Goods & Services Tax (GST) -...

National Institute for Micro, Small and Medium Enterprises

(An organisation of Ministry of MSME, Govt. of India)

Goods & Services Tax (GST)

National Institute for Micro, Small and Medium Enterprises (ni

(An Organisation of the Ministry

Yousufguda, Hyderabad

National Institute for Micro, Small and Medium Enterprises GST ACT 2017


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Training material

on


Compiled by

National Institute for Micro, Small and Medium Enterprises (ni

(An Organisation of the Ministry of MSME, GoI and ISO 9001-2008

Yousufguda, Hyderabad - 500 045, India

Website: www.nimsme.org

GST ACT 2017


National Institute for Micro, Small and Medium Enterprises (ni-msme)

Certified)



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Table of Contents

Sl. No. Topic Page No.

1 Overview of Goods and Service Tax (GST) In India 2

2 Impact of GST on Manufacturer, trader and service provider 11

3 Definitions 32

4 CGST, SGST, IGST, Levy and Exemption 37

5 Supply, Time of Supply and Place of Supply 44

6 Job work and Stock transfer, repair, warranty, returns, Free supply, Donation

61

7 Input tax credit 67

8 Valuation under GST 81

9 Import of goods & service, Exports under GST 87

10 Refunds and assessments under GST 93

11 Transitional issues 102

12 Registration, Amendment, Cancellation & Revocation 117

13 Returns/Returns Rules 124

14 Payment of tax 146

15 Audit

153

16 Appeals and Revision 155

17 Offences and penalties 172

18 IMPACT OF GST ON TEXTILE AND APPAREL SECTOR

183



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1) Overview of Goods and Services Tax (GST) in India Introduction:

Presently under the existing taxation system for indirect taxes, number of indirect taxes are being levied and collected at multiple rates both by Central Government and State Governments on different activities undertaken.

The international best tax practices would include: to ease out the complications and cumbersome confusing compliances under different indirect taxation laws and different statutory authorities. The thought process was started to consolidate number of taxes in to one system of taxation uniformly across the country in late 1970s.

In that direction reforms were thought of many times and partial reforms were being undertaken in the respective taxation laws. The move towards introduction of Goods and Services Tax (GST) was made by the then Finance Minister Mr. P. Chidambaram in 2006-07 budget to introduce GST from 2010.

Passing of GST by Rajya Sabha

Long pending 101 Constitutional Amendment Bill (CAB) was passed in Rajya Sabha on 3rd August 2016 further approval on 8th August by Lok Sabha on the changes made in the bill, giving way for concurrent jurisdiction for both Centre and State to tax under the GST regime.

GST is unified indirect taxes, with cross sectional credit. Existing taxes Central Excise, Service Tax & VAT etc. would be subsumed to be one GST. Under present regime, VAT credit cannot be used for payment of central excise/service tax and vice versa, however in GST regime there would be the levy of GST on all transactions and hence ensuring a smooth credit flow.

Introduction of GST would change the way business is done. It would throw host of opportunities and challenges for the business and it becomes imperative for them to gear up themselves for adapting the change.



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Further Stages in rolling out of GST

Present Taxes: Presently State Government are levying and/or collecting taxes such as sales tax called as VAT, entry tax, Entertainment Tax, Luxury Tax etc. Similarly Union Government is levying and collecting taxes such as Central Excise Duty, Service Tax, Additional Customs Duty and various types of cesses in the nature of Excise duties. Among them the major types of taxes on business transactions can be tabulated as follows:

Tax Levied on - Collected by - State VAT Sales or purchases effected

within the State Respective State Governments

Central Sales Tax (CST)

Sales or purchases effected in interstate trade or commerce

State Government from where sales are done.

State Excise Manufacture of Alcoholic brewages in the state

State Government where manufacture happens.

Central Excise Manufacture of Excisable Goods In India.

Union government

Service Tax Providing of taxable service Union government

1.7.2017



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in taxable territory (India excluding J & K)

Additional Customs Duties

On goods imported into India.

Union government

Proposed GST Model:

Now 101 Constitution Amendment Bill, 2016 is passed in the parliament containing proposed changes in the Constitution related to GST implementation. The highlight of the changes considering, GST model is expected to be as follows: a) There will be four types of Tax as follows: Type of Tax Leviable on Levied by SGST or UTGST

Supply of Goods, or of services, or both within the state or union territory

Respective SG or UT

CGST Supply of Goods, or of services, or both within the state.

CG

IGST Supply of Goods, or of services, or both in the course of interstate trade or commerce.

CG

b) In other words going by the types of transactions – Type of Transaction Type of Tax Levied by

Supply of Goods, or of services, or both within the state or union territory (Same transaction will suffer both types of tax)

SGST or UTGST

Respective SG or UT

CGST CG Supply of goods, or of services, or both in course of interstate trade or commerce

IGST CG

Supply of goods, or of services, or both in course of Import into the territory of India

IGST CG

c) There will be mechanism between the State Government and Central

Government for distribution of the IGST collected by Centre as per the recommendation by GST council (constitutional body to be created after amendment to constitution). From the business entity perspective this may not have direct implications.

d) Subsumed in GST: Central tax/levies State taxes / levies � Central Excise Duty � Additional Excise Duties � Excise Duty levied under

Medicinal & Toiletries Preparation Act

� Service Tax � Additional Customs Duty - CVD

� VAT/Sales tax � Entertainment tax � Luxury tax � Taxes on lottery, betting & gambling � State Cesses& Surcharges in so far

as they relate to supply of goods and services



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� SAD of Customs – 4% (SAD) � CST (Administered by states) � Surcharges � Cesses

� Entry tax

e) The proposed levy of GST will be based on supply of goods, or of services, or

both. This will replace the concept of manufacture and removal of goods; sale of goods; and provision of service by the concept of ‘Supply’ of goods and/or services.

Ambit of ‘supply’ The taxable event under GST is supply of goods and/or services. The term ‘supply’ includes all forms of supply of goods and/ or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, ‘Supply’ also includes specified transactions such as permanent transfer of business assets, assets retained after deregistration, and supply of goods/services by a taxable person to another taxable or non-taxable person in the course of business. However, supply of goods to a job worker would not be treated as supply. It is specified that, inter alia, sale of under construction properties, temporary transfer of intellectual property rights, works contracts (including transfer of property in goods involved in execution of works contracts), transfer of right to use any goods and development, upgradation, customization etc., of software would be supply of service. GST related to Specific Products: Though GST is to consolidate tax code on all products considering various political aspects of our country, certain specific products are dealt separately. The highlights of the same are as follows:

a) Manufacture of alcoholic beverages for human consumption are kept out of GST. State Excise duty would continue to be levied by the respective state Government.

b) On the other hand on Tobacco and Tobacco products Central Government would continue to levy Central Excise Duty (or under some other name) in addition to GST.

c) Levy of GST on Petroleum products are postponed till that time the GST council recommends for its inclusion in GST. Till then States would continue to levy Sales tax and Centre would continue to levy Central Excise duty. The products are as follows :–



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i. Crude petroleum; ii. Diesel; iii. Petrol; iv. Natural gas; and v. Aviation turbine fuel

Set off / Adjustment/ Credit: Main objective of the GST scheme is to avoid double taxation and cascading effect of different taxes levied by states and centre. Therefore it becomes essential that set off / adjustment / credit of all taxes paid on both goods and services which are received is available to be used against the liability to be paid on goods and services supplied.

However as is put across in the GST law, such seamless credit set off/adjustment/credit does not seem to be fully envisaged. Detailing and restrictions are to some extent given in GST law and others are to be set out in Rules to be framed in this regard. As per the present understanding it is proposed to be in following manner broadly. Type of Tax Paid

Tax can be adjusted against

SGST Adjusted against SGST and surplus if any adjusted towards IGST UTGST Adjusted against UGST and surplus if any adjusted towards IGST CGST Adjusted against CGST and surplus if any adjusted towards IGST IGST Adjusted against IGST, CGST, SGST and UTGST in the same order.

Rate of GST and threshold exemption limit: One of the essential aspects of GST is rate of GST. As per the present status, the different types of rates of taxes are finalized in the council though rate for each product is provided but the given rates are not final. The rates (both SGST, UTGST & CGST together or IGST, as the case may be) finalized in following manner- Rates: 5%, 12%, 18%, 28%

� 5% - Essential food items and goods that are commonly used. This includes the goods are most used by people.

� 12%- Standard rate � 18% - The goods that are not included in the above rate will be taxed

at 18% Services also could be taxed at 18%[concessional rate of 15% also possible].

� 28% -Luxurious goods. This includes car, washing machines, air conditioners etc. (additional cess above the highest tax rates for specified goods)



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� Zero tax – GST will be applicable for the 50% of goods falling under consumer price index. This will also includes food grains.

Further CG have given power to state government to levy 2% extra or lower tax over and above the rate of SGST subject max of 14%. As regards to threshold exemption limit, it is finalized to be 20 Lakhs on all India basis and for special category states and in states specified in Article 279A(4)(g) of the Constitution, is agreed as 10 Lakhs. Composition Scheme: For the person who has taxable turnover equal or less than fifty lakhs is proposed to be given a Composition scheme wherein the composition tax rate as in lieu of the tax payable by him, an amount calculated at such rates prescribed as 1%, 2.5%, .5%, for manufacturer, for Clause (b) of paragraph o of Schedule II and for other suppliers. Taxable person who affects any inter-state supplies of goods and /or services is not entitled for composition scheme. Further it is said that a person having business in different places and separately registered all of them should opt for composition scheme. In other words a person cannot be in composition in one registration and outside in another registration. A taxable person who pays tax under composition levy shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit. However industry representation is being made to remove those conditions to enable the survival of small business man without breaking the chain of credit. Registration: In light of section 22 of the GST Act which deals with registration, following points are to be noted:

• Every person liable to get registered as per Section 24 shall apply for registration.

• As per Section 24 , following persons are required to get registered: • Every supplier who is liable to be registered in the state from where

he makes a taxable supply of goods and/or services if the aggregate turnover in a financial year exceeds Rs. 20 Lakhs. [If taxable person conducts business in special category states and in states specified in Article 279A (4)(g) of the Constitution, the threshold limit would be Rs. 10 Lakhs.]

a. Above not applicable if the supplier exclusively engaged in the business of supplying goods and/ or services that are not liable to tax or wholly exempt from tax

b. Agriculturist for the purpose of agriculture



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• Goods sent by job worker after job work to the principal would be included in the above threshold.

• Person who obtained registration under earlier law • Where any business is carried on by a registered taxable person [by

succession or otherwise], the transferee is liable to be registered from the date of transfer/succession.

• When there is transfer by pursuance of a scheme of amalgamation or demerger by an order of High Court, the transferee shall be registered, where required, w.e.f the date on which ROC issues Certificate of Incorporation.

• Notwithstanding turnover limit and whether or not the person is registered under earlier laws, the following persons are required to take registration:

a. Persons making inter-state supply of goods b. Casual taxable persons c. Every e-commerce operator d. Persons required to pay tax under reverse charge e. Non –resident taxable persons f. Persons required to deduct tax u/s 51 g. Persons required to pay tax under sub-section (5)of section 9 h. Persons supplying goods as agent or the like i. Input service distributor j. Person who supplies goods and/or services, other than

branded services, through e-commerce operator k. Person supplying online information and database access or

retrieval services outside India l. Such other persons as the Government may notify.

(b) Such person shall apply for registration, in every state in which he is liable, within 30 days from the date on which he becomes liable. The same shall be in the manner prescribed. [Draft Rules and Formats in this regard has been published].

(c) A person having multiple verticals in one State can obtain separate registration for each business vertical.

(d) Voluntary registration is also permitted (e) Registration shall be based on PAN, a TAN issued under Income Tax Act,

1961. non-resident person may be granted registration ] (f) Application for registration can be rejected, subject to giving notice of

show cause and giving the person reasonable opportunity to be heard. (g) Grant of registration under CGST is deemed to be grant of registration

under SGST and vice versa. Registration has to be obtained state-wise and not on all India basis. However within a state if there is separate business vertical option is given to register the same separately. The taxability is determined based on registration treating them as separate entity for supply of goods/services. Separate registration will



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be accorded by State Government and Central Government in each state, with mutual co-ordination among them. Records and Returns: The records though to be maintained as per the needs of the business, since GST is going to be technology based, all the transactions relating to GST is required to be uploaded into GST portal on periodical basis. Further also there is requirement of matching of credits to the supplier’s output tax to get the benefit of credit, otherwise of which the credit will be denied. Further also it is proposed that the credit will not be permissible unless the vendor deposits appropriate taxes into Government Exchequer. This will add difficulties in business since they have to ensure compliance of their vendor to get the benefit of credit. Job work transactions The principal has the option to send taxable goods without payment of GST to a job worker and bring it back, after processing, to any of his own place of business, for supplying such goods on payment of GST or export it. The principal also has the option to directly supply final products to end customers on payment of GST or export from the premises of job worker itself, subject to fulfilment of applicable conditions. GST credit is allowed in case of direct receipt of inputs or capital goods by the job worker, subject to receipt of goods back by the principal within specified period.(One year for inputs, 3years for capital goods other than moulds and dies, Jigs and fixtures or tools)

- If inputs sent for job-work has not received back by the principal within 1 year it shall be deemed that such inputs were supplied by principal to the job-worker on the day when the said inputs were sent out.

- If capital goods sent for job-work has not received back by the principal within 3 years. It shall be deemed that such capital goods were supplied by principal to the job-worker on the day when the said capital goods were sent out.

- If the job-worker is registered, or the principal, if job worker is not registered may dispatch the scrap or waste from his place of business on payment of tax.



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2) Impact of GST on manufacturer, trader, service provider:

The GST law in India would be a Dual GST. The Central Government and the State Governments will levy GST concurrently on a common base value. There will be no distinction between goods and services for the purpose of imposition of tax. In this segment it covers:

� Impact on Manufacturer � Impact on Service provider � Impact on Traders

Impact of GST on Manufacturers

According to few reports, India is among the top ten manufacturing countries in the world and presently the sector contributes around 10% of our Indian GDP. The new law which could replace the present indirect tax laws from 1st July 2017 could have huge positive impact on manufacturing sector in India. The important functions which would have impact on manufacturing sector under GST are as follows:

1. Sales and Services 2. Purchase 3. Finance and Accounts

1. Sales and Services Following are the important aspects to be considered to understand the impact of GST on Sales and Services.

a. Reduction in price of most categories of goods for customers –

Standard rate Most of the goods manufactured and sold by manufacturer in India would be liable for Central Excise duty at around 12.5% along with VAT at standard rate of around 15%. The total tax is around 28% on sale of goods. If we add, other costs such as entry tax, CST restriction etc, the cost would be even high in present taxation system. Adding credit restriction, CST purchases etc, the tax cost would be around 30% to 32%.

In GST regime, the final tax payable could be around 18% thereby reducing the tax burden on customers by around 12%. This would put the manufacturer in better position to negotiate the price after considering the tax factor. Marketing team could make use of the reduced tax burden for



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fixing the price in better manner. This could be understood with following example:

Particular Present indirect taxes

GST regime

Basic price of goods 1,000 1,000

Excise duty 12.5% 125 -

Sub-total for VAT 1,125 1,000

VAT @ 15% 169 -

GST at 18% (CGST+SGST/IGST)

- 180

Final price for customers

1,294 1,180

From the above example, we could understand that there is a reduction in final price of goods by Rs. 114 in GST regime. Even if certain portion of Rs. 114 is negotiated with the customer and added to basic price, the manufacturer could increase the profit. b. Increase in price of few classes of goods for customers –earlier under

Concessional rate From the earlier example, we understood how the final price of goods would get reduced in GST regime. However, this may not be true in case of all goods. There are certain goods like corrugated boxes, packing materials which are manufactured by small scale industries who are claiming SSI exemption upto Rs 150 Lakhs pa, where no excise duty is being paid, thereby avoiding excise duty on value addition. Further these goods are eligible for concessional / lower rate of VAT of around 5% in most States in India. This scenario would arise even in case of goods which are eligible for concessional excise duty levy of say 6% and VAT of around 5 to 6%.In these cases, the final price of goods would get increased to the customers as they could end up paying 18% GST. Impact would be high especially when customers are final consumers. It may be noted that in the initial years these goods may also be merit rated at 12%. In such a scenario, it would be very critical for manufacturers to plan for GST impact on sale at the earliest by ensuring that their procurement is also tax efficient.



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The impact on goods which are enjoying concessional excise duty and VAT rate could be understood with following example:

Particular Present indirect taxes

GST regime

Basic price of goods 1,000 1,000

Excise duty 6% 60 -

Sub-total for VAT 1,060 1,000

VAT @ 5% 53 -

GST at 18% (CGST+SGST/IGST)

- 180

Final price for customers

1,113 1,180

From the above example, we could understand that there is an increase in final price by Rs. 67 in GST regime. With proper planning, the cost of purchases needs to be reduced to subsume the additional cost of Rs.67. c. Change in price of goods – Excise duty / VAT exempted There are goods like agricultural implements, solar energy goods which are presently exempted from excise duty and VAT. There are other goods which are exempted from excise duty but liable for VAT or otherwise. In these scenarios, the tax burden under present indirect tax system would be 0% to 6%. Even if we consider the merit rate of GST of 12% on such goods, the tax rate would be around 10% resulting in increase in price of goods for the customers. This would definitely pinch the final customers and could create resistance in buying goods. However, in GST regime, the exemption may not continue for most goods which are presently enjoying some kind of exemptions either under VAT / Excise provisions. Therefore, the manufacturers would be liable for payment of GST with merit rate of 12% with benefit of full credit of GST paid on inputs and input services.



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d. Reduction in procurement costs to manufacturers: The reduction in GST rates for most goods from present 30-32% to 12-18% range would in turn reduce the costs of procurements of materials to the manufacturers substantially. This could be understood with following example: Let’s say, Agricultural tillers which are exempted from excise duty are manufactured. The tax structure of purchases could be as under:

Particular Present indirect taxes on exempted tillers

GST regime

Basic price of inputs 1,000 1,000

Excise duty 12.5% 125 -

VAT @ 5% on Rs.1,125 56.25 -

GST @ 18%[CGST+SGST/IGST]

- 180

Total taxes paid 181.25 180

Eligible credits 56.25 180

Cost of materials 1,000+125 = 1,125 1,000

From this example, we understood that the cost of materials with seamless credit is going to reduce in GST regime. In addition to this, there would be credits on input services which would further reduce the cost of sales. With proper planning of credits and cost involved, final price of goods has to be revised to ensure that benefits of reduction in costs are passed on to customers and the customers are not burdened with more taxes. This is more so in case of B2C supplies where the end customer cannot avail credit of taxes paid on supplies of goods. Even in case of VAT composite tax dealers who would be taxable in future under normal scheme of taxation under GST, the impact could be similar. Explained in detail in next segment on purchase and expenditure. e. Increase in cost of services for final consumers In GST regime, the cost of pure services for final consumers would definitely increase as the rate of tax would be around 18% as against present service tax rate of 15%. However, considering the fact that there would be seamless credit in GST regime, the manufacturers who are also service providers would be eligible to claim the credit of taxes paid on inputs-goods/input services which are



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used. Such benefit of reduction in actual outflow of taxes due to input tax credit should be passed on by the suppliers to customers.

f. Discount schemes to be relooked into There could be various types of discounts such as cash discount, trade discount, seasonal discounts etc. Under present indirect tax laws, the discounts allowed to customers would be eligible for deduction mainly: a) When allowed as a regular practice or it is in terms of agreement entered. b) When the discounts are disclosed on the invoice.

*Note: The provision is taken from Karnataka VAT provisions. There have been decisions allowing deduction of post removal discounts only when the discounts are linked to specific invoices through which goods are cleared. However, in GST regime (Section 15- Value of taxable supply), discounts allowed at the time of supply would be eligible for deduction. However, the post supply deduction would be allowed for deduction only when: a) Discount is established as per the agreement and is known at or before

the time of supply b) Discounts are specifically linked to relevant invoices: From the

interpretation, we could understand that it is not compulsory to disclose the discount amount on the invoice in GST regime. Therefore, the discounts would be allowed even if discounts can be linked to specific invoices. In this regard, proper planning is required in framing the discount policy in such a way that the same could be linked to invoices.

c) Input tax credit has been reversed by the recipient of the supply as is attributable to the discount on the basis of document issued by the supplier

g. Decision on continuation of multiple depots / sales offices /

branches Most manufacturers have set up sales offices / depots / branches which could be on account of tax planning, catering to regional market etc. In some cases it may have been due to Just In Time (JIT) concept adopted by the customers. The tax planning could have been made considering levy of CST, different rate of VAT in various states for same products. For example, agricultural tillers are exempted from VAT in states like Tamil Nadu, Orissa. In states like Karnataka and Andhra, the tillers are liable for VAT at 5.5%. As a better tax planning, all tillers could be procured in Tamil Nadu or Orissa and sold directly to customers of all states to avoid tax. It may be noted that even CST would be exempted on sales made from Tamil Nadu in this scenario. In case of GST, SGST rates could vary in range of 1-2%in different states. There would be levy of GST on all supplies including stock transfers to branches / depots / sales offices.



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IGST would be levied on interstate supplies in first instance. Credit of IGST paid on stock transfer would be available to the branch/depot. Savings on account of eligibility of credit of tax paid on interstate supplies. Presently, CST paid credit is ineligible.Due to this depotsmay be done away with and costs of depots set up/storing/handling may come down as well. Savings by way of set off of the input tax credit on IGST+economies of supply chain could be passed on to customers. Considering these factors, decision has to be taken to continue / discontinue such additional place of business. The other factors to be considered in decision making are as follows: a) Cash flow involved on account of GST levy on stock transfers b) Transportation cost involved in sending goods to depots and sale there

from. c) Administrative cost like rent, office maintenance staff etc. for additional

places. d) Cost of compliance in each location under GST like payment of taxes,

filing returns. h. Arrangement with dealers / consignment agents In case of entities which have appointed dealers / consignment agents, there is a need to relook at the agreement clauses. Under the present laws, the goods could be transferred without payment of any taxes. However, in GST regime, the supplies including transfers would be liable for GST. Schedule I lists out the matters to be treated as supply even if made without consideration which includes supply of goods by –

a. By a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or

b. By an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

Such dealers / consignment agents would be treated as separate taxable persons for GST purpose. However, the taxes paid on inward supplies would be eligible as credit for such dealers or agents. For initial period, the cash flow would be high for the manufacturers on account of such transfers. Considering all these changes, there is a need to educate dealers / agents.

i. Cheaper exports and impact on Form H purchases Even under present tax regime, most of indirect taxes paid like excise duty, VAT, service tax in relation to export of goods is eligible for either exemption or refund. The exemptions / refund are resulting in cheaper exporters. In GST regime, manufacturers could expect even cheaper exports due to following factors: a) Taxes like CST paid on procurements would not be a cost in GST as all

taxes paid on procurements are either eligible for credit or refund. b) There would be no levy of entry tax.



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c) Number of forms and compliance expenses involved presently, like obtaining exemption certificate from excise department, filing multiple refund applications would get reduced.

d) Faster refunds are expected under GST as compared to present refund schemes. Present schemes are dead slow and expensive as it involves satisfaction of VAT officers / service tax officers / Excise officers.

Sales / marketing officers could consider these factors for the purpose of pricing of goods. Cheaper goods would make exports even more competitive. j. Tax savings due to various other factors As already explained earlier, there would be savings in cost of materials on account of non-cascading effect of taxes in GST as compared to present indirect taxation. Following factors to be considered by sales / marketing in fixing / negotiating the final price of goods: a) Seamless credit on all purchases / services procured reducing cost of

production. b) Savings on account of non reversal of VAT credit in case of interstate

stock transfers. c) Savings on account of non requirement to pay entry tax. k. Proper tax clauses in sale agreement / contract There is a need to provide clause in sale agreement / contract considering the GST factor. This would be more relevant in case of open purchase orders from customers. Contracts / agreements / orders entered before introduction of GST could include the clauses stating that ‘In addition to price, taxes applicable such as excise duty / VAT / CST / Service tax and GST as the case may be to be collected extra’. If any contracts have been entered which are inclusive of taxes, then special care has to be taken to safeguard the interest of the business as the GST rate would be around 18%. Ignorance of the tax clause could end up with additional cost to business. l. Training of marketing / sales officers After going through all the above points and the GST law which is new, training of marketing / sales officers would be crucial in any business environment. With better knowledge of proposed GST, marketing / sales team would be in good position to deal with prospective customers. When the sales team knows the GST rates and the net tax costs after set off of input tax credit, they could look at reducing the price offered to customers. Example: If Sales team of A Ltd knows that GST rate is 18%, instead of present rate of 12.5% (excise duty) and 14.5% (VAT) on goods manufactured and removed by A Ltd, then with respect to reduction on rate after adjusting input tax credit, say 5-6%, may be reduced from price of goods sold by Sales team of A Ltd.



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This could make the supplies more competitive leading to bagging more orders.

2. Purchase and Expenditure a) Increase in initial cash outflow The standard rate of 18% GST on goods and services would have an impact (negative & positive) on the initial cash outflow. Let us understand the impact from below example with standard rates:

Goods

Present IDT GST

Value 100 Value 100

ED 12.5% 12.5 CGST 10% 10

VAT 14.5% 16.31 SGST 10% 10

Total 128.12 Total 120

Services

Present IDT GST

Value 100 Value 100

ST @ 15% 15 CGST 10% 10

- - SGST 10% 10

Total 115 Total 120

From above example, we could understand that cash outflow would reduce in case of purchase of goods and increase in case of procurement of services. In case of goods which are presently enjoying the benefit of concessional rate of tax wherein overall tax rate is less than 10-12%, the cash outflow could increase. There could also be a scenario where presently goods are exempted but would be taxable in GST regime leading to extra cash outflow. As credit of duty paid can be availed, the cash outflow would be effectively lesser in case of B2B transactions. However, in case of B2C transactions, the customer has to bear the tax burden under GST.



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Proper planning for purchases by procurement dept is essential considering various factors. Few of them could be as follows:

a) Requirement of revision of EOQ levels based on cash flow impact and orders on hand if any.

b) Negotiation of price with vendors due to reduction in cost of supplies of goods for manufacturing sector.

c) Revision in purchase / procurement budgets. d) Ensure purchases made from vendors who have proven track record of

paying taxes on time to ensure there is no disallowance of input tax credit availed on procurements.

b) Reduction in Cost of material purchased Almost 60% to 70% of total production cost would comprise of material cost in many manufacturing business. Most of the manufacturers procure required inputs either from manufacturers or dealers located within state or outside state. There could be reduction in cost of materials in GST due to following points discussed: CST payment When excisable goods are procured, there would be levy of sales tax even on the excise duty amount leading to cascading effect. If the sales tax is in form of VAT, then there is an option of input credit. However, when CST is paid, the same would be ineligible for credit increasing the cost of materials procured. Under GST, there would be no concept of CST, instead IGST would be paid on inter-state supplies. The credit of IGST paid shall be allowed as credit thereby reducing the tax burden. Entry tax payment In case of few states like Karnataka, Orissa, West Bengal, there is a levy of entry tax on specified goods entered into the state. In Karnataka, the entry tax rate is 2% on machineries and its parts. On petroleum products, the levy is 5% on purchase price. The entry tax paid is not eligible for input setoff as well. This levy is increasing the cost of materials procured. In GST regime, abolition of entry tax would result in decrease in cost of procurement. Procurement from non-excise dealers In case of goods procured from dealers other than first / second stage dealer, buyer can avail only VAT credit. Dealer would have procured goods from manufacturers / imported on payment of duties. If the dealers are not registered under excise and not passing on the benefit of taxes paid, then the same would add to purchase cost. In GST, this scenario would not arise as dealers would be eligible to take all credits. Earlier dealerswho were not registered as dealers under central excise were passing on the costs of taxes on imports[ mean rates as follows-BCD10%+Customs cess 3%+12.5%CVD+4%SAD= say 29.5%] and/or



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domesticprocurements( mean rate-12.5%Excise duty) and collecting and paying output VAT after setting off input VAT. In GST, they can get the credit of tax paid on imports-IGST could be say total 18%[BCD cost say 10% would still continue] and domestic procurements-CGST+SGST say 18% and paying net output GST tax. The savings due to set off ranging from 19.5% on import and 12.5% could be passed on to customer. This would reduce procurement cost to manufacturers who purchased from non-excise dealers in past. Purchaser can take GST credit based on dealer invoice. This will reduce the effective cash outflows and effective purchase cost of inputs. c) Eligibility of credit on interstate purchases Goods purchased from manufacturers or dealers from other states are liable to CST at the rate of 2% with C form or equal to local VAT rate. In present IDT system, the CST paid is not eligible for credit. In GST, the supply of goods and or services in the course of interstate trade or commerce is liable for IGST. The amount paid by the purchaser towards IGST can be claimed as input credit. This would reduce the procurement cost for manufacturers. d) Tax levy on purchases / procurement from unregistered dealers On goods procured from unregistered persons, there is a need to pay VAT in all the states which would be eligible as credit provided the goods are used in relation to saleable goods. In GST regime, number of unregistered dealers would get reduced substantially due to lower exemption limit. There could be a GST payable under reverse charge by recipient on procurement of specified goods. Also there could be GST payable under reverse charge by recipient on procurement of specified services in GST regime. Credit of GST paid under reverse charge could be available to the recipient of such goods and or services. e) Procurements from composition dealers to be avoided Under the present VAT regime, the tax paid on purchase of goods from composition dealers would not be eligible for input credit. In most states, the composition VAT cannot be collected from the buyers. In such a scenario, the cost of procurement of goods would increase to the buyer of goods. Even in GST regime, the composition scheme would continue with a minimum tax of .5%. The tax cannot be collected by the seller and therefore, there is no question of credit for the buyer of goods. However, due to ineligibility of credit on purchases, the cost of sales for composition dealer would increase. There is a need to reduce / completely avoid procuring goods from composition dealers in GST regime. However, this decision should be taken considering other factors such price of goods, necessity of goods etc.



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f) Screening of suppliers The credit of excise duty and VAT (though questioned in few states) paid on purchases would be eligible as credit if goods are received and put to use in business. Generally, it is not the responsibility of the buyers to ensure tax payment by the suppliers to the Government. To this, there are exceptions in states like Delhi and Tamil Nadu where the credit of VAT would not be eligible for the buyer of goods unless the taxes are paid by the seller to the Government. However, in GST regime, the credit would be eligible for the buyers only if the suppliers have paid their taxes properly which is applicable to all the states. The concept of matching credits has been introduced. Any default in tax payment by the suppliers would make the buyers ineligible for credits. Therefore, screening of suppliers would be critical. Black listed dealers / suppliers should be avoided. Dealers who do not issue proper invoices should also be avoided by the manufacturers. Procurements from high GST rating vendors Vendor Compliance Rating Score is an important criterion for vendor selection. Every company who is willing to purchase goods, can at the time of getting quotation, can also see the vendor rating and purchase the goods. Purchase done from highly rated vendor, will assist the recipient in

- Filing of timely returns by vendor - In time supply (GSTR-1) upload by supplier, on which auto credit will be reflected in recipient GSTR-2 to avail such credit.

- Ease of business - Timely payment of taxes by vendor under GST

g) Planning of purchases during transitional phase In transitional phase, there would be a need for good planning to ensure that maximum credit benefit is availed. The important factors to be considered are as follows:

a. Timing of purchase – Manufacturers need to plan the time of purchase during transition phase considering the credit eligibility. For example, interstate purchases which suffer 2% CST could be delayed as CST is not eligible as credit. Similarly, entry tax impact could also be considered especially in case of machineries imported or procured from other states. Procurements after GST introduction would not be leviable to entry tax. Goods ineligible for credits under GST could be procured in GST regime with lesser tax.

b. Purchase from unorganized dealers – Purchases from unorganized dealers should be reduced. Dealers who are not regular in their tax payments, black listed dealers, dealers who do not issue proper invoices should be strictly avoided.



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c. Vendors with multiple locations – It is necessary to ascertain if vendors could supply the goods from locations within the state instead of locations outside the state to avoid payment of CST which is ineligible in present regime and payment of IGST in GST regime though credit eligible, it could affect the cash flow. For this purpose, the transportation cost should also be factored in.

d. Contracts / agreements to be revised – All the contracts including purchase orders would have to undergo amendment to include GST clause.

e. Negotiation of price –Ensure passing on of savings in reduction in taxes due to reduced GST on several categories of supplies of goods and or services.Prices agreed as per the contracts should be renegotiated as the cost of manufacturing could be reduced for the suppliers.

h) Increase in cash outflow on services -Planning Presently, the services procured are liable for ST of 15% including cess. In GST regime, the rate of GST could be around 18% resulting in extra cash outflow. Proper planning is required to procure and clear the payment for the services. The payment for services which are ineligible for credit in GST regime should be cleared first to reduce the cash outflow. i) Requirement of credit distribution In case of common services like statutory audit services, consultancy services received, the credit of service tax paid needs to be distributed to respective units under the present tax regime. Even under GST, the situation would continue. However, distribution of credits, compliance with legal requirement could take substantial time. Therefore, with proper planning, the vendors to be instructed to issue separate bills if possible. The place of supply would also be critical in GST regime. Any mistake in place of supply in the invoice could result in denial of credit for the manufacturers/service providers. 3. Finance and Accounts Understanding the business is important. Through websites, audit reports. IFC process flow could be important source of information to understand the business. SOP could be of great use. The following issues could be of much importance:

• Accounting entries for IDT compliance • Planning of cash flow impact • Make aware of GST implementation cost • Impact due to requirement of multiple returns • Impact on budgets – Sales & Purchases • Impact in investment in securities • Need for training vendors / suppliers • Requirement of compliance under TDS / TCS provisions • Revision of SOP



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• System of accounting for purchase returns / sales returns • Steps to be taken for issue / collection of Form under GST • Training for staff under GST • Hiring of additional staff if compliance is increasing • Status of pending litigations and action to be taken • Changes in formats and reports such as tax invoice, BOS etc.

