Goods and Services Tax (GST)

Color Denotations

CONCEPT OF SUPPLY

Related Definitions

Goods

Services

Composite Supply Vs. Principal Supply Vs. Mixed Supply

Meaning of Supply

Scope of Supply - sec 3 r.w. Schedule II

Scope of Supply - sec 3 r.w. Schedule III

Activities or transactions which shall be treated NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES

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 by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of  his clause.

4. Services by a foreign diplomatic mission located in India.
5. Services of funeral, burial, crematorium or mortuary including transportation of the deceased

Scope of Supply - sec 3 r.w. Schedule IV

Activities or transactions undertaken by the central government, a state government or any local authority which shall be treated NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES

1. Services provided by a Government or local authority to another Government or local authority excluding the following services:

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services;

(ii) services in relation to an aircraft or a vessel , inside or outside the precincts of a port or an aircraft; or

(iii) transport of goods or passengers.

2. Services provided by a Government or local authority to individuals in discharge of its statutory powers or functions such as-

(i) issuance of passport, visa, driving licence, birth certificate or death certificate; and

(ii) assignment of right to use natural resources to an individual farmer for the purpose of agriculture.

3. Services provided by a Government or local authority or a governmental authority by way of:

(i) any activity in relation to any function entrusted to a municipality under article  243W of the Constitution;

(ii) any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution;

(iii) health care; and

(iv) education.

4. Services provided by Government towards-

(i) diplomatic or consular activities;

(ii) citizenship, naturalization and aliens;

(iii) admission into , and emigration and expulsion from India;

(iv) currency , coinage and legal tender , foreign exchange;

(v) trade and commerce with foreign countries , import and export across customs frontiers , interstate trade and commerce; or

(vi) maintenance of public order.

5. Any services provided by a Government or a local authority in the course of discharging any liability on account of any tax levied by such Government or authority.
6. Services provided by a Government or a local authority by way of –

(i) tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract; or

(ii) assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April, 2016:

PROVIDED that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource:

7. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import or export of cargo on payment of Merchant Overtime Charges (MOT).
8. Services provided by Government or a local authority by way of-

(i) registration required under any law for the time being in force; or

(ii) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force.

Levy / Exemption from Tax

Features of Charging Section 8

Note:

1. The CGST/SGST shall be paid by every taxable person in accordance with the provisions of this Act.
2. On notified specified categories of supply of goods and/or services, the tax is payable on reverse charge basis paid by the recipient of such goods and/or services
3. Special Charging for e-Commerce Operators
   1. C/SG shall specify categories of services on which tax payable by e-Commerce Operators if supplied through it
   2. If e-Commerce Operators does not have a physical presence  in the taxable territory, any person representing such e-Commerce operator for any  purpose in the taxable territory shall be liable to pay tax
   3. If an e-Commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such  e-Commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

Meaning of Aggregate Turnover

• MEANS aggregate value of
  • All Taxable Supplies
  • Exempt Supplies
  • Export of Goods and /or Services
  • Inter State Supplies
• Of a person having same PAN
• To be computed on all India basis
• EXCLUDES
  • Taxes charged under C / S / IGST
  • Value of Inward Supplies
  • Value of Inward Supplies on which tax is payable on RCM

9. Composition Levy

Registration

Liable for Registration w/o Threshold Limit

• TxP making Inter State Taxable Supply
• Casual Taxable Person
• Persons required to pay under Reverse Charge Mechanism (RCM)
• e-Commerce Operators
• Person required to pay tax u/s 8(4) & collect Tax u/s 56
• Other than specified services u/s 8(4) through e-Commerce
• Non Resident TxP
• Persons required to deduct TDS u/s 46
• Input Service Distributor
• Person supplying online info & database access or retrieval services from outside India to a non registered TxP in India
• Person who supplies goods and/or services on behalf of other TxP as agent or otherwise
• Notified Class of Persons
• Business carried on by registered TxP ➔ transferred as going concern to a successor on succession ➔ Successor Liable to be registered
• In scheme of amalgamation, demerger ➔ Transferee Liable ➔ w.e.f date on which ROC issue COI giving effect to court order
• Every person who is registered under old law ➔ on immediately preceding date to appointed date ➔ Liable  to be registered w.e.f APPOINTED DATE

Structure of Registration Number

• Initial 2 digits – State Code
• Next 10 digits – PAN of Legal Entity
• 13^th Digit – Entity Code ➔ Alpha  / Numeric (1-9 & then A-Z)
• 14^th Digit – Proposed to be Blank (Although practically allotted as ‘Z’)
• 15^th Digit – Check Digit

Taxable Person

(1) Taxable Person means a person who is registered or liable to be registered under Schedule V of this Act.

(2) 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.

(3) 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.

Law at Glance

• Location of Supplier & Place of Supply utmost important to determine the state in which the TxP has to register.
• Single Registration no for CGST / SGST / IGST qua state
• Multiple Business Verticals in a state ➔ May have separate registrations at option of TxP ➔ Subject to Conditions prescribed
• Not liable under Sch V ➔ Voluntary Registration allowed
• PAN issued under Income Tax Act is mandatory
• TAN issued under Income Tax Act is mandatory for Tax Deduction u/s 46
• UIN for UNO, notified UN Bodies, Consulates, Embassies
• UIN for other persons or class of persons
• Exemption from registration to notified specified categories of persons
• Rejection of Registration / UIN under C/SGST shall be deemed as rejection under S/CGST
• Registration / UIN shall be deemed granted if not rejected under C/SGST within prescribed time limit
• If person liable to register ➔ Fails to obtain registration ➔ PO may suo moto register such person

