AUDIT U/S 35(5) OF THE CGST ACT 2017 · accountant. U/S 35(5) having appointed by auditee having...

AUDIT U/S 35(5) OF THE CGST ACT 2017

CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE

INTRODUCTION While the GST regime emphasizes self-assessment processes, the complexities involved in it make one wary.

At this Juncture, it is clear that the GST law is not presently simple enough for an assesse to compute his total and taxable turnovers and duly report the same.

In order to ensure effective compliance with the various GST Provisions and to ensure performance of audits in a systematic, transparent and fair manner, audit provisions have been incorporated under the GST Acts( s)/ Rules.

Definition of audit under the CGST ACT

2017

In terms of Section 2(13) of the CGST Act, 2017, “audit” means the examination of

records, returns and other documents

Maintained or furnished

by the registered person under this Act or the rules made thereunder or under any other law for the time being in force

to verify the correctness of

turnover declared,

taxes paid,

refund claimed and

input tax credit availed, and

to assess his compliance

with the provisions of this Act or the rules made thereunder.

POINTS FOR Discussion

• Now issues arises

• In view of correctness of provisions or compliances(refer audit definition 2(13)- Whether Gst Audit is an Audit or is it a certification ?

• Whether Audit shall be carried out on test check or entire checking?

• What is the ceiling limit by ICAI for Gst Audit (No of Gst audit to be carried out) ?

• If there is a wrong audit/certification will auditor be liable to get fine/penalty/punishment under the Gst?


AUDIT Vis a vis certification

• The difference between term “Certificate” and “Report” is explained by ICAI in Para No.2.2 of its “Guidance Note

• on Audit Report and Certificates for Special Purpose” published in 1984 (revised 2016) as under;

• • “A Certificate is a written confirmation of the accuracy of facts stated therein and does not involve any estimate or opinion.”

• • “A Report, on the other hand, is a formal statement usually made after an enquiry, examination or review of specified matters under report and includes the reporting auditors opinion thereon”

• Chartered Accountant assures factual accuracy of contents to the users of certificate

• Chartered Accountant, through his audit report, expresses his opinion on truth and fairness of contents

• GST Audit Report is not an expression of opinion but it certifies the correctness of annual return filed by the auditee


Recommended ICAI 9 © • Para 2 2ND Line : “My/Our responsibility is to express a

view on the correctness/completeness and accuracy of the returns filed”

• Para 3 2nd Line :-” We plan and perform the audit to obtain reasonable assurance about whether the said accounts , records and statements are free of material misstatement . The audit includes examining on a test check basis, evidence supporting the amounts and disclosure in this audit report.

• Para 5 1st Line :- The following comments are subject to my/our observations and comments about non-compliance , short comings and deficiencies int the returns filed

• Now house has to decide Whether GST report tilts more towards certificate or audit report ?


Test check vis a vis Full check • GST Auditor to affirm that correctness of (source

Recommended ICAI 9 C and section 2(13)) slide 1

• (1) Computation of tax liability of Goods and / or services

• (2) Returns including Annual Return

• (3) Books of accounts and other related records and register

• (4) Aggregate of Outward supplies

• (5) Aggregate of Inward Supplies

• (6) Exemption and abatements claimed

• (7) Amount of credits determined as ineligible


Test check vis a vis entire check -slide 2

• (8)Classification of outward supplies, rate of tax and computation of output tax (including that of inward supplies liable to tax on reverse charge basis)

• (9) Amount of Inuput tax paid on inward supplies and deduction of input tax credit claimed

• (10) Various Reconciliation for Gst Audit

(Issue :- Whether Full checking should be done in case of an Auditor who is not a GST Consultant to Auditee for routine matters?


Selection of Effective and Sufficient Sample –SA 530 OF ICAI

• The auditor should design and select an audit sample, perform audit procedures thereon, and evaluate sample results so as to provide sufficient appropriate audit evidence

• Selection of sample will depend on following situation

• Q1- How GST was implemented?

• Q2-Present GST compliance whether manual or automated?

• Q3-What are the report available in system for Gst ie.

Support of accounting software/vendor Validation

of system generated reports

• Q4-Whether organisation has GST compliance team & if yes knowledge thereof ?

• Q5-Materiality/ risk to be determined based on ratio analysis

• Q6.Tolerable Misstatement:-A monetary amount set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the monetary amount set by the auditor is not exceeded by the actual misstatement in the population(Selection of Top 10 parties which covers 70% of business)

• Q7-Non Sampling Risk-The risk that the auditor reaches erroneous conclusion for any reason not related to sample risk(Export only 10 exports ,than no sampling ull check)


Selection of Effective and Sufficient Sample –SA 530 OF ICAI

• Sample Selection Method

• 1.Random Selection(applied through random number generators, for selection random number tables)

• 2. Systematic Selection:- in which the number of sampling units in the population is divided by the sample size to sampling interval for example 50, and having determined a starting point within the first 50, each 50 the sampling unit thereafter is selected.

• 3. Monetary Unit Sampling is a type of Value-weighted selection in which Sample Size, selection and evaluation results in a conclusion in monetary amounts

• 4.Haphazard selection, in which the auditor selects the sample without following a structured technique Although no structed technique is used, the auditor would nonetheless avoid any conscious bias or predictability(for example, avoiding difficult to locate items or always choosing or avoiding the first or last entries on a page) and thus attempts to ensure that all items in the population have a chance of selection.

• 5.Block Selection involves selection of a block(S) of contagious items within the population CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE

QUOTE

• “The skill of an accountant can always be ascertained by an inspection of his working papers.”—

• Robert H. Montgomery, Montgomery’s Auditing, 1912


Ceiling limit of Gst audit under the CGST 2017

• Company’s Act 2013(20) :-As per Section 141 (3)(g) The Audit “ The Limit is 20 company audit per person

• Tax Audit(60) :-The limit is 60 Tax Audit per Person (In the Council General Guidelines, 2008, the Council Guidelines No.1-CA(7)/02/2008, dated 8th August,2008, in Chapter VI "Tax Audit assignments under Section 44AB of the Income-tax Act, 1961 ", in Explanation given in Para 6.1, in sub-para(a) and sub-para(b), the figure "45" be substituted with the figure "60". )

• GST Audit Under CGST ACT 2017(NO Limit)-Maximum specified Number of audit is not defined.


Appointment as an Auditor for GST 1.Whether statutory auditors can be appointed as GST auditors ?

• Neither a ban under GST legislation nor under CA regulations

• Whether restrictions for appointment of statutory auditor where fee for other services is more than the statutory audit fee is applicable to GST auditors (Chapter IX of ICAI Guidelines) ?

2. Whether auditee can appoint joint auditors to conduct GST audit ?

• Neither a ban in GST legislation nor under CA regulations

• Joint auditors will have to sign the audit report

• If the auditors have different opinion, they should issue separate audit report [Refer SA 299]

3. Whether auditee has to appoint different auditors for his different registration or he can appoint single auditor for all its registrations ?

• It is at the discretion of the auditee

Issue:- Whether Registered Person can appoint Joint GST Auditor ,If Yes who will submit the Gst Report ?


DISQUALIFICATION FOR APPOINTMENT AS AN AUDITOR FOR GST-ICAI Code of

conduct • Member in a part time practice is not entitled to perform attestation function (242nd Council meeting resolution)

• An employee of a CA firm can have COP but is not eligible to perform

attestation function

• Only proprietor or partner of CA firm can perform attestation function

• A chartered accountant having substantial interest in the auditee cannot take up the audit (Clause 4 of Part I of the Second Schedule the Chartered Accountants Act, 1949)

• Refer Appendix 9 of CA Regulations 1988 for the meaning of term

‘Substantial interest’

• A chartered accountant who is responsible for writing or the maintenance of books of account of the auditee should not audit such auditee (Clause (4) of Part I of the Second Schedule to the Act).

• Internal auditor of an auditee cannot be appointed as his tax auditor (281st Council Meeting Resolution).

• A chartered accountant should not accept the GST audit of a person to whom he is indebted for more than Rs.10,000/- (Chapter X of ICAI Guidelines)


Code of conduct –ICAI some relevant provisions

• A chartered accountant cannot charge professional fees based on a percentage of profit or which are contingent upon the finding or the result of the professional employment. (Clause 10 of part I of the First Schedule to the CA Act, 1949).

• NOC:-Communication with the previous auditor is necessary in terms of Clause (8), Part – I of the First Schedule to the Chartered Accountants Act, 1949.

• Is it necessary to communicate with earlier VAT auditor (wherever applicable) for accepting audit for F.Y.

2017-18?

• Since both these audits are under different statutes, this may not be necessary


Coverage FOR INITIAL DISCUSSION

• TYPES OF GST AUDIT

• WHY GST AUDIT IS REQUIRED

• RELEVANT STATUTORY PROVISIONS OF GST AUDIT

• APPLICABILITY OF TURNOVER UNDER GST AND WHEHTER THRE IS NEED TO CONDUCT GST AUDIT STATE WISE

• FAQ-ON GST ANNUAL RETURN AND AUDIT


The Following 3 types of audits are prescribed under the GST Laws:

1] The 1st type of audit is called GST AUDIT is to be done by a chartered accountant or a cost

accountant. U/S 35(5) having appointed by auditee having turnover above prescribed limits

2] 2nd type of audit is called Department Audit(Audit by tax authorities) is to be done by the commissioner or any officer authorised by him in terms of section 65 of the CGST Act, 2017 read with section 20 of the IGST Act, 2017 and section 2 of UTGST Act, 2017.Commissioner can authorise Audit U/s 65 conducted based on the risk profile Lot of data with GSTN data analytics which will indicate patterns etc. Expected that there will be no audit for individual and sole proprietor assessee within Tax Audit Limits

3] The 3rd type of audit is called the Special Audit to be carried out by Chartered Accountant / Cost Accountant nominated by GST authorities and audit to be conducted under instructions of GST

authorities and is to be conducted under the mandate of section 66 of CGST Act,2017 read with Rule 102 of CGST Rules, 2017.Section 66-could in invoked in Scrutiny, enquiry, investigation-Value declared less or ITC not normal ,fraud , collusion , will mis-statement or suppression of facts suspected . Commissioner may direct the assessee to get books of accounts audited by Chartered Accountants or Cost Accountants .Cost of Audit will be borne by commissioner.

AUDIT UNDER GST LAWS – RELEVANT STATUTORY PROVISIONS

Class of registered persons liable for GST Audit:

Section 35 (5) of The CGST Act 2017 “Every registered person whose turnover during a financial year exceeds the prescribed limit (of RS. 2 crore ) shall get his accounts audited by a Chartered Accountant or a Cost Accountant”

Rule 80 (3) of the CGST Act 2017-Annual Return:- Every registered person whose aggregate turnover during a financial year exceeds two crore rupees shall get his accounts audited as specified under sub-section (5) of section 35 and he shall furnish a copy of audited annual accounts and a reconciliation statement, duly certified, in FORM GSTR-9C, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner.

Section 35(5) contain word turnover and

Rule 80 (3) contain word Aggregate Turnover

It is to be noted that Turnover is not defined in CGST ACT 2017 However Section 2(6) defines “Aggregate Turnover” and Section 2(112) defines “Turnover in state” or “turnover in Union Territory”

AUDIT UNDER GST LAWS – RELEVANT STATUTORY PROVISIONS Class of registered persons liable for GST Audit:

• The phrase ‘aggregate turnover’, as defined in Section 2(6) “aggregate turnover” means the aggregate value of all 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;

It would mean the all-India PAN based turnover for the financial year (inclusive of exports, inter-State supplies, exempt supplies, stock transfers, etc. but exclusive of GST and compensation cess). And Term Financial Year is not defined in the Act or Rules

A Careful perusal of above-definition reveals that first of all it is an exhaustive definition because the expression ‘Means” [ and not include] has been used.

[1] Value of all Taxable Suppliers. The term “ Taxable Supply” Means a supply of goods and services or both which is leviable to tax under the GST Acts.

2] Value of all exempt Supplies .The Term Exempt Supply Means supply of any goods and services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11 of the CGST Act/ SGST Act or under section 6 of the Integrated Goods and services Tax Act, Examples of ‘ Exempt Supply” are –Live bovine animals, Live swine, Live Fish, Melons, services by a Foreign Diplomatic Mission Located in India, service by way of admission to a Museum, National Park, Wildlife Sanctuary.

It is also worth highlighting here that the term “ exempt supply “ includes non- taxable supply also. The term ‘ Non-Taxable Supply “ means a supply of goods and service or both which is not leviable to tax under the CGST Act/ SGST Act or under the IGST Act.

Examples of non- taxable supply are Alcoholic Liguor for Human Consumption and five specified Petroleum Products i.e. Petroleum Crude, Motor Spirit ( Petrol) ,High Speed Diesel [ HSD] Natural Gas and Aviation Turbine Fuel [ ATF]

3] Value of Export of Goods and service or both and

4] Supplies to branches in other states having same permanent account Number [PAN]

However, following Exclusions shall be made while computing the value of Aggregate Turnover.

i] Value of Inward supplies on which tax is payable by a person on Reverse Charge basis. Examples of Supplies subject to Reverse Charge are –service provided by way of Sponsorship to any Body Corporate or Partnership Firm, services supplied by a Director of a company or Body Corporate to the said company or Body Corporate.

Ii] Central Tax, State Tax, Union Territory Tax, Integrated Tax and Cess.

Definition of turnover In state or union territory

(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all 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;

Issue:- For Gst Audit Which turnover will be considered either 2(6) “aggregate turnover “ or 2(85)“Turnover in State “?


ASSESSEES WHOSE ACCOUNTS ARE TO BE AUDITED

The threshold turnover limit of Rs.2 crore on pan India Basis.

1] Applicability of Turnover Limit for the period 01.07.2017 to 31.03.2018.

Since GST has been implemented with effect form 01.07.2017. As a consequence, during the financial year 2017-2018, GST remained in fore only for a period of nine months from 01.07.2017 to 31.03.2018 . Now , the question which arises here, is whether the above mentioned annual turnover limit of Rs. 2 crore for audit purposes shall apply proportionately in the given case for a period of nine months or whether the foregoing limit shall apply as it is for a period of nine months? A. Suitable and clarification form the Government ( s) is Required in this regard is awaited.

The ICAI has suggested a shorter audit for smaller assessees keeping in mind the cost and complexity of present law.

2] Conduct of GST Audit state- wise

It is worth emphasizing here that for audit purposes the turnover limit of Rs. 2 crore shall be computed by including turnover in all the states or Union territories, as the case may be i.e. on all India basis under same PAN, Further more, the foregoing threshold turnover limit of Rs. Two Crore is same for assesses in all the states and union Territories.

Thus, it can be safely inferred that no separate threshold limit has been specified for special category states

Since each of the state GST Acts also has the provisions relating to GST Audit, it appears that the GST audit shall be conducted state- wise.

It also appears that only for the purpose of determining the eligibility of the assesse who is required to get its accounts audited by a chartered accountant or a cost accountant, the all India based turnover shall be considered .

However, it shall be better if a suitable clarification from the Government (s) is issued in this regard at the earliest.

ISSUE :- Whether turnover of 2 crs will be counted from 01.07.2017 OR 01.04.2017?

Aggregate Turnover –issues related to GST Audit

• Issues:-

(1) Registered Person Turnover in Financial Statement is Rs.1.90 crs and in Returns is Rs. 2.10 crs?

(2)Registered in 11 states :-Entity Pan India aggregate turnover is 9crs, Maharashtra Turnover is 4 crs, other 10 each states 50 lakhs

(3) Registered in 5 states :- Entity Pan India aggregate turnover is 2.50 crs,turnover in Maharashtra 50 lakhs , Gujrat 60 lakhs,Delhi 20 lakhs,Rajasthan 100 lakhs and Punjab 20 lakhs

(4) Registered in 2 States=Entity Pan India Aggregate

Turnover is 3.20 lakhs=Rajasthan 3 crs , Sikkim 20 lakhs

(5) Registered in Maharashtra and having branch in Punjab as it deals with in exclusively exempt supply =Entity Pan India Turnover is 25 crs =Maharashtra 15 crs and turnover of exclusivery exempt supply in Punjab is Rs.10 crs

• Issue -Whether audit is required to be done each state ?



• Issues:-

• Whether turnover means turnover as per accounts or turnover declared in GST returns?

