata, Chennai, Bangalore, etc. The Stock broker purchase and sell the
securities on behalf of the clients located in Kolkata, Chennai, Bangalore, etc.
The POS shall be the address of the client as per record of the stock broker.
Since these persons are located outside Mumbai, the Stock broker will have to
charge IGST in each of the case.
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13 Insurance The place of supply of insurance services shall,––

Services: (a) to a registered person, be the location of such person;
(Life Insurance
+ General (b) to a person other than a registered person, be the location of the recipient of
Insurance) services on the records of the supplier of services.
 Example:
RP = Location 1) Ola Cabs Gurgaon, Haryana (registered person) having fleet of cars receives
of SR (Actual) insurance services from the United Insurance Co, (registered person in
Mumbai): Place of supply shall be Gurgaon, Haryana; IGST payable in Mumbai,
Maharashtra;
2) Mr. A located in Lucknow (unregistered person) receives insurance services

from LIC of India (registered person in New Delhi): Place of supply shall be
Lucknow. IGST payable in New Delhi;
14 Advertisement The place of supply of advertisement services to the Central Government, a State
services to the Government, a statutory body or a local authority meant for the States or Union
Government territories identified in the contract or agreement shall be taken as being in each of such
States or Union territories and the value of such supplies specific to each State or Union
POS shall be territory shall be in proportion to the amount attributable to services provided by way
located in each of dissemination in the respective States or Union territories as may be determined in
state in terms of the contractor agreement entered into in this regard or, in the absence of such
proportion contract or agreement, on such other basis as may be prescribed.
 Example:
1) Government of India promoting 'Khadi products' in association with all the
States has appointed M/s XYZ Advertisement Private Limited (registered and
located in New Delhi) for advertisement in different States:
Services provided in the State of New Delhi: IGST is not applicable. CGST/SGST
applicable; Services provided in State other than New Delhi: IGST payable in
New Delhi;
2) Say the Government has hired 100 hoardings in Lakshadweep and 75 hoardings
in Gujarat for providing advertisement of Gas subsidy and the contract mention
the consideration for these hoardings separately. The value of services
identifiable with Lakshadweep and Gujarat shall be the amount mentioned in
contract. In case the contract does not mention the amount separately, the
value of the hoarding shall be determined on the reasonable basis. In this case
the number of hoarding in each state or UT. Thus the total consideration shall
be divided by 175 to arrive at the value of each hoarding. Value of each
hoarding multiplied by number of hoarding will provide the value of hoarding in
each state or UT.
In case of broadcasting of advertisement on TV or radio, normally the rating

agencies are able to estimate the number of viewers watching the
advertisement. They also work out the Television Rating Point (TRP). This
information can be the basis of bifurcation of value in different States.
 Something imp to discuss:
Q. A company which has a property let out in many states. Is it mandatory for the company to obtain
registration in each state?
A. A company who has property let-out in many States need not be registered in each State but remain
registered in the home State and effect IGST supply of renting of properties located in all other
States.
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 Sec 12 – Summary:
S Sec Applicability Type Place of Supply of Service

2 General Provision Made to a registered person location of such person
Made to unregistered person - location of recipient where address
on records exist
- location of the supplier of services
in other cases
3 Immovable property, services provided by architects, location at which immovable

boat or vessel interior decorators or any service property or boat or vessel is located
provided by way of grant of rights to or intended to be located
use immovable property or for
carrying out or co-ordination of
construction work
By way of lodging accommodation,

including a houseboat or vessel
Accommodation for organising

marriage or matters related thereto,
official, social, cultural, religious or
business function including services
provided in relation to such function at
such property; etc
Any ancillary services to the above

services
If immovable property or boat or the place of supply shall be the

vessel is located or intended to be location of the recipient
located outside India
Immovable located in more than one State proportionate allocation amongst

Property/boat/vessel states as per the value of service
received or as per the contract or as
may be prescribed
4 Specific services Services like beauty parlour, fitness, location where the services are
restaurant and catering services etc. actually performed
5 Training and Made to a registered person location of such person

performance Made to unregistered person location where the services are
appraisal actually performed
6 Services by way of admission to a cultural, artistic, where the event is actually held
sporting, scientific, educational, or where the park or such other
entertainment event or amusement place is located
park or any other place and services
ancillary thereto
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Page 274
7 Organisation of a Made to a registered person location of such person

cultural, artistic,
sporting event etc., Made to unregistered person the place where the event is
and services ancillary actually held
to organisation of any
of the events or Event held outside India location of the recipient
assigning of
sponsorship of such Held in more than one State proportionate allocation amongst
events states as per the value of service
received or as per the contract or as
may be prescribed
8 Transportation of registered person location of such person

goods, including by
mail or courier unregistered person location at which such goods are
handed over for their transportation
9 Passenger registered person location of such person

transportation service
unregistered person place where the passenger embarks
on the conveyance for a continuous
journey
Right to passage is Made to a registered person Location of such person

given for future use
and the point of Made to unregistered person location of recipient where address
embarkation is not on records
known at the time of exist
issue of right to - location of the supplier of services
passage in other cases
*The return journey shall be treated as a separate journey, even if the right to passage for onward and
return journey is issued at the same time
10 On board a conveyance including a vessel, an location of the first scheduled point

aircraft, a train or a motor vehicle of departure of that conveyance for
the journey
12 Banking and other including stock broking services to any - location of the recipient of service
financial services person on records of supplier or
- if location of recipient is not
available, location of the supplier of
services
13 Insurance services Made to a registered person location of such person
Made to unregistered person location of the recipient of

Services on the records of the
supplier of services.
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Page 276
>> Summary - Telecommunication Services:
Location
S No Description Service Service Others
Recipient Provider
1 For fixed line, leased circuits, internet leased x x Where installed for
circuits , cable connection or dish antenna receipt of service
2 Post-paid mobile and internet service  x

(Billing address)

3 Prepaid mobile, internet service and direct to home television service through voucher or any other means:
(a) Through selling agent or a reseller or a X x Address of such agent,

distributor reseller or distributor
(b) By any person to the final subscriber X x Where such pre-payment

is received or voucher
sold
(c) For other cases

(i) Where address of the recipient is  x x
available as per records of the supplier
(ii) Where address of the recipient is not X  x

available as per records of the supplier
(iii) If prepaid service is availed or recharge  x x

is made through Internet banking or other
electronic mode
Page 277
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Page 279
Q
1) Which of the following supply of goods is an intra-State supply?
a) Location of supplier in Maharashtra and place of supply in Tamil Nadu
b) Location of supplier in Uttar Pradesh and place of supply in Uttar Pradesh
c) Location of supplier in Maharashtra and place of supply on Andhra Pradesh
2) Place of supply in case of installation of lift in a building is

a) Where the movement of lift commences from the supplier’s place
b) Where the delivery of lift is taken
c) Where the installation of lift is made
d) Where address of the recipient is mentioned in the invoice
3) Place of supply of food taken onboard at Delhi for an aircraft departing from Delhi to Bangalore via
Hyderabad is
a) Address of the aircraft carrier mentioned on the invoice of the supplier
b) Delhi
c) Bangalore
d) Hyderabad
4) What is place of supply in case of importation of goods?

a) Customs port where the goods are cleared
b) Location of the importer in India
c) Place where the goods are delivered after clearance from customs port
d) Owner of the goods
5) Real estate agent in Delhi charges brokerage fee to Company A located in Chandigarh for assistance in
getting a commercial property in Mumbai. Which is the place of supply in this case?
a) Delhi
b) Chandigarh
c) Mumbai
6) What is the place of supply of service where a restaurant provides catering service at the premise of
the customer (outdoor catering)?
a) Address of the restaurant from where the food is supplied
b) Customer premise where catering service is provided
c) Optional
7) Mr. X a resident from Pune conducts training for employees of P Ltd. being a registered person under
GST based out in Mumbai at a resort in Darjeeling. The place of supply in this case is
a) Mumbai
b) Pune
c) Darjeeling
Page 280
8) Place of supply of service for DTH by ABC Pvt. Ltd. located in Mumbai to customer in Delhi is
a) Mumbai
b) Delhi
c) Optional
9) Mr. X of Hyderabad not having bank account takes a demand draft in Mumbai from ABC Bank for his
visa purpose. The place of supply is
a) Hyderabad
b) Mumbai
c) Optional
Q A Q A Q A Q A Q A
1) b 2) c 3) b 4) b 5) c
6) b 7) a 8) b 9) B
The world is changed by your example
not by your opinion
Page 281
Page 282
The Union Territories Goods & Services

Tax Act, 2017
Page 283
UTGST Act, 2017
Page 284
 Introduction:
To usher in the GST regime, Union Territory tax along with related GST legislations was to replace the current
tax while empowering the Central Government to levy Union Territory tax on the supply of goods or services
or both taking place within a Union Territory not having a Legislature.
India is a summation of three categories of territories namely –

i) States (29);
ii) Union Territories with Legislature (2); and
iii) Union Territories without Legislature (5).
‘State’ under the GST law is defined to include a Union Territory with Legislature. Delhi and Puducherry,
though are Union Territories, have a Legislature of their own. Accordingly, for GST the Union Territories of
Delhi and Puducherry will be regarded as a State and will be governed by the respective SGST laws passed by
them and rest of the Union Territories like the Andaman and Nicobar Islands, Lakshadweep, Dadra and
Nagar Haveli, Daman and Diu and Chandigarh will be governed by UTGST Act, 2017.
 Applicability of the UTGST Act:

This Act may be called the Union Territory Goods and Services Tax Act, 2017. It would be applicable in the
following union territories.
a) Andaman and Nicobar Islands
b) Lakshadweep,
c) Dadra and Nagar Haveli
d) Daman and Diu,
e) Chandigarh and
f) other territory.
The Delhi and the Pondicherry are the other two 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.
 Definitions:
Some Definition prescribed in the Act are as follows:
1 Appointed day ‘‘Appointed day’’ means the date on which the provisions of this Act shall come into
force.
2 Commissioner ‘‘Commissioner’’ means the Commissioner of Union territory tax appointed under
section 3;
3 Designated ‘‘Designated authority’’ means such authority as may be notified by the

authority Commissioner;
4 Exempt supply ‘‘Exempt supply’’ means supply of any goods or services or both which attracts
 nil rate of tax or
 which may be exempt from tax under section 8, or under section 6 of the
Integrated Goods and Services Tax Act, and
 includes non-taxable supply;
5 Existing law ‘‘Existing law’’ means any law, notification, order, rule or regulation relating to levy
and collection of duty or tax on goods or services or both passed or made before the
commencement of this Act by Parliament or any Authority or person having the
power to make such law, notification, order, rule or regulation;
Page 285
6 Government ‘‘Government’’ means the Administrator or any authority or officer authorised to act
as Administrator by the Central Government;
7 Output tax ‘‘Output tax’’ in relation to a taxable person, means the Union territory tax chargeable
under this Act on taxable supply of goods or services or both made by him or by his
agent but excludes tax payable by him on reverse charge basis;
8 Words not Words and expressions used and not defined in this Act but defined in the Central
defined shall Goods and Services Tax Act, the Integrated Goods and Services Tax Act, the State
have the Goods and Services Tax Act, and the Goods and Services Tax (Compensation to
meaning assigned States) Act, shall have the same meaning as assigned to them in those Acts.
in UTGST
V INDIA “India” means

IMP  the territory of India as referred to in article 1 of the Constitution,
 its territorial waters, seabed and sub-soil underlying such waters,
 continental shelf, exclusive economic zone or any other maritime zone as
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic
Zone and other Maritime Zones Act, 1976, and
 the air space above its territory and territorial waters;
 Exclusive Economic Zone-