Casual Taxable Person Vs. Non-Resident Taxable Person

• Application at least 5 days prior to commencement of business
• Certificate of Registration is VALID for  Earlier of
  • period specified in it; or
  • 90 days
• PO may extend the said period  NOT more than 90 days
• Estimate tax liability [Input Credit to be considered]
• Make advance deposit of Estimated Tax Liability

Amendments to Registration - Rule 9 r.w. sec 25

• Inform any changes in info at time of registration to PO within 15 days in Form GST REG -11 electronically
• PO to issue show cause and provide ROBH to TxP for incorrect or incomplete documents within 7 days of receipt of application in Form GST REG-03
• TxP to Reply to show cause within 7 days in Form GST REG-04
• If PO fails to take action within 15 days of application or 7 days of reply to show cause, the certificate of registration shall stand amended and be made available on Common Portal
• Any Rejection or  Approval under C / SGST Act shall be deemed to be rejection or approval under S / CGST Act

Cancellation of Registration sec 26

• PO to cancel in Form GST REG – 16
  • on own motion after issuing show cause in Form GST REG -15 or
  • application filed by TxP in Form GST REG – 14
• Reasons for cancellation
  • Business Discontinued
  • Transferred Fully due to death / amalgamation / demerger
  • Change in constitution
  • TxP no longer liable to be registered
  • Registered TxP has contravened provisions of Act & Rules
  • Has not filed returns for a continuous period of six months / 3 periods for composition TxP
  • Has obtained voluntary registration but not commenced business within 6 months
  • Registration obtained by Fraud, Wilful Misstatement, Suppression of Facts
• No effect of cancellation on the liability / other dues of TxP
• Cancellation under C / SGST shall be deemed cancellation under S / CGST
• Reg TxP to pay an amount in Electronic Cash Ledger equivalent to Input availed of Stock in Hand and Input Credit on Capital Goods reduced by prescribed % points

Revocation of cancellation – sec 27

• Any TxP whose registration is cancelled by PO on own motion can apply  for revocation in Form GST REG – 17 within 30 days of service of order of cancellation in Form GST REG – 16
• PO to give show cause & ROBH in form GST REG – 19
• PO can either revoke the cancellation of registration in Form GST REG – 18 or reject the application for good and sufficient reasons
• Revocation of Cancellation of Registration  under C / SGST shall be deemed revocation of cancellation of registration under S / CGST

Registration Forms

Time of Supply

Time of Supply of Goods / Service

PROVIDED that 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.

Explanation 1.- For the purposes of clauses (a) and (b), the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment.

Explanation 2.- For the purpose of clause (b), “the date on which the supplier receives the payment” shall be the date on which the payment is entered in his books of accounts or the date on which the payment is credited to his bank account, whichever is earlier

Time of Supply of Goods / Service under RCM

PROVIDED that where it is not possible to determine the time of supply under clause (a), (b) or (c), the time of supply shall be the date of entry in the books of account of the  recipient of supply.

Explanation.- For the purpose of clause (b), “the date on which the payment is made” shall be the date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank  account, whichever is earlier

Time of Supply of Vouchers (Goods / Service)

Time of Supply of Goods / Service (Residuary Case if not possible in above manner)

Time of Supply of Goods / Services – Rate Changes

2 occasions out of 3 (i.e Before or After) shall prevail

PROVIDED that the date of receipt of payment shall be the date of credit in the bank account when such credit in the bank account is after four working days from the date of change in the rate of tax.

Explanation.- For the purpose of this section, “the date of receipt of payment” shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier:

Value of Taxable Supply

Transaction Value (TV) Shall INCLUDE

1. All taxes under any OTHER statute, except under S / C / IGST Act if charged seperately
2. Amt incurred by Recipient ➔ supplier liable to pay ➔ not included in price paid or payable
3. Incidental Expenses, e.g. Commmission / Packing / Anything incurred by supplier in connection with Supply ➔At time of / before delivery + Charged to recipient
4. Interest / Late Fee / Penalty for delayed payment of any consideration for supply
5. Subsidies directly linked to price, excluding CG / SG subsidies included in Value of Supply of supplier who receives it

Transaction Value (TV) Shall NOT INCLUDE Discount

1. Discount allowed BEFORE / AT the time of SUPPLY, Provided such discount  is Duly recorded in Invoice for Supply
2. AFTER supply is effected, 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 + ITC has been reversed as is attributable to the discount on basis of document issued by Supplier

PLACE OF SUPPLY

Place of Supply of Goods – IGST sec 7

Place of Supply of Goods – Import / Export – IGST sec 8

Related Definitions

• Supplier
  • In relation to any goods and/or services SHALL MEAN the person supplying the said goods and/ or services and SHALL INCLUDE and agent acting as such on behalf of such supplier in relation to the goods and/or services supplied
• Location of Supplier of Services
  • Where supply is MADE FROM a place of business for which registration has been obtained, the location of such place of business
  • Where a supply is MADE FROM a place OTHER THAN the place of business for which registration has been obtained, i.e say a Fixed Establishment elsewhere, the location of such fixed establishment
  • Where a supply is MADE FROM more than one establishment, whether place of business/ fixed establishment, location of establishment most directly concerned with the provision of supply
  • In absence of such places, the location of usual place of residence of the supplier
• Recipient
  • Where the consideration is payable for the supply of goods and/or services, the person who is liable to pay that consideration
  • Where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available,
  • Where no consideration is payable for  the supply of a service, the person to whom service is rendered,
  • Any reference to whom a supply is made shall be construed as a reference to the recipient of the supply
  • The expression recipient also includes an agent acting as such on behalf of the recipient in relation to such goods and/or services supplied
• Location of Recipient of Services
  • Where supply is RECEIVED AT a place of business for which registration has been obtained, the location of such place of business
  • Where a supply is RECEIVED AT a place OTHER THAN the place of business for which registration has been obtained, i.e say a Fixed Establishment elsewhere, the location of such fixed establishment
  • Where a supply is RECEIVED AT more than one establishment, whether place of business/ fixed establishment, location of establishment MOST DIRECTLY concerned with the recipient of supply
  • In absence of such places, the location of usual place of residence of the recipient

Place of Supply of Services – IGST sec 9
Location of Supplier & Recipient in India

1. Proviso to sub sec 4: that if the location of the immovable property or boat or vessel is located or intended to be located outside India, the place of supply shall be the location of the recipient.