• The turnover definition speaks of value of the supplies

• The term ‘value’ is defined u/s 15 of the Act read with Rule 27 to 35 of CGST Rules

• Late filing fees for delay in submission of annual return is computed as percentage to turnover in the State

• Example – Inter state branch transfers do not form part of turnover reflected in accounts. However, it is a

supply liable to tax under GST legislation



Issues:- Whether turnover means how books of accounts have been maintained?

*Maintenance of Books of Accounts will depends on (a)Constitution of Entity,(b)Entity governed by specific law or not governed by specific law © Books as per Specific Law(d) Cash and Mercantile Book keeping

Issues :- Which act will govern maintenance of books of accounts?

*Companies Act read with Accounting Standard

Income tax Act read with ICDS

GST Act


aggregate Turnover –issues related to gst audit

• 2.How the turnover will be calculated for following industries (a) Forex dealers and money changer(Rule 32(2)),Air Travel Agents(Rule 32(3)),Life Insurance companies(Rule 32(4)),Dealer in second hand goods(Rule 32(5))?

• * Rule 32 prescribes presumptive valuation for above supplies .In GSTR 1 Return (Row no 4-Taxable outward supplies),the registered person is obliged to declare value as per invoice raised and also taxable value of such invoice.-Issues is Whether value of supply would be taxable value of the supply (presumptive value of supply)or invoice value of supply(actual turnover)?


Aggregate Turnover –issues related to GST Audit • Presumptive Value in Respect of Specified Supplies

• (1) Dealer in foreign currency

• Turnover as per books is the gross value of currency

exchanged

• Turnover under GST would be the margin as prescribed

under Rule 32(2) of CGST Rules

• (2) Air travel agent

• Turnover as per books is gross value of air tickets sold

• Turnover under GST would be 5% of basic fare for domestic travel

tickets and 10 % for international travel tickets [Rule 32(3) of

CGST Rules]

• (3) Life insurance business

• Turnover as per books is gross premium received

• Turnover under GST would be prescribed percentage of

premium received [Rule 32(4) of CGST Rules]

• (4) Dealer in second hand goods

• Turnover as per books is sale value of goods

• Turnover under GST would be margin prescribed under Rule

32(5) of CGST Rules CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE

FAQ:-GST annual return and audit

• 1. What is GSTR-9?

• Answer :- GSTR 9 is an annual return(section 44(1)) to be filed once in a year by the registered taxpayers under GST including those registered under composition levy scheme.

• RULE 80(3). Annual return.-(1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non resident taxable person, shall furnish an annual return as specified under sub-section (1) of section 44 electronically in FORM GSTR-9 through the common portal either directly or through a Facilitation Centre notified by the Commissioner: Following submission to be made;-

(a) Annual return u/s 44(1),

(b) Audited annual accounts / financial statements

© Reconciliation statement u/s 44(2), reconciling the value of supplies

declared in the return furnished for the financial year and audited

annual financial statements(GSTR 9C-AUDIT REPROT)

• It consists of details regarding the supplies made and received during the year under different tax heads i.e. CGST, SGSTand IGST. It consolidates the information furnished in the monthly/quarterly returns during the year.


Faq:- gst annual return and audit

• 2.Who should file GSTR-9 ?

• Answer :- Section 44 (1) mandate All the registered taxable persons under GST must file GSTR 9(Annual Return). However, following persons are not required to file GSTR 9

• Casual Taxable Person

• Input service distributors

• Non-resident taxable persons

• Persons paying TDS under section 51 of GST

Act.


Continuation of previous slide • Section 35(5) mandates audit of every registered

person having turnover exceeding Rs.2 Crs.

• Section 44 (2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

• As per section 44(1) Casual Taxable person and Non-resident taxable person are not required to file annual return CA AVINASH LALWANI-ONLY FOR EDUCTION PURPOSE

Issue :-

1.Whether causal or non-resident taxable person (having turnover exceeding Rs.2 crs) is required to get accounts audited, file audit report and Annual Return?

2. Whether person dealing exclusively in land or completed building is liable to Gst Audit?

3.Whether person dealing exclusively in securities is liable to GST Audit?

(Schedule III items ,Exempt or non taxable turnover entity is not liable to take registration hence GST audit is not required)


FAQ:-gst Annual return and audit

• 3. What are different types of return under GSTR-9 ?


GSTR 9 GSTR 9 should be filed by the regular taxpayers filing GSTR 1, GSTR 2, GSTR 3.

GSTR 9 A GSTR 9A should be filed by the persons registered under composition scheme under GST.

GSTR 9 B GSTR 9B should be filed by the e-commerce operators who have filed GSTR 8 during the financial year.

GSTR 9 C GSTR 9C should be filed by the taxpayers whose annual turnover exceeds Rs 2 crores during the financial year. All such taxpayers are also required to get their accounts audited and file a copy of audited annual accounts and reconciliation statement of tax already paid and tax payable as per audited accounts along with GSTR 9C. NOW ICAI HAS RECOMMENDED 9D ALONG WITH 9C


• 4. When is GSTR-9 due ? Section 44(1) mandates Registered Entity to submit GSTR-9 on or before 31st December of the subsequent financial year.For instance for FY 2017-18, the due date for filing GSTR 9 is 31st December, 2018.

Issues:-

1.Whether annual return and/or reconciliation can be revised subsequently?

2. Can one file annual return and annual accounts without filing audit report(GSTR 9C-Audit report)?

3.Is it the Registered persons(auditee’s) responsibility to submit prescribed documents and not that of the auditor’s?

4. In case of an entity having multiple registrations, the audited financial statement would mean financial statement of the entity as a whole or it would mean audited financial statements of registered establishments for which annual accounts are being filed ?



5. What is the Penalty for the late filing of GSTR-9 return ?

Section 47 (2) of CGST ACTLate fees for not filing the GSTR 9 within the due date is Rs. 100 per day per act up to a maximum of an amount calculated at a quarter percent of the taxpayer turnover in the state or union territory. Thus it is Rs 100 under CGST & 100 under SGST, total penalty is Rs 200 per day of default.

Issue:

1.Whether Penalty and late fee are different?

2. Whether Late fees imposed under CGST AND SGST will also be imposed under IGST?(refer viii-returns other than late fee of Section 20 of IGST ACT)



Submission of GST Audit Report :

Section 35(5) The registered person shall submit a copy of the audited annual accounts, the reconciliation statement (reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement), in Form GSTR-9C and other documents as may be prescribed, on the GST Common Portal. The detailed Rules/Guidelines regarding the audit procedures and the Audit Report Format, etc. are yet to be prescribed/notified.

Section 44 (2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

Issue :- Who is liable to furnish Audit report to GST Department?


Penal provision for non submission of gst audit report by auditee

• No specific provision prescribing penalty for not getting accounts audited or non-filing of audit report in FormNo. GSTR 9C

• Section 125 of the Act provides for residuary penalty of Rs. 25,000/- for contravention of any provision of the Act or Rules for which no penalty is prescribed

General penalty U/s. 125 can be levied for:

• Non-submission of Annual Accounts; and

• Non-filing / delayed filing of GSTR 9C

• Similar penal provision are there in State GST Act (Section 125 of MGST ACT) and also under IGST Act. (point xxi-offence and penalties Section 20 of IGST ACT and last para of section 20 of IGST ACT “Provided also that for the purposes of this Act, the value of a supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, and the Goods and Services Tax (Compensation toStates) Act, if charged separately by the supplier” )

ISSUE :- Would this mean that there will be separate penalties and late filing fees (under 3 different Acts) for one offence?


Penal Provisions • Relevant extract of Section 122(3) of Act: • • Any person who –

• (a) aids or abets any offences specified in section 122(1) of the Act

• (b) …. • (c) ….. • (d) fails to appear before officer of Central Tax, when

issues with a summons for appearance to give evidence or produce a document in inquiry

• (e) …… • Shall be liable to penalty which may extend to Rs.

25,000/-

Issue:- What is aids or abets as referred in (a) above?


• GST AUDIT UNDER SECTION 35(5)


COVERAGE FOR GST AUDIT

• GST AUDIT PLAN

• GST AUDIT PROGRAM

• ICAI SUGGESTED FORMAT FOR

• GST 9 (D) VERSION 1-FOR REGISTERD PERSON WHO IS HAVING TURNOVER BELOW 10 CRS

• GST 9 (D) VERSON 1-FOR REGISTERD PERSON WHO IS HAVING TURNOVER BELOW 10 CRS


PREPARATION FOR GST AUDIT

The GST Audit would be undertaken for the first time this year, and, therefore, demands significant preparation from both the auditor and the auditee. While the statutory audit (under the Companies Act, 2013) and tax audit (under the Income Tax Act, 1961) primarily rely on the financial records, the GST audit coverage would be larger.

It would be the duty of a Chartered Accountant/ Auditor to inform the auditee about the requirement of GST audit, mandatory documents and other preparations required from the auditee.

Suggested Gst audit plan • Preliminary

(a) Ascertain Scope

(b) Knowledge of Business

© Evaluate system and internal controls

• Plan and Action

(a) Desk Review

(b) Design Audit program and Substantive procedure

© Perform the audit

(d) Documentation

• Reporting

(a) Draft report and discussion

(b) Finalise the draft and report to management


suggested Key points may be included in gst audit program

• (1) Computation of tax liability of Goods and / or services

• (2) Returns including Annual Return

• (3) Books of accounts and other related records and register

• (4) Aggregate of Outward supplies

• (5) Aggregate of Inward Supplies

• (6) Exemption and abatements claimed

• (7) Amount of credits determined as ineligible

• (8)Classification of outward supplies, rate of tax and computation of output tax (including that of inward supplies liable to tax on reverse charge basis)

• (9) Amount of Input tax paid on inward supplies and deduction of input tax credit claimed

• (10) Various Reconciliation for Gst Audit

Suggest clients to Get annual return reviewed by GST AUDITOR, it will help to take corrective actions and reduce qualification in audit report.


• GST AUDIT –ICAI FORMAT


• RECONCILIATION TO 9 (C) AUDIT REPORT


Reconciliation Annexure A Net outward supplies after considering the return of supplies on which output tax is payable

SI NO PARTICULARS TOTAL

Revenue from operations

Other Income

Amount as per financials

Less Revenue /other Income pertaining to other registered/ distinct persons

Less Revenue items on which output GST is not payable

Zero rated without payment of tax-Export and supplies to SEZ

Deemed exports

Liable to tax under reverse charge mechanism

Wholly Exempt supplies

Partly Exempt Supplies (exempt portion)

Non- GST supplies

Not a supply as per Schedule III or the definition of supply



Amount as per financials ( in the state)

Add- Sale of Capital Assets

Unearned revenue (advances)

Section 15

Taxes, duties, cess etc levied under other laws charged by supplier

Amount incurred by recipient but liable to be paid by supplier

Interest, late fee or penalty for delayed payment of consideration

Incidental expenses charged by the supplier

Schedule I

Write off and disposal of business assets without consideration, if GST Credit was availed

Supply of goods/services by <<GSTIN>> to related persons/distinct persons

(i) To employees ( excluding gifts per employee up to Rs. 50,000)



(ii) To distinct persons having same PAN

(iii) To other related persons

Goods dispatched by GSTIN to agents to the extent sale is not made/ recognised

Any other ( please specify)

Less: Unbilled Revenue( considering the provisions of section 13(2) of the CGST Act,2017)

Revenue by way of supplies made through agents where tax paid in PY Upon initial dispatch

Revenue Omitted to be declared in the Annual Return

Revenue against which Time of supply has occurred in the previous year


Amount as per Annual Return ( in a state)

Reconciliation Annexure B Output tax payable including interest, fee, penalty and other levies

PARTICULARS TOTAL

Output tax

CGST

Total output tax payable determined under audit

Total output tax payable under annual returns

Difference

Reasons for difference: to be quantified





SGST

IGST

Compensation Cess

Reconciliation Annexure C Net inward supplies on which input tax credit has been taken

SR NO PARTICULARS TOTAL

Operational Expenses

Other expenses

Less Expenses pertaining to other registered persons/distinct persons

Less Expenses on which input tax credit is not available due to the following:

Not a supply as per Schedule III or the definition of supply

Inward supplies received from composition suppliers

Exempt inward supplies

Wholly Exempt Inward Supplies

Partly Exempt Inward Supplies ( Exempt portion)

Non- GST Inward supplies

Goods/ services are not used in the course or furtherance of business

Credit ineligible as the goods/services received are used wholly for effecting exempt supplies ( excluding exports)



Credit ineligible u/s 17(5) (a) : On motor vehicles and other conveyances

Credit ineligible u/s 17(5) (b)(i) : On food and beverages, outdoor catering, beauty treatment , health services, cosmetic and plastic surgery

Credit Ineligible u/s 17( 5) (b) (ii): On Membership of a club, health and fitness centre

Credit Ineligible u/s 17(5) (b)(iii): On rent –a-cab, life insurance and health insurance

Credit Ineligible u/s 17(5) (b) (iv): On travel benefits extended to employees on vacation

Credit Ineligible u/s 17 (5) ( c) : On works contract services when supplied for construction of an immovable property

Credit Ineligible u/s 17 (5) ( d) : On goods/ services received for construction of an immovable property on own account

Credit Ineligible u/s 17(5) (g) : On goods or services received or both used for personal consumption

Credit ineligible u/s 17(5) (h): On goods lost, stolen, destroyed

Credit ineligible u/s 17(5)(h): On goods written off:

Reconciliation Annexure C Net inward supplies on which input tax credit has been taken SR NO PARTICULARS TOTAL

Credit ineligible u/s 17 ( 5) (h) : On goods disposed of by way of gift:

Credit ineligible u/s 17 ( 5) (h) : On goods disposed of by way of free samples:

Credit ineligible u/s 17(5) (i): In respect of tax paid in accordance with the provisions of sections 74,129 and 130

Credit not taken as the recipient’s GSTIN was not mentioned/ mentioned incorrectly

Credit reversed u/s 17 (4) for a banking company / financial institution/ non banking financial company

Credit not taken as the place of supply is outside the state

Amount as per financials ( in the state)

Add Purchase of capital assets

Prepaid expenses

Expenses of previous year on which input tax credit has been taken this year

Section 15

Taxes, duties, cess etc levied under other laws charged by supplier



Amount incurred by recipient but liable to be paid by supplier

Interest, late fee or penalty for delayed payment of consideration

Incidental expenses charged by the supplier


Less Prepaid expense of previous years

Expenses omitted to be declared in the Annual Return

Expenses on which input tax credit will be taken in the subsequent year

Any other (please specify)

Amount as per Annual Return ( in a state)

Reconciliation Annexure D Tax payable ( Including interest, fee, penalty and other levies) on reverse charge inward supplies

Particulars Total

CGST

Total tax payable on reverse charge inward supplies determined under audit

Total tax payable on reverse charge inward supplies as per annual audit

Difference






SGST

IGST

Compensation cess

Reconciliation Annexure E Net input tax credit claimed on inward supplies considering all the reversals, reductions and reclamations of input tax credit

Particulars Total

CGST

Net input tax credit on all inward supplies determined under audit

Net input tax credit on all inward supplies as per the annual audit

Difference






SGST

IGST

Compensation cess

Reconciliation Annexure F Refund claimed

Particulars Total

CGST

Refund claimed as determined under audit

Refund claimed as per the annual return

Difference






SGST

IGST

Compensation cess

Reconciliation Annexure G Net outward supplies on which no output tax is payable

Particulars Total

Net outward supplies on which no output tax is payable as determined under audit

Net outward supplies on which no output tax is payable as per the annual return

Difference






Reconciliation Annexure H Net Inward Supplies ( including reverse charge inward supplies) on which no input tax credit has been taken

Particulars Total

Net inward supplies on which input tax credit has been taken as determined under audit

Net inward supplies on which input tax credit has been taken as per the annual return

Difference



H



• RECOMMENDED GST FORM GSTR – 9 D

• (RULE 80)

• Statement of particulars required to be furnished for the year ended March 31,2018 under Section 35(5) and 44 (2) of the CGST ACT read with corresponding provisions under the relevant State GST,UTGST and IGST Laws.


• PART A OF RECOMMENDED GST FORM GSTR -9D


1 Background of the registered Person

1. GSTIN of the registered person 2. Legal Name of Business 3. Trade Name of Business 4. E Mail address & Contact No. of the registered person 5. PAN 6. IEC Number 7. CIN (If Company), LLIP (If LLP), or Firm registration No.

