Goods and Services Tax (GST)

Introduction
What is TAX?
It is a compulsory contribution to state (i.e. government) revenue, levied by the government on

workers' income and business profits, or added to the cost of some goods, services, and
transactions.
Tax Systems
In the world, there are three structures to implicate tax rates-
Progressive systems Income Tax Rate
Regressive systems Income Tax Rate
Flat / Constant systems Income Fixed Tax Rate
Types of taxes in India
Direct Tax Indirect Tax

It is levied on Person It is levied on the happening of certain event
such as sale, manufacturing or service etc.
Paid by the taxpayer directly from his Indirect taxes are paid by one person &
income/wealth/estate etc. subsequently that person recovers it from some
other person. Thus it is the final consumer who
ultimately pays the taxes
Eg. Income tax, etc. Eg. Goods and Services tax, Custom duty etc.
CS JAY SODANI Page 1 GOODS AND SERVICES TAX

Overview of Goods and Services Tax
Introduction
The Government of India requires funds to provide public utility services like defence,
maintenance of law and order, health, infrastructure etc. Levy of tax is one of the major sources of
funds to the Government.
If the incidence of tax is one person and impact on another person, it is called indirect tax. In other
words, burden is passed on to the ultimate consumer. If both the incidence and impact of tax fall
on the same person, it is called direct tax. In other words, burden cannot be passed on to anyone.
Indirect taxes imposed on Goods or Services affect the prices leading to an inflationary trend. In
order to curb inflation which was due to multiple taxes and cascading effect, Government of India
has introduced Goods and Services Tax.
Goods and Services Tax is one of the biggest reform in Indirect Taxes in the history of India. With
the implementation of Goods and Services Tax, India realises the dream of One Nation- One Tax.
Goods and Services Tax is a simple and destination-based tax that is levied on all activities related
to supply of goods or services of both. The activities that are taxable in GST regime is the supply
of Goods or Services or both. Hence GST is leviable at all transactions of goods whether import,
manufacture, trading, providing services, entertainment or anything else. The scope of GST is so
wide that no activity remains untaxed in this regime unless specifically emptied by law.
The successful implementation of GST is expected to boost the country’s GSP due to reduced cost
of compliances, reduction in corruption, increase in tax revenue for the country, barrier free flow
of goods across the nation, reduced litigations, increase in foreign direct investment in India and
creation of employment due to improvement in overall business climate in the country.
Taxes subsumed in Goods and Services Tax

Central Taxes State Taxes
Central Excise Duty State VAT
Duties of Excise (Medicinal and Toilet Central Sales Tax
preparation)
Additional duties of Excise (Goods of Purchase Tax
special importance)
Additional duties of Excise (Textile and Luxury Tax
Textile Products)
Additional duties of Customs Entry Tax
Special additional duties of Customs Entertainment Tax (except those levied by
local bodies)
Service Tax Taxes on advertisement
Cesses and Surcharges in so far as they relate Taxes on lotteries, betting and gambling
to supply of goods and service
State Cesses and surcharges insofar as they
relate to supply of goods and services

History
1. July 17, 2000 - Government of India setup the Empowered Committee of State Finance
Minister with the Hon’ble State Finance Ministers of West Bengal, Karnataka, Madhya
Pradesh, Maharashtra, Punjab, Uttar Pradesh, Gujarat, Delhi and Meghalaya
2. In 2003 - The Kelkar Task Force on Indirect Tax had suggested a comprehensive Goods and
Services Tax (GST) based on VAT principle.
3. August 12, 2004 - Government of India reconstituted the Empowered Committee with all the
Hon’ble State Finance Minister/Taxation Ministers as its members.
4. February 2007 - An announcement was made by the then Hon’ble Union Finance Minister in
the Central Budget (2007- 08) to the effect that GST would be introduced with effect from
April 01, 2010
5. September 2009 - The Empowered Committee (EC) decided to constitute a Working Group
consisting of Principal Secretaries / Secretaries (Finance / Taxation) and Commissioners of
Trade Taxes of all States/UTs
6. November 2009 - Based on inputs from Government(s) of Centre and States, Empowered
Committee released its First Discussion Paper on GST
7. March 2011 - The Constitution (One Hundred and Fifteenth Amendment) Bill, 2011 to give
concurrent taxing powers to the Union and States was introduced in Lok Sabha. The Bill
suggested the creation of Goods and Services Tax Council and a Goods and Services Tax
Dispute Settlement Authority.
8. November 2012 - A “Committee on GST Design”, consisting of the officials of the

Government of India, State Governments and Empowered Committee (EC) was constituted.
9. March 2013 - A not for profit, non-Government, private limited company was incorporated
in the name of Goods and Services Tax Network (GSTN) as special purpose vehicle setup by
the Government primarily to provide IT infrastructure and services to the Central and State
Government(s), tax payers and other stakeholders for implementation of the Goods and
Services Tax (GST)
10. August 2013 - The Parliamentary Standing Committee submitted its Report to the Lok Sabha.
The recommendations of the Empowered Committee and the recommendations of the
Parliamentary Standing Committee were examined by the Ministry in consultation with the
Legislative Department. Most of the recommendations made by the Empowered Committee
and the Parliamentary Standing Committee were accepted and the Draft Amendment Bill was
suitably revised
11. September 2013 - The final draft Constitutional Amendment Bill incorporating the above
stated changes was sent to the Empowered Committee (EC) for consideration

12. November 2013 - The EC once again made certain recommendations on the Bill after its
meeting in Shillong. Certain recommendations of which were incorporated in the draft
Constitution (115th Amendment) Bill and the revised draft was again sent to EC for its
consideration.
13. June 2014 - The draft Constitution Amendment Bill in March 2014 was sent to the Empowered
Committee after approval of the new Government.
14. December 2014 - The Constitution (One Hundred and Twenty-Second Amendment) Bill,
2014 seeking to amend the Constitution to introduce the Goods and Services Tax (GST) and
subsume state Value Added Tax, octroi and entry tax, luxury tax, etc. was introduced in the
Lok Sabha on December 19, 2014 by the Hon’ble Minister of Finance, Mr. Arun Jaitley.
15. May 2015 - Constitution Amendment (122nd) Bill was passed by Lok Sabha on May 06, 2015.
16. May 2015 - In Rajya Sabha, Bill was referred to a 21-member Select Committee of Rajya
Sabha.
17. July 2015 - Select Committee submitted its report to Rajya Sabha on July 22, 2015.
18. June 2016 - On June 14, 2016, the Ministry of Finance released draft model law on GST in
public domain for views and suggestion
19. August 2016 - On August 03, 2016, the Constitution (122ndAmendment) Bill, 2014 was
passed by Rajya Sabha with certain amendments.
20. August 2016 - The changes made by Rajya Sabha were unanimously passed by Lok Sabha,
on August 08, 2016.
21. September 2016 - The Bill was adopted by majority of State Legislatures wherein approval of
at least 50%of the State Assemblies was required
22. September 2016 - Final assent of Hon’ble President of India was given on 8th September,2016
23. April 2017 - Parliament passed the following four bills-

a. Central Goods and Service Bill
b. Integrated Goods and Service Bill
c. Union Territory Goods and Service Bill
d. Goods and Service Tax (Compensation to States) Bill
• April 2017- President’s assent was given to four key legislations on Goods and Service Tax.
• July 2017- Goods and Services Tax became a reality.

Goods and Services Tax Council
One of the unique feature of GST is that both the Central and State Government have given up
their individual power to levy taxes in favour of a common conditional body which is now as
Goods and Service Tax Council.
Goods and Service Tax Council consists of the Union Finance Minister, the Minister of State
Revenue and the State Finance or Taxation Ministers to recommend the GST Rate, exemption and
thresholds, taxes to be subsumed and other matters relating to GST.
This mechanism would ensure harmonization on different aspects of GST between the Centre an
States as well as between different States
One-half of the total number of members of GSTC would form the quorum in meetings.
Decision in Goods and Services Tax Council would be taken by a majority of not less than three-
forth (75%) of weighted votes cast. Centre would have one-third weightage of the total votes cast
and all the State taken together would have two-third of weightage of the total votes cast.
It is specifically provided in the GST Act, that Central Government shall act on the
recommendation of the Goods and Services Tax Council and hence shall not take any decision of
its own
Functions of Goods and Services Tax Council
• To decide Taxes, cesses, and surcharges levied by the Centre, States and local bodies which
may be subsumed in the GST;
• To decide Goods and Services which may be subjected to or exempted from GST;
• To decide Model GST laws, principles of levy, apportionment of IGST and principles that
govern the place of supply;
• To decide threshold limit of turnover below which goods and services may be exempted from
GST;
• To decide rates including floor rates with bands of GST;
• To decide special rates to raise additional resources during any natural calamity;
• To decide special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
• Any other matters as may be prescribed

Constitutional Validity of Goods and Services Tax
The authority to levy a tax is derived from the Constitution of India
Article 265: No tax shall be levied and collected except by the authority of law
Article 245: Parliament may make laws for the whole or any part of the country and State
Legislature can make laws for the whole or any part of the state
Article 246: Refer schedule VII of Constitution of India for distribution of powers
Schedule VII of Constitution of India
List 1 List 2 List 3
Union List State List Concurrent List
Both Parliament
Only State
Only Parliament and State
Legislature has to
has the power to Legislature has the
power to make
make laws power to make
laws
laws

Indian constitution provides three types of lists.
1. Central List
2. State List
3. Concurrent List
While the Central Government is empowered to tax the activities provided in the Central List, the
State Government can levy the taxes on the State List. If the activity is prescribed in the Concurrent
List, taxes can be levied by both Central and State Government. If the activity is not provided in
any of the three lists, it would be treated a residuary item and the tax shall be levied by the Central
Government.
In Constitution of India, the power to levy taxes on services was specified in the Central list and
the power to levy taxes on goods was specified in the State list which was the biggest hurdle for
Goods and Services Tax because in GST regime taxes on goods as well as services is going to be
levied by both Central as well as State Government. So, to nullify the effect of Article 246,
Constitution of India was amended on 8th September 2016 by inserting following Articles.
After article 246 of the Constitution, the following article shall be inserted, namely: —
"246A. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject
to clause (2), the Legislature of every State, have power to make laws with respect to goods and
services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the
supply of goods, or of services, or both takes place during inter-State trade or commerce.
After article 269 of the Constitution, the following article shall be inserted, namely: —
‘‘269A. (1) Goods and services tax on supplies in the course of inter-State trade or commerce shall
be levied and collected by the Government of India and such tax shall be apportioned between the
Union and the States in the manner as may be provided by Parliament by law on the
recommendations of the Goods and Services Tax Council.
After inserting Article 246A and 269A

1. Both parliament and State Legislature gets power to levy taxes on Goods as well as Services
for all Intra-state Transactions.
2. Parliament gets exclusive powers to levy taxes on Goods as well as Services for all Inter-state
Transactions.
3. Goods and Services Tax Council is the authority to decide the apportionment ratio of tax for
interstate transaction between Central and State.

Overview of GST
Applicability GST is applicable to whole of India including Jammu and Kashmir
Levy GST would be applicable on supply of goods or services as against
the present concept of tax on the manufacture of goods or sale of
goods or on provision of services. The same is applicable on
importation of service whether for consideration or not. Import of
goods are subject to custom duty and GST
Destination based GST would be based on the principle of destination-based
consumption tax consumption taxation as against the present principle of origin-based
taxation. Tax revenue will be levied and collected by the consuming
state.
Dual GST It would be dual GST with the Centre and the States simultaneously
levying it on a common base. The GST to be levied by the centre
would be Central GST and that to be levied by States would be called
State GST. Union Territories without legislature would levy Union
GST.
An Integrated GST would be levied on inter-state supply of goods or
services. This would be collected by the Centre.
GST on Import Import of goods would be treated as inter-state supplies and would be
subject to IGST in addition to the applicable customs duties.
Import of services would be treated as inter-state supplies and would
be subject to IGST
Export It would be zero-rated supplies.
Applicability GST would apply to all Goods or Services except Alcoholic liquor
for human consumption.
GST on five specified petroleum products i.e. Crude oil, Petrol,
Diesel, Aviation Turbine Fuel and Natural Gas would be applicable
from a date to be recommended by the Goods and Services Tax
Council.
Threshold exemption A common threshold exemption would apply to both CGST and
SGST. Taxpayers with an aggregate annual turnover of Rs. 40 Lakhs
(Rs. 20 Lakhs for special category states) would be exempt from
GST.
Reverse Charge The concept of reverse charge on notified supply of goods or services
to be paid by recipient of supplies.
Input Tax Credit It is available in respect of taxes paid on any supply of goods or
services or both used or intended to be used in the course or
furtherance of business.
Advance ruling Advance ruling authority would be constituted by the states to enable
the taxpayer to seek a binding clarity on taxation matters from the
department. Centre would adopt such authority under CGST Act.

Types of Acts in Goods and Services Tax
The Central Goods and Services Tax Act, 2017- To levy, collect CGST on intra-state
supplies and for other matters.
The State Goods and Services Tax Act, 2017- To levy, collect SGST on intra-state
supplies and for other matters.
The Integrated Goods and Services Tax Act, 2017- To levy, collect IGST on inter-
state supplies and for other matters.
The Union-territory Goods and Services Tax Act, 2017- To levy, collect UTGST on
intra-union territory supplies and for other matters.
The GST (Compensation to States) Tax Act, 2017- To compensate States for the loss
of revenue if any due to introduction of IGST.

Central Goods and Services Tax Act, 2017

PRELIMINARY
Short Title, Extent and Commencement (Section 1)
1. This Act may be called as Central Goods and Services Tax Act, 2017
2. It extends to the whole of India
3. It shall come into force on such date as the Central Government may by notification in the
Official Gazette, appoint.
Provided that different dates may be appointed for different provisions of this Act and any
reference in any such provision to the commencement of this Act shall be construed as a
reference to the coming into force of that provision.
Definitions (Section 2)
Sec Aggregate means the aggregate value of all taxable supplies (excluding the
2(6) Turnover value of inward supplies on which tax is payable by a person on
reverse charge basis), exempt supplies, exports of goods or
services or both and inter-State supplies of persons having the
same Permanent Account Number, to be computed on all India
basis but excludes central tax, State tax, Union territory tax,
integrated tax and cess;
Sec Business means a distinguishable component of an enterprise that is
2(18) Vertical engaged in the supply of individual goods or services or a group
of related goods or services which is subject to risks and returns
that are different from those of the other business verticals.
Sec Casual Taxable means a person who occasionally undertakes transactions
2(20) Person involving supply of goods or services or both in the course or
furtherance of business, whether as principal, agent or in any other
capacity, in a State or a Union territory where he has no fixed place
of business
Sec Composite means a supply made by a taxable person to a recipient consisting
2(30) supply of two or more taxable supplies of goods or services or both, or
any combination thereof, which are naturally bundled and
supplied in conjunction with each other in the ordinary course of
business, one of which is a principal supply
Sec Continuous means a supply of goods which is provided, or agreed to be
2(32) supply of Goods provided, continuously or on recurrent basis, under a contract,
whether or not by means of a wire, cable, pipeline or other conduit,
and for which the supplier invoices the recipient on a regular or
periodic basis and includes supply of such goods as the
Government may, subject to such conditions, as it may, by
notification, specify;

Sec Continuous means a supply of services which is provided, or agreed to be
2(33) supply of provided, continuously or on recurrent basis, under a contract, for
Services a period exceeding three months with periodic payment
obligations and includes supply of such services as the
Government may, subject to such conditions, as it may, by
notification, specify;
Sec Input means any goods other than capital goods used or intended to be
2(59) used by a supplier in the course or furtherance of business;
Sec Input Service means any service used or intended to be used by a supplier in the
2(60) course or furtherance of business;
Sec Input Service means an office of the supplier of goods or services or both which
2(61) Distributor receives tax invoices issued under section 31 towards the receipt
of input services and issues a prescribed document for the
purposes of distributing the credit of central tax, State tax,
integrated tax or Union territory tax paid on the said services to a
supplier of taxable goods or services or both having the same
Permanent Account Number as that of the said office;
Sec Job work means any treatment or process undertaken by a person on goods
2(68) belonging to another registered person and the expression “job
worker” shall be construed accordingly;
Sec Mixed Supply means two or more individual supplies of goods or services, or any
2(74) 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.
Sec Non-resident means any person who occasionally undertakes transactions
2(77) taxable person involving supply of goods or services or both, whether as principal
or agent or in any other capacity, but who has no fixed place of
business or residence in India;
Sec Works Contract means a contract for building, construction, fabrication,
2(119) completion, erection, installation, fitting out, improvement,
modification, repair, maintenance, renovation, alteration or
commissioning of any immovable property wherein transfer of
property in goods (whether as goods or in some other form) is
involved in the execution of such contract;

SUPPLY UNDER GOODS AND SERVICES TAX
Relevant definitions
Business (Section 2(17))

It includes:
a. any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity, whether or not it is for a pecuniary benefit;
b. any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
c. any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction;
d. supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business;
e. provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members;
f. admission, for a consideration, of persons to any premises;
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;
i. any activity or transaction undertaken by the Central Government, a State Government or any
local authority in which they are engaged as public authorities;
Goods (Section 2(52))

It 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))
It means anything other than goods, money and securities but includes activities relating to the use
of money or its conversion by cash or by any other mode, from one form, currency or
denomination, to another form, currency or denomination for which a separate consideration is
charged;
Scope of Supply (Section 7)
(1) For the purpose of this Act, “supply” includes

a. All forms of supply of goods or service or both such as sale, exchange, transfer, barter, licence,
rental, lease or disposal made or agreed to be made for a consideration by a person in the course
or furtherance of business
b. Import of service for a consideration whether or not in the course or furtherance of business
Thus, if a person avail any service from outside India for a consideration, whether for business
or personal use then such transaction shall be subject to GST in the hands of the person availing
the service under reverse charge basis.
c. The activities specified in Schedule I, made or agreed to be made without consideration
(1A) The activities or transactions which constitute a supply to be treated as supply of goods or
supply of service refereed in Schedule II
(2) Notwithstanding anything contained in sub section (1), following activities shall be neither
treated as a supply of goods or supply of services or both
a. Activities specified in Schedule III ; or
b. Activities undertaken by the Central Government, State Government or any local authority, as
may be notified by the Government
(3) The Government may on the recommendation of the Council, specify transactions that are to
be treated as -
a. A supply of goods and not as supply of service
b. A supply of service and not as supply of goods

Schedule I
ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT
CONSIDERATION (DEEMED SUPPLY)
1. Permanent transfer or disposal of business assets where input tax credit has been availed on
such assets.
2. Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, when made in the course or furtherance of business:
However, gifts not exceeding fifty thousand rupees in value in a financial year by an employer to
an employee shall not be treated as supply of goods or services or both.
3. 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.
4. Import 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 III
Negative List (Activities not to be treated as supply of goods or 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 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.
7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable
territory without such goods entering into India.
8(a). Supply of warehoused goods to any person before clearance for home consumption
8(b). Supply of goods by the consignee to any other person by endorsement of documents of title
to the goods, after the goods have been dispatched from the port of origin located outside India but
before clearance for home consumption.

Schedule II
Activities to be treated as supply of goods or supply of services
S. No. Provision Whether supply of goods or

supply of services
1(a) Any transfer of the title in goods is a supply of goods; Supply of goods
1(b) Any transfer of right in goods or of undivided share in Supply of service

goods without the transfer of title thereof;
1(c) any transfer of title in goods under an agreement Supply of goods
which stipulates that property in goods shall pass at a
future date upon payment of full consideration as
agreed;
2(a) any lease, tenancy, easement, licence to occupy land; Supply of service
2(b) Any lease or letting out of the building including a Supply of service
commercial, industrial or residential complex for
business or commerce, either wholly or partly;
3 Any treatment or process which is applied to another Supply of service
person's goods (job work);
4(a) Transfer of business assets, disposed of business Supply of goods
assets, whether or not for consideration
4(b) Change of use of goods; from business to personal Supply of service
use, whether or not for a consideration
4(c) Where any person ceases to be taxable person, any Supply of goods
goods forming part of the assets of any business,
unless-
a. The business is transferred as a going concern to
another person
b. The business is carried on by a personal
representative who is deemed to be a taxable
person

5(a) Renting of immovable property Supply of service
5(b) Construction of a complex, building, civil structure or Supply of service
a part thereof, including a complex or building
intended for sale to a buyer, wholly or partly, except
where the entire consideration has been received after
issuance of completion certificate, where required, by
the competent authority or after its first occupation,
whichever is earlier.
5(c) Temporary transfer or permitting the use or Supply of service
enjoyment of any intellectual property right;
5(d) Development, design, programming, customisation, Supply of service
adaptation, upgradation, enhancement,
implementation of information technology software;
5(e) Agreeing to the obligation to refrain from an act, or to Supply of service
tolerate an act or a situation, or to do an act
5(f) Transfer of the right to use any goods for any purpose Supply of service
for cash, deferred payment or other valuable
consideration
6 The following composite supplies shall be treated as Supply of service
a supply of services, namely:—
(a) works contract as defined in clause (119) of
section 2; and
(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 Supply of goods by any unincorporated association or Supply of goods
body of persons to a member thereof for cash,
deferred payment or other valuable consideration.

Practice Questions
1. Mr. Amitabh a dealer sells a washing machine for Rs. 30,000 to earn profit. Does it qualify
as a supply.
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
2. Mr. Ram (an unregistered person) wants to do MBA from abroad. He takes Education
consultancy services from a UK based consultant for Rs. 10,000. Does it qualify as a supply?
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
3. ABC Ltd. A manufacturing company scraps old plant and machinery due to renovation of
manufacturing facility. The company has taken input tax credit of plant and machinery so
scrapped without consideration. Does it qualify as supply?
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
4. Big Ltd. provides management technical services without consideration to Small Ltd in
which Big Ltd. has controlling rights. These technical services have been provided for
benefit of entire group. Does it qualify for supply?
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

5. Americal Express Pvt. Ltd. Makes gifts to an employee worth Rs. 75,000 during the year. Do
such gifts qualify as supply? Would your answer be different if gifts of Rs. 45,000 have been
given to employee.
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
6. Honda Motors ltd. Engages DD Motors as an agent to sell motorcycles on its behalf. For the
purpose, Honda Motors Ltd. Has supplied 500 cars to the showroom of DD Motors located in
Punjab. Does it qualify as supply?
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
7. Raheja builders (a registered taxable person) receives architectural design supplied by a

foreign architect to design residential complex to be built in Faridabad for consideration of
Rs. 1 crore. Does it qualify as supply?
Ans:__________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Composite and Mixed Supply (Section 8)
When two or more goods are sold in a combination it becomes difficult to identify the rate of tax
to be levied. For such goods or services, CGST Act, 2017 has provided with two terms --
“Composite Supply” and “Mixed Supply”.
Both Composite supply and Mixed supply consist of two or more taxable supplies of goods or
services or both but the main difference between the two is that Composite supply is naturally
bundled i.e., goods or services are usually provided together in normal course of business. They
cannot be separated. Whereas in Mixed supply, the goods or services can be sold separately
Composite Supply
Section 2(30): “composite supply” means a supply made by a taxable person to a recipient
consisting of two or more taxable supplies of goods or services or both, or any combination thereof,
which are naturally bundled and supplied in conjunction with each other in the ordinary course of
business, one of which is a principal supply
Principal Supply (Section 2 (90)): means the supply of goods or services which constitutes the
predominant element of a composite supply and to which any other supply forming part of that
composite supply is ancillary
Illustration: Where goods are packed and transported with insurance, the supply of goods, packing
materials, transport and insurance is a composite supply and supply of goods is a principal supply
Applicable rate of tax: The rate of tax which is applicable on principal supply shall be applicable
rate on composite 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 drinks and fruit juices when supplied for a single price is a mixed supply. Each of
these items can be supplied separately and is not dependent on any other. It shall not be a mixed
supply if these items are supplied separately.
Applicable rate of tax: The higher rate of tax will be applicable
Judicial Pronouncement
AQUAA CARE (SURAT) RO TECHNOLOGIES PRIVATE LIMITED, (2019)- AAR GUJARAT
Where company is selling water in containers whether selling of container and water is
composite supply?
Water cannot be sold standalone without filling in containers and thus the supply is naturally
bundled and supplied in conjunction with each other in the ordinary course of business - Selling
of water in container is composite supply where selling of purified water is the principal supply.