4. Other Impact on Manufacturers

a. Competitive in market: There would be a saving in taxes due to less or no restrictions in taking setoff of taxes paid at various stages of manufactures reducing the cost of goods sold. This would make them more competitive both in domestic and international markets.

b. Valuation of the supply of goods:At present, excise duty is paid on the event of manufacture of excisable goods and VAT on the sale of goods. VAT/CST is computed on sale price+ excise duty paid. With the shift of taxable event from manufacture to supply of goods, the valuation of goods could be simplified. Under GST, actual value received as a consideration for the supply of goods would be subject to GST.

c. Reduce Corruption: Due to online filing of returns and statements, and consequent reduced interaction with dept, the corruption faced by the manufacturers would substantially reduce over a period of time.

d. Transaction costs: The transaction costs of compliance could reduce due to widespread computerization and online filling and filing of forms/payment of taxes and returns. However the huge need to upload all transactions may lead to the compliance cost for medium sector to rise and for small sector it may not be bearable.

e. Manufacturers under administration of State VAT officials: Manufacturers having a value of clearances of less than Rs 150 Lakhs are exempted under present Excise law. The States are seeking to administer the Central GST of dealers having gross turnover of less than Rs. 1.5 crores.

Conclusion:

In addition to the aspects covered above, the GST law also covers provisions on levy of interest, penalty, remission, audit, assessment, inspection as well as regular as well as alternate dispute resolution mechanisms.

The implementation of GST is expected to be from 1st July 2017. More important, from the businessman and consumer perspective, this change is going to have substantial impact on the business as well as cost to consumers depending upon the structure of the business and location of business and consumer. Therefore it becomes essential to re-look into structure the business and location depending upon the assessment of implication of GST on each



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type of transactions. The impact analysis and planning for restructuring can be done only after the rates are finalized.



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Impact on Traders:

a) Tax on value addition: The impact of tax on the wholesaler or retailer would be limited to the value addition. The tax paid at earlier stages (except SGST of other states) would be available as set off for payment of GST on supplies. Therefore traders would prefer to buy/receive supplies with invoice.

b) Reduce cascading: Cost of products and services would reduce due to the cascading effect of tax being reduced.

c) SGST levy: SGST would be levied on the local supply of goods within State. IGST (comprised of CGST and SGST) would be levied on interstate supply of goods. CST Act could be abolished in course of time and as a preliminary step the rate of CST could be brought down to 1%. Form C would be abolished under GST law.

d) No subsequent sale or sale in transit under the CST Act against Forms E-1/2:This exemption as per section 6(2) of the CST Act may not be continued under GST levy.

e) Stock transfers: Presently, stock transfer is done without charging CST against Form F. Under GST law, stock transfers from one State to other to one’s branch or consignment agent is treated as inter-State sale and tax levied thereon.

f) Stocktransfers to branches/consignment agents within the State:Under GST, these transfers could also be levied to tax, unless the GSTN number of transferor and transferee is same.



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Impact of GST on service sector GST is not just a tax reform but it is a business reform. It shall change the way in which business processes are performed and the way in which the business transactions are undertaken. Although, GST will bring with it, both positive and negative aspects. However, the organizations that will plan its business processes better in a manner to best suit the needs of the GST regime, then such organization will have competitive edge over others. Therefore, it is of due importance that business house proactively re-structure its business processes and optimize its tax position to reduce the negative impact of the changing tax environment. So far as service sector is concerned, below is the brief of the impact that the GST is going to have on the service sector: The major areas of impact of GST on service providers is under: GST Rate The service sector at present is taxed at the rate of 15% including Swatch Bharat and KrishiKalyan Cess (KKC). The GST rate is likely to be higher widely speculated at 18%. This means that there will be an impact on the services which will become costlier by the differential tax amount from the current levels. All the continuing /ongoing contracts have to suffer the increased rate in respect of work completed after appointed date. International competitiveness Competitiveness of India’s exports has increased over time but gets partially impeded due to certain domestic constraints. One of such constraining factors refers to inefficient indirect tax regime. The following factors may affect the India’s International competitiveness;

• Cascading tax • not getting full offsets by way of credit • origin based taxation • Delay in refunds etc.

With the introduction of GST which is going to be consumption based destination taxation, seamless credit objective and simple payment, return and refund procedures etc such constraints would recede over period, leading to increase in export of services. Supply The present taxable events under different laws are no where relevant and only one event i.e. ‘supply’ needs to be tracked. Supply defined in an inclusive manner. Tax is on supply of service. In the present scenario the service provided without consideration i.e, free service is not taxable. Even all reimbursable expenditure collected by service provider could be taxable as it is nothing but supply.



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Levy and Collection of CGST/SGST Section 9 of Central Goods and Services Tax (CGST/SGST) shall be levied on all intra-State supplies of goods and/or services at the rates notified by Central/State Government in this behalf, but not exceeding 20%, on recommendation of Council and collected in such manner as may be prescribed. Hence two levies on same service i.e. SGST and CGST, instead of only one tax i.e. service tax in the present law. Section 10 of CGST Act provides for not less than .5% of the turnover during the year whose aggregate turnover in preceding financial year does not exceed Rs. 50 Lacs as composition scheme. This scheme is not available to supplier of services. Input tax credit The main objective of GST law is to give seamless credit by not putting restrictions. Service providers are eligible for credit of VAT portion on his purchases hitherto not eligible. The GST law sets out that every registered taxable person who carries on any business at any place in India/State, shall be entitled to take credit of input tax admissible to him which shall be credited to the electronic credit ledger of such person. The amount of credit of IGST available in the electronic credit ledger shall first be utilized towards payment of IGST, CGST, SGST and UTGST, in that order. The amount of credit of CGST shall first be utilized towards payment of CGST and the amount remaining, if any, towards the payment of IGST. Credit of SGST shall first be utilized towards payment of SGST and the amount remaining, if any, towards the payment of IGST. The input tax credit on account of CGST shall not be utilized towards payment of SGST. There is no segregation between manufacture, services and trading for utilization of credit. IGST Service provider has to pay the IGST on interstate supplies. It could apply even for services between head office and branch vice versa if they are situated in different states. This could be one of the draconian provision under GST. Recommendation in this regard is highly preferred. Further import of services shall be liable to IGST under reverse charge mechanism. Supply includes import of services whether or not for consideration whether or not in the course or furtherance of business. Time of Supply This will be helpful for determining the time of supply of goods and / or services under GST law. The provisions of time of supply under GST are more or less similar to present POT Rules, 2011. However these are going to be further more cumbersome.



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Place of Supply Section 10-14 of IGST Act provides the provisions of place of supply, which are similar to erstwhile place of provision rules, 2012. These are useful to determine the place where the services are deemed to be supplied. Determining the place of supply under GST is going to be very cumbersome. Reduction in cost With the introduction of GST the cost of procurement of services is going to be reduced due to no cascading of taxes and reduced prices by the vendors. Ex. Work’s contract service suppliers are going to be the biggest beneficiary in this regard. Works contract - huge impact if not under merit rate. Transaction value GST shall be payable on transaction value of supply of goods and / or services. Transactions with related parties/ group companies’ needs to be properly valued – Valuation issues may creep in this regard. No Disputes around Sale v/s Service Currently service providers are facing difficulty in identifying what is service and what is a good and getting notice from both service tax and VAT /CST departments. Assessees paying service tax are getting notices from VAT / CST department and the assessees who are paying VAT /CST are getting notices from service tax department With the introduction of one single GST on supply of goods and /or services including Schedule II, GST is also likely to put an end to the double taxation of services like software etc. which are treated as goods and services both. Registration Registration needs to be taken by person liable to pay tax (section 22)

• There would be separate categories of registrations for different taxable persons viz., normal taxpayer, taxpayer under compounding scheme, casual dealers, non resident supplier, input service distributor and unique ID for UN bodies/ governmental authorities and PSUs.

• Registration would be PAN based. • An entity having a single PAN but effecting supplies from multiple States

would be required to take registration in each of the States from where the supply is being made.

• Separate registrations may be taken for different business verticals within the same State. This would be optional and not mandatory.

Returns Every registered dealer is required to file return for the prescribed tax period. A Return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period of return; Government entities / PSUs, etc. not



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dealing in GST supplies or persons exclusively dealing in exempted / Nil rated / non –GST goods or services would neither be required to obtain registration nor required to file returns under the GST law.

• Filing of returns would only be through online mode. Facility of offline generation and preparation of returns will also be available. The returns prepared in the offline mode will have to be uploaded.

• 2 returns currently vis-à-vis 37 returns in a year in GST • There will be a common e-return for CGST, SGST, IGST. • A registered Tax Payer shall file GST Return at GST Common Portal

either by himself or through his authorised representative; • There would be no revision of Returns.

Assessments, audits and demands “Assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment – section 2(11) of GST Act. Hence the scheme of separate assessments, audits and demands existed under erstwhile different acts are going to go and only one assessment, one audit and one demand notice under GST law would come into force. The tax administration would have powers to audit and re-assess the taxpayers on a selective basis. The Commissioner of CGST/Commissioner of SGST or any officer authorised by him, by way of a general or a specific order, may undertake audit of the business transactions of any taxable person for such period, at such frequency and in such manner as may be prescribed. Special audit by Chartered/Cost Accountant can be ordered if the officer is of the opinion with prior approval of commissioner. Managing procurement vendors As prices are expected to come down in GST regime, every customer would like to procure goods/services at a cheaper price. In this aspect, Purchase department of an organization has to be more proactive to manage their procurements/ suppliers better and to crack a better deal from their vendors. GST is nothing but an opportunity for the purchase department to enhance their vendors list and negotiate, this aspect is being discussed below in detail as under:

� Vendor masters updation, Tax master updation Once GST is implemented, the first and foremost important task is to update the vendor masters and tax masters with the additional information based on the structural changes and the tax changes performed by each businesses in the GST regime.

� Vendor Performance/ compliance It is very important that every supplier has to comply with GST, as the concept of compliance rating in the GST regime will be playing a crucial role. It not only defines the compliance status of the business but also has an impact on the business, either positive or negative. Suppose if compliance rating is low on scale either because of delay in payment of



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taxes or invoices etc, then the customer would think twice before transacting a business with such vendors. Further, an important aspect in GST is that tax credit to the purchaser is linked with that of tax payment of such taxes by the vendor. Unless, the vendor pays the taxes on supply of the goods/ services, the customer will not be entitled to take credit of such supplies. If supplier has not remitted taxes, then GST becomes cost to buyer and in turn, price of his supply would substantially goes up which would affect the market. Further, if there is any delay on account of vendor in remitting taxes, then the buyer can take credit of taxes only after discharge of taxes by supplier. Till then, buyer has to wait for the payment by supplier. This becomes a big challenge to the business to follow up with the supplier for taking credit. Therefore, procurement department needs to assess their current vendors and the un-organised/ non-compliance oriented vendors must be trimmed down.

� Identifying multiple new vendors As GST is an united indirect tax and since it will change the entire dynamics of the businesses, therefore prices of almost all the businesses will undergo a change. Therefore, it gives an opportunity to the businesses consider entire nation as a common market and enhance the geographical purchase horizon and get the quotes multiple new vendors. Therefore, against the current practice of obtaining 3 or 4 quotations, business can identify multiple new vendors and get revised quotations to obtain for a better and cheaper price at same quality in the GST regime.

� Conducting vendor education programmes for un-organized vendors Since GST involves compliance from both the supplier and the buyer, procurements from un-organized vendors is a bit challenge to the business as the credit may be lost. In such cases, vendor education programmes needs to be conducted for un-organized vendors to bring awareness about GST. Such programmes shall ultimately fetch results for the customers in the long run.

� Pricing of procurements from related parties Although, transaction value with the related party vendors will be acceptable in the GST regime. However, department officers have been given adequate powers to reject the transaction value if there is an iota of doubt on the truth or accuracy of the value adopted or if the value is not kept at the arms length. Therefore, each supplier has to review the current pricing of transactions with the related parties and make suitable changes, if any to comply with GST. Otherwise, GST officers may litigate into the valuation in respect of the related party transactions.



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2. Other Impact on Service Providers a. Present destination based to consumption based levy:

Presently, service tax is levied at origin and is a destination based levy, the burden of which is borne by the end customer. Under GST, they would be taxed at the place of consumption.

b. Service tax-SGST levied by States: Under GST law, the service tax would be levied not just by Centre but also by the States who would be empowered to levy SGST by amendment to the Constitution of India.

c. Taxes received by consuming State: If services are rendered from one State to another, then tax would ultimately go to the consuming State.

Overall Impact a) Change in law and procedure: Since it is a major indirect tax reform in

India, there would be new legislations and procedures. The entire indirect tax code will be a new one.

b) Change in tax-rates: The standard rate of 12.50% for central excise, Service tax, along with residuary rate of VAT at 12.5-14.5% brings the overall rate to 25%-30%. When the tax rates are increased it could lead to tax evasion as well.But, post GST, it is likely to be in the range of 5%-12%-18%; a net gain of almost 6%-10%. Most of the dealers and consumers would experience the change in tax rates, either significantly or marginally.

c) GST based on HSN: The central excise tariff based classification would no longer be applicable. It will reduce the interpretational issues in respect of class of commodities.

d) Nearly Seamless Availment of tax credit: GST will facilitate seamless credit across the entire supply chain and across all States under a common tax base. At present no cross credit are available across central excise/service tax to local VAT/sales tax. Under the GST law, the input tax credit (ITC) (set off) would be given for Central GST against CGST and the States will give input tax credit (ITC) SGST to SGST. Cross-utilization of credit between Central GST and State GST will not be allowed.

e) Credit availment based on vendors invoices: The credit of excise duty paid is available based on the excise invoice raised by manufacturer or service provider. The credit is available under the Service Tax law when the payment of invoice is made within 3 months of invoice date. In respect of joint charge and reverse charge, based on receipt of payment basis on basis of payment challans of the assessee. Under State VAT law, it is allowable on the basis of tax invoice. Under GST the credit could be availed based on the invoices of vendors under CGST and SGST. But the onus may shift onto the assessee to ensure that the amount of the CGST/SGST has been deposited to the respective Government treasury by the vendor. This is not a legal provision and could be challenged.



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f) Avoidance of Double Taxation: Presently, several transactions suffer VAT as well as Service Tax such as in case of works contract or licensing of software. This could be resolved in GST by redefining what is goods and service.

g) Changes in the Accounting Software: Dealers and service providers need to modify/replace the accounting and taxation software. Though initially there could be investment costs, costs of training in GST of people at each level starting from junior/mid to higher level managerial staff, management group/stakeholders.

h) Training: Comprehensive training will be required to the staff members of the business community, both at senior level and also at junior level. Further, the scope of such training should be extended to the marketing personnel, apart from accountants and legal department.

i) Competent Professionals: There are specialized consultants for Excise Duty, Service Tax and VAT. With the GST, only a single consultant maybe required who can handle all GST matters. Compliance for the SME may necessitate competent tax preparers who are semi qualified.

j) Amending existing contracts: Assessee has to put a clause to collect CGST and SGST extra as applicable in respect of existing contracts.



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3) Definitions: Supply, Goods, Service, Taxable person, Exempt supply, Deemed export, Zero rate supply, Import & Export of Goods & Service, Input Tax Credit, Reverse Charge & Consideration Meaning and scope of supply (1) Supply includes— (a) all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business,

(b) importation of services, for a consideration whether or not in the course or furtherance of business,

(c) a supply specified in Schedule I, made or agreed to be made without a consideration; and

(d) Schedule II, in respect of matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.

(2) Notwithstanding anything contained in sub-section (1),

(a) activities or transactions specified in schedule III; or

(b) activities or transactions undertaken by the Central Government, a State

Government or any local authority in which they are engaged as public authorities as specified by the Govt. on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to sub-section (1) and sub-section (2), the Central or a State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as—

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.

(4) The tax liability on a composite or a mixed supply shall be determined in the following manner —

(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;

(b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

Goods



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Section - 2(52) - “goods’’ means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;

Services

Section 2(102) -“services’’ means anything other than goods;

Explanation 1.- Services include transactions in money but does not include money and securities;

Explanation 2.- Services does not include transaction in money other than an activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

Section 2(39) read with sec. 147 “deemed exports”, as notified by the Central Government/State Government on the recommendation of the Council, notify certain supplies of goods as deemed exports refer to those transactions in which the goods supplied do not leave India, and payment for such supplies is received either in Indian Rupees or in convertible foreign exchange if such goods are manufactured in India.

Section 2 (47) “exempt supply” means supply of any goods and/or services which attracts nil rate of tax or which may be wholly exempt from tax u/s 11, or u/s 6 of the IGST Act, and includes non-taxable supply.

Section 2 (10)-IGST Act 2016- “import of goods” with its grammatical variations and cognate expressions, means bringing goods into India from a place outside India; Section 2(5)- “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India; (IGST Act)

Section 2 (23)-IGST Act 2016 “zero-rated supply” means supply of any goods and/or services in terms of section 16 of the IGST Act 2016; and



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Section 2 (11)-IGST Act 2016“import of service” means the supply of any service, where (a) the supplier of service is located outside India, (b) the recipient of service is located in India, and (c) the place of supply of service is in India;

Section 2(6) “export of services” means the supply of any service when

(a) the supplier of service is located in India,

(b) the recipient of service is located outside India,

(c) the place of supply of service is outside India,

(d) the payment for such service has been received by the supplier of service in convertible foreign exchange, and

(e) the supplier of service and recipient of service are not merely establishments of a distinct person in accordance with explanation 1 of section 8; (IGST Act)

Section 2(56) “input tax credit” means credit of ‘input tax’

Section 2(62) "input tax" in relation to a registered person, means the Central tax, State tax, Integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes-

a) The IGST Charged on import of goods

b) The tax payable under the provisions of sub-sections (3) and (4) of section 9;

c) The tax payable under the provision sub-sections (3) and (4) of section 5 of IGST Act,

d) The tax payable under the provision sub-sections (3) and (4) of section 9 of the respective SGST Act; or

e) The tax payable under the provision sub-sections (3) and (4) of section 7 of the UTGST Act;

But doesn’t include the tax paid under the composition levy.

Section 2(98) “reverse charge’’ means the liability to pay tax by the



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recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or (4) of sub section 9, or under sub section (3) or (4) of section 5 of the IGST Act.

Section 2(31) “consideration” in relation to the supply of goods or services or both includes-

(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;

(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:

PROVIDED that a deposit, whether refundable or not, given in respect of the supply of goods or services shall not be considered as payment made for the supply unless the supplier applies the deposit as consideration for the supply;.



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4) CGST, SGST, IGST, Levy and Exemption

Article 265 of Indian constitution: No tax shall be levied or collected except by authority of law.

Article 246 empowered the Parliament and State legislatures to make laws to collect taxes on items listed in list I, II and III in the seventh schedule. In exercise of these powers, tax laws have been framed and taxes are being collected. Parliament and the State Legislatures have derived the power to Levy CGST, SGST, IGST, UTGST (Called GST together) after the amendments made to the constitution in 101st Constitution Amendment Bill were approved by the Parliament and more than half of the State legislatures. The relevant amendments made are briefly explained as under:

Article 246A provides that both parliament and state legislatures shall have concurrent powers to make laws with respect to goods and services tax (GST). Parliament will retain exclusive power to legislate on inter-state trade or commerce.

Article 269 empowers the Parliament to make GST related laws for inter-

state trade / commerce. Article 269A provides that in case of the inter-state trade, the tax will be levied and collected by the Government of India and shared between the Union and States as per recommendation of the GST Council.

Article 279A provides for constitution of a GST Council by President

within sixty days from the day the Article coming into force. This Article also provides details about formation, functions and powers of GST Council.

Article 268 has been amended so that excise duty on medicinal and toilet

preparation will be omitted from the state list and will be subsumed in GST. Article 268A has been repealed so now service tax is subsumed in GST.

Article 366 of the Constitution gives the meaning of expressions used. According to this Article

(i) “goods” includes all materials, commodities, and articles; (ii) “goods and services tax” means any tax on supply of goods, or

services or both except taxes on the supply of the alcoholic liquor for human consumption;

(iii) “Services” means anything other than goods;

Some relevant definitions in the GST law proposed to be placed before GST Council for approval and thereafter for approval of Parliament and State Legislatures are given below.



38

“CGST” means the tax levied under the Central Goods and Services Tax Act, 2016;

“IGST” means the tax levied under the Integrated Goods and Services Tax Act, 2016;

“SGST” means the tax levied under the State Goods and Services Tax Act, 2016;

“UTGST” means the tax levied under the state goods and services tax act, 2016;

Levy and collection of Taxes

Section 9 is the charging section. A tax called the Central/State Goods and Services Tax(CGST/SGST/UTGST) on all intra-State supplies of goods and/or services shall be levied and collected in the manner prescribed. Section also makes it clear that tax will be levied and collected on the value determined under section 15. Tax will be levied and collected at the rates notified by the Central or State Government. As of now there appears to be no proposal to levy tax on the basis of quantity, volume etc. popularly known as ‘specific rate’. The section also provides that rate will be determined on the basis of recommendations of GST council.

A person who has obtained or is required to obtain more than one registration, whether in one State or more than one State, shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.

An establishment of a person who has obtained or is required to obtain registration in a State, and any of his other establishments in another State shall be treated as establishments of distinct persons for the purposes of this Act.

According to Section 22 of the act the persons liable to be registered are:

1. Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds twenty lakh rupees:

PROVIDED that where such person makes taxable supplies of goods and/or services from any of the States specified in sub-clause (g) of clause (4) of Article 279A of the Constitution, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees. (States covered by this Article are Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand)

(Other than Special Category States)



39

2. Every supplier shall be liable to be registered under this Act in the State from where he makes a taxable supply of goods and/or services if his aggregate turnover in a financial year exceeds ten lakh rupees. (Special category states are Assam, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand, Himachal Pradesh)

(Special Category States)

Explanation 1. - The aggregate turnover shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals.

Explanation 2. - The supply of goods, after completion of job-work, by a registered job worker shall be treated as the supply of goods by the “principal” referred to in section 55, and the value of such goods shall not be included in the aggregate turnover of the registered job worker.

Aggregate turnover” i) Shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals; ii) The supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker; iii) The expression “special category states” shall mean the States s specified in sub clause (g) of clause (4) of article 279A of the constitution.

The following persons shall not be liable to registration –

(a) any person engaged exclusively in the business of supplying goods and/or services that are not liable to tax or are wholly exempt from tax under this Act;

(b) an agriculturist, for the purpose of agriculture.

The Government may, on the recommendation of the council, by notification, specify the category of persons who may be exempted from obtaining registration under this act

After giving details of persons who need not be registered, the schedule provides that the following categories of persons shall be required to be registered under this Act:

(i) persons making any inter-State taxable supply;

(ii) casual taxable persons making taxable supply;

(iii) persons who are required to pay tax under reverse charge;

(iv) persons who are required to pay tax under sub section (5) of section 9

(v) Non resident taxable person making taxable supply;



40

(vi) persons who are required to deduct tax under section 51, whether or not separately registered under this Act;

(vii) persons who make taxable supply of goods and services or both on behalf of other taxable persons whether as an agent or otherwise;

(viii) input service distributor, whether or not separately registered under the Act;

(ix) persons who supply goods and/or services, other than supplies specified under sub-section (5) of section 9 , through such electronic commerce operator who is required to collect tax at source under section 52,

(x) every electronic commerce operator;

(xi) every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person; and

(xii) such other person or class of persons as may be notified by the Central Government or a State Government on the recommendation of the Council.

Levy and collection of IGST

Section 5 is the charging section. A tax called the Integrated Goods and Services Tax (IGST) shall be levied on all supplies of goods/and or service made during the course of inter-State trade or commerce. Section also makes it clear that tax will be levied and collected on the value determined under section 15. Tax will be levied and collected at the rates notified by the Central or State Government. There is a ceiling to the rate which is 28% of the value. The section also provides that rate will be determined on the basis of recommendations of GST council and collected in the manner prescribed. IGST on imported goods will be levied and collected in accordance with the provisions of section 3 of Customs Tariff Act, 1975 at the point where customs duties are charged. Provisions relating to reverse charge and electronic commerce operator are similar to the provisions in the CGST law.

The tax has to be paid by every taxable person.

It is important to note that for the purposes of this Act

(i) an establishment of a person in India and any of his other establishments outside India, or

(ii) an establishment of a person in a State and any of his other establishments outside that State,

shall be treated as establishments of distinct persons.



41

A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory.

Collection of tax at source Sections 51 provides for tax deduction at source and 52 [of CGST/SGST Act ]provide for tax collection at source. This is a new concept brought in from Income tax Act.

As per section 51 of the Act, Central or a State Government may mandate

(a) a department or establishment of the Central or State Government, or

(b) Local authority, or

(c) Governmental agencies, or

(d) such persons or category of persons as may be notified, by the Central or a State Government on the recommendations of the Council

to deduct tax at the rate of one percent from the payment made or credited to the supplier. Deduction has to be made in respect of goods and/or services where the total value of such supply, under a contract, exceeds two lakhs fifty thousand rupees (excluding taxes). GST council recommendation and notification of goods and/or services would also be necessary. Remaining provisions are similar to the ones that exist in section 52.

Section 52 makes it obligatory for every electronic commerce operator not being an agent, to collect an amount calculated at the rate of one percent of the aggregate value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator once a month. Naturally goods/services where ECO is required to pay the tax are excluded from this requirement. Amount collected in a month has to be paid to the government within 10 days from the end of the month. ECO has to file a return. Supplier can take credit of tax paid. The provisions relating to electronic credit ledger, matching, resolution of discrepancy etc have been provided for in the section but are similar to the provisions relating to input credit.

Composition scheme

On the recommendation of the Council, the proper officer of the Central or a State Government may, subject to such conditions and restrictions as may be prescribed, permit a registered taxable person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, to pay, in lieu of the tax payable by him, an amount calculated at such rates prescribed as 1%, 2.5%, .5%,for manufacturer, for Clause (b) of paragraph o of Schedule II and for other suppliers.



42

Eligibility: Tax payment under this scheme is an option available to the registered taxable person. Conditions and restrictions would be prescribed.

The taxable person should make an application exercising his option to pay tax under this scheme. Once granted, the eligibility would be valid unless his permission is cancelled under law or he becomes ineligible. The registered person shall be eligible to opt under sub-section (1), if -

(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of schedule II;

(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;

(c) he is not engaged in making any supply of inter –state outward supplies of goods;

(d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source u/s 52; and

(e) he is not a manufacturer of such goods as may be notified by the Govt. on the recommendation of the Council:

PROVIDED that where more than one registered persons are having the same PAN, the registered person shall not be eligible to opt for the scheme under sub section (1) unless all such registered persons opt to pay tax under that sub-section.

Other provisions

The permission granted to a registered taxable person shall stand withdrawn from the day on which his aggregate turnover during a financial year exceeds fifty lakh rupees.

A taxable person permitted to avail the composition scheme shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.

If the proper officer has reasons to believe that a taxable person was not eligible to pay tax under composition scheme, sub-section (1), such person shall, in addition to any tax that may be payable by him under other provisions of this Act, be liable to a penalty and the provisions of section 73 or 74, as the case may be, shall apply. Principles of natural justice have to be followed before proceeding with the demand and imposition of penalty.



43

Power to grant exemption from tax Section 11 explains the powers of the Central and State Governments to

grant exemption from payment of taxes (in respect of taxable goods and / or services) absolutely or subject to certain conditions or by way of special order in each case.

The Central or the State Governments are empowered to grant

exemptions from tax, subject to the following conditions: a. Exemption should be in public interest b. By way of issue of a notification c. On recommendation from the Council e. Exemption may be for any goods and / or services f. Exemption can be absolute or conditional g. For whole or any part of the tax leviable

An absolute exemption is required to be availed mandatorily in view of the explanation to section 11.

In terms of sub-Section (2), the Government may issue a special order on a case-to-case basis. The circumstances of exceptional nature would also have to be specified in the special order.

According to the section, notification can be with effect from the date of issue of or any date subsequent thereto as may be specified in the said notification. This means that no retrospective notification can be issued. However section provides where it is considered necessary or expedient to do for the purpose of clarifying the scope or applicability of any notification issued, an explanation can be inserted at any time within one year of issue of the notification and the explanation shall have effect from the date of notification or order.

The effective date of the notification or the special order would be the date which is so mentioned in the notification or special order. However, if no date is mentioned therein, it would be: Date of its issue for publication in the official gazette; Date on which it is made available on the official website of the Government Department



44

5) Supply, Place of Supply & Time of Supply

Background

Under present indirect tax laws, the taxable event attracting the levy varies under central excise law, service tax law, and VAT laws.

Central excise is levied by Central Government production/ manufacture of goods in India, and the taxable event is the ‘manufacture’ of the excisable goods. Excise duty is levied on the manufacture of excisable goods and collected at time of removal from the factory. The idea of collection at the stage of removal is devised for the sake of convenience. It is not as if the levy is at the stage of removal; it is only the collection that is done at the stage of removal[1]. The “supply” coverage be much wider than removal.

Service tax is levied on services provided by one person for another for a consideration. Value Added Tax /sales tax is a tax on transfer of property in goods (sale of goods). Supply would be much wider than provision and need not be for a consideration. Supply between same entity are liable to GST.

Under Central Sales Tax and local VAT law the levy is on transfer of property in goods for a consideration which is normally a “sale”. Supply would be much wider coverage. Stock transfer therefore would also be liable for GST.

Under proposed GST law, there are no separate events triggering the levy such as manufacture of excisable goods/provision of service / sale of goods-local /interstate basis. The levy of Central Goods and Service tax Act (CGST) or State Goods and Service tax Act (SGST) would get attracted on all supplies of goods and/or services at specified rate.

In this background, the paper writers have briefly examined the scope of supply under GST law as set out in Section 7 of GST Act.

What is meaning and scope of supply?

The term supply is defined to include:

• all forms of supply of goods and/or services: such as sale, transfer, barter, exchange, license, rental, lease or disposal, for consideration by a person in course of or furtherance of business • Importation of service, for a consideration, whether or not in the course

or furtherance of business, and • Supply specified in Schedule I, made or agreed to be made without

consideration, viz.



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• Permanent transfer / disposal of business assets where input tax credit has been availed on such assets.

• Supply of goods or services between related persons or between distinct persons as specified in Section 10, when made in the course or furtherance of business.

• Supply of goods – a) By a principal to his agent where the agent undertakes to supply such

goods on behalf of the principal, or b) By an agent to his principal where the agent undertakes to receive such

goods on behalf of the principal. • Importation of services by a taxable person from a related person or from any

of his other establishments outside India, in the course or furtherance of business. Schedule II of GST Law provides the matters which need to be treated as Supply of goods and services. SCHEDULE II of GST law, where matters as treated as supply of goods or services. 1. Transfer (1) Any transfer of the title in goods is a supply of goods. (2) Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services. (3) Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed, is a supply of goods.

2. Land and Building (1) Any lease, tenancy, easement, licence to occupy land is a supply of services. (2) Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 3. Treatment or process Any treatment or process which is being applied to another person’s goods is a supply of services. 4. Transfer of business assets (1) Where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person. (2) Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a



46

purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services. (3) Where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless— (a) the business is transferred as a going concern to another person; or (b) the business is carried on by a personal representative who is deemed to a taxable person. 5. The following shall be treated as “supply of service” (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier. Explanation.- For the purposes of this clause- (1) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:– (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression "construction" includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d)development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software; (e)agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and (f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (6) Composite Supply (a)works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract. (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 7. The following shall be treated as supply of goods



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(a) supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable. • Activities or transactions which shall be treated neither as a supply of

goods nor a supply of services Schedule III. [extracted below] 1) Services by an employee to the employer in the course of or in relation to

his employment. 2) Services by any court or Tribunal established under any law for the time

being in force. 3) (a) The functions performed by the Members of Parliament, Members of

state legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) The duties performed by any person who holds any post in pursuance of the provisions of the constitution in that capacity; or (c)The duties performed by any person as a chairperson or a Member or a Director in a body established but the Ventral Government or local authority and who is not deemed as an employee before the commencement of this clause.

4) Services of funeral, burial, crematorium or mortuary including transportation of the deceased 5) Sale of land and, Subject to clause (b) of paragraph 5 of Schedule II, sale of building. 6) Actionable claims, other than lottery, betting and gambling. Explanation-For the purposes of paragraph 2, the term “Court” included district court, High court and Supreme Court.

• The tax liability on a composite or a mixed supply shall be determined in the following manner —

(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;

(b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

Definitions:

Composite Supply:

Section 2(30) “composite supply” means a supply made by a taxable person to a recipient comprising two or more supplies of goods or services, or any

combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;



48

Example: 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.