(with registrar of Firms, if registered); any other – viz. Trust, AOP, etc.

8. List the registrations under other Indirect Tax Laws – Central Excise, Service Tax, Value Added tax and other state Commercial Tax Laws.

II GST profile of the registered person:

1. Centre/State Jurisdiction with range

2. Date of registration

3.Whether the registered person has obtained a new registration under the GST laws or migrated from the earlier laws

4. Constitution of Business – Proprietor, Partnership Firm, LLP, Company etc.

5. Category of the registered person – Regular / SEZ

6. Nature of Business – Works Contractor, Trader, Manufacturer, Job-worker etc.

7. Top 10 goods / services supplied (if lower than 10, state all) – To be provided along with classification including HSN details

8. Name, E mail address & contact no of the Primary Authorised Signatory’s

III Registration and place of business (under the same PAN)

1. Principal place of Business

2. Details of any addition/deletion in the additional place of business

3. Whether any registration as casual taxable person has been taken? If yes provide details thereof

4. GSTIN, Name and Principal Place of Business of:

a Business verticals, if any (including SEZ)

b ISD registration if any

5. Place of Business (Outside India)

6. Date of cancellation of registration (if any)

IV General Information

1. Name and version of accounting software used (if electronic records are being maintained, based on Management Information)

2. List of books of accounts/registers maintained 3. List of books of accounts/registers examined 4. Method of accounting employed for the year under audit 5. Method of valuation of closing stock 6. Whether tax audit under Sanction 44AB of the Income Tax Act, 1961 is

applicable to the registered person? If yes, whether the relevant report/returns are filed?

7. Is the registered person a supplier/E-Commerce operator covered under Section9(5) of the CGST Act, 2017?

8. Whether cost audit report under section 148 of the Companies Act,2013 is applicable to the registered person? If yes, whether the effect of such report has been considered?

V Changes during the year (if any)

1. Details of change in the nature of Business during the year

2. Details of change in the constitution of the registration person during the year – LLP to Company, Proprietor to Partnership etc.

3. Changes in the Business structure on account of sale, merger, demerger, amalgamation, lease or transfer of the Business

4. Change in the partners, members, etc. of the registered person

5. Changes in the scheme of payment and their effective dates (composition to Normal and Vice versa)

Accounts and records- preparation for gst audit

• Issue :- Whether Stock Records are to be maintained or compulsorily ? If Stock records are not maintained than How do we report?

*CGST Rules 56 (2) Every registered person, other than a person paying tax under section 10, shall maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof.

In case of stock records does not maintained by Registered Person, Whether Gst Auditor can issue proper disclosure for non maintenance of stock records in GST Audit Report.


Storage of goods at warehouses providing services of goods at various place

• Section 2(85) of CGST Act- “place of business” includes––

• (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or

• (b) a place where a taxable person maintains his books of account; or

• (c) a place where a taxable person is engaged in business through an agent, by whatever name called;

• Issue :- As per definition of 2(85) whether place of storage of goods i.e. ware house is Additional POB of Registered person entity? i.e. bonded ware house, ware houses facility at Bhiwandi ?


• PART A OF RECOMMENDED GST FORM GSTR -9D


I. Levy & Collection of Tax Annexure 1 1. Whether the following supplies effected by the registered person have

been considered in returns (if any)?

a. Sale

b. Transfer

c. Barter

d. Exchange

e. License

f .Rental

g .Lease

h .Disposal (including disposal of business asset as per schedule 1)

I .Other Services

j .Any other supplies (please specify)

Supplies effected by the registered person not considered in return Annexure-I

Note :- To be furnished based on books and records maintained by the registered

person

AMT AMT AMT AMT AMT

List of Supplies Taxable Value

CGST SGST/UTGST

IGST Compensation Cess

Remarks

Sale

Transfer

Barter

Exchange

License

Rental

Lease

Disposal

Other Services

Any Other Supplies ( Please Specify)

Definition‟s

• Transfer means to pass over, convey, relinquishment of a right, abandonment of a claim, alienate, each or any of the above acts, lawfully

• Barter means a “thing or commodity” given in exchange for another. In other words, no value is fixed- viz., bartering a wrist watch with a wall clock. While exchange means:

• Mutual grant of equal interests, the one in consideration of another.

• When two persons mutually transfer ownership inter-se, at a price agreed upon or for goods and / or services plus money

• Disposal means distribution, transferring to new hands, extinguishment of control over, forfeit or pass over control to another


Issue

• Examine the Sales Promotion polices and scheme during the year and Determination of Revenue and Gst Impact of all Samples ,Free supplies sales, Barter Activities as supply-Such transaction may not be accounted for in the books of accounts- for example-(a) Area sharing under Joint development agreement and impact of Gst thereon.(b) Services provided to SRA, MMRDA, MHADA, Municipal corporation for consideration in form of FSI, TDR or development potential Mutual promotions-TV channel promoting movies and movie stars promoting TV shows, Co-branding or co-promotion, credit card promotion(d) Exchange offers under promotion schemes(e) net working partner


AAR-MAHRASHTRA- Compensation received by tenant from Builder-is it supply • GST is applicable on compensation received by tenant for delayed possession of new premises: AAR*

July 2, 2018[2018] 95 taxmann.com 3 (AAR -MAHARASHTRA)

GST : Amount received by tenant of building premises towards alternate accommodation or delayed possession of new premises would be receipt of amounts for doing an act i.e. vacating premises for redevelopment as well as tolerating construction cum redevelopment work till possession of new redeveloped premises and further for tolerating an act of not having completed redevelopment period within time, same would be a 'supply' and therefore, GST to be levied on such amount

• The applicant was a tenant in building premises. The owner of said building premises entered into an agreement for redevelopment of said premises with a developer 'S'. Consequent to the said redevelopment agreement, the applicant was required to vacate the premises to facilitate the redevelopment of the building, by the developer.

• In the process, the applicant has agreed to do an act i.e. vacating the premises to facilitate the supply of service by the developer to the owner and for vacating the said premises; the applicant has received / is to receive compensation from the developer.

• The receipt of amounts towards alternate accommodation or delayed possession of premises would be receipt of amounts for doing an act i.e. vacating the premises for redevelopment as well as tolerating the construction cum redevelopment work till possession of new redeveloped premises as per agreement and further for tolerating an act i.e the act of not having completed the redevelopment work within 36 months. In view thereof, the same would definitely be a 'supply' and therefore, there arises an occasion to levy GST on said amount.

• Issue :- My building is in redevelopment. I receive rent of around 10 lakhs from builder, Whether I need to pay Gst on Rs.10 Lakhs?

• ( person is not in business of letting out of his house , so issue arises Whether I am in business of letting out or it is merely enjoyment of fruits of ownership? Citation =429 AIR 1962 SCR SUPL(3) 368-,That merely letting out property and collected rent is not trade or business and cannot be “in course or furtherance of business)


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AAR-FOOD EXPENSES

• A recent order of the Authority for Advance Ruling – Kerala has ruled, in a matter involving recovery of food expenses from employees for the canteen facility provided by a Company, that such recovery falls within the definition of ‘outward supply’ and are therefore taxable outward supplies under the GST law. In para 9 of the order, the AAR-Kerala has concluded that the supply of food by the applicant (Company) to its employees would definitely come under clause (b) of Section 2(17) as a transaction incidental or ancillary to the main business and thereby the test of ‘in the course or furtherance of business’ is met by the applicant. – Order No. CT/531/18-C3 dated


Import of service will be taxable in the hands of the recipient (importer):

• The word ‘supply’ includes import of a service, made for a consideration (‘consideration’ as defined in Section 2(31)) and whether or not in the course or furtherance of business. This implies that import of services even for personal consumption would qualify as ‘supply’ and therefore, would be liable to tax. This would not be subject to the threshold limit for registration, as tax would be payable in case of import of services on reverse charge basis, requiring the importer of service to compulsorily obtain registration in terms of Section 24(ii) of the Act. However, the GST law has ensured that persons who are not engaged in any business activities will not be required to obtain registration and pay tax under reverse charge mechanism, and it turn, requires the supplier of services located outside India, to obtain registration for the OIDAR (online information and database access and retrieval) services only

• Note: Import of services is included within the meaning of ‘supply’ under the CGST / SGST Acts. However, it would be liable to IGST since it would not be an intra-State supply. In fact, Section 2(21) of IGST Act has adopted the meaning of ‘supply’ from CGST/SGST Act.


Some faq

• Q1. In respect of exchange of goods, namely gold watch for restaurant services, will the transaction be taxable as two different supplies or will it taxable only in the hands of the main supplier?

• Ans. Yes, the transaction of exchange is specifically included in the scope of “supply” under Section 7. Thus, exchange could be taxable both ways. Provided the person exchanging gold watch is in the business of selling watches (A contrary view could also be taken. It depends on the facts of each and every case).

• Q2. What are examples of ‘disposals’ as used in ‘supply’?

• Ans. “Disposals” could include donation in kinds or supplies in a manner other than sale.

• Q3. Will a not-for-profit entity be liable to tax on any supplies effected by it – e.g.: sale of assets received as donation?

• Ans. Yes, it would be liable to tax on value as may be determined under Section 15, for said sale of donated assets.


suggested GST AUDIT VERFICATION in relation to-outward supply BRANCH/HO-INTERUNIT TRANSACTIONS

Detail of Transfer of Goods & services between two Different Distinct Entities with / without consideration( i.e.

(i) Branch/HO/Business Vertical transfers I/w and O/w), (ii) ISD invoices, (iii) cross charge-(a)Manpower and Hr Services(b)Software and IT Support Services ©

Advertising, marketing, brand promotion etc(d) Use of Intangible such as brand names, trademarks, technical knowhow etc etc).(Refer Schedule I of the CGST ACT)

(iv) Detail of Sale / Transfer to-from Branch/Ho of Capital Goods (used)-Cross Charge(Refer Schedule I of the CGST ACT)

(v) Detail of Sale / Transfer to-from Branch/Ho of motor vehicles (used)(Refer Schedule I of the CGST ACT) (vi) Detail GST on receipt of advances on services–1.7.2017 to till date (31.03.2018) and final adjustment thereof

(a) Advances received in HO is settled against sales of branch in other state and vice versa (b) Advance received in one branch settled against sales of branch in other state (c) Advances received and taxed in service tax regime and invoicing of said service is in GST

era


suggested GST AUDIT VERFICATION in relation to-outward supply

EMPLOYER/EMPLOYEE RECOVERIES

Organisation HR Policies and practices

Detail of each type of (I) Recoveries from Employees, Vendors, Service Providers etc for example (i)In case of Employees- Perquisites and facilities provided to employees(a) Canteen facilities(b)Pickup and drop facilities ©Car provided(d)Notice Pay Recovery –(Refer Schedule I of the CGST ACT)(Usually recovery of expenses is netted off against the expenses in the books of account. Such recoveries forms part of turnover in GST returns but may not be appearing as separate revenue item in profit and loss account)


suggested GST AUDIT VERFICATION in relation to-outward supply

PARTICULARS

Examine the policies related to related party transaction and Determine Supply to related party for example (a)Sharing of Common Premises(b) sharing of common infrastructure such as IT Systems, office infrastructure,© Sharing of common Human Resources and Management Resources(d) Corporate guarantee for each other and GST Impact thereon.( Related Person is defined under explanation to Section 15,Refer Schedule I of the CGST ACT)


Analysis of profit and loss account-income for gst audit

• Outward supplies not accounted as revenues–

stock transfers/cross billings,

overdue job works,

sale on approval basis,

employer-employee transactions,

disposal of business assets without consideration,

Bill To Ship To invoicing from vendors

• (Generally Outward supplies accounted for Local Supply , Inter State Supply , Branch Transfer ,Highsea Supply, Supply from Bonded Warehouse, Export Supply, Sez Supply, Deemed Supply)


Levy & Collection of Tax Annexure 2

2. Whether non-taxable supplies have been reported in the return?

Value of Non- Taxable Supplies Which have Not been Considered in the return –Annexure-2

Note :- To be furnished based on books and records maintained by the registered person

AMT

Description Total Value Remarks

Supply of Alcoholic liquor for human consumption

Supply of Petroleum crude

Supply of High Speed Diesel

Supply of Natural gas

Supply of aviation turbine fuel

Supply of motor spirit ( Commonly known as petrol)

High Sea Sales

Any other non taxable Supplies ( Please Specify)


3. Whether the tax liability for composite and mixed supply has been determined in accordance with Section 8 of the CGST Act,2017? If No, specify reasons/instances

Details of Composite and mixed Supplies not determined in accordance with Section 8 of the CGST Act 2017 Annexure-3- SLIDE 1

A. Composite Supplies Amt Amt Amt Amt Amt

Components of the composite supply

HSN/SAC of all such Components

HSN of Principal Supply

Rate of Tax applicable to the Principal Supply

Rate of tax as charged in the returns

Value of the Supplies

Differential CGST payable

Differential SGST/UTGST payable

Differential IGST payable

Differential Cess Payable

Remarks

Details of Composite and mixed Supplies not determined in accordance with Section 8 of the CGST Act 2017 Annexure-3-SLIDE 2

B. Mixed Supplies Amt Amt Amt Amt Amt

Components of the Mixed supply

HSN/SAC of all such Components

HSN of Supply on which the highest rate of tax is applicable

Rate of Tax applicable to such apply

Rate of tax as charged in the returns

Value of the Supplies

Differential CGST payable

Differential SGST/UTGST payable

Differential IGST payable

Differential Cess Payable

Remarks

DEFINITION OF composite or a mixed supply U/S 8 OF CGST ACT 2017 • 8. The tax liability on a composite or a mixed supply shall be determined in

the following 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.


Examples of Composite Supplies

• Some Illustrations and cases of composite supplies have been discussed in thefollowing paragraphs:

(1) Illustration (provided in Section 2(27)): 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 the principal supply. This implies that the supply will be taxed wholly as supply of goods.

(2) Para 5(3) of Circular No.32/06/2018-GST dated 12.02.2018 clarifies that “food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of health care and not separately taxable”. It also goes on to clarify further that supplies of food by hospital to patients (not admitted) or their attendants or visitors are taxable.


Examples of Composite Supplies • Circular No.11/11/2017-GST dated 20.10.2017 has provided clarification on • treatment of printing contracts. It is clarified that :In the case of printing of

books, pamphlets, brochures, annual reports, and the like, where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs while the physical inputs including paper used for printing belong to the printer, supply of printing of the content supplied by the recipient of supply is the principal supply.

• In case of supply of printed envelopes, letter cards, printed boxes, tissues ,napkins, wall paper etc. falling under Chapter 48 or 49, printed with design ,logo etc. supplied by the recipient of goods but made using physical inputs including paper belonging to the printer, the predominant supply is that of goods and the supply of printing of the content supplied by the recipient of supply is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods falling under respective headings of Chapter 48 or 49 of the Customs Tariff.


Examples of Composite Supplies • Circular No. 34/8/2018-GST dated 01.03.2018 provides a clarification on some matters including

the following:

• The activity of bus body building is a composite supply. As regards which of the components is the principal supply, the Circular directs that it be determined on the basis of facts and circumstances of each case.

• Re-treading of tyres– In re-treading of tyres, which is a composite supply, the pre-dominant element is the process of re-treading which is a supply of service, and the rubber used for re-treading is an ancillary supply. The Circular also specifies that “Value may be one of the guiding factors in this determination, but not the sole factor. The primary question that should be asked is what is the essential nature of the composite supply and which element of the supply imparts that essential nature to the composite supply”.

• Other examples: If a contract is entered for (i) supply of certain goods and erection and installation of the same thereto or (ii) supply of certain goods along with installation and warranty thereto, it is important to note that these are naturally bundled and therefore would qualify as ‘composite supply’. Accordingly, it would qualify as supply of the goods therein, which is essentially the principal supply in the contract. Thus, the value attributable to erection andinstallation or installation and warranty thereto will also be taxable as if they are supply of the goods therein.


Example of Mixed Supply • Some Illustrations and cases of mixed supplies have been discussed in

thefollowing paragraphs:

• Illustration (provided in Section 2(66)): A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink 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. This implies that the supply will be taxed wholly as supply of those goods which are liable to the highest rate of GST.

• Other examples: 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%) 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).