The exclusive economic zone of India (hereinafter referred to as the
exclusive economic zone) is an area beyond and adjacent to the territorial
waters, and the limit of such zone is two hundred nautical miles from the
baseline.
 Continental shelf
The continental shelf of India comprises the seabed and subsoil of the
submarine areas that extend beyond the limit of its territorial waters
throughout the natural prolongation of its land territory to the outer edge
of the continental margin or to a distance of two hundred nautical miles
from the baseline where the outer edge of the continental margin does not
extend up to that distance.
The territory of India as referred to in  Land Part

article 1 of the Constitution, 29 States
7 UTs
 Other territories as may be
acquired.
Territorial waters, seabed and sub-soil TWI = 12 Nm

Seabed = solid surface underlying a sea
or ocean
Subsoil = the earthy material

immediately under the surface soil
Continental shelf and EEZ 200 Nm

Air space above its territory and Air space over LAND PART+TWI
territorial waters
Page 286
 Administration:
1 Administrator The Administrator may, by order, authorise any officer to appoint officers of Union
may authorise territory tax below the rank of Assistant Commissioner of Union territory tax for the
officers to administration of this Act.
appoint officers
below AC The Commissioner may, subject to such conditions and limitations as may be specified
in this behalf by him, delegate his powers to any other officer subordinate to him.
2 Officers under Without prejudice to the provisions of this Act, the officers appointed under the
CGST Act = PO Central Goods and Services Tax Act are authorised to be the PROPER OFFICERS for
under UTGST the purposes of THIS ACT, subject to such conditions as the Government shall, on the
Act recommendations of the Council, by notification, specify.
3 (a) Order a) where any proper officer issues an order under this Act, he shall also issue an
passed under order under the Central Goods and Services Tax Act, as authorised by the said
UTGST Act, then Act under intimation to the jurisdictional officer of central tax;
PO shall also
issue order
under CGST
(b)Proceedings b) where a proper officer under the Central Goods and Services Tax Act has
initiated under initiated any proceedings on a subject matter, no proceedings shall be initiated
CGST Act = No by the proper officer under this Act on the SAME subject matter.
proceedings to
be initiated
under UTGST
Act on the
SAME matter
4 Order passed by Any proceedings for rectification, appeal and revision, wherever applicable, of any
the UTGST order passed by an officer appointed under this Act, SHALL NOT LIE before an officer
officer, the appointed under the Central Goods and Services Tax Act.
appeals, etc
shall not lie to
before officers -
CGST Act
Page 287
 Levy and Collection of UTGST:
1 UTGST on As per the provision of Section of the UTGST Act,
inter-state
supplies  there shall be levied a tax called the Union territory 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 of the Central Goods and Services
Tax Act and at such rates, not exceeding twenty per cent, as may be notified by
the Central Government
 on the recommendations of the Council and collected in such manner as may be

prescribed and shall be paid by the taxable person.
Petrol, However, the Union territory tax on the supply of

Natural gas ,  petroleum crude, high speed diesel, motor spirit (commonly known as
ATF- date to petrol),
be notified  natural gas and
 aviation turbine fuel
shall be levied with effect from such date as may be notified by the Central
Government on the recommendations of the Council.
2 Rates of  The GST Council has already approved the total tax rates of 0%, 5%, 12%, 18% &
taxes 28%.
Why 20%?  The highest applicable approved rate of UTGST has been prescribed at 20%.
 Though the highest rate of tax as charges as UTGST would not be more than 14%
but an enabling limit of 20% has been prescribed in law to avoid need of
changing the law, in case of need to revise the rate of tax in future.
3 Reverse The Central Government may, on the recommendations of the Council, by

Charge notification, specify categories of supply of goods or services or both, the tax on
Mechanism 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 Supplier – The Union territory tax in respect of the supply of taxable goods or services or both
Non  BY a supplier, who is not registered,
registered  TO a registered person
Recipient – shall be paid by such person on reverse charge basis as the recipient and all the
Registered provisions of this Act shall apply to such recipient as if he is the person liable for
RCM paying the tax in relation to the supply of such goods or services or both.
For Eg: A registered taxable person receives agricultural produce say paddy from an
agriculturist, than such registered taxable person would be liable for payment of tax at
the applicable rate on paddy as an agriculturist is not liable for registration.
5 Services on The Central Government may, on the recommendations of the Council, by

which tax notification, specify categories of services the tax on intra-State supplies of which
shall be paid shall be paid by the electronic commerce operator if such services are supplied
by ECO through it, and all the provisions of this Act shall apply to such electronic commerce
Page 288
operator as if he is the supplier liable for paying the tax in relation to the supply of
such services:
PROVIDED THAT where an electronic commerce operator does not have a physical
presence in the taxable territory, any person representing such electronic commerce
operator for any purpose in the taxable territory shall be liable to pay tax.
PROVIDED FURTHER THAT where an electronic commerce operator does not have a
physical presence in the taxable territory and also he does not have a representative
in the said territory, such electronic commerce operator shall appoint a person in the
taxable territory for the purpose of paying tax and such person shall be liable to pay
tax.
Page 289
Page 290
 Exemption from GST:
1 Exemption by Where the Central Government is satisfied that it is necessary in the public interest so
notification to do, it may, on the recommendations of the Council, by notification, exempt
generally either absolutely or subject to such conditions as may be specified therein,
goods or services or both of any specified description from the whole or any part of
the tax leviable thereon with effect from such date as may be specified in such
notification.
 Examples for Absolute Exemptions:

1) Wholly: The Central Government may exempt the tax payable under the
UTGST Act by any taxable person on supply of “sugar” with effect from
01.04.2018.
2) Partial: All kinds of digital training services @ 9% (Exemption-50%) with

effect from 01.04.2018.
 Examples for Conditional Exemptions:

1) Wholly: The Central Government may exempt the tax payable under the
UTGST Act by any taxable person on supply of “blankets with MRP less than
Rs. 300” with effect from 01.04.2018.
2) Partial: The tax payable by a registered taxable person on the supply of

scissors made to a recipient, being a registered taxable person, shall be
calculated @ 1% subject to the condition that the recipient uses such goods
as inputs in the manufacture of scissors used in medical surgeries with effect
from 01.04.2018.
2 Exemption by Where the Central Government is satisfied that it is necessary in the public interest so
special order to do, it may, on the recommendations of the Council, by special order in each case,
under circumstances of an exceptional nature to be stated in such order, exempt
from payment of tax any goods or services or both on which tax is leviable.
 Example:
1) The Central Government may exempt the tax payable under the UTGST Act
by any taxable person on sale of goods and / or services in respect of all
Hotels located in Chandigarh for a period of 3 months with effect from
01.08.2018 to 31.10.2018 in view of the heavy floods in late July’17.
3 Explanation The Central Government may, if it considers necessary or expedient so to do for the
to the purpose of clarifying the scope or applicability of any notification issued under
notification subsection (1) or order issued under sub-section (2), insert an explanation in such
or order notification or order, as the case may be, by notification at any time WITHIN ONE
YEAR of issue of the notification under sub-section (1) or order under sub-section (2),
and every such explanation shall have effect as if it had always been the part of the
first such notification or order, as the case may be.
4 Explanation Explanation.—For the purposes of this section, where an exemption in respect of any
to the Section goods or services or both from the whole or part of the tax leviable thereon has been
granted absolutely, the registered person supplying such goods or services or both
shall not collect the tax, in excess of the effective rate, on such supply of goods or
services or both.
Page 291
Page 292
CREDIT
AVAILABLE CT ST UTT IT
Ist - CT Ist - ST Ist - UTT Ist - IT

UTILIZATION
AGAINST IInd -IT IInd -IT IInd -IT IInd -CT
IIIrd –ST
IVth -UTT
Note :
The ST would not be allowed to be adjusted to the CT and
vice versa.
The UTT would not be allowed to be adjusted to the CT and
vice versa
Where there is an OTL of ST there will NOT be ITC of UTT and
vice versa.
Page 293
 Input Tax Credit and its adjustment:
1 Utilization of As per the provision of section 9 of the Act, the amount of input tax credit available in
Credit – the electronic credit ledger of the registered person on account of:
Sequence
a) integrated tax shall first be utilised towards payment of integrated tax and the
amount remaining, if any, may be utilised towards the payment of central tax
and State tax, or as the case may be, Union territory tax, in that order;
b) the Union territory tax shall first be utilised towards payment of Union territory
tax and the amount remaining, if any, may be utilised towards payment of
integrated tax;
c) the Union territory tax shall NOT be utilised towards payment of central tax.
Page 294
Migration of existing Tax Payers to GST:
PRE GST
Existing taxpayer – i.e. registered
under any of earlier laws
POST GST
 “Provisional Certificate of Registration” granted irrespective of whether existing taxpayer liable to

be registered under section 22 of the Act or not.
 Further allowable extended time period to submit requisite documents as may be prescribed.
 Final registration to be granted by Central Government (CG)/State Government (SG) subject to the
condition that the :
 Requisite information submitted within the time period allowed.
 “Provisional Certificate of Registration” granted deemed to not have been issued if application filed
for cancellation of registration by person not liable to be registered under Section 22 [Registration
requirement] of the Act/If he does not furnish the prescribed information within prescribed time
period.
Example: Since this is a fact that the threshold under the Service Tax was Rs. 10 lakhs but the
threshold under GST has been increased to Rs.20 lakhs. Therefore in this sort of situations the
assessee might not be requiring registrations & therefore applies for cancellation of provisional
registration.
Page 295
Transitional Provisions
 Migration of existing taxable person to UTGST:
1 Provisional Every person registered under any of the existing laws and having a valid Permanent
COR to Account Number would be migrated to UTGST and shall be issued a provisional
person registration certificate.
registered
under earlier Such taxable person would be required to furnish the prescribed information and file
laws such documents as may be prescribed which (provisional registration certificate)
unless replaced by a final certificate of registration under sub-section (2), shall be
liable to be cancelled if the conditions so prescribed are not complied with.
2 The final COR The final certificate of registration shall be granted in such form and manner and
as may be subject to such conditions as may be prescribed.
prescribed
[Though the time limit is NOT given in the Act or the Rules but Revised Model Law
stated the time limit of six months for furnishing the Information for obtaining the
final COR]
3 Cancellation The certificate of registration issued to a person under sub-section (1) shall be
of deemed to have not been issued if the said registration is CANCELLED in pursuance of
Provisional an application filed by such person that he was not liable to registration under
COR section 22 or section 24 of the Central Goods and Services Tax Act.
 Transitional Provision – Input Tax Credit:
1 Carry A registered person, other than a person opting to pay tax under section 10 (
forward of registered person who is availing Composition Scheme) of the Central Goods and
ITC – VAT Services Tax Act as composition levy, shall be entitled to take, in his electronic credit
and Entry ledger,
Tax
credit of the amount of Value Added Tax and Entry Tax, if any, carried forward in the
Return RETURN relating to the period ending with the day immediately preceding the
within 90 appointed day, furnished by him under the existing law, not later than ninety days
days after the said day, in such manner as may be prescribed.
2 Eligibility for These credits will not be eligible if:

claiming ITC 1) The returns under the existing law for the period ending on a day immediately
preceding appointed day are not filed within 90 days of the appointed day;
2) The said credit are not eligible as input tax credit in the GST law;
3) Taxable person has not furnished the returns under the existing law for a period
of 6 months before appointed day;
4) Where the credit related to goods cleared under exemption (under GST Law);
Page 296
 Credit of unavailed CENVAT credit in respect of capital goods, not carried forward in a return, shall be
allowed:
A RTP shall be shall In the electronic Credit on Capital Goods

be eligible to take credit ledger NOT carried forward in
the credit a return
Unavailed Credit = [Total Such credit shall be eligible