Mixed Supply:

Section 2(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply; Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated 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

Time of Supply & Place of supply

The concepts of time of supply of goods and services have been summarized below by way of a chart. The detailed explanation of the concept of time of supply of goods and services is given in the article given in Appendix to this booklet.

Time of supply of goods

CGST-Chapter IV-Section 12

Earliest of the date on which:

(a) (b)

*Where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess shall, at the option of the said supplier, be the date of issue of invoice.

Exp 2: For (b) “the date on which the supplier receives the payment” shall be earliest of

Date of issue of

invoice by the

supplier

OR Last date on which he

is required, under

section 31, to issue the

invoice with respect to

the supply

Date on which

the supplier

receives the

payment



i. date on which the payment is entered in his books of accounts orii. date on which the payment is credited to his bank account


Where not possible to determine the time of supply under above, the time of supply shall be date of entry in the books of a

“the date on which the payment is made” shall be earliest of

i. date on which the payment is entered in his books of accounts of recipient or

ii. date on which the payment is debited to his bank account

Supply of vouchers issued by

Not possible to determine the time of supply under above provisions, time of supply shall be:

Supply is identifiable at the point

Dat of issue of voucher

Receipt of goods Payment is made



49

on which the payment is entered in his books of accounts ordate on which the payment is credited to his bank account

Under RCM


Where not possible to determine the time of supply under above, the time of supply shall be date of entry in the books of account of recipient of supply.


date on which the payment is entered in his books of accounts of

date on which the payment is debited to his bank account

Supply of vouchers issued by a supplier

Not possible to determine the time of supply under above provisions, time

Supply is identifiable at the

Dat of issue of

All other cases

Date of redemption of voucher

Payment is made Date immediately following 30

days from the date of invoice

issued by the supplier

GST ACT 2017

on which the payment is entered in his books of accounts or

Where not possible to determine the time of supply under above, the time of ccount of recipient of supply.



Not possible to determine the time of supply under above provisions, time

immediately following 30

days from the date of invoice

issued by the supplier



Time of Supply of Services

CGST/SGST


1.

*Where the supplier of taxable goods receives an amount up to rupees in excess of the amountsupply to the extent of such excess shall, at the option of the said supplier, be the date of issue of invoice

Exp 2: For (b)“the date on which the supplier receives the payment” shall be earliest of

i. date on which the payment is entered in his ii. date on which the payment is credited to his bank account

Where periodical return has to be filed

Date on which such return is to be filed

Date of issue of

invoice by the

supplier

OR



50

Time of Supply of Services

CGST/SGST-Chapter IV-Section 13


(b)

*Where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice,

to the extent of such excess shall, at the option of the said supplier, be the date of issue of invoice.

Exp 2: For (b)“the date on which the supplier receives the payment” shall be

date on which the payment is entered in his books of accounts ordate on which the payment is credited to his bank account

Under RCM

Where periodical return

Date on which such return is

In any other cases

Date on which the CGST/SGST is paid

Last date on which he

is required, under

section 31, to issue the

invoice with respect to

the supply

Date on which

the supplier

receives the

payment

GST ACT 2017

one thousand indicated in the tax invoice, the time of

to the extent of such excess shall, at the option of the said supplier, be

Exp 2: For (b)“the date on which the supplier receives the payment” shall be

books of accounts or date on which the payment is credited to his bank account


Date on which

the supplier

receives the

payment



Earliest of the date on

Payment is made Date immediately following 60 days

Not possible to determine the time of supply under above RCM provision: date of entry in the books of accou


i. date on which the payment is entered in his books of accounts of recipient or

ii. date on which the payment is debited to his bank account

“Associated enterprises”, where the supplier of service is located outside India


Date of entry in the books of Date of paymentaccount of the recipient of supply


Not possible to determine the time of supply under above provisions

Supply is identifiable at the point

Dat of issue of voucher



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Payment is made Date immediately following 60 days from the date of invoice issued by the supplier

Not possible to determine the time of supply under above RCM date of entry in the books of account of the recipient of supply.




“Associated enterprises”, where the supplier of service is located outside


Date of entry in the books of Date of payment recipient of supply



Supply is identifiable at the

Dat of issue of

All other cases

Date of redemption of voucher

GST ACT 2017

Payment is made Date immediately following 60 days from the date of invoice issued by the

Not possible to determine the time of supply under above RCM nt of the recipient of supply.



“Associated enterprises”, where the supplier of service is located outside




Time of Supply – Change in Rate

Goods/Service Supplied

Date of invoice (DOI)

Before change in rate

After

Before

After

After change in rate

Before

Before

After

Place of Supply of Goods and Place of supply of Under the present tax regime, the determination of tax is dependent upon whether the services are provided within the taxable territory or not. Service tax is consumption based tax. Place of Provision of Services Rules, 2012 are to be referred to determine the place where a service has been consumed. GST is destination based tax.supply is made or is treated as being made. The place of supply would

Where periodical return has to be filed

Date on which such return is to be filed



52

Change in Rate

Date of invoice

Date of payment (DOP)

Rate applicable

After DOI or DOP –earlier of both

Before After DOI

Before DOP

Before Before DOI or DOP – earlier of both

Before After DOP

Before DOI

Place of Supply of Goods and Place of supply of services: Under the present tax regime, the determination of tax is dependent upon whether the services are provided within the taxable territory or not. Service tax is consumption based tax. Place of Provision of Services Rules, 2012 are to

determine the place where a service has been consumed.

GST is destination based tax. The place of supply of services is where the supply is made or is treated as being made. The place of supply would

Where periodical return

Date on which such return is

In any other cases


GST ACT 2017

Rate applicable

earlier of both

earlier of both

Under the present tax regime, the determination of tax is dependent upon whether the services are provided within the taxable territory or not. Service tax is consumption based tax. Place of Provision of Services Rules, 2012 are to

determine the place where a service has been consumed.

The place of supply of services is where the supply is made or is treated as being made. The place of supply would




53

determine first as to whether the transaction is in India or outside India. If it is outside India it would not be liable to GST. It would also determine the place of levy. Most transactions are expected to be liable at the rate in the destination. There would be some exceptions in regard to services and a few in regard to goods. Thus understanding the provisions relating to place of supply of goods and services is of utmost importance. Section 10 of IGST Act: (Applicable for other than supply of goods imported into, or exported from India).

Sl. No

Situations Place of supply of goods

(1) Supply involves movement of goods – by supplier/ recipient/ other person

Location of goods at the time of termination of movement of goods terminated for delivery

(2) • supplier acting on direction of third person (agent or otherwise)

• Delivered goods to recipient

• Before/during movement of goods

• Either by transfer of document of title or otherwise

• Then – shall be deemed - third person has received the goods

• Eg. “Bill to – ship to” supplies , in-transit sales

Principal place of business of third person

(3) Supply does not involve movement of goods

Location of goods at time of delivery to recipient

(4) Goods assembled/ installed at site Place of such installation/assembly

(5) Supplied on board a conveyance Location at which such goods are taken on board



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(6) Place cannot be determined as above

Determined by law made by Central Govt w.r.t. recommendation of Council

Section 11 of IGST Act: Place of supply of goods imported into, or exported from India:

Place of supply of goods Place of supply of goods

Imported into India location of the importer

Exported from India location outside India

Section 12-IGST Act-Place of supply of services-when location of supplier of service and location of recipient of service is in India

(1) Supplied to registered person Location of such person

(2) Supplied to person other than registered person

Location of recipient as per records;

otherwise, location of supplier.

(3) Relation to immovable property (architects/decorators etc), lodging accommodation (including boat/vessel), accommodation for functions & ancillary services

Location of such immovable property If location of immoveable property/boat/vessel is outside India, then place of supply is location of recipient

(4) Restaurant, catering, personal grooming, cosmetic & plastic surgery

Location where services actually performed

(5) Services in relation to training &performance appraisal

Location of registered person receiving the services

If person not registered - place where services performed

(6) Admission to events/ amusement parks & ancillary services

Location where event is held or park is situated

(7) Organization of events & ancillary services & assigning of sponsorship of such events


If person not registered - place where event actually held

If event held outside India, then location



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of recipient

(8) Transportation of goods, including mail/courier


If person not registered – place where such goods are handed over for their transportation.

(9) Passenger transportation service � Location of the registered person � If person not registered – place where

the passenger embarks on the conveyance for the continuous journey.

(10) Service on board a conveyance such as vessel, aircraft, train or motor vehicle

Location of the first scheduled point of departure of that conveyance for the journey.

(11) Telecommunication services including data transfer, broadcasting, cable and direct to home television services:

a. Services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna;

b. Mobile connection for telecommunication and internet services provided on post-paid basis;

c. Mobile connection for telecommunication and internet services are provided on pre-payment through a voucher or any other means

Location where the telecommunication line, leased circuit or cable connection or dish antenna is installed. Location of billing address of the service receiver on record of the service provider. (i) through selling agent or a re-seller or a distributor of SIM card or re-charge voucher, shall be address of the selling agent or re-seller or distributor as per the record of the supplier at the time of supply; or (ii) by any person to the final subscriber shall be the location where such pre-payment is received or such vouchers are sold. In other cases not covered in (b) and (c) above, shall be the address of the recipient as per records of the supplier of the service.

(12) Banking or other financial services Location of the service receiver on the



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including stock broking record of the service provider.

Where the location of recipient is not on record of supplier, the place of supply shall be location of the supplier of services.

(13) Insurance services In case of registered person – location of such person

Other than registered person - location of the service receiver available on the records of the supplier of service.

(14) Advertisement services to the central government, state government, a statutory body or a local authority meant for identifiable states.

Each such State

Section 13 of IGST Act: Place of supply of services where the location of the supplier or the location of the recipient is outside India:

Place of supply of services-default provision

Place of supply of services

Services other than those specified below

Shall be the location of the recipient of service. Where location of recipient is not available in normal course of business, the place of supply is location of supplier of service.

13 The place of supply of the following services namely:

Sl. no.

Relevant Rule

Situations Place of provisions of Service

1 13(3) Performance based supply

(a) Services supplied in respect of goods that are required to be made physically available by the recipient of service to the

Location at which services are actually performed.



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supplier of service, or to a person acting on behalf of the supplier of service in order to provide the service

Proviso – when services are provided from a remote location by way of electronic means

This clause shall not apply in the case of a service supplied in respect of goods that are temporarily imported into India for repairs and are exported after repairs without being put to any use in India, other than that which is required for such repairs

(b) services supplied to an individual, represented either as the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the recipient, with the supplier for the supply of the service

Location at which services are actually performed.

13(4) Services provided directly related to an Immovable property including

- services of experts and estate agents,

- supply of hotel accommodation by a hotel, inn, guest house, club or campsite (by whatever name called)

- grant of rights to use

where the immovable property is located or intended to be located



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immovable property - services for carrying out

or co-ordination of construction work, including architects or interior decorators

13(5) admission to, or organization of:

- a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar events

Services ancillary to such admission

where the event is actually held

13(6) Multiple location based supply of 13(3)/(4)/(5) where one of the location is in taxable territory.

Location of taxable territory where the greatest proportion of service is provided.

13(7) Services of 13(3)/(4)/(5) (6)Supplied in more than one State,

Taken as being in each of the States in proportion to the value of services so provided in each State as ascertained from the terms of the contract

or

agreement entered into in this regard or,

in absence of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf.

13(8) a. supplied by a banking company, or a financial institution, or a non-

Location of the supplier of service



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banking financial company, to account holders

b. Intermediary services

c. Service consisting of hiring of means of transport, other than aircraft/vessels except yachts up to a period of one month

For this clause goods includes securities as defined

13(9) Services of transportation of goods, other than by way of mail or courier

Place of destination of the goods

13(10) Passenger transportation service

place where the passenger embarks on the conveyance for a continuous journey

13(11) Services provided on a board a conveyance in course of passenger transport operation

First scheduled point of departure of that conveyance for the journey

13(12) online information and database access or retrieval services‖

location of recipient of service

13(12) For the purposes of this sub-section, person receiving such services shall be deemed to be located in the taxable territory if any two of the following non contradictory conditions are satisfied, namely:- (a) the location of address presented by the recipient of service via internet is in taxable territory; (b) the credit card or debit card or store value card or charge card or smart card or any other card by which the recipient of service settles payment has been issued in the taxable territory; (c) the billing address of recipient of service is in the taxable territory; (d) the internet protocol address of the device used by the recipient of service is in the taxable territory;



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(e) the bank of recipient of service in which the account used for payment is maintained is in the taxable territory; (f) the country code of the subscriber identity module (SIM) card used by the recipient of service is of taxable territory; (g) the location of the fixed land line through which the service is received by the recipient is in taxable territory.

13(13) In order to prevent:

1. double taxation or 2. non-taxation of the supply of a service or 3. for the uniform application of rules

The Central Government shall have the power to notify any description of service or circumstances in which the place of supply shall be the place of effective use and enjoyment of a service.



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6) Job Work and Stock Transfer 1. JOB-WORK The manufacturing industries now a days the stick to their core competencies and get most jobs done on outsourced basis. The sending of raw materials/semi-finished materials for some manufacturing process or for completion as per the directions of principal manufacturer is known as job work. The industries who undertake the work of job work should be aware of the provisions under GST, so that can be compliant and not face demands of levy or excess availment of credit. Even the principal manufacturer should be aware of the provisions applicable for job work not only for the purpose of enabling them to plan their processes effectively but also to cut manufacturing costs. The job work concept available without payment of central excise duty under Notification 214/86 has been continued under GST. Meaning of Job work under GST Section 2(68)-“job work” means

• undertaking any treatment or process • by a person • on goods • belonging to another registered taxable person. • Any person who does such job work will be considered as “Job Worker”.

In CCR it only covers processing on goods supplied to job worker. This definition is different from existing definition in CCR as it now specifies job work on goods of registered taxable person. Unregistered persons sending goods for job work would not to be considered as job work under GST. Place of business: 2)(74) “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, provides

or receives goods and/or services; 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

Job Work and GST

� Under GST, levy gets attracted on supply of goods. � Therefore, normally the taxable person [who is called as principal] for job

work would have to pay applicable GST at time of supply of materials dispatched for job work. The job worker would avail credit of tax paid by principal. Later the job worker would clear job worked goods on payment



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of GST. Principal would avail credit of GST charged by job worker and discharge GST on supply of final processed goods.

� Under section 143 the Principal could send materials without paying of taxes and discharge GST on the final goods which are resulting out of processing of job worked goods received back from job worker, subject to following prescribed procedure in this regard.

� The job worker can receive the goods directly from the raw material/ component supplier.

� The principal would engage in further processing resulting into final product. The final product would be supplied on payment of applicable GST by the principal.

� Job worked goods could be sent directly from job worker premises to customer of principal.

� The responsibility for accounting of materials and payment of tax on job worked goods lies on principal. Job worker would pay GST on processing charges.

� The procedure for job work has been prescribed in Section 143 and given below.

Section 143 is as under: (1) A registered taxable person (hereinafter referred to as the “principal”) may, under intimation and subject to such conditions as may be prescribed, send any inputs and/or capital goods, without payment of tax, to a job worker for job-work and from there subsequently send to another job worker and shall –

(a) bring back inputs, after completion of job-work or otherwise, and/or capital goods, other than moulds and dies, jigs and fixtures, or tools, within 1 year and 3 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, and/or capital goods, other than moulds and dies, jigs and fixtures, or tools, within 1 year and 3years, 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:

The “principal” shall not supply the goods from the place of business of a job worker in terms of clause (b) unless the said “principal” declares the place of business of the job-worker as his additional place of business except in a case-

(ii) where the job worker is registered under section 25 ; or (iii) where the “principal” is engaged in the supply of such goods as may be

notified by the Commissioner in this behalf. (2) The responsibility for accountability of the inputs and/or capital goods shall lie with the “principal”. (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 clause(a) of sub-section (1) or are not supplied from the place of business of the job worker in



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accordance with clause (b) of sub-section (1) within a period of 1 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 clause(a) of sub-section (1) or are not supplied from the place of business of the job worker in accordance with clause (b) of sub-section (1) within a period of 3years 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) 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. Job work & Credit:

� The supplier of materials [principal] can avail credit of input tax on inputs and capital goods sent to a job-worker for job-work.

� Such credit availment shall be subject to such conditions and restrictions prescribed

� Credit can be availed on inputs/capital goods even if directly sent to a job worker for job work.

� In such a case, the period of 1 year / 3 years shall be counted from the date of receipt of the inputs/Capital goods by the job worker.

� If the inputs/capital goods, are not received back within 1 year/ 3 years respectively of being sent to job worker premises, then it is deemed as supply on the day when the said inputs/Capital goods were sent out.

Existing provisions on job work:

1. Job work amounting to manufacture of excisable goods: Manufacturing of excisable goods can be done by a job worker for another on the materials sent to him for job work.

2. Alternatively, the job worker can be completing part of processing related to the manufacturing activity related to manufacture of excisable goods. These could then be further processed and converted to final goods by principal manufacturer.

3. The notification no.214/86-CE is exempting the excisable goods produced as a job work in a factory from payment of the whole of the duty of excise.

4. The benefit of this exemption is available to the job worker only when the principal undertakes responsibility to discharge excise duty on final products.

5. When job work amounts to manufacture of excisable goods, it is covered in negative list and excluded from ST levy in hands of Job worker.



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6. When job work does not amount to manufacture: When processing done by job worker does not amount to manufacture, then service tax is applicable on processing charges.

7. There is ST exemption in 25/12-ST when the principal discharges excise duty on final manufactured products/exports such final products resulting from further processing of job worked materials.

8. Cenvat credit can be availed by job worker on the inputs/consumables used for job work.

9. The notification no. 83/94-CE grants an exemption to specified goods manufactured on a job work basis in a factory, subject to certain conditions- it must be used in the factory of the supplier in or in relation to the manufacture of specified goods(eligible for SSI exemption) which are exempted from the whole of duty of excise and the supplier of goods undertakes to discharge the duty liability if the goods are not so utilized.

Landmark Decisions under present provisions: � Usage of own materials by job worker: The Honourable Supreme Court

in Prestige Engineering (India) Ltd Vs CCE Meerut (1994 (73) ELT 497 (SC)) wherein the court held that where the sub-contractor or job worker contributed his own raw material for manufacturing, the transaction was not one of job work at all. However, minor additions by the job worker would not detract the transaction from being one of job work.

� Eligibility to Cenvat credit: In Sterlite Industries (I) Ltd v/s C.C.Ex, Pune [2005 (183) ELT 353 (LB)]”held that job worker, who received goods from manufacturer under Rule 57E of erstwhile Central Excise Rules, 1944 entitled to take credit of duty in respect of other inputs received directly and used by him in manufacture of said goods on job work basis.

2. STOCK TRANSFER OF GOODS

Stock transfer under GST regime i. Under GST law, stock transfers from one State to other to one’s branch

or consignment agent might be treated as inter-State sale and tax levied thereon.

ii. Stock transfers to branches/consignment agents within the State: Under GST, these transfers could also be levied to tax, unless the GSTN number of transferor and transferee is same.

Stock Transfer under existing provision � Branch(s) means every office outside the State, where the dealer has its head

office (i.e. Principal place of Business). Branch may be an office, merely for booking the orders in complete control of the head office or it may be an independent office, monitored by the head office. Even separate registration of branch in other State will not constitute their separate entity.



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� Basic elements required for treating a transaction a complete sale in case of Branch Transfer

o There must be two parties, who are competent to contract o There must be mutual assent o There must be transfer of property o Valuable consideration must exist.

� Manufacturing unit of the assesse in Maharashtra transfers goods to Punjab branch. Company was having one main buyer in Punjab who used to give orders to Punjab office, based upon his requirements. As the goods were transferred on regular basis/generally and not on the order of the main buyer, this is a case of Branch Transfer. [Based on the decisions of Honourable Andhra Pradesh high Court in the cases of Gromor Chemicals (P) Ltd. Vs. State of A.P. (1990) 79 STC 42 (AP); State of A.P. vs. Coromandel Paint & Chemical Ltd. (1995) 98 STC 82 (AP)]

� The dealer transferred stock in bulk from one state to another state, but not in pursuance to a contract of sale. It was held as Branch Transfer. [Based on the decision of Honourable Allahabad High Court in the case of CST vs. ModiPon Ltd. (1995) 96 STC 394 (ALL) ]

� The term sale price u/s2(h) of CST Act refers to the amount payable to a

dealer as CONSIDERATION for the sale of any goods, it may be market price, cost price or any other deemed consideration.

� There is no consideration payable in case of branch transferred and any

such consideration to be taxed is yet to be settled by courts

� Meaning thereby even an agreement to sell may also now result in classification of such stock transfers as “inter-state sales” and not “branch transfer” which resulted in movement of goods from one state to another (even before the date of sales) held in Hyderabad Engineers (SC) 2. Repair, warranty, returns, Free supply, Donation, and Captive

Consumption 1. Repair: Processing of goods belonging to others is treated as service,

under GST.

2. Returns: Goods returned against refund paid to a registered taxable person would be liable to GST. The recipient can avail credit of GST charged on such returns.

3. Free Supply: Supply does not specifically include supply of goods between independent persons on free of cost basis. Free Supply of goods between related persons/between establishments of a person having more than 1 registration in one or more states, made in course of business is treated as supply without consideration.



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4. Warranty replacement on free of cost basis: Same as above.

5. Donation: Goods donated may not be liable to GST.

6. Captive consumption: Captive consumption within same establishment with same registration number within state not liable. Other cases liable as given in point 3.



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7) Input Tax credit under GST Regime The Cenvat credit scheme under present law was intended to be a beneficial scheme to allow the supplier of taxable goods and/or services to avail Cenvat credit, including on input services related to business. However, Cenvat credit rules have placed several artificial restrictions on availment of input service credit on construction [other than to persons engaged in taxable services of construction/works contract], motor vehicles related credit and employee credit on expenses primarily incurred in relation to business. The restrictions lead to break in the credit chain and consequent cascading effect, leading to increase in costs of goods and services. There has been expectation under GST that credit connected to business would be allowed without any restrictions. The GST law sets out that every registered taxable person who carries on any business at any place in India/State, shall be entitled to take credit of input tax admissible to him which shall be credited to the electronic credit ledger of such person. The amount of credit of IGST available in the electronic credit ledger shall first be utilized towards payment of IGST, CGST and SGST or UTGST in that order. The amount of credit of CGST shall first be utilized towards payment of CGST and the amount remaining, if any, towards the payment of IGST. In this backdrop, the paper writers have examined the provisions relating to input services credit under the GST regime and also compared with the existing eligibility to input service under Cenvat Credit Rules. Section 2(62) "input tax" in relation to a registered person, means the Central tax, State tax, Integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes-

a) The IGST Charged on import of goods

b) The tax payable under the provisions of sub-sections (3) and (4) of section 9;

c) The tax payable under the provision sub-sections (3) and (4) of section 5 of IGST Act,

d) The tax payable under the provision sub-sections (3) and (4) of section 9 of the respective SGST Act; or

e) The tax payable under the provision sub-sections (3) and (4) of section 7 of the UTGST Act;

But doesn’t include the tax paid under the composition levy. Section 2(56) “input tax credit” means credit of ‘input tax



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Section 2(17) - Business is defined in inclusive manner as under: a) any trade, commerce, manufacture, profession, vocation, adventure,

wager or any other similar activity, whether or not for a pecuniary benefit,

b) any activity or transaction in connection with or incidental or ancillary to(a) above;

c) any activity or transaction in the nature of (a) above, whether or not here is volume, frequency, continuity or regularity of such transaction

d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business;

e) provision by a club, association, society, or any such body (for subscription or any other consideration) of the facilities or benefits to its members ass the case may be;

f) admission of persons to any premises for a consideration; and g) services supplied by a person as the holder of an office which has been

accepted by him in the course or furtherance of his trade, profession or vocation

h) services provided by a race club by way of totalisator or a licence to book maker in such club; and

i) any activity or transaction undertaken by the Central Govt., a state Govt. or any local authority in which they are engaged as public authorities;

Definition of Capital goods – Section 2(19) “Capital goods” means: Goods, the value of which is capitalized in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business; Definition of Inputs - Section 2 (59) “Input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business”. Definition of Input service – Section 2 (60) “Input service” means any service, used or intended to be used by a supplier in the course or furtherance of business. Comparison with the present regime: Capital goods definition under present Cenvat Credit Rules � The definition of capital goods is given in Cenvat Credit Rules 2004. � Definition is restrictive. Only what is specified therein is covered. � Capital goods used 1) in factory of manufacture of final product; or 2) for

providing output service. � At present following are covered: tools, knives falling under chapter 82,

machines covered in chapter 84, electrical machinery under chapter 85, measuring, checking and testing machines falling in chapter 90 grinding wheels of heading 6804; pollution control equipment

� Components, spares and accessories of above [ need not fall in above headings].

� moulds and dies, jigs and fixtures;



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� refractories and refractory materials; � tubes and pipes and fittings thereof; � storage tank; � motor vehicles other than those excluded; � CG used outside factory for generation of power used captively in factory. � motor vehicles used for providing specified services such as transport of

passengers/ courier agency service � Credit on dumpers and tippers is eligible as capital goods. Decisions on eligibility to credit on capital goods under existing Cenvat Credit Rules; Plant/machinery: Capital goods can be machines, machinery, plant equipment, apparatus, tools or appliances. Any of these goods if used for producing or processing of any goods or for bringing about any change in any substance for the manufacture of final product would be ‘Capital goods’, and, therefore, qualify for availing credit. Similarly held in C.C.Ex.Coimbatorevs Jawahar Mills Ltd (2001 (132) E.L.T. 3 (S.C.). Parts/Spares of machinery: Components/spares/accessories of machineries need not fall in chapter 82, 84, 85, 90. The only requirement is that they should be part, component or accessory of machinery. Held in CCE vs RashtriyaIspat Nigam Ltd (2011 (267) ELT 311 (AP HC) that “capital goods” would not only include goods falling under Chapters 82, 84, 85 and 90 of the Central Excise Tariff Act but also components, spares and accessories of such goods. Steel panels/channels: In Rajasthan Spinning & Weaving Mills (2010 (255) ELT 481 (SC) held by applying user test that steel plates and MS channels used in fabrication of chimney for DG set is eligible as accessory to capital goods. Capital goods becoming immoveable property: Credit on inputs used in manufacture capital goods such as storage tanks/pollution control equipment is eligible even if it becomes immoveable property. Held in CCE vs SLR Steels (2012 (280) E.L.T. 176 (Kar.). Definition of input under present Cenvat Credit Rules as under: The term input is defined in Rule 2(k) of CCR: “input” means: Eligible Credit:

� all goods used in the factory by the manufacturer of the final product; or � any goods including accessories, cleared along with the final product, the

value of which is included in the value of the final product and goods used for providing free warranty for final products; or

� all goods used for generation of electricity or steam or pumping water for captive use; or

� all goods used for providing any output service;



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� All capital goods having value upto Rs.10000 per piece Restriction on availment of credit on inputs Excludes:

� light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;

� any goods used for – 1. construction or execution of works contract of a building or a civil

structure or a part thereof; or 2. laying of foundation or making of structures for support of capital

goods, except for the provision of service portion in the execution of a works or construction service as listed under clause (b) of section 66E of the Act;

� capital goods except when (i)used as parts or components in the manufacture of a final product or (ii)value of such capital goods is upto Rs.10000 per piece;

� motor vehicles; � any goods, such as food items, goods used in a guesthouse, residential

colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and

� any goods which have no relationship with the manufacture of a final product. It may be noted there is specific restriction to avail credit on inputs used for executing works contract service [material plus labour contract] set out in ST Valuation Rules.

Landmark Decisions on indicative list of eligible credit on inputs under Cenvat Credit Rules

1. Raw materials:In TELCO vs. State of Bihar (1994 (74) E.L.T. 193), the Supreme Court held that the term raw material varies from industry to industry and decided that items like tyres and tubes, which, though are finished products in themselves, can be considered as raw materials for vehicles.

2. Goods used for testing: In the case of Flex Engineering Ltd vs. CCE, U.P 2012 (276) ELT 153 (SC) wherein it was held that goods used for testing machines were inputs used in relation to manufacture of final product, eligible for Cenvat/` credit. Physical presence in final product is not pre-requisite to claim credit. They may very well be indirectly related to manufacture and still be necessary for completion of manufacture of final product, which is complete only when product is rendered marketable

3. Credit on accessories: The Supreme Court in HMM Ltd. vs. CCE - 1994 (74) E.L.T. 19, wherein it was held that metal screw cap put on Horlicks bottle is a component part of the finished product.



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4. Furnace oil: In the case of CCE, Meerut-I vs. Silvertone Papers Ltd., 2013 (287) ELT 478 (Tri. Del.) Furnace oil procured and used in boiler on trial basis. Assessee is entitled to credit of duty paid on it.

Comparison with the present regime: Input service definition in Cenvat credit rules

• Credit is permitted on following: • Any service-

o used for providing an output service; or o used by a manufacturer, whether directly or indirectly, in or in

relation to the manufacture of final products and clearance of final products upto the place of removal,

o and includes o services used in relation to

modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; Decisions permitting credit on specific input services under Cenvat Credit scheme: Repair maintenance: In Red Hat India Pvt Ltd vs. Principal Commr, Service Tax, Commissionerate, Pune (2016-TIOL-1300-CESTAT-MUM) appellants are engaged in the providing export of services and filed refund claim under Rule 5 of Cenvat Credit Rules, 2004.As regards Works contract service, credit has been taken as this service is related to monthly maintenance of photocopier, computer and building premises of the appellant. After extracting rule 2(l) of the CCR, the Bench held -As per rule 2(l) of CCR, 2004, Works Contract Services are excluded only when used for construction services. Works contract services used for maintenance of office equipment and building are to be treated as Input Services, credit admissible and eligible for refund. It is relevant this was decision under new input service definition applicable w.e.f 1.4.2011. Outdoor catering: Held in StanzenToyotetsu India Pvt. Ltd. vs. C. C. Ex., Bangalore-III 2009 (14) S.T.R. 316 (Tri. - Bang.) Affirmed in 2011 (23) STR 444 (Karnataka High Court) held outdoor caterer services for providing food to staff. Facility provided because of statutory obligation imposed under Section 46 of Factories Act, 1948 and it becoming condition of Service as far as employees concerned. Expenses incurred considered in fixing price. Activity may be welfare measure but not charity provided by employer to employees. Test whether service utilised for manufacture directly or indirectly or used in relation to activities relating to business. Credit available.



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Employee group insurance/accident insurance: In Milipore India Ltd Vs CCE Bangalore –II (2009 (236) ELT 145 (Tri-Bang). Affirmed in 2012 (26) STR 514 (Karnataka High Court) there was no restriction on availment of such insurance credit. This decision was followed in Reliance Industries decision (2015-TIOL-181-CESTAT-MUM). Air travel by company directors/employees: Expenditure incurred on air travel by employees/directors of the company for official purpose is eligible for credit subject to proper documentary evidence. Similarly held in CCE vs Fine Care Biosystems (2009 (244) ELT 372 (CESTAT) and Goodluck Steel Tubes Ltd. Vs C. C. Ex., Noida 2013 (32) S.T.R. 123 (Tri. - Del.). Lodging/Boarding: One Advertising & Communication Services Ltd. vs C.S.T., Ahmedabad (2012 (27) S.T.R. 344 (Tri. - Ahmd.). wherein it was held payment of Service tax on hotel rent for chief executive for business and client meeting. Issue directly relatable to assessee’s business. Therefore, credit admissible Commission agent: The decision of Punjab and Haryana Hon’ble High Court in the case of CCE vsAmbika Overseas (2012 (025) STR 348 (P&H) wherein it was held that canvassing and procuring orders were in relation to sales promotion and would fall under sales promotion activities. Hence respondent is eligible for cenvat credit on the commission paid accordingly the objection requires to be dropped. Mobile phones in the name of employees: In CCE, Goa vs. Hindustan Coca Cola Beverages (P) Ltd. (2015 (39) STR 360 (Bom) wherein held Credit of Service Tax paid on mobile phones used by employees/staff of manufacturer admissible. Gardening services: In CCE & ST, LTU, Chennai vs. Rane TRW Steering Systems (2015 (39) S.T.R. 13 (Mad.) wherein it was held housekeeping and gardening services where an employer spends money to maintain their factory premises in an eco-friendly manner, tax paid on such services would form part of the cost of final products and the same would fall within the ambit of “input services” and therefore assessee is entitled to claim the benefit. Thus, Housekeeping and landscaping services included in the scope of term “input services”. Group insurance: In CCE & ST, LTU, Bangalore vs. Micro Labs Ltd. 2012(26) STR 383 (Kar) held Group Insurance Health Policy though a welfare measure is an obligation cast under statute that employer has to obey. Policy taken by assessee is service constituting activity relating to business which covered under input service definition. Service tax paid on all services utilised directly or indirectly in or in relation to final product eligible as credit.