Test for Composite/Mixed:-While there are no infallible tests for such determination, the following guiding principles could be adopted to determine whether a supply would be a composite supply or a mixed supply. However, every supply should be independently analysed.

Description Composite Supply

Mixed Supply

Naturally bundled YES NO

Each supply available for supply individually NO YES/NO

One is predominant supply for recipient YES YES/NO

Other supply(ies) are ancillary or they are received because of predominant supply

YES NO

Each supply priced separately YES/NO NO

Supplied together YES YES

All supplies can be goods YES YES

All supplies can be services YES YES

A combination of one / more goods and one / more services

YES YES



4. Details of inward supply of notified goods/services liable to tax under reverse charge mechanism u/s 9(3) of the CGST Act, read with section 5(3) of the IGST Act, on which tax has not been remitted

5. Details of inward supply of taxable goods/services effected from unregistered persons liable to tax under reverse charge mechanism u/s 9(4) of the CGST Act, read with section 5(4) of the IGST Act, on which tax has not been remitted

Details of inward supplies on which tax payable under reverse charge mechanism ( RCM) has not been remitted Annexure-4-SLIDE 1

A. Notified inward Supplies liable to tax on RCM u/s 9(3)

Amt Amt Amt Amt Amt

Description of the goods/ Service

HSN/SAC Tax Rate Taxable Value

CGST SGST/UTGST


Remarks

Details of inward supplies on which tax payable under reverse charge mechanism ( RCM) has not been remitted Annexure-4-SLIDE 2

B. Inward Supplies liable to tax on RCM on account of supplies made by unregistered person u/s 9 ( 4 )

Amt Amt Amt Amt Amt

Description of the goods/ Service

HSN/SAC Of all such Components

Rate of tax applicable to such Supply

Taxable Value

CGST SGST/ UTGST


Remarks

Definitions • Levy and collection.

• CGST ACT 9 (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both

• IGST ACT 5 (3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.


RCM Impact – Section 9 (3)

• Analyse GST on Section 9(3) expenses.

Freight Payments –Type of tax

Ocean Freight

Advocate Payments

Forex gain/ loss,

Legal Expenses,

Professional services,

Advertisement & marketing,

Fees & licences


Definitions • Levy and collection.

• CGST ACT 9 (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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.

• IGST ACT 5(4) The integrated tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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.


RCM Impact – Section 9 (4)

• Analyse GST on Section 9(4) expenses.

Law was applicable only upto13th October 2017

Self Invoice.

Aggregate Rs.5,000/-in a day (accounting or

invoicing or payment)

Time of Supply

Timing of ITC

rate of tax,

type of tax,

eligibility of credits



6. a) Whether any exemption notifications or special orders under the Act are applicable to the registered person? Provide summary of such supplies

b) Specify cases of non-compliance with the attached conditions

c) Provide instances where the registered person, despite being eligible to avail the benefit of any exemptions, has failed to claim the same

d) Whether classification of outward supplies/inward supplies liable to tax under reverse charge mechanism is in accordance with Schedules / Notifications / Circulars, etc. If not, provide details? Disclose the details where the supplier has offered the tax instead of the recipient

Summary of exempted Supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect

classification Annexure-5-Slide 1

A. Summary of Exempted Supplies

Notification No Entry Description HSN Remarks

Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification Annexure-5-slide 2

B. Non Compliance with Conditions for Claiming Exemption

Amt Amt Amt Amt Amt

Notification No

Entry Description

HSN Condition Violated

Taxable Value

CGST Payable

SGST/ UTGST Payable

IGST Payable

Cess Payable

Remarks

Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification Annexure-5-slide3 C. Foregone benefit of exemption Amt Amt Amt Amt Amt

Notification No

Entry Description

HSN Value of exempt supplies

Taxable Value

CGST Payable

SGST/ UTGST Payable

IGST Payable

Cess Paid

Remarks

Summary of exempted supplies, non-compliance with condition for exemption, foregone benefit of exemption and incorrect classification Annexure-5-SLIDE 4

D. Incorrect Classification of outward supplies/ inward supplies liable to reverse charge

Amt Amt Amt Amt Amt

Description

Applicable HSN

Rate of tax applicable

Rate of tax as per the return

Taxable Value

( Excess CGST paid) / CGST payable

( Excess SGST paid) / SGST payable

( Excess IGST paid) / IGST payable

( Excess Cess paid) / Cess payable

Remarks

AAR RULING –Registration-Exempt Income • Issue:-Whether the applicant will be liable for registration under any

clause of Section 24 of the GST Act even if it is not making any taxable supply?

• (West Bengal-01/WBAAR/2017-18 dated 21/03/2018 incase of Joint Plant Committee )

• Facts :- Point no 4. It appears from the statement of accounts for the year ending on 31/03/2017, submitted along with the Application, that the main source of the Applicant’s income is interest accrued on the deposits and on the loans provided from the Steel Development Fund. A secondary source of income is the consideration received from sale of journals and periodicals and from renting accommodation in its guest houses. The aggregate turnover from these sources well exceeds the threshold of twenty lakh rupees and makes it liable for registration under Section 22 (1) of the GST Act, provided it does not make exclusively supply of goods or services that are not liable to tax or wholly exempt from tax under the GST Act.

• 5. The Applicant’s supplies of journals and periodicals are wholly exempt under serial no. 120 of Notification No. 2/2017 – Central Tax (Rate) dated 28/06/2017 (1126 – FT dated 28/06/2017 under the WBGST Act, 2017; hereinafter referred to as “the State Tax”) (Tariff head: 4907).


AAR RULING –Registration-Exempt Income

• 7. Moreover, it is stated to be charging room rent below Rs. 1000/- per day per unit for accommodation in its guest houses, which is an exempt supply under serial no. 14 of the Exemption Notifications for Services.

• 8. The Applicant declares it makes no other supplies of goods or services.

• 9. However, as already seen, the main source of the Applicant’s income is the interest consideration received by way of interest on services like extending deposits, loans or advances. This service, also, is wholly exempt under Serial no. 27 of the Exemption Notifications for Services (Tariff head: 9971).

• RULING

• The Applicant is not required to be registered under the GST Act if he is not otherwise liable to pay tax under reverse charge under section 9(3) of the GST Act.


ADVANCE RULING NO. GUJ/GAAR/RULING/2018/4 (IN APPLICATION NO. Advance

Ruling/SGST&CGST/2017-18/AR/21) Date : 20.03.2018. , M/s. Rishi Shipping

• 6.2 The applicant has submitted in the application that as a part of the services, it provides service of warehouse / space on rent to the customers, where they (customers of applicant) store imported agricultural commodities. Therefore, an issue arises whether the service of providing warehouse/ space on rent can be considered as ‘storage or warehousing’ service or ‘renting of storage premises’.

• 6.3 In this regard, we observe that there is difference between ‘storage or warehousing’ service and ‘renting of storage premises’ service. The ‘storage and warehousing service’ provider normally make arrangement for space to keep the goods, loading, unloading and stacking of goods in the storage area, keeps inventory of goods, makes security arrangements and provide insurance cover etc. In a case where a person only rents the storage premises, he does not provide any service such as loading / unloading, stacking, security etc. Mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods.

• R U L I N G

• The service provided by M/s. Rishi Shipping (GSTIN 24ABCPM8333P1ZA) is classifiable as ‘Rental or leasing services involving own or leased non-residential property’ (Service Accounting Code – 9972) leviable to Goods and Services Tax @ 18%.

• Note:= Due care may be taken while classifying Revenue of Registered Person


Levy & Collection of Tax 7. Whether the registered person availing option to supply for export without payment of

integrated tax has paid the tax along with interest on failure to :

a) Export goods within 3 months (or a further period allowed by the Commissioner) from the date of issue of invoice.

b) Receive payment in convertible foreign exchange within 1 Year (or a further period allowed by the Commissioner) from the date of issue of invoice

If not, please indicate the amount of tax payable along with the taxable value

8. Whether any goods have been subject matter of detention/seizure or confiscation as per Section 129 and 130 of the CGST Act 2017 on which any tax, interest or penalty has been determined as payable as per the order of the proper officer? If yes, whether the said liability has been discharged?

---------END OF Levy and Collection of Tax--------

Section 129 and Section 130 of the CGST ACT 2017

• Detention, seizure and release of goods and conveyances in transit.

• CGST SEC 129. (1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released.

• Confiscation of goods or conveyances and levy of penalty.

• 130. (1) Notwithstanding anything contained in this Act, if any person—

• (i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

• (ii) does not account for any goods on which he is liable to pay tax under this Act; or

• (iii) supplies any goods liable to tax under this Act without having applied for registration; or

• (iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or

• (v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.


II Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act) Annexure 6

1. Specify instances where tax has not been paid in accordance with Section 12/13 read with Section 31 of the CGST Act, 2017

Details of Transactions where tax has not been paid in accordance with the provisions of time of supply Annexure-6-slide 1

Amt Amt Amt Amt Amt

Nature of Supply Basis as per law

Basis Followed

Value of such supply

CGST Interest

SGST/ UTGST Interest

IGST Interest

Cess Interest

Remarks

a) Time of supply of

goods i) Other than reverse charge

ii) Reverse Charge

iii) Continuous supply of goods

iv) Supply of Vouchers

v) Where not possible to determine as per the above

vi) Delayed payment of consideration

vii) Any other, please specify

Details of Transactions where tax has not been paid in accordance with the provisions of time of supply Annexure-6-slide 2

Amt Amt Amt Amt Amt

Nature of Supply Basis as per law

Basis Followed


CGST Interest

SGST/ UTGST Interest

IGST Interest

Cess Interest

Remarks

a) Time of supply of Service i) Other than reverse charge

ii) Reverse Charge

iii) Continuous supply of goods

iv) Supply of Vouchers

v) Where not possible to determine as per the above

vi) Delayed payment of consideration

vii) Any other, please specify

Time of Supply of Goods – Sec 12(2)

© Indirect Taxes Committee, ICAI

113

As per Section 12(2) of CGST ACT, time of supply of goods shall be earlier of invoice/ payment, i.e., –

Actual date of issue of invoice by the supplier

Due date for issue of invoice by the supplier [Section 31(1)*]:

- Supply involves movement: Time of removal of goods for supply

- Continuous Supply: Date of issue of statement

- Sale on approval basis: Earlier of time at which it becomes known that the supply has taken place OR 6 months from date of removal

- Other cases: Delivery of goods/ making available to the recipient or

- Notified categories of supplies: Time to be specified by Rules

Date on which payment is entered in the books of Accounts of supplier

Date on which payment is credited to the supplier‟s bank a/c

*Where payment is received in advance, the Supplier shall issue a receipt voucher, and NOT a

tax invoice

Time of Supply of Goods – Sec 12(2) Illustrations


114

Section 12(2) Invoice date Invoice due date

Payment entry in

supplier's books

Credit in bank

account Time of supply

1 Invoice raised before removal 10-Oct-17 20-Oct-17 26-Oct-17 30-Oct-17 10-Oct-17

2 Advance received 30-Oct-17 20-Oct-17 10-Oct-17 30-Oct-17 10-Oct-17



115

Supply involves movement of goods Section 12(2) r/w Section 31(1)(a)

Invoice/ document

date

Removal of goods

Delivery of goods

Receipt of payment

Time of supply

3 Delayed issue of invoice 26-Oct-17 20-Oct-17 26-Oct-17 26-Oct-17 20-Oct-17

4 Inter-State stock transfer 10-Oct-17 20-Oct-17 26-Oct-17 - 10-Oct-17

5 Advance received, invoice for full amount issued on same day (40% advance, 60% post supply payment)

30-Oct-17 10-Nov-17 14-Nov-17

30-Oct-17 30-Oct-17

20-Nov-17 30-Oct-17



116

Supply otherwise than by involving movement of goods Section 12(2) r/w Section 31(1)(b)

Invoice date Receipt of invoice by recipient

Delivery of goods

Receipt of payment

Time of supply

6 Delayed issue of invoice 30-Oct-17 05-Nov-17 26-Oct-17 10-Nov-17 26-Oct-17

7 Invoice issued prior to delivery 20-Oct-17 10-Nov-17 26-Oct-17 10-Nov-17 20-Oct-17

Continuous supply of goods Section 12(2) r/w Section 31(4)

Invoice date Removal of

goods

SoA/ payments due

date

Receipt of payment

Time of supply

8

Contract provides for successive statements of account/ successive payments

01-Nov-17 15-Oct-17

05-Nov-17 01-Nov-17 01-Nov-17 25-Oct-17

9 11-Dec-17 08-Nov-17

05-Dec-17 11-Dec-17 05-Dec-17 30-Nov-17

10

08-Jan-18

14-Dec-17 05-Jan-18 01-Jan-18 01-Jan-18

23-Dec-17

Time of Supply of Services – Sec 13(2)


If invoice not issued within 30 days

(45 days in case of Banking, Insurance,

Financial Institution or NBFC company)

117

If both cases do not apply

*Where payment is received in advance, the Supplier shall issue a receipt voucher, and NOT a

tax invoice

Date on which recipient shows in

his books of accounts

Date of completion of service or

payment, whichever is earlier

If invoice issued within prescribed time u/s

31(2) - 30 days (45 days in case of Banking,

Insurance, Financial Institution or NBFC

company)

Date of issue of Invoice or

Payment, whichever is earlier

*Where payment of Rs. 1000/- is received in advance, then time of supply for goods or services is

date of issue of invoice

Time of Supply of Services – Sec 13(2) Illustrations


118

Section 13(2) Invoice date Invoice due date

Payment entry in

supplier's books

Credit in bank

account Time of supply

1 Invoice raised before completion of service

10-Oct-17 20-Oct-17 26-Oct-17 30-Oct-17 10-Oct-17

2 Advance received 30-Oct-17 20-Oct-17 10-Oct-17 30-Oct-17 10-Oct-17



119

Based on due date for invoicing Section 13(2) r/w Section 31(2) r/w Invoice Rule - 2

Invoice date Commencem

ent of service

Completion of service

Receipt of payment

Time of supply

3 Delayed issue of invoice 26-Dec-17 20-Oct-17 16-Nov-17 28-Jan-18 16-Dec-17

4 Advance received, invoice for full amount issued on same day (40% advance, 60% post supply payment)

30-Oct-17 30-Oct-17 30-Dec-17

30-Oct-17 30-Oct-17

04-Dec-17 30-Oct-17



120

Continuous supply of services Section 13(2) r/w Section 31(5)

Invoice date Date as per

contract Receipt of payment

Entry of provision of services in

books

Time of supply

5

Section 31(5)(a) Contract provides for payments monthly on the 10th of succeeding month

02-Nov-17 10-Nov-17 15-Nov-17 31-Oct-17 02-Nov-17

17-Dec-17 10-Dec-17 15-Dec-17 30-Nov-17 10-Dec-17

10-Jan-18 10-Jan-18 06-Jan-18 31-Dec-17 06-Jan-18

6

Section 31(5)(c) 12-Nov-17 10-Nov-17 25-Nov-17 12-Nov-17 10-Nov-17

Contract provides for payments on completion of event. Recipient to pay within 1 month from date of completion

24-Apr-18 24-Apr-18 20-Apr-18 24-Apr-18 20-Apr-18

Time of Supply of Goods / Services - Reverse Charge – Sec 12(3) / 13(3)

© Indirect Taxes Committee, ICAI 121

Date on which payment is entered in the books of recipient

Date on which payment is debited to the recipient‟s bank a/c

31st day (in case of goods) / 61st day (in case of services) from the date of issue of invoice by supplier Note: This factor is not relevant in case of services from a supplier being an associated enterprise outside India

Where it is not possible to determine time of supply in the 3 other cases: Date of entry in the books of account of the recipient

Where tax liable to be paid on reverse charge basis, the time of supply of goods/services shall be earliest of

Note: On the date of receipt of goods (or services) from a supplier being an

unregistered person, the recipient shall issue an invoice [Section 31(3)]



Note: On the date of receipt of goods (or services) from a supplier being an

unregistered person, the recipient shall issue an invoice [Section 31(3)]

Reverse charge Section 12(3)

Date of invoice issued

by supplier

Removal of goods

Receipt of goods

Payment by recipient

Time of supply

1 General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17

2 Advance paid 31-Oct-17 31-Oct-17 20-Nov-17 05-Nov-17 05-Nov-17

3 No payment made for the supply

31-Oct-17 30-Dec-17 05-Jan-18 - 30-Nov-17



Reverse charge Section 13(3)