Explanation: Where the immovable property or boat or vessel is located in more than one State, the supply of service shall be treated as made in each of the States in proportion to the value for services separately collected or determined, in terms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other reasonable basis as may be prescribed in this behalf

2. PROVISO to sub sec 8: that if the event is held outside India, the place of supply shall be the location of the recipient.

Explanation: Where the event is held in more than one State and a consolidated amount is charged for supply of services relating to such event, the place of supply of such services shall be taken as being in the 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

3. PROVISO to sub sec 10: that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in the manner specified in sub-sections (2) or (3), as the case may be.

Explanation: For the purposes of this sub-section, the return journey shall be treated as a separate journey even if the right to passage for onward and return journey is issued at the same time.

4. PROVISO to sub sec 12: that where address of the recipient as per records of the supplier of service is not available, the place of supply shall be location of the supplier of service:

PROVIDED FURTHER that if such pre-paid service is availed or the recharge is made through internet banking or other electronic mode of payment, the location of the recipient of services on record of the supplier of services shall be the place of supply of such service.

Explanation: Where the leased circuit is installed in more than one State and a consolidated amount is charged for supply of services relating to such circuit, the  place of supply of such services shall be 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

5. PROVISO to sub sec 13 that if the location of the recipient of services is not on the records of the supplier, the place of supply shall be location of the supplier of services.

Place of Supply of Services – IGST sec 10
Location of Supplier or Recipient is outside India

• Proviso to sub sec 3(a): that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of service: PROVIDED FURTHER that 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;
• For the purposes of sub-section 12, 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:-
  • the location of address presented by the recipient of service via internet is in taxable territory;
  • 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;
  • the billing address of recipient of service is in the taxable territory;
  • the internet protocol address of the device used by the recipient of service is in the taxable territory;
  • the bank of recipient of service in which the account used for payment is maintained is in the taxable territory;
  • the country code of the subscriber identity module (SIM) card used by the recipient of service is of taxable territory;
  • the location of the fixed land line through which the service is received by the recipient is in taxable territory.

Determination of Intra/ Inter State Transaction

1. Any supply of goods and/or services in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce

2. “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with Legislature [i.e for purposes of this Act, State means 29 states, Delhi & Pudhucherry]

Input Tax Credit

Sec 16. Eligibility and conditions for taking input tax credit

Notes

PROVIDED that 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 installment:

PROVIDED FURTHER that 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 of three months 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.

Explanation.—For the purpose of clause (b), 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) Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961(43 of 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 return under section 34 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) 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) Where the goods and / or services are used by the registered taxable person partly for effecting taxable supplies including zero-rated supplies under this Act or 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.

Explanation.- For the purposes of this sub-section, exempt supplies shall include supplies on which recipient is liable to pay tax on reverse charge basis under subsection (3) of section 8.

(3) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub-section (2), or avail of, every month, an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month.

Explanation.- The option once exercised shall not be withdrawn during the remaining part of the financial year.

(4) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1), (2), (3) and (4) of section 18, input tax credit 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 services, cosmetic and plastic surgery except where such inward supply of goods or services of a particular category is used by a registered taxable person for making an outward taxable supply of the same category of goods or services;

(ii) membership of a club, health and fitness centre,

(iii) rent-a-cab, life insurance, health insurance except where the Government notifies the services which are obligatory for an  employer to provide to its employees under any law for the time being in force; 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 received by a taxable person for construction of an immovable property on his own account, other than plant and machinery,  even when used in course or furtherance of business;

Explanation 1.- For the purpose of this clause, the word “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property.

Explanation 2.- ‘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 on which tax has been paid under section 9 i.e Composition Scheme;

(f) goods and/or services used for personal consumption;

(g) 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 67, 89 or 90.

(5) The Central or a State Government may, by notification issued in this behalf, prescribe the manner in which the credit referred to in sub-sections (1) and (2) above may be attributed.

Sec 18. Availability of credit in special circumstances

(1) A person who has applied for registration under the Act within thirty 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.

(2) A person, who takes registration under sub-section (3) of section 23 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.

(3) Where any registered taxable person ceases to pay tax under section 9 i.e Composition Scheme, 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 under section 8:

PROVIDED that the credit on capital goods shall be reduced by such percentage points as may be prescribed in this behalf

(4) Where an exempt supply of goods or services 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:

PROVIDED that the credit on capital goods shall be reduced by such percentage points as may be prescribed in this behalf.

(5) A taxable person shall not be entitled to take input tax credit under sub-section (1), (2), (3) or (4), as the case may be, in respect of any supply of goods and / or services to him after the expiry of one year from the date of issue of tax invoice relating to such supply.

(6) 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.

(7) Where any registered taxable person who has availed of input tax credit switches over as a taxable person for paying tax under Composition Scheme section 9 or, where the goods and  / or services supplied by him become exempt absolutely under section 11, 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:

PROVIDED that after payment of such amount, the balance of input tax credit, if  any, lying in his electronic credit ledger shall lapse.

(8) The amount payable under sub-section (7) shall be calculated in such manner as may be prescribed.

(9) The amount of credit under sub-section (1), (2), (3) and (4) shall be calculated in such manner as may be prescribed.

(10) 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 under sub-section (1) of section 15, whichever is higher:

PROVIDED FURTHER that 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 under sub-section (1) of section 15.