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The decisions referred above other than (i) were in context of earlier input service definition applicable till 31.3.2011 where there was no restriction in place for availment of credit on employee related costs. Section 16: Eligibility and conditions for taking input tax credit (1) Every registered taxable person can avail credit of input tax charged on any supply of goods or services to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person subject to such conditions and restrictions as may be prescribed and within the time and manner specified. (2) Registered taxable person shall not be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying document(s) as may be prescribed; (b) he has received the goods and/or services; (c) the tax charged in respect of such supply has been actually paid to the account of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 34: Where goods received in lots: Where the goods against an invoice are received in lots or instalments, the registered taxable person shall be entitled to take credit upon receipt of the last lot or instalment. When recipient not paid amount towards supply of service + tax within 180 days: Where a recipient fails to pay to the supplier of services, the amount towards the value of supply of services along with tax payable thereon within a period 180 days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in the manner as may be prescribed. Deemed receipt of goods: For the purpose of clause (b) above, it shall be deemed that the taxable person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such taxable person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise. (3)No claiming depreciation under IT act on capital goods: Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods and Plant and machinery under the provisions of the Income Tax Act, 1961, the input tax credit shall not be allowed on the said tax component. (4) A taxable person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services after furnishing of the



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return for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. 17. Apportionment of credit and blocked credits (1) Goods and or services used partly for business and other purpose: Where the goods and/or services are used by the registered taxable person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (2) Goods and or services used partly for taxable including zero rated supplies and partly for exempt supplies: Where the goods and / or services are used by the registered taxable person partly for effecting taxable supplies including zero-rated supplies under this Actor under the IGST Act, 2016 and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. (3) Exempt supplies shall include supplies on which recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and subject to clause (b) of paragraph 5 of schedule II, sale of building. (4) A banking company or a financial institution including a non-banking financial company, which is engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either given under (2) above, or avail of, every month, an amount equal to 50% of the eligible input tax credit on inputs, capital goods and input services in that month and rest will lapse.

� The option once exercised as above shall not be withdrawn during the remaining part of the financial year.

� Provided that the restriction of 50% shall not apply to the tax paid on supplies made by one registered person to another registered person having the same PAN.

(5) Input tax credit shall not be available in respect of the following: Notwithstanding anything contained in sub-section (1) of section 16 and sub section (1) of section 18, ITC shall not be available in respect of the following; (a) motor vehicles and other conveyances except when they are used (i) for making the following taxable supplies, namely (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods. (b) supply of goods and services, namely, (i) food and beverages, outdoor catering, beauty treatment, health



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services, cosmetic and plastic surgery except where such inward registered taxable person for making an outward taxable supply of the same category of goods or services or both as an element of a taxable composite or mixed supply.

(ii) membership of a club, health and fitness centre, (iii) rent-a-cab, life insurance, health insurance except where (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of taxable composite or mixed supply; and (iv) travel benefits extended to employees on vacation such as leave or home travel concession. (c) works contract services when supplied for construction of immovable property, other than plant and machinery, except where it is an input service for further supply of works contract service; (d) goods or services or both received by a taxable person for construction of an immovable property(other than plant and machinery) on his own account, including when such goods or services or both are used in course or furtherance of business; For the purpose of the above clause, the word “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property. ‘Plant and Machinery’ means apparatus, equipment, machinery, pipelines, telecommunication tower fixed to earth by foundation or structural support that are used for making outward supply and includes such foundation and structural supports but excludes land, building or any other civil structures. (e) goods and/or services or both on which tax has been paid under section 10; (f) goods and/or services or both received by a non resident taxable person except on goods imported by him. (g) goods and/or services or both used for personal consumption; (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and (h) any tax paid in terms of sections 74, 12 or 130. (6) The Government may prescribe the manner in which the credit referred to in sub sections (1) and (2) may be attributed. Explanation: for the purpose of this chapter and chapter VI, the expression “Plant and machinery” 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— (a)land , building or any other civil structures; (b) Telecommunication towers; and © pipelines laid outside the factory.



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18. Availability of credit in special circumstances (a) Credit to person who applied and got registration within 30 days from when liable for registration: A person who has applied for registration under the Act within 30 days from the date on which he becomes liable to registration and has been granted such registration shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act. (b)Voluntary registration: A person, who takes voluntary registration shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration. (c) Person ceases to pay composition levy tax: Where any registered taxable person ceases to pay tax under section 10, he shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax u/s 9. The credit on capital goods shall be reduced by such percentage points as may be prescribed in this behalf. (d) When exempt supplies become taxable: Where an exempt supply of goods or services or both by a registered taxable person becomes a taxable supply, such person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable. The credit on capital goods shall be reduced by such percentage points as may be prescribed in this behalf. (2) A taxable person shall not be entitled to take input tax credit under sub-section(1) above, as the case may be, in respect of any supply of goods and /or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply. (3) Change in constitution: Where there is a change in the constitution of a registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed. (4) Switch over from normal scheme to composition scheme of paying tax: Where any registered taxable person who has availed of input tax credit switches over as a taxable person for paying tax under section 10 or, where the



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goods and/ or services supplied by him become exempt absolutely, he shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed, on the day immediately preceding the date of such switch over or, as the case may be, the date of such exemption. After payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse. (5) The amount of credit under sub-section (1) and the amount payable under sub section (4) shall be calculated in such manner as may be prescribed. (6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered taxable person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by the percentage points as may be specified in this behalf or the tax on the transaction value of such capital goods or plant and machinery, whichever is higher. Where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods. 19. Taking input tax credit in respect of inputs sent for job work – (1) The “principal” shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job-worker for job-work. (2) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the “principal” shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job-work without their being first brought to his place of business. (3) Where the inputs sent for job-work are not received back by the “principal” after completion of job-work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or (b) of sub-section (1) of section 143 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: Where the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. (4) The “principal” shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on capital goods sent to a job-worker for job-work. (5) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the “principal” shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job-work without their being first brought to his place of business. (6) Where the capital goods sent for job-work are not received back by the “principal” within a period of three years of their being sent out, it shall be



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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: Where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker. (7) Nothing contained in sub-section (3) or sub-section (6) shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job-worker for job-work

Manner of distribution of credit by Input Service Distributor – Section 20 (1) The Input Service Distributor shall distribute, in such manner as may be prescribed, the credit of CGST as CGST or IGST and IGST as IGST or CGST, by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed or being reduced thereafter, where the Distributor and the recipient of credit are located in different States. (CGST ACT) The Input Service Distributor shall distribute, in such manner as may be prescribed, the credit of SGST as SGST or IGST ,[there appears to be mistake in drafting as SGST cannot be distributed as IGST], by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed or being reduced thereafter, where the Distributor and the recipient of credit are located in different States. (SGST Act) (2) The Input Service Distributor may distribute the credit subject to the following conditions, namely: (a) the credit can be distributed against a prescribed document issued to each of the recipients of the credit so distributed, and such document shall contain details as may be prescribed; (b) the amount of the credit distributed shall not exceed the amount of credit available for distribution; (c) the credit of tax paid on input services attributable to a recipient of credit shall be distributed only to that recipient; (d) the credit of tax paid on input services attributable to more than one recipient of credit shall be distributed only amongst such recipient(s) to whom the input service is attributable and such distribution shall be pro rata on the basis of the turnover in a State of such recipient, during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period; (e) the credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period. Explanation 1. –For the purposes of this section, the “relevant period” shall be-



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(i) if the recipients of the credit have turnover in their States in the financial year preceding the year during which credit is to be distributed, the said financial year; or (ii) if some or all recipients of the credit do not have any turnover in their States in the financial year preceding the year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed. Explanation 2. - For the purposes of this section, ‘recipient of credit’ means the supplier of goods and / or services having the same PAN as that of Input Service Distributor. Explanation 3. – For the purposes of this section, ‘turnover’ means aggregate value of turnover, as defined under sub-section (112) of section 2. Comparative review These provisions are similar to the provisions contained in Rule 7 of CENVAT credit rules for distribution of credit of input service by an ISD. It appears that the distribution of credit among the recipients prescribed in CENVAT credit Rules has been continued in proposed GST law. The conditions for distribution of credit to each recipient also appears to be continued as before. Manner of recovery of credit distributed in excess – Section 21 Where the Input Service Distributor distributes the credit in contravention of the provisions contained in section 20 resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed shall be recovered from such recipient(s) along with interest, and the provisions of section 73 or 74, as the case may be, shall apply mutatis mutandis for effecting such recovery. Comparative review: Currently, recovery provision is specified in Rule 14 of CENVAT Credit Rules. The CENVAT credit taken or utilized wrongly or has been erroneously refunded, is recovered along with interest under the provisions of sections 11A and 11AB of the Excise Act or sections 73 and 75 of the Finance Act. Currently, there is no specific provision for excess distribution of credit by ISD. Now specific provision is provided in the proposed GST law providing for recovery of amount along with interest. Further, the relevant period for recovery of excess amount distributed is also provided in GST law Last opportunity to claim Cenvat Credit In GST regime, it is expected that there would be enabling facilities for availing the credits missed out in the transition period. If this facility is not provided, claiming of missed out credit amounts could be disputed. Therefore, the



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manufacturer and service provider who have in the past done any of the following, may like to review the option of availing missed out credits;

1. Credit reversed under protest for unlimited period 2. Credit reversed at the time of audit to buy peace. (If documentary

evidence available, without time limit credit can be claimed) 3. Credit reversed erring on caution in respect of services like GTA

Outwards, Outdoor Catering Service, Group medi-claim Insurance, renting of immovable property on car parking and Cafeteria services. Examine the eligibility and claim credit if eligible with intimation to department.

4. Examine any excise duty / service tax credit missed on eligible Capital goods, input and input services by way of reconciliation

5. Credit availment on rejection of Cenvat credit refund claim 6. Incorrect reversal of credit under Rule 6 of Cenvat credit provisions

considering gross trading value as exempted value instead of considering only margin or 10% of cost of goods involved in trading as exempted value.

7. Job-work / Job-worker’s Credit missed out 8. Credit missed at the time of import due to sub-contract service by

Custom House Agency (CHA). The Cenvat credit on inputs and input services needs to be claimed within one year. Therefore, this is one-time opportunity available by submitting a ST-3 return with disclosure of eligible credits. If ST-3 return is already filed, option of disclosure could be examined by filing revised return within 90 days from the date of filing of original ST-3 return. Due date for filing ST-3 return for April to Sept 2016 was 25thOct 2016. Conclusion The credit under GST was expected to be available as long as goods/ services used in or in relation to business. The carrying forward of the old restrictions in the GST law means that to some extent the old case laws would all be revisited. It is advisable that manufacturers, service providers ensure eligible credit which were missed out to be availed in past is availed now (before 31st July 2017) without fail. This is to take advantage of a facility given for c/f of the eligible credit availed in last return filed before July 2017 as opening balance of credit under GST law.



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8) Valuation under GST Act:

Value of taxable supply (Section 15) (1) The value of a supply of goods and/or services shall be the

transaction value. Transaction value is the price actually paid or payable for the said supply of goods and/or services where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply.

(2)The transaction value shall include:

a. any taxes, duties, cesses, fees and charges levied under any statute, other than this act, the SGST, UTGST and the GST(Compensation to states) Act, if charged separately by the supplier;

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 and/or services;

c. incidental expenses, such as, commission and packing, charged by the supplier to the recipient of a supply, including any amount charged for anything done by the supplier in respect of the supply of goods and/or services at the time of, or before delivery of the goods or, as the case may be, supply of the services;

d. interest or late fee or penalty for delayed payment of any consideration for any supply; and

e. subsidies directly linked to the price excluding subsidies provided by the Central and State governments; Explanation- For the purposes of this sub section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy.

(3)The transaction value shall not include Any discount that is given: (a) before or at the time of the supply provided such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if:

(i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit has been reversed by the recipient of the supply as is attributable to the discount on the basis of document issued by the supplier.

(4) Where the value of the supply of goods or services or both can’t be determined under sub section (1), the same shall be determined in such manner as may be prescribed. (5) Notwithstanding anything contained in sub-section (1) or sub section (4), the value of such supplies as may be notified by the Govt. on the recommendations of the council shall be determined in such manner s may be prescribed.



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Explanation: For the purpose of this Act,-- (a) Persons shall be deemed to be “related persons” If (i) such persons are officers or directors of one another’s business; (ii) such persons are legally recognised partner in business; (iii) such persons are employer and employee (iv) any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly control the others; (vi) one of them directly or indirectly control the 3rd person; (vii) together they directly or indirectly control a 3rd person; or they are members of the same family; (b) the term who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, however described, of the other, shall be deemed to be related. Determination of Value of Supply

1. Value of supply of goods or services where the consideration is not wholly in money

Where the supply of goods or services is for a consideration not wholly in money, the value of the supply shall,

(a) be the open market value of such supply;

(b) if open market value is not available, be the sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money if such amount is known at the time of supply;

(c) if the value of supply is not determinable under clause (a) or clause (b), be the value of supply of goods or services or both of like kind and quality;

(d) if value is not determinable under clause (a) or clause (b) or clause (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 4 or rule 5 in that order.

Illustration: (1) Where a new phone is supplied for Rs.20000 along with the exchange of an old phone and if the price of the new phone without exchange is Rs.24000, the open market value of the new phone is Rs 24000.

(2) Where a laptop is supplied for Rs.40000 along with a barter of printer that is manufactured by the recipient and the value of the printer known at the time of supply is Rs.4000 but the open market value of the laptop is not known, the value of the supply of laptop is Rs.44000.

2. Value of supply of goods or services or both between distinct or related persons, other than through an agent:



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The value of the supply of goods or services or both between distinct persons as specified in sub-section (4) and (5) of section 25 or where the supplier and recipient are related, other than where the supply is made through an agent, shall,-

(a) be the open market value of such supply;

(b) if open market value is not available, be the value of supply of goods or services of like kind and quality;

(c) if value is not determinable under clause (a) or (b), be the value as determined by application of rule 4 or rule 5, in that order:

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 ninety percent 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:

Provided further that 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:

3. Value of supply of goods made or received through an agent The value of supply of goods between the principal and his agent shall,-

(a) be the open market value of the goods being supplied, or at the option of the supplier, be ninety percent 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, where the goods are intended for further supply by the said recipient;

Illustration: Where 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 Rs.5000 per quintal on the day of supply. Another independent supplier is supplying groundnuts of like kind and quality to the said agent at the price of Rs.4550 per quintal. The value of the supply made by the principal shall be Rs.4550 per quintal or where he exercises the option the value shall be 90% of the Rs.5000 i.e. is Rs.4500 per quintal.

(b) where the value of a supply is not determinable under clause (a), the same shall be determined by application of rule 4 or rule 5 in that order. 4. Value of supply of goods or services or both based on cost

Where the value of a supply of goods or services or both is not determinable by any of the preceding rules, the value shall be one hundred and ten percent of the cost of production or manufacture or cost of acquisition of such goods or cost of provision of such services.



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5. Residual method for determination of value of supply of goods or services or both Where the value of supply of goods or services or both cannot be determined under rules 1 to 4, the same shall be determined using reasonable means consistent with the principles and general provisions of section 15 and these rules:

Provided that in case of supply of services, the supplier may opt for this rule, disregarding rule 4.

6. Determination of value in respect of certain supplies

(1) Notwithstanding anything contained in these rules, the value in respect of supplies specified below shall, at the option of the supplier, be determined in the manner provided hereinafter.

(2) The value of supply of services in relation to purchase or sale of foreign currency, including money changing, shall be determined by the supplier of service in the following manner:-

(a) For a currency, when exchanged from, or to, Indian Rupees (INR), the value shall be equal to the difference in the buying rate or the selling rate, as the case may be, and the Reserve Bank of India (RBI) reference rate for that currency at that time, multiplied by the total units of currency:

Provided that in case where the RBI reference rate for a currency is not available, the value shall be 1% of the gross amount of Indian Rupees provided or received by the person changing the money:

Provided further that in case where neither of the currencies exchanged is Indian Rupee, the value shall be equal to 1% of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies into Indian Rupee on that day at the reference rate provided by RBI.

Provided also that a person supplying the services may exercise option to ascertain value in terms of clause (b) for a financial year and such option shall not be withdrawn during the remaining part of that financial year.

(b) At the option of supplier of services, the value in relation to supply of foreign currency, including money changing, shall be deemed to be (i) one per cent. of the gross amount of currency exchanged for an amount up to one lakh rupees, subject to a minimum amount of two hundred and fifty rupees;

(ii) one thousand rupees and half of a per cent. of the gross amount of currency exchanged for an amount exceeding one lakh rupees and up to ten lakh rupees; and



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(iii) five thousand and five hundred rupees and one tenth of a per cent. of the gross amount of currency exchanged for an amount exceeding ten lakh rupees, subject to maximum amount of sixty thousand rupees.

(3) The value of supply of services in relation to booking of tickets for travel by air provided by an air travel agent, shall be deemed to be an amount calculated at the rate of five percent. of the basic fare in the case of domestic bookings, and at the rate of ten per cent. of the basic fare in the case of international bookings of passage for travel by air. Explanation - For the purposes of this sub-rule, the expression “basic fare” means that part of the air fare on which commission is normally paid to the air travel agent by the airline.

(4) The value of supply of services in relation to life insurance business shall be:

(a) the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such amount is intimated to the policy holder at the time of supply of service;

(b) in case of single premium annuity policies other than (a), ten per cent. of single premium charged from the policy holder; or

(c) in all other cases, twenty five per cent. of the premium charged from the policy holder in the first year and twelve and a half per cent. of the premium charged from policy holder in subsequent years:

Provided that nothing contained in this sub-rule shall apply where the entire premium paid by the policy holder is only towards the risk cover in life insurance.

(5) Where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e. used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on purchase of such goods the value of supply shall be the difference between the selling price and purchase price and where the value of such supply is negative it shall be ignored:

Provided that the purchase value of goods repossessed from a defaulting borrower, who is not registered, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter or part thereof, between the date of purchase and the date of disposal by the person making such repossession.

(6) The value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or



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services or both shall be equal to the money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp.

(7)The value of taxable services provided by such class of service providers as may be notified by the Government on the recommendations of the Council as referred to in paragraph 2 of Schedule I between distinct persons as referred to in section 25, where input tax credit is available, shall be deemed to be NIL. 7. Value of supply of services in case of pure agent Notwithstanding anything contained in these rules, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely:-

(i) the supplier acts as a pure agent of the recipient of the supply, when he makes payment to the third party on authorization by such recipient;

(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and

(iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.

Explanation . - For the purposes of this rule, “pure agent” means a person who –

(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;

(b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply;

(c) does not use for his own interest such goods or services so procured; and

(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account .

Illustration. Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to Registrar of the Companies. The fees charged by the Registrar of the companies registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent



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in the payment of those fees. Therefore, A’s recovery of such expenses is a disbursement and not part of the value of supply made by A to B.

8. Rate of exchange of currency, other than Indian rupees, for determination of value The rate of exchange for determination of value of taxable goods or services or both shall be the applicable reference rate for that currency as determined by the Reserve Bank of India on the date of time of supply in respect of such supply in terms of section 12 or, as the case may be, section 13 of the Act.

9. Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax Where the value of supply is inclusive of integrated tax or, as the case may be, central tax, State tax, Union territory tax, the tax amount shall be determined in the following manner, Tax amount= Value inclusive of taxes X tax rate in % of IGST or as the case may be CGST, SGST or UTGST (100+ sum of tax rates, as applicable, in %) Explanation.- For the purposes of this Chapter,-

(a) “open market value” of a supply of goods or services or both means the full value in money, excluding the integrated tax, central tax, State tax, Union territory tax and the cess payable by a person in a transaction, where the supplier and the recipient of the supply are not related and price is the sole consideration, to obtain such supply at the same time when the supply being valued is made.

(b) “supply of goods or services or both of like kind and quality” means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity, functional components, materials, and reputation of the goods or services or both first mentioned, is the same as, or closely or substantially resembles, that supply of goods or services or both.



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Import of Goods and services: Present law: Import of services: Under present service tax law, in respect of any taxable services provided or agreed to be provided by any person located in a non-taxable territory and received by any person who is located in taxable territory, the service receiver is liable to make payment of service tax. Service tax is payable by recipient of service in respect of services received in taxable territory of India. We determine location of place of provision of service, whether within or outside India, by referring to the Place of Provision of service Rules. Applying the principles laid down in the said rules, if the place of provision of service happens to be outside the taxable territory. Then there is no taxability in hands of service receiver on the payments/remittances done to outside India, under reverse charge mechanism. Import of services under GST Supply of services in the course of import into the territory of India shall be deemed to be a supply of services in the course of inter-State trade or commerce. Section 2(11) of IGST act: “import of service” means the supply of any service, where (a) the supplier of service is located outside India, (b) the recipient of service is located in India, and (c) the place of supply of service is in India; Comments:

• The fundamental principle is that tax is payable on the supply of services which is supplied to recipient in India.

• The establishment of a person in India and any of his other establishment outside India shall be treated as establishments of distinct persons. The effect is that though two persons may not be different, yet by this fiction they are recognized as separate person and any transaction between them, if it satisfies elements of taxability would be liable to service tax.

• Example, transaction of supply of service between branch located in non taxable territory, say Singapore and Indian HO is treated as transaction between 2 persons.

• Under GST, tax under reverse charge on services provided from outside and received in India cannot be paid out of input tax credit.

• Tax to be paid by e-payment on services supplied from outside India and received in India.

• After making payment of GST, the credit can be availed to extent attributed to taxable supply of goods or services.

Import of goods-present law Under present customs law, import of goods means bringing into India from place outside India. Import starts when goods cross the customs barrier in a



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foreign country and ends when they cross customs barrier in the importing country, India. When goods are imported into India, the goods are said to have crossed the customs barrier after the duty is paid and the goods are brought out of the limits of the customs station. Import of goods vs Sale in course of import There is also a concept of sale or purchase in course of import under present VAT and sales tax laws. The concept of sale or purchase in course of import is: 1) The course of import of goods starts at a point when the goods cross the customs barrier of the foreign country and ends at a point in the importing country after the goods cross the customs barrier; 2) The sale which occasions/causes the import is a sale in the course of import; 3) A purchase by an importer of goods when they are on high seas by payment against shipping documents is also a purchase in course of import; and 4) A sale by an importer of goods, after the property in the goods passed to him either after the receipt of the documents of title against payment or otherwise, to a third party by a similar process before goods cross customs frontier of India is also a sale in course of import. Import of goods under GST Section 2(10) of IGST Act: Import of goods with its grammatical variations and cognate expressions, means bringing into India from a place outside India; Under GST law, supply of goods and/or services in the course of import into India shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. Exports Under GST Introduction: Export of Service under present law: Under Present Service tax regime, post 01.07.2012 if the taxable service fulfills the conditions as prescribed in Rule 6A of Service Tax Rules, 1994, it was treated as “Export of Service” and no service tax is required to be paid.. The said rule provides that any service provided or agreed to be provided would be treated as export of service when-

a. The provider of service is located in taxable territory of India [other than J&K].

b. The recipient of service is located outside India. c. The service is not specified in negative list of the Act. d. The place of provision of service is outside India. e. The payment for such service has been received by provider of service in

convertible foreign exchange and f. The provider and the recipient of service are two distinct establishments

and not merely establishments of the same person.



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Export of Service under GST:

As per Section 2(6) of the IGST law, the supply of any service shall be treated as “export of service” when-

a) the supplier of service is located in India, b) the recipient of service is located outside India, c) the place of supply of service is outside India, d) the payment for such service has been received by the supplier of

service in convertible foreign exchange, and e) the supplier of service and recipient of service are not merely

establishments of a distinct person Explanation: For the purposes of clause (e), an establishment of a person in India and any of his other establishment outside India shall be treated as establishments of distinct persons.

Analysis:-

� If any one of the conditions for export of service, is not fulfilled, then the transaction shall not be treated as export of service, and such transaction would be subject to IGST.

� The approach of Export of Service under GST law is similar to concept of Export of Service as prescribed under Rule 6A of Service Tax Rules, 1994.

� The Supplier of Service shall avail the input credit related to Export of Service or go for refund in respect of tax paid on export of services.

Concept of location of supplier and recipient of service: Section 2(15) of IGST Act “location of supplier of service” means: (i) where a supply is made from a place of business for which registration has been obtained, the location of such place of business ; (ii) where a supply is made from a place other than the place of business for which registration has been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed establishment; (iii) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the provision of the supply; and (iv) in absence of such places, the location of the usual place of residence of the supplier Example: Sl. No.

Scenario Place of Location of Service Provider

1 Supply of Consulting Services from Bangalore location of CA firm

Bangalore

2 Supply of Consulting Services made from Hyderabad location of CA firm

Hyderabad



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3 Where consulting services assignment obtained by Gurgaon location of multi-location CA firm, but part of consulting services provided from Vizag [where a supply is made from more than one establishment]

Gurgaon[the location most directly concerned with the provision of the supply]

Section 2(14) of IGST Act “location of recipient of service” means: (i) where a supply is received at a place of business for which registration has been obtained, the location of such place of business; (ii) where a supply is received at a place other than the place of business for which registration has been obtained, that is to say, a fixed establishment elsewhere, the location of such fixed establishment; (iii) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and (iv) in absence of such places, the location of the usual place of residence of the recipient; Export of Goods under Present Law: Presently, Export of Goods means taking goods from India to place outside India both under Central Excise and Customs. Export of goods under GST Section 2(5) of IGST law: “Export of goods” with its grammatical variations and cognate expressions, means taking out of India to a place outside India; Comments:

� The Concept of Export of Goods under GST is similar to concept of Export of Goods under Present law also.

� Export will not be liable to tax under GST law. � There is no requirement for receipt of foreign exchange currency in case

of export of goods. � Input Credit related to Export of Goods can be availed and also can go

for refund or rebate to the extent credit utilized, also on deemed exports.

Goods: � Section 2(52) of GST law: “Goods’’ means every kind of movable

property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply;

Comments: � Deemed Exports:- As per Section 2(39) deemed exports means such

supply of goods as may be notified under section 147.



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General Points: � HSN Codes at 8-digit level and accounting Codes for services will be

mandatory in case of exports and imports. � It has been clarified that the Export shall be treated as “Zero Rated

Supply” and credit related to same can be availed or alternately go for refund.

� As per the IGST law, Supply of goods and/or services, when the supplier is located in India and the place of supply is outside India, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce.

Section 16 of the Draft IGST Act contains the provisions relating to zero-rated supplies:

� “Zero rated supply” means any of the following taxable supply of goods and/or services, namely – (a) export of goods and/or services; or (b) supply of goods and/or services to a SEZ developer or an SEZ unit.

� Subject to the provisions of sub-section (5) of section 17 of the CGST Act, Credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

� A registered taxable person making zero rated supply shall be eligible to claim refund under either of the following options, namely:-- (a) a registered taxable person may supply goods or services or both under bond or letter of undertaking, subject to such conditions, safeguards and procedure as may be prescribed in this regard, without payment of IGST and claim refund of unutilized input tax credit (b) a registered taxable person may supply goods or services, subject to such conditions, safeguards and procedure as may be prescribed in this regard, on payment of IGST and claim refund of IGST paid on goods and services or both supplied, In accordance with the provisions of section 54 of CGST Act or the rules made there under.



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10) Refunds Under GST

Introduction: GST is said to me most awaited indirect tax reform in Independent India. The process of refund under GST is simplified to a large extent, to ensure the assessee does not have to run pillar to post to get his refund. The refund can be claimed for –

� Export of goods/ services including deemed exports. � Credit accumulation due to inadvertent duty structure � Excess paid of tax due to mistake � Finalization of provisional assessment � Refund of pre-deposit, in case assessee wins the case. � Payment of excess tax during investigation. � Refund on purchase made by Embassies and UN nation. � Year-end volume based incentives provided by supplier through

credit notes. � Tax refund for International tourist

Time limit for filing Refund Application: The refund application should be filed to the proper officer within two years from the relevant date as prescribed in the Goods and Service Tax Refund Rules.

� There is no time limit for the payments under protest. Relevant Date: The relevant dates for filing refund application are as follows:-

a. If tax paid on goods exported itself or tax paid on input or input services then,

� Exported by sea or air->date when the ship or the aircraft leaves India;

� exported by land ->date when such goods pass the frontier; � exported by post ->date of dispatch of goods by concerned

Post Office to a place outside India. b. If Refund of tax paid on services exported itself or tax paid on

inputs/input service then, � If supply of service is completed prior to the receipt of

payment–>date of receipt of payment in convertible foreign exchange.

� If payment for the service received in advance prior to the date of issue of invoice –> date of issue invoice.

c. If supply of goods is considered as deemed export->the date on which the return relating to such deemed exports is filed.

d. If goods returned for being remade, refined, reconditioned, or subjected to any other similar process in any place of business-> the date of entry for the purposes aforesaid at a place of business.



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e. If the refund is as a consequence of judgment, decree, order or direction of Appellate authority, Appellate Tribunal or any Court -> date of communication of such judgement/decree/order/direction

f. If refund of unutilized input tax credit due to exports -> end of the financial year in which such claim for refund arises; and

g. If the tax paid is provisionally -> the date of adjustment of tax after the final assessment.

Documents substantiating no unjust enrichment:

a. Certificate from Chartered Accountant or cost accountant based on examination of books of accounts. If the refund claim amount is more than or equal to Rs 5 Lakhs.

b. If the refund claim amount was less than Rs 5 Lakhs, self-declaration certificate.

c. Invoice Copy - Tax not charged in invoice d. Customer ledger account. e. Agreement copy. f. Declaration from Customer.