Date of invoice issued

by supplier

Date of completion of

service

Payment by recipient

Entry of receipt of services in recipient's

books

Time of supply

4 General 31-Oct-17 31-Oct-17 20-Nov-17 30-Nov-17 20-Nov-17

5 Advance paid 31-Oct-17 31-Oct-17 05-Nov-17 31-Oct-17 05-Nov-17

6 Delay in payment (Max. 60 days from date of invoice)

31-Oct-17 31-Oct-17 10-Jan-18 31-Oct-17 31-Dec-17

7 Service received from associated enterprise located outside India (No time extension allowed)

31-Oct-17 30-Nov-17 05-Apr-18 31-Mar-18 31-Mar-18

8 Service by unregistered person, no payment made

- 30-Nov-17 - 05-Dec-17 05-Dec-17

Time of Supply of Vouchers – Sec 12(4)/13(4)


Time of supply in case of supply of voucher–

Date of issue – If supply is identifiable at the point of issue of voucher

Date of redemption of voucher – Other cases

Note: Voucher – can be for goods or services

Time of Supply of Vouchers – Sec 12(4)/13(4)


Issue of vouchers Section 13(4) [or Section 12(4)]

First service/ delivery of

goods

Issue of voucher

Redemption of voucher

Last date for acceptance of

voucher Time of supply

1

Voucher issued to a recipient after supply of a service [or specific goods], for the same service - valid for 1 year

01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 01-Nov-17

2

Voucher issued to a recipient of machinery along at the time of delivery, for availing repair services [or specific goods] worth Rs. 5,000 - valid for 1 year

01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 01-Nov-17

3

Voucher issued to a recipient after supply of a service, for any other services or goods across India, - valid for 1 year

01-Nov-17 01-Nov-17 14-Dec-17 30-Oct-18 14-Dec-17

4 Gift voucher for Rs. 1,500 for services [or goods]- valid for 6 months

- 01-Nov-17 25-Dec-17 31-Mar-18 01-Nov-17

Residual Provision – Sec 12(5) / 13(5)


Where it is not possible to determine the time of supply under any of the circumstances discussed, it shall be determined as:

Due date for filing of such return – If periodical return has to be filed

Date on which the Tax is paid – Other cases


Time of supply for value addition by way of

Interest,

Late Fees,

Penalty

For Delayed payment of

Consideration shall be

Date on which the supplier receives such addition in value

Time of Supply of Goods / Services - Value Addition –

Sec 12(6) / 13(6)-(Point vi of Annexure 6- Delayed

payment of consideration)

II. Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act) Annexure 7

2. Whether there was a change in rate of tax on the goods or services or both supplied during the year? Provide details where the effect of the change has not been provided same in all cases

Details of Transaction on which the effect of change in rate of tax has not been provided

Annexure-7

Description of goods and/or services

HSN Notification No

Effective date of new rate

Rate before change

Rate after change

Aggregate value of supplies made under the wrong rate

( Excess CGST Paid)/ CGST payable

( Excess SGST Paid)/ SGST payable

( Excess IGST Paid)/ IGST payable

( Excess Cess paid)/ Cess Payable

Remarks

Change in rate of tax in respect of supply of goods or services – Sec 14


Date of supply

of goods or

services

Date of

invoice

Date of

receipt of

payment

Time of supply Rate of tax

(1) (2) (3) (4) (5)

Before After After Earlier of (2) and (3) New

Before Before After (2) Old

Before After Before (3) Old

After Before After (3) New

After Before Before Earlier of (2) and (3) Old

After After Before (2) New

II Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act) Annexure 8

3. Details of supply of services where the supply ceased prior to completion, and no tax has been discharged thereon

Details of outward supply of service where services ceases prior to completion but not taxes discharged Annexure-8

Description of service

HSN Rate Reason for cessation

Total value agreed upon

Value upto cessation of service

CGST payable

SGST/ UTGST payable

IGST payable

Cess payable

Remarks

Section 31(6) supply of services ceases -TAX INVOICE, CREDIT AND DEBIT NOTES • 31 (6) In a case where the supply of services ceases under a contract

before the completion of the supply, the invoice shall be issued at the time when the supply ceases and such invoice shall be issued to the extent of the supply made before such cessation.


II Time of Supply (Verification of Compliance with Section 12,13 and 14 of the Act)

Annexure 9

4. Details of supply of goods on ‘sale on approval basis’ exceeding the time limit of 6 months and not offered to tax

Details of supply of goods on „ sale on approval basis‟ exceeding the time limit of 6 months and not offered to tax. Annexure-9

Months in which the time period of 6 months expire

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Amounts

Month in which the goods were sent

Apr

May Jun Jul Aug Sep Oct Nov Dec Jan

Feb Mar Total

CGST payable

SGST/UTGST payable

IGST payable

Cess Payable

Remarks

Section 31(7) Goods Sent on Approval Basis-TAX INVOICE, CREDIT AND DEBIT NOTES • 31(7) Notwithstanding anything contained in sub-section (1), 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 before or at the time of supply or six months from the date of removal, whichever is earlier.




137

Sale on approval basis Section 12(2) r/w Section 31(7)

Removal of goods

Issue of invoice

Accepted by recipient

Receipt of payment

Time of supply

11 Acceptance communicated within 6 months of removal

01-Nov-17 25-Nov-17 15-Nov-17 25-Nov-17 15-Nov-17

12 Amount paid to supplier before informing acceptance

01-Nov-17 25-Nov-17 15-Nov-17 12-Nov-17 12-Nov-17

13 Acceptance not communicated within 6 months of removal

01-Oct-17 15-May-18 15-May-18 02-May-18 01-Apr-18

III Place of Supply Annexure 10

1. Specify instances where the registered person has not determined the place of supply in terms of Section 10-13 of the IGST Act,2017

Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 1

Section reference under the IGST Act

Situation Amt Amt Amt Amt

A. Cases other than supply of goods imported into ,or exported from India

Basis of place of supply followed by the registered person

Basis of place of supply as per law

Place of supply as per return

Place of supply as per law


(Excess CGST paid)/ CGST payable

(Excess SGST paid)/ SGST payable

(Excess IGST Paid )/ IGST payable

Remarks

Section 10 (1) (a)

Supply involves movement of goods, whether by the registered person (as a supplier ) or the recipient or by any other person.

Section 10 (1) (b)

Goods are delivered by the supplier to a recipient/ any other person on the direction of the registered person ( whether acting as an agent or otherwise ) before or during Movement of goods, either by way of transfer of documents of title to the good or otherwise.

Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 1A



A. Cess other than supply of goods imported into ,or exported from India









Remarks

Section 10 (1 ) ( c)

Supply does not involve movement of goods, whether by the registered person ( as a supplier) or the recipient

Section 10 ( 1) ( d)

Goods are assembled or installed at site

Section 10 ( 1) ( e)

Goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle

Section 10 ( 2)

Where place of supply of goods cannot be determined as above.

B. Cases of import and export of goods

Section 11 (1)

Goods imported into India

Section 11 (1)

Goods exported from India

Place of Supply of Goods – Sec 10 IGST (other than goods imported / exported)

141

Section 10(1)(a)

Supply involves movement of

Goods

Location of goods at the time at which

movement terminates for

delivery to recipient

Section 10(1)(b)

Goods supplied on direction of the

third person

Principal Place of Business of

the third person (i.e., address in

Registration Certificate)

Section 10(1)(c) Supply does not

involves movement of goods

Location of goods at the

time of delivery to the recipient

Section 10(1)(d)

Goods are assembled or

installed at site

Place of installation or

assembly

Section 10(1)(e)

Goods supplied on board a

conveyance

Location at which such goods are

taken on board

Sec 10(2) - Where none of the above rules apply, place of supply would be determined in the manner

to be prescribed © Indirect Taxes Committee, ICAI

Section 11 of IGST ACT ANNEXURE 10-POINT B-CASES OF IMPORT AND EXPORT OF INDIA • Place of supply of goods imported into, or exported from India

• 11. The place of supply of goods,––

• (a) imported into India shall be the location of the importer;

• (b) exported from India shall be the location outside India.













Remarks

C. Cases of Supply of services where the supplier or recipient is located in India

Section 12 ( 3) In relation to immovable property

Section 12 ( 4) Restaurant and personal care

Section 12 ( 5) Training and performance appraisal

Section 12 ( 6) Admission to events

Section 12 ( 7) Organising events

Section 12 ( 8) Goods transportation services

Section 12 ( 9) Passenger transportation services

Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 3 Section reference

under the IGST Act Situation Amt Amt Amt Amt









Remarks

Section 12 (10) Services on board a conveyance

Section 12 (11) Telecommunication ,etc

Section 12 (12) Banking and other financial services

Section 12( 13) Insurance services

Section 12 (14) Advertisement services to governmental agencies

Section 12 (2) (a)

Where place of supply cannot be determined as above, in case of registered recipients

Section 12 ( 2) (b)

Where place of supply cannot be determined as above, in case of unregistered recipients

145

For Supply of any other Service,

Place of supply is: (General Rule)

Section 12(2)(a)): Registered recipient: Location of recipient

Section 12(2)(b): Unregistered recipient: Location of recipient if address in supplier‟s

records Location of supplier if address not available

Place of Supply of Services – Sec 12 IGST (where supplier and recipient are in India)



146

Supply of:

Services directly in relation to: a) Immovable property – grant-of-

rights, construction, use, accommodation, marriage, letting out, architects, surveyors, etc.

b) Boat, Vessel – lodging, club, etc. c) Ancillary services to the above

Place of supply - Section 12(3): Location of property/ boat/

vessel If property is outside India –

Location of Recipient

a) Restaurant and catering

b) Personal grooming

c) Fitness

d) Beauty treatment

e) Health service including cosmetic and plastic surgery

Place of supply - Section 12(4):

Location of „actual‟ performance


147

Sec 12(5): Supply of Services of Training

and Performance Appraisal

Registered recipient:

Location of recipient

Unregistered recipient:

Place of „actual‟ performance

Sec 12(6): Supply of Services for admission to: a) Cultural and artistic b) Sporting c) Scientific and educational d) Entertainment event e) Amusement Park f) Services ancillary to above

Venue of event/ park

Sec 12(7): Supply of:

a) Organising cultural, arts, sports, educational, scientific, entertainment, conference, fair exhibition or similar events

b) Services ancillary to above

Registered recipient:


Unregistered recipient:

Venue of event

Event outside India: Location of recipient



148

Supply of services of:

Sec 12(8): Transportation of goods, including by mail or courier

Registered Recipient: Location of Recipient

Unregistered Recipient: Location where goods handed over for transportation

Sec 12(9): Passenger Transportation Service (Return journey treated as separate journey)

Registered Recipient: Place of Registered Recipient

Unregistered Recipient: Place where passenger embarks on the conveyance for a continuous journey

Sec 12 (10): Services on board conveyance like vessel, aircraft, train, motor vehicle

First scheduled point of departure of that conveyance for that journey



149

Supply

of te

lecom

munic

ation s

erv

ices

inclu

din

g d

ata

t

ransfe

r, b

roadcasting,

DT

H, cable

etc

.

(a) Services of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna

Location where line / device is installed

(b) Post-paid mobile connection for telecommunication and internet services*

Location of billing address of the recipient on record

(c) Pre-paid mobile connection for telecommunication and internet services*

Through internet: Location of recipient on record

Through selling agents: Location of selling agent on record of supplier

Though others: Location where pre-payment received / vouchers sold

Place of Supply of Services – Sec 12(11) IGST (where supplier and recipient are in India)

• In cases not covered, address of recipient on records shall be the place of supply;

• Where no address of the recipient available in records, location of the supplier shall be the place of supply © Indirect Taxes Committee, ICAI

150

Supply of:

Sec 12(12) Banking and Other Financial Services including

Stock Broking

Location of recipient in suppliers records

(If not available, location of supplier)

Sec 12(13) Insurance Services

Registered recipient: Location of recipient

Unregistered recipient: Location of recipient in

supplier‟s records

Sec 12(14) Advertisement

Services to Government, etc.

Place is State of dissemination in

proportion



Instances where place of supply has not been determined under section 10-13 of the CGST Act 2017 Annexure 10-SLIDE 4 Section reference under the IGST Act










Remarks

D. Cases of supply of service where the recipient is located outside India

Section 13(3) (a)

Where goods are required to be made physically available to the Supplier

Section 13 ( 3)(b)

Service requiring the physical presence of the recipient

Section 13 (4) In relation to immovable property

Section 13( 5) Admission to or organization of events

Section 13( 8) (a)

Services by banking/ financial/ NBFCs to account holders

Section 13 ( 8) (b)

Intermediary services












Remarks

Section 13( 8) ( c)

Hiring of means of transport

Section 13 ( 9) Goods transportation services

Section 13 (10) Passenger transportation services

Section 13( 11) Service on board a conveyance

Section 13( 12) OIDAR Service

Place of Supply of Services – Sec 13 IGST (where supplier or recipient is outside India)

153

Sec 13(3)(a)-Services when goods required

to be made physically available

by recipient or Sec 13(3)(b) requiring physical presence of

receiver / person acting on his behalf

Location where services actually

performed

13(4)Services supplied directly in

relation to immovable property

Location of such immovable property (or where it is

intended to be located)

Sec 13(5)Service by way of admission to / organising an event,

etc. and ancillary services

Place where the event is actually

held

Sec 13(8)(a)-Banking services to account

holders,Section 13(8)(b) intermediary

services, Section 13(8)(C)hiring of

means of transport (other than aircraft and vessels) upto 1

month

Location of supplier

Section 13(9) Transportation of

goods (other than by way of mail / courier)

Destination of the goods

1 to 3 When supplied at >1 location (including India) Deemed location in India.

When supplied from >1 state / UT In proportion to the value of services © Indirect Taxes Committee, ICAI

Place of Supply of Services – Sec 13 IGST (where supplier or recipient is outside India)

154

Section 13(10)Passenger

transportation service

Place where passenger

embarks on the conveyance for

a continuous journey

Section 13(11) Service provided

on board a conveyance

First scheduled

point of departure of

that conveyance

for that journey

Section 13(12) Online information

and database access or retrieval

services


Section 13(2) Residuary

Location of the recipient;

If not available in the ordinary

course of business, location of supplier

Section 13(13)To prevent double taxation / non-

taxation, or for the uniform application

of rules, CG has power to notify

services/ circumstances

Place of effective use

and enjoyment of a service


III Place of Supply

2. Basis of identification of location of recipient, in case of supply of services if place of supply determined u/s 12(2) or 13(2) of the IGST Act,2017

Section 12(2) and 13(2) of The IGST ACT 2017

• Place of supply of services where location of supplier and recipient is in India.

• IGST SEC 12 (2) The place of supply of services, except the services specified in sub-sections (3) to (14),––made to a registered person shall be the location of such person; made to any person other than a registered person shall be,––

• (i) the location of the recipient where the address on record exists; and

• (ii) the location of the supplier of services in other cases

• Place of supply of services where location of supplier or location of recipient is outside India.

• IGST SEC 13 (2) The place of supply of services except the services specified in sub-sections (3)to (13) shall be the location of the recipient of services:

Provided that where the location of the recipient of services is not available in the ordinary

course of business, the place of supply shall be the location of the supplier of services.


IV Value of supply Annexure 11

1. a) Details of all transactions of outward supplies (or inward supplies liable to RCM) where the transaction value is not acceptable under section 15 and value of supply is incorrectly determined under Rule 27-31 of the CGST Rules

Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017

Annexure-11-SLIDE 1

SR NO

TYPE Transaction Value as per tax invoice/ books

Taxable value reported in GST return

Correct taxable as per CGST Rules

( Excess CGST paid)/ CGST payable

( Excess SGST paid)/ SGST payable

( Excess IGST paid)/ IGST payable

(Excess Cess paid)/ Cess payable

Remarks

A Outward Supplies

1 Where price is not he sole consideration ( including barter, exchange,etc)

2 Permanent transfer or disposal of business asset where there is no consideration, and ITC was availed

3 Supply to related person ( other than employees ) where ITC not fully available to recipient, whether or not for a consideration

Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017 Annexure-

11-Slide 2

SR NO





( Excess SGST paid)/ SGST payable

( Excess IGST paid)/ IGST payable


Remarks

4 Supply to employees whether or not for a consideration

5 Supply to distinct persons where ITC Not fully available to recipient whether or not for a consideration

6 Supply of goods to agent without any consideration

7 Supply for consideration to an agent who is a related party

Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017 Annexure-11-Slide 3

SR NO






(Excess IGST paid)/ IGST payable


Remarks

B Inward Supplies

1 Inward Supplies received from related persons/ distinct persons, where ITC can be fully claimed by the GSTIN, attracting tax on RCM basis

2 Import of service without consideration from a related person/ his other establishment outside India, in the course of furtherance of business

3 Supply of goods received form agents without any consideration which attract tax on RCM basis

Details of Transaction where transaction value is not accepted and value of supply is based on Rule 27-31 of CGST Rules 2017 Annexure-

11-slide 4

• Where possible, indicate the relevant rule under which the valuation has been carried out

SR NO






(Excess IGST paid)/ IGST payable


Remarks

4 Supply for consideration received from an agent who is a related party and for which tax is payable on RCM basis

5 Where price is not the sole consideration ( including barter, exchange, etc)

Section 15 Value of Taxable Supply

• Value of taxable supply.