eligible Credit – Credit under the earlier law AND
availed] under the earlier under GST Law
law
 Credit of eligible duties in respect of inputs held in stock allowed in certain situations:
Person eligible for input tax credit: Person eligible for input tax credit: Person eligible for input tax credit:
 Person not liable to be registered  Inputs held in stock and inputs  Goods must be used for taxable
under the earlier law contained in semi-finished goods supply.
 Person engaged in dealing with or finished goods held in stock as
exempted goods or tax free goods. on appointed day  Eligible to take the credit under
 Goods which have suffered tax at GST law
first point of sale and their  Above benefit not available for
subsequent sale is not liable to tax input services  Eligible to take the credit under
in the UT under the existing law GST law
but which are liable to be taxed in  Such credit can be taken in the
GST. electronic credit ledger  Invoice or other document
 Where a person is entitled to Input should be within 12 months
Tax Credit at the time of sale. from the AD
Page 297
 Input Tax Credit on Capital Goods:
1 ITC on Capital  The VAT laws of some territory provides for the input tax credit on capital
Goods goods. At some places, inputs tax credit is available in two equal installments.
 The registered taxable person would be eligible for the UNAVAILED INPUT TAX
CREDIT on capital goods under existing law, which is not carried forward in a
return in their electronic credit ledger.
 However, these credits would not be eligible to taxable person who opt to pay
tax u/s 10 as composition levy. Further, these credits would be eligible only if
such credits are eligible as input tax credits under GST laws also.
 Input Tax Credit on Input Stocks:
1 ITC The eligible inputs tax credits in respects of
embedded in  inputs held in stocks,
goods is  inputs held in semi finished goods and
available  inputs held in stock of finished goods
on a day immediately preceding the appointed day will be eligible as input tax credit
to be taken as UTGST in the electronic ledger.
2 Eligibility for The following registered taxable person will be eligible for the input tax credit:
availing the a) Who was not liable to be registered.
ITC
b) Who was involved in dealing with exempted goods or tax free goods.
c) Goods which have suffered tax at first point of sale and their subsequent sale is
not liable to tax in the UT under the existing law but which are liable to be taxed
in GST.
d) Where a person is entitled to the credit of input tax at the time of sale of goods.
3 Conditions However, the Input tax credit is available subject to the following conditions:
for availing i) such inputs or goods are used or intended to be used for making taxable supplies
ITC under GST;
ii) the said registered person is eligible for input tax credit on such inputs under
GST;
iii) the said registered person is in possession of invoice or other prescribed

documents evidencing payment of tax under the existing law in respect of such
inputs; and
iv) such invoices or other prescribed documents were issued not earlier than twelve
months immediately preceding the appointed day.
However, in case such taxable person is not in possession of invoice or tax paying
document (RCM), such person can take credit at such rate as may be prescribed.
However he would be required to pass the benefit of reduced taxes to his
recipients.
Page 298
Page 299
 Input Tax Credit: Taxable as well as exempted Goods:
1 ITC: Taxable A registered person, who was engaged in the sale of taxable goods as well as
as well as exempted goods or tax free goods under the existing law but which are liable to tax
exempted under this Act, shall be entitled to take, in his electronic credit ledger:
Goods
i) the amount of credit of the VALUE ADDED TAX and ENTRY TAX, if any, carried
forward in a return furnished under the existing law by him in accordance with
the provisions of sub-section (1); and
ii) the amount of credit of the VALUE ADDED TAX and ENTRY TAX, if any, in respect
of
 inputs held in stock and
 inputs contained in semi-finished
 inputs contained in finished goods
held in stock on the appointed day, relating to such exempted goods or tax free
goods in accordance with the provisions of sub-section (3).
 Input Tax Credit: Goods in Transit:
1 ITC: Goods in In case of GOODS which are IN TRANSIT on the appointed day, a registered taxable
Transit person shall be entitled to take credit of VAT and ENTRY TAX on goods received on or
after the appointed day, the TAX ON WHICH HAS BEEN PAID before APPOINTED DAY.
However, the eligibility of input tax credit is subject to following conditions:
 the invoice or any other tax paying document (RCM) of the same was
recorded in the books of account of such person within a period of thirty
days from the appointed day. The competent authority has power to extend
the period of 30 days by another period not exceeding 30 days on sufficient
cause being shown to it.
 Furnish such statement in respect of such credit in such manner as may be

prescribed.
Page 300
 Transitional provisions relating to job work:
Applicability of EXEMPTION:
No TAX liability WHEN: TAX payable WHEN and by WHOM:
Principal and Job Worker
Goods were removed as such Goods are liable for payment of
should DECLARE details of
or after partial processing for taxes under GST; and
inputs held in Stock by the
Job work under the earlier
Job Worker on behalf of
law prior to AD. Such goods are returned after 6
the Principal on the AD.
months or the extended period
Such goods are returned (2 months) from the AD.
within 6 months or within
the extended period (2 If goods are NOT returned within
months) from the appointed 6 months or extended period ,
day to the said place of ITC availed iro inputs removed
business. will be recovered from the
Principal
 Duty paid Goods returned to the place of business on or after the appointed day:
Duty paid GOODS

under the earlier
law
Removed within 6
months before the
applicability of GST
If person returning the

Returned to the POB Returned to the POB
goods is unregistered,
within 6 months from the after 6 months from the
then RCM u/s 9(4) will
date of applicability of date of applicability of
get attracted.
GST GST
Return to the person GST payable by the

other than Registered person returning the
Person goods, if he is a
registered Person
Registered person shall

be eligible for refund of
tax under the earlier law
Page 301
 Switch over from Composition levy:
1 Switch over A registered person, who was either paying tax at a fixed rate or paying a fixed
from amount in lieu of the tax payable under the existing law (means availing Composition
Composition Scheme in the earlier regime) shall be entitled to take, in his electronic credit ledger,
levy credit of VALUE ADDED TAX in respect of
 inputs held in stock and
 inputs contained in semi-finished or
 inputs contained in finished goods
held in stock on the appointed day subject to the following conditions, namely:
i) Such inputs or goods are used or intended to be used for making taxable
supplies under this Act;
ii) the said registered person is NOT paying tax under section 10 [Composition
Scheme] of the Central Goods and Services Tax Act;
iii) the said registered person is eligible for input tax credit on such inputs under
this Act;
iv) the said registered person is in possession of invoice or other prescribed

documents [RCM] evidencing payment of tax under the existing law in
respect of inputs; and
v) such invoices or other prescribed documents were issued not earlier than
twelve months immediately preceding the appointed day.
 Transitional provisions relating to job work:
1 Transitional Where any inputs or semi finished goods received at a place of business had been
provisions despatched as such or despatched after being partially processed to a job worker for
relating to further processing, testing, repair, reconditioning or any other purpose in
job work accordance with the provisions of existing law PRIOR appointed day and such inputs
are returned to the said place on or AFTER the appointed day,
 NO tax shall be payable if such inputs, after completion of the job work or
otherwise, are returned to the said place within six months from the
appointed day.
Provided that the period of six months may, on sufficient cause being shown, be
extended by the Commissioner for a further period not exceeding two months.
Provided further that if such inputs are not returned within a period of six months or
the extended period from the appointed day, the input tax credit shall be liable to be
recovered in accordance with the provisions of clause (a) of sub-section (8) of section
142 of the Central Goods and Services Tax Act.
Provided also that the person despatching the goods may, in accordance with the
provisions of the existing law, transfer the said goods to the premises of any
registered person for the purpose of supplying therefrom on payment of tax in India
or without payment of tax for exports within six months or the extended period, as
the case may be, from the appointed day.
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 Duty paid Goods returned to the place of business on or after the appointed day:
Duty paid GOODS

under the earlier law
Removed within 6
months before the
If person returning the

Returned to the POB Returned to the POB
goods is unregistered,
within 6 months from the after 6 months from the
then RCM u/s 9(4) will
applicability of GST applicability of GST
get attracted.
Return to the person GST payable by the

other than Registered person returning the
Person goods, if he is a
registered Person
Registered person shall

be eligible for refund of
tax under the earlier law
 Section 142(2)- Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of
a contract:
Any contract entered
into PRIOR to the
Revision of price
after the date of
Upward revision Downward revision
Issue supplementary Issue Credit Note within

invoice or Debit Note 30 days of Price revision
within 30 days of Price [Recipient to reduce his
revision ITC correspondingly]
Deemed to be issued
in respect of an
Output supply
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The tax under this sections shall not be payable only if the person despatching the
goods and the job worker declare the details of the inputs or goods held in stock by
the job worker on behalf of the said person on the appointed day in such form and
manner and within such time as may be prescribed.
 MISCELLANEOUS TRANSITION PROVISIONS:
 Return of taxable goods:
1 Return of  Where any goods on which tax, if any, had been paid under the existing law at
taxable the time of sale thereof, not being earlier than six months prior to the appointed
goods day,
 are RETURNED to any place of business on or after the appointed day,
the registered person (the seller) shall be eligible for refund of the tax
paid under the existing law where such goods are returned by a person,
other than a registered person, to the said place of business within a
period of six months from the appointed day and such goods are
identifiable to the satisfaction of the proper officer.
 However, if the said goods are returned by a registered person, the return of
such goods shall be deemed to be a supply and GST would be payable on returns
of such goods.
 Revision of price of goods supplied before appointed day:
1 Price revised  Where, in pursuance of a contract entered into prior to the appointed day, the
Upward price of any goods is revised UPWARDS on or after the appointed day, the
registered person who had sold such goods shall issue to the recipient a
supplementary invoice or debit note, containing such particulars as may be
prescribed, within thirty days of such price revision and for the purposes of this
Act,
 such supplementary invoice or debit note shall be deemed to have been issued
in respect of an outward supply made under this Act.
2 Price revised  Where, in pursuance of a contract entered into prior to the appointed day, the
Downward price of any goods is revised DOWNWARDS on or after the appointed day, the
registered person who had sold such goods may issue to the recipient a credit
note, containing such particulars as may be prescribed, within thirty days of such
price revision and
 for the purposes of this Act such credit note shall be deemed to have been issued
in respect of an outward supply made under this Act.
 However, such SUPPLIER would be allowed to reduce his taxable outward supply
liability only if the RECIPIENT of the invoice or credit note reduces the
corresponding input tax credit.
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 Refund Claims:
Any refund claim filed
BEFORE, ON or AFTER the
date of applicability of GST
Disposed of in accordance
of earlier law
Refund is allowed in Refund is rejected in

entirety or partially entirety or partially
The portion allowed The portion

shall be paid in CASH rejected will LAPSE
 Finalization of proceedings relating to output duty or tax liability
Any proceeding relating to

Output duty liability initiated
before the applicability of GST
Disposed of in accordance
with the provisions of the
earlier laws
Any amount found Any amount found

to be REFUNDABLE to be RECOVERABLE
Refundable In CASH Recovered as an arrear of

tax under the GST law
Nor admissible as ITC
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 Refund Claims:
1 Refund The claims of refund of input tax credit, tax or interest filed by a taxable person
Claims BEFORE or AFTER the appointed day would be processed only under the law in which
the claims are filed and UTGST law WOULD NOT BE applicable on such claims.
 Such claims would be allowed to be paid to taxable person only in CASH even if
there are contrary provisions in the existing law.
Provided that where any claim for refund of the amount of input tax credit is fully or
partially REJECTED, the amount so rejected shall LAPSE. However, the claimant would
be eligible to file appeal in respect of such rejection of claim. The reference to such
appeal has been provided in section 182 of CGST Act.
Further, no refund shall be allowed of any amount of input tax credit where the
balance of the said amount as on the appointed day has been carried forward under
this Act.
 Proceedings of output tax under the existing law:
1 Amount Every proceeding of appeal, revision, review or reference relating to any output tax
Recoverable liability initiated whether BEFORE, ON or AFTER the appointed day under the existing
law, shall be disposed of in accordance with the provisions of the existing law, and
 if any amount becomes recoverable as a result of such appeal, revision, review or

reference, the same shall, unless recovered under the existing law, be recovered
as an arrear of tax under this (GST) Act and amount so recovered shall NOT be
admissible as input tax credit under this Act.
2 Amount Every proceeding of appeal, revision, review or reference relating to any output tax
admissible to liability initiated whether BEFORE, ON or AFTER the appointed day under the existing
be refunded law, shall be disposed of in accordance with the provisions of the existing law, and
 any amount found to be admissible to the claimant shall be refunded to him in