19. Recovery of Input Tax Credit and Interest thereon

Where credit has been taken wrongly, the same shall be recovered from the registered taxable person in accordance with the provisions of this Act.

20. Taking input tax credit in respect of inputs sent for job work

(1) The “principal” referred to in section 55 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 (b) of sub-section (1) of  section 55 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:

PROVIDED that 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 deemed that such capital goods had been supplied by the principal to the jobworker on the day when the said capital goods were sent out:

PROVIDED that 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.

21. Manner of distribution of credit by Input Service Distributor

(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 or SGST as SGST or 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.

 (2) The Input Service Distributor shall distribute, in such manner as may be prescribed, the credit of CGST and IGST as CGST or SGST as SGST and IGST 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, being a business vertical, are located in the same State.

(3) The Input Service Distributor may distribute the credit subject to the following conditions, namely:

1. 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;
2. the amount of the credit distributed shall not exceed the amount of credit available for distribution;
3. the credit of tax paid on input services attributable to a recipient of credit shall be  distributed only to that recipient;
4. 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;
5. 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

(a) 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

(b) 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 (6) of section 2.

22. Manner of recovery of credit distributed in excess

Where the Input Service Distributor distributes the credit in contravention of the provisions contained in section 21 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 66 or 67, as the case may be, shall apply mutatis mutandis for effecting such recovery.

Payments

Modes

• Every deposit of payment of Tax / Interest / Penalty / Other Amount shall  be made by 
  • Internet Banking;
  • Debit Card
  • Credit Card of Taxable  Person Registered with GSTN;
  • NEFT
  • RTGS
  • OTC upto Rs. 10,000/- in Cash, DD, Cheque of same bank or Local cheque of any bank
  • Any other mode as prescribed.

Law at Glance

• Amount paid under above methods shall be credited to ECL (GST PMT – 3) of tax payer
• Payment to be made by generating GST PMT 4, valid for 15 days
• Copy of challan shall be available on GSTN for downloading / printing
• Bank Charges, viz commission, payment gateway, etc. to be borned by tax payer
• Input Tax Credit as self assessed shall be credited in ECrL (GST PMT – 2)
• Unique Identification Number (UIN) shall be generated on GSTN Common Portal for each credit / debit to ECL
• This UIN is indicated at time of discharging liability in Electronic Tax Liability Ledger (ETLR) (GSTN PMT – 1)
• Debits in ETLR shall be towards tax liability, interest or mismatch under sec 37, 38 & 56
• Payment of liability shall be made by Crediting ETLR through balances in Electronic Cash  / Credit ledgers

Utilisation of Balances in Electronic Credit Ledgers to set off liability as per Electronic Tax Liability Ledger (ETLR)    

Credit / Debit Notes

Payment  Forms / Ledgers

Refund

Situations of Refund

• Excess payment due to mistake and inadvertence,

• The situations where the tax payer has made excess payment of tax either by mistake or by inadvertence resulting in more payment of tax than due to the Government. Such excess payment may be on account of:-

1. wrong mention of nature of tax (CGST / SGST / IGST),
2. wrong mention of GSTIN, or
3. wrong mention (deposit) of tax amount.

• In first two situations i.e. in case of wrong mention of nature of tax (CGST / SGST / IGST) or in case of wrong mention of GSTIN, the tax administration is required to verify the correctness of the taxpayer’s claim and therefore the taxpayer may file a refund application which should be decided within a period to be prescribed by the GST Law.
• In the first and third situation, the refund of excess amount of tax, at the option of the taxpayer, would either be automatically carried forward for adjustment against future tax liabilities or be refunded                                                     

• Export (including deemed export),
• Finalization of Provisional Assessment,
• Refund of pre deposit in case of Appeal or Investigation,
• Refund for Tax payment on transactions by UN bodies, CSD Canteens, Para-military forces canteens, etc.
• Refund from Manufacturing / Generation/ Production/ Creation of Tax- free supplies or Non-GST Supplies,
• Refund of Carry Forward Input Tax Credit may arise due to
  • Inverted Duty Structure i.e. GST on output supplies is less than the GST on the input supplies;
  • Stock accumulation;
  • Capital goods; and
  • Partial Reverse charge mechanism for certain services
• Tax refunds for International Tourists
  • Refund of GST will be available at designated airports and ports only and the refund of the GST paid on retail purchase by the foreign tourists during their stay in India is allowed.
  • A part of the eligible amount of refund will be deducted as handling fee for services rendered

Law at Glance

• Proof  of satisfying Principle of Unjust Enrichment is on tax payer
  • Self Certification by Tax payers for refund below ₹ 5 lakhs
  • CA / CMA Certificates for taxpayers beyond threshold limit of ₹ 5 lakhs
• Date of communication shall be the relevant date for interest liability
• Interest shall be paid on delayed refunds at notified rate if delay in paying refund after 60 days of receipt of application.
• A period of TWO YEARS from the relevant date may be allowed for filing of refund application
• A period of SIX MONTHS from the last day of the month in which such supply is received, Refund application be allowed for Embassy/International Organizations