LEVY AND COLLECTION
Levy and Collection (Section 9)
1. The Central Goods and Services Tax (CGST Tax) shall be levied on all intra-state supplies
except on the supply of alcoholic liquor for human consumption. The maximum rate of Central
Goods and Services Tax shall not exceed 20%
2. The CGST Tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly
known as petrol), natural gas and aviation turbine fuel shall be levied with such effect as may
be notified by the Government on the recommendation of the Council
3. The Government may on the recommendation of the Council notify certain supplies of goods
or services or both on which reverse charge shall be applicable i.e. the tax shall be paid by
recipient to the Government and not by the supplier.
4. If registered person receives goods or services or both from an unregistered recipient than tax
on such supplies shall be paid to the Government by the recipient of the goods or services or
both i.e. by the registered person. (Provision ceased to have an effect from 31.01.2019)
5. The government may on the recommendation of the council specify categories of services on
which tax on intra-state supplies shall be paid by electronic commerce operator, if supplied
through it.
If electronic commerce operator does not have any physical presence in India than any person
representing such electronic commerce operator shall pay the tax.
If electronic commerce operator does not have any physical presence in India and does not
have any representative in India than he shall appoint a person for the purpose of paying tax in
India.
The Central Government vide notification no. 17/2017 has notified following categories of
services, the tax on intra-state supplies shall be paid by electronic commerce operator –
1. Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor

cycle

2. Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites
or other commercial places meant for residential or lodging purposes, except where the person
supplying such service through electronic commerce operator is liable for registration.
3. Services by way of house-keeping, such as plumbing, carpentering etc., except where the
person supply such service through electronic commerce operator is liable for registration

Services under Reverse Charge (Notified under Section 9(3))
S. Category of supply of Supplier of Service Recipient of Service
No. service
1 Supply of service by Goods transport 1. Any factory registered under or
Goods transport agency governed by the Factories Act, 1948(63
agency of 1948); or
2. any society registered under the
Societies Registration Act, 1860 (21 of
1860) or under any other law for the
time being in force in any part of India;
3. or any co-operative society established
by or under any law; or
4. any person registered under the Central
Goods and Services Tax Act or the
Integrated Goods and Services Tax Act
or the State Goods and Services Tax Act
or the Union Territory Goods and
Services Tax Act; or
5. any body corporate established, by or
under any law; or
6. any partnership firm whether registered
or not under any law including
association of persons; or
7. any casual taxable person; located in the
taxable territory.
2 Supply of legal Services provided by Any business entity located in the taxable
services an territory
1. individual
advocate
including a senior
advocate or
2. firm of advocates
by way of legal
services, directly
or indirectly
3 Service supplied by An arbitral tribunal Any business entity located in the taxable
an arbitral tribunal territory
4 Sponsorship Services Any person Any body corporate or partnership firm

located in the taxable territory

5 Services supplied by Governmental Any business entity located in the taxable
the Central Authority territory
Government, State
Government, Union
territory or local
authority to a
business entity
excluding, -
1. renting of
immovable
property, and
2. services specified
below-
(i) services by the
Department of
Posts by way of
speed post,
express parcel
post, life
insurance, and
agency services
provided to a
person other than
Central
Government,
State Government
or Union territory
or local authority;
(ii) services in
relation to an
aircraft or a
vessel, inside or
outside the
precincts of a port
or an airport;
(iii) transport of
goods or
passengers.
5A Services supplied by Services supplied by Any person registered under Goods and
the Central the Central Services Tax Act, 2017
Government, State Government, State
Government, Union Government, Union
territory or local territory or local
authority by way of authority to a business
renting of immovable entity
property to a person
registered under the
Central Goods and
Services Tax Act,
2017

5B Services supplied by Any person Promoter
any person by way of
transfer of
development rights or
Floor Space Index
(FSI) (including
additional FSI) for
construction of a
project by a promoter
5C Long term lease of Any person Promoter
land (30 years or
more) by any person
against consideration
in the form of upfront
amount (called as
premium, salami,
cost, price,
development charges
or by any other name)
and/or periodic rent
for construction of a
project by a
promoter.
6 Services supplied by Director of a The company or director located in a
a director of a company or a body taxable territory
company or a body corporate
corporate to the said
company or the body
corporate.
7 Services supplied by An insurance agent Any person carrying on insurance business,
an insurance agent to located in the taxable territory.
any person carrying
on insurance
business.
8 Services supplied by A recovery agent A banking company or a financial
a recovery agent to a institution or a non-banking financial
banking company or company located in a taxable territory
a financial institution
or a non- banking
financial company.
9 Supply of services by Author or music Publisher, music company, producer or the
an author, music composer, like, located in a taxable territory.
composer, photographer, artist or
photographer, artist the like
or the like by way of
transfer or permitting
the use or enjoyment
of a copyright
covered under clause
(a) of sub-section (1)

of section 13 of the
Copyright Act, 1957
relating to original
literary, dramatic,
musical or artistic
works to a publisher,
music company,
producer or the like.
10 Supply of services by Members of Reserve bank of India
the members of the Overseeing
overseeing Committee
committee to Reserve constituted by the
bank of India Reserve bank of India
11 Services supplied by Individual direct A banking company or a NBFC located in
individual Direct selling agents other a taxable territory
Selling Agents other than a body corporate,
than a body partnership or LLP
corporate,
partnership or LLP to
bank or NBFC
12 Service provided by Business facilitator A banking company
business facilitator to
a banking company
13 Services provided by An agent of business A business correspondent
an agent of business correspondent
correspondent to
business
correspondent
14 Security services Any person other than A registered person
a body corporate
15 Any service supplied Any person located in Any person located in the taxable territory
by any person who is a non-taxable territory other than non-taxable online recipient
located in a non-
taxable territory to
any person other than
non-taxable online
recipient
16 Services supplied by A person located in Importer
a person located in non-taxable territory
non-taxable territory
by way of
transportation of
goods by a vessel
from a place outside
India up to the
customs station of
clearance in India.

17 Services provided by Any person, other Any body corporate located in the
way of renting of than a body corporate taxable territory
any motor vehicle who supplies the
designed to carry service to a body
passengers where the corporate and does
cost of fuel is not issue an invoice
included in the charging integrated
consideration tax at the rate of 12
charged from the percent. to the service
service recipient, recipient
provided to a body
corporate
18 Services of lending of Lender i.e. a person Borrower i.e. a person who borrows the
securities under who deposits the securities under the Scheme through an
Securities Lending securities registered approved intermediary of SEBI”.
Scheme, 1997 in his name or in the
(“Scheme”) of name of any other
Securities and person duly
Exchange Board of authorised on his
India (“SEBI”), as behalf with an
amended. approved
intermediary for the
purpose of lending
under the Scheme of
SEBI

Goods under Reverse Charge (Notified under Section 9(3))
S. Description of Supply Supplier of Goods Recipient of Supply
No of Goods
1 Cashew nuts not Agriculturist Any registered person
shelled or pelled
2 Bidi wrapper leaves Agriculturist Any registered person
(tendu)
3 Tobacco leaves Agriculturist Any registered person
4 Silk yarn Any person who manufactures Any registered person
silk yarn from raw silk or silk
worm cocoons for supply of
silk yarn
4A Raw Cotton Agriculturist Any registered person
5 Supply of lottery State Government, Union Lottery distributor or selling
Territory or any local authority agent.
6 Used vehicles, seized Central Government, State Any registered person
and confiscated goods, Government, Union Territory
old and used goods, or a local authority
waste and scrap
7 Priority sector lending Any registered person Any registered person
certificate

COMPOSITION LEVY
Composition levy (Section 10)
To give relief to the small taxpayers, Government has incorporated ‘Composition Scheme’ in the
Central Goods and Services Tax Act. This scheme is optional on the part of the assessee.
Any registered person having business of supply of goods and restaurant services whose aggregate
turnover in a preceding financial year did not exceed One crore and fifty lakh rupees (Rs. 1.5
crores), may opt to pay, tax as per composition scheme. However, the aggregate turnover in the
preceding financial year shall not exceed Rs. 75 lakhs in case of an eligible registered person in
any of the following states namely: 1. Arunachal Pradesh 2. Meghalaya 3. Manipur 4. Mizoram 5.
Nagaland 6. Sikkim 7. Tripura 8. Uttarakhand
The GST Council has extended the scope for applicability of composition scheme to the service
providers other than provider of restaurant service who have annual turnover of Rs. 50,00,000 in
the preceding financial year.
Registered person opting composition scheme shall fulfil following condition:

1. He is not engaged in the supply of services other than restaurant service.
However supplier of goods shall be allowed to make supply services of value not exceeding
10% of turnover in a State or Union Territory in the preceding financial year or Rs. 5,00,000,
whichever is higher
2. He is not engaged in making any supply of goods which are not leviable to tax under this act
(Non Taxable supplies)
3. He not engaged in making any inter-state supplies
4. He is not engaged in supply of goods through electronic commerce operator
5. He is not manufacture of such goods as may be notified by Central Government on the
recommendation of the Council

Manufacturer not eligible to opt for composition scheme
S. No. Tariff item, sub heading, Description
heading or chapter
1 2105 00 00 Ice cream and other edible ice, whether or not
containing cocoa
2 2106 90 20 Pan masala
3 24 All goods i.e. Tobacco and manufactured substitutes
4 2202 10 10 Aerated waters
6. He shall mention the words “Composition Taxable Person, not eligible to collect tax on
supplies” at the top of the bill of supply issued by him
7. He shall mention the words “Composition taxable person” on every notice or signboard
displayed at a prominent place at his principal place of business and at every additional places
of business
8. Where more than one registered person are having same PAN (issued under Income Tax Act),
the registered person shall not be eligible to opt for the scheme unless all such registered person
opt to pay tax under the composition scheme.
Registered person who opts for composition scheme, shall not take any credit of input tax and shall
not collect any tax from the recipient of goods or services or both.
Registered person who opts composition scheme shall pay tax from his own pocket on the amount
of turnover as per the following rates of taxes:
Types of supplier Rate of Tax
Manufacturer 0.5% CGST + 0.5% SGST/UTGST of
turnover
Supplier of Foods and beverages other than 2.5% CGST + 2.5% SGST/UTGST of
alcoholic drinks turnover
Other Traders 0.5% CGST + 0.5% SGST/UTGST of
turnover
Supplier of services 3% CGST + 3% SGST/UTGST of turnover

For example:
Mr. Abhishek is engaged in supply of goods. His aggregate turnover in preceding FY is Rs. 60
lakh. Since his aggregate turnover in the preceding FY does not exceed Rs. 1.5 crore, he is eligible
for composition scheme in current FY. Further, in current FY, he can supply services [other than
restaurant services] upto a value not exceeding:
a. 10% of Rs. 60 lakhs i.e. Rs. 6 lakhs
b. Rs. 5 lakhs
whichever is higher. Thus he can supply services upto a value of Rs. 6 lakh in current financial
year. If the value of services supplied exceeds Rs. 6 lakhs, he becomes ineligible for the
composition scheme and has to opt out of the composition scheme.
The option availed by a registered person shall lapse with effect from the day on which his
aggregate turnover during a financial year exceeds the limit specified above
If the proper officer has reason to believe that a taxable person has paid tax under composition
scheme despite not being eligible, such person shall be liable to pay the difference amount of tax
also penalty and section 73 or section 74 of CGST Act shall also apply for determination of tax
and penalty.

Composition Rules of CGST Rules, 2017
Intimation for Composition Levy (Rule 3)
Intimation to Any person who has been granted registration on a provisional basis under
opt clause (b) of sub-rule (1) of rule 24 and who opts to pay tax under section 10,
composition shall electronically file an intimation in FORM GST CMP-01, duly signed
levy (Rule 3(1)) or verified through electronic verification code, on the common portal, either
directly or through a Facilitation Centre notified by the Commissioner, prior
to the appointed day, but not later than thirty days after the said day, or such
further period as may be extended by the Commissioner in this behalf:
Provided that where the intimation in FORM GST CMP-01 is filed after the
appointed day, the registered person shall not collect any tax from the
appointed day but shall issue bill of supply for supplies made after the said
day.
Mention in Any person who applies for registration under sub-rule (1) of rule 8 may
Registration give an option to pay tax under section 10 in Part B of FORM GST REG-
form (Rule 01, which shall be considered as an intimation to pay tax under the said
3(2)) section.
Intimation to Any registered person who opts to pay tax under section 10 shall
opt electronically file an intimation in FORM GST CMP-02, duly signed or
composition verified through electronic verification code, on the common portal, either
levy before directly or through a Facilitation Centre notified by the Commissioner, prior
commencement to the commencement of the financial year for which the option to pay tax
of Financial under the aforesaid section is exercised and shall furnish the statement in
Year (Rule FORM GST ITC-03 in accordance with the provisions of sub-rule (4) of rule
3(3)) 44 within a period of sixty days from the commencement of the relevant
financial year.
Rule 3(A) Notwithstanding anything contained in sub-rules (1), (2) and (3), a person
who has been granted registration on a provisional basis under rule 24 or who
has been granted certificate of registration under sub-rule (1) of rule 10 may
opt to pay tax under section 10 with effect from the first day of the month
immediately succeeding the month in which he files an intimation in FORM
GST CMP-02, on the common portal either directly or through a Facilitation
Centre notified by the Commissioner, on or before the 31st day of March,
2018, and shall furnish the statement in FORM GST ITC-03 in accordance
with the provisions of sub-rule (4) of rule 44 within a period of 180 days from
the day on which such person commences to pay tax under section 10.

Provided that the said persons shall not be allowed to furnish the
declaration in FORM GST TRAN-1 after the statement in FORM GST
ITC-03 has been furnished.
Furnish details Any person who files an intimation under sub-rule (1) to pay tax under
of stock (Rule section 10 shall furnish the details of stock, including the inward supply of
3(4)) goods received from unregistered persons, held by him on the day preceding
the date from which he opts to pay tax under the said section, electronically,
in FORM GST CMP-03, on the common portal, either directly or through a
Facilitation Centre notified by the commissioner within a period 90 days
from the date on which the option for composition levy is exercised or within
such further period as may be extended by the Commissioner in this behalf.
One intimation Any intimation under sub-rule (1) or sub rule (3) in respect of any place of
is deemed business in any State or Union territory shall be deemed to be an intimation
intimation for in respect of all other places of business registered on the same Permanent
all other places Account Number.
(Rule 3(5))
Effective date of Composition Levy (Rule 4)
Effective date The option to pay tax under section 10 shall be effective from the beginning
for of the financial year, where the intimation is filed under sub- rule (3) of rule
composition 3 and the appointed day where the intimation is filed under sub-rule (1) of the
levy (Rule said rule.
4(1))
Effective date The intimation under sub-rule (2) of rule 3, shall be considered only after the
(Rule 4(2)) grant of registration to the applicant and his option to pay tax under section
10 shall be effective from the date fixed under sub-rule (2) or (3) of rule 10.
Validity of Composition Levy (Rule 6)
Validity of The option exercised by a registered person to pay tax under section 10 shall
composition remain valid so long as he satisfies all the conditions mentioned in the said
scheme (Rule 6 section and under these rules.
(1))
Liability to pay The person referred to in sub-rule (1) shall be liable to pay tax under sub-
tax under section (1) of section 9 from the day he ceases to satisfy any of the conditions
regular scheme mentioned in section 10 or the provisions of this Chapter and shall issue tax
(Rule 6(2)) invoice for every taxable supply made thereafter and he shall also file an
intimation for withdrawal from the scheme in FORM GST CMP-04 within
seven days of the occurrence of such event.

File application The registered person who intends to withdraw from the composition scheme
for withdrawal shall, before the date of such withdrawal, file an application in FORM GST
of scheme (Rule CMP-04, duly signed or verified through electronic verification code,
6(3)) electronically on the common portal.
Issue show Where the proper officer has reasons to believe that the registered person
cause notice was not eligible to pay tax under section 10 or has contravened the provisions
and order by of the Act or provisions of this Chapter, he may issue a notice to such person
proper officer in FORM GST CMP-05 to show cause within fifteen days of the receipt of
(Rule 6(4)) such notice as to why the option to pay tax under section 10 shall not be
denied.
Reply of show Upon receipt of the reply to the show cause notice issued under sub-rule (4)
cause notice from the registered person in FORM GST CMP-06, the proper officer shall
and order by issue an order in FORM GST CMP-07within a period of thirty days of the
proper officer receipt of such reply, either accepting the reply, or denying the option to pay
(Rule 6(5)) tax under section 10 from the date of the option or from the date of the event
concerning such contravention, as the case may be.
Furnish details Every person who has furnished an intimation under sub-rule (2) or filed an
of stock (Rule application for withdrawal under sub-rule (3) or a person in respect of whom
6(6)) an order of withdrawal of option has been passed in FORM GST CMP-07
under sub-rule (5), may electronically furnish at the common portal, either
directly or through a Facilitation Centre notified by the Commissioner, a
statement in FORM GST ITC-01 containing details of the stock of inputs and
inputs contained in semi-finished or finished goods held in stock by him on
the date on which the option is withdrawn or denied, within a period of thirty
days from the date from which the option is withdrawn or from the date of
the order passed in FORM GST CMP-07, as the case may be.
Any intimation Any intimation or application for withdrawal under sub-rule (2) or (3) or
applicable to all denial of the option to pay tax under section 10 in accordance with sub-rule
other places (5) in respect of any place of business in any State or Union territory, shall
also (Rule 6(7)) be deemed to be an intimation in respect of all other places of business
registered on the same Permanent Account Number.

Applicable forms and due dates for registered person opting composition scheme:
Form No Time Period Event
GST CMP - 01 Prior to appointed date or within 30 Intimation for opting
days from the appointed date composition scheme
(For person migrating in GST)
GST REG - 01 Can intimate for opting composition Intimation for opting
scheme during registration under GST composition scheme at the
(For new registration in GST) time of registration
GST CMP - 02 Prior to commencement of financial If opting composition
year scheme later on financial
year
GST ITC - 03 Within 60 days from the Reversal of input tax credit
commencement of financial year
GST CMP - 03 Within 90 days from the date on which Details about stock, inward
composition levy is exercised supply of goods received
from unregistered person,
held by him on the day
preceding the day on which
scheme is opted
GST CMP - 04 Within 7 days of the occurrence of If not remain eligible for
event composition scheme, or
wants to opt out from
composition scheme
GST CMP - 05 Show Cause Notice to be
issue by proper officer if
person not eligible for
composition scheme
GST CMP - 06 With in 15 days from the date of receipt Reply should be sent by
of Show cause notice noticee

GST CMP - 07 Within 30 days from the date of receipt Order to be issued by proper
of reply officer
GST ITC - 01 Within 30 days from the date of Details about stock, inward
withdrawal from composition scheme supply of goods received
or from the date of order issued under from unregistered person,
GST CMP - 07 held by him on the day
preceding the day on which
scheme is opted as the case
may be

Question 1 – A Ltd. is a manufacturing concern in Pune. For the Financial Year 2020-21 the
breakup of supplies are as follows–
Particulars Rs
(1) Intra State supplies made under forward charge 25,00,000
(2) Intra State Supplies made which are chargeable to GST at Nil rate 18,00,000
(3) Intra state Supplies which are wholly exempt under section 11 of 57,00,000
CGST Act. 2017
(4) Value of inward supplies on which tax payable under RCM 2,60,000
Briefly explain whether A Ltd. is eligible to opt for Composition scheme in F.Y. 2021-22.
Solution:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Computation of Aggregate Turnover:

Particulars Rs
(1)
(2)
(3)
(4)
Total
______________________________________________________________________________
______________________________________________________________________________

Question 2 – A Ltd. a manufacturing concern in Rajasthan has opted for composition scheme
furnishes you with the following information for Financial Year 2020-21. It requires you to
determine its composition tax liability and total tax liability for Financial Year 2020–21 the break-
up of supplies are as follows–
Particulars Rs.
(1) Intra Stare Supplies of Goods X chargeable @5% GST 30,00,000
(2) Intra State Supplies made which are which are chargeable to GST at 18,00,000
Nil rate
(3) Intra State supplies which are wholly exempt under Section 11 of 2,40,000
CGST Act, 2017
(4) Value of inward supplies on which tax payable under RCM (GST Rate 5,00,000
5%)
(5) Intra State Supplies of Goods Y chargeable @ 18% GST 30,00,000
Solution: The composite tax liability of A Ltd. shall be as under:

Question 3 – XYZ Ltd., a manufacturing concern had effected intra-state taxable supply of Rs.
20,00,000 and interstate taxable supply of Rs. 25,00,000 in Financial year 2020–21. The company
wants to opt for composition scheme under Section 10 of CGST Act, 2017. As a GST consultant
advise XYZ Ltd. whether it can opt for composition scheme.
Solution:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Question 4 – A, a retailer who keeps no inventories, presents the following expected information
for the year–
(1) Purchases of goods: Rs. 50 lakhs (excluding GST @5%)
(2) Sales (at fixed selling price inclusive of all taxes): Rs. 60 lakhs (GST on sales @ 5%)
Discuss whether he should opt for composition scheme if composite tax is 1% of turnover.
Expenses of keeping detailed statutory records required under the GST Laws will be Rs. 1,20,000
p.a., which shall get reduced to Rs. 50,000 if composition scheme is opted for. Other expenses are
Rs. 3,00,000 p.a.
Solution: The cost to the ultimate consumer under two schemes is as under–

Question 5 –XYZ Ltd. is having two factories. One factory is located in Rajasthan is
manufacturing readymade garments and another factory located in Gujarat is engaged in
manufacture of auto components. The turnover details of Financial Year 2020–21 are as under:
Particular Rs
(1) Intra – State supply of readymade garments in Rajasthan 28,00,000
(2) Intra – State supply of auto – components in Gujarat 18,00,000
Total Value of taxable supplies 46,00,000
The company wants to opt for composition scheme for factory in Rajasthan and tax at normal rates
in Gujarat. Advise.
Solution:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

EXEMPT SUPPLY
What is Exempt Supply?
Section 2(47) of the CGST Act, 2017 defines “exempt supply” as supply of any goods or services
or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or
under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply.
Thus, exempt supply includes the following:

• Any goods or services which attract Nil rate of tax.
• Any goods or services which are wholly exempted from tax.
• Any goods or services are held as no-supply under the GST law. It includes goods or services
which have been excluded from the purview of GST like Alcoholic liquor for human
consumption. It also includes goods or services listed under Schedule III of CGST Act.
Exemption (Section 11)

Power to grant exemption (Section 11(1))
Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
recommendations of the Council, by notification, exempt generally, either absolutely or subject to
such conditions as may be specified therein, goods or services or both of any specified description
from the whole or any part of the tax leviable thereon with effect from such date as may be
specified in such notification.
Circumstances of an exceptional nature (Section 11(2))

Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the
recommendations of the Council, by special order in each case, under circumstances of an
exceptional nature to be stated in such order, exempt from payment of tax any goods or services
or both on which tax is leviable.
Power to insert explanation within 1 year (Section 11(3))

The Government may, if it considers necessary or expedient so to do for the purpose of clarifying
the scope or applicability of any notification issued under sub-section (1) or order issued under

sub-section (2), insert an explanation in such notification or order, as the case may be, by
notification at any time within one year of issue of the notification under sub-section (1) or order
under sub-section (2), and every such explanation shall have effect as if it had always been the part
of the first such notification or order, as the case may be.
Goods exempt from tax

A list of items have been notified under section 11(1) of CGST Act, 2017 and section 6(1) of IGST
Act, 2017. The items have been exempted from whole of tax.
The Government has issued a list of approximately 150 items of exempted goods in CGST law by
notification NO. 2/2017 dated 28.06.2017 as amended. Items such as unbranded atta, maida, besan,
unpacked food grains, milk, eggs, curd, lassi and fresh vegetables are among the items exempted
from GST.
Goods imported by unit/developer in SEZ exempt from IGST

All goods imported by Unit/Developer in the Special Economic Zone for the authorised operations
are exempt from the whole of IGST leviable under section 3(7) of the Custom Tariff Act, 1975
read with section 5 of IGST Act, 2017.
Services exempt under GST (Notification No. 12/2017- Central Tax (Rate))
1. Services by Government or a local authority excluding the following services:

a. Services by the Department of Posts by way of speed post, express parcel post, life insurance,
and agency services provided to a person other than Government;
b. Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an
airport;
c. Transport of goods or passengers; or
d. Any service, other than services covered under clauses (i) to (iii) above, provided to business
entities.
2. Services by the Reserve Bank of India
3. Services by a foreign diplomatic mission located in India

4. Services relating to cultivation of plants and rearing of all life forms of animals, except the
rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural
produce by way of:
• Agricultural operations directly related to production of any agricultural produce including
cultivation, harvesting, threshing, plant protection or testing or
• Supply of farm labour;
• Processes carried out at an agricultural farm including tending, pruning, cutting,
harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading,
cooling or bulk packaging and such like operations which do not alter the essential
characteristics of agricultural produce but make it only marketable for the primary market;
• Renting or leasing of agro machinery or vacant land with or without a structure incidental
to its use;
• Loading, unloading, packing, storage or warehousing of agricultural produce;
• Agricultural extension services;
• Services by any Agricultural Produce Marketing Committee or Board or services provided
by a commission agent for sale or purchase of agricultural produce.
5. Service by way of access to a road or a bridge on payment of toll charges
6. Transmission or distribution of electricity by an electricity transmission or distribution utility
7. Services by way of renting of residential dwelling for use as residence
8. Services by way of:
• Extending deposits, loans or advances in so far as the consideration is represented by way
of interest or discount (other than interest involved in credit card services);
• Inter se sale or purchase of foreign currency amongst banks or authorised dealers of
foreign exchange or amongst banks and such dealers;
9. Services by way of transportation of goods
• By road except the services of:
• A goods transportation agency;
• A courier agency;
• By inland waterways;
10. Services provided to the United Nations or a specified international organization.