Extract of Draft Refund Rules –GST – 1. Application for refund of tax, interest, penalty, fees or any other amount (1) Any person, except the persons covered by notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, may file an application electronically in FORM GST RFD-01 through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner: Provided that any claim for refund relating to balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 may also be made through the return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7, as the case may be: Provided further that in case of export of goods, application for refund shall be filed only after the export manifest or an export report, as the case may be, is delivered under section 41 of the Customs Act, 1962 in respect of such goods: Provided also that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorized operations, as endorsed by the specified officer of the Zone: Provided also that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the supplier of services along with such evidence regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone: Provided also that in respect of supplies regarded as deemed exports, the application shall be filed by the recipient of deemed export supplies: Provided



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also that refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the last return required to be furnished by him. (2) The application under sub-rule (1) shall be accompanied by any of the following documentary evidences, as applicable, to establish that a refund is due to the applicant: (a) the reference number of the order and a copy of the order passed by the proper officer or an appellate authority or Appellate Tribunal or court resulting in such refund or reference number of the payment of the amount specified in sub-section (6) of section 107 and sub-section (8) of section 112 claimed as refund; (b) a statement containing the number and date of shipping bills or bills of export and the number and date of relevant export invoices, in a case where the refund is on account of export of goods; (c) a statement containing the number and date of invoices and the relevant Bank Realization Certificates or Foreign Inward Remittance Certificates, as the case may be, in a case where the refund is on account of export of services; (d) a statement containing the number and date of invoices as prescribed in rule Invoice. along with the evidence regarding endorsement specified in the third proviso to sub-rule (1) in case of supply of goods made to a Special Economic Zone unit or a Special Economic Zone developer; (e) a statement containing the number and date of invoices, the evidence regarding endorsement specified in the fourth proviso to sub-rule (1) and the details of payment, along with proof thereof, made by the recipient to the supplier for authorized operations as defined under the Special Economic Zone Act, 2005, in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer (f) a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed of the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer; (g) a statement containing the number and date of invoices along with such other evidence as may be notified in this behalf, in a case where the refund is on account of deemed exports; (h) a statement in Annex 1 of FORM GST RFD-01 containing the number and date of invoices received and issued during a tax period in a case where the claim pertains to refund of any unutilized input tax credit under sub-section (3) of section 54 where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, other than nil-rated or fully exempt supplies; (i) the reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of finalisation of provisional assessment;



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(j) a statement showing the details of transactions considered as intra-State supply but which is subsequently held to be inter-State supply; (k) a statement showing the details of the amount of claim on account of excess payment of tax; (l) a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees: Provided that a declaration is not required to be furnished in respect of cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54; (m) a Certificate in Annex 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees: Provided that a certificate is not required to be furnished in respect of cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54; Explanation.– For the purposes of this rule, (i) in case of refunds referred to in clause (c) of sub-section (8) of section 54, “invoice” means invoice conforming to the provisions contained in section 31 ; (ii) where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer. (3) Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the applicant in an amount equal to the refund so claimed. (4) In case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, refund of input tax credit shall be granted as per the following formula: Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted Total Turnover Where,- (A) "Refund amount" means the maximum refund that is admissible; (B) "Net ITC" means input tax credit availed on inputs and input services during the relevant period; (C) "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking; (D) "Turnover of zero-rated supply of services" means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been



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received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (E) "Adjusted Total turnover" means the turnover in a State or a Union territory, as defined under subsection (112) of section 2, excluding the value of exempt supplies other than zero-rated supplies, during the relevant period; (F) “Relevant period” means the period for which the claim has been filed. (5) In case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula: Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover} minus tax payable on such inverted rated supply of goods Explanation: The meaning of the term “Net ITC” and “Adjusted Total turnover” shall have the same meaning as assigned to them in sub-rule (4). 2. Acknowledgement (1) Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the Common Portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing. (2) The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the proper officer who shall, within fifteen days of filing of the said application, scrutinize the application for its completeness and where the application is found to be complete in terms of sub-rule (2), (3) and (4) of rule 1, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the Common Portal electronically, clearly indicating the date of filing of the claim for refund and the time period specified in sub-section (7) of section 54 shall be counted from such date of filing. Provided that where the claim for refund of integrated tax is on account of export of goods, the acknowledgment shall be issued within a period of three days of filing of such claim. (3) Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through the Common Portal electronically, requiring him to file a fresh refund application after rectification of such deficiencies. (4) Where deficiencies have been communicated in FORM GST RFD-03 under the GST Rules of the State, the same shall also deemed to have been communicated under this Rule along with deficiencies communicated under sub-rule (3). (4) Where deficiencies have been communicated in FORM GST RFD-03 under the CGST Rules, the same shall also deemed to have been communicated under this Rule along with deficiencies communicated under sub-rule (3). 3. Grant of provisional refund (1) The provisional refund in accordance with the provisions of sub-section (6) of section 54 shall be granted subject to the condition that the person claiming refund has, during any period of five years immediately preceding the tax



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period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees; (2) The proper officer, after scrutiny of the claim and the evidence submitted in support thereof and on being prima facie satisfied that the amount claimed as refund under sub-rule (1) is due to the applicant in accordance with the provisions of sub-section (6) of section 54, shall make an order in FORM GST RFD-04, sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of acknowledgement under sub-rule (1) or sub-rule (2) of rule 2. (3) The proper officer shall issue a payment advice in FORM GST RFD-05 for the amount sanctioned under sub-rule (2) and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund. 4. Order sanctioning refund (1) Where, upon examination of the application, the proper officer is satisfied that a refund under sub-section (5) of section 54 is due and payable to the applicant, he shall make an order in FORM GST RFD-06, sanctioning the amount of refund to which the applicant is entitled, mentioning therein the amount, if any, refunded to him on a provisional basis under sub-section (6) of section 54, amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable: Provided that in cases where the amount of refund is completely adjusted against any outstanding demand under the Act or under any existing law, an order giving details of the adjustment shall be issued in Part A of FORM GST RFD-07. (2) Where the proper officer or the Commissioner is of the opinion that the amount of refund is liable to be withheld under the provisions of sub-section (10) or, as the case may be, sub-section (11) of section 54, he shall pass an order in Part B of FORM GST RFD-07 informing him the reasons for withholding of such refund. (3) Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in FORM GST RFD-08 to the applicant, requiring him to furnish a reply in FORM GST RFD-09 within fifteen days of the receipt of such notice and after considering the reply, make an order in FORM GST RFD-06, sanctioning the amount of refund in whole or part, or rejecting the said refund claim and the said order shall be made available to the applicant electronically and the provision of sub-rule (1) shall, mutatis mutandis, apply to the extent refund is allowed: Provided that no application for refund shall be rejected without giving the applicant a reasonable opportunity of being heard. (4) Where the proper officer is satisfied that the amount refundable under sub-rule (1) or (2) is payable to the applicant under sub-section (8) of section 54, he shall make an order in FORM GST RFD- 06 and issue a payment advice in FORM GST RFD-05, for the amount of refund and the same shall be



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electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund. (5) Where the proper officer is satisfied that the amount refundable under sub-rule (1) or sub-rule (2) is not payable to the applicant under sub-section (8) of section 54, he shall make an order in FORM GST RFD-06 and issue an advice in FORM GST RFD-05, for the amount of refund to be credited to the Consumer Welfare Fund. 5. Credit of the amount of rejected refund claim (1) Where any deficiencies have been communicated under sub-rule (3) of rule 2, the amount debited under sub-rule (3) of rule 1 shall be re-credited to the electronic credit ledger. (2) Where any amount claimed as refund is rejected under rule 4, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. Explanation.– For the purposes of this rule, a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking in writing to the proper officer that he shall not file an appeal. 6. Order sanctioning interest on delayed refunds Where any interest is due and payable to the applicant under section 56, the proper officer shall make an order along with a payment advice in FORM GST RFD-05, specifying therein the amount of refund which is delayed, the period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund. 7. Refund of tax to certain persons (1) Any person eligible to claim refund of tax paid by him on his inward supplies as per notification issued section 55 shall apply for refund in FORM GST RFD-10 once in every quarter, electronically on the Common Portal, either directly or from a Facilitation Centre notified by the Commissioner, along with a statement of inward supplies of goods or services or both in FORM GSTR-11, prepared on the basis of statement of outward supplies furnished by corresponding suppliers in FORM GSTR-1. (2) An acknowledgement for receipt of the application for refund shall be issued in FORM GST RFD-02. (3) Refund of tax paid by the applicant shall be available if- (a) the inward supplies of goods or services or both were received from a registered person against a tax invoice and the price of the supply covered under a single tax invoice exceeds five thousand rupees, excluding tax paid, if any; (b) name and GSTIN or UIN of the applicant is mentioned on the tax invoice; and (c) such other restrictions or conditions as may be specified in the notification are satisfied. (4) The provisions of rule 4 shall, mutatis mutandis, apply for the sanction and payment of refund under this rule.



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(5) Where an express provision in a treaty or other international agreement, to which the President or the Government of India is a party, is inconsistent with the provisions of these rules, such treaty or international agreement shall prevail. 8. Consumer Welfare Fund (1) All credits to the Consumer Welfare Fund shall be made under sub-rule (4) of rule 4. (2) Any amount, having been credited to the Fund, ordered or directed as payable to any claimant by orders of the proper officer, appellate authority or Appellate Tribunal or court, shall be paid from the Fund. (3) Any utilisation of amount from the Consumer Welfare Fund under sub-section (1) of section 58 shall be made by debiting the Consumer Welfare Fund account and crediting the account to which the amount is transferred for utilisation. (4) The [Central/State] Government shall, by an order, constitute a Standing Committee with a Chairman, a Vice-Chairman, a Member Secretary and such other members as it may deem fit and the Committee shall make recommendations for proper utilisation of the money credited to the Consumer Welfare Fund for welfare of the consumers. (5) The Committee shall meet as and when necessary, but not less than once in three months. (6) Any agency or organisation engaged in consumer welfare activities for a period of three years registered under the Companies Act, 2013 (18 of 2013) or under any other law for the time being in force, including village or mandal or samiti level co-operatives of consumers especially Women, Scheduled Castes and Scheduled Tribes, or any industry as defined in the Industrial Disputes Act, 1947 (14 of 1947) recommended by the Bureau of Indian Standards to be engaged for a period of five years in viable and useful research activity which has made, or is likely to make, significant contribution in formulation of standard mark of the products of mass consumption, the Central Government or the State Government may make an application for a grant from the Consumer Welfare Fund: Provided that a consumer may make application for reimbursement of legal expenses incurred by him as a complainant in a consumer dispute, after its final adjudication. (7) All applications for grant from the Consumer Welfare Fund shall be made by the applicant Member Secretary, but the Committee shall not consider an application, unless it has been inquired into in material details and recommended for consideration accordingly, by the Member Secretary. (8) The Committee shall have powers – (a) to require any applicant to produce before it, or before a duly authorised Officer of the Government such books, accounts, documents, instruments, or commodities in custody and control of the applicant, as may be necessary for proper evaluation of the application; (b) to require any applicant to allow entry and inspection of any premises, from which activities claimed to be for the welfare of consumers are stated to be



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carried on, to a duly authorised officer of the Central Government or, as the case may be, State Government; (c) to get the accounts of the applicants audited, for ensuring proper utilisation of the grant; (d) to require any applicant, in case of any default, or suppression of material information on his part, to refund in lump-sum, the sanctioned grant to the Committee, and to be subject to prosecution under the Act; (e) to recover any sum due from any applicant in accordance with the provisions of the Act; (f) to require any applicant, or class of applicants to submit a periodical report, indicating proper utilisation of the grant; (g) to reject an application placed before it on account of factual inconsistency, or inaccuracy in material particulars; (h) to recommend minimum financial assistance, by way of grant to an applicant, having regard to his financial status, and importance and utility of nature of activity under pursuit, after ensuring that the financial assistance provided shall not be misutilised; (i) to identify beneficial and safe sectors, where investments out of Consumer Welfare Fund may be made and make recommendations, accordingly. (j) to relax the conditions required for the period of engagement in consumer welfare activities of an applicant; (k) to make guidelines for the management, administration and audit of the Consumer Welfare Fund. (9) The Central Consumer Protection Council and the Bureau of Indian Standards shall recommend to the GST Council, the broad guidelines for considering the projects or proposals for the purpose of incurring expenditure from the Consumer Welfare Fund.



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11) Transitional issues Uniformity in implementation of law is the key to success both for tax administrators and concerned assesses. If tremendous efforts are required to completely plan, implement and execute the new business models under the strictures of the GST law, then the major tranche of those efforts will have to be devoted in ensuring smooth transition into the new regime. In any change, there will be transitional clutches. The transitional issues may be of business issues which need to be dealt internally, or to be dealt with outsider. Further also there can be transitional issues related to statute either to comply with the law or to avail certain benefits given by law. Non-addressing of the said transitional issues may lead to loss in business, loss of credit, non-compliance of law etc. It is therefore essential to concentrate on the same. Transitional issues that is internal to the entities: Understand the GST Law: The GST law covering draft Central GST Law, draft State GST Law and draft Integrated GST law is in the public domain since 14th June 2016. Further, a new GST draft law has been published in public domain on 26th November 2016 and final law. It is required to go through the law as is relevant to concerned and understand the implication of the same on their business/profession/industry. Development/modification of Information Technology infrastructure: Today most of the entities rely upon the Information Technology to carry out their business/profession. With the introduction of GST which is essentially run based on centralized information technology portal, the entities are required to either develop their infrastructure to suit the requirement of GST or to modify the existing infrastructure to suit the same. Vendor Development: Having organized Vendor base is very important in the GST regime and hence Vendor Development and training needs to be done to support its own business. Representation: Since the final GST law is prepared by the representatives of Government, it seems to have missed out the focus on the interest of the public at large, therefore in the interest of the concerned, it is required to identify the provisions, which are having adverse effect on one’s business or industry and make a suitable recommendation for change of law. GST Impact Assessment: Since the new GST law is going to change the entire dynamics of the business in many respect, it is essential to understand the impact of the changes on different aspects of the business like procurement, production, job work, storage, distribution, marketing, finance including cash flow, final consumer etc. Therefore it is essential for any entity to carry out GST impact assessment to analyse effects of GST. This can be carried out either by the in-house team of an outside professional.



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Training the Resources: As the concept of GST is different from the existing methodology and procedure, there will be requirement for unlearning many things and relearning many new things. Therefore in the interest of the entity, it becomes essential to train their resources at accounts, taxation, procurement and other impact areas of the entity. The Key Decisions: Since the GST is going to change the costs of different elements of the products and/or services, it becomes essential to relook at the pricing of the products, cost of procurement compared with different sources and other operational areas. Therefore key decision making has to be done in all the affected area due to GST changes. Impact on the long term contract: All the long terms contract, which would be stretching beyond 01.07.2017 needs to be re-looked into as to impact of GST and whether the terms of the contract has addressed the same or not. If the same is not addressed in the contract, action may be initiated to deal with the same with other party and terms be re-negotiated if necessary with mutual discussion before the effective date of introduction of GST. Development/modification of Standard Operating Procedure: GST implementation is nothing but change in law as well as procedures. The changes required to be adopted in the procedures being followed by the entity have to be assessed. In that direction it is essential that the entity may have to either develop new standard operating procedure (guideline of procedures) or amend the existing one. Some of the transitional issues that are to be addressed entities: Apart from those mentioned above, the other transitional issues faced by the business entities could be: � Selection of business location – tax neutrality � Basic exemption – Cost benefit analysis � Careful drafting of agreements � Appropriate disclosure � Prior Intimations � Change in procedures for Billing, payment of tax, filing of returns � Tax credits prior to date not availed and missed out Some of the unaddressed issues in the transitional provisions are availability of credits on goods in transit on cut-off date, availability of credit of excise duty paid by traders and VAT paid by the service providers on goods in stock, etc. Industry would need to ensure that all credits which would be available to them as part of the transitional provisions are captured in returns/ records so that the claim of credit is supported by adequate records. Industry will also need to represent for allowing credit of VAT/ excise duty on goods in stock to service providers/ traders.



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GST TRANSITION COVERAGE:

A. Introduction B. Important Transition provisions under GST C. Action plan for business during transition D. Tapping migration opportunities E. Value addition for business and professionals F. Conclusion

A. INTRODUCTION:

The industry as such is looking forward to migrate to GST by July 2017. In tax laws the vigilant would get the most benefit. Those who are going to be liable for the first time are even more susceptible to adverse impact. It may happen due to their goods/ services becoming liable, exemption available not available, customer insisting on passing on credit.

B. TRANSITIONAL PROVISIONS GST LAW

The GST Act (chapter XX) covering the provisions from 139 to 142 dealing with transitional aspects. The same are explained in brief below

Existing taxpayers (having a valid PAN)to GST

Amount of CENVAT carried forward A registered taxable person other than a person opting to pay tax under section 10 shall be entitled to take credit of CENVAT credit/Value Added Tax credit carried forward in return furnished under earlier laws.

Sec

139

Sec

140(1)

Credit furnished under

earlier law

Credit available

If, admissible under

the GST law



Un-availed CENVAT credit on capital goods notearlier return 1. A registered person

on capital goods, not carried forward in earlier return filed under the earlier law or Act.

2. Above is subject to admissibility of the credit in the eaadmissible as input tax credit under GST law.

Credit of duties and taxes in respect of inputs held in stock

1. A registered person:-a. who was not liable to registration under earlier law or b. Engaged in manufacture of exempted

services/ Works contract service and availing 26/12 benefit/ 1dealer/ 2ndstage dealer , but liable to registration under GST laws shall entitled to take credit of eligible duties and taxes in respect of inputs held in stock.

2. The above is subject to:

Credit of duties and taxes in respect of inputs held in stock in certain situations

A. A registered person:i. Engaged in manufacture of non exempted& exempted goods, ii. Providing exempted & non exempted

Such inputs

•Are used

for making taxable

supplies

Taxable

person

•Passes on the benefit

of

Sec

140(2)

Sec

140(3)

Sec

140

(4)



105

availed CENVAT credit on capital goods not carried forward in

A registered person -entitled to take credit of unavailed CENVAT credit on capital goods, not carried forward in earlier return filed under the

Above is subject to admissibility of the credit in the eaadmissible as input tax credit under GST law.

Credit of duties and taxes in respect of inputs held in stock: -

who was not liable to registration under earlier law or Engaged in manufacture of exempted goods,/ providing exempted services/ Works contract service and availing 26/12 benefit/ 1

stage dealer , but liable to registration under GST laws shall entitled to take credit of eligible duties and taxes in respect of inputs

The above is subject to:

Credit of duties and taxes in respect of inputs held in stock in certain

A registered person:- Engaged in manufacture of non exempted& exempted goods, Providing exempted & non exempted services

Taxable

Passes on the benefit

Taxable

person

•Eligible for input tax

credit

under GST

Act

Taxable

person

•Is in possession

of invoice

& other

Docs as under

earlier law

Such invoice

•Are issued

not earlier than

months

preceding

the appinted

day

GST ACT 2017

carried forward in

entitled to take credit of unavailed CENVAT credit on capital goods, not carried forward in earlier return filed under the

Above is subject to admissibility of the credit in the earlier law &

goods,/ providing exempted services/ Works contract service and availing 26/12 benefit/ 1ststage

stage dealer , but liable to registration under GST laws shall entitled to take credit of eligible duties and taxes in respect of inputs

Credit of duties and taxes in respect of inputs held in stock in certain

Engaged in manufacture of non exempted& exempted goods,

Such invoice

Are issued

not earlier

preceding

appinted

Supplier

of service

•not eligible

for any

abatement

under GST



iii. Entitled to take credit B. Credit carried forward in the return furnished in earlier law.C. Credit can be availed

on appointed date Credit of eligible duties & taxes in respect of inputs & input services during transit

A. A registered person:i. Credit in respect of inputs & input services received on or aft the

appointed date. ii. Duty or taxed paid before iii. Invoice/ duty paying document

days ( can be extended to another 30days)

Impact on person switching over to composition scheme

1. Registered taxable person who is paying tax at fixed rate undearlier law shall be entitled to take credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semifinished goods held in stock on the appointed date.

2. The above is subject to:

*

And other condition same as Section 140(3) Section 140(7) Notwithstanding anything to the contrary contained in this act, the ITC on account of any services received prior to the appointed day by an Input service distributor shall be eligible for distribact even if the invoices relating to such services are received on or after the appointed. (8) Where a registered person having centralized registration under the existing law has obtained a registration under this Act, such pertake, in his electronic credit ledger, credit of the amount of CENVAT credit

Sec

140

(5)

Sec

140

(6)



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Entitled to take credit – electronic credit ledger Credit carried forward in the return furnished in earlier law.Credit can be availed - inputs held in stock/ semi-finished goods/FGon appointed date- relating to exempted goods/ service.

ble duties & taxes in respect of inputs & input services

A registered person:- Credit in respect of inputs & input services received on or aft the

Duty or taxed paid before appointed date. Invoice/ duty paying document- recorded in books of a/c days ( can be extended to another 30days)

Impact on person switching over to composition scheme Registered taxable person who is paying tax at fixed rate undearlier law shall be entitled to take credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semifinished goods held in stock on the appointed date.

The above is subject to:

And other condition same as Section 140(3)

Section 140(7) Notwithstanding anything to the contrary contained in this act, the ITC on account of any services received prior to the appointed day by an Input service distributor shall be eligible for distribution as credit under this act even if the invoices relating to such services are received on or after the

) Where a registered person having centralized registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit

GST ACT 2017

Credit carried forward in the return furnished in earlier law. finished goods/FG-

ble duties & taxes in respect of inputs & input services

Credit in respect of inputs & input services received on or aft the

recorded in books of a/c – within 30

Registered taxable person who is paying tax at fixed rate under the earlier law shall be entitled to take credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semi-finished or

Section 140(7) Notwithstanding anything to the contrary contained in this act, the ITC on account of any services received prior to the appointed day by an

ution as credit under this act even if the invoices relating to such services are received on or after the

) Where a registered person having centralized registration under the existing son shall be allowed to

take, in his electronic credit ledger, credit of the amount of CENVAT credit



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carried forward in a return, furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed: Provided that if the registered person furnishes his return for the period ending with the day immediately preceding the appointed day within three months of the appointed day, such credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier: Provided further that the registered person shall not be allowed to take Credit unless the said amount is admissible as input tax credit under this Act: Provided also that such credit may be transferred to any of the registered persons having the same Permanent Account Number for which the centralized registration was obtained under the existing law. (9) Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day. (10) The amount of credit under sub-sections (3), (4) and (6) shall be calculated in such manner as may be prescribed. Explanation 1.—For the purposes of sub-sections (3), (4) and (6), the expression “eligible duties” means–– (i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975; (iii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975; (iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978; (v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985; (vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985; and (vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001, in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day. Explanation 2.—For the purposes of sub-section (5), the expression “eligible duties and taxes” means–– (i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957; (ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975; (iii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975;



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(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978; (v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985; (vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985; (vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001; and (viii) the service tax leviable under section 66B of the Finance Act, 1994, in respect of inputs and input services received on or after the appointed day. Section 141 Transitional provisions relating to Job work (1) Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day: Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if such inputs are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142. (2) Where any semi-finished goods had been removed from the place of business to any other premises for carrying out certain manufacturing processes in accordance with the provisions of existing law prior to the appointed day and such goods (hereafter in this section referred to as “the said goods”) are returned to the said place on or after the appointed day, no tax shall be payable, if the said goods, after undergoing manufacturing processes or otherwise, are returned to the said place within six months from the appointed day Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142: Provided also that the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods to the premises of any registered person for the purpose of supplying therefrom on payment of tax in India or without payment of tax for exports within the period specified in this sub-section.



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(3) Where any excisable goods manufactured at a place of business had been removed without payment of duty for carrying out tests or any other process not amounting to manufacture, to any other premises, whether registered or not, in accordance with the provisions of existing law prior to the appointed day and such goods, are returned to the said place on or after the appointed day, no tax shall be payable if the said goods, after undergoing tests or any other process, are returned to the said place within six months from the appointed day: Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if the said goods are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of section 142: Provided also that the manufacturer may, in accordance with the provisions of the existing law, transfer the said goods from the said other premises on payment of tax in India or without payment of tax for exports within the period specified in this sub-section. (4) The tax under sub-sections (1), (2) and (3) shall not be payable, only if the manufacturer and the job worker declare the details of the inputs or goods held in stock by the job worker on behalf of the manufacturer on the appointed day in such form and manner and within such time as may be prescribed. Section 142 Miscellaneous transitional provisions (1) Where any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer: Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply. (2) (a) where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised upwards on or after the appointed day, the registered person who had removed or provided such goods or services or both shall issue to the recipient a supplementary invoice or debit note, containing such particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such supplementary invoice or debit note shall be deemed to have been issued in respect of an outward supply made under this Act; (b) where, in pursuance of a contract entered into prior to the appointed day, the price of any goods or services or both is revised downwards on or after the appointed day, the registered person who had removed or provided such goods or services or both may issue to the recipient a credit note, containing such



110

particulars as may be prescribed, within thirty days of such price revision and for the purposes of this Act such credit note shall be deemed to have been issued in respect of an outward supply made under this Act: Provided that the registered person shall be allowed to reduce his tax liability on account of issue of the credit note only if the recipient of the credit note has reduced his input tax credit corresponding to such reduction of tax liability. (3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944: Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse: Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act. (4) Every claim for refund filed after the appointed day for refund of any duty or tax paid under existing law in respect of the goods or services exported before or after the appointed day, shall be disposed of in accordance with the provisions of the existing law: Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse: Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act. (5) Every claim filed by a person after the appointed day for refund of tax paid under the existing law in respect of services not provided shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944. (6) (a) every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act: Provided that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act;



111

(b) every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act. (7) (a) every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and if any amount becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of duty or tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act. (b) every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and any amount found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act. (8) (a) where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act; (b) where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act. (9) (a) where any return, furnished under the existing law, is revised after the appointed day and if, pursuant to such revision, any amount is found to be recoverable or any amount of CENVAT credit is found to be inadmissible, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act; (b) where any return, furnished under the existing law, is revised after the appointed day but within the time limit specified for such revision under the



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existing law and if, pursuant to such revision, any amount is found to be refundable or CENVAT credit is found to be admissible to any taxable person, the same shall be refunded to him in cash under the existing law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act. (10) Save as otherwise provided in this Chapter, the goods or services or both supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act. (11) (a) notwithstanding anything contained in section 12, no tax shall be payable on goods under this Act to the extent the tax was leviable on the said goods under the Value Added Tax Act of the State; (b) notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994; (c) where tax was paid on any supply both under the Value Added Tax Act and under Chapter V of the Finance Act, 1994, tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed. (12) Where any goods sent on approval basis, not earlier than six months before the appointed day, are rejected or not approved by the buyer and returned to the seller on or after the appointed day, no tax shall be payable thereon if such goods are returned within six months from the appointed day: Provided that the said period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that the tax shall be payable by the person returning the goods if such goods are liable to tax under this Act, and are returned after a period specified in this sub-section: Provided also that tax shall be payable by the person who has sent the goods on approval basis if such goods are liable to tax under this Act, and are not returned within a period specified in this sub-section. (13) Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under any law of a State or Union territory relating to Value Added Tax and has also issued an invoice for the same before the appointed day, no deduction of tax at source under section 51 shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day. Explanation.––For the purposes of this Chapter, the expressions “capital goods”, “Central Value Added Tax (CENVAT) credit”, “first stage dealer”, “second stage dealer”, or



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“manufacture” shall have the same meaning as respectively assigned to them in the Central Excise Act, 1944 or the rules made thereunder.

C. Action Plan for Business during Transition: a. Preliminary GST Impact Study: The introduction of GST would have

huge impact (could be positive or negative) on manufacturing, trading and service industry. Manufacturing sector may find GST’s introduction to be positive as cascading taxes would get reduced and overall tax payment would be less compared present rate of taxes. For few services, it could be negative as rate of GST could be 20 % which is higher than present service tax rate of 15%. Therefore, it is essential for the business entities to get preliminary GST impact study done to ascertain the impact on the business. Presently, GST law along with few reports on refund, payment, registration and returns are available in public domain which could be relied on for impact study. The impact study report would require be relooked once other regulations and modified GST law is introduced.

b. Issues for representation: Industry specific possible issues that would arise on GST implementation could be identified and collectively discussed with the policy makers to iron out any possible hiccups on transition to GST regime.

c. Effective implementation during transition phase:Transition phase could include identification of eligible credits, modification of contracts / agreements, implementation of pricing and costing changes, modification of ERPs considering GST requirements, training of vendors if necessary. Effective and comprehensive ERP implementation would be inevitable as GST would be administered through full automation and manual intervention would be very less.

d. Documenting SOPs and training of staff for compliance: Initially there would be lot of challenges for business entities in implementation of GST. All important divisions of a business such as marketing, stores, finance / accounts would be in need to understand the basics of GST as it is a new law. Entities could face lot of challenges in transition phase. Operation wise standard operating procedures (SOPs) could be made. Also, pro-actively organising appropriate training programs for the staff could help the business during this phase for smooth transition.

e. Good internal/ external teams of business consultants: A dedicated team of internal/external knowledgeable employees/consultants comprising of a senior member from the HO along with representatives from the tax, supply chain and IT departments, could be built up to help



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the business during the pre as well as post implementation phase of GST. Knowledge of implication under direct tax / international taxation in addition to GST would be of a great use. Business structuring / tax advice / guiding on development of standard operating procedure etc. could be some of the important focus areas of these teams.

f. Regular review of GST compliance: Business entities would have to undertake regular reviews of compliances to ensure effective and accurate compliance with respect to tax payments, availment of credits etc. In GST, compliance would be a key for the assessee for availment of credits, payment of taxes, taking deduction etc. There is a proposal to introduce matching concept wherein the credit for the buyer would be allowed only if taxes are properly reflected by the seller and appropriately paid to department by such seller.

g. Dispute avoidance and resolution: Initially there could be lot of disputes in GST for which the proposed GST council has to establish a mechanism for resolution. Businesses would have to be gear up and pro-actively take steps to handle such probable situations in future.

D. TAPPING MIGRATION OPPORTUNITIES

a. Opportunity to claim missed out credits of past: The industry as such is looking forward to migrate to GST by July 2017. However in India the ground reality is that there are several segments of businessman: Segment A: Very diligent and forward thinking- who have already done or in process of getting a GST Impact Study done. Segment B: the GST Act & Rules to be put in place. Segment C: Who will wake up in June or some even in Julyl!! In tax laws the vigilant would get the most benefit. However one can get ready to smoothly move into GST without losing out the vital credit which goes to reduce the cost. Those who are going to be liable for the 1st time are even more susceptible to adverse impact. It may happen due to their goods/ services becoming liable, exemption available not available, customer insisting on passing on credit. The facility of availing credit of Excise duty and Service Tax paid on inputs, input services and capital goods after migrating to GST is available under Cenvat credit provisions. However, for this purpose, the ER-1 excise return needs to be revised by end of calendar month in which the original ER-1 return if filed. Similarly, revision of ST-3 can be done within 90 days from the date of filing original ST-3 returns by service providers. Time limits may disable the credit availment.



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In GST regime, it is expected that there would be enabling facilities for availing the credits missed out in the transition period. If this facility is not provided, claiming of missed out credit amounts could be disputed. Therefore, the manufacturer and service provider who have in the past done any of the following, may like to review the option of availing missed out credits; a. Credit reversed under protest for unlimited period b. Credit reversed at the time of audit to buy peace. (If documentary

evidence available, without time limit credit can be claimed) c. Credit reversed erring on caution in respect of services like GTA

Outwards, Outdoor Catering Service, Group medi-claim Insurance, renting of immovable property on car parking and Cafeteria services. Examine the eligibility and claim credit if eligible with intimation to department.

d. Examine any excise duty / service tax credit missed on eligible Capital goods, input and input services by way of reconciliation

e. Credit availment on rejection of Cenvat credit refund claim f. Incorrect reversal of credit under Rule 6 of Cenvat credit provisions

considering gross trading -value as exempted value instead of considering only margin or 10% of cost of goods involved in trading as exempted value.

g. Job-work / Job-worker’s Credit missed out h. Credit missed at the time of import due to sub-contract service by

Custom House Agency (CHA).

The Cenvat credit on inputs and input services needs to be claimed within one year. Therefore, this is one-time opportunity available by submitting a ST-3 return for April 2016 to September 2016 with disclosure of eligible credits from April 2015 onwards. If ST-3 return is already filed, option of disclosure could be examined by filing revised return within 90 days from the date of filing of original ST-3 return. Similar exercise could be done considering the revised return option available in excise provisions and even for the period October 2016 to March 2017. Under VAT laws the period of revised return maybe confirmed as per the State. Generally it is 6 months. However if carry forward not done then the refund in cash in State may have to be applied and that is expected to be delayed and costly. This exercise could be value additive to ensure that pre-GST credits are available in full and carry forwarded in full for utilization in GST regime.

E. CONCLUSION: A more harmonised taxation system, like a GST, restricts the freedom of individual governments to deviate from a common tax structure. Given the federal structure of India, harmonisation of tax rules and regulations is



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more important than harmonisation of tax rates from a business perspective.

If international experience is anything to go by, it is unlikely that a faultless GST will be designed and rolled out in India as a single event. But some structural faults could easily be addressed and rectified. Given the diversity involved in design and administration, an Indian GST will be unique. How successful it is in terms of compliance and revenue mobilisation will largely depend on the provision of incentives for tax invoice based transactions and the simplification of tax administration.



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12) Registration Introduction It is well known that after Implementation of GST, Whole India will become one market and there will be free flow of Goods, services and input tax credit from one place to another. From taxpayers point of view registration is one of the important factors to proceed with GST. Goods and Service Tax Act 2017. Further government has published business process for registration and GST registration rules. The following formats are as per GST formats released in April 2017 notified. Reading these rules and business process for registration is much easier and everything is online and no need of submitting the documents manually in case need arises physical verification will be carried. Who needs to be registered under GST Regime? There will be a threshold of aggregate Turnover of Rs. 20 lakhs and Rs.10(North East State) lakhs for states specified in Sub-clause (g) of Clause (4) of Article 279A of the Constitution and Special category states below which any person engaged in taxable supply of Goods or Services or both will not be required to take registration. Supplier shall not be liable to register if his aggregate turnover consists only goods and/or services and both which are not liable to tax under this Act or if he is an agriculturist, for the purpose of agriculture. Once a supplier of goods/services or both crosses the required threshold registration application must be filed within 30 days from the date of the supplier’s liability for obtaining such registration. However in case of a casual taxable person or a non-resident taxable person then he shall apply of registration at least five days prior to commencement of business. The threshold shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. Earlier the States were demanding separate threshold for individual State but it was opposed by the representatives of Union Government. Further any person, who holds registration or a licence under earlier law immediately preceding the appointed day, shall be liable to be registered under this Act with effect from appointed day. Where business is transferred on account of succession or otherwise, to another person as a going concern, the transferee, or the successor shall be liable to be registered with effect from the date of such transfer or succession.



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The voluntary registration and composition scheme shall also be incorporated under GST with almost same principals prevailing under various State laws. Irrespective of turnover, if a taxable person carries out any inter-state supply and/or is liable to pay GST under reverse charge, he will be compulsorily required to take registration. Such person shall neither be eligible for exemption threshold nor for Compounding scheme. Following table provides who has to compulsorily register under GST 1 Interstate supply

2 Casual taxable person

3 Person liable for payment of GST under Reverse charge

4 Non-resident taxable person

5 Person required to deduct tax

6 Person required to collect tax

7 Person supplying goods on behalf of other taxable person as an agent or otherwise

8 Input service distributor

9 Electronic commerce operator.

10 Person who supply goods and/or services, other than branded services, through electronic commerce operator

11 Online information and database access or retrieval services from a place outside India to a person in India other than registered taxable person

12 Such other person as may be notified

How to apply for registration (The following provisions are as per the formats and Registration rules released in April 2017. (Thus these are subjected to changes if any notified in future in this regard) Any supplier before applying for registration, declare his PAN, mobile number and e-mail address in Part A of FORM GST REG-01 on the common portal either directly or through a Facilitation Centre.

� The PAN shall be validated online by the common portal from database maintained by CBEC

� The Mobile number shall be verified through a one-time password. � The e-mail address shall be verified through a separate one-time

password.



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On successful verification of the PAN, mobile number and e-mail address, an application reference no shall be generated and communicated to the applicant. Using the above reference number the application shall be submitted electronically in part-B of Form GST REG 01, duly signed along with documents specified in the said Form, after submitting the documents the acknowledgment will be received electronically in FORM GST REG-02. Person applying for registration as a casual taxable person shall be given a temporary identification number by the common portal for making advance deposit and acknowledgment shall be issued electronically. The casual taxable person shall make on advance deposit of tax in an amount equivalent to the estimated tax liability during the period which registration is sought. After submission of application and documents electronically, the same will be forwarded to proper officer who shall examine the application and documents, if the same are found to be in order, approve the grant of registration to the applicant within three common working days from the date of submission. The application submitted is found to be deficient, either in terms of any information or any documents or officer requires any clarification with regard to any information provided in the application or documents furnished, he may so intimate to the applicant electronically in FORM GST REG 03 within 3 common working days and applicant shall furnish electronically such clarification, information or documents sought, in FORM GST REG-04 within 7 workings days from the date of receipt of such intimation. After satisfying with the clarification, information or documents furnished, he may approve the grant of registration to the applicant within seven common working days after such clarification or information or document received. If officer not satisfied with the clarification, information or documents furnished, he shall, for reasons to be recorded in writing, reject such application and inform the applicant electronically in FORM GST REG-05. If officer fails to take any action, within 3 common working days from the date of submission of application, within 7 workings days from the date of receipt of clarification, information and documents furnished, the application for grant of registration shall be deemed to have been approved. If the application is not rejected in FORM GST REG 05 a certificate of registration in FORM GST REG 06 for the principal place of business and for every additional place of business shall be made available to the applicant. The registration is effective from the date on which the person becomes liable to registration where the application for registration has been submitted within 30 days from such date. If application for registration has been submitted by the applicant after thirty days from the date of his becoming liable to registration, the effective date of registration shall be the date of grant of registration.