Relevant dates for Filing of Refund

Refund Forms

Accounts & Records

• True & Correct Records to be maintained of
  • Production or Manufacture of Goods
  • Inward or Outward Supply of Goods / Services
  • Stock of Goods
  • Input Tax Credit Availed
  • Output Tax Payable / Paid
  • Other Particulars as may be prescribed
  • Additional particulars for notified  class of persons, prescribed by Commissioner
  • If not possible to maintain as such, then other records as prescribed by Commissioner for such class of persons
• Every registered TxP whose turnover exceeds prescribed limit in a FY,  i.e             ₹ 1 crore
  • has to get accounts audited by CA / CMA
  • Submit copy of audited accounts to PO
  • Submit Reconciliation statement u/s 39(2) to PO
  • Other documents in form and manner prescribed
• Every owner / operator of warehouse / godown / other place used for storage of goods irrespective whether registered TxP or not shall maintain
  • Records of Consignor / Consignee
  • Other relevant records as may  be prescribed
• If TxP fails to account for goods/ services as prescribed
  • PO shall determine tax payable on unaccounted goods / services u/s 66 / 67 as if supplied by such TxP
• Accounts & Records to be maintained by TxP until 60 months from due date of filing of annual return
• If TxP is party to appeal / Revision / any proceeding before appellate authority / Tribunal / court shall retain accounts & records for said period under consideration, LATER of
  • upto 1 year from FINAL DISPOSAL of such appeal / Revision / any proceeding before appellate authority / Tribunal / court
  • 60 months from due date of filing of annual return

Types of Returns

Flow of activities per month  for Generic Returns under GST

Law at Glance

• Monthly Returns Compulsory
• Quarterly Returns only for Dealers opting for Composition Levy u/s 9
• Returns to be filed even if no supplies have been effected in the said period
• Self assessment of tax liability by the tax payer
• Tax Due is to be paid till the last  day of furnishing the return
• Revision of Returns NOT ALLOWED
• Omissions / Discovery of incorrect particulars by the dealer, other than those found by departmental enquires, to be RECTIFIED IN RETURN for  the PERIOD in which mistake is discovered.
• Rectifications NOT ALLOWED AFTER due date for filing return for period ending September immediate next year or actual date of filing annual return whichever is earlier.
• B2B transactions proposed on Invoice wise ➔ GSTIN, Invoice No, Date, description, rate of tax, value of taxable supply & value of tax
• B2C invoice wise only for Inter State Supply above Rs. 100/-
• Separate  Data Input fields for Debit / Credit Notes / TDS / ISD
• Common e-Return for CGST, SGST & IGST with different fields First return  u/s 35- To disclose details  of outward supplies in period between date on which TxP become liable for registration till the date on which registration is granted
• Final Return u/s 40 within 3 months of cancellation of registration
• Notice to Defaulters u/s 41 to furnish return within 15 days in prescribed manner
• Tax Return Preparers u/s 43
• Annual Return u/s 39
• Reconciliation Statement to be filed
• Audit required for crossing prescribed turnover of ₹ 1 crore
• Levy of Late Fee
• Annual Return – ₹ 100/- per day, Max 0.25% of turnover of the state
• Other than Annual Return – ₹ 100/- per day, Max ₹ 5000/- i.e. for all other types of returns

Input Tax Credit Claim sec 36

Note: Input Tax Credit Claim shall be matched with outward supplies filed by corresponding  tax payer

Matching, Reversal, Reclaim of
ITC sec 37 / Output Tax Liability  sec 38

Audit by Tax Authorities

Special Audit

Assessments

57. Self-Assessment

Every registered taxable person shall himself assess the taxes payable under this Act and furnish a return for each tax period as specified under section 34.

58. Provisional Assessment

(1) Where the taxable person is unable to determine the value of goods and/or services or determine the rate of tax applicable thereto, he may request the proper officer in writing giving reasons for payment of tax on a provisional basis and the proper officer may pass an order allowing payment of tax on provisional basis at such rate or on such value as may be specified by him.

(2) The payment of tax on provisional basis may be allowed, if the taxable person executes a bond in such form as may be prescribed in this behalf, and with such surety or security as the proper officer may deem fit, binding the taxable person for payment of the difference between the amount of tax as may be finally assessed and the amount of tax provisionally assessed.

(3) The proper officer shall, within a period not exceeding six months from the date of the communication of the order issued under sub-section (1), pass the final assessment order after taking into account such information as may be required for finalizing the assessment:

PROVIDED that the period specified in this sub-section may, on sufficient cause being shown and for reasons to be recorded in writing, be extended by the Joint/Additional Commissioner for a further period not exceeding six months and by the Commissioner for such further period as he may deem fit.

(4) The taxable person shall be liable to pay interest on any tax payable on the supply under provisional assessment but not paid on the due date specified under sub-section (7) of section 34 or the rules made thereunder at the rate specified under sub-section (1) of section 45, from the first day after the due date of payment of tax in respect of the said goods and/or services till the date of actual payment, whether such amount is paid before or after the issue of order for final assessment.

(5) Where the taxable person is entitled to a refund consequent to the order for final assessment under sub-section (3), subject to sub-section (8) of section 48,  interest shall be paid on such refund as provided in section 50.

59. Scrutiny of returns

(1) The proper officer may scrutinize the return and related particulars furnished by the taxable person to verify the correctness of the return in such manner as may be prescribed.

(2) The proper officer shall inform the taxable person of the discrepancies noticed, if  any, after such scrutiny in such manner as may be prescribed and seek his explanation thereto.

(3) In case the explanation is found acceptable, the taxable person shall be informed accordingly and no further action shall be taken in this regard.

(4) In case no satisfactory explanation is furnished within a period of thirty days of being informed by the proper officer or such further period as may be permitted by him or where the taxable person, after accepting the discrepancies, fails to take the corrective measure in his return for the month in which the discrepancy is accepted, the proper officer may initiate appropriate action including those under section 63, 64 or section 79, or proceed to determine the tax and other dues under sub-section (7) of section 66 or under sub-section (7) of section 67.

60. Assessment of non-filers of returns

(1) Where a registered taxable person fails to furnish the return required under section 34 or section 40, even after the service of a notice under section 41, the proper officer may proceed to assess the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order within the time limit specified in sub-section (8) of section 67.

(2) Where the taxable person furnishes a valid return within thirty days of the service of the assessment order under sub-section (1), the said assessment order shall  be deemed to have been withdrawn.