11. Services provided by operators of the Common Bio-medical Waste Treatment Facility to a
clinical establishment by way of treatment or disposal of bio-medical waste or the processes
incidental thereto;
12. Services by a veterinary clinic in relation to health care of animals or birds;
13. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961)
by way of charitable activities;
14. Services by a specified organisation in respect of a religious pilgrimage facilitated by the
Ministry of External Affairs of the Government of India, under bilateral arrangement;
15. Services provided by:
• An arbitral tribunal to
• Any person other than a business entity; or
• A business entity with a turnover up to rupees twenty lakh (ten lakh rupees in a
special category state) in the preceding financial year;
• A partnership firm of advocates or an individual as an advocate other than a senior
advocate, by way of legal services to-
• An advocate or partnership firm of advocates providing legal services;
• A business entity with a turnover up to rupees twenty lakh (ten lakh rupees in a special
category state) in the preceding financial year; or
• A senior advocate by way of legal services to
• A business entity up to rupees twenty lakh (ten lakh rupees in a special category state)
in the preceding financial year;
16. Services provided,
• By an educational institution to its students, faculty and staff;
• To an educational institution, by way of,
• Transportation of students, faculty and staff;
• Catering, including any mid-day meals scheme sponsored by the Government;
• Security or cleaning or house-keeping services performed in such educational
institution;

• Services relating to admission to, or conduct of examination by, such institution; upto
higher secondary.
17. Services provided by the Indian Institutes of Management, as per the guidelines of the Central
Government, to their students, by way of the following educational programmes, except
Executive Development Programme, –
• Two year full time residential Post Graduate Programmes in Management for the Post
Graduate Diploma in Management, to which admissions are made on the basis of
Common Admission Test (CAT), conducted by Indian Institute of Management;
• Fellow programme in Management;
• Five year integrated programme in Management.
18. Services provided to a recognized sports body by-
• An individual as a player, referee, umpire, coach or team manager for participation in a
sporting event organized by a recognized sports body;
• Another recognised sports body;
19. Services by an artist by way of a performance in folk or classical art forms of (i) music, or
(ii)dance, or (iii)theatre, if the consideration charged for such performance is not more than
one lakh and fifty thousand rupees: Provided that the exemption shall not apply to service
provided by such artist as a brand ambassador;
20. Services by way of collecting or providing news by an independent journalist, Press Trust of
India or United News of India;
• Services by way of giving on hire –
To a state transport undertaking, a motor vehicle meant to carry more than twelve
passengers; or
• To a goods transport agency, a means of transportation of goods;
21. Services by way of giving on hire –
• To a state transport undertaking, a motor vehicle meant to carry more than twelve
passengers; or
• To a goods transport agency, a means of transportation of goods;
22. Transport of passengers, with or without accompanied belongings, by –

• Air, embarking from or terminating in an airport located in the state of Arunachal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra
located in West Bengal;
• Non-airconditioned contract carriage other than radio taxi, for transportation of
passengers, excluding tourism, conducted tour, charter or hire; or
• Stage carriage other than air-conditioned stage carriage
23. Services of life insurance business provided by way of annuity under the National Pension
System regulated by Pension Fund Regulatory and Development Authority of India (PFRDA)
under the Pension Fund Regulatory And Development Authority Act, 2013 (23 of 2013)
24. Services of life insurance business provided or agreed to be provided by the Army, Naval and
Air Force Group Insurance Funds to members of the Army, Navy and Air Force, respectively,
under the Group Insurance Schemes of the Central Government
25. Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year
subject to the following conditions, namely:-
• The total turnover had not exceeded fifty lakh rupees during the preceding financial year;
and
• A period of three years has not been elapsed from the date of entering into an agreement
as an incubatee;
26. Service by an unincorporated body or a non- profit entity registered under any law for the time
being in force, to its own members by way of reimbursement of charges or share of contribution
–
• As a trade union;
• For the provision of carrying out any activity which is exempt from the levy of GST; or
• Up to an amount of five thousand rupees per month per member for sourcing of goods or
services from a third person for the common use of its members in a housing society or a
residential complex;
27. Services by an organiser to any person in respect of a business exhibition held outside India;
28. Services by way of slaughtering of animals;
29. Services received from a provider of service located in a non- taxable territory by –
• Government, a local authority, a governmental authority or an individual in relation to any
purpose other than commerce, industry or any other business or profession;

• An entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the
purposes of providing charitable activities; or
• A person located in a non-taxable territory;
Provided that the exemption shall not apply to – (i) online information and database access
or retrieval services received by persons or services by way of transportation of goods by
a vessel from a place outside India up to the customs station of clearance in India;
30. Services of public libraries by way of lending of books, publications or any other knowledge-
enhancing content or material;
31. Services by Employees’ State Insurance Corporation to persons governed under the
Employees’ Insurance Act, 1948 (34 of 1948);
32. Services by way of transfer of a going concern, as a whole or an independent part thereof;
33. Services by way of public conveniences such as provision of facilities of bathroom,
washrooms, lavatories, urinal or toilets;
34. Services by government, local authority or governmental authority by way of any activity in
relation to any function entrusted to a municipality under Article 243 W of the Constitution.
35. Services received by the Reserve Bank of India, from outside India in relation to management
of foreign exchange reserves;
36. Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly
outside India.
37. Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling
of fruits and vegetables which do not change or alter the essential characteristics of the said
fruits or vegetables;
38. Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or
zoo;
39. Services provided by Government or a local authority to a business entity with a turnover up
to rupees twenty lakh (ten lakh rupees in a special category state) in the preceding financial
year.
40. Services provided by Employees Provident Fund Organisation (EPFO) to persons governed
under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);

41. Services provided by Insurance Regulatory and Development Authority of India (IRDA) to
insurers under the Insurance Regulatory and Development Authority of India Act, 1999 (41 of
1999);
42. Services provided by Securities and Exchange Board of India (SEBI) set up under the
Securities and Exchange Board of India Act, 1992 (15 of 1992) by way of protecting the
interests of investors in securities and to promote the development of, and to regulate, the
securities market;
43. Services provided by National Centre for Cold Chain Development under Ministry of
Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge
dissemination;
44. Services by way of transportation of goods by an aircraft from a place outside India upto the
customs station of clearance in India.
45. Services provided by Government or a local authority to another Government or local
authority:
46. Services provided by Government or a local authority by way of issuance of passport, visa,
driving licence, birth certificate or death certificate.
47. Services provided by Government or a local authority by way of 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;
48. Services provided by Government or a local authority by way of-
• Registration required under any law for the time being in force;
• Testing, calibration, safety check or certification relating to protection or safety of
workers, consumers or public at large, including fire license, required under any law for
the time being in force;
49. Services provided by Government or a local authority by way of assignment of right to use
natural resources to an individual farmer for cultivation of plants and rearing of all life forms
of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar
products;
50. Services by Government, a local authority or a governmental authority by way of any activity
in relation to any function entrusted to a Panchayat;

51. Services provided by Government or a local authority by way of 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;
52. Services provided by Government or a local authority by way of allowing a business entity to
operate as a telecom service provider or use radio frequency spectrum during the period prior
to 1st April, 2016, on payment of licence fee or spectrum user charges, as the case may be;
53. 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 export cargo on
payment of Merchant Overtime charges (MOT).
54. Services by an acquiring bank, to any person in relation to settlement of an amount upto two
thousand rupees in a single transaction transacted through credit card, debit card, charge card
or other payment card service.
55. Services of leasing of assets (rolling stock assets including wagons, coaches, locos) by Indian
Railways Finance Corporation to Indian Railways
56. Services provided by any person for official use of a foreign diplomatic mission or consular
post in India or for personal use or for the use of the family members of diplomatic agents or
career consular officers posed therein. This exemption is available on reciprocal basis based
on a certificate issued by MEA;
57. Taxable services, provided or to be provided, by a Technology Business Incubator (TBI) or a
Science and Technology Entrepreneurship Park (STEP) recognized by the National Science
and Technology Entrepreneurship Development Board (NSTEDB) of the Department of
Science and Technology, Government of India or bio-incubators recognized by the
Biotechnology Industry Research Assistance Council, under Department of Biotechnology,
Government of India;
58. Taxable service provided by State Government Industrial Development Corporations/
Undertakings to industrial units by way of granting long term (thirty years, or more) lease of
industrial plots from so much of tax leviable thereon, as is leviable on the one time upfront
amount (called as premium, salami, cost, price, development charges or by any other name)
payable for such lease.

59. Services provided to the government by way of transport of passengers with or without
accompanied belongings, by air, embarking from or terminating at a regional connectivity
scheme airport, against consideration in the form of viability gap funding (VGF). Provided that
nothing contained in this entry shall apply on or after the expiry of a period of 1 year from the
date of commencement of operations of the regional connectivity scheme airport as notified
by the Ministry of Civil Aviation
60. Services provided by cord blood banks by way of preservation of stem cells or any other service
in relation to such preservation;
61. Services by way of training or coaching in recreational activities relating to,
• Arts or culture. Or
• Sports by charitable entities registered under section 12AA of Income tax Act, 1961;
62. Any services provided by:
• The National Skill Development Corporation set up by the Government of India;
• A Sector Skill Council approved by the National Skill Development Corporation;
• An assessment agency approved by the Sector Skill Council or the National Skill
Development Corporation;
• A training partner approved by the National Skill Development Corporation or the Sector
Skill Service Tax Exemptions to be continued in GST as decided by GST Council in
relation to
• The National Skill Development Programme implemented by the National Skill
Development Corporation; or
• A vocational skill development course under the National Skill Certification and
Monetary Reward Scheme; or
• Any other Scheme implemented by the National Skill Development Corporation.
63. Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry
of Skill Development and Entrepreneurship by way of assessments under Skill Development
Initiative (SDI) Scheme;
64. Services provided by training providers (Project implementation agencies) under Deen Dayal
Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of
offering skill or vocational training courses certified by National Council For Vocational
Training.

65. Services by way of sponsorship of sporting events organised:
• By a national sports federation, or its affiliated federations, where the participating teams
or individuals represent any district, State, zone or Country;
• By Association of Indian Universities, Inter-University Sports Board, School Games
Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India
or Special Olympics Bharat;
• By Central Civil Services Cultural and Sports Board;
• As part of national games, by Indian Olympic Association; or
• Under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;
66. Services provided by way of pure labour contracts of construction, erection, commissioning,
installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil
structure or any other original works pertaining to the Beneficiary-led individual house
construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas
Yojana (PMAY);
67. Services by way of pure labour contracts of construction, erection, commissioning, or
installation of original works pertaining to a single residential unit otherwise than as a part of
a residential complex;
68. Services of general insurance business provided under following schemes:
• Hut Insurance Scheme;
• Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as
Integrated Rural Development Programme);
• Scheme for Insurance of Tribals;
• Janata Personal Accident Policy and Gramin Accident Policy;
• Group Personal Accident Policy for Self-Employed Women;
• Agricultural Pumpset and Failed Well Insurance;
• Premia collected on export credit insurance;
• Weather Based Crop Insurance Scheme or the Modified National Agricultural
Insurance Scheme, approved by the Government of India and implemented by the
Ministry of Agriculture;
• Jan Arogya Bima Policy;

• National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);
• Pilot Scheme on Seed Crop Insurance;
• Central Sector Scheme on Cattle Insurance;
• Universal Health Insurance Scheme;
• Rashtriya Swasthya Bima Yojana; or
• Coconut Palm Insurance Scheme;
• Pradhan Mantri Suraksha BimaYojna
• Niramaya Health Insurance Scheme implemented by Trust constituted under the
provisions of the National Trust for the Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); or
• Any other insurance scheme of the State Government as may be notified by
Government of India on the recommendation of GSTC.
69. Services of life insurance business provided under following schemes:
• Janashree Bima Yojana (JBY); or
• Aam Aadmi Bima Yojana (AABY);
• Life micro-insurance product as approved by the Insurance Regulatory and
Development Authority, having maximum amount of cover of fifty thousand rupees;
• Varishtha Pension BimaYojana;
• Pradhan Mantri Jeevan JyotiBimaYojana;
• Pradhan Mantri Jan DhanYogana;
• Pradhan Mantri Vaya Vandan Yojana; and
• Any other insurance scheme of the State Government as may be notified by
Government of India on the recommendation of GSTC.
70. Services by way of collection of contribution under Atal Pension Yojana (APY).
71. Services by way of collection of contribution under any pension scheme of the State
Governments.
72. Service of transportation of passengers, with or without accompanied belongings, by:
• Railways in a class other than:
• First class; or
• An air-conditioned coach;

• Metro, monorail or tramway;
• Inland waterways;
• Public transport, other than predominantly for tourism purpose, in a vessel between places
located in India; and
• Metered cabs or auto rickshaws (including E-rickshaws);
73. Services by a person by way of:
a. Conduct of any religious ceremony;
b. Renting of precincts of a religious place meant for general public, owned or managed by an
entity registered as a charitable or religious trust under section 12AA of the Income-tax Act,
1961
c. Provided that nothing contained in this exemption shall apply to:
• Renting of rooms where charges are Rs 1000/- or more per day;
• Renting of premises, community halls, kalyanmandapam or open area, etc where
charges are Rs 10,000/- or more per day;
• Renting of shops or other spaces for business or commerce where charges are Rs
10,000/-or more per month.
74. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential
or lodging purposes, having declared tariff of a unit of accommodation less than one thousand
rupees per day or equivalent;
75. Services by way of transportation by rail or a vessel from one place in India to another of the
following goods:
• Relief materials meant for victims of natural or man-made disasters, calamities,
accidents or mishap;
• Defence or military equipments;
• Newspaper or magazines registered with the Registrar of Newspapers;
• Railway equipments or materials;
• Agricultural produce;
• Milk, salt and food grain including flours, pulses and rice; and
• Organic manure
76. Services provided by a goods transport agency, by way of transport in a goods carriage of:
a. Agricultural produce;

b. Goods, where gross amount charged for the transportation of goods on a consignment
transported in a single carriage does not exceed one thousand five hundred rupees;
c. Goods, where gross amount charged for transportation of all such goods for a single consignee
does not exceed rupees seven hundred fifty;
d. Milk, salt and food grain including flour, pulses and rice;
e. organic manure;
f. Newspaper or magazines registered with the Registrar of Newspapers;
g. Relief materials meant for victims of natural or man-made disasters, calamities, accidents or
mishap; or
h. Defence or military equipment’s;
77. Services by the following persons in respective capacities –
a. Business facilitator or a business correspondent to a banking company with respect to accounts
in its rural area branch;
b. Any person as an intermediary to a business facilitator or a business correspondent;
c. Business facilitator or a business correspondent to an insurance company in a rural area;
78. Carrying out an intermediate production process as job work in relation to cultivation of plants
and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw
material or other similar products or agricultural produce;
79. Services by way of loading, unloading, packing, storage or warehousing of rice;
80. Services by way of right to admission to the following and where the consideration for
admission is not more than Rs 250 per person
a. Circus, dance, or theatrical performance including drama or ballet;
b. Award function, concert, pageant, musical performance or any sporting event other than a
recognized sporting event;
c. Recognised sporting event;
81. Services provided by Government or a local authority where the gross amount charged for such
services does not exceed Rs.5000.
82. Health care services by a clinical establishment, an authorised medical practitioner or para-
medics; Services provided by way of transportation of a patient in an ambulance;
83. Services provided by the Goods and Services Tax Network (GSTN) to the Central Government
or State Governments/Union Territories for implementation of Goods and Services Tax (GST)

REGISTRATION UNDER GOODS AND SERVICES
TAX
Relevant definitions
Aggregate Turnover (Section 2(6))

It means the aggregate value of all taxable supplies (excluding the value of inward supplies on
which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or
services or both and inter-State supplies of persons having the same Permanent Account Number,
to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess;
Business vertical (Section 2(18))

It means a distinguishable component of an enterprise that is engaged in the supply of individual
goods or services or a group of related goods or services which is subject to risks and returns that
are different from those of the other business verticals.
Electronic commerce (Section 2(44))

It means the supply of goods or services or both, including digital products over digital or
electronic network;
Electronic commerce operator (Section 2(45))

It means any person who owns, operates or manages digital or electronic facility or platform for
electronic commerce;
Exempt supply (Section 2(47))

It means supply of any goods or services or both which attracts nil rate of tax or which may be
wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services
Tax Act, and includes non-taxable supply;

Non-taxable supply (Section 2(78))
It means a supply of goods or services or both which is not leviable to tax under this Act or under
the Integrated Goods and Services Tax Act;
Casual taxable person (Section 2(20))

It means a person who occasionally undertakes transactions involving supply of goods or services
or both in the course or furtherance of business, whether as principal, agent or in any other capacity,
in a State or a Union territory where he has no fixed place of business;
Non-resident taxable person (Section 2(77))

It means any person who occasionally undertakes transactions involving supply of goods or
services or both, whether as principal or agent or in any other capacity, but who has no fixed place
of business or residence in India.
Person liable for registration (Section 22)

1. Every supplier shall be liable to be registered under CGST Act in the State or Union Territory,
other than special category States, from where he makes taxable supplies of services if his
aggregate turnover exceeds Rs. 20,00,000 in a financial year
However if a supplier supplies taxable goods shall be liable to be registered under CGST Act
in the State or Union Territory, other than special category States, from where he makes taxable
supplies of goods if his aggregate turnover exceeds Rs. 40,00,000 in a financial year, except:
1. Persons required to take compulsory registration under section 24 of the Act;
2. Persons engaged in making the following supplies
• Ice cream and other edible ice
• Pan Masala
• Tobacco and manufactured tobacco substitutes

Where such person makes taxable supplies of goods or services or both from any of the special
category States, he shall be liable to be registered if his aggregate turnover in financial year exceeds
Rs. 20,00,000 (special category states are Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Puducherry, Sikkim, Telangana, Uttarakhand and Tripura).
Every supplier liable for registration will have to take a separate registration in every state even
though such supplier may be supplying goods or services or both from more than one State as a
single entity
2. Every person who is registered or holds a licence under an existing law, shall be liable to be
registered under CGST Act with effect from appointed date (1st-July-2017).
Procedure for Migration of persons registered under existing law

Rule 24 of the CGST Rules, provided that
• Every person, registered under an existing law and having a Permanent Account Number shall enroll on the GST
portal (www.gst.gov.in) by validating his e-mail address and mobile number.
• Upon enrolment, the said person shall be granted registration on a provisional basis and a certificate of registration
in FORM GST REG-25
• Every person who has been granted a provisional registration shall submit an application electronically in FORM GST
REG-26, along with the necessary information and documents, on the GST portal
• The information asked above shall be furnished within a period of three months.
• If the information and the particulars furnished in the application are found, by the proper officer, to be correct and
complete, a certificate of registration in FORM GST REG-06 shall be issued.
• Where the particulars or information specified above have either not been furnished or not found to be correct or
complete, the proper officer shall, after serving a notice to show cause in FORM GST REG- 27 and after affording the
person concerned a reasonable opportunity of being heard, cancel the provisional registration granted above and
issue an order in FORM GST REG-28.
• Where a certificate of registration has not been issued to the applicant within a period of fifteen days from the date
of the furnishing of information and no notice has been issued within the said period, the registration shall be
deemed to have been granted and the said certificate of registration issued.
• Provided that the show cause notice issued in FORM GST REG- 27 can be withdrawn by issuing an order in FORM
GST REG- 20, if it is found, after affording the person an opportunity of being heard, that no such cause exists for
which the notice was issued.
• Every person registered under any of the existing laws, who is not liable to be registered under the Act may, on or
before [31st March, 2018], at his option, submit an application electronically in FORM GST REG- 29 for the
cancellation of registration granted to him and the proper officer shall, after conducting such enquiry as deemed
fit, cancel the said registration.

3. Where business carried on by a taxable person registered under CGST Act is transferred,
whether on account of succession or otherwise, to another person as a going concern, the
transferee or the successor, as the case may be, shall be liable to be registered with effect from
the date of such transfer or succession
4. In case of transfer pursuant to sanction of scheme or an arrangement for amalgamation or as
the case may be, demerger of two or more companies pursuant to an order of High Court,
Tribunal or otherwise, the transferee shall liable to be registered, with effect from the date on
which the Registrar of Companies issues a certificate of incorporation giving effect to such
order of the High Court or Tribunal.
Person exempt from registration (Section 23)

The following persons are not liable for registration (Section 23(1)):
1. Any person engaged exclusively in the business of supplying goods or services or both that are
not liable to tax or wholly exempt from tax under CGST Act or under IGST Act,
2. An agriculturist, to the extent of supply of goods of produce out of cultivation of land
Notified categories of persons (Section 23(2)):

The Government may on the recommendation of the council, by notification, specify the category
of persons who may be exempted from obtaining registration under CGST Act.
Notification No. 5/2017-CT dated 19-06-2017 w.e.f. from 22-06-2017:

Persons only engaged in making taxable supplies, total tax on which is liable to be paid on reverse
charge basis- Exempt from obtain registration.
The Central Government has specified the persons who are only engaged in making supplies of
taxable goods or services or both, the tax on which is liable to paid on reverse charge basis by the
recipient of such goods or services or both under Section 9(3) of the said act as the category of
persons exempted from obtaining registration.

Compulsory Registration (Section 24)
Notwithstanding anything contained in section 22, the following categories of persons shall be
required to be registered under this Act,
• Person making any inter-state taxable supply (Person making inter-state taxable supplies of
services whose annual aggregate turnover is less than Rs. 20,00,000 (for special category states
the turnover limit is Rs. 10,00,000) are exempt from obtaining registration)
• Casual taxable person making taxable supply (making supply of handicraft goods provided
aggregate value of such supplies to be computed on all India basis does not exceed amount of
Rs. 20,00,000 (for special category states the turnover limit is Rs. 10,00,000) in a financial year
are exempt from obtaining registration )
• Person who is required to pay tax under reverse charge
• Person who are required to pay tax under section 9(5) i.e. E-commerce operator who is required
to pay tax on specified services,
• Person who supply goods or services or both, other than supplies specified under section 9(5),
through such e-commerce operator who is required to collect tax at source under section 52
(Person making supplies of services through e-commerce operator and having an aggregate
turnover to be computed on all India basis not exceeding an amount of Rs. 20,00,000 (for special
category states the turnover limit is Rs. 10,00,000) in a financial year are not required to obtain
registration.)
• Non-resident taxable person making taxable supply
• Person who are required deduct tax under section 51
• Persons who make taxable supply of goods or services or both on behalf of other taxable persons
whether as an agent or otherwise
• Input Service Distributor
• Every electronic commerce operator
• 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 person
• Such other class or person as may be notified

Procedure for registration (Section 25)
The procedure to obtain registration is as under -

Section 25(1): Every person who is liable to be registered under Section 22 or 24, shall apply for
registration in every such State or Union Territory in which he is liable to be registered within 30
days from the date on which he becomes liable to registration, in Form No. GST REG - 01. On
receipt of application, an acknowledgement shall be issued electronically to the applicant in GST
REG -02
A casual or Non Resident taxable person shall apply for registration at least 5 days prior to the
commencement of business
Every person who makes a supply from the territorial waters of India shall obtain registration in
the coastal state or Union Territory where the nearest point of the appropriate base line is located.
Where the application submitted is found to be deficient, either in terms of any information or any
document required to be furnished or where the proper officer requires any clarification with regard
to any information provided in the application or documents furnished therewith, he may issue a
notice to the applicant electronically in FORM GST REG-03 within a period of three working days
from the date of submission of the application and the applicant shall furnish such clarification,
information or documents electronically, in FORM GST REG-04, within a period of seven
working days from the date of the receipt of such notice.
Where the proper officer is satisfied with the clarification, information or documents furnished by
the applicant, he may approve the grant of registration to the applicant within a period of seven
working days from the date of the receipt of such clarification or information or documents.
Where no reply is furnished by the applicant in response to the notice issued under or where the
proper officer is 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 the proper officer fails to take any action, -
(a) within a period of three working days from the date of submission of the application; or
(b) within a period of seven working days from the date of the receipt of the clarification,
information or documents furnished by the applicant,
the application for grant of registration shall be deemed to have been approved.
Issue of registration certificate-

Where the application for grant of registration has been approved, a certificate of registration in
FORM GST REG-06 showing the principal place of business and additional place or places of
business shall be made available to the applicant on the common portal and a Goods and Services
Tax Identification Number shall be assigned
Goods and Services Tax Identification Number is a 15 digit alpha numeric number:
a. two characters for the State code;
b. ten characters for the Permanent Account Number
c. two characters for the entity code; and
d. one checksum character.
Section 25(2): A person seeking registration under this Act shall be granted a single registration
in a State or Union Territory.
However a person having multiple places of business in a State or Union Territory may be granted
a separate registration for each such place of business, subject to such conditions as may be
specified.
Section 25(3): a person not liable for registration under section 22 or section 24 may get himself
registered voluntarily, and all the provisions of this Act, as are applicable to be registered person,
shall apply to such person.
Section 25(4): A person who has obtained or is required to obtain multiple registration in one
State/Union Territory or in different State/Union Territory shall be considered distinct person for
the purpose of CGST Act.

Section 25(5): where a person who has obtained or is required to obtain registration in a State or
Union Territory in respect of an establishment, has an establishment in another State or Union
Territory, then such establishment shall be treated as establishments of distinct persons for the
purpose of this Act.
Section 25(6): Every person shall have a Permanent Account Number (PAN) issued under Income
Tax Act, 1961 in order to be eligible for grant of registration
Section 25(6A): Every registered person shall undergo authentication or furnish proof of
possession of Aadhar Number.
Section 25(7): Notwithstanding contained in Section 25(6), non-resident taxable person may be
granted registration on the basis of self-attested valid passport.
A non-resident person shall apply for registration in GST REG-09 at least 5 days prior to the
commencement of business
Section 25(8): If a person fails to obtain registration who is liable to be register, the proper officer
may proceed to register such person on a temporary basis and issue an order in FORM GSTREG-
12
Every person to whom a temporary registration has been granted shall, within a period of 90 days
from the date of grant of registration suit an application for registration in the prescribed form.
Section 25(9):
a) Any specialised agency of the United Nations Organisations or any Multilateral Financial
Institution and Organisations notified under the United Nations (Privileges and Immunity) Act,
1947, Consulate or Embassy of foreign countries and
b) any other person or class or persons as may be notified by the Commissioner
shall apply for the allotment of Unique Identification Number in FORM GST REG-13. The proper
officer may after filing up the said form, assign Unique Identification Number to the said person
and issue a certificate in FORM GST REG-06 within a period of 3 working days from the date of
submission of application.