• 15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.


Transaction value: Recourse to Rules


A. Where value cannot be determined u/s 15(1), i.e., when: 1. Price is not the sole consideration

2. Supplier-recipient are related persons: Recourse to Rules even if the Supplier-Recipient relationship:

• Did not influence the price;

• Precedes agreement to the supply;

• Has no bearing on pricing;

• Has no bearing on Agreement to the Supply;

• Has no relevance to the Supply;

• Was to meet with different criteria or purpose;

(Rules will apply both ways – supplier to recipient and recipient to supplier)

B. In case of notified supplies

Related Person Definition Explanation to Section 15 • 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 person; or(viii) they are members of the same family;

• (b) the term “person” also includes legal persons;

• (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related.



Valuation Rules under

CGST Rules, 2017

(Rule 27 to 35)

Rule 27 of CGST Rules


Value of supply of goods or services where consideration is not wholly in money • The value of supply shall be- a) The open market value of such supply

b) If open market value not available, • be the sum total of consideration in money and such further

amount in money as is equivalent to consideration not in money if such amount is not known at time of supply

Rule 27 of CGST Rules continued


• The value of supply shall be-

c) If value is not determinable under (a) or (b), the value of supply of goods/ services of like kind and quality

d) If value not determinable under (a), (b) or (c), be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by application of rule 30 or 31 in that order.

Rule 27 of CGST Rules continued


• Illustration:

• (1) Where a new phone is supplied for twenty thousand rupees along with the exchange of an old phone and if the price of the new phone without exchange is twenty four thousand rupees, the open market value of the new phone is twenty four thousand rupees.

• (2) Where a laptop is supplied for forty thousand rupees along with the barter of a printer that is manufactured by the recipient and the value of the printer known at the time of supply is four thousand rupees but the open market value of the laptop is not known, the value of the supply of the laptop is forty four thousand rupees.

Rule 28: Value of supply of goods or services or both between distinct or related persons,or than through an agent


(a) The open market value of such supply

Value of supply of goods or

services of like kind and quality

Provided that where goods are intended for further supply as such by

the recipient, the value shall, at the option of the supplier, be an

amount equivalent to 90% of the price charged for the supply of goods

of like kind and quality by the recipient to his customer not being a

related person

Value as determined by

application of Rule 30 or Rule

31, in that order

Where the recipient is eligible for full input tax credit, the value

declared in the invoice shall be deemed to be the open market value of

goods or services

Rule 29: Value of supply of goods made or received through an agent


a) be the open market value, or • at the option of the supplier, be 90% of the price charged for the

supply of goods of like kind and quality by the recipient (agent) to his customer not being a related person,

• where the goods are intended for further supply by the said recipient (agent)

b) where the value of a supply is not determinable under clause (a),

• the same shall be determined by application of rule 30 or rule 31 in that order.

Rule 29: Value of supply of goods made or received through an agent


• Illustration:

• A principal supplies groundnut to his agent and the agent is supplying groundnuts of like kind and quality in subsequent supplies at a price of five thousand rupees per quintal on the day of the supply. Another independent supplier is supplying groundnuts of like kind and quality to the said agent at the price of four thousand five hundred and fifty rupees per quintal. The value of the supply made by the principal shall be four thousand five hundred and fifty rupees per quintal or where he exercises the option, the value shall be 90 per cent. of five thousand rupees i.e., four thousand five hundred rupees per quintal.

Rule 30: Value of supply of goods or services or both based on cost


• Where value is not determinable by any of the preceding rules, • the value shall be 110% of the: cost of production or manufacture or cost of acquisition of such goods or cost of provision of such services.

Rule 31: Residual Method


• Where value cannot be determined under any above provision, the same shall be determined using reasonable means consistent with the principles and general provisions of Sec15 and these Rules.

• Further, in case of supply of services, the supplier may opt for this rule, disregarding rule 30.


2. Whether registered person has correctly determined the value of supply based on inclusions listed u/s 15(2)?

Details of Transaction wherein the value of supply has been incorrectly determined u/s 15 (2) of the CGST Act 2017 Annexure-12-Slide1

Amounts Amounts Amounts

Amounts

Amounts

Section

Inclusions Listed u/s 15 (2)

Nature of Contravention u/s 15(2)

Reasons of incorrect determination

Taxable Value to be included

CGST Payable

SGST/ UTGST payable

IGST payable

Cess payable

Remarks

15(2) (a) Any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than that under the GST Laws/ GST Compensation Cess Law, if charged separately by the supplier

15(2) (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 service or both.

Details of Transaction wherein the value of supply has been incorrectly determined u/s 15 (2) of the CGST Act 2017 Annexure-12 –Slide 2

Amounts Amounts Amounts

Amounts

Amounts

Section

Inclusions Listed u/s 15 (2)

Nature of Contravention u/s 15(2)

Reasons of incorrect determination


CGST Payable

SGST/ UTGST payable

IGST payable

Cess payable

Remarks

15(2) (c) Incidental expenses, including commission and packing, charged by the supplier in respect of the supply of goods or services or both at the time of, or before delivery or goods or supply of services

15 ( 2) ( d)

Interest or late fee or penalty for delayed payment of any consideration for any supply

15 ( 2) ( e)

Subsidies directly linked to the price excluding subsidies provided by the central Government and state Governments.

Value of Taxable Supply – Sec 15


Value of Taxable Supply

Value of supply of goods and / or services on which CGST/SGST is to be discharged shall be the „Transaction Value‟, where

• Supplier and recipient of supply are unrelated

• Price is actually paid / payable – AND price is the sole consideration for the supply

Explanation to Section 15 of the CGST Act deems the persons below to be “related

persons”:

• Officers / Directors of one another‟s business

• Partners in business

• Employer – employee

• A person directly / indirectly owns / controls / holds 25% of shares of both the persons

• One directly / indirectly controls the other

• Both are directly / indirectly controlled by a third person

• Together, they directly / indirectly control a third person

• Members of the same family

• Sole agent / distributor / concessionaire of the other

Transaction value: Inclusions and exclusions


Transaction Value INCLUDES:

Sec 15(2)(a)Amounts charged by supplier to recipient in

respect of any taxes, duties, cesses, fees and charges

levied under any statute, other than taxes paid under GST

regime;

Sec 15(2)(b)Amount incurred by Recipient which is liable

to be paid by the Supplier;

Charges by Supplier to Recipient being:

• Sec 15(2)(c) -cIncidental expenses (e.g: packing,

commission)

• Sec 15(2)(c)-Charges for anything done by the

Supplier at the time or before the supply, in respect

thereof

• Sec 15(2)(d)-Interest/ late fee/ penalty for delayed

payment of consideration

• Sec 15(2)(e)-Subsidies directly linked to price – for

supplier receiving the subsidy (excluding Central and

State Govt subsidies; i.e., Government subsidies will not

be included in transaction value)

Transaction Value EXCLUDES

discount:

Sec 15(3)(a)-Before / at the time of

supply

• Single condition: Such discount

is duly recorded in the invoice

Sec 15(3)(b)-After the supply:

Cumulative conditions:

• Agreement establishing discount

entered into before / at the time

of supply

• Discount specifically linked to

relevant invoices

• ITC reversed by the recipient to

the extent of discount


3. Provide details of discounts adjusted in contravention of the provisions of Section 15(3)

Details of discounts adjusted in contravention with section 15( 3) of the CGST Act 2017 Annexure -13

Amounts Amounts Amounts Amounts

Amounts

Section Nature of discount

Nature of contravention u/s 15 ( 3)

Reasons for incorrect determination


CGST Payable

SGST/UTGST payable

IGST Payable

Cess payable

Remarks

15 ( 3) (a) Discount given before or at the time of supply

15 ( 3) ( b)

Discount given after the supply had been effected

IV Value of supply

4. Whether the registered person has reversed any output tax liability on account of bad debts?


5.Has the supplier contravened the provisions of pure agent as per Rule 33 of CGST Rules,2017?

Details of Supplies where the provisions of Rule 33 of CGST Rules 2017 in respect of pure agent have been contravened

Annexure-14

Nature of contravention

Reasons for contravention

Total Value including reimbursements ( Excluding taxes)

Taxable value on which tax has been paid

Additional value on which tax is liable to be paid

CGST payable

SGST/UTGST payable

IGST payable

Cess Payable

Remarks

Rule 33: Definition of Pure Agent


• Agency supplies are different from „pure agent‟ in relation to valuation

• There is a payment made to third party by a payer

• Payer is a supplier of goods or services or both to a beneficiary (client)

• Underlying obligation to pay third party is of the beneficiary (client)

• Payment by payer is to discharge beneficiary‟s obligation toward third party

• Third party enjoys recourse to beneficiary in case of non-payment by payer

• For example, income-tax liability of a client is paid by the CA

Rule 33: Value of supply of services in case of Pure Agent


• The expenditure or costs incurred by the pure agent shall be excluded from the value of supply, if all the following conditions are satisfied, namely:

a) pure agent makes payment to the third party on behalf of recipient as the contract is between third party and recipient;

b) Recipient uses the services procured by pure agent - Many rules omitted here

c) Recipient is liable to make payment to third party; d) Recipient authorizes pure agent to make payment on his behalf; e) Recipient knows that the services for which payment has been made by

pure agent shall be provided by third party;

Rule 33: Value of supply of services in case of Pure Agent


f) Payment made by pure agent on behalf of recipient has been separately indicated in invoice issued by pure agent to recipient;

g) Pure agent recovers from recipient only such amount as has been paid by him to third party;

h) Services procured by pure agent from third party are in addition to supply he provides on his own account.

V Input Tax Credit Annexure 15

A General

1 Details of ineligible input tax credit in respect of inward supplies of inputs, input services and capital goods availed during the year (disclose supplies from related persons and distinct persons including business verticals separately)

Details of ineligible input tax credit availed during the year Annexure-15-slide1

Amt Amt Amt Amt

SR NO Particulars CGST SGST IGST Cess Remarks

A. RELATED PERSONS AS PER SECTION 15 ( 5) OF THE CGST ACT AND DISTINCT PERSONS AS PER SECTION 25 OF THE CGST ACT

1 Goods/services are not used in the course or furtherance of business

2 Credit ineligible as the goods/services received are used wholly for effecting exempt supplies ( excluding exports)

3 Credit ineligible u/s 17 ( 5)

4 Credit ineligible as the recipients GSTIN was not mentioned/ mentioned incorrectly.

5 Credit reversible u/s 17 ( 4) For a banking company/ financial institution/ non banking financial company.

Details of ineligible input tax credit availed during the year Annexure-15-Slide 2

Amt Amt Amt Amt


6 Credit not eligible as the place of supply is outside the state

7 Incorrect /Omission of Reversal u/r42



10 Incorrect /Omission of Reversal u/r44 A

11 Credit reversible u/r 37 for non- payment within 180 days

12 Excess credit distributed by ISD

13 Credit claimed beyond the period allowed u/s 16 (4)

14 Deprecation claimed on the tax component of capital goods in contravention of 16 ( 3)

15 Credit claimed without satisfaction of all the conditions u/s16(2)

16 Any Other (please specify

Details of ineligible input tax credit availed during the year Annexure-15-Slide 3

Amt Amt Amt Amt


B. PERSONS OTHER THAN RELATED PERSON AND DISTINCT PERSONS AS GIVEN UNDER (A) ABOVE

1 Goods/services are not used in the course or furtherance of business

2 Credit ineligible as the goods/services received are used wholly for effecting exempt supplies ( excluding exports)

3 Credit ineligible u/s 17 ( 5)

4 Credit ineligible as the recipients GSTIN was not mentioned/ mentioned incorrectly.

5 Credit reversible u/s 17 ( 4) For a banking company/ financial institution/ non banking financial company.

Details of ineligible input tax credit availed during the year Annexure-15-Slide 4 Amt Amt Amt Amt


6 Credit not eligible as the place of supply is outside the state




10 Incorrect /Omission of Reversal u/r44 A

11 Credit reversible u/r 37 for non- payment within 180 days

12 Excess credit distributed by ISD

13 Credit claimed beyond the period allowed u/s 16 (4)

14 Deprecation claimed on the tax component of capital goods in contravention of 16 ( 3)

15 Credit claimed without satisfaction of all the conditions u/s16(2)

16 Any Other (please specify

V Input Tax Credit

2. Whether the records maintained by the registered person facilitate verification as to whether the goods/services had been received before the end of the month for which credit is availed?


3. Whether apportionment of credit has been effected in terms of section 17(2) of CGST Act,2017 read with Rule 42/43 of CGST Rules,2017

Concept of ITC


“Input tax" means IGST (including that on import of goods), CGST, SGST and UTGST;

Charged on any supply of goods or services and;

Includes the tax payable under sub-section (3) and (4) of section 9,

Includes the tax payable under sub-section (3) and (4) of section 5 of IGST Act,

Includes the tax payable under sub-section (3) and (4) of section 9 of SGST Act,

Includes the tax payable under sub-section (3) and (4) of section 7 of UTGST Act, excludes the tax paid under section 10 (composition levy)

Principles on Input Tax Credit

System for a seamless flow of credit

Extends to inter-State supplies

Credit utilization would be as follows [Sec 49(5)]:

*The numbers represent the order of utilization of credit

Expectation: Accumulation of unutilized GST credits would be avoided except in cases of exports


Credit of: Allowed for Payment of

IGST CGST SGST IGST (1) (2) (3) CGST (2) (1) SGST (2) (1)

Conditions for Availment of ITC by a Registered Taxable Person – Sec 16

Basis - tax invoice / debit note issued by a registered supplier, or other prescribed taxpaying document

Goods and/or services have been

received*

Tax actually paid by the supplier to the credit of the

appropriate Government, either

in cash or by utilization of ITC

He has furnished the monthly return in Form GSTR-3 under Section 39


Conditions for Availment of ITC by a Registered Taxable Person – Sec 16

Note:

• Credit only upon receipt of the last lot/ instalment in case of goods received in lots / instalments.

• Goods deemed to be received by a taxable person when the supplier delivers the goods to the recipient/ any other person, on the direction provided by the taxable person to the supplier.