Explanation.— Nothing in this section shall preclude the liability for payment of interest under section 45 and/or for payment of late fee under section 42.

61. Assessment of unregistered persons

Notwithstanding anything to the contrary contained in section 66 or section 67, where a taxable person fails to obtain registration even though liable to do so, the proper officer may proceed to assess the tax liability of such taxable person to the best of his judgement for the relevant tax periods and issue an assessment order within a period of five years from the due date for filing of the annual return for the year to which the tax not paid relates:

PROVIDED that no such assessment order shall be passed without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.

62. Summary assessment in certain special cases

(1) The proper officer may, on any evidence showing a tax liability of a person coming to his notice, with the previous permission of [Additional/Joint Commissioner], proceed to assess the tax liability of such person to protect the interest of revenue and issue an assessment order, if he has sufficient grounds to believe that any delay in doing so will adversely affect the interest of revenue:

PROVIDED that where the taxable person to whom the liability pertains is not ascertainable and such liability pertains to supply of goods, the person in charge of such goods shall be deemed to be the taxable person liable to be assessed and pay tax and amount due under this section.

(2) On an application made within thirty days from the date of receipt of order passed under sub-section (1) by the taxable person or on his own motion, if the Additional/Joint Commissioner considers that such order is erroneous, he may withdraw such order and follow the procedure laid down in section 66 or 67.

Prosecution & Compounding

PENALTIES

SEC 85

87. General disciplines related to penalty

(1) No tax authority shall impose substantial penalties for minor breaches of tax regulations or procedural requirements. In particular, no penalty in respect of any omission or mistake in documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than necessary to serve merely as a warning.

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 record.

(2) The penalty imposed shall depend on the facts and circumstances of the case and shall be commensurate with the degree and severity of the breach.

(3) No penalty shall be imposed on any taxable person without giving a notice to show cause and without giving the person a reasonable opportunity of being heard.

(4) The tax authority shall ensure that when a penalty is imposed in an order for a breach of the laws, regulations or procedural requirements, an explanation is provided therein to the persons upon whom the penalty is imposed, specifying the nature of the breach and the applicable law, regulation or procedure under which the amount or range of penalty for the breach has been prescribed.

(5) When a person voluntarily discloses to a tax authority the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the tax authority, the tax authority may consider this fact as a potential mitigating factor when quantifying a penalty for that person.

(6) The provisions of this section shall not apply in such cases where the penalty prescribed under the Act is either a fixed sum or expressed as a fixed percentage.

88. 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 proceeding under sections 59, 60, 61, 62, 66, 67, 89 or 90, he may issue an order levying such penalty after giving a notice and after giving a reasonable opportunity of being heard to such person.

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

(1) Where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or rules made thereunder, all such goods and the conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyances 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 100% of the tax payable on such goods, 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 50% of the value of the goods reduced by the tax amount paid thereon, where the owner of the goods does not come forward for payment of such tax and penalty.

(c) the proper officer detaining or seizing goods and/or conveyances shall issue a notice specifying the tax payable and thereafter, pass an order for payment of tax and penalty under clause (a) or (b), as the case may be.

(2) On payment of the amount referred to in sub-section (1), all liabilities under this section shall stand discharged in respect of such goods and such conveyance.

(3) where the person transporting any goods or, as the case may be, 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, further proceedings shall be initiated in terms of section 90 and provisions of sub-section (6) of section 79, shall apply mutatis mutandis for provisional release of the detained goods or conveyances.

PROVIDED that where the detained 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.

90. Confiscation of goods and/or conveyances and levy of penalty

(1) If any person –

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

(v) uses any conveyance as a means of transport for carriage of taxable goods in contravention of the provisions of this Act or 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 and / or conveyance shall be liable to confiscation and the person shall be liable to penalty under section 85.

(2) Whenever confiscation of any goods or conveyance is authorized by this Act, the CGST/SGST officer adjudging it shall give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized or the owner or the person in-charge of the conveyance, an option to pay in lieu of confiscation such fine as the said officer thinks fit:

PROVIDED that such fine shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:

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 89:

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 the person referred to in sub-section (1), shall, in addition, be liable to any tax and charges payable in respect of such goods.

(4) No order of confiscation of goods and/or conveyance and/or imposition of penalty  shall be issued without serving a notice on such person requiring him to show cause and without giving the person a reasonable opportunity of being heard.

(5) Where any goods and/or conveyance are confiscated under this Act, the title of such goods and/or conveyance shall thereupon vest in the appropriate 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 and  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 such goods and/or conveyances and deposit the sale proceeds thereof with the Government.

91. Confiscation or penalty not to interfere with other punishments

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

APPEALS

Transitional Provisions

Sec 166 - Migration of existing taxpayers to GST

Migration Requisites & Tips

• Provisional ID to be technically  Valid for 6 months as proposed in Draft law
• Draft Rule 14, GST Registration Rules
• Refer Form GST REG 20 and keep the details ready prior to registration
• Refer FAQs published by CBEC, available on GST website “www.gst.gov.in”
• E-mail & Mobile no Mandatory for purpose of OTP
• GST Helpdesk ➔ Email: helpdesk@gst.gov.in ; Call: 0124 – 4688999
• DSC or Aadhar Number for e-Signature
• Registration details under different Indirect Taxes Laws to be subsumed in GST Law
• Harmonised System of Nomenclature (HSN) Code for goods
  • In case of excise assesse, available on registration
  • Refer DGFT site for detailed list
• Services Accounting Codes (SAC) for services
  • Refer ST-2 of the assesse
  • 8 digit code, first 4 digits Major Code “0044” followed by Minor Code “XXXX” used while paying service tax of principal  service
• Sector, Circle, Ward, Jurisdiction Details
  • For Maharashtra ➔ Refer Trade Circular 20T of 2015 dated 30/12/2015 for restructuring of VAT Officer

Sec 167 Amount of CENVAT credit carried forward in a return to be allowed as input tax credit

Sec 168 Unavailed cenvat credit on capital goods, not carried forward in a return, to be allowed in certain situations

Sec 169 Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations

Sec 170 Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations

• A registered taxable person
  • Engaged in the manufacture of non-exempted as well as exempted goods under the Central Excise Act, 1944  
  • Provider of non-exempted as well as exempted services under Service Tax Laws
• shall be entitled to take, in his electronic credit ledger
  • the amount of Cenvat credit carried forward in a return furnished under the earlier law by him in terms of section 167
  • the amount of Cenvat credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to exempted goods or services, in terms of section 169.