Section 25(10): the registration or the Unique Identification Number shall be granted or rejected
after due verification.
Section 25(11): A certificate of registration shall in issued in prescribed form
Section 25(12): A registration or a Unique Identification Number shall be deemed to have been
granted after the expiry of prescribed period (i.e. 3 days) info deficiency is communicated to the
applicant within that period.
Deemed Registration (Section 26)

1. The grant of registration or the Unique Identification Number under SGST, Act or UTGST,
Act shall be deemed to be grant of registration or the Unique Identification Number under
CGST Act, subject to the condition that application for registration or the Unique Identification
Number has not been rejected under CGST Act.
2. Any rejection of application for registration of the Unique Identification Number under the
SGST Act or the UTGST Act shall be deemed to be a rejection of application for registration
under this Act
Registration of Non-Resident and Casual Taxable Person (Section 27)

1. The certificate issued to Casual or Non-resident taxable person shall be valid for -
• a period specified in application for registration or
• 90 days from the effective date of registration
whichever is earlier
2. Such person shall make taxable supplies only after the issuance of the certificate of registration
3. The period of registration can be extended for a further period of 90 days, if sufficient cause
being shown by the registered person to the proper officer.
4. A casual taxable person or a non-resident taxable person shall, at the time of submission of
application for registration, make an advance deposit of tax in an amount equivalent to the
estimated tax liability of such person for the period for which registration is sought.
5. Where any extension of time is sought in GST REG-11, such taxable person shall deposit an
additional amount of tax equivalent to the estimated tax liability of such person for the period

for which the extension is sought.
6. The amount deposited shall be credited to the electronic cash ledger of such person shall be
utilised in the manner as prescribed u/s 49.
Grant of registration to persons required to deduct tax at source or to collect tax at source
(Rule 12 of CGST Rules, 2017)
Application by person required to deduct TDS and collect TCS (Rule 12(1))
Any person required to deduct tax in accordance with the provisions of section 51 or a person
required to collect tax at source in accordance with the provisions of section 52 shall electronically
submit an application, duly signed or verified through electronic verification code, in FORM GST
REG-07 for the grant of registration through the common portal, either directly or through a
Facilitation Centre notified by the Commissioner.
Issue of Certificate of registration (Rule 12(2))

The proper officer may grant registration after due verification and issue a certificate of registration
in FORM GST REG-06 within a period of three working days from the date of submission of the
application.
Cancellation of registration certificate (Rule 12(3))

Where, upon an enquiry or pursuant to any other proceeding under the Act, the proper officer is
satisfied that a person to whom a certificate of registration in FORM GST REG-06 has been issued
is no longer liable to deduct tax at source under section 51 or collect tax at source under section
52, the said officer may cancel the registration issued under sub-rule (2) and such cancellation
shall be communicated to the said person electronically in FORM GST REG-08.

Grant of registration to a person supplying online information and database access or
retrieval services from a place outside India to a non-taxable online recipient (Rule 14 of
CGST Rules, 2017)
Application by person supplying online information etc. (Rule 14(1))

Any person supplying online information and database access or retrieval services from a place
outside India to a non-taxable online recipient shall electronically submit an application for
registration, duly signed or verified through electronic verification code, in FORM GST REG-10,
at the common portal, either directly or through a Facilitation Centre notified by the
Commissioner.
Grant of registration (Rule 14(2))

The applicant referred to in sub-rule (1) shall be granted registration, in FORM GST REG-06,
subject to such conditions and restrictions and by such officer as may be notified by the Central
Government on the recommendations of the Council.
Amendment of Registration (Section 28)

Section 28(1): Every registered person and person to whom a Unique Identification Number has
been assigned shall inform the proper officer of any changes in the information furnished at the
time of registration or subsequent thereto.
The application for amendment of registration shall be made within a period of 15 days of sun
change in FORM GST REG -14 along with documents relating to such change.
Provided that where change relates to
(i) legal name of business,
(ii) address of the principal place of business or any additional place(s) of business or
(iii) addition, deletion or retirement of partners or directors, karma, Managing Committee, Board
of Trustees, Chief Executive Officer or equivalent, responsible for the day to day affairs of the
business, the proper officer shall after due verification approve the amendment within a period of
15 working days from the date of receipt of application and issue an order in FORM GST REG-
15 and such amendment shall take effect from the date of the occurrence of the vent warranting
such amendment.

Where the change related to any particular other than those specified above, the certificate of
registration shall stand amended upon submission of the application on the portal.
Where change in the constitution of business results in the change of the Permanent Account
Number (PAN) of a registered person, the said person shall apply for fresh registration.
Where the proper officer is of the opinion that the amendment sought is either not warranted or
documents furnished are incomplete or incorrect, he may issue a notice in FORM GST REG-03
within a period 15 working days from the date of receipt of application
The registered person shall furnish the reply of notice in FORM GST REG-04 within a period of
7 working days from the date of service of the notice.
Where the reply furnished is found to be not satisfactory or where no reply is furnished in response
to the notice, the proper officer shall reject the application and pass an order in FORM GST REG-
05
If the proper officer fails to take action-

a) within a period of 15 working days from the date of submission of application or
b) Within a period of 7 working days from the date of receipt of reply to the notice
The certificate of registration shall stand amended and the amended certificate shall be made
available to the registered person.
Section 28(2): The proper officer may on the basis of information furnished above or as
ascertained by him, approve or reject amendments in the registration particulars.
Proper officer shall not reject the application for amendment in the registration particulars without
giving the person an opportunity of being heard
Section 28(3): Any reject or approval of amendments under SGST Act or UTGST Act, as the case
may be shall be deemed to be rejection or approval under this Act.

Cancellation of Registration (Section 29)
Section 29(1) Cancellation of registration either sue moth or on application by registered person:
The proper officer may-
• Either own his own motion;
• On application filed by -
• By the registered person, or
• By his legal heir, in case of death of such person
cancel the registration, in such manner as may be prescribed
Circumstance in which registration is cancelled:

The registration can be cancelled having regard to the following circumstances where-
• The business has been-
• discontinued,
• transferred fully or
• any reason including death of the proprietor,
• amalgamated with other legal entity,
• demerged or otherwise disposed of,
• There is change in the constitution of the business
• The taxable person is not liable to be registered due to reduction in turnover.
Section 29(2): The proper officer may also cancel the registration of his own motion under
following circumstances -
• The registered person has contravened provisions of the Act
• A person availing composite scheme has not furnished returns for 3 consecutive tax periods
• Any other registered person has not furnished returns for a continuous period of 6 months
• Any person who has taken voluntary registration has not commenced business within 6 months
from the date of registration
• Registration has been obtained by means of fraud, will full mis-statement or suppression of facts
The proper officer shall not cancel the registration without giving the person an opportunity of
being heard.

Section 29(3): The person shall continue to be liable for all obligations for any period prior to date
of cancellation
Section 29(4): The cancellation of registration under the SGST Act or UTGST Act shall be
deemed to be a cancellation of registration under CGST Act
Section 29(5): Every registered person whose registration has been cancelled, shall pay to the
Government an amount equivalent to the
a. credit of input tax in respect of
• inputs held in stock as such or
• inputs contained in semi-finished goods or
• inputs continued in finished goods or
• capital goods or plant and machinery
on the day immediately preceding the date of such cancellation or
b. the output tax payable on such goods whichever is higher
Payment in case of Capital Goods: in case of capital goods or plant and machinery, the taxable
person shall pay-
• The input tax credit involved in the remaining useful life in months shall be computed on
pro-rata basis, taking the useful life as five years or
• The tax on the transaction value of such capital goods or plant and machinery under section
15
whichever is higher
Application for cancellation of registration: A registered person shall electronically submit an
application in FORM GST REG-16, including therein the details of
• inputs held in stock or
• inputs contained in semi-finished or
• finished goods held in stock and
• of capital goods held in stock
on the date from which the cancellation of registration is sought, along with the application,
relevant documents in support thereof, at the common portal within a period of thirty days of the
occurrence of the event.

Where a person who has submitted an application for cancellation of his registration is no longer
liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an
order in FORM GST REG-19, within a period of thirty days from the date of application submitted
Cancellation of registration:
(1) Where the proper officer has reasons to believe that the registration of a person is liable
to be cancelled under section 29, he shall issue a notice to such person in FORM GST
REG-17, requiring him to show cause, within a period of seven working days from the
date of the service of such notice, as to why his registration shall not be cancelled.
(2) The reply to the show cause notice shall be furnished in FORM GST REG–18.
(3) Where the reply furnished, is found to be satisfactory, the proper officer shall drop the
proceedings and pass an order in FORM GST REG –20.
Revocation of cancellation of registration (Section 30)

Section 30(1): Any person whose registration is cancelled by the proper officer on his own motion
may apply for revocation within 30 days from the date of cancellation in FORM GST REG-21.
Section 30(2): The proper officer by order either revoke cancellation in FORM GST REG-22 or
reject the application with a period of 30 days from the date of receipt of such application
Section 30(3): The revocation under the SGST Act or UTGST Act, shall be deemed to be a
revocation or cancellation or registration under CGST Act.

Question 1: Mr. Ram of Tamil Nadu has effected following supplies within the state of Tamil
Nadu. You are required to determine whether he is required to obtain registration under GST law.
Particulars Rs
Intra-state supply of goods agricultural 17,00,000
produce grown out of cultivation of land by
family members
Intra-state supply of goods which are wholly 6,00,000
exempt from GST u/s 11 of CGST Act, 2017
Intra-state supply of goods chargeable with 9,50,000
GST @ 12%
Total value of supplies 32,50,000
Solution:

Question 2: From the following information you are required to determine whether Karishma
Limited incorporated in Maharashtra is liable to be registered under GST Law if the company has
effected following supplies with the state of Maharashtra
Particulars Rs
Intra-state supply of goods chargeable with 6,75,000
GST @ 12%
Intra-state supply of goods which are wholly 7,00,000
exempt from GST u/s 11 of CGST Act, 2017
Intra-state supply of goods chargeable with Nil 7,70,000
rate
Total value of supplies 21,45,000
Solution:

Question 3: ABC limited of Jaipur, Rajasthan has effected intra-state supplies of taxable goods
amounting to Rs. 12,00,000 till 31-07-2020. On 01-08-2020 it has effected inter-state supply of
taxable goods amounting to Rs. 1,00,000. ABC Limited is of the opinion that it is not required to
get registered under GST law since its aggregate turnover is not likely to exceed Rs. 40,00,000
during financial year 2020-21. As a consultant of the company you are required to advise the
company relating to registration requirements.
Solution:

TAX INVOICE, CREDIT AND DEBIT NOTE
Invoice is a documentary evidence in support of a transaction entered into book of account for the
purpose of recording revenue and confirm among other things nature of supplies made by the
supplier.
An “invoice” or “tax invoice” is a document issued to the addressee/recipient specifying, amongst

other things, the description of taxable goods or services or both as well as value of taxable supply.
There is no format prescribed for the Tax Invoice. Only certain fields have been prescribed as
mandatory fields. Further, invoices may be issued manually or electronically. Issuance of
electronic invoices is not mandatory
Time limit for issuance of invoice in case of supply of goods (Section 31(1)):
A registered person shall issue a tax invoice before or at the time of -
a. Removal of goods for supply to the recipient, where the supply involves movement of goods
b. Delivery of goods or making available thereof to the recipient in any other case
Tax invoice to be issued in prescribe time in respect of notified goods: The Government may
notify the categories of goods or supplies in respect of which a tax invoice shall be issued with in
such time as may be prescribed
Removal (Section 2(96)): in relation to goods means-

a. despatch of the goods for delivery by the supplier thereof or by any other person acting on
behalf of such supplier; or
b. collection of the goods by the recipient thereof or by any other person acting on behalf of
such recipient;

Time limit for issuance of invoice in case of supply of services (Section 31(2)):
A registered person supplying taxable services shall issue tax invoice within 30 days from the date
of supply of service.
Provided that where the supplier of services is an insurer or a banking company or a financial
institution, including a non-banking financial company, the period within which the invoice or any
document in lieu thereof is to be issued shall be 45 days from the date of the supply of service
Manner of issue of invoice

The invoice shall be prepared in triplicate, in the case of supply of goods, in the following manner,
namely,-
a. the original copy being marked as ORIGINAL FOR RECIPIENT;
b. the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
c. the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
The invoice shall be prepared in duplicate, in the case of the supply of services, in the following
manner, namely,-
a. the original copy being marked as ORIGINAL FOR RECIPIENT; and
b. the duplicate copy being marked as DUPLICATE FOR SUPPLIER.
Tax Invoice - Miscellaneous Provisions (Section 31(3))

a. A registered person may within one month from the date of issuance or certificate of
registration, issue a revised invoice against the invoice already issued during the period
beginning with the effective date of registration till the date of issuance of certificate of
registration.
b. A registered person may not issue tax invoice if the value of goods or services or both supplied
is less than Rs. 200
c. A registred person supplying exempted goods or services or both or paying tax under the
provisions of Section 10 shall issue, instead of tax invoice, a bill of supply containing such
particulars as may be prescribed.
d. A registered person shall on receipt of advance payment with respect to any supply of goods

or services or both, issue a receipt voucher in such manner as may be prescribed, evidencing
receipt of payment.
e. Where on receipt of advance payment with respect to any supply of goods or services or both,
the registered person issues a receipt voucher, but subsequently no supply is made, the said
registered person may issue to the person who had made the payment, a refund voucher against
such payment
f. A registered person who is liable to pay tax under reverse charge shall issue an invoice in
respect of goods or services or both received by him from the supplier who is to registered on
the date of receipt of goods or services or both.
g. A registered person may issue a consolidated invoice at the end of the month for supplies
covered under reverse charge, where the aggregate value of supplies exceeds Rs. 5,000 in
a day from any or all the supplies
h. A registered person who liable to be taxed under reverse charge shall issue a payment voucher
at the time of making payment to the supplier.
Tax invoice in case of continuous supply of goods (section 31(4)):

Continuous supply of goods section 2(32): Continuous supply of goods means:
• Which is provided, or agreed to be provided, continuously or on recurrent basis, under a
contract, whether or not by means of wire, cable, pipeline, or other conduit, and for which
the supplier invoices the recipient on the regular or periodic basis, and
• Includes supply of such goods as the Government may subject to such conditions, as it may
by notification specify.
In case of continuous supply of goods, where successive payments are involved, the invoice shall
be issued before or at the time each such statement is issued or as the case may be each such
payment is received.

Tax invoice in case of continuous supply of services (section 31(5)):
Continuous supply of services section 2(33): Continuous supply of service means:
• A supply of service which is provide or agreed to be provided continuously or on recurrent
basis, under a contract for a period exceeding 3 months with periodic payment obligations
and
• Includes supply of services as the Government may subject to such conditions, as it may by
notification specify.
In case of continuous supply of services invoice shall be issued as per the following provisions:
Where the due date of payment is The invoice shall be issued on or before the
ascertainable from the contract due date of payment
Where the due date of payment is not The invoice shall be issued before or at the
ascertainable from the contract time when supplier of service receives the
payment
Where the payment is linked to the The invoice shall be issued on or before the
completion of event due date of completion of event
Section 31(6): In a case where the supply of services ceases under a contract before the completion
of the supply, the invoices shall be issued at the time when the supply ceases and such invoice
shall be issued to the extent of the supply made before cessation.
Section 31(7): Notwithstanding anything contained in section 31(1), where the goods being sent
or taken on approval for sale or return are removed before the supply takes place, the invoice shall
be issued
• before or at the time of supply or
• six months from the date of removal

Digits of Harmonised System of Nomenclature (HSN) Code to be quoted in Invoice
Sl. No. Annual Turnover in the preceeding financial year Number of digits of HSN Code
1 Upto Rs. 1.5 crores Nil

2 More than Rs. 1.50 crores and upto Rs. 5 crores 2
3 More than Rs. 5 crores 4
Contents to be mention in Bill of Supply

a. name, address and Goods and Services Tax Identification Number of the supplier;
b. a consecutive serial number
c. date of its issue;
d. name, address and Goods and Services Tax Identification Number
e. Harmonised System of Nomenclature Code for goods or services;
f. description of goods or services or both;
g. value of supply of goods or services or both taking into account discount if any; and
h. signature or digital signature of the supplier or his authorised representative:
Contents to be mention in receipt voucher:

d. name, address and Goods and Services Tax Identification Number or Unique Identity Number,
if registered, of the recipient;
e. description of goods or services;
f. amount of advance taken;
g. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
h. amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated
tax, Union territory tax or cess);
i. place of supply along with the name of State and its code, in case of a supply in the course of
inter-State trade or commerce;
j. whether the tax is payable on reverse charge basis; and
k. signature or digital signature of the supplier or his authorised representative

Contents to be mention in refund voucher:
d. name, address and Goods and Services Tax Identification Number or Unique Identity Number,
if registered, of the recipient;
e. number and date of receipt voucher issued in accordance with the provisions of rule 50;
f. description of goods or services in respect of which refund is made;
g. amount of refund made;
h. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
i. amount of tax paid in respect of such goods or services (central tax, State tax, integrated tax,
Union territory tax or cess);
j. whether the tax is payable on reverse charge basis; and
k. signature or digital signature of the supplier or his authorised representative.
Contents to be mention in payment voucher:

a. name, address and Goods and Services Tax Identification Number of the supplier if registered;
d. name, address and Goods and Services Tax Identification Number of the recipient;
e. description of goods or services;
f. amount paid;
g. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
h. amount of tax payable in respect of taxable goods or services (central tax, State tax, integrated
tax, Union territory tax or cess);
i. place of supply along with the name of State and its code, in case of a supply in the course of
inter-State trade or commerce; and
j. signature or digital signature of the supplier or his authorised representative.

Prohibition of unauthorised collection of tax (Section 32)
1. A person who is not a registered person shall not collect in respect of any supply of goods or
services or both any amount by way of tax under CGST Act.
2. No registered person shall collect tax except in accordance with the provisions of CGST Act or
the rules made thereunder.
Amount of tax to be indicated in tax invoice and other documents (Section 33)
Where any supply is made for a consideration, every person who is liable to pay tax for such supply
shall prominently indicate the amount of tax in all documents relating to assessment, tax invoice
and other like documents, the amount of tax which shall form part of the price at which such supply
is made.
Note: Draft format of tax invoice is in form GST INV-01
Credit and debit notes (Section 34)

Section 34(1): Where a tax invoice has been issued for supply of goods or services or both and
1. The taxable value or tax charged is found to exceed the taxable value or tax payable
or
2. Where the goods supplied are returned by the buyer or;
3. Where goods or services are found to be deficient
The supplier may issue to the buyer a credit note
Section 34(2): The details of such credit note shall declare the details of such credit note in the
return month during which such credit note was issued but not later than September following the
end of financial year or before furnishing annual return which ever is earlier
Section 34(3): Where a tax invoice has been issued for supply of goods or services or both and the
taxable value or tax charged is found to be less than the taxable value or tax payable, the supplier
shall issue to the buyer a debit note.
Section 34(4): The details of such debit note shall declare the details of such debit note in the return
month during which such debit note was issued.

Transportation of goods without issue of invoice (Rule 55 of CGST Rules, 2017)
Transportation For the purposes of-
of goods by a. supply of liquid gas where the quantity at the time of removal from
delivery challan the place of business of the supplier is not known,
(Rule 55(1)) b. transportation of goods for job work,
c. transportation of goods for reasons other than by way of supply, or
d. such other supplies as may be notified by the Board,
the consigner may issue a delivery challan, serially numbered not
exceeding sixteen characters, in one or multiple series, in lieu of invoice at
the time of removal of goods for transportation, containing the following
details, namely: -
(i) date and number of the delivery challan;
(ii) name, address and Goods and Services Tax Identification Number
of the consigner, if registered;
(iii) name, address and Goods and Services Tax Identification Number
or Unique Identity Number of the consignee, if registered;
(iv) Harmonised System of Nomenclature code and description of
goods;
(v) quantity (provisional, where the exact quantity being supplied is not
known);
(vi) taxable value;
(vii) tax rate and tax amount – central tax, State tax, integrated tax,
Union territory tax or cess, where the transportation is for supply to
the consignee;
(viii) place of supply, in case of inter-State movement; and
(ix) signature
Triplicate copy of The delivery challan shall be prepared in triplicate, in case of supply of
delivery challan goods, in the following manner, namely:–
(Rule 55(2)) a. the original copy being marked as ORIGINAL FOR CONSIGNEE;
b. the duplicate copy being marked as DUPLICATE FOR
TRANSPORTER; and

c. the triplicate copy being marked as TRIPLICATE FOR
CONSIGNER.
Declaration in E- Where goods are being transported on a delivery challan in lieu of invoice,
way bill (Rule the same shall be declared as specified in rule 138.
55(3))
Issue of tax Where the goods being transported are for the purpose of supply to the
invoice after recipient but the tax invoice could not be issued at the time of removal of
delivery (Rule goods for the purpose of supply, the supplier shall issue a tax invoice after
55(4)) delivery of goods.
Goods are Where the goods are being transported in a semi knocked down or
transported in completely knocked down condition -
semi/completely a. the supplier shall issue the complete invoice before dispatch of the
knocked down first consignment;
condition (Rule b. the supplier shall issue a delivery challan for each of the subsequent
55(5)) consignments, giving reference of the invoice;
c. each consignment shall be accompanied by copies of the
corresponding delivery challan along with a duly certified copy of
the invoice; and
d. the original copy of the invoice shall be sent along with the last
consignment.
Rule 55A Person-in-charge of the conveyance shall carry a copy of the tax invoice or
the bill of supply.
Rules 46A Where a registered person is supplying taxable as well as exempted goods
or services or both to an unregistered person, a single ―invoice-cum-bill
of supply may be issued for all such supplies
Rule 48 E-Invoicing: Registered person whose aggregate turnover in a financial

year exceeds Rs. 500 crores shall prepare electronic invoice and same will
(w.e.f.01.10.2020)
be mandatory from 1st October, 2020

TIME OF SUPPLY
Introduction:
The time of supply fixes the point when the liability to charge GST arises. It also indicates when
a supply is deemed to have been made. The CGST/SGST Act provides separate time of supply for
goods and services.
Time of Supply in case of Goods (Section 12)
Time of supply (Section 12(1)): The liability to pay tax on goods shall arise at the time of supply,
as determined in accordance with the provisions of this section.
The time of supply shall be earlier of the following dates (forward charge) (Section 12(2)):
1. The date of issue of invoice
2. Last date on which he is required under Section 31(1), to issue invoice with respect to the
supply
3. The date on which the supplier receives the payment with respect to the supply.
As per Notification No. 66/2017, dated 15.11.2017, the registered person who did not opt for the
composition levy under section 10 shall pay the central tax on the outward supply of goods at the
time of supply of supply as per section 12(2)(a) (i.e. on the date of issue of invoice by the supplier
or the last date of on which he is required under section 31(1) with respect of the supply of goods
and not at the time of receipt of advance of such supplies). In other words, for such registered
person, in case he receives advance payment, the time of supply shall be on the date of issue of
invoice by the supplier or the last date of on which he is required under section 31(1) with respect
of the supply and condition (b) shall not be applicable. However this notification shall not be
relevant for determining time of supply of services under section 13.

Determination of date when supplier receives the payment:
1. The date on which the payment is entered in his books of accounts or
2. The date on which payment is credited in his bank account,
Excess payment upto Rs. 1,000 - date of invoice to be time of supply: Where the supplier of
taxable goods receives an amount upto Rs. 1,000 in excess of the amount indicated in the tax
invoice, the time of supply to the extent of such excess amount shall, at the option of the said
supplier, be the date of issue of invoice in respect of such excess amount.
Analysis:
Time of supply of goods shall be earlier of the following dates:
1. Date of issue of invoice; or
2. Date of receipt of payment; or
3. Date of removal of goods:- where supply involves movement of goods; or
4. Date of delivery of goods or making available:- where the supply does not involve
movement of goods; or
5. Date of statement of accounts or successive payments:- in case of continuous supply of
goods; or
6. Six months from the date of removal or date of acceptance whichever is earlier:- where
goods sent for approval for sale or return.
The time of supply shall be earlier of the following dates (reverse charge) (Section 12(3)):
1. The date of the receipt of goods
2. The date of payment as entered in the books of accounts of recipient or the date on which the
payment is debited in his bank account whichever is earlier or
3. The date immediately following 30 days from the date of issue of invoice or any other
document, by whatever name called by the supplier
Where it is not possible to determine time of supply as per above provision, the time of supply
shall be the date of entry in the books of account of the recipient of supply.