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Separate registration for multiple business verticals within a state. Person having multiple business verticals within a state, requiring a separate registration for any of its business verticals shall be granted separate registration in respect of each of the verticals subject to following conditions:

� Business vertical- shall have the meaning assigned to a ‘business segment in accounting standard 17 issued by the institute of Chartered accountant of India’.

� No business vertical of a taxable person shall be granted registration to pay tax under composition dealer if any of the other business verticals of the same person paying tax under regular scheme.

� If any one of business vertical becomes ineligible to pay tax under composition scheme, all other business verticals of the said person shall become ineligible to pay tax under composition scheme.

� The business verticals if supply goods/services to another business vertical shall issue tax invoice for such supply.

The business verticals may file separate application in FORM GST REG 01 in respect of each such vertical. Registration to persons required to deduct tax at source or collect tax at source Person required deduct tax at source under section 51, or person required to collect tax at source under section 52 shall electronically apply in FORM GST REG -07 for grant of registration. After due verification officer, should issue registration certificate in FORM GST REG 06 within 3 working days from the date of submission of application. Upon an enquiry or pursuant to any other proceedings, the proper officer is satisfied that the certification of registration has been issued is no longer liable to deduct tax at source under section 51or collect tax at source under section 52, the officer may cancel the registration issued such cancellation shall be communicated to the said person in FORM GST REG-08 without giving notice or without giving the persona reasonable opportunity of being heard the officer shall not cancel the registration . Assignment of unique identity number to certain special entities Person required to obtain Unique identity number i.e. specialized agency of the United organization or any Multilateral Financial Institution and Organization notified under the united Nations (privileges and Immunities) Act 1947 (46 of 1947), Consulate or Embassy of foreign countries and any other person or class of person as may be notified, may apply, electronically in FORM GST REG-09, duly verified in the manner specified. Upon submission of the application in FORM GST Reg-13 to the officer may assign a unique identity number to the said person and issue a certificate in FORM GST REG -06 within 3 common working days from the date of submission of application.



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Grant of registration to non-resident taxable person Non-resident taxable person shall electronically apply for registration, duly signed in FORM GST REG-09, at least 5days prior to commencement of the business. Non-resident taxable person will receive temporary identification number for making an advance deposit of tax and the acknowledgment shall receive thereafter. Shall make an advance deposit of tax in an amount equivalent to the estimated tax liability of such person during the period for which registration is sought. Other provision related to registration and verification will apply mutatis mutandis. Amendment to registration If there is any change in any of the particulars furnished in the application for registration in FORM GST REG 01, REG-07, REG 09 or REG 10, either at the time of obtaining registration or as amended from time to time, the registered taxable person shall, within 15 days of such change, submit an application electronically in FORM GST REG-14, electronically along with documents relating such change.

� Where changes relates to the name of business, principal place of business and details of partners or directors, karta, managing committee, board of trustees, chief executive officer or equivalent, responsible for day to day affairs of the business which does not warrant cancellation of registration. The officer shall approve the amendment within 15 common workings days from the date of receipt of application in FORM GST REG 14 after due verification and on being satisfied about the need to make amendment and issue an order in FORM GST REG-15 electronically.

� Change relates to other than those specified above, the certificate of registration shall stand amended upon submission of the application in FORM GST REG 15. Any change in Mobile number or the e-mail address of authorized signatory submitted initially shall be carried out only after online verification.

� Change in constitution of any business results in change of PAN of registered taxable person shall apply for fresh registration.

The proper officer believes the amendment sought is either not warranted or the document furnished therewith is incomplete or incorrect, he may by notice in FORM GST REG-03 within 15 common workings days from the date of receipt of the application in FORM GST REG 14, the taxable person requires to show cause, within 7 common working days of the service of the said FORM GST REG-03, as to why the application submitted shall not be rejected. Shall file a reply to the notice to show cause in FORM GST REG 04 within 7 days of the receipt of the said notice. If officer not taken any action- within 15 days of application or within 7 days from the receipt of clarification, information or documents furnished, the certificate of registration shall stand amended to the extent applied for and the amended certificate shall be made available.



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Suo moto Registration During any survey, inspection, search, enquiry or any other proceeding under the Act, the officer finds that a person liable to registration under the Act has filed to apply for such registration, such officer may register the person on a temporary basis and issue an order in FORM GST REG 12, the registration is effective from the date of order of registration. the person to whom a temporary registration has been granted, within 30days from the date of the grant of such registration file an application for registration, unless the said the person has filed an appeal against the grant of temporary registration, in which the application for registration shall be applied for 30 days after the date of the issuance of order upholding the liability to register by the appellate authority. The verification and issuance of certificate of registration shall apply mutatis mutandis, further GSTIN assigned pursuant to verification shall be effective from the date of order of registration. Application for Cancellation of registration Registered taxable person seeking cancellation of his registration shall electronically apply in FORM GST REG 16 including the details of closing stock and liability thereon and may furnish, along with application, relevant documents in support thereof. Application for cancellation registration shall not be considered in case of a taxable person, who has registered voluntarily, before the expiry of a period of one year from the effective date of registration. Further other than composition dealer seeking cancellation of registration under sub-rule (1) shall furnish a final return. The officer has reason to believe that the registration of a taxable person is liable to be cancelled, he may issue a notice to in FORM GST REG 17, to show cause within seven days as to why his registration should not be cancelled. The officer satisfied that a taxable person who has applied for cancellation of his registration is no longer liable to be registered or his registration is liable to cancelled he may, by issue of an order in FORM GST REG-19, to be passed within 30 days from the date of application or as the case be the date of reply to the show cause issued, cancel the registration, with effect from a date to be determined by office and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid. Further the above provision shall apply mutatis mutandis to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself. Revocation of cancellation of registration A taxable person, the registration is cancelled by the officer on his own motion, may apply for revocation of cancellation of registration in FORM GST REG-21, to such officer, within 30 days from the date of service of the order of cancellation of registration. No application for revocation shall be filed if the registration has been cancelled due to failure to furnish returns unless such



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return filed and amount due as tax in terms of such returns has been paid along with interest and penalties and late fee payable. If officer satisfied with reason to be recorded in writing, that there are sufficient grounds for revocation of cancellation of registration, he shall revoke the by on order in FORM GST REG-22 within 30 days from the date of receipt of such application and communicate the same. The officer recorded in writing by an order in FORM GST REG-23 reject the application for revocation of cancellation of registration and communicate the same to the applicant. The officer may require the applicant to furnish, within 3 common working days of the filing of the application, such additional information or clarification as, may be required for verifying the furnished in the said application, in FORM GST REG-24, the applicant shall furnish information or the clarification within 7 common working days from the date of the service of notice in FORM GST REG-24. The officer after receipt of clarification/information in FORM GST REG 24 has dispose of the application within 30 days, the application shall not be rejected without affording the applicant an opportunity of being heard by issue of notice in FORM GST REG-22 within 30 days from the date of such application. Migration of existing registrants: The Dealers registered under VAT laws of various States and registered under Service Tax or Central Excise will be granted registration on a provisional basis and certificate of registration in FORM GST REG-25, incorporating the GSTIN.

� Every person who has been granted a provisional registration under sub-rule (1) shall submit an application electronically in FORM GST REG 26, duly signed along with information and documents specified in the said application.

� The above information is to be furnished Within 6 months/such extended period.

� The information is correct and complete, a certificate of registration in FORM GST REG-06 shall be issued to the taxable person.

If information specified in sub-rule (2) have not furnished or incorrect or no complete, the officer shall cancel the provisional registration granted and issue an order in FORM GST REG 28. The provisional registration shall be cancelled after serving notice to show cause in FORM GST REG 27 and giving reasonable opportunity of being heard. Every person registered under earlier laws, who is not liable to be registered under the Act may, at his option, file application in FORM GST REG 29 at the common portal for cancellation of the registration granted provisionally, the officer after conducting such enquiry as deemed fit, cancel the said provisional registration.



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13) RETURNS

37- Furnishing details of outward supplies. 1) Every registered person, other than an Input Service Distributor, a non-resident taxable person and a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, in such form and manner as may be prescribed, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall be communicated to the recipient of the said supplies within such time and in such manner as may be prescribed: Provided that the registered person shall not be allowed to furnish the details of outward supplies during the period from the eleventh day to the fifteenth day of the month succeeding the tax period: Provided further that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing such details for such class of taxable persons as may be specified therein: Provided also that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed to be notified by the Commissioner. (2) Every registered person who has been communicated the details under sub-section (3) of section 38 or the details pertaining to inward supplies of Input Service Distributor under sub-section (4) of section 38, shall either accept or reject the details so communicated, on or before the seventeenth day, but not before the fifteenth day, of the month succeeding the tax period and the details furnished by him under sub-section (1) shall stand amended accordingly. (3) Any registered person, who has furnished the details under sub-section (1) for any tax period and which have remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a Period of short payment of tax on account of such error or omission, in the return to be furnished for such tax period: Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to



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which such details pertain, or furnishing of the relevant annual return, whichever is earlier. Explanation.––For the purposes of this Chapter, the expression “details of outward supplies” shall include details of invoices, debit notes, credit notes and revised invoices issued in relation to outward supplies made during any tax period. Sec 38-Furnishing details of inward supplies. (1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52, shall verify, validate, modify or delete, if required, the details relating to outward supplies and credit or debit notes communicated under sub-section (1) of section 37 to prepare the details of his inward supplies and credit or debit notes and may include therein, the details of inward supplies and credit or debit notes received by him in respect of such supplies that have not been declared by the supplier under sub-section (1) of section 37. (2) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, the details of inward supplies of taxable goods or services or both, including inward supplies of goods or services or both on which the tax is payable on reverse charge basis under this Act and inward supplies of goods or services or both taxable under the Integrated Goods and Services Tax Act or on which integrated goods and services tax is payable under section 3 of the Customs Tariff Act, 1975, and credit or debit notes received in respect of such supplies during a tax period after the tenth day but on or before the fifteenth day of the month succeeding the tax period in such form and manner as may be prescribed: Provided that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing such details for such class of taxable persons as may be specified therein: Provided further that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed to be notified by the Commissioner. (3) The details of supplies modified, deleted or included by the recipient and furnished under sub-section (2) shall be communicated to the supplier concerned in such manner and within such time as may be prescribed.



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(4) The details of supplies modified, deleted or included by the recipient in the return furnished under sub-section (2) or sub-section (4) of section 39 shall be communicated to the supplier concerned in such manner and within such time as may be prescribed. (5) Any registered person, who has furnished the details under sub-section (2) for any tax period and which have remained unmatched under section 42 or section 43, shall, upon discovery of any error or omission therein, rectify such error or omission in the tax period during which such error or omission is noticed in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period: Provided that no rectification of error or omission in respect of the details furnished under sub-section (2) shall be allowed after furnishing of the return under section 39 for the month of September following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier. Sec 139 Furnishing of returns. (1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof. (2) A registered person paying tax under the provisions of section 10 shall, for each quarter or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, of turnover in the State or Union territory, inward supplies of goods or services or both, tax payable and tax paid within eighteen days after the end of such quarter. (3) Every registered person required to deduct tax at source under the provisions of section 51 shall furnish, in such form and manner as may be prescribed, a return, electronically, for the month in which such deductions have been made within ten days after the end of such month. (4) Every taxable person registered as an Input Service Distributor shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, within thirteen days after the end of such month.



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(5) Every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, a return, electronically, within twenty days after the end of a calendar month or within seven days after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier. (6) The Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing the returns under this section for such class of registered persons as may be specified therein: Provided that any extension of time limit notified by the Commissioner of State tax or Union territory tax shall be deemed to be notified by the Commissioner. (7) Every registered person, who is required to furnish a return under sub-section (1)or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return. (8) Every registered person who is required to furnish a return under sub-section (1) or sub-section (2) shall furnish a return for every tax period whether or not any supplies of goods or services or both have been made during such tax period. (9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein,other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed, subject to payment of interest under this Act: Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier. (10) A registered person shall not be allowed to furnish a return for a tax period if the return for any of the previous tax periods has not been furnished by him. Sec 45-First return. Every registered person who has made outward supplies in the period between



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the date on which he became liable to registration till the date on which registration has been granted shall declare the same in the first return furnished by him after grant of registration. Claim of input tax credit and provisional acceptance thereof. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to take the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited on a provisional basis to his electronic credit ledger. (2) The credit referred to in sub-section (1) shall be utilised only for payment of selfassessed output tax as per the return referred to in the said sub-section. Matching, reversal and reclaim of input tax credit. (1) The details of every inward supply furnished by a registered person (hereafter in this section referred to as the “recipient”) for a tax period shall, in such manner and within such time as may be prescribed, be matched–– (a) with the corresponding details of outward supply furnished by the corresponding registered person (hereafter in this section referred to as the “supplier”) in his valid return for the same tax period or any preceding tax period; (b) with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him; and (c) for duplication of claims of input tax credit. (2) The claim of input tax credit in respect of invoices or debit notes relating to inward supply that match with the details of corresponding outward supply or with the integrated goods and services tax paid under section 3 of the Customs Tariff Act, 1975 in respect of goods imported by him shall be finally accepted and such acceptance shall be communicated, in such manner as may be prescribed, to the recipient. (3) Where the input tax credit claimed by a recipient in respect of an inward supply is in excess of the tax declared by the supplier for the same supply or the outward supply is not declared by the supplier in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed. (4) The duplication of claims of input tax credit shall be communicated to the recipient in such manner as may be prescribed.



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(5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the recipient, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated. (6) The amount claimed as input tax credit that is found to be in excess on account of duplication of claims shall be added to the output tax liability of the recipient in his return for the month in which the duplication is communicated. (7) The recipient shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5), if the supplier declares the details of the invoice or debit note in his valid return within the time specified in sub-section (9) of section 39. (8) A recipient in whose output tax liability any amount has been added under sub-section (5) or sub-section (6), shall be liable to pay interest at the rate specified under sub-section (1) of section 50 on the amount so added from the date of availing of credit till the corresponding additions are made under the said sub-sections. (9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the recipient by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may be prescribed: Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the supplier. (10) The amount reduced from the output tax liability in contravention of the provisions of sub-section (7) shall be added to the output tax liability of the recipient in his return for the month in which such contravention takes place and such recipient shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50. Matching, reversal and reclaim of reduction in output tax liability. (1) The details of every credit note relating to outward supply furnished by a registered person (hereafter in this section referred to as the “supplier”) for a tax period shall, in such manner and within such time as may be prescribed, be matched–– (a) with the corresponding reduction in the claim for input tax credit by the corresponding registered person (hereafter in this section referred to as the “recipient”) in his valid return for the same tax period or any subsequent tax period; and



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(b) for duplication of claims for reduction in output tax liability. (2) The claim for reduction in output tax liability by the supplier that matches with the corresponding reduction in the claim for input tax credit by the recipient shall be finally accepted and communicated, in such manner as may be prescribed, to the supplier. (3) Where the reduction of output tax liability in respect of outward supplies exceeds the corresponding reduction in the claim for input tax credit or the corresponding credit note is not declared by the recipient in his valid returns, the discrepancy shall be communicated to both such persons in such manner as may be prescribed. (4) The duplication of claims for reduction in output tax liability shall be communicated to the supplier in such manner as may be prescribed. (5) The amount in respect of which any discrepancy is communicated under sub-section (3) and which is not rectified by the recipient in his valid return for the month in which discrepancy is communicated shall be added to the output tax liability of the supplier, in such manner as may be prescribed, in his return for the month succeeding the month in which the discrepancy is communicated. (6) The amount in respect of any reduction in output tax liability that is found to be on account of duplication of claims shall be added to the output tax liability of the supplier in his return for the month in which such duplication is communicated. (7) The supplier shall be eligible to reduce, from his output tax liability, the amount added under sub-section (5) if the recipient declares the details of the credit note in his valid return within the time specified in sub-section (9) of section 39. (8) A supplier in whose output tax liability any amount has been added under sub-section (5) or sub-section (6), shall be liable to pay interest at the rate specified under sub-section (1) of section 50 in respect of the amount so added from the date of such claim for reduction in the output tax liability till the corresponding additions are made under the said sub-sections. (9) Where any reduction in output tax liability is accepted under sub-section (7), the interest paid under sub-section (8) shall be refunded to the supplier by crediting the amount in the corresponding head of his electronic cash ledger in such manner as may be prescribed:



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Provided that the amount of interest to be credited in any case shall not exceed the amount of interest paid by the recipient. (10) The amount reduced from output tax liability in contravention of the provisions of sub-section (7) shall be added to the output tax liability of the supplier in his return for the month in which such contravention takes place and such supplier shall be liable to pay interest on the amount so added at the rate specified in sub-section (3) of section 50. 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 for every financial year electronically in such form and manner as may be prescribed on or before the thirty-first day of December following the end of such financial year. (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. Sec45 Final return. Every registered person who is required to furnish a return under sub-section (1) of section 39 and whose registration has been cancelled shall furnish a final return within three months of the date of cancellation or date of order of cancellation, whichever is later, in such form and manner as may be prescribed. Sec-46 Notice to return defaulters. Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a notice shall be issued requiring him to furnish such return within fifteen days in such form and manner as may be prescribed. Sec-47 Levy of late fee. (1) Any registered person who fails to furnish the details of outward or inward supplies required under section 37 or section 38 or returns required under section 39 or section 45 by the due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.



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(2) Any registered person who fails to furnish the return required under section 44 by the due date shall be liable to pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum of an amount calculated at a quarter per cent. Of his turnover in the State or Union territory. Sec-48 Goods and services tax practitioners. (1) The manner of approval of goods and services tax practitioners, their eligibility conditions, duties and obligations, manner of removal and other conditions relevant for their functioning shall be such as may be prescribed. (2) A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 in such manner as may be prescribed. (3) Notwithstanding anything contained in sub-section (2), the responsibility for correctness of any particulars furnished in the return or other details filed by the goods and services tax practitioners shall continue to rest with the registered person on whose behalf such return and details are furnished. RETURNS Rules 1. Form and manner of furnishing details of outward supplies (1) Every registered person (other than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017) required to furnish the details of outward supplies of goods or services or both under section 37, shall furnish such details in FORM GSTR-1 electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner. (2) The details of outward supplies of goods or services or both furnished in FORM GSTR- 1 shall include, inter alia, – (a) invoice wise details of all - (i) inter-State and intra-State supplies made to registered persons; and (ii) inter-State supplies with invoice value more than two and a half lakh rupees made to unregistered persons; (b) consolidated details of all - (i) intra-State supplies made to unregistered persons for each rate of tax; and (ii) State wise inter-State supplies with invoice value upto two and a half lakh rupees made to unregistered persons for each rate of tax; (c) debit and credit notes, if any, issued during the month for invoices issued previously.



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(3) The details of outward supplies furnished by the supplier shall be made available electronically to the concerned registered persons (recipients) in Part A of FORM GSTR-2A, in FORM GSTR-4A and in FORM GSTR-6A through the Common Portal after the due date of filing of FORM GSTR-1. (4) The details of inward supplies added, corrected or deleted by the recipient in his FORM GSTR-2 under section 38 or FORM GSTR-4 or FORM GSTR-6 under section 39 shall be made available to the supplier electronically in FORM GSTR-1A through the Common Portal and such supplier may either accept or reject the modifications made by the recipient and FORM GSTR-1 furnished earlier by the supplier shall stand amended to the extent of modifications accepted by him. 2. Form and manner of furnishing details of inward supplies (1) Every registered person (other than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017) required to furnish the details of inward supplies of goods or services or both received during a tax period under sub-section (2) of section 38 shall, on the basis of details contained in Part A, Part B and Part C of FORM GSTR-2A, prepare such details as specified in sub-section (1) of the said section and furnish the same in FORM GSTR-2 2 electronically through the Common Portal, either directly or from a Facilitation Centre notified by the Commissioner, after including therein details of such other inward supplies, if any, required to be furnished under sub-section (2) of section 38. (2) Every registered person shall furnish the details, if any, required under sub-section (5) of section 38 electronically in FORM GSTR-2. (3) The registered person shall specify the inward supplies in respect of which he is not eligible, either fully or partially, for input tax credit in FORM GSTR-2 where such eligibility can be determined at the invoice level. (4) The registered person shall declare the quantum of ineligible input tax credit on inward supplies which is relatable to non-taxable supplies or for purposes other than business and cannot be determined at the invoice level in FORM GSTR-2. (4A) The details of invoices furnished by an non-resident taxable person in his return in FORM GSTR-5 under rule 5 shall be made available to the recipient of credit in Part A of FORM GSTR-2A electronically through the Common Portal and the said recipient may include the same in FORM GSTR-2. (5) The details of invoices furnished by an Input Service Distributor in his return in FORM GSTR-6 under rule 7 shall be made available to the recipient of credit in Part B of FORM GSTR-2A electronically through the Common Portal and the said recipient may include the same in FORM GSTR-2.



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(6) The details of tax deducted at source furnished by the deductor under sub-section (3) of section 39 in FORM GSTR-7 shall be made available to the deductee in Part C of FORM GSTR-2A electronically through the Common Portal and the said deductee may include the same in FORM GSTR-2. (7) The details of tax collected at source furnished by an e-commerce operator under section 52 in FORM GSTR-8 shall be made available to the concerned person in Part C of FORM GSTR-2A electronically through the Common Portal and such person may include the same in FORM GSTR-2. (8) The details of inward supplies of goods or services or both furnished in FORM GSTR-2 shall include, inter alia, - (a) invoice wise details of all inter-State and intra-State supplies received from registered persons or unregistered persons; (b) import of goods and services made; and (c) debit and credit notes, if any, received from supplier. 3. Form and manner of submission of monthly return (1) Every registered person, other than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 or an Input Service Distributor or a non-resident taxable person or a person paying tax under section 10 or section 51 or, as the case may be, under section 52 shall furnish a return specified under sub-section (1) of section 39 in FORM GSTR-3 electronically through the Common Portal either directly or through a Facilitation Centre notified by the Commissioner. (2) Part A of the return under sub-rule (1) shall be electronically generated on the basis of information furnished through FORM GSTR-1, FORM GSTR-2 and based on other liabilities of preceding tax periods. (3) Every registered person furnishing the return under sub-rule (1) shall, subject to the provisions of section 49, discharge his liability towards tax, interest, penalty, fees or any other amount payable under the Act or these rules by debiting the electronic cash ledger or electronic credit ledger and include the details in Part B of the return in FORM GSTR-3. (4) A registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in Part B of the return in FORM GSTR-3 and such return shall be deemed to be an application filed under section 54. (5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, return in FORM GSTR-3B, in lieu of FORM GSTR3, may be furnished in such manner as may be notified by the Commissioner.



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4. Form and manner of submission of quarterly return by the composition supplier (1) Every registered person paying tax under section 10 shall, on the basis of details contained in FORM GSTR-4A, and where required, after adding, correcting or deleting the details, furnish the quarterly return in FORM GSTR- 4 electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner. (2) Every registered person furnishing the return under sub-rule (1) shall discharge his liability towards tax, interest, penalty, fees or any other amount payable under the Act or these rules by debiting the electronic cash ledger. (3) The return furnished under sub-rule (1) shall include, inter alia,- (a) invoice wise inter-State and intra-State inward supplies received from registered and un-registered persons; and (b) consolidated details of outward supplies made. (4) A registered person who has opted to pay tax under section 10 from the beginning of a financial year shall, where required, furnish the details of outward and inward supplies and return under rule 1, rule 2 and rule 3 relating to the period during which the person was liable to furnish such details and returns till the due date of furnishing the return for the month of September of the succeeding financial year or furnishing of annual return of the preceding financial year, whichever is earlier. 4 Explanation. – The person shall not be eligible to avail of input tax credit on receipt of invoices or debit notes from the supplier for the period prior to his opting for the composition scheme. (5) A registered person opting to withdraw from the composition scheme at his own motion or where option is withdrawn at the instance of the proper officer shall, where required, furnish the details relating to the period prior to his opting for payment of tax under section 9 in FORM GSTR-4 till the due date of furnishing the return for the quarter ending September of the succeeding financial year or furnishing of annual return of the preceding financial year, whichever is earlier. 5. Form and manner of submission of return by non-resident taxable person Every registered non-resident taxable person shall furnish a return in FORM GSTR-5



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electronically through the Common Portal, either directly or through a Facilitation Centre notified by the Commissioner, including therein the details of outward supplies and inward supplies and shall pay the tax, interest, penalty, fees or any other amount payable under the Act or these rules within twenty days after the end of a tax period or within seven days after the last day of the validity period of registration, whichever is earlier. 5A. Form and manner of submission of return by persons providing online information and database access or retrieval services Every registered person providing online information and data base access or retrieval services from a place outside India to a person in India other than a registered person shall file return in FORM GSTR-5A on or before the twentieth day of the month succeeding the calendar month or part thereof. 6. Form and manner of submission of return by an Input Service Distributor Every Input Service Distributor shall, on the basis of details contained in FORM GSTR-6A, and where required, after adding, correcting or deleting the details, furnish electronically the return in FORM GSTR-6, containing the details of tax invoices on which credit has been received and those issued under section 20, through the Common Portal either directly or from a Facilitation Centre notified by the Commissioner. 7. Form and manner of submission of return by a person required to deduct tax at source (1) Every registered person required to deduct tax at source under section 51 shall furnish a return in FORM GSTR-7 electronically through the Common Portal either directly or from a Facilitation Centre notified by the Commissioner. (2) The details furnished by the deductor under sub-rule (1) shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A and FORM-GSTR-4A on the Common Portal after the due date of filing of FORM GSTR-7.

(2) The certificate referred to in sub-section (3) of section 51 shall be made available electronically to the deductee on the Common Portal in FORM GSTR-7A on the basis of the return furnished under sub-rule (1).

8. Form and manner of submission of statement of supplies through an e-commerce operator (1) Every electronic commerce operator required to collect tax at source under section 52 shall furnish a statement in FORM GSTR-8 electronically on the Common Portal, either directly or from a Facilitation Centre notified by the



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Commissioner, containing details of supplies effected through such operator and the amount of tax collected as required under sub-section (1) of section 52. (2) The details furnished by the operator under sub-rule (1) shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the Common Portal after the due date of filing of FORM GSTR-8. 9. Notice to non-filers of returns A notice in FORM GSTR-3A shall be issued, electronically, to a registered person who fails to furnish return under section 39 or section 44 or section 45 or section 52. 10. Matching of claim of input tax credit The following details relating to the claim of input tax credit on inward supplies including imports, provisionally allowed under section 41, shall be matched under section 42 after the due date for furnishing the return in FORM GSTR-3 (a) GSTIN of the supplier; (b) GSTIN of the recipient; (c) invoice or debit note number; (d) invoice or debit note date; and (e) tax amount: Provided that where the time limit for furnishing FORM GSTR-1 specified under section 37 and FORM GSTR-2 specified under section 38 has been extended, the date of matching relating to claim of input tax credit shall also be extended accordingly: Provided further that the Commissioner may, on the recommendations of the Council, by order, extend the date of matching relating to claim of input tax credit to such date as may be specified therein. Explanation 1.- The claim of input tax credit in respect of invoices and debit notes in FORM GSTR-2 that were accepted by the recipient on the basis of FORM GSTR-2A without amendment shall be treated as matched if the corresponding supplier has furnished a valid return. Explanation 2. - The claim of input tax credit shall be considered as matched where the amount of input tax credit claimed is equal to or less than the output tax paid on such tax invoice or debit note by the corresponding supplier. 11. Final acceptance of input tax credit and communication thereof (1) The final acceptance of claim of input tax credit in respect of any tax period, specified in



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sub-section (2) of section 42, shall be made available electronically to the registered person making such claim in FORM GST MIS-1 through the Common Portal. (2) The claim of input tax credit in respect of any tax period which had been communicated as mismatched but is found to be matched after rectification by the supplier or recipient shall be finally accepted and made available electronically to the person making such claim in FORM GST MIS-1 through the Common Portal. 12. Communication and rectification of discrepancy in claim of input tax credit and reversal of claim of input tax credit (1) Any discrepancy in the claim of input tax credit in respect of any tax period, specified in sub-section (3) of section 42 and the details of output tax liable to be added under sub-section (5) of the said section on account of continuation of such discrepancy, shall be made available to the recipient making such claim electronically in FORM GST MIS-1 and to the supplier electronically in FORM GST MIS-2 through the Common Portal on or before the last date of the month in which the matching has been carried out. (2) A supplier to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available. (3) A recipient to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of inward supplies to be furnished for the month in which the discrepancy is made available. (4) Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the recipient in his return to be furnished in FORM GSTR-3 for the month succeeding the month in which the discrepancy is made available. Explanation 1.- Rectification by a supplier means adding or correcting the details of an outward supply in his valid return so as to match the details of corresponding inward supply declared by the recipient. Explanation 2.- Rectification by the recipient means deleting or correcting the details of an inward supply so as to match the details of corresponding outward supply declared by the supplier. 13. Claim of input tax credit on the same invoice more than once Duplication of claims of input tax credit in the details of inward supplies shall be communicated to the registered person in FORM GST MIS-1 electronically through the Common Portal.



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14. Matching of claim of reduction in the output tax liability The following details relating to the claim of reduction in output tax liability shall be matched under section 43 after the due date for furnishing the return in FORM GSTR-3:- (a) GSTIN of the supplier; (b) GSTIN of the recipient; (c) credit note number; (d) credit note date; and (e) tax amount: Provided that where the time limit for furnishing FORM GSTR-1 under section 37 and FORM GSTR-2 under section 38 has been extended, the date of matching of claim of reduction in the output tax liability shall be extended accordingly: Provided further that the Commissioner may, on the recommendations of the Council, by order, extend the date of matching relating to claim of reduction in output tax liability to such date as may be specified therein. Explanation 1.- The claim of reduction in output tax liability due to issuance of credit notes in FORM GSTR-1 that were accepted by the corresponding recipient in FORM GSTR-2 without amendment shall be treated as matched if the said recipient has furnished a valid return. Explanation 2.— The claim of reduction in the output tax liability shall be considered as matched where the amount of output tax liability after taking into account the reduction claimed is equal to or more than the claim of input tax credit after taking into account the reduction admitted and discharged on such credit note by the corresponding recipient in his valid return. 15. Final acceptance of reduction in output tax liability and communication thereof (1) The final acceptance of claim of reduction in output tax liability in respect of any tax period, specified in sub-section (2) of section 43, shall be made available electronically to the person making such claim in FORM GST MIS-1 through the Common Portal. (2) The claim of reduction in output tax liability in respect of any tax period which had been communicated as mis-matched but is found to be matched after rectification by the supplier or recipient shall be finally accepted and made available electronically to the person making such claim in FORM GST MIS-1 through the Common Portal.



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16. Communication and rectification of discrepancy in reduction in output tax liability and reversal of claim of reduction (1) Any discrepancy in claim of reduction in output tax liability, specified in sub-section (3) of section 43, and the details of output tax liability to be added under sub-section (5) of the said section on account of continuation of such discrepancy, shall be made available to the registered person making such claim electronically in FORM GST MIS- 1 and the recipient electronically in FORM GST MIS-2 through the Common Portal on or before the last date of the month in which the matching has been carried out. (2) A supplier to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available. (3) A recipient to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of inward supplies to be furnished for the month in which the discrepancy is made available. (4) Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the supplier and debited to the electronic liability register and also shown in his return in FORM GSTR-3 for the month succeeding the month in which the discrepancy is made available. Explanation 1.- Rectification by a supplier means deleting or correcting the details of an outward supply in his valid return so as to match the details of corresponding inward supply declared by the recipient. Explanation 2.- Rectification by the recipient means adding or correcting the details of an inward supply so as to match the details of corresponding outward supply declared by the supplier. 17. Claim of reduction in output tax liability more than once Duplication of claims for reduction in output tax liability in the details of outward supplies shall be communicated to the registered person in FORM GST MIS-1 electronically through the Common Portal. 18. Refund of interest paid on reclaim of reversals The interest to be refunded under sub-section (9) of section 42 or sub-section (9) of section 43 shall be claimed by the registered person in his return in FORM GSTR-3 and shall be credited to his electronic cash ledger in FORM GST PMT-05 and the amount credited shall be available for payment of any future liability towards interest or the taxable person may claim refund of the amount under section 54.