• Exception in case of goods being directly sent to job worker

• If the recipient of services fails to pay (value + tax) within 180 days from date of invoice, (ITC availed + interest @ 18%) shall be added to his output tax liability. ITC available when amount discharged later


ITC in case of Capital Goods


Depreciation claimed on Tax component of the cost

of capital goods under IT Act

Example:

Cost of asset = Rs. 100

Tax-10%(say) = Rs. 10

Total Cost Rs. 110

ITC not Available

If Depreciation charged

on Rs.100

ITC Available

If Depreciation charged on

Rs.110

ITC not Available

“capital goods” means the goods, the value of which is capitalized in the books of accounts of the

person claiming the credit and which are used of intended to be used in the course or furtherance

of the business

ITC on the Basis of use of Inputs – Sec 17


Use of input tax credit

For Business purposes

ITC Available

For Other Purposes

ITC not Available

―input‖ means any goods other than capital goods used or intended to be used by a supplier in

the course or furtherance of business

―input service‖ means any service used or intended to be used by a supplier in the course or

furtherance of business

Note: Attribution

of ITC to be

made as per the

manner

prescribed in the

ITC Rules

ITC on the Basis of use of Inputs – Sec 17


Use of input tax credit: Partly for

Taxable Supplies

ITC Available

Zero-rated Supplies

ITC Available

Non-taxable

Supplies

ITC not available

Exempt Supplies

ITC not available

Nil-rated Supplies

ITC not available

Note: Attribution

of ITC to be

made as per the

manner

prescribed in the

ITC Rules

Alternative to apportionment between taxable and exempt supplies in case of banking companies

and financial institutions:

• Yearly option to avail a standard rate of 50% of eligible ITC on inputs, capital goods and input

services on a monthly basis

• 50% shall not be applied on tax paid on supplies made by one registered person to another

registered person having same PAN

Restrictions on ITC – Sec 17(5) Blocked credits


a) Motor Vehicles

ITC for Motor

Vehicles will

NOT be

available

Except

when

they are

used for

Transportation of goods , or

Making the following taxable services:

i. Further supply of such vehicles /

conveyances, or

ii. Transportation of passengers, or

iii. Training for driving / flying /

navigating such vehicles /

conveyances

Note: Where any amount has been paid on goods and / or services, in lieu of tax,

under composition scheme, no credit on such amount would be allowed.



b) Supply of goods and services being:

Food and

Beverages

Outdoor

Catering

Beauty

Treatment

Health

Services

Cosmetic

and Plastic

Surgery

Membership

of club

Health and

Fitness

Centre

Travel

Benefits to

employees

Life / health

Insurance Rent-a-cab

Allowed ONLY if goods /

services of a particular

category are used towards

making taxable outward

supplies of the same

category

NEVER allowed

Allowed ONLY if where the services are notified as

obligatory for an employer to provide an employee

or services of a particular category are used

towards making taxable outward supplies of the

same category



c) Construction of Immovable Property (other than plant and machinery)

Works contract services,

except where it is an input

service for further supply of

works contract service

Goods or services received by a

taxable person for construction of an

immovable property on his own

account even when used in course or

furtherance of business;

ITC not Available

Construction includes re-

construction, renovation,

additions or alterations or

repairs to the extent of

capitalisation

Restrictions on ITC : Sec 17(5) Blocked credits


Taxes on supply of goods or services paid u/s 10

Goods or services or both received by a non-resident taxable person except on goods

imported by him, shall not be allowed

Goods or services or both used for personal consumption

Goods lost, stolen, destroyed, written off or disposed of by way of gift or free supplies and

Any tax paid in accordance with the provisions of sections 74, 129 and 130.

Plant and machinery means means apparatus, equipment, and machinery fixed to earth by

foundation or structural support that are used for making outward supply of goods or services

or both and includes such foundation and structural supports but excludes— (i) land, building

or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the

factory premises.

Eligibility and Time Limit for Availing ITC


205 E

lig

ibilit

y a

nd

Tim

e L

imit

of

IT

C A

vailm

en

t Registered Taxable Person – 16(1)

Admissible to take ITC on supplies used / intended to be used

in the course / furtherance of

business

ITC amount will be credited to the electronic Credit Ledger

Person applied for registration within 30 days of becoming liable to register, and registration granted

ITC available in respect of: a) Inputs b)Semi-finished Good c) Finished Goods

On the day immediately preceding the date from which he becomes liable to pay tax

Person applied for Voluntary Registration

Same as above On the day immediately preceding the date of registration

Earlier of : 1. Annual Return filing

Date 2. Return filing date for

September of the following FY

One Year from

the date of

issue of tax

invoice 18(2)

Eligibility and Time Limit for Availing ITC


206

Elig

ibilit

y a

nd

Tim

e L

imit

of

IT

C A

vailm

en

t

Registered taxable person ceases to pay composition tax

ITC available in respect of: a) Inputs/ Capital Goods b)Semi-finished Good c)Finished Goods

On the day immediately preceding the date from which he becomes liable to pay tax u/s 8

Where exempt supply become taxable

supply Same as above

On the day immediately preceding the date on which supply becomes taxable

Earlier of :

1. Annual Return

filing Date

2. Return filing date

for September of

the following FY

One Year from

the date of issue

of tax invoice

18(2)

Eligibility of ITC in case of New Registrations – Sec 18(1)


Person liable for registration u/s 25(1)

(

Who applies for registration within

30 days

Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished

goods

Relevant Date: As on the preceding date

on which he becomes liable to

pay tax

Eligibility of ITC in case of New Registrations (Voluntary Registration) – Sec 18(1)


Person liable for registration u/s 25(3)

Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished

goods

Relevant Date: As on the preceding date on which registration is

granted

Switching from Composition / Exempt Supply to Normal Tax / Taxable Supply – Sec 18(1)


Person ceases to pay tax u/s 10

Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished goods and Capital

Goods

Relevant Date: As on the preceding date on which liable to pay u/s

9

Goods or Services becoming taxable

Entitled to credit of input tax w.r.t inputs held in stock, semi-finished or finished goods and Capital

Goods

Relevant Date: As on the preceding date from which supply becomes taxable

Credit on Capital Goods to be available after reducing 5% per quarter of a year or part from the

date of invoice or such other document on which capital goods were received by taxable person

Conditions for claiming credit under – Sec 18(1)


Purchase invoice should not be earlier than 1 year from the relevant date

Declaration in Form GST ITC-01 to be filed within 30 days from the date

of him becoming eligible

Details of Inputs held in stock / semi finished or finished goods and

capital goods to be furnished in Form GST ITC-01 within 30 days from

the relevant date

Declaration in Form GST ITC-01 to be certified by a practicing Chartered

Accountant or Cost Accountant if the value of credit claimed exceeds Rs.

2,00,000

ITC – Change in Constitution of Taxable Person Sec 18(3)


Change in

Constitution of

Registered Taxable

Person

On account of:

Sale,

Merger,

Demerger,

Amalgamation,

Lease, or

Transfer of business

Transfer of Unutilized

ITC in the books

allowed to such:

Sold,

Merged,

Demerged,

Amalgamated,

Leased, or

Transferred Business

ITC shall be apportioned in the ratio of value of assets of the new units in case of demerger scheme

Transferor to submit certificate from a practicing Chartered Accountant certifying whether the sale /

merger / de-merger / amalgamation / lease / transfer has been done with specific provision for

transfer of liabilities

Transferee to furnish details of credit available in Form GST ITC-02

Switching from regular to over composition- Pay and Exit – Sec 18(4)


Eligible credit under earlier law carried forward in the return

Amount equivalent to the credit of input tax in respect of input held in stock or input contained in semi-finished goods or finished goods held in stock

and capital goods as on appointed day

Such amount shall be payable by debiting the electronic credit ledger or cash ledger

Balance in electronic credit ledger shall lapse

Declaration for input tax reversed to be submitted in Form GST ITC-3

Supply of Capital goods on which ITC already taken – Sec 18(6)


Supply of Capital goods on which ITC had been

taken earlier Pay Tax on higher of:

ITC availed earlier LESS 5% for every quarter

OR

Tax on Transaction Value

Note: Any credit wrongly taken shall be subjected to the recovery provisions

Purchase Date of Laptop Jan 01, 2015

Purchase Price 50,000

Taxes Paid 10,000

Sale Date May 05, 2017

Sale Value of Laptop 10,000

Particulars Amount

Sale Value of Laptop 10,000

IGST @ 18% 1,800

Particulars Amount

Input Tax Credit Availed 10,000

Less: 5% per quarter (For 10 quarters) 5,000

ITC Rules – Credit in Special Circumstances


Credit of Capital Goods as provided to a person switching from composition to regular scheme and a person whose exempt supply becomes taxable supply (Section 18 (1)(c) and (d), shall be claimed after reducing such tax by 5% per quarter from the date of issue of invoice;

A declaration within 30 days shall be furnished in all the scenarios as specified in Section 18 (1) for details relating to inputs, semi-finished, finished and capital goods as the case may be;

CA/CMA certificate is necessary in case claim for input tax exceeds 2 lakhs;

Matching of claims shall be done with GSTR-1 or GSTR-4 of the corresponding supplier.

ITC Rules (Rule 36-45) – Manner of Reversal


I. Reversal of credit where inputs or input services are used partly for business purposes

or partly for effecting exempt supplies –

Total input tax in a tax period to be denoted as „T‟

Amount of input tax used exclusively for the purposes other than business „T1‟

Amount of input tax used exclusively for effecting exempt supplies „T2‟

Amount of blocked credit as per Section 17 (5) „T3‟

Amount of input tax to be credited to electronic credit ledger „C1 = T-(T1+T2+T3)‟

Amount of input tax used exclusively for effecting taxable and zero rated supplies „T4‟

T1, T2, T3, T4 to be determined at invoice level in GSTR-2

Common Credit “C2 = C1-T4”

Credit attributable towards exempt supplies “D1 = C2*(E/F)

where

„E‟ is the aggregate value of exempt supplies, that is, all supplies other than taxable and

zero rated supplies, during the tax period, and

„F‟ is the total turnover of the registered person during the tax period:

Credit attributable towards non business purpose “D2 = C2*5%

ITC Rules – Manner of Reversal


Remaining credit available for business purpose and for taxable and zero

rated supplies “C3 = C2 - (D1+D2)”;

C3 to be computed separately for CGST, SGST, UTGST and IGST;

D1 and D2 shall be added to output tax liability provided invoice wise

segregation has been made;

Credit calculated on provisional basis shall be computed finally before due

date of filing returns for the month of September following the end of the FY

to which credit relates;

In case amount calculated exceeds the provisional calculation the

differential amount shall be added to the output tax liability and interest from

the month of April of next FY till the date of payment to be paid;

In case amount finally calculated is short of the provisional calculation, the

differential amount shall be taken as credit in the month of September.


Terms used in

Rule

Particulars Amount

T Total Input Tax of Input and Input Services 500.00

T1 ITC for Non Business 100.00

T2 ITC for Exempt Supply 50.00

T3 ITC of Blocked Credits (Inputs Only) 25.00

C1 = T-(T1+T2+T3) Valid ITC in ECL 325.00

T4 ITC for Taxable Supply 200.00

C2= C1-T4 Common ITC 125.00

E Value of Exempt Supplies 2000.00

F Aggregate Turnover 5000.00

D1= E/F*C2 Value of ITC for Exempt Supply (From Common ITC) 50.00

D2= C2*5% Value of ITC for Non Business Purpose ( From Common ITC) 6.25

C3= C2-(D1+D2) Eligible ITC from Common ITC 68.75

T4+C3 Total Eligible ITC for Use 268.75

ITC Rules – Manner of Reversal- Illustration



II. Reversal of credit where capital goods are used partly for business purposes or partly

for effecting exempt supplies:

Amount of input tax in respect of capital goods used exclusively for non business purposes

or used for effecting exempted supplies shall be indicated in GSTR-2 and shall not be

credited in ECL

Amount of input tax in respect of capital goods used exclusively for effecting taxable

supplies including zero rated supplies shall be indicated in GSTR-2 and shall be credited in

ECL

Amount of input tax for remaining capital goods shall be denoted as „A‟ and useful life shall

be taken as 5 years

In case where capital goods subsequently used for business purposes or for effecting

taxable supplies including zero rated supplies, input tax credit shall be included in A after

reducing 5% for every quarter

The aggregate amount of A shall be denoted as Tc

Input tax attributable to common capital goods “Tm=Tc/60”

Input tax at the beginning of tax period for capital goods having remaining residual life

during tax period „Tr‟ which is aggregate of Tm of all capital goods



Amount of credit attributable towards exempted supplies “Te=(E/F)*Tr, where,

„E‟ is the aggregate value of exempt supplies, that is, all supplies other than taxable and

zero rated supplies, during the tax period, and

„F‟ is the total turnover of the registered person during the tax period:

Amount of Te along with applicable interest shall be added to output tax liability during

every tax period of the residual life of the concerned capital goods

Te to be computed separately for CGST, SGST, UTGST, IGST

For the purpose of this rule –

(1) “capital goods” shall include “plant and machinery” as defined in the Explanation to section 17;

(2) for determining the value of an exempt supply as referred to in sub-section (3) of section 17:-

(a) the value of land and building shall be taken as the same as adopted for the purpose of paying

stamp duty; and

(b) the value of security shall be taken as one per cent. of the sale value of such security.

ITC in respect of goods sent for job work – Sec 19


Principal Job Worker

Inputs/ Capital Goods sent for job

work

Received back or directly supplied from

job-worker‟s premises within 1 year

(inputs) or 3 years (capital goods) of being

sent out

ITC available if the conditions and restrictions under job work are satisfied

If not received / directly supplied in time: Principal to pay ITC availed + Interest.

He can reclaim this ITC on receiving back such inputs/ capital goods.

Input Service Distributor – Sec 20

ITC is distributed to supplier of goods and / or services of same entity having the same PAN

Deemed as ISD is a supplier of Service for distributing credit

Common Services used at for


Office /

Corporate

office of

Supplier

Distribution of Credit where ISD and recipient are

located in different State under CGST ACT, SGST

ACT or UTGST Act

Distribution of Credit where ISD and recipient are

located in within State under CGST ACT, SGST

ACT or UTGST Act

Input Service Distributor


ISD and Recipient in

Different States

CGST Act

Credit of CGST or IGST as

IGST

SGST Act

Credit of SGST as IGST

ISD and Recipient in Same State

(Business vertical)

CGST Act

Credit of CGST or IGST as CGST

SGST Act

Credit of SGST or IGST as SGST

Conditions to distribute credit : Input Service Distributor

Credit distributed to recipient through prescribed documents containing prescribed details. Such document should be issued to each of the recipient of credit.

Credit distributed should not exceed the credit available for distribution

Tax paid on input services used by a particular location (registered as supplier) has to be distributed only to that location.

Credit of tax paid on input service used by more than one location who are operational is to be distributed to all of them based on the pro rata basis of turnover of each location in a State to aggregate turnover of all such locations who have used such services


Excess Credit distributed by Input Service Distributor – Sec 21


Excess Credit Distributed by ISD

Credit distributed in excess of what

was available Excess credit distributed to one or

more suppliers

Recovery of such excess credit with

interest from the supplier(s)

ITC Rules – Credit Distribution Procedure in case of ISD


I. Distribution to one or more recipients – Section 20(2)(d)(e)

Credit to be distributed to recipients whether registered or not, from amongst the

total of all the recipients to whom input tax credit is attributable, including the

recipient(s) who are engaged in making exempt supply, or are otherwise not

registered for any reason –

C1 = (t1/T)*C

where,

“C” is the amount of credit to be distributed,

“t1” is the turnover, as referred to in section 20, of person R1 during the relevant

period, and

“T” is the aggregate of the turnover of all recipients during the relevant period;

Details where apportionment of credit has not effected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules Annexure 16-Slide 1

Amt Amt Amt Amt

Rule Particulars of Reversal Reasons for contravention

( Excess CGST paid)/ CGST Payable

( Excess SGST paid)/ SGST Payable

( Excess IGST paid)/ IGST Payable

(Excess Cess paid)/ Cess Payable

Remarks

42(1)(b) Amount of input tax attributable to input and input services used exclusively for purposes other than business

42( 1) ( c)

Amount of input tax attributable to input and input services used exclusively for effecting exempt supplies

42( 1) ( d)

Amount of input tax in respect of input and input services on which is not available under section 17(5) of the CGST Act 2017

42(1) (f) Amount of input tax credit attributable to input and input services used exclusively for effecting supplies other than exempted but including zero rated supplies.

Details where apportionment of credit has not effected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules Annexure 16-slide 2

Amt Amt Amt Amt






Remarks

42(1) (i) Common credit of input and input services attributable to exempt supplies

42(1) (i) Common Credit of input and input services attributable to non business purposes

42 (2) (a) Aggregate of the reversal of input and input services determined at the end of the year determined to be in Shortage of the actual reversal made

42(2) (b) Aggregate of the reversal of input and input services determined at the end of the year determined to be in Excess of the actual reversal made

43(1) (a) Amount of input tax in respect of capital goods used exclusively of non business purposes or exclusively for effecting exempt supplies.

Details where apportionment of credit has not effected in terms of section 17(2) of the CGST Act 2017 read with Rule 42 and 43 of the CGST Rules

Annexure 16 –slide 3

Amt Amt Amt Amt






Remarks

43(1)(b) Amount of input tax in respect of capital goods used exclusively for effecting supplies other than exempted supplies but including zero rated supplies

43(1)(c) Amount of input tax credit in respect of capital goods which are used for commonly for exempt and taxable supplies

43(1) (h) Common credit in respect of capital goods attributable to exempt supplies.