CASH in accordance with the provisions of the existing law and the amount
rejected, if any, shall NOT be admissible as input tax credit under this Act.
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 Treatment of the amount recovered or refunded pursuant to revision of return:
Due to revision of return

under the earlier law, if
any amount
Becomes refundable Becomes recoverable

from taxable person from the taxable person
Amount refunded in Amount shall be recovered

CASH as arrear of tax
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 Proceedings of Assessment or adjudication under existing law:
1 Amount Where in pursuance of an assessment or adjudication proceedings instituted,
Recoverable whether BEFORE, ON or AFTER the appointed day, under the existing law,
 any amount of tax, interest, fine or penalty becomes recoverable from the
person, the same shall, unless recovered under the existing law, be recovered as
an arrear of tax under this (GST) Act and the amount so recovered shall NOT be
admissible as input tax credit under this Act.
2 Amount Where in pursuance of an assessment or adjudication proceedings instituted,

admissible to whether BEFORE, ON or AFTER the appointed day under the existing law,
be refunded
 any amount of tax, interest, fine or penalty becomes refundable to the taxable
person, the same shall be refunded to him in CASH under the said law and the
amount rejected, if any, shall NOT be admissible as input tax credit under this
Act.
 Revision of Return after the appointed day:
1 Amount Where any return, furnished under the existing law, is REVISED after the appointed
Recoverable day and
 if, pursuant to such revision, any amount is found to be recoverable or any

amount of input tax credit is found to be inadmissible, the same shall, unless
recovered under the existing law, be recovered as an arrear of tax under this
(GST) Act and the amount so recovered shall NOT be admissible as input tax
credit under this Act.
2 Amount Where any return, furnished under the existing law, is REVISED after the appointed
admissible to day but within the time limit specified for such revision under the existing law and
be refunded
 if, pursuant to such revision, any amount is found to be refundable or input tax
credit is found to be admissible to any taxable person, the same shall be refunded
to him in CASH under the existing law and the amount rejected, if any, shall NOT
be admissible as input tax credit under this Act.
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 Taxability of supply of goods sent on approval basis:
Where:
 Goods are sent on approval basis before
the appointed day.
 Returned by the buyer on account of
rejection/no approval, on or after the
appointed day.
 Such goods are sent not earlier than six
months / further extended period up to 2
months before the appointed day
Tax treatment shall be as follows:
Where transaction takes place within Where transaction exceeds the time
the time limit as per this section limit as per this Section
 Returned to the seller within six a) Where:

months / further extended  The goods are liable to tax under this Act
period up to 2 months from the AND
 Returned to the seller after six months /
appointed day
further extended period up to 2 months
from the appointed day.
No tax shall be payable on such Tax shall be payable by the “person returning
goods the goods”
b) Where:
 The goods are liable to tax under this
Act AND
 Not returned to the seller within six
months / further extended period up to
2 months from the appointed day.
Tax shall be payable by the “person sending
the goods on approval basis”
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 Tax paid goods supplied after the appointed day:
1 Tax paid Notwithstanding anything contained in section 12 of the Central Goods and Services
goods Tax Act, no tax shall be payable on GOODS under this (GST) Act to the extent the tax
supplied was leviable on the said goods under the existing law.
after the AD
Notwithstanding anything contained in section 13 of the Central Goods and Services
Tax Act, no tax shall be payable on SERVICES under this (GST) Act to the
extent the tax was leviable on the said services under Chapter V of the
Finance Act, 1994 (Service Tax law) .
Where tax was paid on any supply, both under any existing law relating to sale of
goods and under Chapter V of the Finance Act, 1994, tax shall be leviable under this
Act and the taxable person shall be entitled to take credit of value added tax or
service tax paid under the existing law to the extent of supplies made after the
appointed day and such credit shall be calculated in such manner as may be
prescribed. (Both under the earlier regime and the GST regime)
 Goods sent on approval basis:
1 Goods sent Where any GOODS sent on approval basis, not earlier than six months before the
on approval appointed day, are rejected or not approved by the buyer and returned to the seller
basis on or after the appointed day, NO tax shall be payable thereon if such goods are
returned within six months from the appointed day.
Provided that the said period of six months may, on sufficient cause being shown, be
extended by the Commissioner for a further period not exceeding two months.
Provided further that the tax shall be payable by the person returning the goods if
such goods are liable to tax under this Act and are returned after the period specified
in this sub-section.
Provided also that tax shall be payable by the person who has sent the goods on
approval basis if such goods are liable to tax under this (GST) Act, and are NOT
returned within the period specified in this sub-section.
 Tax deducted at Source (TDS):
1 Tax deducted Where a supplier has made any sale of goods in respect of which tax was required to
at Source be deducted at source under any existing law relating to sale of goods and has also
(TDS) issued an INVOICE for the same before the appointed day,
NO deduction of tax at source under section 51 of the Central Goods and Services Tax
Act, as made applicable to this Act, shall be made by the deductor under the said
section where payment to the said supplier is made ON or AFTER the Appointed Day.
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 Inspection, Search, Seizure and Arrest:
 Officers required to assist proper officers:
1 Assisting  All officers of Police, Railways, Customs, and
UTGST officers
 those officers engaged in the collection of land revenue, including village officers,
and officers of central tax and
 officers of the State tax shall assist the proper officers in the implementation of
this Act.
2 Notification The Government may, by notification, empower and require any other class of officers
 to assist the proper officers in the implementation of this Act when called upon to
do so by the Commissioner.
 Demands and Recovery:

 Tax wrongfully collected and paid to Central Government or Union territory Government:
1 Interstate A registered person who has paid the central tax and the Union territory tax on a
transaction transaction considered by him to be an intra-State supply, but which is subsequently
Initially held to be an inter-State supply, shall be refunded the amount of taxes so paid in
considered as such manner and subject to such conditions as may be prescribed.
intra-state
[Under this Act, he is get the refund of the taxes paid (Also refer Sec 19 of the IGST
Act, 2017)]
2 Interest not to be A registered person who has paid integrated tax on a transaction considered by him
paid to be an inter-State supply, but which is subsequently held to be an intra-State
supply, shall not be required to pay any interest on the amount of the central tax
and the Union territory tax payable.
[Under this Act, he is NOT required to pay the interest (Also refer Sec 19 of the IGST
Act, 2017)]
19. Tax wrongfully collected and paid to Central Government or State Government (IGST ACT, 2017):
1 Intra-state held A registered person who has paid integrated tax on a supply considered by him to be
to be an Inter- an inter-State supply, but which is subsequently held to be an intra-State supply,
state shall be granted refund of the amount of integrated tax so paid in such manner and
subject to such conditions as may be prescribed.
2 No interest--- A registered person who has paid central tax and State tax or Union territory tax, as
Inter-state held the case may be, on a transaction considered by him to be an intra-State supply, but
to be an Intra- which is subsequently held to be an inter-State supply, shall not be required to pay
state any interest on the amount of integrated tax payable.
Page 311
 Recovery of tax:
1 Methods in Where any amount of tax, interest or penalty is payable by a person to the
which recovery Government under any of the provisions of this Act or the rules made thereunder and
can be made… which remains unpaid, the proper officer of central tax, during the course of recovery
of said tax arrears, may recover the amount from the said person as if it were an
arrear of central tax and credit the amount so recovered to the account of the
Government under the appropriate head of Union territory tax.
2 Recovered< Where the amount recovered under sub-section (1) is less than the amount due to the
Due—the Government under this Act and the Central Goods and Services Act, the amount to be
amount to be credited to the account of the Government shall be in proportion to the amount due
credited in the as Union territory tax and central tax.
proportion (V. Imp)
ADVANCE RULING
 Definitions:
In this Chapter, unless the context otherwise requires,—
(a) Advance ruling ‘‘Advance ruling’’ means a decision provided by the Authority or the Appellate
Authority to an applicant on matters or on questions specified in
 sub-section (2) of section 97 or

 sub-section (1) of section 100 of the Central Goods and Services Tax Act,
in relation to the supply of goods or services or both being undertaken or proposed to

be undertaken by the applicant;
Notes:
 Sub-section (2) of section 97:
The question on which the advance ruling is sought under this Act, shall be in
respect of,––
(a) classification of any goods or services or both;
(b) applicability of a notification issued under the provisions of this Act;
(c) determination of time and value of supply of goodsor services or both;
(d) admissibility of input tax credit of tax paid or deemed to have been paid;
(e) determination of the liability to pay taxon any goods or services or both;
(f) whether applicant is required to be registered;
(g) whether any particular thing done by the applicant with respect to any
goods or services or both amounts to or results in a supply of goods or
services or both, within the meaning of that term.
Page 312
 Sub-section (1) of section 100:

“The concerned officer, the jurisdictional officer or an applicant aggrieved
by any advance ruling pronounced under sub-section (4) of section 98, may
appeal to the Appellate Authority.”
(b) Appellate ‘‘Appellate Authority’’ means the Appellate Authority for Advance Ruling constituted
Authority under section 16.
(c) Applicant ‘‘Applicant’’ means any person registered or desirous of obtaining registration under
this Act;
(d) Application ‘‘Application’’ means an application made to the Authority under sub-section (1) of
section 97 of the Central Goods and Services Tax Act;
Notes:
 Sub-section (1) of section 97
“An applicant desirous of obtaining an advance ruling under this Chapter
may make an application in such form and manner and accompanied by such
fee as may be prescribed, stating the question on which the advance ruling
is sought.”
(e) Authority ‘‘Authority’’ means the Authority for Advance Ruling, constituted under section 15;
Constitution of Authority for Advance Ruling:
1 Example: The Central Government shall, by notification, constitute an Authority to be known
Chandigarh as the name of the Union territory, Authority for Advance Ruling:
Authority for
Advance Ruling
Chandigarh PROVIDED that the Central Government may, on the recommendations of the
Authority for Council, notify any Authority located in any State or any other Union territory to
Advance Ruling act as the Authority for the purposes of this Act.
for the PUNJAB
as well
2 1 member = The Authority shall consist of—
Central Tax (i) one member from amongst the officers of central tax; and
1 member = (ii) one member from amongst the officers of Union territory tax, to be appointed
Union Territory by the Central Government.
Tax
Page 313
3 Qualifications & The qualifications, the method of appointment of the members and the terms and
other T&C – as conditions of their service shall be such as may be prescribed.
may be
prescribed
Constitution of Appellate Authority for Advance Ruling:
1 Example: The Central Government shall, by notification, constitute an Appellate Authority to
Chandigarh be known as the (name of the Union territory) Appellate Authority for Advance
Appellate Ruling:
Authority for
Advance Ruling
Chandigarh
Appellate PROVIDED that the Central Government may, on the recommendations of the
Authority for Council, notify any Appellate Authority located in any State or any other Union
Advance Ruling territory to act as the Authority for the purposes of this Act.
for the PUNJAB
as well
2 Chief The Appellate Authority shall consist of—