 Sec 171 Credit of eligible duties and taxes in respect of inputs or input services during transit

Sec 172 Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme

• A registered taxable person in GST
  • Paying tax at a fixed rate under the earlier law
  • Paying a fixed amount in lieu of the tax payable (Composition Scheme)  under the earlier law
• shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions satisfied by said TxP
  • such inputs /or goods are used or intended to be USED for making taxable supplies under this Act
  • Not registered as Composition Dealer in GST
  • Eligible for input tax credit, on such inputs under this Act  & Earlier State Laws
  • Is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law in respect of such inputs
  • such invoices and /or other prescribed documents were issued not prior to12 months of the appointed day

Sec 173 Exempted goods returned to the place of business on or after the appointed day

• Where any goods on which Duty / Tax had been exempt under the earlier law
• at the time of removal  / Sale thereof
• not being earlier than 6 months prior to the appointed day
• are returned to any place of business on or after the appointed day
• no tax shall be payable thereon
• if such goods are returned to the said place of business within a period of 6 months from the appointed day and such goods are identifiable to the satisfaction of the PO

PROVIDED that TAX shall be payable by the person returning the goods if the said goods are liable to tax under this Act and are returned after a period of 6 months from the appointed day

PROVIDED FURTHER that no tax shall be payable if the goods are returned by non TxP under GST

Sec 174 Duty / Tax Paid goods returned to the place of business on or after the appointed day

• Where any goods on which Duty / Tax had been paid under the earlier law
• At the time of removal  / Sale thereof
• not being earlier than 6 months prior to the appointed day
• Are returned to any place of business on or after the appointed day
• the registered taxable person shall be eligible for refund of the duty paid under the earlier law where such goods are returned by a person, other than a Reg TxP
• if such goods are returned to the said place of business within a period of 6 months from the appointed day and such goods are identifiable to the satisfaction of the PO

PROVIDED that if the said goods are returned by a Reg TxP, the return of the goods shall be deemed to be a supply under GST

Sec 175 Inputs removed for job work and returned on or after the appointed day

• Where any inputs received in a factory / POB had been removed/despatched as such or removed/despatched after being partially processed
• To a job worker for further processing, testing, repair, reconditioning or any other purpose
• in accordance with the provisions of earlier law prior to the appointed day
• Such inputs, are returned to the said factory / POB 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 factory  / POB within 6 months from the appointed day:
• On sufficient cause , period be extended by the competent authority for a further period not exceeding 2 months
• If not received within above period from the appointed day the ITC shall be liable to be recovered in terms of section 184
• if the manufacturer / dealer and the job worker declare the details of the inputs held in stock by the job worker on behalf of the manufacturer/dealer  on the appointed day in such form and manner and within such time as may be prescribed

Sec 176 Semi finished goods removed for job work and returned on or after the appointed day

• Where any semi-finished goods had been removed/despatched  a factory / POB
• For carrying out manufacturing process in accordance with the provisions of earlier law prior to the appointed day
• Such goods, are returned to the said factory / POB on or after the appointed day
• no tax shall be payable if such goods, after undergoing manufacture process, returned to the said factory  / POB within 6 months from the appointed day or period be extended
• If not received within above period from the appointed day the ITC shall be liable to be recovered in terms of section 184
• Transfer the said goods to premises of any reg TxP for the purpose of supplying therefrom on payment of GST in India or without payment of tax for exports within 6 months or extended
• if the manufacturer / dealer and the job worker declare the details of the goods held in stock by the job worker on behalf of the manufacturer/dealer on the appointed day in such form and manner and within such time as may be prescribed

Sec 177 Finished goods removed for certain processes and returned on or after the appointed day

• Where any finished goods had been removed/despatched  a factory / POB without payment of duty / tax
• For carrying out process other than manufacture in accordance with the provisions of earlier law prior to the appointed day
• Such goods, are returned to the said factory / POB on or after the appointed day
• no tax shall be payable if such goods returned to the said factory  / POB within 6 months from the appointed day or period be extended
• If not received within above period from the appointed day the ITC shall be liable to be recovered in terms of section 184
• Transfer the said goods to other’s premises, as per earlier law, on payment of GST in India or without payment of tax for exports within 6 months or extended
• if the manufacturer / dealer and the job worker declare the details of the goods held in stock by the job worker on behalf of the manufacturer/dealer on the appointed day in such form and manner and within such time as may be prescribed

sec 178 – Issue of supplementary invoices, debit or credit notes where price is revised in pursuance of contract

Contract entered PRIOR TO APPOINTED date & change in effect of price after the appointed date IN PURSUANCE of such contract

sec 179 – Pending Refund Claims to be disposed under the Earlier Laws

• EVERY CLAIM FOR REFUND
  • filed by any person before or after the appointed day
  • for refund of any amount of CENVAT / Input Tax credit, duty, tax or interest paid before the appointed day
  • shall be disposed of in accordance with the provisions of earlier law
  • If any amount eventually accruing to him shall be paid in cash
• PROVIDED
  • Where any claim for refund of CENVAT  / Input Tax credit is fully or partially rejected, the amount so rejected shall lapse
• PROVIDED FURTHER
  • No refund claim shall be allowed of any amount of CENVAT / Input Tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

sec 180 – Refund claims filed after the appointed day for goods cleared or services provided before the appointed day and exported before or after the appointed day to be disposed of under earlier law