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19. Matching of details furnished by the e-Commerce operator with the details furnished by the supplier The following details relating to the supplies made through an e-Commerce operator, as declared in FORM GSTR-8, shall be matched with the corresponding details declared by the supplier in FORM GSTR-1- (a) State of place of supply; and (b) net taxable value: Provided that where the time limit for furnishing FORM GSTR-1 under section 37 has been extended, the date of matching of the above mentioned details shall be extended accordingly: Provided further that the Commissioner may, on the recommendations of the Council, by order, extend the date of matching to such date as may be specified therein. 20. Communication and rectification of discrepancy in details furnished by the ecommerce operator and the supplier (1) Any discrepancy in the details furnished by the operator and those declared by the supplier shall be made available to the supplier electronically in FORM GST MIS-3 and to the e-commerce operator electronically in FORM GST MIS–4 on the Common Portal on or before the last date of the month in which the matching has been carried out. (2) A supplier to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available. (3) An operator to whom any discrepancy is made available under sub-rule (1) may make suitable rectifications in the statement to be furnished for the month in which the discrepancy is made available. (4) Where the discrepancy is not rectified under sub-rule (2) or sub-rule (3), an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in FORM GSTR-3 for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically on the Common Portal in FORM GST MIS–3. 21. 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



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the Commissioner: Provided that a person paying tax under section 10 shall furnish the annual return in FORM GSTR-9A. (2) Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement referred to in sub-section (5) of the said section in FORM GSTR -9B. (3) 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. 22. Final return Every registered person required to furnish a final return under section 45, shall furnish such return electronically in FORM GSTR-10 through the Common Portal either directly or through a Facilitation Centre notified by the Commissioner. 23. Details of inward supplies of persons having Unique Identity Number (1) Every person who has been issued a Unique Identity Number and claims refund of the taxes paid on his inward supplies, shall furnish the details of such supplies of taxable goods or services or both electronically in FORM GSTR-11, along with application for such refund claim, through the common portal either directly or through a Facilitation Centre notified by the Commissioner. (2) Every person who has been issued a Unique Identity Number for purposes other than refund of the taxes paid shall furnish the details of inward supplies of taxable goods or services or both as may be required by the proper officer in FORM GSTR-11. 24. Provisions relating to a goods and services tax practitioner (1) An application in FORM GST PCT-01 may be made electronically through the Common Portal either directly or through a Facilitation Centre notified by the Commissioner for enrolment as goods and services tax practitioner by any person who: (a) (i) is a citizen of India; (ii) is a person of sound mind; (iii) is not adjudicated as insolvent; (iv) has not been convicted by a competent court,- and satisfies any of the following conditions: - (b) that he is a retired officer of the Commercial Tax Department of any State



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Government or of the Central Board of Excise and Customs, Department of Revenue, Government of India, who, during his service under the Government, had worked in a post not lower in rank than that of a Group-B gazetted officer for a period of not less than two years; or (c ) that he has been enrolled as a sales tax practitioner or tax return preparer under the existing law for a period of not less than five years; (d) he has passed: (i) a graduate or postgraduate degree or its equivalent examination having a degree in Commerce, Law, Banking including Higher Auditing, or Business Administration or Business Management from any Indian University established by any law for the time being in force; or (ii) a degree examination of any Foreign University recognized by any Indian University as equivalent to the degree examination mentioned in sub-clause (i); or (iii) any other examination notified by the Government, on the recommendation of the Council, for this purpose; or (iv) has passed any of the following examinations, namely.- (a) final examination of the Institute of Chartered Accountants of India; or (b) final examination of the Institute of Cost Accountants of India; or (c) final examination of the Institute of Company Secretaries of India. (2) On receipt of the application referred to in sub-rule (1), the officer authorised in this behalf shall, after making such enquiry as he considers necessary, either enrol the applicant as a goods and services tax practitioner and issue a certificate to that effect in FORM GST PCT-02 or reject his application where it is found that the applicant is not qualified to be enrolled as a goods and services tax practitioner. (3) The enrolment made under sub-rule (2) shall be valid until it is cancelled: Provided that no person enrolled as a goods and services tax practioner shall be eligible to remain enrolled unless he passes such examination conducted at such periods and by such authority as may be notified by the Commissioner on the recommendations of the Council: Provided further that no person to whom the provisions of clause (c) of sub-section (1) apply shall be eligible to remain enrolled unless he passes the said examination within a period of one year from the appointed date. (4) If any goods and services tax practitioner is found guilty of misconduct in connection with any proceedings under the Act, the authorised officer may, after giving him a notice to show cause in FORM GST PCT-03 for such misconduct and after giving him a reasonable opportunity of being heard, by order in FORM GST PCT -04 direct that he shall henceforth be disqualified under section 48 to function as a goods and services tax practitioner.



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(5) Any person against whom an order under sub-rule (4) is made may, within thirty days from the date of issue of such order, appeal to the Commissioner against such order. (6) Any registered person may, at his option, authorise a goods and services tax practitioner on the Common Portal in FORM GST PCT-05 or, at any time, withdraw such authorisation in FORM GST PCT-05 and the goods and services tax practitioner so authorised shall be allowed to undertake such tasks as indicated in the said authorization during the period of authorisation. (7) Where a statement required to be furnished by a registered person has been furnished by the goods and services tax practitioner authorised by him, a confirmation shall be sought from the registered person over email or SMS and the statement furnished by the goods and services tax practitioner shall be made available to the registered person on the Common Portal: Provided that where the registered person fails to respond to the request for confirmation till the last date of furnishing of such statement, it shall be deemed that he has confirmed the statement furnished by the goods and services tax practitioner. (8) A goods and services tax practitioner can undertake any or all of the following activities on behalf of a registered person, if so authorised by him to: (a) furnish the details of outward and inward supplies; (b) furnish monthly, quarterly, annual or final return; (c) make deposit for credit into the electronic cash ledger; (d) file a claim for refund; and (e) file an application for amendment or cancellation of registration: Provided that where any application relating to a claim for refund or an application for amendment or cancellation of registration has been submitted by the goods and services tax practitioner authorised by the registered person, a confirmation shall be sought from the registered person and the application submitted by the said practitioner shall be made available to the registered person on the Common Portal and such application shall not be proceeded with further until the registered person gives his consent to the same. (9) Any registered person opting to furnish his return through a goods and services tax practitioner shall- (a) give his consent in FORM GST PCT-05 to any goods and services tax practitioner to prepare and furnish his return; and (b) before confirming submission of any statement prepared by the goods and services tax practitioner, ensure that the facts mentioned in the return are true and correct.



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(10) The goods and services tax practitioner shall- (a) prepare the statements with due diligence; and (b) affix his digital signature on the statements prepared by him or electronically verify using his credentials. (11) A goods and services tax practitioner enrolled in any other State or Union Territory shall be treated as enrolled in the State/Union territory for the purposes specified in sub-rule (8). 25. Conditions for purposes of appearance (1) No person shall be eligible to attend before any authority as a goods and services tax practitioner in connection with any proceedings under the Act on behalf of any registered or unregistered person unless he has been enrolled under rule 24. (2) A goods and services tax practitioner attending on behalf of a registered or an unregistered person in any proceedings under the Act before any authority shall produce before such authority, if required, a copy of the authorisation given by such person in FORM GST PCT-05.



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14) PAYMENT OF TAX 49. Payment of tax, interest, penalty and other amounts. (1) Every deposit made towards tax, interest, penalty, fee or any other amount by a person by internet banking or by using credit or debit cards or National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode and subject to such conditions and restrictions as may be prescribed, shall be credited to the electronic cash ledger of such person to be maintained in such manner as may be prescribed. (2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed. (3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the rules made thereunder in such manner and subject to such conditions and within such time as may be prescribed. (4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed. (5) The amount of input tax credit available in the electronic credit ledger of the registered person on account of–– (a) integrated tax shall first be utilised towards payment of integrated tax and the amount remaining, if any, may be utilised towards the payment of central tax and State tax, or as the case may be, Union territory tax, in that order; (b) the central tax shall first be utilised towards payment of central tax and the amount remaining, if any, may be utilised towards the payment of integrated tax; (c) the State tax shall first be utilised towards payment of State tax and the amount remaining, if any, may be utilised towards payment of integrated tax; (d) the Union territory tax shall first be utilised towards payment of Union territory tax and the amount remaining, if any, may be utilised towards payment of integrated tax; (e) the central tax shall not be utilised towards payment of State tax or Union territory tax; and



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(f) the State tax or Union territory tax shall not be utilised towards payment of central tax. (6) The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of section 54. (7) All liabilities of a taxable person under this Act shall be recorded and maintained in an electronic liability register in such manner as may be prescribed. (8) Every taxable person shall discharge his tax and other dues under this Act or the rules made thereunder in the following order, namely:–– (a) self-assessed tax, and other dues related to returns of previous tax periods; (b) self-assessed tax, and other dues related to the return of the current tax period; (c) any other amount payable under this Act or the rules made thereunder including the demand determined under section 73 or section 74. (9) Every person who has paid the tax on goods or services or both under this Act shall, unless the contrary is proved by him, be deemed to have passed on the full incidence of such tax to the recipient of such goods or services or both. Explanation.––For the purposes of this section,— (a) the date of credit to the account of the Government in the authorised bank shall be deemed to be the date of deposit in the electronic cash ledger; (b) the expression,— (i) “tax dues” means the tax payable under this Act and does not include interest, fee and penalty; and (ii) “other dues” means interest, penalty, fee or any other amount payable under this Act or the rules made thereunder. 50. (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council. (2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from the day succeeding the day on which such tax was due to be paid.



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(3) A taxable person who makes an undue or excess claim of input tax credit under sub-section (10) of section 42 or undue or excess reduction in output tax liability under sub-section (10) of section 43, shall pay interest on such undue or excess claim or on such undue or excess reduction, as the case may be, at such rate not exceeding twenty-four per cent., as may be notified by the Government on the recommendations of the Council. 51. (1) Notwithstanding anything to the contrary contained in this Act, the Government may mandate,–– (a) a department or establishment of the Central Government or State Government; or (b) local authority; or (c) Governmental agencies; or (d) such persons or category of persons as may be notified by the Government on the recommendations of the Council, (hereafter in this section referred to as “the deductor”), to deduct tax at the rate of one per cent. from the payment made or credited to the supplier (hereafter in this section referred to as “the deductee”) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakh and fifty thousand rupees: Provided that no deduction shall be made if the location of the supplier and the place of supply is in a State or Union territory which is different from the State or as the case may be, Union territory of registration of the recipient. Explanation.––For the purpose of deduction of tax specified above, the value of supply shall be taken as the amount excluding the central tax, State tax, Union territory tax, integrated tax and cess indicated in the invoice. (2) The amount deducted as tax under this section shall be paid to the Government by the deductor within ten days after the end of the month in which such deduction is made, in such manner as may be prescribed. (3) The deductor shall furnish to the deductee a certificate mentioning therein the contract value, rate of deduction, amount deducted, amount paid to the Government and such other particulars in such manner as may be prescribed. (4) If any deductor fails to furnish to the deductee the certificate, after deducting the tax at source, within five days of crediting the amount so deducted to the Government, the deductor shall pay, by way of a late fee, a



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sum of one hundred rupees per day from the day after the expiry of such five days period until the failure is rectified, subject to a maximum amount of five thousand rupees. (5) The deductee shall claim credit, in his electronic cash ledger, of the tax deducted and reflected in the return of the deductor furnished under sub-section (3) of section 39, in such manner as may be prescribed. (6) If any deductor fails to pay to the Government the amount deducted as tax under sub-section (1), he shall pay interest in accordance with the provisions of sub-section (1) of section 50, in addition to the amount of tax deducted. (7) The determination of the amount in default under this section shall be made in the manner specified in section 73 or section 74. (8) The refund to the deductor or the deductee arising on account of excess or erroneous deduction shall be dealt with in accordance with the provisions of section 54: Provided that no refund to the deductor shall be granted, if the amount deducted has been credited to the electronic cash ledger of the deductee. Sec-52. (1) Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator (hereafter in this section referred to as the “operator”), not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator. Explanation.––For the purposes of this sub-section, the expression “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5) of section 9, made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month. (2) The power to collect the amount specified in sub-section (1) shall be without prejudice to any other mode of recovery from the operator. (3) The amount collected under sub-section (1) shall be paid to the Government by the operator within ten days after the end of the month in which such collection is made, in such manner as may be prescribed.



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(4) Every operator who collects the amount specified in sub-section (1) shall furnish a statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected under sub-section (1) during a month, in such form and manner as may be prescribed, within ten days after the end of such month. (5) Every operator who collects the amount specified in sub-section (1) shall furnish an annual statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected under the said sub-section during the financial year, in such form and manner as may be prescribed, before the thirty first day of December following the end of such financial year. (6) If any operator after furnishing a statement under sub-section (4) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest, as specified in sub-section (1) of section 50: Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier. (7) The supplier who has supplied the goods or services or both through the operator shall claim credit, in his electronic cash ledger, of the amount collected and reflected in the statement of the operator furnished under sub-section (4), in such manner as may be prescribed. (8) The details of supplies furnished by every operator under sub-section (4) shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under this Act in such manner and within such time as may be prescribed. (9) Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the corresponding details furnished by the supplier under section 37, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.



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(10) The amount in respect of which any discrepancy is communicated under sub-section (9) and which is not rectified by the supplier in his valid return or the operator in Collection of tax at source. is statement for the month in which discrepancy is communicated, shall be added to the output tax liability of the said supplier, where the value of outward supplies furnished by the operator is more than the value of outward supplies furnished by the supplier, in his return for the month succeeding the month in which the discrepancy is communicated in such manner as may be prescribed. (11) The concerned supplier, in whose output tax liability any amount has been added under sub-section (10), shall pay the tax payable in respect of such supply along with interest, at the rate specified under sub-section (1) of section 50 on the amount so added from the date such tax was due till the date of its payment. (12) Any authority not below the rank of Deputy Commissioner may serve a notice, either before or during the course of any proceedings under this Act, requiring the operator to furnish such details relating to— (a) supplies of goods or services or both effected through such operator during any period; or (b) stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by whatever name called, managed by such operator and declared as additional places of business by such suppliers, as may be specified in the notice. (13) Every operator on whom a notice has been served under sub-section (12) shall furnish the required information within fifteen working days of the date of service of such notice. (14) Any person who fails to furnish the information required by the notice served under sub-section (12) shall, without prejudice to any action that may be taken undersection 122, be liable to a penalty which may extend to twenty-five thousand rupees. Explanation.—For the purposes of this section, the expression “concerned supplier” shall mean the supplier of goods or services or both making supplies through the operator. 53. On utilisation of input tax credit availed under this Act for payment of tax dues under the Integrated Goods and Services Tax Act in accordance with the provisions of sub-section (5) of section 49, as reflected in the valid return furnished under sub-section (1) of section 39, the amount collected as central tax shall stand reduced by an amount equal to



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such credit so utilised and the Central Government shall transfer an amount equal to the amount so reduced from the central tax account to the integrated tax account in such manner and within such time as may be prescribed.



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15) AUDIT 65. Audit by tax Authorities (1) The Commissioner or any officer authorised by him, by way of a general or a specific order, may undertake audit of any registered person for such period, at such frequency and in such manner as may be prescribed. (2) The officers referred to in sub-section (1) may conduct audit at the place of business of the registered person or in their office. (3) The registered person shall be informed by way of a notice not less than fifteen working days prior to the conduct of audit in such manner as may be prescribed. (4) The audit under sub-section (1) shall be completed within a period of three months from the date of commencement of the audit: Provided that where the Commissioner is satisfied that audit in respect of such registered person cannot be completed within three months, he may, for the reasons to be recorded in writing, extend the period by a further period not exceeding six months. Explanation.––For the purposes of this sub-section, the expression “commencement of audit” shall mean the date on which the records and other documents, called for by the tax authorities, are made available by the registered person or the actual institution of audit at the place of business, whichever is later. (5) During the course of audit, the authorised officer may require the registered person,— (i) to afford him the necessary facility to verify the books of account or other documents as he may require; (ii) to furnish such information as he may require and render assistance for timely completion of the audit. (6) On conclusion of audit, the proper officer shall, within thirty days, inform the registered person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings. (7) Where the audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74.



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66. Special audit (1) If at any stage of scrutiny, inquiry, investigation or any other proceedings before him, any officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, is of the opinion that the value has not been correctly declared or the credit availed is not within the normal limits, he may,with the prior approval of the Commissioner, direct such registered person by a communication in writing to get his records including books of account examined and audited by a chartered accountant or a cost accountant as may be nominated by the Commissioner. (2) The chartered accountant or cost accountant so nominated shall, within the period of ninety days, submit a report of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such other particulars as may be specified: Provided that the Assistant Commissioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days. (3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force. (4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder. (5) The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final. (6) Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74.



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16) APPEALS AND REVISION 107. Appeals to Appellate Authority (1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person. (2) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or the Commissioner of Union territory tax, call for and examine the record of any proceedings in which an adjudicating authority has passed any decision or order under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, for the purpose of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order. (3) Where, in pursuance of an order under sub-section (2), the authorised officer makes an application to the Appellate Authority, such application shall be dealt with by the Appellate Authority as if it were an appeal made against the decision or order of the adjudicating authority and such authorised officer were an appellant and the provisions of this Act relating to appeals shall apply to such application. (4) The Appellate Authority may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months or six months, as the case may be, allow it to be presented within a further period of one month. (5) Every appeal under this section shall be in such form and shall be verified in such manner as may be prescribed. (6) No appeal shall be filed under sub-section (1), unless the appellant has paid— (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and (b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed.



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(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed. (8) The Appellate Authority shall give an opportunity to the appellant of being heard. (9) The Appellate Authority may, if sufficient cause is shown at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal. (10) The Appellate Authority may, at the time of hearing of an appeal, allow an appellant to add any ground of appeal not specified in the grounds of appeal, if it is satisfied that the omission of that ground from the grounds of appeal was not wilful or unreasonable. (11) The Appellate Authority shall, after making such further inquiry as may be necessary, pass such order, as it thinks just and proper, confirming, modifying or annulling the decision or order appealed against but shall not refer the case back to the adjudicating authority that passed the said decision or order: Provided that an order enhancing any fee or penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund or input tax credit shall not be passed unless the appellant has been given a reasonable opportunity of showing cause against the proposed order: Provided further that where the Appellate Authority is of the opinion that any tax has not been paid or short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, no order requiring the appellant to pay such tax or input tax credit shall be passed unless the appellant is given notice to show cause against the proposed order and the order is passed within the time limit specified under section 73 or section 74. (12) The order of the Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for such decision. (13) The Appellate Authority shall, where it is possible to do so, hear and decide every appeal within a period of one year from the date on which it is filed: Provided that where the issuance of order is stayed by an order of a court or Tribunal, the period of such stay shall be excluded in computing the period of one year.



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(14) On disposal of the appeal, the Appellate Authority shall communicate the order passed by it to the appellant, respondent and to the adjudicating authority. (15) A copy of the order passed by the Appellate Authority shall also be sent to the jurisdictional Commissioner or the authority designated by him in this behalf and the jurisdictional Commissioner of State tax or Commissioner of Union Territory Tax or an authority designated by him in this behalf. (16) Every order passed under this section shall, subject to the provisions of section 108 or section 113 or section 117 or section 118 be final and binding on the parties. 108. Powers of Revisional Authority. (1) Subject to the provisions of section 121 and any rules made thereunder, the Revisional Authority may, on his own motion, or upon information received by him or on request from the Commissioner of State tax, or the Commissioner of Union territory tax, call for and examine the record of any proceedings, and if he considers that any decision or order passed under this Act or under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of revenue and is illegal or improper or has not taken into account certain material facts, whether available at the time of issuance of the said order or not or in consequence of an observation by the Comptroller and Auditor General of India, he may, if necessary, stay the operation of such decision or order for such period as he deems fit and after giving the person concerned an opportunity of being heard and after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, including enhancing or modifying or annulling the said decision or order. (2) The Revisional Authority shall not exercise any power under sub-section (1), if— (a) the order has been subject to an appeal under section 107 or section 112 or section 117 or section 118; or (b) the period specified under sub-section (2) of section 107 has not yet expired or more than three years have expired after the passing of the decision or order sought to be revised; or (c) the order has already been taken for revision under this section at an earlier stage; or (d) the order has been passed in exercise of the powers under sub-section (1): Provided that the Revisional Authority may pass an order under sub-section (1) on any point which has not been raised and decided in an appeal referred to in



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clause (a) of sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or before the expiry of a period of three years referred to in clause (b) of that sub-section, whichever is later. (3) Every order passed in revision under sub-section (1) shall, subject to the provisions of section 113 or section 117 or section 118, be final and binding on the parties. (4) If the said decision or order involves an issue on which the Appellate Tribunal or the High Court has given its decision in some other proceedings and an appeal to the High Court or the Supreme Court against such decision of the Appellate Tribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Tribunal and the date of the decision of the High Court or the date of the decision of the High Court and the date of the decision of the Supreme Court shall be excluded in computing the period of limitation referred to in clause (b) of sub-section (2) where proceedings for revision have been initiated by way of issue of a notice under this section. (5) Where the issuance of an order under sub-section (1) is stayed by the order of a court or Appellate Tribunal, the period of such stay shall be excluded in computing the period of limitation referred to in clause (b) of sub-section (2). (6) For the purposes of this section, the term,–– (i) “record” shall include all records relating to any proceedings under this Act available at the time of examination by the Revisional Authority; (ii) “decision” shall include intimation given by any officer lower in rank than the Revisional Authority. 109. Constitution of Appellate Tribunal and Benches thereof. (1) The Government shall, on the recommendations of the Council, by notification, constitute with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority. (2) The powers of the Appellate Tribunal shall be exercisable by the National Bench and Benches thereof (hereinafter in this Chapter referred to as “Regional Benches”), State Bench and Benches thereof (hereafter in this Chapter referred to as “Area Benches”). (3) The National Bench of the Appellate Tribunal shall be situated at New Delhi which shall be presided over by the President and shall consist of one Technical Member (Centre) and one Technical Member (State).



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(4) The Government shall, on the recommendations of the Council, by notification, constitute such number of Regional Benches as may be required and such Regional Benches shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member(State). (5) The National Bench or Regional Benches of the Appellate Tribunal shall have jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases where one of the issues involved relates to the place of supply. (6) The Government shall, by notification, specify for each State or Union territory, a Bench of the Appellate Tribunal (hereafter in this Chapter, referred to as “State Bench”) for exercising the powers of the Appellate Tribunal within the concerned State or Union territory: Provided that the Government shall, on receipt of a request from any State Government, constitute such number of Area Benches in that State, as may be recommended by the Provided further that the Government may, on receipt of a request from any State, or on its own motion for a Union territory, notify the Appellate Tribunal in a State to act as the Appellate Tribunal for any other State or Union territory, as may be recommended by the Council, subject to such terms and conditions as may be prescribed. (7) The State Bench or Area Benches shall have jurisdiction to hear appeals against the orders passed by the Appellate Authority or the Revisional Authority in the cases involving matters other than those referred to in sub-section (5). (8) The President and the State President shall, by general or special order, distribute the business or transfer cases among Regional Benches or, as the case may be, Area Benches in a State. (9) Each State Bench and Area Benches of the Appellate Tribunal shall consist of a Judicial Member, one Technical Member (Centre) and one Technical Member (State) and the State Government may designate the senior most Judicial Member in a State as the State President. (10) In the absence of a Member in any Bench due to vacancy or otherwise, any appeal may, with the approval of the President or, as the case may be, the State President, be heard by a Bench of two Members: Provided that any appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined in any order appealed against, does not exceed five lakh



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rupees and which does not involve any question of law may, with the approval of the President and subject to such conditions as may be prescribed on the recommendations of the Council, be heard by a bench consisting of a single member. (11) If the Members of the National Bench, Regional Benches, State Bench or Area Benches differ in opinion on any point or points, it shall be decided according to the opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President or as the case may be, State President for hearing on such point or points to one or more of the other Members of the National Bench, Regional Benches, State Bench or Area Benches and such point or points shall be decided according to the opinion of the majority of Members who have heard the case, including those who first heard it. (12) The Government, in consultation with the President may, for the administrative convenience, transfer— (a) any Judicial Member or a Member Technical (State) from one Bench to another Bench, whether National or Regional; or (b) any Member Technical (Centre) from one Bench to another Bench, whether National, Regional, State or Area. (13) The State Government, in consultation with the State President may, for the administrative convenience, transfer a Judicial Member or a Member Technical (State) from one Bench to another Bench within the State. (14) No act or proceedings of the Appellate Tribunal shall be questioned or shall be invalid merely on the ground of the existence of any vacancy or defect in the constitution of the Appellate Tribunal. 110. President and Members of Appellate Tribunal, their qualification, appointment, conditions of service, etc. (1) A person shall not be qualified for appointment as— (a) the President, unless he has been a Judge of the Supreme Court or is or has been the Chief Justice of a High Court, or is or has been a Judge of a High Court for a period not less than five years; (b) a Judicial Member, unless he— (i) has been a Judge of the High Court; or (ii) is or has been a District Judge qualified to be appointed as a Judge of a High Court; or (iii) is or has been a Member of Indian Legal Service and has held a post not less than Additional Secretary for three years; (c) a Technical Member (Centre) unless he is or has been a member of Indian



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Revenue (Customs and Central Excise) Service, Group A, and has completed at least fifteen years of service in Group A; (d) a Technical Member (State) unless he is or has been an officer of the State Government not below the rank of Additional Commissioner of Value Added Tax or the State goods and services tax or such rank as may be notified by the concerned State Government on the recommendations of the Council with at least three years of experience in the administration of an existing law or the State Goods and Services Tax Act or in the field of finance and taxation. (2) The President and the Judicial Members of the National Bench and the Regional Benches shall be appointed by the Government after consultation with the Chief Justice of India or his nominee: Provided that in the event of the occurrence of any vacancy in the office of the President by reason of his death, resignation or otherwise, the senior most Member of the National Bench shall act as the President until the date on which a new President, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office: Provided further that where the President is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member of the National Bench shall discharge the functions of the President until the date on which the President resumes his duties. (3) The Technical Member (Centre) and Technical Member (State) of the National Bench and Regional Benches shall be appointed by the Government on the recommendations of a Selection Committee consisting of such persons and in such manner as may be prescribed. (4) The Judicial Member of the State Bench or Area Benches shall be appointed by the State Government after consultation with the Chief Justice of the High Court of the State or his nominee. (5) The Technical Member (Centre) of the State Bench or Area Benches shall be appointed by the Central Government and Technical Member (State) of the State Bench or Area Benches shall be appointed by the State Government in such manner as may be prescribed. (6) No appointment of the Members of the Appellate Tribunal shall be invalid merely by the reason of any vacancy or defect in the constitution of the Selection Committee. (7) Before appointing any person as the President or Members of the Appellate Tribunal, the Central Government or, as the case may be, the State Government, shall satisfy itself that such person does not have any financial or other interests which are likely to prejudicially affect his functions as such President or Member.



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(8) The salary, allowances and other terms and conditions of service of the President,State President and the Members of the Appellate Tribunal shall be such as may be prescribed: Provided that neither salary and allowances nor other terms and conditions of service of the President, State President or Members of the Appellate Tribunal shall be varied to their disadvantage after their appointment. (9) The President of the Appellate Tribunal shall hold office for a term of three years from the date on which he enters upon his office, or until he attains the age of seventy years, whichever is earlier and shall be eligible for reappointment. (10) The Judicial Member of the Appellate Tribunal and the State President shall hold office for a term of three years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligible for reappointment. (11) The Technical Member (Centre) or Technical Member (State) of the Appellate Tribunal shall hold office for a term of five years from the date on which he enters upon his office, or until he attains the age of sixty-five years, whichever is earlier and shall be eligible for reappointment. (12) The President, State President or any Member may, by notice in writing under his hand addressed to the Central Government or, as the case may be, the State Government resign from his office: Provided that the President, State President or Member shall continue to hold office until the expiry of three months from the date of receipt of such notice by the Central Government, or, as the case may be, the State Government or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest. (13) The Central Government may, after consultation with the Chief Justice of India, in case of the President, Judicial Members and Technical Members of the National Bench, Regional Benches or Technical Members (Centre) of the State Bench or Area Benches, and the State Government may, after consultation with the Chief Justice of High Court, in case of the State President, Judicial Members, Technical Members (State) of the State Bench or Area Benches, may remove from the office such President or Member, who— (a) has been adjudged an insolvent; or (b) has been convicted of an offence which, in the opinion of such Government involves moral turpitude; or (c) has become physically or mentally incapable of acting as such President, State President or Member; or



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(d) has acquired such financial or other interest as is likely to affect prejudicially his functions as such President, State President or Member; or (e) has so abused his position as to render his continuance in office prejudicial to the public interest: Provided that the President, State President or the Member shall not be removed on any of the grounds specified in clauses (d) and (e), unless he has been informed of the charges against him and has been given an opportunity of being heard. (14) Without prejudice to the provisions of sub-section (13),–– (a) the President or a Judicial and Technical Member of the National Bench or Regional Benches, Technical Member (Centre) of the State Bench or Area Benches shall not be removed from their office except by an order made by the Central Government on the ground of proved misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court nominated by the Chief Justice of India on a reference made to him by the Central Government and of which the President or the said Member had been given an opportunity of being heard; (b) the Judicial Member or Technical Member (State) of the State Bench or Area Benches shall not be removed from their office except by an order made by the State Government on the ground of proved misbehaviour or incapacity after an inquiry made by a Judge of the concerned High Court nominated by the Chief Justice of the concerned High Court on a reference made to him by the State Government and of which the said Member had been given an opportunity of being heard. (15) The Central Government, with the concurrence of the Chief Justice of India, may suspend from office, the President or a Judicial or Technical Members of the National Bench or the Regional Benches or the Technical Member (Centre) of the State Bench or Area Benches in respect of whom a reference has been made to the Judge of the Supreme Court under sub-section (14). (16) The State Government, with the concurrence of the Chief Justice of the High Court, may suspend from office, a Judicial Member or Technical Member (State) of the State Bench or Area Benches in respect of whom a reference has been made to the Judge of the High Court under sub-section (14). (17) Subject to the provisions of article 220 of the Constitution, the President, State President or other Members, on ceasing to hold their office, shall not be eligible to appear, act or plead before the National Bench and the Regional Benches or the State Bench and the Area Benches thereof where he was the President or, as the case may be, a Member.



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111. Procedure before Appellate Tribunal. (1) The Appellate Tribunal shall not, while disposing of any proceedings before it or an appeal before it, be bound by the procedure laid down in the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and subject to the other provisions of this Act and the rules made thereunder, the Appellate Tribunal shall have power to regulate its own procedure. (2) The Appellate Tribunal shall, for the purposes of discharging its functions under this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the following matters, namely:— (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872, requisitioning any public record or document or a copy of such record or document from any office; (e) issuing commissions for the examination of witnesses or documents; (f) dismissing a representation for default or deciding it ex parte; (g) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and (h) any other matter which may be prescribed. (3) Any order made by the Appellate Tribunal may be enforced by it in the same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for the Appellate Tribunal to send for execution of its orders to the court within the local limits of whose jurisdiction,— (a) In the case of an order against a company, the registered office of the company is situated; or (b) In the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain. (4) All proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code, and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973. 112. Appeals to Appellate Tribunal. (1) Any person aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods and Services Tax Act or the Union Territory



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Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal. (2) The Appellate Tribunal may, in its discretion, refuse to admit any such appeal where the tax or input tax credit involved or the difference in tax or input tax credit involved or the amount of fine, fee or penalty determined by such order, does not exceed fifty thousand rupees. (3) The Commissioner may, on his own motion, or upon request from the Commissioner of State tax or Commissioner of Union territory tax, call for and examine the record of any order passed by the Appellate Authority or the Revisional Authority under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act for the purpose of satisfying himself as to the legality or propriety of the said order and may, by order, direct any officer subordinate to him to apply to the Appellate Tribunal within six months from the date on which the said order has been passed for determination of such points arising out of the said order as may be specified by the Commissioner in his order. (4) Where in pursuance of an order under sub-section (3) the authorised officer makes an application to the Appellate Tribunal, such application shall be dealt with by the Appellate Tribunal as if it were an appeal made against the order under sub-section (11) of section 107 or under sub-section (1) of section 108 and the provisions of this Act shall apply to such application, as they apply in relation to appeals filed under sub-section (1). (5) On receipt of notice that an appeal has been preferred under this section, the party against whom the appeal has been preferred may, notwithstanding that he may not have appealed against such order or any part thereof, file, within forty-five days of the receipt of notice, a memorandum of cross-objections, verified in the prescribed manner, against any part of the order appealed against and such memorandum shall be disposed of by the Appellate Tribunal, as if it were an appeal presented within the time specified in sub-section (1). (6) The Appellate Tribunal may admit an appeal within three months after the expiry of the period referred to in sub-section (1), or permit the filing of a memorandum of cross-objections within forty-five days after the expiry of the period referred to in sub-section (5) if it is satisfied that there was sufficient cause for not presenting it within that period. (7) An appeal to the Appellate Tribunal shall be in such form, verified in such manner and shall be accompanied by such fee, as may be prescribed.