Commissioner (i) the Chief Commissioner of central tax as designated by the Board; and
= Central Tax
(ii) the Commissioner of Union territory tax having jurisdiction over the applicant.
Commissioner
= Union
Territory Tax
MISCELLANEOUS
Application of provisions of Central Goods and Services Tax Act:
1 Application of Subject to the provisions of this Act and the rules made thereunder, the provisions of
certain the Central Goods and Services Tax Act, relating to,—
provisions of (i)scope of supply;
the UTGST Act,
2016 (ii)composition levy;
(iii)composite supply and mixed supply;
(iv)time and value of supply;
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(v)input tax credit;
(vi)registration;
(vii)tax invoice, credit and debit notes;
(viii)accounts and records;
(ix)returns;
(x)payment of tax;
(xi)tax deduction at source;
(xii)collection of tax at source;
(xiii)assessment;
(xiv)refunds;
(xv)audit;
(xvi)inspection, search, seizure and arrest;
(xvii)demands and recovery;
(xviii)liability to pay in certain cases;
(xix)advance ruling;
(xx) appeals and revision;
(xxi)presumption as to documents;
(xxii)offences and penalties;
(xxiii)job work;
(xxiv) electronic commerce;
(xxv) settlement of funds;
(xxvi) transitional provisions; and
(xxvii) miscellaneous provisions including the provisions relating to the imposition of

interest and penalty,
shall, mutatis mutandis, apply.
Page 315
Power to make rules:
1 CG to make The Central Government may, on the recommendations of the Council, by
rules to carry notification, make rules for carrying out the provisions of this Act.
purpose of the
Act
2 Specific powers Without prejudice to the generality of the provisions of sub-section (1), the Central
- Rules may be Government may make rules for all or any of the matters which by this Act are
regarding: required to be, or may be, prescribed or in respect of which provisions are to be or
may be made by rules.
3 Rules may be The power to make rules conferred by this section shall include the power to give
brought into retrospective effect to the rules or any of them from a date not earlier than the date
force by on which the provisions of this Act come into force.
retrospective
amendments
4 General Any rules made under sub-section (1) may provide that a contravention thereof shall
penalty for be liable to a penalty not exceeding ten thousand rupees.
breach of any
rule-upto
Rs.10,000 if no
specific penalty
is prescribed
Laying of rules, regulations and notifications:
24 Rules and 
notifications  Every rule made by the Central Government,
shall be laid  every regulation made by the Board and
before  every notification issued by the Central Government under this Act,
Parliament/ shall be laid, as soon as may be, after it is made or issued, before each House of
State Parliament,
Legislature
 while it is in session, for a total period of thirty days which may be comprised in
one session or in two or more successive sessions, and
 if, before the expiry of the session immediately following the session or the
successive sessions aforesaid,
both Houses agree in making any modification in the rule or regulation or in the
notification, as the case may be, or both Houses agree that the rule or regulation
or the notification should not be made,
Page 316
the rule or regulation or notification, as the case may be, shall thereafter
have effect only in such modified form or be of no effect, as the case may be;
 so, however, that any such modification or annulment shall be without prejudice
to the validity of anything previously done under that rule or regulation or
notification, as the case may be.
Power to issue instructions or directions:
25 Power to issue The Commissioner may, if he considers it necessary or expedient so to do for the
instructions or purpose of uniformity in the implementation of this Act, issue such orders,
directions: instructions or directions to the Union territory tax officers as he may deem fit, and
thereupon all such officers and all other persons employed in the implementation of
this Act shall observe and follow such orders, instructions or directions.
Removal of difficulties:
1 If difficulty If any difficulty arises in giving effect to any provision of this Act, the Central
arises- do Government may, on the recommendations of the Council, by a general or a special
anything to order published in the Official Gazette, make such provisions not inconsistent with the
remove provisions of this Act or the rules or regulations made thereunder, as may be
difficulty necessary or expedient for the purpose of removing the said difficulty:
Order to be PROVIDED that no such order shall be made after the expiry of a period of three
made within years from the date of commencement of this Act.
the expiry of
three years
2 Shall be laid Every order made under this section shall be laid, as soon as may be, after it is made,
before before each House of Parliament.
Parliament [LS
+ RS]
Page 317
Q
1) UTGST Act shall not be applicable to which Union Territory?
a) Chandigarh
b) Daman & Diu
c) Delhi
d) Andaman & Nicobar Islands
2) UTGST Act shall not be applicable to which Union Territory?

a) Dadra & Nagar Haveli
b) Daman & Diu
c) Lakshadweep
d) Pondicherry (Puduchery)
3) How many UTGST Act will be there?

a) 4
b) 5
c) 1
d) 2
4) Which of the following taxes would be levied on an intra-State supply of goods or services or both?
a) CGST
b) Union Territory tax
d) IGST
5) Does GST applies on Alcoholic liquor for Human Consumption?

a) Yes
b) No
c) May be
d) Can’t say
6) Is there any maximum rate prescribed under UTGST?

a) 14%
b) 28%
c) 20%
d) 30%
7) Who will notify the rate of tax to be levied under UTGST?

a) Central Government suo moto
b) State Government suo moto
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c) GST Council suo moto

d) Central Government as per the recommendations of the GST Council
8) Unless and until notified, UTGST shall not be levied on the intra-State supply of which of the following:
a) Industrial alcohol
b) Restaurant Service
c) Petroleum
9) What are the supplies on which reverse charge mechanism would apply?
a) Notified categories of goods or services or both
b) Inward supply of goods or services or both from an unregistered dealer
10) What if an e-commerce operator having no physical presence in the taxable territory, does not have a
representative in the taxable territory?
a) His will have to discharge his tax liability in foreign currency
b) He will not be liable to tax
c) He has to appoint a person in the taxable territory for the purpose of paying tax on his behalf
d) Any of the above
11) Which of the following can be issued by Central Government/ State Government to exempt goods
and/or services on which tax is leviable in exceptional cases?
a) Exemption Notification
b) Special order
12) For the purpose of clarifying the scope or applicability of any notification or order issued, insert an
explanation in such notification or order by notification at any time WITHIN _____YEAR of issue of the
notification or order, and every such explanation shall have effect as if it had always been the part of
the first such notification or order, as the case may be.
a) One year
b) Two years
c) Three years
Q A Q A Q A Q A Q A
1) c 2) d 3) c 4) c 5) b
6) c 7) d 8) c 9) c 10) c
11) c 12) a
 Multiple Choice Questions
Q
1) Does an existing Tax payer have to surrender the existing Registration certificates to obtain GST
registration?
a) No, automatically he will receive final registration.
b) Yes, all registration certificates to be surrendered
c) No, Provisional Registration is automatic
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2) Is PAN Mandatory for Migration to Provisional GST registration?

a) No
b) Yes
c) PAN Application is sufficient
3) What is the validity of the provisional registration certificate issued to the existing dealers?
a) 6 months
b) 12 months
c) 3 months
d) Not mentioned in the law
4) Is a Composition dealer registered under the old law required to obtain Final GST Registration?
a) No, Old number will continue
b) Yes, mandatory for all Composition dealers
c) Yes, Subject to the turnover crossing the GST Turnover limit.
5) Will a person having multiple registration in various states receive single registration on Migration
a) Separate Registration would have to be obtained on migration for each State even for a single PAN
number.
b) Centralised Registration will be obtained for each PAN number across all States.
c) Separate Registration would have to be surrendered and fresh registration is required to be obtained
6) What will be the amount carried forward as CGST/SGST/UTGST from the earlier law and shown in the
return filed for the period ending as on appointed date?
a) No amount will be carried forward from the earlier law
b) Amount which is admissible under earlier law but may not be admissible under GST
c) Amount which is admissible under both the GST and earlier law
7) So as to avail the credit, the return has to filed within ________days from the appointed date?
a) 50 days
b) 90 days
c) 140 days
d) 180 days
8) So as to avail the credit, the taxable person should have furnished the returns under the earlier law for
a period of ________months before the appointed date?
a) 3 months
b) 6 months
c) 9 months
d) 12 months
9) Which amount will be carried forward as UTGST under GST law (Assuming applicability of GST from 1st
July, 2017)?
a) Input tax credit as per the CENVAT Credit Register on 30th June, 2017.
b) Input tax credit as per the books as on 30th June, 2017
c) Input tax credit as per the return furnished for the period ending 30th June, 2017
10) Input tax credit as per the VAT law will be carried forward as (in the context of Union Territory):
a) CGST
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b) UTGST
c) IGST
d) CGST or SGST at the option of the supplier
11) Who among the following persons are allowed to carry forward credit under the CGST/ SGST /UTGST
law?
a) COT dealers not required to take registration under GST law in view of minimum threshold turnover.
b) Regular dealers under the earlier law and opting for COT scheme under the GST law
c) Regular dealers under the earlier law and NOT opting for COT scheme under GST law
12) Is there any requirement of a pre-approval or assessment or verification by the GST officers for
transitioning the credit lying in balance in the VAT/ Cenvat Return into GST return?
a) Specific approval of the jurisdictional officer is required
b) Automatic, closing credit in the respective return would be automatically carried forward into the
electronic credit ledger under GST
c) Detailed assessment / audit is mandatory for allowing credit
13) Whether credit brought forward under the old law is eligible as input tax credit under GST law?
a) Yes, without any restrictions
b) Credit irregularly taken under the earlier law will also be available
c) Eligible credit under the earlier law will be available only if it is also admissible as input tax credit under
the GST law
14) Unavailed Input Tax Credit on Capital Goods will be carried forward as (in the context of Union
Territory)
a) CGST
b) SGST
c) UTGST
d) CGST or SGST at the option of the supplier
15) What is the condition for taking unavailed CENVAT Credit on Capital Goods?
a) The CENVAT Credit should have been admissible under earlier law but not under GST
b) The CENVAT Credit should have been admissible under GST but not under earlier law
c) The CENVAT Credit should have been admissible under both the earlier law and GST
16) If the unavailed Input Tax Credit on Capital Goods under the earlier law which has been subsequently
availed under the GST law is found to be inadmissible as per the Proceedings of the Department, then
what will be the course of action for the Department?
a) Such amount will be recovered under the GST law
b) Such amount will be recovered under the earlier law
c) Such amount cannot be recovered
17) For credit to be allowable, invoices should not be issued earlier than:
a) Three months before the appointed day
b) Four months before the appointed day
c) Ten months before the appointed day
d) Twelve months before the appointed day
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*18) A manufacturer of exempted and non-exempted goods or a service provider of exempted and taxable
services are entitled to Cenvat credit
a) All goods whether in stock or in finished goods or in semi-finished goods is eligible
b) Only goods directly pertaining to non-exempted goods or taxable services is eligible
c) Only proportionate credit based on the previous year turnover of non-exempted goods or taxable services
is eligible
*19) Which of the following is a condition for availing credit on goods in transit or incomplete services
a) Credit should be taken in 30 days from the appointed date
b) Duty or tax should have been paid before the appointed date
c) Should be in possession of valid invoice or duty paid document
d) All of the above
*20) Which of the following is not a conditions for a tax payer paying taxes under the composition scheme
under the earlier law now switching to the regular scheme under the GST law:
a) Said person is eligible for input tax credit of such inputs under the GST law
b) Said person is in possession of invoice or duty paid documents not earlier than 12 months preceding the
appointed date
c) The said person is continuing to pay taxes under the composition scheme under sec 9
d) The goods are intended to be used for making taxable supplies.
*21) In case of Transitional provisions for Job worker, the time limit of six months or the extended period
shall be counted from?
a) Appointed date
b) Date of removal of inputs to job worker
c) Date of receipt of inputs by job worker
22) Declaration of inputs held in stock by job worker on behalf of manufacturer is to be filed by?
a) Manufacturer
b) Job Worker
c) Both (a) and (b)
d) Any of the above
23) What happens to duties and taxes paid on goods which are returned within six months form the
appointed date?
a) Revise old return and claim reduction in output liaility
b) Claim refund of taxes paid earlier on such goods
c) Claim re-credit of taxes paid under earlier law as input tax credit under GST law
*24) Which of the following is not necessary pre-requisite in respect of upward price revision during
transition period?
a) Supplier should supplementary issue invoice or debit note
b) Such document should be raised within 30 days of price revision
c) Contract should have entered prior to appointed date
d) Goods should be removed or sold prior or services should be provided prior to appointed date
e) Supplier should revise earlier return and pay tax on differential
25) Which of the following is mandatory pre-condition in respect of downward price revision during
transition period?
a) Recipient of credit note reduced his input tax credit
b) Supplier should revise earlier return and reduce tax liability
c) Supplier claims refund of downward revision
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26) If the refund claim is fully or partially rejected the amount would _____________
a) Lapse
b) Be carried forward
c) Be refunded
d) All of the above
27) Under what circumstances will the refund claim filed under the earlier law be rejected?
a) Refund claim is filed after appointed date
b) Credit is carried forward equivalent to refund amount
c) Refund claim is withdrawn
28) How will the refunds occurring due to any proceedings under the earlier law relating to CENVAT Credit
is treated under GST?
a) Such refund will be made in cash
b) Such refund will be allowed as input tax credit
c) Either a or b at the option of the taxable person
29) The proceedings can involve:

a) Appeal
b) Review
c) Revision
d) All of the above
30) Whether the amount paid as arrears of tax under the earlier law is admissible as input tax credit?
a) Yes
b) No
c) Can’t say
31) Where a supplier has made a sale of goods and deducted tax thereon under earlier law and issued
invoice for the same before the appointed day but received payment after the appointed day
a) No TDS is required to be deducted again under GST Act
b) TDS is be deducted again under GST Act
Q A Q A Q A Q A Q A
1) c 2) b 3) d 4) c 5) a
6) c 7) b 8) b 9) c 10) b
11) c 12) b 13) c 14) a 15) c
16) a 17) d 18) a 19) d 20) c
21) a 22) c 23) b 24) e 25) a
26) a 27) b 28) a 29) d 30) b
31) a
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Q
1) The …………………. Officer is empowered to assist the proper officer.
a) Police/Customs
b) Health
c) CBI
d) State Excise
2) The __________ officer is empowered to assist the proper officer

a) Registrar of Companies
b) Health
c) CBI
d) Railway
*3) __________ Officer is not empowered to assist the proper officer u/s 72(1) of the Act.
a) Police
b) Custom
c) State Excise
d) Railway
4) What happens if a taxable person has paid CGST & SGST or, as the case may be, CGST & UTGST (in SGST
/ UTGST Act) on a transaction considered by him to be an intra-state supply but which is subsequently
held to be an inter-state supply?
a) Seek refund
b) Adjust against future liability
c) File a suit for recovery
5) What happens if a taxable person has paid IGST (in IGST Act) on a transaction considered by him to be
an inter-state supply but which is subsequently held to be an intra-state supply?
a) Seek refund
b) Adjust against future liability
c) Take re-credit
6) Whether a taxable person who has paid IGST on a transaction considered by him to be an inter-state
supply, but which is subsequently held to be an intra-state supply is required to pay interest?
a) Yes
b) No
d) At Commissioner’s discretion
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7) Whether a taxable person who has paid CGST & SGST or, as the case may be, CGST & UTGST on a
transaction considered by him to be an intra-state supply, but which is subsequently held to be an
inter-state supply is required to pay interest?
a) Yes
b) No
d) At Commissioner’s discretion
8) The registered person has paid IGST by treating an intra-State supply as inter-State supply. The officer
has levied CGST and SGST as the same is intra-State supply. What is the remedy?
a) Pay CGST and SGST along with applicable interest
b) Pay CGST and SGST and Claim refund of IGST
c) Forgo IGST paid
Q A Q A Q A Q A Q A
1) a 2) d 3) c 4) a 5) a
6) b 7) b 8) b
Q
1) The _________ shall, by notification, constitute an Authority for Advance Ruling and Appellate
Authority for Advance Ruling
b) State Government
c) Union Territory
d) Board
2) Where shall the Advance Ruling Authority and Appellate Authority for Advance Ruing be located?
a) The Authority shall be located in each state / Union Territory
b) The Authority shall be located in Centre
c) The Authority shall be located in both Centre & State
*3) The Advance Ruling Authority shall comprise of

a) One member from amongst the officers of Central tax
b) One member from amongst the officers of State tax or Union Territory tax, as the case may be, to be
appointed by Central Government
c) (a) & (b)
4) The Appellant Authority for Advance Ruling shall comprise of

a) Chief Commissioner of Central tax as designated by the board
b) Commissioner of State tax or union Territory tax, as the case may be, having jurisdiction over the
applicant
c) (a) & (b)
d) (a) or (b)
Q A Q A Q A Q A Q A
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1) a 2) a 3) c 4) c
Q
1) The ___________ may, on the recommendations of the Council, by notification, make rules for carrying
out the provisions of this Act.
b) State Government
c) Union Territory
d) Board
2) Whether the rules can be made with retrospective effect?

a) Yes
b) No
c) Yes. Subject to the limitation that it cannot be made beyond the date on which the chapter comes into
force
3) Government has the power to enact provisions in the rules stating that contravention thereof would be
liable to penalty. Maximum penalty amount has been restricted to Rs._______
a) 5,000
b) 10,000
c) 20,000
d) 1,00,000
4) Every rule made by the Central Government, every regulation made by the Board and every notification
issued by the Central Government under this Act, shall be laid before:
a) Lok Sabha
b) Rajya Sabha
d) Either of the above
5) What would be the sanctity of anything done/ omitted to be done on the basis of Rules, Regulations or
Notifications, which are subsequently modified/ annulled by the Parliament?
a) The modification or annulment made by the Parliament shall be without prejudice to the validity of
anything previously done under that rule or regulation or notification, as the case may be [Whatever is
done is done - that is freezed]
6) The _________ may, if he considers it necessary or expedient so to do for the purpose of uniformity in
the implementation of this Act, issue such orders, instructions or directions to the Union territory tax
officers.
b) State Government
c) Commissioner
d) Board
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7) The Central Government has the power to issue General Order/ Special Order to remove the difficulty
arising while giving effect to the provisions of this Act, within a period of _____ years from the date of
commencement of the CGST Act.
a) Two
b) Three
c) Four
d) Five
8) Should the General/ Special Order so passed by the Central Government for the removal of difficulty
arising while giving effect to the provisions of this Act be laid before the Parliament?
a) No
b) Yes, Lok Sabha
c) Yes, Rajya Sabha
d) Yes, Both house
Q A Q A Q A Q A Q A
1) a 2) c 3) b 4) c 5)
6) c 7) b 8) d
The harder you will work for something, the

greater you’ll feel when you achieve it
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The Goods & Services Tax

(Compensation to States) Act, 2017
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The Goods & Services Tax (Compensation to States) Act, 2017
 Background:
SN Description
1 The GST Council in its 10th meeting held on 18th February, 2017 approved the “GST compensation to
states” bill that provides for the compensation of loss arising out of introduction of Goods and Service Tax
in India. An Act to provide for compensation to the States for the loss of revenue arising on account of
implementation of the goods and services tax for the period of five years in pursuance of the provisions of
the Constitution (One Hundred and First Amendment) Act, 2016.
2 The Union Government presents the Goods and Service Tax (Compensation to States) Bill, 2017 in Lok
sabha on 27th March, 2017 and the same has been passed by Lok sabha on 29th March, 2017. The Rajya
sabha passed the bill on 6th April, 2017 and was assented by the President on 12th April, 2017.
3 This Act may be called the Goods and Services Tax (Compensation to States) Act, 2017 “the Act”. It
extends to the whole of India and shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.
 Salient Features of Compensation Act:
1 The Coverage The Compensation Act provides for the manner of ascertaining the amount of
compensation payable to States during the transition period of five years by the Centre
on account of revenue loss attributable to levy of goods and services tax. It would
interalia involve the followings:
 Ascertaining the base year

 Identifying the revenue of base year
 Projected revenue
 Computation of compensation
 Release of compensation
The compensation shall be met out from compensation cess for which the provisions in
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relation to collection, payment return, refund etc. have been provided for in the
Compensation Act.
2 Objectives of The Act provides for the following:

the Act
i) It provides for the compensation of loss to the states arising out of introduction of Goods
and Service Tax in India.
ii) The financial year 2015-16 shall be taken as base year for the purpose of calculating
compensation amount payable to the States.
iii) The revenue to be compensated consists of revenues from all the taxes that are levied by
the States which are now to be subsumed under goods and services tax, as audited by
the comptroller and auditor general of India.
iv) The projected growth rate of revenue during transition period shall be 14%.
v) The compensation shall be released bi-monthly on provisional basis and final adjustment
shall be made after getting audited accounts of the year from the Comptroller and
Auditor General of India.
vi) In case of eleven special category states referred to in article 279A of the Constitution,
the revenue forgone on account of exemption of taxes granted any states shall be
counted towards the definition of Revenue for the base year 2015- 16 for calculating
compensation.
vii) The revenues of the states that were not credited to the consolidated funds of states
government but were directly collected by “mandi” or “municipality” would also be
included in the definition of revenue if these were subsumed in the goods and services
tax.
viii) To generate revenue to compensate states for five year for loss suffered by the states on
account of implementation of goods and service tax, by levy a cess on such goods as
recommended by the GST Council over and above the GST rate on that item.
ix) The proceeds of the cess shall be credited to the fund called Goods and Service Tax
compensation fund and all the compensation payable to the states as GST compensation
shall be paid from the above mentioned fund.
The balance if any left out in the GST compensation fund after five year shall be
EQUALLY shared between the Centre and the States.
2. Definitions:
1 In this Act, unless the context otherwise requires,—
(a) Central tax “Central tax” means the central goods and services tax levied and collected under the
Central Goods and Services Tax Act;
(b) Central Goods “Central Goods and Services Tax Act” means the Central Goods and Services Tax Act,
and Services 2017;
Tax Act
(c) Cess “Cess” means the goods and services tax compensation cess levied under section 8;
(d) Compensation “Compensation” means an amount, in the form of goods and services tax
compensation, as determined under section 7;
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(e) Council “Council” means the Goods and Services Tax Council constituted under the provisions
of article 279A of the Constitution;
(f) Fund “Fund” means the Goods and Services Tax Compensation Fund referred to in section
10;
(g) Input tax “Input tax” in relation to a taxable person, means,––
 cess charged on any supply of goods or services or both made to him;
 cess charged on import of goods and includes the cess payable on reverse
charge basis;
(h) Integrated “Integrated Goods and Services Tax Act” means the Integrated Goods and Services Tax
Goods and Act, 2017;
Services Tax
Act
(i) Integrated tax “Integrated tax” means the integrated goods and services tax levied and collected
under the Integrated Goods and Services Tax Act;
(j) Prescribed “Prescribed” means prescribed by rules made, on the recommendations of the Council,
under this Act;
(k) Projected “Projected growth rate” means the rate of growth projected for the transition period
growth rate as per section 3;
(l) Schedule “Schedule” means the Schedule appended to this Act;
(m) State “State” means,––
(i) for the purposes of sections 3, 4, 5, 6 and 7 the States as defined under the
Central Goods and Services Tax Act; and
[means States includes Delhi and Puduchery]
(ii) for the purposes of sections 8, 9, 10, 11, 12, 13 and 14 the States as
defined under the Central Goods and Services Tax Act and the Union
territories as defined under the Union Territories Goods and Services Tax Act;
[means States includes Delhi and Puduchery and rest of the 5 UTs are guided
by Union Territories GST Act]
(n) State tax “State tax” means the State goods and services tax levied and collected under the
respective State Goods and Services Tax Act;
(o) State Goods “State Goods and Services Tax Act” means the law to be made by the State Legislature
and Services for levy and collection of tax by the concerned State on supply of goods or services or
Tax Act both;
(p) Taxable supply “Taxable supply’’ means a supply of goods or services or both which is chargeable to
the CESS under this Act;
(q) Transition date “Transition date” shall mean, in respect of any State, the date on which the State
Goods and Services Tax Act of the concerned State comes into force;
(r) Transition “Transition period” means a period of five years from the transition date; and
period
(s) Union “Union Territories Goods and Services Tax Act” means the Union Territories Goods and
Territories Services Tax Act, 2017.
Goods and
Services Tax
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Act
2 Refer CGST Act The words and expressions used and not defined in this Act but defined in the Central
for Intra-state Goods and Services Tax Act and the Integrated Goods and Services Tax Act shall have
trade or the meanings respectively assigned to them in those Acts.
commerce
3. Projected growth rate:
3 Projected The projected nominal growth rate of revenue subsumed for a State during the
Growth rate transition period shall be fourteen per cent per annum.
4. Base year:
4 Base Year= For the purpose of calculating the compensation amount payable in any financial year
2015-16 during the transition period, the financial year ending 31st March, 2016, shall be taken
as the base year.
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5. Base year revenue:
1 Computation of Subject to the provision of sub-sections (2), (3), (4), (5) and (6), the base year revenue
Base Year for a State shall be
Revenue:
 the sum of the revenue collected by the State and the local bodies [Eg:
House Tax, Water tax, etc.] during the base year,
The inclusion
part  on account of the taxes levied by the respective State or Union
[Eg: Central sales tax levied under the Central Sales Tax Act, 1956 (+) Duties
of Excise on medicinal and toilet preparations levied by the Union but
collected and retained by the concerned SG ] and
 net of refunds, with respect to the following taxes, imposed by the

respective State or Union, which are subsumed into goods and services tax,
namely:–
(a) the
 value added tax, sales tax,
 purchase tax,
 tax collected on works contract, or
 any other tax
levied by the concerned State under the erstwhile entry 54 of List-II (State List) of
Page 335
the Seventh Schedule to the Constitution;
OLD Entry 54 Taxes on the sale or purchase of goods other than

newspapers, subject to the provisions of entry 92A of List I.)
[Inter-state sale or purchase has been dealt in Entry 92A of