The time of supply in case of supply of vouchers in respect of goods (Section 12(4)):
Voucher (Section 2(118)): an instrument where there is an obligation to accept it as consideration

or part consideration for a supply of goods or services or both and where the goods or services or
both to be supplied or the identities of their potential suppliers are either indicated on the
instrument itself or in related documentation, including the terms and conditions of use of such
instrument
In case of supply of voucher by a supplier, the time of supply shall be-
1. The date of issue of voucher, if the supply is identifiable at the point; or
2. The date of redemption of voucher in all other cases.
Time of supply in case of residuary cases (Section 12(5)): where it is not possible to determine
the time of supply as per above provisions, the time of supply shall be-
1. In case where a periodical return has to be filed, be the date on which return is to be filed; or
2. In any other case, be the date on which tax is paid.
Time of supply with respect to addition in value by way of interest, late fee or penalty or any
other delayed payment of consideration (Section 12(6)):
The time of supply to the extent it relates to an addition in value of supply by way of interest, late
fee or penalty for delayed payment of any consideration shall be the date on which supplier
receives such additional value. In other words, the receipt of payment of these amounts are
essential to attract levy of tax.
Time of supply if there is continuous supply of goods

S. Invoice date Removal of Statement of Receipt of
N goods accounts payment
o.
1 01/12/2017 15/11/2017 05/12/2017 02/12/2017
2 21/01/2018 18/01/2018 05/01/2018 10/02/2018
3 08/02/2018 14/01/2018 05/02/2018 01/02/2018

Time of supply of goods if goods are supplied on approval basis
S. Removal of Issue of invoice Accepted by Receipt of
N goods receipient payment
o.
1 01/12/2017 15/12/2017 05/12/2017 25/12/2017
2 01/12/2017 15/12/2017 15/12/2017 12/12/2017
3 01/12/2017 25/07/2018 25/07/2018 20/07/2018
Time of Supply in case of Services (Section 13)
Time of supply (Section 13(1)): The liability to pay tax on services shall arise at the time of
supply, as determined in accordance with the provisions of this section.
Time of supply shall be earlier of the following dates (Forward Charge) (Section 13(2)):
A. If invoice is issued within prescribed period under section 31(2):

1. Date of issue of invoice
2. The date of receipt of payment
B. If invoice is not issued within prescribed period under section 31(2):

1. The date of completion of provision of services
2. The date of receipt of payment
Determination of date receipt of payment:

1. The date on which the payment is entered in the books of accounts of supplier or
2. The date on which payment is credited to his bank account,

Excess payment upto Rs. 1,000 - date of invoice to be time of supply: where the supplier of
taxable services receives an amount upto Rs. 1,000 in excess of the amount indicated in the tax
invoice, the time of supply to the extent of such excess amount shall, at the option of the said
supplier, be the date of issue of invoice in respect of such excess amount.
The time of supply shall be earlier of the following dates (reverse charge) (Section 13(3)):
1. The date of payment as entered in the books of accounts of the recipient or the date on which
payment is debited in his bank account whichever is earlier or
2. The date immediately following 60 days from the date of issue of invoice
If it is not possible to determine time of supply as per above provision, the time of supply shall be
the date of entry in the books of account of the recipient of supply.
The time of supply in case of associated enterprises: in case of associated enterprises, where the
supplier of service is located outside India, the time of supply shall be -
1. The date of entry in the books of accounts of the recipient or
2. The date of payment
The time of supply in case of supply of vouchers in respect of services (Section 13(4)):
In case of supply of vouchers by a supplier, the time of supply shall be-
1. The date of issue of voucher, if the supply is identifiable at that point or
2. The date of redemption of voucher, in all other cases
Time of supply in case of residuary cases (Section 13(5)): where it is not possible to determine
the time of supply as per above provisions, the time of supply shall be-
1. In case where a periodical return has to be filed, be the date on which return is to be filed; or
2. In any other case, be the date on which tax is paid.

Time of supply with respect to addition in value by way of interest, late fee or penalty or any
other delayed payment of consideration (Section 13(6)):
The time of supply to the extent it relates to an addition in value of supply by way of interest, late
fee or penalty for delayed payment of any consideration shall be the date on which supplier
receives such additional value. In other words, the receipt of payment of these amounts are
essential to attract levy of tax.
Rate of exchange of currency, other than Indian rupees, for determination of value (Rule 34
of CGST Rules, 2017)
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 Central Board of Indirect taxes
and Customs on the date when point of taxation arises in respect of such supply in term of section
12 or section 13 of the Act as the case may be.
Time of supply of continuous service where contract provides for monthly payment upto 15th of
the succeeding month
Entry of Invoice date Due date of Receipt of
provision of payment as per payment
service in contract
books
30/11/2017 07/12/2017 15/12/2017 20/12/2017
31/12/2017 22/01/2018 15/01/2018 20/01/2018
31/01/2018 15/02/2018 15/02/2018 11/02/2018
Time of supply of service where contract provides for payments linked wit completion of event
Entry of Date as per Invoice date Receipt of
provision of contract payment
service in
books
12/11/2017 10/11/2017 12/11/2017 25/11/2017
24/04/2018 24/04/2018 24/04/2018 20/04/2018

Time of supply in case of change in rate of tax of goods or services (Section 14)
Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is
a change in the rate of tax in respect of goods or services or both, shall be determined in the
following manner, namely:
1. In case of goods or services or both have been supplied BEFORE the change in rate of tax-
Condition Time of supply Applicable Rate
Where the invoice issued and Earlier of New Rate
payment received after the 1. Date of receipt of
change in rate of tax payment
Where the invoice has been Date of issue of invoice Old Rate
issued prior to the change in
rate of tax but payment is
received after the change in
rate of tax
Where the payment has been Date of receipt of payment Old Rate
received before the change in
rate of tax, but the invoice for
same is issued after the
change in rate of tax
2. In case of goods or services or both have been supplied AFTER the change in rate of tax-
Condition Time of supply Applicable Rate
Where the invoice issued and Earlier of Old Rate
payment received before the 1. Date of receipt of
change in rate of tax payment
Where the invoice has been Date of issue of invoice New Rate
issued after the change in rate
of tax but payment is
received before the change in
rate of tax
Where the payment has been Date of receipt of payment New Rate
received after the change in
rate of tax, but the invoice for
same is issued before the
change in rate of tax

Question 1 – When does the liability to pay GST arise in respect of supply of Goods and Services?
Solution:
Question 2 – What is the time of supply of goods in case of tax payable under reverse charge?
Solution:
Question 3 – What is the time of supply of service in case of tax payable under reverse charge?
Solution:
Question 4 – Determine the time of supply of service in the following cases:-

1. Mugdha Private Limited is engaged in supply of services. It receives advances of Rs.1,00,000
from clients on 23rd June, 2019 for the service to be rendered in the month of July, 2019.
2. Rohan Ltd. provided management consultancy services to M/s. Bhatia & Sons on 5th June,
2019 and billed it for Rs.1,20,000 on 10th July, 2019. It received the payment for the same on
14th July, 2019.
Solution: .

Practical Questions
Question 1 –Determine the Time of supply in each of the following independent cases in
accordance with provisions of Section 12 of the CGST Act, 2017 in case supply involves
movement of goods.
SI. Date of Removal Date of invoice Date when goods Date of
No. made available to receipt of
recipient payment
1. 01-10-2020 02-10-2020 03-10-2020 15-11-2020
2. 03-10-2020 01-10-2020 04-10-2020 25-11-2020
3. 04-11-2020 04-11-2020 06-11-2020 01-10-2020
Solution:
Question 2–From the following information determine the time of supply if supply involves
movement of goods :
S. No. Invoice date Removal of goods Receipt of payment

1. 15-11-2020 26-10-2020 20-11-2020
2. 26-10-2020 30-10-2020 05-11-2020
Solution:

Question 3 –Determine the Time of ply in each of following independent cases in accordance
with provisions of Section 12 of the CGST Act, 2017 in case supply involves movement of goods.
S. Invoice date Invoice due date Payment entry in Credit in bank
No. supplier's books account
1. 10-11-2020 20-11-2020 28-11-2020 30-11-2020
2. 30-11-2020 18-11-2020 10-11-2020 28-11-2020
Solution:
Question 4 - Determine the Time of supply in each of the following independent cases in
accordance with provisions of Section 12 of the CGST Act, 2017 in case supply involves
movement of goods.
Sl. No. Date of Removal Date of invoice Date when goods Date of
made available to receipt of
recipient payment
1. 01-10-2020 02-10-2020 03-10-2020 15-11-2020
2. 03-10-2020 01-10-2020 04-10-2020 25-11-2020
3. 04-11-2020 04-11-2020 06-11-2020 01-10-2020
Solution:

Question 5 - From the following information determine the time of supply if supply involves
movement of goods :
S. Invoice date Removal of goods Receipt of payment
No
.1. 15-11-2020 26-10-2020 20-11-2020
2. 26-10-2020 30-10-2020 . 05-11-2020
Solution:
Question 6 - Determine the Time of supply in each of following independent cases in accordance
with provisions of Section 12 of the CG Act, 2017 in case supply involves movement of goods.
S. No. Invoice date Invoice due Payment entry Credit in bank
date in supplier's books account
1. 10-11-2020 20-11-2020 28-11-2020 30-11-2020
2. 30-11-2020 18-11-2020 10-11-2020 28-11-2020
Solution:

Question 7 - From the following information determine the time of supply of goods where supply
involves movement of goods :
S. Invoice/ Remova Delivery Receipt of Other information
No. documen l of of goods payment
t date goods
1. 16-11-2020 10-11- 16-11- 16-11- -
2020 2020 2020
2. 01-11-2020 10-11- 16-11- - Supply is on account of Inter-
2020 2020 State stock transfer.
3. 20-11-2020 01-12- 04-12- 20-11- Rs. 5,00,000 is received as
2020 2020 2020 & advance and invoice for the
10-12- whole amount is issued on the
2020 same day. Balance payment
Rs. 6,20,000 is received on 10-
12-2020.
Solution:
with provisions of Section 12 of the Act, 2017 in case supply does not involve movement of goods.
Sl. Date of invoice Date when goods made Date of receipt of
No. available to recipient payment
1. 02-10-2020 03-10-2020 15-11-2020
2. 04-10-2020 01-10-2020 25-11-2020
3. 04-11-2020 06-11-2020 01-10-2020
Solution:

Question 9 - Mr. X purchased certain roods from M/s. ABC a registered supplier on 15-11-2019
worth Rs. 15,750. He made a payment of Rs. 16,000 with an instruction to adjust the excess
payment against future purchases, and hence the same was adjusted by the supplier in case of his
future purchase made on 01-01-2020 (invoice issued on same date). Determine the tax implications
with regard to such excess payment in light of the GST law.
Solution:
Question 10 - From the following information determine the time of supply if there is continuous
supply of goods :
S. No. Invoice date Removal of Statement of Receipt of
goods accounts payment
1. 01-12-2020 15-11-2020 05-12-2020 02-12-2020
25-11-2020
2. 21-01-2020 18-01-2020 05-01-2020 10-02-2020
31-01-2020
3. 08-02-2020 14-01-2020 05-02-2020 01-02-2020
23-01-2020
Solution:

Question 11 - From the following information determine the time of supply if goods are supplied
on approval basis
S.No. Removal of goods Issue of invoice Accepted by Receipt of payment
recipient
1. 01-12-2020 15-12-2020 05-12-2020 25-12-2020
2. 01-12-2020 15-12-2020 15-12-2020 12-12-2020
3. 01-12-2020 25-07-2020 25-07-2020 20-07-2020
Solution:
with provisions of Section 12 of the CGST Act, 2017 in case recipient of goods is liable to pay tax
under reverse charge mechanism.
Sl. Date of Date of receipt Date of payment Date when payment

No. invoice of goods in books debited in bank account
1. 01-10-2020 05-10-2020 10-10-2020 12-10-2020
2. 01-10-2020 15-10-2020 10-10-2020 12-10-2020
3. 01-10-2020 15-10-2020 12-10-2020 10-10-2020
4. 01-10-2020 15-11-2020 18-11-2020 20-11-2020
Solution:

Question 13 - From the following information determine the time of supply if supply is taxed
under reverse charge basis :
S. Date of invoice Removal Receipt of Date of entry Date of
No. issued by of goods goods in books of debit in
supplier accounts of bank
recipient account
of
recipient
1. 31-12-2020 31-12-2020 20-01- 30-01-2020 01-02-2020
2020
2. 31-12-2020 31-12-2020 20-01- 05-01-2020 06-01-2020
2020
3. 31-12-2020 28-02-2020 05-03- -
2020
Solution:
Question 14 - XYZ Ltd. has purchased for its customers 100 vouchers dated 24-12-2020 worth
Rs. 1,000 each from ABC Ltd, a footwear manufacturing company. The vouchers were issued by
ABC Ltd. on 25-12-2020. The vouchers can be encashed at retail outlets of ABC Ltd. The
employees of XYZ Ltd. encashed the same on 01-01-2021. Determine time of supply of vouchers.
Solution:

Question 15 - Ms Reema purchased a gift voucher from Shoppers Stop (a departmental store)
worth Rs. 1,500 on 30-10-2020 and gifted it to her friend on occasion of her birthday on 04-11-
2020. Her friend encashed the same on 01-01-2021 for purchase of a handbag. Determine the time
of supply.
Solution:
Question 16 - Mr. X, a registered supplier supplied certain goods to Mr. Y on 6 months credit
with a penalty clause in the agreement levying a penalty of 5% of the invoice value in case of
delayed payment. The invoice was dated 01-11-2020. Mr. Y could not make the payment on the
due date due to unavoidable reasons. He however made the payment of the invoice value on 05-
05-2021. Mr. X raised a debit note for the penalty amount. There being dispute on this, the matter
was in arbitration which was finally resolved with Mr. Y agreeing to pay half of the penalty
amount. The amount was paid by Mr. Y on 12-12-2021. Determine the Time of Supply in light of
the GST law.
Solution:

Question 17- Determine the time of supply in each of following independent cases in accordance
with provisions of CGST Act, 2017 :
S. Date of actual Time [Date] of Date on which payment received
No. provision of Invoice, Bill or
service Challan as the
case may be
1. 10-11-2020 30-11-2020 15-12-2020
2. 10-11-2020 30-11-2020 15-11-2020
3. 10-11-2020 30-11-2020 15-11-2020 (Part) and 10-12-2020
(remaining)
4. 10-11-2020 30-11-2020 06-11-2020 (Part) and 09-11-2020
(remaining)
5. 10-11-2020 30-11-2020 06-11-2020 (Part) and 16-11-2020
(remaining)
6. 10-11-2020 12-12-2020 30-04-2021
7. 10-11-2020 12-12-202- 05-11-2020 (Part) and 25-12-2020
(remaining)
8. 10-11-2020 22-12-2020 12-12-2020
Solution:

Question 18 - From the following information determine the time of supply of services:
S. Date of Invoic Payment Credit Reason
No. completio e date entry in in bank
n of supplier's account
service books
1. 20-10-2020 21-10- 26-10-2020 30-10-
2020 2020
2. 20-10-2020 30-10- 24-10-2020 22-10-
2020 2020
3. 16-11-2020 26-12- 28-01-2021 29-01-
2020 2021
4. 01-12-2020 30-10- 30-10-2020 30-10- Rs. 5,00,000 is received as
2020 2020 advance on. 30-10-2020 and
30-10- 06-12-2020 08-12- balance amount Rs. 6,80,000 is
2020 2020 received on 06-12-2020.
Solution:

Question 19 - From the following information determine the time of supply of services. The
supply is a continuous supply of service where contract provides for monthly payment upto 15th
of the succeeding month.
Entry of provision of Invoice date Due date of Receipt of payment
services in books payment as
per contract
30-11-2020 07-12-2020 15-12-2020 20-12-2020
31-12-2019 22-01-2020 15-01-2020 20-01-2020
31-01-2020 15-02-2020 15-02-2020 11-02-2020
Solution:
Question 20 - From the following information determine the time of supply of services. The
supply is a continuous supply of service where contract provides for payments linked with
completion of event.
'Entry of Date as Invoice date Receipt of payment

provision of per contract
services in
books
12-11-2020 10-11-2020 12-11-2020 25-11-2020
24-04-2020 24-04-2020 24-04-2020 20-04-2020
Solution:

Question 21 - Rajesh of Assam received some taxable services from Loreal Enterprises of UK
on 1-12-2019for which an invoice was raised on 1-12-2019. Determine the time of supply of
services if Rajesh makes the payment for the said services on:-
Case 1: 01-01-2020 Case II: 05-03-2020
Solution:
Question 22 - Apte & Apte Ltd. is located in India and h ding 51% of shares of Wilson Ltd., a
USA based company. Wilson Ltd. provides Business Auxiliary Services to Apte & Apte Ltd.
From the following details, determine the time of supply of Apte & Apte Ltd.:
Agreed consideration US $ 1,00,000
Date on which services are provided by Wilson Ltd. 16-12-2020
Date on which invoice is sent by Wilson Ltd. 19-12-2020
Date of debit in the books of account of Apte & Apte Ltd. 30-12-2020
Date on which payment is made by Apte & Apte Ltd. 23-03-2021
Solution:

Question 23 - From the following information determine the time of supply of services where
services are taxed on reverse charge basis.
S. Date of Date of Date of payment Entry of receipt of
No. invoice completion by recipient services in recipient's
issued by of service books
supplier
1. 30-11-2020 30-11-2020 10-12-2020 12-12-2020
2. 30-11-2020 30-11-2020 15-11-2020 30-11-2020
3. 30-11-2020 30-11-2020 10-03-2021 30-11-2020
Solution:
Question 24 - From the following information determine the time of Supply of services where
supply is by issue of voucher valid for one year and are issued after supply of first service.
First service Issue of voucher Redemption of Last date for
voucher acceptance of
voucher
01-01-21 01-01-2021 31-10-2021 31-12-2021
Solution:

Question 25 - From the following information determine the time of supply of service.
Particulars of voucher First Issue of Redemption of Last date for
service voucher voucher acceptance of
delivery of voucher
goods
Voucher valid for one year is 01-01-2021 01-01-2021 14-12-2021 31-12-2021
issued to a recipient after
supply of a service, for any
other services or goods across
India.
Solution:
Question 26 - Determine the time of supply in the following cases. The rate of CGST has been
increased to 12% w.e.f. 01-10-2020, Before the said date, the rate of tax was 5% ,
S. Date of supply Date of Invoice Date of Payment Value of service

No. of Service (Rs.)
1. 25-09-2020 05-10-2020 08-10-2020 20,00,000
2. 25-09-2020 25-09-2020 08-10-2020 10,00,000
3. 25-09-2020 08-10-2020 30-09-2020 15,00,000
4. 04-10-2020 28-09-2020 30-09-2020 20,00,000
5. 04-10-2020 04-10-2020 30-09-2020 10,00,000
6. 04-10-2020 30-09-2020 08-10-2020 15,00,000
Solution:

Question 27- A service provider supplied service on 01-12-2020 for a value of Rs. 25,00,000. He
issued invoice for the same on 30-11-2020 and received payment by an account payee cheque on
30-11-2020 and the same was entered in the books on the same date 30-11-2020. The cheque was
deposited in bank on 04-12-2020 and the same was credited in his bank account on 09-12-2020.
The said service was taxable @ 5% prior to 01-12-2020. The rate of CGST has been increased to
12% w.e.f 01-12-2020. On 03-12-2020, there was a public holiday Discuss his CGST liability.
Solution:
Question 28- Determine the time of supply of service in the following cases
1. Mugdha Private Limited is engaged in supply of services. It receives advances of Rs. 1,00,000
from clients on 23rd June 2020 for the services to be rendered in the month of July 2020.
2. Rohan Limited provided management consultancy services to M/s Bhatia & Sons on 5th June
2020 and billed it for Rs. 1,20,000 on 10th July 2020. It received the payment for the same on
14th July 2020
Solution:

INPUT TAX CREDIT
Relevant Definitions:
Input (Section 2(59)): Any goods other than capital goods used or intended to be used by a
supplier in the course or furtherance of business.
Input Service (Section 2(60)): Any service used or intended to be used by a supplier in the course
Capital Goods (Section 2(19)): Goods, the value of which is capitalised in the books of account
of the person claiming the input tax credit and which are used or intended to be used in the course
Exempt Supply (Section 2(47)): Supply of any goods or services or both which attracts nil rate
of tax or which may be wholly exempt from tax under section 11, or under section 6 of the
Integrated Goods and Services Tax Act, and includes non-taxable supply
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 integrated goods and services tax charged on import of goods;
b. the tax payable under the provisions of sub-sections (3) and (4) of section 9;
c. the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated
Goods and Services Tax Act;
d. the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective
State Goods and Services Tax Act; or
e. the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union
Territory Goods and Services Tax Act,
Input tax credit (Section 2(63)): It means the credit of input tax
Taxable supply (Section 2(108)): It means a supply of goods or services or both which is leviable
to tax under this Act
Non-taxable supply (Section 2(78)): It means a supply of goods or services or both which is not
leviable to tax under this Act or under the integrated Goods and Services Tax Act.

Eligibility and Conditions for taking input tax credit (Section 16):
1. A registered person is entitled to take credit of input tax charged on supply of goods or
services or both to him which are used or intended to be used in the course or furtherance
of business, subject to certain conditions.
2. No registered person shall take input tax credit in respect of any supply of goods or
services or both to him unless:
• He is in possession of a tax invoice, debit note issued by the supplier or such other
document as may be prescribed.
• He has received the goods or services or both.
• The tax charged in respect of such supply has been actually paid to the Government.
• He has furnished the return.
• If goods are received in lots or instalments, the registered person shall be entitled to
take credit upon receipt of the last lot or instalment.
Note: Where a recipient fail to pay to the supplier of goods or services or both, other than the
supplies on which tax is payable on reverse charge basis, the amount towards the value of supply
along with tax payable thereon within a period of one hundred and eighty days (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.
3. If a registered 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 on the said tax component shall not be allowed.
4. A registered person shall not be entitled to take input tax credit in respect of any invoice
or debit note for supply made to him after the due date of furnishing of the return for the
month of September of the next financial year or before furnishing annual return (Before
31st December of next financial year) whichever is earlier.
Note: Where any person claims that he is eligible for input tax credit under this Act, the burden of
proving such claim shall lie on such person (Section 155)

Documentary requirements and conditions for claiming input tax credit (Rule 36 of CGST
Rules, 2017)-
• The input tax credit shall be availed by a registered person, including the Input Service
Distributor, on the basis of any of the following documents, namely,-
a. an invoice issued by the supplier of goods or services or both in accordance with the
provisions of section 31;
b. an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of
section 31, subject to the payment of tax;
c. a debit note issued by a supplier in accordance with the provisions of section 34;
d. a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules
made thereunder for the assessment of integrated tax on imports;
• Input tax credit to be availed by a registered person in respect of invoices or debit notes, the
details of which have not been uploaded by the suppliers, shall not exceed 10 percent. of the
eligible credit available in respect of invoices or debit notes the details of which have been
uploaded by the suppliers.
Reversal of input tax credit in the case of non-payment of consideration (Rule 37 of CGST
Rules, 2017) –
1. A registered person, who has availed of input tax credit on any inward supply of goods or
services or both, but fails to pay to the supplier thereof, the value of such supply along with
the tax payable thereon, within a period of 180 days from the date of issue of invoice by the
supplier, shall furnish the details of such supply, the amount of value not paid and the amount
of input tax credit availed of proportionate to such amount not paid to the supplier in FORM
GSTR-2 for the month immediately following the period of one hundred and eighty days from
the date of the issue of the invoice.
2. The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax
liability of the registered person for the month in which the details are furnished.
3. The registered person shall be liable to pay interest at the rate not more than 18% per annum
for the period starting from the date of availing credit on such supplies till the date when the
amount added to the output tax liability, is paid.
4. The time limit specified in sub-section (4) of section 16 shall not apply to a claim for re-
availing of any credit, in accordance with the provisions of the Act or the provisions of this
Chapter, that had been reversed earlier.

Apportionment of credit and blocked credit (Section 17):
1. If goods or services or both are used 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 attributable to
the purpose of his business.
2. If goods or services or both are used partly for effecting taxable supplies including zero rated
supplies and partly for exempt supplies, the amount of credit shall be restricted to so much of
the input tax as attributable to the purpose taxable supplies.
3. The value of exempt supplies under sub-section (2), shall be such as may be prescribed and
shall include
• supplies on which the recipient is liable to pay tax under reverse charge basis,
• transaction in securities
• sale of land
• subject to clause (b) of paragraph 5 of Schedule II, sale of building
4. Optional method for bank etc. for taking input tax credit: A banking company or a
financial institution including a non-banking financial company, engaged in supplying
services by way of accepting deposits, extending loans advances shall have the option
to either comply with the provision of sub-section (2) 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 the rest shall lapse.
• Option once exercised shall not be withdrawn during the remaining part of the
financial year.
• 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.
Claim of credit by a banking company or a financial institution- A banking company or a financial

institution, including a non-banking financial company, engaged in the supply of services by way
of accepting deposits or extending loans or advances that chooses not to comply with the
provisions of section 17, in accordance with the option permitted under sub-section (4) of that
section, shall follow the following procedure, namely,-
The said company or institution shall not avail the credit of,-
• the tax paid on inputs and input-services that are used for non-business purposes; and
• the credit attributable to the supplies specified in sub-section (5) of section 17, in FORM
GSTR-2.

Ineligible Input Tax Credit (Section 17(5))
Motor vehicle and other However credit will be available when they used for-
conveyances for (i) for making following taxable supplies namely-
transportation of persons a. further supply of such vehicle or conveyance
having approved seating b. transportation of passengers
capacity of not more than c. imparting training ,on driving, flying, navigating such
thirteen persons including vehicle or conveyances;
the driver d. transportation of goods
Vessels and aircraft However credit will be available when they used for-
(i) for making following taxable supplies namely-
a. further supply of such vehicle or conveyance
b. transportation of passengers
c. imparting training on navigating such vessels or
d. imparting training on flying such aircraft;
(ii) for transportation of goods
Services of General Provided that the input tax credit of such services shall be
insurance, servicing, available-
repair and maintenance in (i) where the motor vehicle, vessesl or aircraft are used
so far as they relate to for the purpose therein
motor vehicles, vessels or (ii) where received by taxable person engaged-
aircraft refereed above a. in the manufacturing of such motor vehicles,
vessels or aircrafts; or
b. in the supply of general insurance services of
such motor vehicle, vessels or aircrafts insured
by him
Goods and services for The following supply of goods or services or both-
food, beauty treatment, i. food and beverages, outdoor catering, beauty treatment,
health mainly for personal health services, cosmetic and plastic surgery
consumption However, credit will be available where an 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 an element of a
taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and 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 a taxable composite or mixed
supply; and
(iv) travel benefits extended to employees on vacation such
as leave or home travel concession;
Works Contract Service Works contract service when supplied for construction of an
immovable property. However, credit is allowed-
• where it is an input service for further supply of works
contract service.
• wehere it is supplied for construction of plant and
machinery
Goods or Services for Goods or services or both received by a taxable person for
construction of immovable construction of an immovable property on his own account
property including when such goods or services or both are used in the
course or furtherance of business.
However, credit is allowed if they are supplied for construction
of plant and machinery
Goods or Services under Goods or services or both on which tax has been paid under
Composition scheme section 10;

Goods or Services by Non- Goods or services or both received by a non-resident taxable
resident person except on goods imported by him
Personal Consumption Goods or services or both used for personal consumption

Lost, stolen goods etc Goods lost, stolen, destroyed, written off or disposed of by way
of gift or free samples
Evasion, confiscation etc Any tax paid in accordance with the provisions of sections 74,
129 and 130
Attributable Credit to be determined in accordance with rules (Section 17(6)): The

Government may prescribe the manner in which the credit referred to in Section 17(1) and Section
17(2) may be attributed.