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(8) No appeal shall be filed under sub-section (1), unless the appellant has paid–– (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and (b) a sum equal to twenty per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, in relation to which the appeal has been filed. (9) Where the appellant has paid the amount as per sub-section (8), the recovery proceedings for the balance amount shall be deemed to be stayed till the disposal of the appeal. (10) Every application made before the Appellate Tribunal,— (a) in an appeal for rectification of error or for any other purpose; or (b) for restoration of an appeal or an application, shall be accompanied by such fees as may be prescribed. 113. Orders of Appellate Tribunal. (1) The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the Appellate Authority, or the Revisional Authority or to the original adjudicating authority, with such directions as it may think fit, for a fresh adjudication or decision after taking additional evidence, if necessary. (2) The Appellate Tribunal may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time to the parties or any of them and adjourn the hearing of the appeal for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal. (3) The Appellate Tribunal may amend any order passed by it under sub-section (1) so as to rectify any error apparent on the face of the record, if such error is noticed by it on its own accord, or is brought to its notice by the Commissioner or the Commissioner of State tax or the Commissioner of the Union territory tax or the other party to the appeal within a period of three months from the date of the order: Provided that no amendment which has the effect of enhancing an assessment or reducing a refund or input tax credit or otherwise increasing the liability of the other party, shall be made under this sub-section, unless the party has been given an opportunity of being heard. (4) The Appellate Tribunal shall, as far as possible, hear and decide every appeal within a period of one year from the date on which it is filed.



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(5) The Appellate Tribunal shall send a copy of every order passed under this section to the Appellate Authority or the Revisional Authority, or the original adjudicating authority, as the case may be, the appellant and the jurisdictional Commissioner or the Commissioner of State tax or the Union territory tax. (6) Save as provided in section 117 or section 118, orders passed by the Appellate Tribunal on an appeal shall be final and binding on the parties. 114. Financial and administrative powers of President. The President shall exercise such financial and administrative powers over the National Bench and Regional Benches of the Appellate Tribunal as may be prescribed: Provided that the President shall have the authority to delegate such of his financial and administrative powers as he may think fit to any other Member or any officer of the National Bench and Regional Benches, subject to the condition that such Member or officer shall, while exercising such delegated powers, continue to act under the direction, control and supervision of the President. 115. Interest on refund of amount paid for admission of appeal. Where an amount paid by the appellant under sub-section (6) of section 107 or sub-section (8) of section 112 is required to be refunded consequent to any order of the Appellate Authority or of the Appellate Tribunal, interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount. 116. Appearance by authorized representative (1) Any person who is entitled or required to appear before an officer appointed under this Act, or the Appellate Authority or the Appellate Tribunal in connection with any proceedings under this Act, may, otherwise than when required under this Act to appear personally for examination on oath or affirmation, subject to the other provisions of this section, appear by an authorised representative. (2) For the purposes of this Act, the expression “authorised representative” shall mean a person authorised by the person referred to in sub-section (1) to appear on his behalf, being— (a) his relative or regular employee; or (b) an advocate who is entitled to practice in any court in India, and who has not been debarred from practicing before any court in India; or



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(c) any chartered accountant, a cost accountant or a company secretary, who holds a certificate of practice and who has not been debarred from practice; or (d) a retired officer of the Commercial Tax Department of any State Government or Union territory or of the Board who, during his service under the Government, had worked in a post not below the rank than that of a Group-B Gazetted officer for a period of not less than two years: Provided that such officer shall not be entitled to appear before any proceedings under this Act for a period of one year from the date of his retirement or resignation; or (e) any person who has been authorised to act as a goods and services tax practitioner on behalf of the concerned registered person. (3) No person,— (a) who has been dismissed or removed from Government service; or (b) who is convicted of an offence connected with any proceedings under this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, or under the existing law or under any of the Acts passed by a State Legislature dealing with the imposition of taxes on sale of goods or supply of goods or services or both; or (c) who is found guilty of misconduct by the prescribed authority; (d) who has been adjudged as an insolvent, shall be qualified to represent any person under sub-section (1)— (i) for all times in case of persons referred to in clauses (a), (b) and (c); and (ii) for the period during which the insolvency continues in the case of a person referred to in clause (d). (4) Any person who has been disqualified under the provisions of the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act shall be deemed to be disqualified under this Act. 117. Appeal to High Court. (1) Any person aggrieved by any order passed by the State Bench or Area Benches of the Appellate Tribunal may file an appeal to the High Court and the High Court may admit such appeal, if it is satisfied that the case involves a substantial question of law. (2) An appeal under sub-section (1) shall be filed within a period of one hundred and eighty days from the date on which the order appealed against is received by the aggrieved person and it shall be in such form, verified in such manner as may be prescribed:



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Provided that the High Court may entertain an appeal after the expiry of the said period if it is satisfied that there was sufficient cause for not filing it within such period. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question and the appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (4) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (5) The High Court may determine any issue which–– (a) has not been determined by the State Bench or Area Benches; or (b) has been wrongly determined by the State Bench or Area Benches, by reason of a decision on such question of law as herein referred to in sub-section (3). (6) Where an appeal has been filed before the High Court, it shall be heard by a Bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges. (7) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only, by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it. (8) Where the High Court delivers a judgment in an appeal filed before it under this section, effect shall be given to such judgment by either side on the basis of a certified copy of the judgment. (9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908, relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section. 118. Appeal to Supreme Court. (1) An appeal shall lie to the Supreme Court— (a) from any order passed by the National Bench or Regional Benches of the



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Appellate Tribunal; or (b) from any judgment or order passed by the High Court in an appeal made under section 117 in any case which, on its own motion or on an application made by or on behalf of the party aggrieved, immediately after passing of the judgment or order, the High Court certifies to be a fit one for appeal to the Supreme Court. (2) The provisions of the Code of Civil Procedure, 1908, relating to appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under this section as they apply in the case of appeals from decrees of a High Court. (3) Where the judgment of the High Court is varied or reversed in the appeal, effect shall be given to the order of the Supreme Court in the manner provided in section 117 in the case of a judgment of the High Court. 119. Sums due to be paid notwithstanding appeal, etc. Notwithstanding that an appeal has been preferred to the High Court or the Supreme Court, sums due to the Government as a result of an order passed by the National or Regional Benches of the Appellate Tribunal under sub-section (1) of section 113 or an order passed by the State Bench or Area Benches of the Appellate Tribunal under sub-section (1) of section 113 or an order passed by the High Court under section 117, as the case may be, shall be payable in accordance with the order so passed. 120. Appeal not to be filed in certain cases. (1) The Board may, on the recommendations of the Council, from time to time, issue orders or instructions or directions fixing such monetary limits, as it may deem fit, for the purposes of regulating the filing of appeal or application by the officer of the central tax under the provisions of this Chapter. (2) Where, in pursuance of the orders or instructions or directions issued under sub-section (1), the officer of the central tax has not filed an appeal or application against any decision or order passed under the provisions of this Act, it shall not preclude such officer of the central tax from filing appeal or application in any other case involving the same or similar issues or questions of law. (3) Notwithstanding the fact that no appeal or application has been filed by the officer of the central tax pursuant to the orders or instructions or directions issued under sub-section (1), no person, being a party in appeal or application shall contend that the officer of the central tax has acquiesced in the decision on the disputed issue by not filing an appeal or application. (4) The Appellate Tribunal or court hearing such appeal or application shall have



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regard to the circumstances under which appeal or application was not filed by the officer of the central tax in pursuance of the orders or instructions or directions issued under sub-section (1). 121. Non-appealable decisions and orders. Notwithstanding anything to the contrary in any provisions of this Act, no appeal shall lie against any decision taken or order passed by an officer of central tax if such decision taken or order passed relates to any one or more of the following matters, namely:— (a) an order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer; or (b) an order pertaining to the seizure or retention of books of account, register and other documents; or (c) an order sanctioning prosecution under this Act; or (d) an order passed under section 80.



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17) OFFENCES AND PENALTIES 122. Penalty for certain offences. (1) Where a taxable person who–– (i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply; (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder; (iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax; (vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52; (vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder; (viii) fraudulently obtains refund of tax under this Act; (ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder; (x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; (xi) is liable to be registered under this Act but fails to obtain registration; (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently; (xiii) obstructs or prevents any officer in discharge of his duties under this Act; (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf; (xv) suppresses his turnover leading to evasion of tax under this Act; (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder; (xvii) fails to furnish information or documents called for by an officer in



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accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act; (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act; (xix) issues any invoice or document by using the registration number of another registered person; (xx) tampers with, or destroys any material evidence or document; (xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act, he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher. (2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,— (a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent. of the tax due from such person, whichever is higher; (b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher. (3) Any person who–– (a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1); (b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry; SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 77 (e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to twenty-five thousand rupees.



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123. Penalty for failure to furnish information return. If a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continues: Provided that the penalty imposed under this section shall not exceed five thousand rupees. 124. Fine for failure to furnish statistics. If any person required to furnish any information or return under section 151,— (a) without reasonable cause fails to furnish such information or return as may be required under that section, or (b) wilfully furnishes or causes to furnish any information or return which he knows to be false, he shall be punishable with a fine which may extend to ten thousand rupees and in case of a continuing offence to a further fine which may extend to one hundred rupees for each day after the first day during which the offence continues subject to a maximum limit of twentyfive thousand rupees. 125. General penalty. Any person, who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided for in this Act, shall be liable to a penalty which may extend to twenty-five thousand rupees. 126. General disciplines related to penalty. (1) No officer under this Act shall impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence. Explanation.––For the purpose of this sub-section,–– (a) a breach shall be considered a ‘minor breach’ if the amount of tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record. (2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach. (3) No penalty shall be imposed on any person without giving him an opportunity of being heard. (4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of



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the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified. (5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the officer under this Act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person. (6) The provisions of this section shall not apply in such cases where the penalty specified under this Act is either a fixed sum or expressed as a fixed percentage. 127. Power to impose penalty in certain cases. Where the proper officer is of the view that a person is liable to a penalty and the same is not covered under any proceedings under section 62 or section 63 or section 64 or section 73 or section 74 or section 129 or section 130, he may issue an order levying such penalty after giving a reasonable opportunity of being heard to such person. 128. Power to waive penalty or fee or both The Government may, by notification, waive in part or full, any penalty referred to in section 122 or section 123 or section 125 or any late fee referred to in section 47 for such class of taxpayers and under such mitigating circumstances as may be specified therein on the recommendations of the Council. 129. Detention, seizure and release of goods and conveyances in transit. (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,–– (a) on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty; (b) on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty; (c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in such form and manner as may be prescribed:



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Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods. (2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances. (3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c). (4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard. (5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded. (6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130: Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer. 130. Confiscation of goods or conveyances and levy of penalty. (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. (2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit: Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:



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Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129: Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon. (3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance. (4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard. (5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government. (6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession. (7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government. 131. Confiscation or penalty not to interfere with other punishments. Without prejudice to the provisions contained in the Code of Criminal Procedure, 1973, no confiscation made or penalty imposed under the provisions of this Act or the rules made thereunder shall prevent the infliction of any other punishment to which the person affected thereby is liable under the provisions of this Act or under any other law for the time being in force. 132. Punishment for certain offences. (1) Whoever commits any of the following offences, namely:— (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax; (b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; 2 of 1974. (c) avails input tax credit using such invoice or bill referred to in clause (b); (d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or



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documents or furnishes any false information with an intention to evade payment of tax due under this Act; (g) obstructs or prevents any officer in the discharge of his duties under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or (l) attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (k) of this section, shall be punishable–– (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine; (iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. (2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.



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(3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section (1) and sub-section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Act, except the offences referred to in sub-section (5) shall be noncognizable and bailable. The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable. (6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. Explanation.— For the purposes of this section, the term “tax” shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act and cess levied under the Goods and Services Tax (Compensation to States) Act. 133. Liability of officers and certain other persons. (1) Where any person engaged in connection with the collection of statistics under section 151 or compilation or computerisation thereof or if any officer of central tax having access to information specified under sub-section (1) of section 150, or if any person engaged in connection with the provision of service on the common portal or the agent of common portal, wilfully discloses any information or the contents of any return furnished under this Act or rules made thereunder otherwise than in execution of his duties under the said sections or for the purposes of prosecution for an offence under this Act or under any other Act for the time being in force, he shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to twenty-five thousand rupees, or with both. (2) Any person— (a) who is a Government servant shall not be prosecuted for any offence under this section except with the previous sanction of the Government; (b) who is not a Government servant shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. 134. Cognizance of offences. No court shall take cognizance of any offence punishable under this Act or the



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rules made thereunder except with the previous sanction of the Commissioner, and no court inferior to that of a Magistrate of the First Class, shall try any such offence. 135. Presumption of culpable mental state. In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation.—For the purposes of this section,–– (i) the expression “culpable mental state” includes intention, motive, knowledge of a fact, and belief in, or reason to believe, a fact; (ii) a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability. 136. Relevancy of statements under certain circumstances. A statement made and signed by a person on appearance in response to any summons issued under section 70 during the course of any inquiry or proceedings under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,–– (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the court and the court is of the opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. 137. Offences by companies. (1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is



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attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. (3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis, apply to such persons. (4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. Explanation.––For the purposes of this section,–– (i) “company” means a body corporate and includes a firm or other association of individuals; and (ii) “director”, in relation to a firm, means a partner in the firm. 138. Compounding of offences (1) Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed: Provided that nothing contained in this section shall apply to— (a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f) of sub-section (1) of section 132 and the offences specified in clause (l) which are relatable to offences specified in clauses (a) to (f) of the said sub-section; (b) a person who has been allowed to compound once in respect of any offence, other than those in clause (a), under this Act or under the provisions of any State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act or the Integrated Goods and Services Tax Act in respect of supplies of value exceeding one crore rupees; (c) a person who has been accused of committing an offence under this Act which is also an offence under any other law for the time being in force; (d) a person who has been convicted for an offence under this Act by a court; (e) a person who has been accused of committing an offence specified in clause (g) or clause (j) or clause (k) of sub-section (1) of section 132; and Offences by companies.



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(f) any other class of persons or offences as may be prescribed: Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law: Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences. (2) The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than ten thousand rupees or fifty per cent. of the tax involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher. (3) On payment of such compounding amount as may be determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated.



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18) IMPACT OF GST ON TEXTILE AND APPAREL

SECTOR

INTRODUCTION:

The textile and apparel industry can be broadly divided into two segments - yarn and fibre, and processed fabrics and apparel. India accounts for 14 per cent of the world's production of textile fibres and yarns (largest producer of jute, second largest producer of silk and cotton, and third largest in cellulosic fibre). India has the highest loom capacity (including hand looms) with 63 per cent of the world's market share.

The domestic textile and apparel industry in India is estimated to reach US$ 141 billion by 2021 from US$ 67 billion in 2014. Increased penetration of organised retail, favourable demographics, and rising income levels are likely to drive demand for textiles. India is the world's second largest exporter of textiles and clothing.

Textile and apparel exports from India are expected to increase to US$ 82 billion by 2021. Readymade garments remain the largest contributor to total textile and apparel exports from India, contributing 40 per cent to total textile and apparel exports. Cotton and man-made textiles were the other major contributors with shares of 31 per cent and 16 per cent, respectively.

The Ministry of Textiles is encouraging investments through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS). To promote apparel exports, 12 locations have been approved by the government to set up apparel parks for exports. As per the 12th Five Year Plan, the Government plans to provide a budgetary support of US$ 4.25 billion to textiles. Free trade with ASEAN countries and proposed agreement with European Union will also help boost exports.

The government has extended the duty drawback facility on all textile products and increased rates in some cases for one year to boost exports in the sector. The government is also planning to conduct roadshows to promote the country's textiles in non-traditional markets like South America, Russia and select countries in West Asia.

The current indirect taxes vary from 4% to 12% based on these categories. Further, textile sector is dominated by unorganized players who are given tax exemptions on the basis of size of their operations. All these factors result in a number of key concerns for the textile sector which include:



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• Dispute over fabric versus garment classification: E.g. Sarees • Differential taxation for cotton and manmade fibre: Zero duty for cotton

fibre as compared to high excise duty structure of nearly 12.5% on manmade fibre segment.

• Composite mills are taxed at a higher rate than the power looms discouraging integration of production Also, the current taxation is production based leading to blocked input taxes which results in higher cost.

ROLE OF THE TEXTILE AND APPAREL SECTOR:

The textile and apparel sector plays a critical role in the Indian economy. Next to food, it is the single largest component of the consumer basket. Its share of GDP and exports are 6% and 13% respectively. The sector is the second largest employer after agriculture with direct employment of over 5 crore and indirect employment of over 6 crore people. The apparel sector in particular is the most labour intensive sector in the manufacturing industry. The domestic demand provides an opportunity to attract new investment in manufacturing. Over 20 million new jobs can be created by the growth in domestic consumption alone. India is one of the unique countries in the world, which has large garment production base, supported by an even larger domestic market.

CHALLENGES FACED BY THE TEXTILE AND APPAREL SECTOR:

The key challenges faced by the Indian textile and apparel sector, the tax and tariff policy in particular has created distortions that impede India’s domestic as well as export competitiveness. The sector is characterised by small and inefficient manufacturing, arising out of the exemption from the central excise for those Rs. 1.5 crores of turnover. The current tax regime also differentiates by type of fibre (cotton vs man-made fibres), by price (for garments above Rs. 1,000), by type of product (fabrics vs garments) and by branding (branded vs unbranded garments). As a result, the supply chain (consisting of ginning, weaving, processing, and garment manufacturing) is fragmented, and individual production units do not have the scale required for competitiveness in domestic or export markets. The ad-hoc and fragmented application of tax leads to blocked input taxes, high compliance costs, and product categorisation disputes (example, whether saree is to be taxed as fabric or garment). It also creates opportunities for tax avoidance and gives rise to competitive distortions, which in turn creates pressures for further exemptions.



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After the introduction of VAT, the AED (Additional Excise Duty) was withdrawn In 2007, and the States were empowered to levy VAT on textiles. However, they have encountered significant resistance from dealers in applying the tax, and, as a result, the textile supply chain remains largely untaxed. The fabrics are exempt from both Central Excise and State VAT, and garments upto Rs. 999, are exempt from excise & above Rs. 1000/- attract and excise duty 1.2% and VAT of 5%. The aggregate revenues from this sector is a meagre Rs. 3,400 crores against a total consumption of Rs. 4.5 lakh crores. Although there are supplementary revenues from blocked taxes on production and distribution inputs, their quantum is not large relative to the total size of the sector.

PRESENT INDIRECT TAXES APPLICABLE: Central Excise duty Central excise duty was first introduced on woven garments in year 2001 which was subsequently extended to entire textile industry by 2003. The excise duty exemption option was also provided vide notification no.30/2004 with condition of non-availment of Cenvat credit. There was also an option to pay concessional rate of excise duty with Cenvat credit benefit. However, almost all assesses opted for exemption. In 2011, mandatory excise duty was reintroduced on branded garments with Cenvat credit benefit and abatement of 55% for duty payment. This mandatory levy was again removed in 2013 and optional scheme of paying duty with Cenvat credit benefit was continued. In 2016, mandatory excise duty has been introduced again on branded readymade garments made up of textiles falling under central excise tariff heading 61, 62 and 63. The levy is attracted only when retail sale rice (RSP) is Rs.1000/- or more and levy is only on 60% value after standard abatement of 40%. For payment of duty, rate of 2% without Cenvat credit or 12.5% with Cenvat credit option is applicable. Non-branded goods continue with “Nil” levy without Cenvat credit benefit. Otherwise, option of paying 6% with Cenvat credit in case of garments / articles of cotton, not containing any other textile material is available. For garments of other composition, “Nil” rate without Cenvat credit or 12.5% with Cenvat credit is available. Contract Manufacturing/ Job Work In garment industry many times, brand name owners outsource the goods manufactured completely or on job work basis. There are special provisions that the central excise duty levy which in normal course should be with the job worker gets shifted to brand name owner. Such brand name owner instead of job-worker needs to register and comply with excise provisions. Brand name owner alternatively could authorize his job-worker to obtain registration and pay the duty on goods. VAT / Sales tax Most of the states in India have exempted textiles and fabrics from levy of VAT / Sales tax. Garments including textiles are being subject to lower rate of VAT / Sales tax in many states. For example, in Karnataka state, readymade garments and other articles suffer lower rate of 5.5% tax. Textiles are exempted from VAT. For small players, the option of paying taxes at concessional rates is also provided under composition scheme in many states. Entry tax In case of many states, entry tax is levied on specified goods when goods enter local area.



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Even textiles such as cotton, woolen or silk or artificial silks are liable to entry tax in states like Karnataka at the rate of 1% which is adding to purchase cost. GST RATE AND ITS IMPACT: Presently, most of the garment manufacturers opt for either complete excise duty exemption or payment at 2% duty without Cenvat credit benefit as most of the raw materials do not suffer excise duty, especially in case of cotton based sector. On branded garments, the effective excise duty rate would be 1.2% (if opted for 2% payment with abatement of 40%) or 7.5% (if opted for 12.5% payment with abatement of 40%). The sales tax would also be paid at lower rates or at concessional rates under composition schemes as applicable in different states. Exports have continued to be free from taxes all these years. GST Council announced rates on Textile and Apparel on 3rd June,2017

which is as under:

• In the textiles category, silk and jute fibre have been exempted,

while cotton and natural fibre; and

• all kinds of yarns will be levied a 5 per cent GST.

• Man-made fibre and yarn will attract a 18 per cent tax rate.

• All categories of fabric will attract a 5 per cent rate.

• Man-made apparel up to Rs 1,000 will attract a 5 per cent tax,those

costing above Rs 1,000, will continue to attract 12 per cent with no

cash refund of Input Tax Credit.

Most of the indirect taxes such as central excise duty, service tax, VAT / Sales tax and entry tax would get subsumed.Man-made apparels upto Rs.1000 will be positive impact on the Industry and above Rs.1000 is 12% it could have a negative impact as the industry is as such price sensitive. Paying 12% GST would be costlier for assesses who presently paying 1.2 % excise duty + 5% to 6% of VAT which amounts to 6 to 7.2% tax. Even input tax credit on inputs and input services may not be sufficient to fill the gap as natural raw materials such as cotton and natural fibre continue to get exemption in GST regime. It may be noted that other materials such as chemicals, dyes, accessories and packing materials which constitutes around 8% to 12% of total material cost could be liable for standard GST of 18% which is eligible as input tax credit when output GST is paid. However, in case of manmade fibre segment, most assesses have been paying excise duty at regular rates along with VAT. Inputs such as polyster fibre, nylon and other petrochemicals suffer excise duty which can be claimed as Cenvat credit. This segment impact may be negative as well because GST rate is 18%. For this sector, seamless credit could also result in lower price of goods which could boost demand for non-cotton garments benefitting consumers by way of price reduction.



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OPTION OF TAX PAYMENT JOB WORK IN GST: Even in GST regime, the principal would get the option of sending inputs or capital goods for job work. Raw materials sent to be received back within 1 year and capital goods to be received back within 3 years. If the goods are not received within this time limit, then supply of goods would be treated as supply for levy of GST. The processed goods could also be sent directly to customers of principal, provided job workers are registered or the details of job workers place are added as additional place of business in principal’s registration certificate. The principal manufacturers who have authorized the job workers to pay excise duty may be required to pay GST directly instead of authorizing the job workers. However, when the goods are procured and supplied by job workers after processing, then the same would be treated as supply for levy of GST by job workers. Wherever the principal manufacturers are sending goods to job work units who are not required to be registered under GST regime, such units are to be added as additional place of business in principal’s registration certificate. It may be noted that the job work processing on goods sent by the principal would be treated as service for GST purpose. Job workers could choose GST exemption if the value of such services is not exceeding Rs.20 lakh per annum. However, such option may not be feasible as it would break the input tax credit chain. GST payment option could be a better choice as GST would provide seamless credit on goods and services. This would be beneficial even for the principal manufacturers. Therefore, the educating the job workers would be important. There are a few transitional provisions which are applicable for the incomplete transactions and also requirement of declarations to ensure credit on the closing stock. DUTY DRAWBACK: In GST regime, duty drawback may lose relevance as there would be seamless credit at each stage of value addition and better transparency. Even if duty drawback is continued to offset the impact of basic customs duty component, which is non-creditable tax, the drawback rate could be very less. This could impact largely, those assesses who are dependent on duty drawbacks for achieving good margin / profit. EXPORT: Exports would be zero rated supplies under GST with benefit of credits on goods and services procured. The accumulated credits could be claimed as



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refund within 2 years from specified date. Due to better transparency, refunds could be faster in GST regime. 90% of the refund would be provisionally processed after filing of refund application subject to certain conditions. If this is really executed by the Government, then it could solve the cash flow problem for the industry. CREDIT ON CAPITAL GOODS: The assesses who have plans for large investments in capital goods could plan for the same in GST regime which would enable them to take credit of taxes paid on capital goods procurement for utilization against payment of output GST. Assesses who are engaged in export of goods could opt for Export Promotion Capital Goods (EPCG) scheme to procure the goods without payment of any duties. It is expected that the EPCG scheme wherein 6 times of duty saved amount to be exported within 6 years would continue in GST regime as this is provided under the Foreign Trade Policy under Ministry of Commerce. PROCUREMENT PLANNING: Exemptions would be phased out in GST regime and there may not be any product specific or area specific advantage for textile industry which could create competitive environment. There is a need to plan for the procurement of inputs at better prices considering various factors such as quality, location of supplier, type of taxes charge etc. Taxes paid on interstate purchases would be eligible for credit in GST regime. Presently, CST paid on interstate purchases is not being allowed as credit for setoff against output VAT / sales tax. The procurements from unorganized sectors or from suppliers who opts for composition scheme under GST could increase the cost of materials as such suppliers would not be eligible for any input tax credit. Therefore, the source of procurement would also play a vital role in GST regime. IMPACT ON CASHFLOW AND COMPLIANCES UNDER GST: GST would be levied on supply of goods or services. Stock transfers between the different units of an inter state unit of entity and intra-state of vertical unit of the entitiy would be subject to GST. Transfers between units within same state may not be liable unless different GST registrations are obtained (Vertical Unit). This would have initial impact on cash flow. The goods receiving unit would be eligible for input tax credit of GST charged by goods sending unit. The level of stock to be maintained at warehouses, godowns, depots etc. to be decided considering this cash flow impact. Return filing, all compliances including documentations would be automated in GST regime. Input credit eligibility would be subject to tax payment and return filing by supplier of inputs or services. Credits and liabilities would be matched online on monthly basis based on the various returns to be filed. As provided in GST return



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related reports released, there are 3 monthly regular returns to be filed in addition to one annual return followed by audit report. For distributing the credit of GST paid on common input services relating to units in multiple states, there is a separate return prescribed (ISD return). Increase in number of returns could increase compliance cost in form of addition time and staff recruitment. GST implementation cost Shift to GST regime from present indirect tax regime would have huge impact on the business. There is a need to analyze the impact on the entire business including main functions which would be helpful in preparedness for GST. ERP systems would need customization for compliance under GST. Key personnel including the key vendors should be trained to understand the concept, impact and compliance requirement under GST. CONCLUSION:

• The impact of GST on this sector would be substantial involving lot of transitional issues and industry needs to gear up for implementation of GST after understanding the impact.

• Early preparation could provide lot of benefits including better transition planning.

• Proper action plan should be drawn on and comparative analysis of present tax regime and GST tax regime should be analyze to get maximum advantages of GST regime.

• Transitional provisions is utmost important therefore focus should be on transitional provisions on or before 30th June,2017.

• Wherever possible restructuring of business and its related policies is a need of an hour. All the contracts with works contractors and other should be critically scrutinize and require changes to get the maximum advantages of GST Regime.



ni-

ni-msme, the pioneer institute in the field of MSME is playing a major role in providing proenvironment to foster the progress of MSME towards success and prosperity. The raison detre of this Institute is to assist the Government in formulating policies for Micro, Small and Medium Enterprises and to help the practicing, potential entrepreneurs and Government officials through a host of services like training, research, consultancy, information, education and extension. Scontributions by creating an impressive record of achievements beyond the Indian shores, enabling different developing countries to get the benefit of the Institute’s expertise. Located in a sprawling and enthrallincampus amidst a rich natural setting, niinfrastructure. In keeping with the changing times and technological changes, the Institute has updated its style of functioning by focusing on the use of IT ithe wisdom and advantages of deeply ingrained traditionalimplemented through four Schools of Excellence, viz., School of Enterprise Development (SED)Enterprise Management(SEM), School of Entrepreneurship & Extension (SEE) and School of Enterprise Information & Communication (SEIC) as well as theme focused Centres like National Resource Centre for Cluster Development (NRCD), Intellectual ProTraditional Paintings (RCTP) and Goods & Services Tax Centre (GSTC). The Institute stores and supplies information that helps make a successful entrepreneur who is well versed in the intricacies of busican participate in business activities intelligently and diligently through its Small Enterprises National Documentation Centre (SENDOC) and knowledge portal www.msmeinfo.in. Livelihood Business Incubator (LBI) established in 2016 under the Schemeecosystem for entrepreneurial development in theorganizing 14,034 programmes which includes prospective/existing entrepreneurs and officiaMinistries of Govt. of India and State Governments till 2015Ministry of External Affairs, Govt. of India since 1967and trained 9,450 International Executives from 142 developing countries. The Institute has also undertaken 909 research and consultancy projects. The management of the Institute rests with the Governing Council appointed by the Government of India. The governing body provides the necessary directions to the Executive Committee, Director General implements the activities.

ni-msme, Yousufguda, Hyderabad 23608547, 23608956 Website: www.nimsme.org,



190

-msme - the premier institute

msme, the pioneer institute in the field of MSME is playing a major role in providing proenvironment to foster the progress of MSME towards success and prosperity. The raison detre of this

Government in formulating policies for Micro, Small and Medium Enterprises and to help the practicing, potential entrepreneurs and Government officials through a host of services like training, research, consultancy, information, education and extension. Set up in 1962, ni-msme has made valuable contributions by creating an impressive record of achievements beyond the Indian shores, enabling different developing countries to get the benefit of the Institute’s expertise. Located in a sprawling and enthrallincampus amidst a rich natural setting, ni-msme is well equipped with both physical and academic infrastructure. In keeping with the changing times and technological changes, the Institute has updated its style of functioning by focusing on the use of IT in every aspect of its activities, but at the same time retaining the wisdom and advantages of deeply ingrained traditional practices. The core activities are being implemented through four Schools of Excellence, viz., School of Enterprise Development (SED)Enterprise Management(SEM), School of Entrepreneurship & Extension (SEE) and School of Enterprise Information & Communication (SEIC) as well as theme focused Centres like National Resource Centre for Cluster Development (NRCD), Intellectual Property Facilitation Centre (IPFC), Resource Centre for Traditional Paintings (RCTP) and Goods & Services Tax Centre (GSTC). The Institute stores and supplies information that helps make a successful entrepreneur who is well versed in the intricacies of busican participate in business activities intelligently and diligently through its Small Enterprises National Documentation Centre (SENDOC) and knowledge portal www.msmeinfo.in. Livelihood Business Incubator (LBI) established in 2016 under the Scheme of ASPIRE of Ministry of MSME for creating a ecosystem for entrepreneurial development in the country. The Institute has trained 4,62,393 participants by organizing 14,034 programmes which includes prospective/existing entrepreneurs and officiaMinistries of Govt. of India and State Governments till 2015-16. The Institute is implementing ITEC Scheme of Ministry of External Affairs, Govt. of India since 1967and trained 9,450 International Executives from 142

he Institute has also undertaken 909 research and consultancy projects. The management of the Institute rests with the Governing Council appointed by the Government of India. The governing body provides the necessary directions to the Executive Committee, accordingly the resident Director General implements the activities.

msme, Yousufguda, Hyderabad - 500 045, India Tel : 91-40-23633499, 23608544, 46, 23608317, Fax: 9123608547, 23608956 Website: www.nimsme.org,

E-mail: [email protected];

GST ACT 2017

msme, the pioneer institute in the field of MSME is playing a major role in providing pro-business environment to foster the progress of MSME towards success and prosperity. The raison detre of this

Government in formulating policies for Micro, Small and Medium Enterprises and to help the practicing, potential entrepreneurs and Government officials through a host of services like training,

msme has made valuable contributions by creating an impressive record of achievements beyond the Indian shores, enabling different developing countries to get the benefit of the Institute’s expertise. Located in a sprawling and enthralling

msme is well equipped with both physical and academic infrastructure. In keeping with the changing times and technological changes, the Institute has updated its

n every aspect of its activities, but at the same time retaining practices. The core activities are being

implemented through four Schools of Excellence, viz., School of Enterprise Development (SED), School of Enterprise Management(SEM), School of Entrepreneurship & Extension (SEE) and School of Enterprise Information & Communication (SEIC) as well as theme focused Centres like National Resource Centre for

perty Facilitation Centre (IPFC), Resource Centre for Traditional Paintings (RCTP) and Goods & Services Tax Centre (GSTC). The Institute stores and supplies information that helps make a successful entrepreneur who is well versed in the intricacies of business and can participate in business activities intelligently and diligently through its Small Enterprises National Documentation Centre (SENDOC) and knowledge portal www.msmeinfo.in. Livelihood Business Incubator

of ASPIRE of Ministry of MSME for creating a favourable country. The Institute has trained 4,62,393 participants by

organizing 14,034 programmes which includes prospective/existing entrepreneurs and officials from various 16. The Institute is implementing ITEC Scheme of

Ministry of External Affairs, Govt. of India since 1967and trained 9,450 International Executives from 142 he Institute has also undertaken 909 research and consultancy projects. The

management of the Institute rests with the Governing Council appointed by the Government of India. The accordingly the resident

23633499, 23608544, 46, 23608317, Fax: 91-40-

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