• EVERY CLAIM FOR REFUND
  • Any duty or tax paid under earlier law
  • Filed after the appointed day
  • For the goods or services exported before or after the appointed day
  • Shall be disposed of in accordance with the provisions of earlier law
• PROVIDED
  • Where any claim for refund of CENVAT  / Input Tax credit is fully or partially rejected, the amount so rejected shall lapse
• PROVIDED FURTHER
  • No refund claim shall be allowed of any amount of CENVAT / Input Tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

sec 181 – Refund claims filed after the appointed day for payments received and tax deposited before the appointed day in respect of services not provided

sec 182 – Claim of CENVAT / Input Tax credit to be disposed of under the earlier law

• EVERY PROCEEDING
  • appeal, revision, review or reference relating to a claim for CENVAT / Input Tax credit
  • initiated before, on or after the appointed day, under the earlier law
  • shall be disposed of in accordance with the provisions of earlier law
  • and any amount of credit found to be admissible to the claimant shall be refunded to him in cash & shall not be admissible as input tax  credit under this Act
• PROVIDED
  • No refund claim shall be allowed of any amount of CENVAT / Input Tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act.
• IF CREDIT IS RECOVERABLE
  • Shall be recovered under C / SGST
  • Amount recovered shall not be admissible as Input Tax Credit under GST

sec 183 – Finalisation of proceedings relating to output duty or tax liability

• EVERY PROCEEDING
  • appeal, revision, review or reference relating to output duty / tax liability
  • initiated before, on or after the appointed day, under the earlier law
  • shall be disposed of in accordance with the provisions of earlier law
• IF DUTY / TAX IS RECOVERABLE
  • Shall be recovered under C / SGST
  • Amount recovered shall not be admissible as Input Tax Credit under GST
  • If any amount found to be admissible to the claimant shall be refunded to him in cash & shall not be admissible as input tax credit under this Act

sec 184 – Treatment of Amount Recovered or refunded in pursuance of assessment or adjudication proceedings

Assessment or adjudication proceeding initiated before, on or after the appointed day, under the earlier law

IF DUTY / TAX IS RECOVERABLE

• Shall be recovered under C / SGST
• Amount recovered shall not be admissible as Input Tax Credit under GST

• If any amount of tax, interest, fine or penalty is  found to be refundable, it shall be refunded to him in cash

sec 185 – Treatment of Amount Recovered or refunded in pursuance to revision of returns

Return furnished under the earlier law REVISED after the appointed day, under the earlier law

IF DUTY / TAX IS RECOVERABLE / CENVAT / Input Tax Credit is Inadmissible

• Shall be recovered under C / SGST
• Amount recovered shall not be admissible as Input Tax Credit under GST

• If return filed under earlier law, revised within prescribed time under earlier law and if any amount is  found to be refundable, it shall be refunded to him in cash

sec 186 – Treatment of Long Term Construction  / Works Contract

Sec 187 – Progressive or periodic supply of goods or services

Sec 188 & 189 – Taxability of supply of services / goods in certain cases

Sec 190 – Credit distribution of service tax by ISD

Sec 191 – Provision for transfer of unutilized CENVAT Credit by taxable person having centralized registration under the earlier law

Sec 192 – Tax paid on goods lying with agents to be allowed as credit

• The agent is a registered taxable person under this Act
• Both the principal and the agent declare the details of stock of goods lying with such agent on the date immediately preceding the appointed day
• in such form and manner and within such time as may be prescribed in this behalf
• The invoices for such goods had been issued not earlier than twelve months immediately preceding the appointed day
• The principal has either reversed or not availed of the input tax credit in respect of such goods.

Sec 193 – Tax paid on capital goods lying with agents to be allowed as credit

• The agent is a registered taxable person under this Act
• Both the principal and the agent declare the details of stock of capital goods lying with such agent on the date immediately preceding the appointed day
• in such form and manner and within such time as may be prescribed in this behalf
• The invoices for such capital goods had been issued not earlier than 12 months immediately preceding the appointed day
• The principal has either reversed or not availed of the input tax credit in respect of such goods.

Sec 194 – Treatment of Branch Transfers

• Notwithstanding anything to the contrary contained in this Act, any amount of input tax credit reversed prior to the appointed day shall not be admissible as credit of input tax under this Act.

Sec 195 – Goods sent on approval basis returned on or after the appointed day

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 6 months from the appointed day or as may be extended by PO upto further 2 months. 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 of 6 months or the extended period, as the case may be, from the appointed day:

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 of six months or the extended period , as the case may be, from the appointed day.

Sec 196 – Deduction of Tax at Source

Sec 197 – Transitional provisions for availing CENVAT Credit in certain cases

Sec 21 of IGST – Import of services or inter-State supply of goods and/or services made on or after the appointed day

• Notwithstanding anything contained in section 12 and 13 of the CGST Act, 2016 import of services or inter-State supply of goods and/or services made after the appointed day shall be liable to tax under the provisions of this Act regardless of whether the transactions for such import of services or inter-state supply had been initiated before the appointed day
• PROVIDED that if the tax on such import or inter-State supply had been paid in full under the earlier law, no tax shall be payable on such import or inter-state supply under this Act:
• PROVIDED FURTHER that if the tax on such import of services had been paid in part under the earlier law, balance amount of tax shall be payable on such import or inter-state supply under this Act.
• Explanation: For the purpose of this section, a transaction shall be deemed to have been initiated before the appointed day if either the invoice relating to such supply or payment, either in full or in part, has been received or made before the appointed day.