ITC in the hands of suppliers in respect of sales promotion schemes
Samples and Free Samples which are supplied free of cost, without any consideration, do
Gifts not qualify as “supply” under GST, except where the activity falls within
the ambit of Schedule I of the CGST Act.
ITC shall not be available to the supplier on the inputs, input services
and capital goods to the extent they are used in relation to the gifts or
free samples distributed without any consideration. However, where the
activity of distribution of gifts or free samples falls within the scope of
“supply” on account of the provisions contained in Schedule I of the said
Act, the supplier would be eligible to avail the ITC.
Buy one get one This is not an individual supply of free goods, but a case of two or more
individual supplies where a single price is being charged for the entire
free offer
supply. It can at best be treated as supplying two goods for the price of
one.
Taxability of such supply will be dependent upon as to whether the
supply is a composite supply or a mixed supply and the rate of tax shall
be determined as per the provisions of section 8.
ITC shall be available to the supplier for the inputs, input services and
capital goods used in relation to supply of goods or services or both as
part of such offers.
Discounts including Discounts offered by the suppliers to customers (including staggered
discount under “Buy more, save more” scheme and post supply / volume
Buy more save
discounts established before or at the time of supply) shall be excluded
more offers to determine the value of supply provided they satisfy the parameters
laid down in sub- section (3) of section 15, including the reversal of ITC
by the recipient of the supply as is attributable to the discount on the
basis of document (s) issued by the supplier.
Secondary These are the discounts which are not known at the time of supply or are
offered after the supply is already over. Such discounts shall not be
discounts
excluded while determining the value of supply. There is no impact on
availability or otherwise of ITC in the hands of supplier in this case.

Manner of determination of input tax credit in respect of inputs or input services and
reversal thereof (Rule 42 of CGST Rules, 2017)-
1. The input tax credit in respect of inputs or input services, which attract the provisions of sub-
section (1) or sub-section (2) of section 17, being partly used for the purposes of business and
partly for other purposes, or partly used for effecting taxable supplies including zero rated
supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business
or for effecting taxable supplies in the following manner, namely,-
a. the total input tax involved on inputs and input services in a tax period, be denoted as ‘T’;
b. the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used
exclusively for the purposes other than business, be denoted as ‘T1’;
c. the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used
exclusively for effecting exempt supplies, be denoted as ‘T2’;
d. the amount of input tax, out of ‘T’, in respect of inputs and input services on which credit is
not available under sub-section (5) of section 17, be denoted as ‘T3’;
e. the amount of input tax credit credited to the electronic credit ledger of registered person, be
denoted as ‘C1’ and calculated as-
C1 = T- (T1+T2+T3);
f. the amount of input tax credit attributable to inputs and input services intended to be used
exclusively for effecting supplies other than exempted but including zero rated supplies, be
denoted as ‘T4’;
g. input tax credit left after attribution of input tax credit under clause (g) shall be called common
credit, be denoted as ‘C2’ and calculated as-
C2 = C1- T4;
i. the amount of input tax credit attributable towards exempt supplies, be denoted as ‘D1’ and
calculated as-
D1= (E÷F) × C2
where, ‘E’ is the aggregate value of exempt supplies during the tax period, and ‘F’ is the total
turnover in the State of the registered person during the tax period:
Provided that where the registered person does not have any turnover during the said tax period or
the aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values
of ‘E’ and ‘F’ of the last tax period for which the details of such turnover are available, previous

to the month during which the said value of ‘E/F’ is to be calculated;
j. the amount of credit attributable to non-business purposes if common inputs and input services
are used partly for business and partly for non-business purposes, be denoted as ‘D2’, and shall
be equal to five per cent. of C2; and
k. the remainder of the common credit shall be the eligible input tax credit attributed to the
purposes of business and for effecting supplies other than exempted supplies but including zero
rated supplies and shall be denoted as ‘C3’, where,-
C3 = C2 - (D1+D2);
l. the amount ‘C3’ shall be computed separately for input tax credit of central tax, State tax,
Union territory tax and integrated tax;
m. the amount equal to aggregate of ‘D1’ and ‘D2’ shall be added to the output tax liability of the
registered person:
Provided that where the amount of input tax relating to inputs or input services used partly for the
purposes other than business and partly for effecting exempt supplies has been identified and
segregated at the invoice level by the registered person, the same shall be included in ‘T1’ and
‘T2’ respectively, and the remaining amount of credit on such inputs or input services shall be
included in ‘T4’.
2. The input tax credit determined under sub-rule (1) shall be calculated finally for the financial
year before the due date for furnishing of the return for the month of September following the
end of the financial year to which such credit relates, in the manner specified in the said sub-
rule and-
a. where the aggregate of the amounts calculated finally in respect of ‘D1’ and ‘D2’ exceeds
the aggregate of the amounts determined under sub-rule (1) in respect of ‘D1’ and ‘D2’,
such excess shall be added to the output tax liability of the registered person in the month
not later than the month of September following the end of the financial year to which such
credit relates and the said person shall be liable to pay interest not exceeding 18% per
annum for the period starting from the first day of April of the succeeding financial year
till the date of payment; or
b. where the aggregate of the amounts determined under sub-rule (1) in respect of ‘D1’ and
‘D2’ exceeds the aggregate of the amounts calculated finally in respect of ‘D1’ and ‘D2’,

such excess amount shall be claimed as credit by the registered person in his return for a
month not later than the month of September following the end of the financial year to
which such credit relates.
Manner of determination of input tax credit in respect of capital goods and reversal thereof
in certain cases (Rule 43 of CGST Rules, 2017)-
1. Subject to the provisions of sub-section (3) of section 16, the input tax credit in respect of
capital goods, which attract the provisions of sub-sections (1) and (2) of section 17, being
partly used for the purposes of business and partly for other purposes, or partly used for
effecting taxable supplies including zero rated supplies and partly for effecting exempt
supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the
following manner, namely,-
a. the amount of input tax in respect of capital goods used or intended to be used exclusively for
non-business purposes or used or intended to be used exclusively for effecting exempt supplies
shall be indicated in FORM GSTR-2 and shall not be credited to his electronic credit ledger;
b. the amount of input tax in respect of capital goods used or intended to be used exclusively for
effecting supplies other than exempted supplies but including zero-rated supplies shall be
indicated in FORM GSTR-2 and shall be credited to the electronic credit ledger;
c. the amount of input tax in respect of capital goods not covered under clauses (a) and (b),
denoted as ‘A’, shall be credited to the electronic credit ledger and the useful life of such goods
shall be taken as five years from the date of the invoice for such goods:
Provided that where any capital goods earlier covered under clause (a) is subsequently covered
under this clause, the value of ‘A’ shall be arrived at by reducing the input tax at the rate of five
percentage points for every quarter or part thereof and the amount ‘A’ shall be credited to the
electronic credit ledger;
Explanation.- An item of capital goods declared under clause (a) on its receipt shall not attract the
provisions of sub-section (4) of section 18, if it is subsequently covered under this clause.
d. the aggregate of the amounts of ‘A’ credited to the electronic credit ledger under clause (c), to
be denoted as ‘Tc’, shall be the common credit in respect of capital goods for a tax period:
Provided that where any capital goods earlier covered under clause (b) is subsequently covered
under clause (c), the value of ‘A’ arrived at by reducing the input tax at the rate of five percentage

points for every quarter or part thereof shall be added to the aggregate value ‘Tc’;
e. the amount of input tax credit attributable to a tax period on common capital goods during their
useful life, be denoted as ‘Tm’ and calculated as-
Tm= Tc÷60
f. the amount of input tax credit, at the beginning of a tax period, on all common capital goods
whose useful life remains during the tax period, be denoted as ‘Tr’ and shall be the aggregate
of ‘Tm’ for all such capital goods;
g. the amount of common credit attributable towards exempted supplies, be denoted as ‘Te’, and
calculated as-
Te= (E÷ F) x Tr
where, ‘E’ is the aggregate value of exempt supplies, made, during the tax period, and ‘F’ is the
total turnover of the registered person during the tax period:
Provided that where the registered person does not have any turnover during the said tax period or
the aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values
of ‘E’ and ‘F’ of the last tax period for which the details of such turnover are available, previous
to the month during which the said value of ‘E/F’ is to be calculated;
h. the amount Te along with the applicable interest shall, during every tax period of the useful
life of the concerned capital goods, be added to the output tax liability of the person making
such claim of credit.
2. The amount Te shall be computed separately for central tax, State tax, Union territory tax and
integrated tax.

Availability of credit in special circumstances (Section 18):
1. Subject to certain conditions and restrictions:
A. A person who has applied for registration, within 30 days from the date on which he become
liable to register and has been granted such registration, shall be entitled to take credit of
input tax in respect of
• inputs held in stock and
• inputs contained in semi finished goods held in stock
• inputs contained in finished goods held in stock
on the day immediately preceding the date from which he becomes liable to pay tax.
B. A person who takes voluntary registration shall be entitled to take credit of input tax in
respect of
• inputs contained in semi finished goods held in stock
• inputs contained in finished goods held in stock
on the date immediately preceding the date of grant of registration.
C. Where any registered person ceases to pay tax under composition scheme; or
D. Where an exempt supply of goods or services or both by a registered person becomes a
taxable supply.
They shall be entitled to take credit of inputs tax in respect of
• inputs held in stock,
• inputs contained in semi finished or
• on capital goods
on the day immediately preceding the date from which he becomes liable to pay tax under
Section 9.
Provided that the credit on capital goods shall be reduced by 5% per quarter of a year or part
thereof .
2. No Input Tax Credit after one year of invoice: A registered person shall not be entitled to take
input tax credit under sub-section (1) in respect of any supply of goods or service or both to
him after the expiry of one year from the date of issue of tax invoice relating to such supply.

3. Utilisation of Input Tax Credit when change of constitution of registered person: Where there
is a change in the constitution of a registered person on account of sale, merger, demerger,
amalgamation, lease or transfer of business with the specific provision of transfer of liabilities,
the said registered person shall be allowed to transfer the input tax credit which remains un-
utilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or
transferred business.
Conditions to be fulfil for transfer of credit on sale, merger, amalgamation, lease or transfer
of a business (Rule 41 of CGST Rules, 2017)-
a. A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or
transfer or change in the ownership of business for any reason, furnish the details of sale,
merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, on
GST portal along with a request for transfer of unutilized input tax credit lying in his
electronic credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of
the value of assets of the new units as specified in the demerger scheme.
b. The transferor shall also submit a copy of a certificate issued by a practicing chartered
accountant or cost accountant certifying that the sale, merger, de-merger, amalgamation,
lease or transfer of business has been done with a specific provision for the transfer of
liabilities.
c. The transferee shall, on the common portal, accept the details so furnished by the transferor
and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be
credited to his electronic credit ledger.
d. The inputs and capital goods so transferred shall be duly accounted for by the transferee in
his books of account.

4. Taxable person become exempt or opt for composition scheme: Where any registered person
who has availed of input tax credit opts to pay tax under section 10 or where the goods or
services or both supplied by him become wholly exempt, he shall pay an amount, by way of
debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input
tax in respect of
• inputs contained in semi-finished or
• on capital goods, reduced by 5% per quarter of a year or part thereof ,
on the day immediately preceding the date of exercising of such option 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.
5. The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall
be calculated in such manner prescribed.
6. Reversal of Input Tax Credit on clearance of Capital Goods: In case of supply of capital goods
or plant and machinery, on which input tax credit has been taken, the registered person shall
pay an amount equal to the input tax credit taken on the said capital goods or plant and
machinery reduced by 5% per quarter of a year or part there of or the tax on the transaction
value of such capital goods or plant and machinery determined under section 15, whichever is
higher:
Provided 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 determined under section 15.

Manner of reversal of credit under special circumstances (Rule 44 of CGST Rules, 2017)-
1. The amount of input tax credit relating to inputs held in stock, inputs contained in semi-finished
and finished goods held in stock, and capital goods held in stock shall, for the purposes of sub-
section (4) of section 18 or sub-section (5) of section 29, be determined in the following
manner, namely,-
a. for inputs held in stock and inputs contained in semi-finished and finished goods held in stock,
the input tax credit shall be calculated proportionately on the basis of the corresponding
invoices on which credit had been availed by the registered taxable person on such inputs;
b. for capital goods held in stock, the input tax credit involved in the remaining useful life in
months shall be computed on pro-rata basis, taking the useful life as five years.
Illustration: Capital goods have been in use for 4 years, 6 month and 15 days. The useful
remaining life in months= 5 months ignoring a part of the month Input tax credit taken on such
capital goods= C Input tax credit attributable to remaining useful life= C multiplied by 5/60
2. The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of
central tax, State tax, Union territory tax and integrated tax.
3. Where the tax invoices related to the inputs held in stock are not available, the registered person
shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods
on the effective date of the occurrence of any of the events specified in sub-section (4) of
section 18 or, as the case may be, sub-section (5) of section 29.
4. The amount determined under sub-rule (1) shall form part of the output tax liability of the
registered person and the details of the amount shall be furnished in FORM GST ITC- 03,
where such amount relates to any event specified in sub-section (4) of section 18 and in FORM
GSTR-10, where such amount relates to the cancellation of registration.
5. The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing
chartered accountant or cost accountant.

Question 1 XYZ Ltd. purchased goods valuing Rs. 6,00,000 (exclusive of CGST and SGST @
9% each) under the cover of invoice dated 25-12-2019. The company made payment to the supplier
on the same date. Since there was a doubt regarding admissibility of tax credit on such inputs, the
company did not take the input tax credit at the time of receipt of input. The company obtained
clarification from a legal consultant who opined that the goods were eligible as inputs under Input
tax Credit Rules. The opinion was received on 05-05-2020. The company now wants to avail Input
tax credit of the tax paid on such inputs. Can it do so? The company has filed its annual return for
the year 2019-20 on12-08-2020.
Solution:–
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Question 2 From the following information determine the amount of Input tax credit admissible
to ABC Ltd. in respect of various inputs purchased during the month of September, 2020.
Purchases CGST &
SGST (Rs.)
(1) Goods purchased without invoice 25,000
(2) Goods purchased from PQR Ltd. (Full Payment is made by ABC Ltd to 1,20,000
PQR Ltd. against such supply but tax has not been deposited by PQR
Ltd.)
(3) Purchases of goods not to be used for business purposes 18,000
(4) Purchases of goods from TT Ltd. (Invoice of TT Ltd. is received in 24,000
month of September 2020, but goods were received in month of October
2020)
(5) Goods purchased against valid invoice from FF Ltd. Tax has been 36,000
deposited by FF Ltd. ABC Ltd has made payment to FF Ltd. for such
purchases in the month of October 2020.

Solution:– Computation of admissible ITC to ABC Ltd. for the month of September, 2020:
Particulars CGST &
SGST (Rs.)
Question 3 - S Ltd. a registered manufacturer of Jaipur entered in a contract with a supplier for
supply of Input 'X' in October, 2019. As per contract it was agreed that 10,000 kgs of Input 'X' will
be supplied for Rs. 7,28,000 (inclusive of CGST and SGST @ 6% each) in 4 lots. Invoice of Rs.
7,28,000 has been issued with supply of first lot of Input 'X'. Following further information has
been provided regarding supply of Input received in subsequent lots.
Briefly explain whether S Ltd. eligible to take credit on proportionate basis.
Input 'X' (in lots) Quantity in Kgs Date of Receipt of Supply
First Lot 2,500 19-10-2019
Second lot 3,000 21-10-2019
Third Lot 1,500 12-11-2019
Fourth Lot 3,000 01-12-2019
Solution:–
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Question 4 - X Ltd. a registered manufacturer engaged in taxable supply of goods procured the
following goods during the month of October, 2019. The same has been capitalized in the books
of accounts of X Ltd. Determine the amount of Input Tax credit avail le by giving necessary
explanations for treatment of various items.
Items Input tax
(Rs.)
Electrical transformers used in the factory 2,16,000
Moulds and dies used in the factory 26,000
Pollution control equipment used in the factory . 2,34,000
Capital Goods purchased on which depreciation has been taken on full 1,35,000
value including input tax thereon
Capital goods used as parts purchased from supplier who paid tax of Rs.
10,000 under composition scheme and the composite tax has not been
collected from X Ltd.
Solution: Computation of Input Tax credit available to X Ltd.:

Particulars
Question 5 - ABC Pvt. Ltd. a registered manufacturer is engaged in taxable supply of goods. It
procured the following goods during the month of November, 2019. Determine the amount of
Input Tax credit available by giving necessary explanations for treatment of various items.
Items Input Tax paid
[`]
Laptops used in office within factory 36,000
Truck used for transportation of inputs in the factory 2,24,000
Capital goods used exclusively for non business purposes 54,000
Pumps obtained from the unregistered supplier on which tax has been paid 4,500
by ABC Pvt. Ltd on reverse charge basis
Goods used in construction of office building 45,600
Capital Goods used exclusively for making outward supplies to SEZ unit 28,800

Solution: Computation of Input Tax credit available to ABC Pvt. Ltd.:
Particulars
Question 6 - Determine the amount of Input tax credit available to Posco Ltd. in respect of the
following items procured by them in the month of January, 2020 :
Input tax
S. No. Item
paid [`]
(i) Input used for the manufacture of the final product 72,000
(ii) Food and Beverages procured from Sweet Caterers for being used in 48,000
dealer's meet
(iii) Goods used for providing services during warranty period 12,000
(iv) Goods used for setting up Telecommunication Towers being 90,000
immovable property
(v) Inputs stolen from the factory Store 13,200
Solution: Computation of Input Tax credit available with Posco Ltd.:

Particulars

Question 7 - Determine the amount of Input tax credit admissible to Ltd. in respect of the
following goods procured by it in the month of January, 2020 :
S. Item Input tax paid
No. [Rs.]
1. Goods used in constructing an additional floor of office building 28,800
2. Packing Materials used in a factory 6,000
3. Goods destroyed due to natural calamities 12,500
4, Goods used for repairing the office building and cost of such 12,000
repairs is debited to profit and loss account
5. Paper for photocopying machine used in Administrative Office 950
6. Goods given as gifts 25,000
7. Inputs used for tests or quality control check 15,600
Solution: Computation of Input tax credit available with PQR Ltd.:

Particulars

Question 8 - Determine the amount of Input tax credit admissible to P Ltd. in respect of the
following items procured by them in the month of November, 2019:
S. No. Item Input tax paid
[`]
1. Goods supplied for captive consumption in a factory 9,800
2. Goods purchased for being used in repairing the factory shed and 18,000
same has been capitalized in books
3. Cement used for making foundation and structural support to 14,000
Plant and Machinery
4. Inputs used in trial runs 14,60
5. Food and beverages purchased for the employees during office 8,400
hours
Solution: – Computation of Input tax credit available with P Ltd.:

Particulars

Question 9 - An Elite Training institute provides service of training pilot in flying commercial
aircraft so that candidates become eligible for obtaining Aviation license. Determine whether the
institute is eligible to take credit on aircraft purchased for imparting training.
Solution:
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Question 10 - Compute the Input tax credit available with Ujjwal tors Ltd., manufacturer of cars,
in respect of the following services availed by it in the month of October, 2019:
S. No. Services billed Input tax
paid (`)
(i) Accounting and Auditing Services 7,200
(ii) Health insurance services for employees (Services are not provided 16,200
under Government obligation)
(iii) Routine maintenance of the cars manufactured by Ujjwal Motors Ltd. 18,000
(iv) Repair services for office building (cost of repairs is charged to Profit 14,400
and loss Account
Hotel accommodation and Conveyance facility to employees on
(v) 3,360
vacation
(vi) Testing services availed for car engines 9,000
Solution: Computation of Input tax credit available with Ujjwal Motors Ltd.:
Particulars

Question 11 - XYZ Ltd. engaged in supplying taxable goods has availed following services in
month of September, 2019. Compute the input tax credit admissible on such input services.
S. Services billed Input tax
No. paid (`)
(1) Sales promotion services 16,200
(2) Health care services availed from Physique Club for upkeep of health of 10,800
their employees
(3) XYZ Ltd. hired cab on rent for employees. (Government has issued a 4,500
notification for such service to be mandatorily provided to employees.)
(4) Market research services 10,080
(5) Quality control services 18,000
(6) Work contract services for construction of office building 45,000
Solution:– Computation of Input tax credit available with XYZ Ltd.:

Particulars
Question 12 – XYZ Ltd., a manufacturer, which is engaged in supply of taxable goods has
purchased 10,000 kg of inputs for Rs. 1,00,000 (exclusive of CGST @ 6% and SGST @ 6%) on
which input tax credit has been taken. Due to technical changes in manufacturing process, the said
inputs became obsolete, and their value has been written off in the books of accounts. Explain
Input tax credit treatment in above case.
Solution:
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Question 13 - XYZ Ltd. is engaged in supply of works contract services. It gives a part of the
construction work to a sub-contractor. The sub-contractor charges GST in his invoice to XYZ Ltd.
You are required to advice XYZ Ltd. if it can avail Input tax credit of the GST charged it by the
sub-contractor.
Solution:
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Question 14 - XYZ Ltd. is engaged in supply of passenger transportation services. In the month
of September, 2019, it has purchased two motor vehicles for Rs. 36,00,000 plus GST @ 28%. You
are required to advice XYZ Ltd. if it can avail Input tax credit of the GST paid by it on for vehicles.
Solution:
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Question 15 - XYZ Ltd. conducted its 66th Annual General meeting at its head office in New Delhi
and availed services of Delicious caterers on that occasion. Delicious caterers charged Rs.
15,00,000 plus GST @18% for the supply of outdoor catering services. You are required to advice
XYZ Ltd. if it can avail Input tax credit of the GST paid on outdoor catering service.
Solution:
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Question 16 - Yes Bank, having a branch in Jaipur engaged in supply of services by way of
accepting deposits and extending loans opted for the option to avail credit of 50% of input tax of
the month to which input tax relates under Section 17(4). Its head office is in Mumbai and branch
in Ahmedabad. Input tax Credit (CGST & SGST) available for the month August, 2019 is Rs.
90,000 which includes:
Total Input tax Credit includes credit relating to —

Particulars Input tax (Rs.)
[CGST & SGST]
(1) Services availed from its distinct establishment i.e., from Mumbai 18,000
Head office
(2) Outdoor catering services received for its employees 14,400
(3) Goods that has obsolete and whose value has been written off in
2,500
books
(4) Auditing Services 22,500
(5) Goods which are used for personal use of employees 6,500
Determine the amount of input tax credit of August, 2019 that can be availed by Yes bak.
Solution:–
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Computation of Eligible Input tax Credit for August, 2019:

Eligible Input
Particulars tax Credit
(Rs.)

Question 17 - What would be your answer if capital goods being Refractory Bricks are removed
as scrap at a transaction value of Rs. 25,000 on 29-03-2020 ?
Solution:
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Question 18 - B Ltd. is not required to register under CGST Act, 2017 but it wishes to obtain
voluntary registration so, it applied for voluntary registration on 18th September, 2019 and
registration certificate has been granted to it on 25th September, 2019. The CGST and SGST
liability for the month of September, 2019 is Rs. 21,000 each.
B Ltd. provides the following information of inputs held in stock on 24th September, 2019. It is
not engaged in making Interstate outward taxable supplies.
Particulars Rs.
Input procured on 02-09-2019 lying in stock :
CGST @ 6% 4,500
SGST @ 6% 4,500
Input Received on 21-02-2019 contained in semi finished goods held in

stock :
CGST @ 6% 7,500
SGST @ 6% 7,500
Value of inputs contained in finished goods held in stock Rs. 2,00,000
were procured on 19-09-2018:
IGST @ 18% 36,000
Inputs valued Rs. 50,000 procured on 13-09-2019 lying in stock:

IGST @ 18% 9,000
Capital Goods procured on 12-09-2019 :
CGST @ 6% 12,000
SGST @ 6% . 12,000
You are required to determine the amount of tax to be paid in cash by B Ltd. for the month of
September, 2019.
Solution:
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Particulars IGST @
CGST @ SGST @
18% (`)
6% (`) 6% (`)
Computation of Tax payable in cash by B Ltd. for the month of September, 2019:
Particulars CGST SGST
(`) (`)

Question 19 - PQR (Pvt.) Ltd. is engaged in supplying taxable goods to its customers within
the state and it is not liable for registration under Section 22 of CGST Act, 2017.
From 15-02-2018 onwards, it started interstate supply of taxable goods hence it applied for
registration on 25-02-2018 and same has been granted to him. Its CGST, SGST and IGST liability
for the month of February, 2018 is Rs. 19,500, Rs. 19,500 and Rs. 40,500 respectively and PQR
Private Limited has to make e-payment of tax on the due date i.e., on 20-03-2018.
PQR Private Limited has provided the following details of stock of input held on 14-02-2018
and tax paid thereon:
Particulars CGST SGST

(`) (`)
Inputs received on 10-01-2018 (Invoice dated 11-01-2018) lying
3,600 3,600
in stock
Inputs received on 25-10-2017 (Invoice dated 26-10-2017) lying 7,500 7,500
in semi finished stock
Inputs received on 15-01-2018 (Invoice dated 15-01-2018) 9,600 9,600
contained in Finished Goods
Briefly explain the tax payable by PQR Private Limited in cash, if any. The company
has not opted for the Composition scheme.
Solution:
In view of above provision Input tax credit available to PQR Private Limited. will be
computed as follows:
Particulars CGST @ SGST @
6% (`) 6% (`)

Computation of Tax payable in cash by PQR Private Limited for month of February, 2018:
Particulars CGST @ SGST @ IGST @
6% (Rs.) 6% (Rs.) 12% (Rs.)