V Input Tax Credit

6. Whether in case of Banking / Financial / NBFC. Credit have been availed in contravention of section 17(4) of the Act?

7. Whether on 1st July,2017 transition credits have been availed in contravention of Section 139 to 142 of the Act

8. Whether all the certificate(s) required under the section 18, has / have been obtained?

(point no 4 and 5 is missing in suggested format)


B Job work

1. Where registered person is the principal, whether tax has been discharged by him in accordance with Section 143 read with Rule 45? Specify instances where the tax has not been paid even though the goods are not received back by the principal/supplied from job worker’s premises within the prescribed time limit

Cases where inputs and capital goods have not been received within the prescribed time limit and no tax has been offered on them Annexure-17-Slide 1

A .Inputs Amount of tax payable in the current tax period

Month in which goods were sent out to job worker in the previous year

Value of goods which were sent and were not offered to tax even though they were not received within the prescribed time limit

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Total

Cases where inputs and capital goods have not been received within the prescribed time limit and no tax has been offered on them Annexure-17

B .Capital Goods Amount of tax payable in the current tax period

Month in which goods were sent out to job 3 worker year before the current tax period

Value of goods which were sent and were not offered to tax even though they were not received within the prescribed time limit

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Total

ITC in respect of goods sent for job work – Sec 19


Principal Job Worker

Inputs/ Capital Goods sent for job

work

Received back or directly supplied from

job-worker‟s premises within 1 year

(inputs) or 3 years (capital goods) of being

sent out

ITC available if the conditions and restrictions under job work are satisfied

If not received / directly supplied in time: Principal to pay ITC availed + Interest.

He can reclaim this ITC on receiving back such inputs/ capital goods.

Job Work • SECTION 143 :-Job work procedure.

• 143. (1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––

• (a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;

• (b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, 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, as the case may be:

• Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—

• (i) where the job worker is registered under section 25; or(ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.

• (2) The responsibility for keeping proper accounts for the inputs or capital goods shall lie with the principal


Job Work • SECTION 143 :-Job work procedure.

• (3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of one year of their being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out.

• (4) Where the capital goods, other than moulds and dies, jigs and fixtures, or tools, sent for job work are not received back by the principal in accordance with the provisions of clause (a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with the provisions of clause (b) of sub-section (1) within a period of three years of their being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out.

• (5) Notwithstanding anything contained in sub-sections (1) and (2), any waste and scrap generated during the job work may be supplied by the job worker directly from his place of business on payment of tax, if such job worker is registered, or by the principal, if the job worker is not registered.

• 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.


Job Work • RULE 45 OF THE CGST RULES-RELATED TO ITC-JOB WORK

• 45. Conditions and restrictions in respect of inputs and capital goods sent to the job worker.-(1)The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by the principal, including where such goods are sent directly to a job-worker, [and where the goods are sent from one job worker to another job worker, the challan may be issued either by the principal or the job worker sending the goods to another job worker:

• Provided that the challan issued by the principal may be endorsed by the job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal:Provided further that the challan endorsed by the job worker may be further endorsed by another job worker, indicating therein the quantity and description of goods where the goods are sent by one job worker to another or are returned to the principal.


VI Returns Annexure 18

1. Whether all the applicable returns / forms have been filed within the due dates?

Date of filing of returns / forms Annexure-18-Tabel 1 A. Monthly Returns

(i) GSTR-3B Months Due date Date of filing Delay ( in days) Late fee Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Date of filing of returns / forms Annexure-18-TABEL 2 A. Monthly Returns

(ii) GSTR-I Months Due date Date of filing Delay ( in days) Late fee Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Date of filing of returns / forms Annexure-18-TABEL 3 A. Monthly Returns

(iii) GSTR-2 Months Due date Date of filing Delay ( in days) Late fee Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Date of filing of returns / forms Annexure-18-TABEL 4 A. Monthly Returns (iv) GSTR-3

Months Due date Date of filing Delay ( in days) Late fee Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Date of filing of returns / forms Annexure-18-TABEL 5 B. Supplier of OIDAR Services

GSTR-5A Months Due date Date of filing Delay ( in days) Late fee Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Date of filing of returns / forms Annexure-18-TABEL 6 C. Other forms

Forms Due date Date of filing Delay ( in days) Late fee Remarks

Form GSTR9

Form GSTR 9B

Form GSTR 10

Form ITC 01

Form ITC 02

Form ITC 03

Form ITC 04 (Q1)

Form ITC 04 (Q2)

Form ITC 04 ( Q3)

Form ITC 04( Q4)

Date of filing of returns / forms Annexure-18-TABEL 7 D. Transition forms

Forms Due date Date of filing Delay ( in days) Late fee Remarks

Form GST TRAN 01

Form GST TRAN 02 (July 2017)

Form GST TRAN 02( Aug 2017)

Form GST TRAN 02 ( Sep 2017)

Form GST TRAN 02 ( Oct 2017)

Form GST TRAN 02 ( Nov 2017)

Form GST TRAN 02 ( Dec 2017)

VII Payments

1. Whether there are any mismatches between the electronic cash ledger and electronic credit ledger viz a vis records / books of accounts?

VII Payments Annexure 19

2. Whether any interest is payable on delayed payment of taxes and the same has been remitted?

Tax payable Interest Liability

Month Due date of

payment

Actual date of payment

Delay ( in Days)

CGST SGST/UTGST

IGST Cess CGST SGST/UTGST

IGST

Cess

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Total

Details of interest on delayed payment of taxes which have not been remitted A. Delay in posting credit entry to electronic liability ledger Annexure-19-SLIDE1

Tax Payable Actual Tax Paid within due date Shortfall in tax payment within due date

Interest Liability

Description

Due date of payment

Actual date of payment

Delay ( in days)

CGST SGST/UTGST




IGST Cess

Total

Details of interest on delayed payment of taxes which have not been remitted Annexure-19-SLIDE 2 A. Delay in underreporting of output tax/over reporting of input tax credit/wrongly availment of input tax credit in a particulars tax period.

VII Payments Annexure 20

3. List the instances where tax has been collected by the registered persons and has not been deposited with the Government

Details of tax collected but not deposited with the Government Annexure 20

Amount collected but not deposited Interest Liability

Description

Month in which collected

Due date of deposit

CGST SGST/UTGST


IGST Cess

TOTAL

VII Payments

4. Whether the provisions of TDS and TCS are applicable to the registered person during the period covered under audit? If yes, whether these provisions have been adequately complied with?

VIII Refunds

1. Where the registered person is eligible for refund under Section 54 of the Act, specify under which cases refund has been claimed? Whether the registered person has claimed any transition credit as well as refunds under the erstwhile laws

IX Documentation

1.Whether the registered person has issued the following documents in accordance with the act and rules framed thereunder: A Tax invoice u/s 31 and u/r 46 and Invoice cum bill of supply u/r 46A B Tax invoice on inward supplies from unregistered persons u/s 31 and u/r

46 C Bill of supply u/s 31 and u/r 49 D Receipt voucher u/s 31 and u/r 50 E Refund voucher u/s 31 and u/r 51 F Payment voucher u/s 31 and u/r 52 G Revised tax invoice, Credit Note and Debit Note u/s 34 and u/r 53 H Delivery challan u/r 55

X Ratios: Provide the following ratios for

current year and previous year A. Gross profit to turnover in state

B. Net profit to turnover in state

C. Cash payment of taxes / total payment of taxes

D. Related party turnover / total turnover

F Output Tax paid to outward taxable supplies

G. Output tax as per return / Total tax liability as determined under audit

H. Inward supply from unregistered persons to Net inward supplies

(note :- E is missing)

XI Any other issues considered to be relevant for the purpose of Audit to be given by way of a separate annexure to this report

The information furnished in this form is true and correct

The information furnished in this form is true and correct

As per our report of even date attached

For XXXXXXXXXX For and on behalf of

Chartered / Cost Accountants <<Legal name of

the registered person>>

Firm Registration Number

XXXXXXXXXX XXXXXXXXXXX

Partner Partner / Managing

Director etc.

Membership No: XXXXX

GST Enrolment Number: XXXXX

Place: XXXXXX Place: XXXXXX

Date: XX / XX/ 20XX Date: XX / XX/ 20XX

VERSION 2 –ABOVE 10 CRS

ADDITIONAL POINTS WITH ANNUEXURE


I Levy & Collection of tax- Annexure-3

3.Whether it is ensured that transactions of the following natures have not been reported in the return?

• a) Transactions covered under Schedule III of the Act

• b) Transactions not covered by definition of supplies

Transactions reported in GST returns though they are covered under Schedule III or excluded from the definition of supplies Note- To be furnished based on books and records maintained by the registered person Annexure-3

Amt

Statutory Reference Description Total Value Remarks

Schedule III Para 4 Services of funeral, burial, crematorium or mortuary including transportation of the deceased.

Schedule III Para 5 Sale of land and, subject to clause ( b) of paragraph 5 of schedule II, Sale of building

Schedule III Para 6 Actionable claims, other than lottery, betting and gambling.

Transaction in money

Transaction in securities

Any other items, please specify

I Levy & Collection of tax

8. Whether e-waybills are applicable in case of movement of goods caused by the registered person during the period under audit? If yes, whether all the movements have been made using proper e-waybills?

IV Value of Supply Annexure-13

• 1. b) Details of transactions of outward supplies (or inward supplies liable to RCM) where the value of supply was reflected as transaction value in the monthly / annual returns, whereas the value should have been determined under Rule 27 – 31 of the valuation rules?

Details of Transactions where value of supply is based on transaction value although the value ought to have been determined under Rule 27-31 of the CGST Rules 2017. Annexure 13-SLIDE 1

SR NO

TYPE Transaction value as per tax invoice/books


( Excess CGST paid)/CGST payable

( Excess SGST paid)/SGST payable

( Excess IGST paid)/IGST payable

( Excess Cess paid)/Cess payable

Remarks

A. Outward Supplies

1 Where prices is not the sole consideration ( including barter, exchange, etc)

2 Permanent transfer or disposal of business asset where there is no consideration , and ITC was availed

3 Supply to related person ( other than employees ) where ITC not fully available to recipient, whether or not for a consideration

4 Supply to employees whether or not for a consideration

5 Supply to distinct persons where ITC Not Fully available to recipient whether or not for a consideration

6 Supply of goods to agent without any consideration

7 Supply for consideration to an agent who is a related party

Details of Transactions where value of supply is based on transaction value although the value ought to have been determined under Rule 27-31 of the CGST Rules 2017. Annexure 13-SLIDE2

SR NO

TYPE Transaction value as per tax invoice/books


( Excess CGST paid)/CGST payable

( Excess SGST paid)/SGST payable

( Excess IGST paid)/IGST payable

( Excess Cess paid)/Cess payable

Remarks

B Inward Supplies

1 Inward Supplies received from related persons/ distinct person, where ITC Can be fully claimed by the GSTIN, attracting tax on RCM basis

2 Import of services without consideration from a related person/ his other establishment outside India, in the course or furtherance of business

3 Supply of goods received from agents without any consideration which attract tax on RCM basis

4 Supply for consideration received from an agent who is a related party and for which tax is payable on RCM basis

The above details shall be provided as appearing in the tax invoices

IV Value of Supply Annexure-16

4. Details of outward supplies effected by the registered person where the value of supply has been determined in contravention of the provisions under Rule 31A / 32 of the CGST Rules, 2017

Details of transaction wherein the value of supply has been incorrectly determined u/r 31 A/32 of the CGST Rules 2017 Annexure 16

Amounts

Amounts

Amounts

Amounts

Amounts

Rule Nature of Supply Nature of Contravention

Reasons for incorrect determination


CGST payable

SGST/ UTGST payable

IGST payable

Cess payable

Remarks

31A(2) Lottery

31A (3) Betting, gambling and horse racing

32 (2) Purchase or sale of foreign currency including money changing

32 (3) Booking of tickets for air travel provided by air travel agent

32(4) Life Insurance

32(5) Supply of used goods by a person dealing in buying and selling of second hand goods.

32(6) Token or voucher or coupon or stamp redeemable against supply of goods or services or both

32(7) Supply by notified class of services providers as referred to in paragraph 2 of schedule I of the CGST 2017 between distinct person as per section 25 of the CGST Act 2017 where input tax credit is available

IV Value of Supply

5. Whether the rate of exchange for determining the value of imports / exports of goods*/ services are considered in accordance with Rule 34 of the CGST Rules, 2017?

V Input Tax Credit Annexure-19 (Part A)

3. Whether re-claim of tax credit taken without full /part payment to supplier?

ITC reversal u/s 16(2) Annexure 19 A. Reclaim of Tax Credit without full/part payment to the supplier

Amount of credit reclaimed upon payment of consideration

Month in which the credit was paid as output liability

Amount of ITC paid as output tax liability u/s 16(2) r/w Rule 37 which is subject to reclamation

Apr May Jun Jul Aug Sep Oct Nov

Dec Jan FEB Mar Remarks

PY-3

PY-2

PY-1

Apr -

May - -

Jun - - -

Jul - -- - -

Aug - - - - -

SEP - - - - - -

Oct - - - - - - -

Nov, Dec, Jan, Feb, March

- - - - - - - - - - - - -

Total

V Input Tax Credit Annexure-19 (Part B)

4. Details of transactions where the credit has not been reversedi* along with interest u/s 16(2) of the Act read with Rule 37 of the Rules, on account of non-payment of consideration & tax

ITC reversal u/s 16(2) Annexure 19 B. Details of transaction where the credit has not been reversed u/s 16(2) Of the Act read with Rule 37 on account of non payment of consideration and tax

Month in which the amount of credit should have been paid as output liability u/s 16(2) r/w rule 37

Month in which the credit was paid as output liability

Amount of ITC paid as output tax liability u/s 16(2) r/w Rule 37

Apr May Jun Jul Aug Sep Oct Nov

Dec Jan FEB Mar Remarks

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Total

Reversal of ITC Rules 42 – Manner of Reversal- Illustration-final working by September pay differential with interest/claim refund without interest


Terms used in

Rule

Particulars Amount

T Total Input Tax of Input and Input Services 500.00

T1 ITC for Non Business 100.00

T2 ITC for Exempt Supply 50.00

T3 ITC of Blocked Credits (Inputs Only) 25.00

C1 = T-(T1+T2+T3) Valid ITC in ECL 325.00

T4 ITC for Taxable Supply 200.00

C2= C1-T4 Common ITC 125.00

E Value of Exempt Supplies 2000.00

F Aggregate Turnover 5000.00

D1= E/F*C2 Value of ITC for Exempt Supply (From Common ITC) 50.00

D2= C2*5% Value of ITC for Non Business Purpose ( From Common ITC) 6.25

C3= C2-(D1+D2) Eligible ITC from Common ITC 68.75

T4+C3 Total Eligible ITC for Use 268.75

Reversal of credit rule 43 relating to capital goods-change in use of cg-reduce itc 5% per quarter

PARTICLUARS TREATMENT

ADD TOTAL INPUT CREDIT IN CAPITAL GOODS T

LESS EXCLUSIVE FOR OTHER THAN BUSINESS/EXEMPT SUPPLIES

NO CREDIT IN ELECTRONIC CREDIT LEDGER

LESS EXCLUSIVE FOR TAXABE SUPPLIES FULL CREDIT IN ELECTRONIC CREDIT LEDGER

NET COMMON CREDIT IN CAPITAL GOODS TC AVAIL EQULAAY EVERY MONTH FOR 60 MONTHS

LESS CREDIT ATTRIBUTABLE TO EXEMPT SUPPLIES-REVERSE IN T/O RATIO

Te Reverse every month for 60 months


X Advance Ruling

1. Whether the registered person has given any affect to advance ruling order?

2. Whether the order of Advance ruling authority is proposed to be followed in the subsequent years? If not, please indicate the deviation.

XI Adjudication, appeals and revision

1. Whether there is any show cause notice issued by the appropriate adjudicating authority pending against the registered person? If yes, please provide details.

2. Whether there is any overdue demand in respect of any adjudication/appellate order passed against which no further appeal has been filed? If yes, please provide details.

Complied by:-

• CA AVINASH LALWANI

• 09821118801

• [email protected]


AUDIT U/S 35(5) OF THE CGST ACT 2017 · accountant. U/S 35(5) having appointed by auditee having...

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