List I i.e. Union List]
NEW Entry 54 Taxes on the sale of petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural gas,
aviation turbine fuel and alcoholic liquor for human
consumption, but not including sale in the course of inter-
State trade or commerce or sale in the course of international
trade or commerce of such goods."
[Inter-state sale or purchase has been dealt in Entry 92A of

List I i.e. Union List]
COMMENT That means VAT, inter-alia, subsumed except VAT on Petrol,

natural gas, aviation turbine fuel and alcoholic liquor for
human consumption as they have not been brought under
GST at present
(b) the Central sales tax levied under the Central Sales Tax Act, 1956;
(c) the
 entry tax,
 octroi,
 local body tax or
 any other tax
levied by the concerned State under the erstwhile entry 52 of List-II (State List) of
the Seventh Schedule to the Constitution;
OLD Entry 52 Taxes on the entry of goods into a local area for consumption,
use or sale therein.
NEW Entry 52 Omitted
COMMENT This means Entry Taxes, Octroi are subsumed are subsumed in
GST
(d) the
 taxes on luxuries, including taxes on entertainments, amusements, betting
and gambling or
 any other tax levied by the concerned State under the erstwhile entry 62 of
List-II (State List) of the Seventh Schedule to the Constitution;
OLD Entry 62 Taxes on luxuries, including taxes on entertainments,

amusements, betting and gambling.
NEW Entry 62 Taxes on entertainments and amusements to the extent
levied and collected by a Panchayat or a Municipality or a
Regional Council or a District Council.
COMMENT This means Luxury tax, Betting & Gambling tax subsumed.
Entertainment tax & Amusement tax levied by State are
subsumed but Entertainment Tax & Amusement tax levied by
local bodies are not subsumed.
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(e) the
 taxes on advertisement or
 any other tax levied by the concerned State under the erstwhile entry 55 of
List-II (State List) of the Seventh Schedule to the Constitution;
OLD Entry 55 Taxes on advertisements other than advertisements published

in the newspapers.
NEW Entry 55 Omitted
COMMENT This means Taxes on advertisement subsumed in GST
(f) the duties of excise on medicinal and toilet preparations levied by the Union but
collected and retained by the concerned State Government under the erstwhile
article 268 of the Constitution;
(g) any cess or surcharge or fee leviable under entry 66 read with entries 52, 54, 55
and 62 of List-II of the Seventh Schedule to the Constitution by the State Government
under any Act notified under sub-section (4), prior to the commencement of the
provisions of the Constitution (One Hundred and First Amendment) Act, 2016:
The mentioned Provided that the revenue collected during the base year in a State, net of refunds,
taxes will be under the following taxes shall not be included in the calculation of the base year
excluded from revenue for that State, namely:—
Base Year
revenue as there (a) any taxes levied under any Act enacted under the erstwhile entry 54 of
will NOT be any List-II (State List) of the Seventh Schedule to the Constitution, prior to the
loss of revenue coming into force of the provisions of the Constitution (One Hundred and
to states on the First Amendment) Act, 2016, on the sale or purchase of petroleum crude,
account of high speed diesel, motor spirit (commonly known as petrol), natural gas,
mentioned aviation turbine fuel and alcoholic liquor for human consumption;
transactions as
the earlier taxes Comment As petroleum crude, high speed diesel, motor spirit
will continue to (commonly known as petrol), natural gas, aviation turbine
be levied on fuel and alcoholic liquor for human consumption are NOT
Petrol and yet subsumed under GST therefore,
Alcoholic liquor
for HC and  VAT (levied on intra-state sale of goods) will continue
States will to be levied on the sale of petroleum crude, high
continue to speed diesel, motor spirit (commonly known as
generate their petrol), natural gas, aviation turbine fuel and
revenue alcoholic liquor for human consumption
(b) tax levied under the Central Sales Tax Act, 1956, on the sale or purchase
of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas, aviation turbine fuel and alcoholic liquor for human
consumption;
Comment As petroleum crude, high speed diesel, motor spirit

(commonly known as petrol), natural gas, aviation turbine
fuel and alcoholic liquor for human consumption are NOT
yet subsumed under GST therefore,
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 CST (levied on inter-state sale of goods) will continue

to be levied on the sale of petroleum crude, high
speed diesel, motor spirit (commonly known as
petrol), natural gas, aviation turbine fuel and
alcoholic liquor for human consumption
(c) any cess imposed by the State Government on the sale or purchase of
petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas, aviation turbine fuel and alcoholic liquor for human
consumption; and
(d) the entertainment tax levied by the State but collected by local bodies,
under any Act enacted under the erstwhile entry 62 of List-II (State List) of the
Seventh Schedule to the Constitution, prior to coming into force of the
provisions of the Constitution (One Hundred and First Amendment) Act,
2016.
2 Inclusion: In respect of the State of Jammu and Kashmir, the base year revenue shall include the
Service tax in the amount of tax collected on sale of services by the said State Government during the
J&K base year.
 Understanding:
Chapter V of Finance Act, 1994 has no reach to Jammu & Kashmir that why the
Jammu & Kashmir has its own levy of Service tax law.
Since this is being subsumed so this will be added to the base year revenue as it is
a state levy.
3 11 states In respect of the States mentioned in sub-clause (g) of clause (4) of article 279A of the
includes 7 sister Constitution, the amount of revenue foregone on account of exemptions or remission
states +Sikkim given by the said State Governments to promote industrial investment in the State,
+UK+HP+J&K with respect to such specific taxes referred to in sub-section (1), shall be included in
the total base year revenue of the State, subject to such conditions as may be
prescribed.
4 Acts subsuming The Acts of the Central Government and State Governments under which the specific
taxes shall be as taxes are being subsumed into the goods and services tax shall be such as may be
notified notified.
5 Basis- The base year revenue shall be calculated as per sub-sections (1), (2), (3) and (4) on
Revenue net of the basis of the figures of revenue collected and net of refunds given in that year, as
refunds audited by the Comptroller and Auditor-General of India.
Audited by CAG
6 Not credited, In respect of any State, if any part of revenues mentioned in sub-sections (1), (2), (3)
even then it shall and (4) are not credited in the Consolidated Fund of the respective State, the same
be included- shall be included in the total base year revenue of the State, subject to such
Accrual basis conditions as may be prescribed.
6. Projected revenue for any year:
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6 Projected The projected revenue for any year in a State shall be calculated by applying the
revenue for the projected growth rate over the base year revenue of that State.
year Illustration— If the base year revenue for 2015-16 for a concerned State, calculated
as per section 5 is one hundred rupees, then the projected revenue for financial year
2018-19 shall be as follows—
Projected Revenue for 2018-19-100 (1+14/100)^3
For all years:
Projected Revenue 100 (1+0.14)=114 100(1.14)=114

for 2016 – 17
Projected Revenue 114 (1+0.14)=129.96 100(1.14)^2=129.96
for 2017 – 18
Projected Revenue 129.96 (1+0.14)=148.154 100(1.14)^3=148.154
for 2018 – 19
for 2019 – 20
for 2020 – 21
for 2021 – 22
7. Calculation and release of compensation:
1 Compensation The compensation under this Act shall be payable to any State during the transition
is payable for period [5 years].
the transitional
period
2 Provisionally The compensation payable to a State shall be provisionally calculated and released at
released 2 the end of every two months period, and shall be finally calculated for every financial
monthly year after the receipt of final revenue figures, as audited by the Comptroller and
Auditor General of India:
Finalised at
year end as per
CAG report
Excess released PROVIDED that in case any excess amount has been released as compensation to a
shall be State in any financial year during the transition period, as per the audited figures of
adjusted in revenue collected, the excess amount so released shall be adjusted against the
future compensation amount payable to such State in the subsequent financial year.
3 a) The total compensation payable for any financial year during the transition period to
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Computation any State shall be calculated in the following manner, namely:––