JOB WORKER
Job work (Section 2(68)): It means any treatment or process undertaken by a person on goods
belonging to another registered person.
The person who is treating or processing the goods belonging to other person is called job worker
and the person to whom the goods belongs is called principal
Input tax credit in case of job work (Section 19)

1. The principal shall subject to such conditions and restrictions as prescribed, be allowed input
tax credit on inputs sent to job worker for job work
2. 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 a job work without being first brought to his place of business
3. The inputs sent for job work shall be received back by the principal after completion of job
work or otherwise or shall be supplied from the place of business of the job worker within one
year of being sent out,
In case of direct dispatch to job worker- Period of ONE year starts from receipt of inputs by
job-worker: 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. 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 being first brought to his place of
business
6. Capital goods other than moulds and dies, jigs and fixtures or tools sent for job work shall be
received back by the principal within a period of three years of being sent out,
In case of direct dispatch to job worker- Period of THREE year starts from receipt of capital
goods by job-worker: Where the capital goods are sent directly to a job worker, the period of
three year shall be counted from the date of receipt of capital goods by the job worker.

If the conditions above is not fulfilled, then the inputs or capital goods shall be deemed to be
cleared on the original dates and the tax and interest shall be paid accordingly
7. Moulds and dies, jigs and fixtures, or tools – Time limit not applicable: Nothing contained in
section 19(3) or section 19(6) shall apply to moulds and dies, jigs and fixtures, or tools snt out
to a job worker for job work.
Conditions and restrictions in respect of inputs and capital goods sent to the job worker
1. The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover
of a challan issued by the principal, including where such goods are sent directly to a job-
worker.
2. The details of challans in respect of goods dispatched to a job worker or received from a job
worker or sent from one job worker to another during a quarter shall be included in FORM
GST ITC-04 furnished for that period on or before the twenty-fifth day of the month
succeeding the said quarter.
3. Where the inputs or capital goods are not returned to the principal within 3 years, it shall be
deemed that such inputs or capital goods had been supplied by the principal to the job worker
on the day when the said inputs or capital goods were sent out and the said supply shall be
declared in FORM GSTR-1 and the principal shall be liable to pay the tax along with applicable
interest.

INPUT SERVICE DISTRIBUTOR
Input Service Distributor (Section 2(61)): An office of the supplier of goods or services or both
which receives tax invoices issued under section 31 towards the receipt of input services and issues
“input service distributor invoice” for the purposes of distributing the credit of central tax, state
tax, integrated tax or union territory tax paid on the said services to a supplier of taxable goods or
services or both having the same Permanent Account Number as that of the said office.
Input tax credit in case of Input Service Distributor (Section 20)

1. The ISD shall distribute the credit of CGST as CGST or IGST and credit of IGST as IGST or
CGST by way of issue of a document containing the amount of input tax credit being
distributed in such manner as may be prescribed
2. Input Service Distributor shall distribute the credit subject to following conditions
a. The credit can be distributed to the recipients of credit by issuing Input Service Distributor
Invoice.
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 amongst such recipients to whom the input service is attributable and
such distribution shall be pro rata on the basis of the turnover in a State or turnover in a
Union territory 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 or turnover in a Union territory 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

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 recipients along with interest, and the
provisions of section 73 or section 74, as the case may be, shall apply.

VALUE OF SUPPLY
Introduction
• The taxes levied on the supply of the goods or service in GST are usually ad valorem in nature.
It means that the GST is in proportion to the value of supply.
• The higher is the value, the more is the tax
• Therefore determination of accurate value of supply is one of the most significant aspects of the
assessment of taxes
Determination of value of taxable supply (Section 15(1))

The value of supply of goods or service or both
• shall be the transaction value,
• which is price actually paid or payable for the supply of goods or service or both where
• supplier and recipient of the goods or service are not related and
• price is the sole consideration
The value of supply shall (Section 15(2) and (3))

Shall include Shall not include
Taxes, duties, cesses, fees and charges except Discount given to the buyer or recipient of
CGST, SGST, UTGST, IGST and GST goods or services or both if duly recorded in
compensation cess the invoice in respect of such supply
Amount incurred by recipient on behalf of
the supplier
Incidental expenses and amount charged for
activities done before delivery
Charges for delayed payment of
consideration
Subsidies directly linked to the price
excluding subsidies provided from Central
Government and State Government

Where the value of supply of goods or services or both cannot be determined as per the provisions
of section 15(1), the same shall be determined as per the relevant rules. (Section 15(4))
Notwithstanding contained in section 15(1) or 15(4), the value of supply of such supplies as may
be notified by the Government on the recommendation of the council shall be determined in such
manner as may be prescribed. (Section 15(5))
Related Person means

• Such person are officers or directors of one another’s business
• Such person is legally recognised partners in business
• Such person are employer and employee
• Any person directly or indirectly owns, control or holds 25% or more of the outstanding voting
stock or shares of both of them
• One of them directly or indirectly controls the other
• Both of them are directly or indirectly controlled by third person
• They are members of the same family
Question: Mr. Kohli residing in Noida, purchase 20,000 Markers @ Rs. 20 each from Ankita &
Stationary, wholesalers at Delhi. Mr. Kohli’s sister working as Manager in Ankita & Stationary.
Open Market Value of Marker is Rs. 23. Ankita & Stationary additionally charges Rs. 10,000 for
supplying markers to Kohli’s business place.
Solution:
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Question: Mr. Ram a manufacture furnish the following particular
Price of the machine 1,00,000

Packing charges 10,000
Designing charges 20,000
Transit insurance 1,000
Freight outward 8,000
Cash discount to customer 25
Compute the value of the machine.
Solution:
Question: From the following information determine the value of taxable supply as per provision
of Section 15 of the CGST Act, 2017?
Particulars Rs
Contracted value of supply of goods (including GST @ 18%) 11,00,000
The contracted value of supply includes the following
1. Cost of primary packing 25,000
2. Cost of protective packing 15,000
3. Design and engineering charges 85,000
Other information
• Commission paid to agent be recipient on instruction of supplier 5,000
• Freight and insurance charges paid by recipient on behalf of supplier 75,000

Determination of value of supply as per Rules
Rule 27: 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 the open market value is not available under clause (a), 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 the 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 the application of rule 30 or rule 31 in that order.
Illustration:
1. Where a new phone is supplied for twenty thousand rupees along with the exchange of an old
phone and if the price of the new phone without exchange is twenty four thousand rupees, the
open market value of the new phone is twenty four thousand rupees.
2. Where a laptop is supplied for forty thousand rupees along with the barter of a printer that is
manufactured by the recipient and the value of the printer known at the time of supply is four
thousand rupees but the open market value of the laptop is not known, the value of the supply
of the laptop is forty four thousand rupees.

Rule 28: Value of supply of goods or services or both between distinct or related persons,
other than through an agent.-
The value of the supply of goods or services or both between distinct persons (having same PAN)
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 the open market value is not available, be the value of supply of goods or services of like
kind and quality;
c. if the value is not determinable under clause (a) or (b), be the value as determined by the
application of rule 30 or rule 31, in that order:
Provided that where the 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:
Question: M/s. Showmakerz an event management Co. for creation of large scale events &
Occasions, owned by Mr. Shipu Kingdom of Dreams in Gurugram contracts with Showmakerz
ompany to arrange a celebrity concerts charging Rs. 8,00,000.The company sub-contract the same
work to Aura Mgt. Company which were also controlled and managed by Mr. Shipu for Rs.
6,00,000. M/s. Aura Mgt Co. charges Rs. 6,20,000 from market for the same work.
Solution:
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Rule 29: 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
per cent. 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: A principal supplies groundnut to his agent and the agent is supplying groundnuts of
like kind and quality in subsequent supplies at a price of five thousand rupees (Rs. 5,000) per
quintal on the day of the supply. Another independent supplier is supplying groundnuts of like
kind and quality to the said agent at the price of four thousand five hundred and fifty rupees (Rs.
4,550) per quintal. The value of the supply made by the principal shall be four thousand five
hundred and fifty rupees (Rs. 4,550) per quintal or where he exercises the option, the value shall
be 90 per cent. of five thousand (Rs. 5,000) rupees i.e., four thousand five hundred rupees (Rs.
4,500) per quintal.
b. where the value of a supply is not determinable under clause (a), the same shall be determined
by the application of rule 30 or rule 31 in that order.
Rule 30: 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 of this Chapter, the value shall be one hundred and ten percent (110%) of the cost
of production or manufacture or the cost of acquisition of such goods or the cost of provision of
such services.
Rule 31: 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 27 to 30,
the same shall be determined using reasonable means consistent with the principles and the general
provisions of section 15 and the provisions of this Chapter.

Rule 31A: Value of supply in case of lottery, betting, gambling and horse racing
Particulars Value of supply

Lottery run by State Governments 100/112 of the face value of the ticket
Lottery authorised by State Governments 100/128 of the face value of the ticket
Actionable claim in form of chance to win 100% of the face value of the bet
betting, gambling or horse racing
Rule 32: Determination of value in respect of certain supplies-

1. Notwithstanding anything contained in the provisions of this Chapter, the value in respect of
supplies specified below shall, at the option of the supplier, be determined in the manner
provided hereinafter.
Purchase or sale of foreign currency, including money changing: The value of supply of services
in relation to the purchase or sale of foreign currency, including money changing, shall be
determined by the supplier of services in the following manner, namely:-
a. Exchanged from or to Indian Rupees: for a currency, when exchanged from, or to, Indian
Rupees, 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 reference rate for that currency at that time,
multiplied by the total units of currency:
Provided that in case where the Reserve Bank of India reference rate for a currency is not
available, the value shall be one percent. 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 Rupees, the
value shall be equal to one percent 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 the Reserve Bank of India.

Provided also that a person supplying the services may exercise the option to ascertain the
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.
Option 1
Where the RBI reference rate for a currency when exchanged from, or to, Indian Rupees,
is available 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
reference rate for that currency at that time,
multiplied by the total units of currency
Where the RBI reference rate for a currency Provided that in case where the Reserve
is not available Bank of India 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
Whether neither of the currencies exchanged Provided further that in case where neither of
is Indian Rupee the currencies exchanged is Indian Rupees,
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
the Reserve Bank of India
Option II
b. at the option of the supplier of services, the value in relation to the supply of foreign currency,
including money changing, shall be deemed to be-
• one percent 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;
• one thousand rupees and half of a percent. of the gross amount of currency exchanged for

an amount exceeding one lakh rupees and up to ten lakh rupees; and
• five thousand and five hundred rupees and one tenth of a percent. of the gross amount of
currency exchanged for an amount exceeding ten lakh rupees, subject to a maximum
amount of sixty thousand rupees.
Amount Exchanged Value of supply

Upto Rs. 1,00,000 1% of the gross amount of currency
exchanged subject to minimum Rs. 250
Above 1,00,000 but upto Rs. 10,00,000 Rs. 1,000 + 0.5% of gross amount of
currency exchanged
Above Rs. 10,00,000 Rs. 5,500 + 0.1% of the gross amount of
currency exchanged subject to maximum of
Rs. 60,000
c. The value of the 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 per cent.
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.
Type of Booking Value of supply
Domestic Booking 5% of the basic fare
International Booking 10% of the basic fare
d. 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 an 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 the policy holder
in subsequent years:

Type of policy Value of supply
If amount is intimated to the policy holder Gross premium charged - amount
at the time of supply of service allocated for investments
In case of single premium annuity policy 10% of single premium charged
In all other cases First year of policy - 25% of premium
charged
Subsequently - 12.5% of premium charged
Provided that this sub-rule shall not apply where the entire premium paid by the policy holder is
only towards the risk cover in life insurance.
e. 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 the purchase of such goods, the
value of supply shall be the difference between the selling price and the purchase price and
where the value of such supply is negative, it shall be ignored.
Value of second hand goods = Sale price – Purchase price
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.
f. 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 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.

Rule 32A: Value of supply in case where Kerala Flood Cess is applicable: The value of supply
of goods or services or both on which Kerala Flood Cess is levied under clause 14 of the Kerala
Finance Bill 2019, shall be deemed to be the valzue determined in terms of section 15 of the Act,
but shall not include the said cess
Rule 33: Value of supply of services in case of pure agent.-

Notwithstanding anything contained in the provisions of this Chapter, 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,-
• the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to
the third party on authorisation by such recipient;
• 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
• 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
• does not use for his own interest such goods or services so procured; and
• 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 the Registrar of Companies. The fees charged
by the Registrar of Companies for the registration and approval of the name are compulsorily
levied on B. A is merely acting as a pure agent 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.

Question 1
(i) Kite Ltd. exported some goods to H corporation of USA. It received US $ 10,000 as
consideration for the same and sold it @ Rs 69 per US dollar. Compute the value of taxable
supply
(a) RBI reference rate for US dollar at that time is Rs 70 per US dollar
(b) RBI reference rate for US dollars is not available.
(ii) What would be the value of taxable supply if US $ 9,000 are converted into UK £ 6,200. RBI
reference rate at that time for US $ id Rs 70 per US dollar and for UK £ is Rs 100 per UK
Pound.
Solution:
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Question 2
Mr. Prakash is an Air Travel Agent and provides the following information for the month of
October, 2020.
Date Particulars Basic Commission Total
Fare Value
02/10/2020 Booked by Mr. Ram for Delhi to Chennai 3,000 500 6,000
10/10/2020 Booked by Mr. Sachin for Delhi to Bangkok 15,000 1,500 19,000
24/10/2020 Booked by Mr. Raj for Delhi to Mumbai 2,600 500 5,500
Compute value under various methods applicable for air travel agent. Answer:
Solution:
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Question 3 –
Mr. Ramesh a manufacture furnish the following particular
Price of the machine 1,00,000
Packing charges 10,000
Designing charges 20,000
Transit insurance 1,000
Freight outward 8,000
Cash discount to customer 2%
Compute the value of machine when Ramesh has to deliver machine to factory of recipient.
Solution:
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Question 4 –
From the following information determine the value of taxable supply as per provisions of section
15 of the CGST Act, 2017?
Particulars `
Contracted value of supply of goods (including GST @ 18%) 11,00,000
The contracte4d value of supply includes the following:
(1) Cost of primary packing 25,000
(2) Cost of protective packing at recipient’s request for safe transportation 15,000
(3) Design and engineering charges 85,000
Other information:
(i) Commission paid to agent by recipient on instruction of supplier 5,000
(ii) Freight and insurance charges paid by recipient on behalf of supplier 75,000
Give reasons with suitable assumptions where necessary.

Solution:–
Particulars
Question 5-
From the following information determine the value of taxable supply as per provisions of section
15 of the CGST Act, 2017?
Particulars Rs.
Value of machine (including GST @ 12%) 15,00,000
The invoice value includes the following
(1) Taxes (other than CGST /SGST /IGST) charged separately by the
15,000
supplier
(2) Weighment and loading charges 25,000
(3) Consultancy Charges in relation to pre-installation planning 10,000
(4) Testing Charges 2,000
(5) Inspection Charges 4,500
Other information: .
(i) Subsidy received from Central government for setting up factory in
51,000
backward region
(ii) Subsidy received from third party for timely supply of machine to
50,000
recipient
(iii) Trade discount actually allowed shown separately in invoice 24,000
Give reasons with suitable assumptions where necessary.

Solution: Computation of Value of taxable supply of Goods :
Particulars Rs. Rs.
Question 6-
Comfort footwear, a registered supplier of Agra, has a non-moving stock worth Rs. 8,00,000 of a
particular variety of shoes that are out of fashion. It has not been able to find market inspite of
huge discounts offered. Subsequently, it was able to sell this stock at a very low price of Rs.
5,00,000 to a retailer in Madhya Pradesh with a condition that the retailer would display hoardings
of Comfort Footwear in all their retail outlets in the State. Determine the value of supply.
Solution:
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Question 7 –
Computation of value of taxable supply and tax payable: Determine the value of able supply as
per Section 15 of the CGST Act, 2017 and the Rules thereof:
Contracted sale price of goods (including CGST and SGST @5%) 10,56,000
The contracted sale price includes the following elements of cost:
(i) Cost of drawings and design 5,000
(ii) Cost of primary packing 2,000
(iii) Cost of packing at buyer's request 4,000
(iv) Fright and insurance from 'place of removal' to buyer's premises 43,000
A discount of Rs 6,000 was given by the supplier at the time of supply of goods. CGST and SGST
is levied @5 %.
Solution: Computation of Assessable value:
Question 8-
Mr. X located in Jaipur purchases 2,000 drawing boxes for Rs. 2,00,000 from M/s. Stationers Ltd.
(wholesalers) located in Delhi. Mr. X's son is an employee in M/s. Stationers Ltd. The price of
each drawing box in the open market is Rs. 120. The supplier additionally charges Rs. 5,000 for
delivering the goods to the recipient's place of business.
Solution:
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ACCOUNTS AND RECORDS
Accounts and Records (Section 35)

1. Every registered person shall keep and maintain following accounts at his principle place of
business
• production or manufacture of business
• inward and outward supply of goods or service or both
• stocks of goods
• input tax credit availed
• output tax payable and paid
• a true and correct account of the goods or services imported or exported or of supplies
attracting payment of tax on reverse charge,
• including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt
vouchers, payment vouchers and refund vouchers.
More than one place of business: If registered person has more than one place of business than
accounts relating to each place of business shall be kept at such place of business
2. Maintenance of records in electronic form: Registered person may keep and maintain such
accounts in electronic form also.
Generation and maintenance of electronic records (Rule 57 of CGST Rules, 2017)

1. Proper electronic back-up of records shall be maintained and preserved in such manner that,
in the event of destruction such records due to accidents or natural causes, the information
can be restored within a reasonable period of time.
2. The registered person maintaining electronic records shall produce, on demand, the relevant
records or documents, duly authenticated by him, in hard copy or in any electronically
readable format.
3. Where the accounts and records are stored electronically by any registered person, he shall,
on demand, provide the details of such files, passwords of such files and explanation for
codes used, where necessary, for access and any other information which is required for
such access along with a sample copy in print form of the information stored in such files.

3. Every owner or operator of warehouse or godown or any other place used for storage of goods
and every transporter, irrespective whether he is a registered person or not, shall maintain
records of the consignor, consignee and other relevant details of the goods.
Records to be maintained by owner or operator of godown or warehouse and transporters-

• Every person required to maintain records and accounts in accordance with the provisions of
sub-section (2) of section 35, if not already registered under the Act, shall submit the details
regarding his business electronically on the common portal in FORM GST ENR-01,
• Every person who is enrolled under sub-rule (1) shall, where required, amend the details
furnished in FORM GST ENR-01 electronically on the common portal either directly or through
a Facilitation Centre notified by the Commissioner.
4. Maintenance of additional records: The Commissioner may notify a class of taxable persons
to maintain additional accounts or documents for such purpose as may be specified therein.
5. Power of Commissioner to permit maintenance of records: Where the Commissioner

considers that any class of taxable person is not in a position to keep and maintain accounts in
accordance with the provisions of this section, he may, for reasons to be recorded in writing,
permit such class of taxable persons to maintain accounts in such manner as may be prescribed.
6. Audit of Accounts: Every registered person whose turnover during a financial year exceeds
Rs. Two crore (2 Crores) shall get his accounts audited by a chartered accountant or a cost
accountant and shall submit a copy of the audited annual accounts, the reconciliation statement
under sub-section (2) of section 44 and such other documents in such Form GSTR-9C
7. Determination of liability in case of failure to maintain the accounts: If the registered

person fails to account for the goods or services or both, the proper officer shall determine the
amount of tax payable on the goods or services or both that are not accounted for, as if such
goods or services or both had been supplied by such person and the provisions of section 73 or
section 74, as the case may be, shall, mutatis mutandis, apply for determination of such tax.

Maintenance of accounts by registered person (Rule 56 of CGST Rules, 2017)
1. Every registered person shall keep and maintain, in addition to the particulars mentioned in
sub-section (1) of section 35, a true and correct account of the goods or services imported or
exported or of supplies attracting payment of tax on reverse charge along with the relevant
documents, including
• invoices,
• bills of supply,
• delivery challans,
• credit notes,
• debit notes,
• receipt vouchers,
• payment vouchers and
• refund vouchers.
2. Every registered person, other than a person paying tax under section 10, shall maintain the
accounts of stock in respect of goods received and supplied by him, and such accounts shall
contain particulars of the
• opening balance,
• receipt,
• supply,
• goods lost,
• stolen,
• destroyed,
• written off or disposed of by way of gift or free sample and
• the balance of stock including raw materials, finished goods, scrap and wastage thereof.
3. Every registered person shall keep and maintain a separate account of advances received, paid
and adjustments made thereto.
4. Every registered person, other than a person paying tax under section 10, shall keep and
maintain an account, containing the details of

• tax payable (including tax payable in accordance with the provisions of sub-section (3) and
sub-section (4) of section 9),
• tax collected and paid,
• input tax,
• input tax credit claimed, together with a register of tax invoice,
• credit notes,
• debit notes,
• delivery challan issued or received during any tax period.
5. Every registered person shall keep the particulars of -
• names and complete addresses of suppliers from whom he has received the goods or
services chargeable to tax under the Act;
• names and complete addresses of the persons to whom he has supplied goods or services,
where required under the provisions of this Chapter;
• the complete address of the premises where goods are stored by him, including goods
stored during transit along with the particulars of the stock stored therein.
6. If any taxable goods are found to be stored at any place(s) other than those declared under sub-
rule (5) without the cover of any valid documents, the proper officer shall determine the amount
of tax payable on such goods as if such goods have been supplied by the registered person.
7. Every registered person shall keep the books of account at the principal place of business and
books of account relating to additional place of business mentioned in his certificate of
registration and such books of account shall include any electronic form of data stored on any
electronic device.
8. Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and
all incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation
and thereafter the correct entry shall be recorded and where the registers and other documents
are maintained electronically, a log of every entry edited or deleted shall be maintained.
9. Each volume of books of account maintained manually by the registered person shall be
serially numbered.
10. Unless proved otherwise, if any documents, registers, or any books of account belonging to a
registered person are found at any premises other than those mentioned in the certificate of
registration, they shall be presumed to be maintained by the said registered person.

11. Every agent referred to in clause (5) of section 2 shall maintain accounts depicting the,-
• particulars of authorisation received by him from each principal to receive or supply goods
or services on behalf of such principal separately;
• particulars including description, value and quantity (wherever applicable) of goods or
services received on behalf of every principal;
• particulars including description, value and quantity (wherever applicable) of goods or
services supplied on behalf of every principal;
• details of accounts furnished to every principal; and
• tax paid on receipts or on supply of goods or services effected on behalf of every principal.
12. Every registered person manufacturing goods shall maintain monthly production accounts
showing quantitative details of raw materials or services used in the manufacture and
quantitative details of the goods so manufactured including the waste and by products thereof.
13. Every registered person supplying services shall maintain the accounts showing quantitative
details of goods used in the provision of services, details of input services utilised and the
services supplied.
14. Every registered person executing works contract shall keep separate accounts for works
contract showing -
(a) the names and addresses of the persons on whose behalf the works contract is executed;
(b) description, value and quantity (wherever applicable) of goods or services received for the
execution of works contract;
(c) description, value and quantity (wherever applicable) of goods or services utilized in the
execution of works contract;
(d) the details of payment received in respect of each works contract; and
(e) the names and addresses of suppliers from whom he received goods or services.
15. The records under the provisions of this Chapter may be maintained in electronic form and the
record so maintained shall be authenticated by means of a digital signature.
16. Accounts maintained by the registered person together with all the invoices, bills of supply,
credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and
outward supply shall be preserved for the period as provided in section 36 and shall, where
such accounts and documents are maintained manually, be kept at every related place of

business mentioned in the certificate of registration and shall be accessible at every related
place of business where such accounts and documents are maintained digitally.
17. Any person having custody over the goods in the capacity of a carrier or a clearing and
forwarding agent for delivery or dispatch thereof to a recipient on behalf of any registered
person shall maintain true and correct records in respect of such goods handled by him on
behalf of such registered person and shall produce the details thereof as and when required by
the proper officer.
18. Every registered person shall, on demand, produce the books of accounts which he is required
to maintain under any law for the time being in force.
Period of retention of accounts (Section 36)

• Shall retain the accounts until the expiry of 72 months from the due date of furnishing
annual return for the year pertaining to such accounts and records.
• Provided that a registered person who is a party to an appeal or revision or any other
proceedings, shall retain the books of accounts and other records for a period of 1 year after
final disposal of such appeal or revision or proceedings or the period specified above which
ever is later.