of
Compensation (a) the projected revenue for any financial year during the transition period, which
for the could have accrued to a State in the absence of the goods and services tax, shall be
FINANCIAL calculated as per section 6;
YEAR
(Illustration: If the projected revenue for any year calculated as per section 6
is Rs. 100, the projected revenue that could be earned till the end of third
quarter for the purpose ofthis sub-section shall be Rs. 75.)
(b) & (c) (b) the actual revenue collected by a State in any financial year during the transition
>> Revenue period shall be—
(Sec 6) – SGST
earned – IGST (i) the actual revenue from State tax collected by the State, net of refunds
(apportioned) given by the said State under Chapters XI and XX of the State Goods and
= GST Services Tax Act;
Compensation
payable (ii) the integrated goods and services tax apportioned to that State; and
(iii) any collection of taxes on account of the taxes levied by the respective
State under the Acts specified in sub-section (4) of section 5, net of refunds of
such taxes, as certified by the Comptroller and Auditor-General of India;
(c) the total compensation payable in any financial year shall be the difference
between the projected revenue for any financial year and the actual revenue
collected by a State referred to in clause (b).
4 Computation The loss of revenue at the end of every two months period in any year for a State
of during the transition period shall be calculated, at the end of the said period, in the
Compensation following manner, namely:––
(a) (a) the projected revenue that could have been earned by the State in absence of the
th
5/6 of the goods and services tax till the end of the relevant two months period of the
projected respective financial year shall be calculated on a pro-rata basis as a percentage of the
revenue for the total projected revenue for any financial year during the transition period, calculated
FY in accordance with section 6.
Illustration—If the projected revenue for any year calculated in accordance with
section 6 is one hundred rupees, for calculating the projected revenue that could be
earned till the end of the period of ten months for the purpose of this sub-section
shall be 100x(5/6)=Rs.83.33.);
(b) & (c) (b) the actual revenue collected by a State till the end of relevant two months period
>> Prop in any financial year during the transition period shall be-
Revenue (Sec
6) – SGST (i) the actual revenue from State tax collected by the State, net of refunds
earned – IGST given by the State under Chapters XI and XX of the State Goods and Services
(apportioned) Tax Act;
– Amount
already paid= (ii) the integrated goods and services tax apportioned to that State, as
GST certified by the Principal Chief Controller of Accounts of the Central Board of
Compensation Excise and Customs; and
payable
(iii) any collection of taxes levied by the said State, under the Acts specified
in subsection (4) of section 5, net of refund of such taxes;
Page 340
(c) the provisional compensation payable to any State at the end of the relevant two
month period in any financial year shall be the difference between the projected
revenue till the end of the relevant period in accordance with clause (a) and the actual
revenue collected by a State in the said period as referred to in clause (b), reduced by
the provisional compensation paid to a State till the end of the previous two months
period in the said financial year during the transition period.
5 At the year end In case of any difference between the final compensation amount payable to a State
– calculated in accordance with the provisions of sub-section (3) upon receipt of the
as a result if audited revenue figures from the Comptroller and Auditor-General of India, and the
excess released total provisional compensation amount released to a State in the said financial year
in accordance with the provisions of sub-section (4), the same shall be adjusted
against release of compensation to the State in the subsequent financial year.
6 PY- Excess  Where no compensation is due to be released in any financial year, and in case
distributed any excess amount has been released to a State in the previous year,
CY- No
compensation  this amount shall be refunded by the State to the Central Government and such
payable amount shall be credited to the Fund in such manner as may be prescribed.
> The SG to
refund to CG
8. Levy and Collection of Cess:
1 Levy & There shall be levied a cess on such intra-State supplies of goods or services or both,
Collection as provided for in section 9 of the Central Goods and Services Tax Act, and such inter-
State supplies of goods or services or both as provided for in section 5 of the
Integrated Goods and Services Tax Act, and collected in such manner as may be
prescribed, on the recommendations of the Council, for the purposes of providing
compensation to the States for loss of revenue arising on account of implementation
of the goods and services tax with effect from the date from which the provisions of
the Central Goods and Services Tax Act is brought into force, for a period of five years
Proviso: or for such period as may be prescribed on the recommendations of the Council:
No cess on the
supplies made PROVIDED that no such cess shall be leviable on supplies made by a taxable person
by the taxable who has decided to opt for composition levy under section 10 of the Central Goods
person opting and Services Tax Act.
composition
scheme (Very Imp)
2 Cess is charged The cess shall be levied on such supplies of goods and services as are specified in
Page 341
at the column (2) of the Schedule, on the basis of value, quantity or on such basis at such
prescribed rate rate not exceeding the rate set forth in the corresponding entry in column (4) of the
Schedule, as the Central Government may, on the recommendations of the Council,
by notification in the Official Gazette, specify:
On VALUE as
per Sec 15 PROVIDED that where the cess is chargeable on any supply of goods or services or
both with reference to their value, for each such supply the value shall be determined
under section 15 of the Central Goods and Services Tax Act for all intra-State and
inter-State supplies of goods or services or both:
In case of
Import of PROVIDED further that the cess on goods imported into India shall be levied and
GOODS – Cess collected in accordance with the provisions of section 3 of the Customs Tariff Act,
is charged on 1975, at the point when duties of customs are levied on the said goods under section
the value as 12 of the Customs Act, 1962, on a value determined under the Customs Tariff Act,
per CTA, 1975 1975.
9. Returns, payments and refunds:
1 Every RTP shall Every taxable person, making a taxable supply of goods or services or both, shall—
furnish returns (a) pay the amount of cess as payable under this Act in such manner;
& shall pay the
dues & apply (b) furnish such returns in such forms, along with the returns to be filed under the
for refunds of Central Goods and Services Tax Act; and
CESS paid
(c) apply for refunds of such cess paid in such form, as may be prescribed.
2 Provisions & For all purposes of furnishing of returns and claiming refunds, except for the form to
rules of CGST be filed, the provisions of the Central Goods and Services Tax Act and the rules made
Act shall apply thereunder, shall, as far as may be, apply in relation to the levy and collection of the
irt levy & cess leviable under section 8 on all taxable supplies of goods or services or both, as
collection of they apply in relation to the levy and collection of central tax on such supplies under
Cess the said Act or the rules made thereunder.
10. Crediting proceeds of cess to Fund:
1 Cess collected to The proceeds of the cess leviable under section 8 and such other amounts as may be
be credited to recommended by the Council, shall be credited to a non-lapsable Fund known as the
GST Goods and Services Tax Compensation Fund, which shall form part of the public
Compensation account of India and shall be utilised for purposes specified in the said section.
Fund
2 Compensation All amounts payable to the States under section 7 shall be paid out of the Fund.
to be paid from
GST
Compensation
Fund
3 Balance left in Fifty percent of the amount remaining unutilized in the Fund at the end of the
the fund after transition period shall be transferred to the Consolidated Fund of India as the share of
the end of Centre, and the balance fifty per cent. shall be distributed amongst the States in the
transition period ratio of their total revenues from the State tax or THE UNION TERRITORY GOODS
of 5 years?? and SERVICES TAX, as the case may be, in the last year of the transition period.
Page 342
In the ratio of their total revenues

from the State tax or the Union
100 territory tax in the last year of the
transition period.
50 50
CG SG & UT
4 Audit by CAG &  The accounts relating to Fund shall be audited by the Comptroller and Auditor
expense shall be General of India or any person appointed by him at such intervals as may be
bourne by the specified by him and
CG
 any expenditure in connection with such audit shall be payable by the Central
Government to the Comptroller and Auditor-General of India.
5 The Accounts & The accounts of the Fund, as certified by the Comptroller and Auditor-General of India
Audit Report or any other person appointed by him in this behalf together with the audit report
shall be laid thereon shall be laid before each House of Parliament.
before LS & RS
11. Other provisions relating to cess:
1 Provisions & The provisions of the Central Goods and Services Tax Act, and the rules made
rules of CGST thereunder, including those relating to assessment, input tax credit, non-levy, short-
Act shall apply levy, interest, appeals, offences and penalties, shall, as far as may be, mutatis
irt levy & mutandis, apply, in relation to the levy and collection of the cess leviable under
collection of section 8 on the intra-State supply of goods and services, as they apply in relation to
Cess the levy and collection of central tax on such intra-State supplies under the said Act or
(Intra-state the rules made thereunder.
transactions)
2 Provisions & The provisions of the Integrated Goods and Services Tax Act, and the rules made
rules of IGST thereunder, including those relating to assessment, input tax credit, non-levy, short-
Act shall apply levy, interest, appeals, offences and penalties, shall, mutatis mutandis, apply in
irt levy & relation to the levy and collection of the cess leviable under section 8 on the inter
collection of State supply of goods and services, as they apply in relation to the levy and collection
Cess of integrated tax on such inter State supplies under the said Act or the rules made
(Inter-state thereunder:
Page 343
transactions)
OTL(Cess) XX PROVIDED that the input tax credit in respect of cess on supply of goods and services
ITC (Cess)(XX) leviable under section 8, shall be utilised only towards payment of said cess on
Net Cess XX supply of goods and services leviable under the said section.
(Very Imp)
12. Power to make rules:
1 Make rules to The Central Government shall, on the recommendations of the Council, by
carry out the notification in the Official Gazette, make rules for carrying out the provisions of this
provisions of Act.
the Act
2 Matters for In particular, and without prejudice to the generality of the foregoing power, such
which the rules rules may provide for all or any of the following matters, namely:—
can be made
(a) the conditions which were included in the total base year revenue of the States,
referred to in sub-clause (g) of clause (4) of article 279A of the Constitution, under
sub-section (3) of section 5;
(b) the conditions subject to which any part of revenues not credited in the
Consolidated Fund of the respective State shall be included in the total base year
revenue of the State, under sub-section (6) of section 5;
(c) the manner of refund of compensation by the States to the Central Government
under sub-section (6) of section 7;
(d) the manner of levy and collection of cess and the period of its imposition under
subsection (1) of section 8;
(e) the manner and forms for payment of cess, furnishing of returns and refund of
cess under sub-section (1) of section 9; and
(f) any other matter which is to be, or may be, prescribed, or in respect of which
provision is to be made, by rules.
Page 344
Page 345
Q
1) The GST (Compensation to States) Act, 2017 provides for compensation to the States for the loss of
revenue arising on account of implementation of the goods and services tax for the period of _____years
a) Four
b) Five
c) Six
d) Ten
2) The compensation shall be met out from _________

a) Compensation Cess
b) CGST Collection
c) SGST collection
3) The financial year______ shall be taken as base year for the purpose of calculating compensation amount
payable to the States.
a) 2014-15
b) 2015-16
c) 2013-14
d) 2012-13
4) Compensation to the States shall be based on the figures as audited by_______

a) Chartered Accountant
b) Cost Accountant
c) Company Secretary
d) Comptroller & Auditor General of India
5) The projected growth rate of revenue during transition period shall be _______
a) 12%
b) 13%
c) 14%
d) 15%
6) The compensation shall be released _______ on provisional basis and final adjustment shall be made
after getting audited accounts of the year from the Comptroller and Auditor General of India.
a) Quarterly
b) Bi-monthly
c) Half Yearly
d) Annually
7) The proceeds of the cess shall be credited to the non lapsable fund called ________
a) Consumer Welfare Fund
b) GST Compensation Fund
c) Investor Protection Fund
8) The balance if any left out in the GST compensation fund after five year shall be _______shared between
the Centre and the States.
a) 1:1
b) 3:2
c) 5:6
*9) Referring to the above question, from half of the portion allocated to the States. States and UTs gets:
Page 346
a) Equally
b) In the ratio of total revenues from the State tax or the Union territory tax in the last year of the transition
period
c) 5:6
10) For the purpose of computingactual revenue which forms the basis of release of compensation, who
certifies the amount of IGST apportioned to the respective State?
a) Comptroller & Auditor General of India
b) Principal Chief Controller of Accounts of CBEC
c) Chartered Accountant
d) Cost Accountants
11) No cess shall be leviable on supplies made by a taxable person who has decided to opt for __________ of
the Central Goods and Services Tax Act.
a) Regular Scheme
b) Composition Scheme
12) Input tax credit in respect of cess on supply of goods and services leviable under section 8, shall be
utilised only towards payment of ________ on supply of goods and services?
a) CGST
b) SGST
c) IGST
d) Compensation Cess
Q A Q A Q A Q A Q A
1) b 2) a 3) b 4) d 5) c
6) b 7) b 8) a 9) b 10) b
11) b 12) d
I can do it. I deserve it. I will get it.
End of story
Thanks...
Page 347

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CS EXECUTIVE CA ROHIT GAMBHIR

Jai Saraswati Maa

Lesson Description Page No

15. Returns 181

“god spent a long time crafting you and god

Let us understand the differences between the two:

Direct tax versus Indirect taxes

SN Particulars Direct Tax Indirect tax

3 Examples  Income Tax  Excise Duty

3 Examples  Income Tax  Goods & Service Tax

The 101st Constitution Amendment Act, 2016

-CA ROHIT GAMBHIR

2) France happens to be the first country which has implemented GST in

3) Malaysia is the most recent country to join the bandwagon (1 st Aril

29th Mar 2017 12th April 2017

10th Nov 2009

There would be 35 GST laws in

Particulars Excise Duty Sales Tax Service Custom

Cost = 100 Cost = 130

Pay = 143 Pay = 165

Cost = 100 Cost = 143

Pay = 143 Pay = 179.3

 Credits of input taxes paid at each stage will be available in

 However, there is NO integration of VAT with excise duty and service

Particulars Output Tax Liability ITC available or Cascading?

Trader VAT ED- No Yes

Service Provider ST ED- Yes Yes

1) Cascading Effect: Other reasons

 In case of manufacturer, VAT Illustration:

 Under the earlier powers provided in the Constitution, neither the

1) Cascading Effect: Other reasons

 Another contributing factor to tax cascading is the Central Sales tax

Cost = 100 Cost = 143

Pay = 143 Pay = 179.3

And this becomes the reason for adopting DESTINATIONBased tax

Central level State level

• Central Excise Duty, •State VAT,

Elimination of Developing Buoyancy

Mitigation of Boost ‘Make in

25 parts 448 Articles

11 part Article 246

Union List State List Concurrent

ED, ST, VAT, Entry tax, Bankruptcy,

Consequently, a constitutional amendment was

And thus amended the Constitution vide Constitution

Significant amendments made by the Constitution

1) “Goods and Services tax” means any tax on supply

2) Concurrent powers on Parliament and State

3) Levy of IGST on inter-State transactions of goods

4) On the following products, GST shall not be levied

And till then Excise Duty shall be levied

5) The Union Government shall retain the power to

6) Article 279A of the Constitution empowers the

President constituted the GST Council on 15th

 The Union Finance Minister is the Chairman of

The function of the Council is to make

2 Intra-state Location of supplier & Place of Supply is in

Central Tax & Integrated Tax

Central Tax State Tax Union Territory Integrated Tax

The CT is has replaced the existing central excise duty

CT would be administered by the CG.

ST would replace State VAT, Entry tax, Octroi, Luxury

ST would be administered by the State Governments.