Electronic way bills
Section 68 of the CGST Act provides that the Government may require the person in charge of a
conveyance carrying any consignment of goods of value exceeding such amount as may be
specified to carry with him such documents and such devices as may be prescribed.
In terms of the said provision, Electronic Way Bill has been prescribed as one of the documents
which the person in charge of a conveyance is required to carry.
The Government may require the person in charge of a conveyance carrying any consignment of
goods of value exceeding the prescribed amounts, to carry with himself such documents and
devices as may be prescribed.
Where any such conveyance is intercepted by the proper officer, he may require the person in
charge of the conveyance to produce the documents & devices for verification and that person then
has the duty to cooperate and allow the inspection.
It is for the same reason that Electronic Way Bills (E-way bills) have been prescribed.
Every registered person who causes movement of goods of consignment value greater than Rs.
50,000 whether for supply or otherwise or due to the inward supply from an unregistered person,
shall before commencement of such movement, furnish the necessary information in Form GST
EWB-01 which is divided into two parts Part-A and Part-B, electronically on the portal.
Part-A shall be filed by registered person whereas Part-B shall be filed and filled by transporter
Where the E-way bill hasn’t been generated and the consignment is handed over to a transporter,
the transporter will generate the E-way bill on the basis of information furnished on the portal by
the registered person.
Upon the generation of the E-way bill, a unique E-way bill number (EBN), is generated and made
available to the supplier, the recipient and the transporter. Where multiple consignments are being
carried, a transporter may also generate a consolidated E-way bill.
For the purpose of calculating the consignment value of goods, the value as declared in an invoice,
a bill of supply or a delivery challan shall include includes the Central tax, State or Union territory
tax, integrated tax and cess charged, if any, in the document and shall exclude the value of exempt
supply of goods where the invoice is issued in respect of both exempt and taxable supply of goods.

Validity of E-way Bill
The E-way bill so generated is valid for one day if the distance involved is less than or equal to
100 kms, and one additional day for every 100 kms over and above. In case of over dimensional
cargo, the validity shall be one day for first 20 KM and one additional day for every 20 KM.
Type of conveyance Distance Validity period
Upto 20 kms 1 day
For over dimensional cargo For every additional 20kms 1 additional day
or part thereof
Other than over dimensional Upto 100 kms 1 day
cargo For every additional 100 kms 1 additional day
or part thereof

ZERO RATED SUPPLY AND PLACE OF SUPPLY
What is zero rated supply (Section 16 of IGST Act)

1. It means any of the following supplies of goods or services or both namely:
a. Export of goods or services or both
b. Supplies of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.
2. Subject to provision of section 17(5), of CGST Act, 2017, credit of input tax may be availed
for making zero rated supplies
3. A registered person making zero rated supplies shall be eligible to claim refund under either
of the following options, namely:
a. he may supply goods or services or both under bond or Letter of Undertaking
b. he may supply goods or services or both on payment of integrated tax and claim refund of
such tax paid on goods or services or both supplied

What is inter-state supply?
According to section 7 of IGST Act, 2017, the broad principle for determining the supply of goods
and services in the course of inter-state trade and commerce are:
With reference to supply of goods

Section 7(1): Subject to provision of section 10 of IGST Act, 2017, where the location of the
supplier and the place of supply are in -
a. Two different States
b. Two different Union Territories
c. A State and a Union Territory
shall be treated as supply in the course of inter-state trade or commerce
Section 7(2): Import of goods- Supply of goods imported into the territory of India, till they cross
the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state
trade or commerce.
With reference to supply of services

supplier and the place of supply are in -
a. Two different States
b. Two different Union Territories
c. A State and a Union Territory
shall be treated as supply in the course of inter-state trade or commerce
Section 7(4): Import of services- Supply of services imported into the territory of India, shall be
treated to be a supply of goods in the course of inter-state trade or commerce.
\
Section 7(5): Supply of goods or services or both
a. When the supplier of goods located in India and place of supply is outside India
b. To or by Special Economic Zone developer or a Special Economic Zone unit
c. In the taxable territory not being an intra-state supply and covered elsewhere.
shall be treated as supply of goods or services or both in the course of inter-state trade or
commerce.

What is intra-state supply?
According to section 8 of IGST Act, 2017, the broad principle for determining the supply of goods
and services in the course of intra-state trade and commerce are:
With reference to supply of goods

supplier and the place of supply are in the same State or Union Territory shall be treated as intra-
state supply.
Provided that following supply of goods shall not be treated as intra-state supply:
a. supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit
b. goods imported into the territory of India till they cross the customs frontiers of India
c. supplies made to a tourist referred to in section 15
With reference to supply of services

supplier and the place of supply are in the same State or Union Territory shall be treated as intra-
state supply.
Provided that intra-state supply of services shall not include supply of services to or by Special
Economic Zone developer or Special Economic Zone unit.
Supplies in territorial waters Section 9 : Notwithstanding anything contained in IGST Act, 2017
a. Where the location of the supplier is in the territorial waters, the location of such supplier or
b. Where the place of supply is in the territorial waters, the place of supply
Shall, for the purpose of this act, be deemed to be in the coastal State or Union Territory where the
nearest point of the appropriate base line is located.

Place of supply of goods other than supply of goods imported into or exported from India
(Section 10)
Section Nature of Transaction Place of supply
10(1)(a) where the supply involves movement of goods, location of the goods at the
whether by the supplier or the recipient or by any time at which the movement
other person of goods terminates for
delivery to the recipient
10(1)(b) where the goods are delivered by the supplier to a the place of supply of such
recipient or any other person on the direction of a goods shall be the principal
third person, whether acting as an agent or place of business of such
otherwise, before or during movement of goods, person
either by way of transfer of documents of title to
the goods or otherwise,
10(1)(c) where the supply does not involve movement of the location of such goods at
goods, whether by the supplier or the recipient the time of the delivery to the
recipient
10(1)(d) where the goods are assembled or installed at site the place of such installation
or assembly
10(1)(e) where the goods are supplied on board a be the location at which such
conveyance, including a vessel, an aircraft, a train goods are taken on board
or a motor vehicle
Place of supply of goods imported into or exported from India (Section 11)
The place of supply of goods -
a. Imported into India shall be location of the importer
b. Exported from India shall be location outside India

Exercise
1. X ltd. of Mumbai receives order from A ltd. of Jaipur, for supply of certain goods. The price
quoted by X Ltd is inclusive of freight. X Ltd. arranges for the transportation of the goods to
Jaipur. The delivery of goods is taken by A ltd. at Jaipur. Determine the place of supply of
goods. Would your answer be different if A ltd has arranged the transport of goods which are
delivered to it by transporter in Jaipur.
Solution:
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2. P ltd of Jaipur places order on Q ltd of Jaipur for delivery of certain goods. P ltd directs Q ltd
to deliver the goods to R ltd. in Mumbai, and Q ltd arranges for transportation of the goods to
R ltd in Mumbai. What will be the place of supply of goods
Solution:
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3. Mr. Ram of Mumbai went to Chennai on holidays. He purchased laptop from shop located in
Chennai. What will be place of supply of laptop.
Solution:
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4. Mr. X of Rajasthan has a warehouse in Pune, Maharashtra. Mr. Y of Rajasthan approaches Mr.
X for purchase of goods lying in warehouse in Pune and takes delivery of goods from the Pune
warehouse. Mr. X issues an invoice for sale of goods at his principal place of business in
Rajasthan. Determine place of supply of goods
Solution:
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5. Mr. Arjun located in Mumbai places order on Mr. Bhuvan of Mumbai for installation of a
machinery at his factory located in Chandigarh. Mr. Bhuvan procures the various parts of the
machinery from different states and arranges for installation of the same in Arjun’s factory at
Chandigarh. Determine the place of supply of machine.
Solution:
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6. Moody ltd. of Delhi entered into contract with the airlines authority for the supply of food
packets to the passenger travelling in Delhi - Mumbai route. Aircraft commenced the journey
from Delhi. The goods were loaded on board the aircraft in Jaipur. Determine the place of
supply of goods.
Solution:
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7. From the following information determine the place of supply of goods, where the goods are
delivered by the supplier to a recipient on the direction of third person during the course of
movement of goods. Also determine the nature of supply - whether inter-state or intra-state
supply
Supplier and his Location of the Recipient and his Place of delivery of
location buyer (third location goods
person)
A ltd. Jaipur B ltd. Jaipur M ltd. Mumbai Mumbai
A ltd. Jaipur M ltd. Mumbai B ltd. Jaipur Jaipur
A ltd. Jaipur S ltd. Surat M ltd. Mumbai Mumbai
A ltd. Jaipur M ltd. Mumbai P ltd. Mumbai Mumbai
8. XYZ Ltd. of Jaipur imported certain goods from PQR Inc of US. The goods were imported
through vessel and delivery of goods was taken at Mumbai port. Determine the place of
supply of goods.
Solution:
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Place of supply of services where location of supplier and recipient is in India (Section 12)
Section Nature of Transaction Place of supply
12(1) Determination of place of supply of services where the location of supplier and
recipient of service is in India
12(2) General Provision: the place of supply of services
a) Made to a registered person Location of such person
b)Made to any person other than a registered
person
(i) where the address on record exist The location of the recipient
(ii) in other cases the location of the supplier of
service
12(3) Services provided in relation to immovable property
a) directly in relation to an immovable property, Location at which the
including services provided by architects, interior immovable property or boat or
decorators, surveyors, engineers and other related vessel, as the case may be, is
experts or estate agents, any service provided by located or intended to be
way of grant of rights to use immovable property located
or for carrying out or co-ordination of construction
work
b) by way of lodging accommodation by a hotel,
inn, guest house, home stay, club or campsite, by
whatever name called, and including a house boat
or any other vessel
c) by way of accommodation in any immovable
property for organising any marriage or reception
or matters related thereto, official, social, cultural,
religious or business function including services
provided in relation to such function at such
property
d) any services ancillary to the services referred to
in clauses (a), (b) and (c)
If the location of immovable property or boat or Location of the recipient
vessel is located or intended to be located outside
India

12(4) Restaurant and catering services, personal Location where the service is
grooming, fitness, beauty treatment, health service actually performed
including cosmetic and plastic surgery
12(5) Services in relation to training and
performance appraisal to
a) a registered person Location of such person
b) a person other than registered person Location where service is
actually performed
12(6) Services provided by way of admission to a Place where the event is
cultural, artistic, sporting, scientific, educational, actually held or where the park
entertainment event or amusement park or any or such other place is located
other place and services ancillary thereto
12(7) Service provided by way of
a) organisation of a cultural, artistic, sporting,
scientific, educational or entertainment event
including supply of services in relation to a
conference, fair, exhibition, celebration or similar
events
b) services ancillary to organisation of any of the

events or services referred to in clause (a), or
assigning of sponsorship to such events
Provided to a registered person Location of such person
To a person other than registered person
if event is held outside India Location of recipient
if event is held in India Place where the event is
actually held or where the park
or such other place is located
12(8) Services by way of transportation of goods,
including by mail or courier to
To a registered person Location of such person
A person other than registered person Location at which such goods
are handed over for
transportation

12(9) Passenger transportation service
A person other than registered person Place where the passenger
embarks on the conveyance for
a continuous journey
12(10) Services on board a conveyance, including a Location of the first scheduled
vessel, an aircraft, a train or a motor vehicle point of departure of that
conveyance for the journey
12(11) Telecommunication services including data
transfer, broadcasting, cable and direct to
home television services to any person shall
a) in case of services by way of fixed Location where the
telecommunication line, leased circuits, internet telecommunication line, leased
leased circuit, cable or dish antenna circuit or cable connection or
dish antenna is installed for
receipt of services
b) in case of mobile connection for Location of billing address of
telecommunication and internet services provided the recipient of services on the
on post-paid basis record of the supplier of
services
c) in cases where mobile connection for
telecommunication, internet service and direct to
home television services are provided on pre-
payment basis through a voucher or any other
means
(i) through a selling agent or a re-seller or a Address of the selling agent or
distributor of subscriber identity module card or re-seller or distributor as per
re-charge voucher the record of the supplier at the
time of supply
(ii) by any person to the final subscriber Location where such pre-
payment is received or such
vouchers are sold

12(12) Banking and other financial services, including Location of the recipient of
stock broking services to any person services on the records of the
supplier of services
Provided that if the location of recipient of services is not on the records of the
supplier, the place of supply shall be the location of the supplier of services
12(13) Insurance services
To a person other than a registered person Location of the recipient of
services on the records of the
supplier of services
12(14) Advertisement services to the Central Shall be taken as being in each

Government, a State Government, a statutory of such States or Union
body or a local authority meant for the States or territories
Union territories identified in the contract or
agreement
Special provision for payment of tax by a supplier of online information and database access
or retrieval services (Section 14)
1. This section is applicable in case of
• supply of online information and database access or retrieval services by any person located
in a non-taxable territory
• received by a non-taxable online recipient,
• the supplier of services located in a non-taxable territory shall be the person liable for paying
integrated tax on such supply of services
2. An intermediary located in a non taxable territory, who arranges or facilitate the supply of such
services, shall be deemed to be, the recipient of such service from the supplier of services in
non-taxable territory, and supplying such services to the non taxable online recipient.
3. The supplier of online information and database access or retrieval services shall, for payment
of integrated tax, take a single registration under the Simplified Registration Scheme to be
notified by the Government
Refund of Integrated Tax to International Tourist (Section 15)

The integrated tax paid by tourist leaving India on any supply of goods taken out of India by him
shall be refunded in such manner and subject to such conditions and safeguards as may be
prescribed.

Question 1 – Determine place of supply in independent cases as under:
(1) A company in Pune contracts with a Pune based architect to design a structure for their new
office to be located in Bangalore.
(2) Mr. A of Jaipur entered into a lease agreement with Mr. B of Jaipur whereby he leased out his
farm in Nagpur to Mr. B.
(3) Mr. A an employee of ABC Ltd. Kolkata, goes on an official tour to Hyderabad and stays in
a hotel there, booked in the name of his company.
(4) Mr. X of Mumbai arranged for destination wedding of his son at Pushkar (Rajasthan) he
booked a resort at Pushkar for the accommodation of his guests and also performing the
marriage ceremony. Apart from providing the resort for the marriage purpose, decoration was
also provided.
(5) The contractor M/s. ABC of Pune sub-contracted the work of construction of the building at
Delhi to M/s. XYZ of Mumbai, to complete the work as per the drawing and design of the
Architect.
(6) ABC Ltd. of Mumbai, hires a professional firm of Delhi to design its office in Canada.
Solution: The place of supply of services shall be determined as under —
Case Place Reasons

of
supply

Question 2 : XYZ Ltd. of Delhi has entered into a contract with ASL Training Ltd. of Mumbai
for training and performance appraisal of its employees. The services were performed at Dehradun
Training Centre of ASL Training Ltd. Determine the Place of supply of services in case XYZ Ltd.
is registered in Delhi. What would your answer be in case XYZ Ltd. is unregistered recipient.
Solution:
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Question 3 - Auditions of music show were held at Jaipur, where the judges of the music and
dance firm registered in Mumbai were sent to appraise the performance of the young aspirants.
Determine the place of supply of performance appraisal services.
Solution:
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Question 4 - Mr. X, of Mumbai purchased online tickets for the Wonder la water park in
Bengaluru. Determine the place of supply.
Solution:
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Question 5 - Mr. A of Pune, booked online for the Tiger Safari at the Ranthambor National Park
and hired a jeep to be taken around for the safari. Determine the place of supply for the services.
Here, there are two kinds of supply of services- first admission to the park and second hiring of
the jeep.
Solution:
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Question 6 - Jas Fashions Ltd. an Indian fashion designing company registered in Delhi hosts a
faishon show at Toronto, Canada. The firm receives the services of ABC Ltd. of Mumbai for
organizing the event. Determine the place of supply of services provided by ABC Ltd.
Solution:
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Question 7 - Mr. A of Raipur (unregistered person) hires the services of M/s XYZ an event
management company registered in Jaipur, for organising the marriage ceremony of his daughter
at marriage garden in Jaipur. Determine place of supply of services provided by XYZ Ltd. What
would your answer be in case marriage takes place in Dubai.

Solution:
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Question 8 - The All India Scientists Association (AISA) registered in Bengaluru, contracted with
event managers M/s. BB Ltd. of New Delhi for organising the National seminar of scientists at
Gurgaon and the highly esteemed real estate company XYZ Ltd. of Rajasthan offered sponsorship
for the seminar. Mr. A, a scientist from Chennai paid for the fees to attend the seminar at the
Bengaluru office of the AISA. Determine the place of supply of the various services supplied
herein.
Solution: The place of supply shall be determined as follows:
Service Supplier Recipient Place of Reason

supplied supply

Question 9 - Mr. X of Jaipur has availed services of Delhi Transport Company of Delhi for
transport of goods from his house in Bhilwara (Rajasthan) to Delhi. Determine place of supply of
goods transport services.
Solution:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Question 10 - Mr. A, partner of M/s. ABC Chartered Accountants, a firm registered in Delhi, went
to Mumbai for audit purposes. He purchased from Jaipur Airlines (registered in Rajasthan) air
ticket from Jaipur to Mumbai disclosing the name of the organisation and its GST Registration
number. Determine the place of supply of service. What would your answer be in case Mr. A does
not disclose the particulars of organisation.
Solution:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Question 11 - Mr. X residing in Delhi travelling with Indian Airlines is provided with the movie-
on-demand service as on-board entertainment during the Kolkata -Delhi leg of a Bangkok -
Kolkata - Delhi flight. Determine the place of supply of service provided to Mr. X.
Solution:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

RETURNS
Furnishing details of outward supplies (Section 37)

Every registered person, other than -
a. An Input Service Distributor
b. A non - resident taxable person and
c. A person paying tax under section 10 (Composition Scheme)
shall furnish return, electronically in GSTR-1
• The details of outward supplies of goods or services or both effected during a tax period on or
before 10th day of the month succeeding the said tax period, and
• Such details shall be communicated to the recipient of the said supplies in Part A of GSTR-2A,
GSTR-4A and GSTR-6A after the due date of filing FORM GSTR-1
• The registered person shall not be allowed to furnish the details of outward supplies during the
period from 11th to 15th day of the month succeeding the tax period
• The commissioner may for reason to be recorded in writing, by notification, extend the time
limit for furnishing such details for such class of taxable person as may be specified therein
Every registered person who has been communicated the details pertaining to inward supplies of
Input Service Distributor shall-
a. Either accept or reject the details so communicated, on or before 17th day, but not before the
15th day of the month succeeding the tax period and
b. The details furnished by him shall stand amended accordingly
Any registered person, who has furnished the details under this section for any tax period and
which have been remained unmatched, shall upon discovery of any error or omission therein,
rectify such error or omission in such manner as prescribed and shall pay the tax and interest, if
any, in case there is a shot payment of tax on account of such error or omission, in the return to be
furnished for such period.

Time limit for rectification: no rectification of error or omission in respect of the details furnished
under this section shall be allowed after-
a. Furnishing of the return for the month of September following the end of the financial year to
which such details pertain or
b. Furnishing of the relevant annual return
Question: Anand Ltd. furnished the annual return for the year 2018-19 on August 25, 2019. An
error is discovered in respect of a transaction pertaining to outward supplies of September 2018.
Determine the time limit to rectify the mistake in case return of September 2019 is furnished on
19th October 2019. Would your answer be different is annual return for financial year 2018-19 is
furnished on 25-12-2019.
Furnishing details of inward supplies (Section 38)

shall verify, validate, modify or delete, if required, the details relating to outward supplies and
credit and debit notes communicated under section 37
• To prepare the details of his inward supplies and credit and 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 section 37
Every registered person, other than-


shall furnish electronically, the details of-
• Inward supplies of taxable goods or services or both
• Inward supplies of goods or services or both on which tax is payable under reverse charge
• Credit or debit notes received in respect of such supplies during the tax period
after the 10th day but on or before 15th day of the month succeeding the tax period in FORM
GSTR-2.
limit for furnishing such details for such class of taxable person as may be specified therein.
• The details of supplies modified, deleted or included by the recipient in the return furnished
shall be communicated to the supplier concerned.
• Any registered person who’s furnished the details for any tax period and which have remain
unmatched shall upon discovery of any error or omission therein rectify such error or omission
in the tax tax period during which such error or omission is noticed and shall pay tax and interest,
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.
Furnishing of return (Section 39)


Shall for every calendar month or part thereof, furnish, in FORM GSTR-3 a return electronically
of-
a. Inward and outward supplies of goods or services or both
b. Input tax credit availed
c. Tax payable
d. Tax paid
e. Such other particulars as may be prescribed
On or before 20th day of the month succeeding such calendar month or part thereof
• A registered person paying tax under the provision of the Composition scheme, shall for each
quarter or part thereof, furnish, in FORM GSTR-4 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
18 days after the end of each such quarter
• Every registered person required to deduct tax at source under the provisions of CGST Act,
2017, shall furnish return in FORM GSTR-7 electronically for the month in which such
deductions has been made within 10 days after the end of such month.
• Every taxable person registered as an Input Service Distributor shall for every calendar month
or part thereof, furnish, in FORM GSTR-6 a return electronically within 13 days after the end
of such month.
• Every registered non-resident taxable person shall for every calendar month or part thereof,
furnish, in FORM GSTR-5, a return electronically within 20 days after the end of a calendar
month.
limit for furnishing such details for such class of taxable person as may be specified therein.
• Every registered person who is required to furnish a return, 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.
• Every registered person who is required to furnish a return under section 39 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.
• If any registered person after furnishing a return under section 39 discovers any omission or
incorrect particulars therein, 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.
Such rectification cannot be done when omission or incorrect particulars are discovered as a result
of scrutiny, audit, inspection or enforcement activity by tax authorities
• 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.
First Return (Section 40)

Every registered person who has made outward supplies in the period between the date on which
he become 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 (Section 41)
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 self- assessed
output tax as per the return referred to in the said sub-section.

Annual Return (Section 44)
1. Every registered person other than-

b. A casual taxable person
c. A non-resident taxable person
shall furnish an annual return for every financial year electronically in FORM GSTR-9 on or before
31st 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 section 35 shall furnish, electronically, the annual return along with a copy of the
audited annual accounts and a reconciliation statement with the audited annual financial statement.
Final Return (Section 45)

Every registered person 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
FORM GSTR-10.
Notice to return defaulters (Section 46)

Where a registered person fails to furnish a return under section 39 or section 44 or section 45, a
notice shall be issued electronically requiring him to furnish such return within fifteen days (15
days) in FORM GSTR-3A.
Levy of Late Fee (Section 47)

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 (Rs. 100) for every day during which such
failure continues subject to a maximum amount of five thousand rupees (Rs. 5,000).

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 (Rs. 100) for every day during which
such failure continues subject to a maximum of an amount calculated at a quarter per cent.
(0.25%) of his turnover in the State or Union territory.
Goods and Service Tax Practitioner (Section 48)

• A registered person may authorise an approved Goods and Service Tax Practitioner to
furnish the details of outward supplies, inward supplies and other particulars in the return
• The responsibility for correctness of any particulars furnished in the return or other details
filed by the Goods and Service Tax Practitioners shall continue to rest with the registers
person on whose behalf such return and details are furnished
• The application for registration as GST Practitioner shall be made in FORM GST PCT-01
electronically and the certification of registration shall be issued in FORM GST PCT-02.
• Functions of GST Practitioner are
• Furnish the details of outward and inward supplies
• Furnish monthly, quarterly and annual or final return
• Make deposit for credit into the electronic cash ledger
• File a claim of refund
• File an application for amendment or cancellation of registration

Return filing:
1. All taxpayers would file return in Form GSTR-3B along with payment of tax for each of the
month from by 20th of the succeeding month
2. For filing details in Form GSTR-1, taxpayers would be divided into two categories, which are
as follows:
a. Taxpayers with annual aggregate turnover upto Rs. 1.5 crore need to file GSTR-1 on
quarterly basis as per following frequency:
Sl. No. Period Last date for filing of
return in FORM GSTR-1
1 July-September 31st October
2 October-December 31st January
3 January-March 30th April
4 April-June 31st July
b. Taxpayers with annual aggregate turnover more than Rs. 1.5 crore need to file GSTR-1
for each of the month on the 11th day of the month succeeding each month.

List of GST Returns/Statements to be furnished by registered person
GSTR-1 Details of outward supplies of taxable goods or services or both
GSTR-1A Details of inward supplies as added, corrected or deleted by the recipient made available to
the supplier
GSTR-2 Details of inward supplies of taxable goods or services or both claiming input tax credit
GSTR-2A Details of outward supplies furnished by the supplier made available to the recipient on the
basis of Form GSTR-1 furnished by the supplier
GSTR-3 Monthly return on the basis of finalisation of details of outward supplies an inward supplies
along with payment of tax
GSTR-3A Notice to a registered taxable person who fails to furnish return
GSTR-3B Return furnished on extension of time limit for furnishing of details under Form GSTR-1
or GSTR-2
GSTR-4 Quarterly return for Composition supplier
GSTR-4A Details of outward supplies made available to the recipient registered under Composition
scheme on the basis of FORM GSTR-1 furnished by the supplier
GSTR-5 Return for registered Non-Resident taxable person
GSTR-5A Details of supplies of online information and database access or retrieval services by a
person located outside India made to a non-taxable person in India
GSTR-6 Return for Input service distributor
GSTR-6A Details of outward supplies made available to the ISD recipient on the basis of FORM
GSTR-1 furnished by the supplier
GSTR-7 Return for authorities deducting tax at source (TDS) under section 51
GSTR-7A TDS Certificate
GSTR-8 Details of supplies effected through e-commerce operator and the amount of tax collected
GSTR-9 Annual return
GSTR-9A Annual return by composition taxable person
GSTR-9B Annual statement by electronic commerce operator required to collect tax at source
GSTR-9C Reconciliation statement
GSTR-10 Annual return
GSTR-11 Details of inward supplies to be furnished by a person having Unique Identity Number
(UIN)

PAYMENT OF TAX
Payment of tax, interest, penalty and other amount (Section 49)

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
shall be credited to the electronic cash ledger of such person.
2. The input tax credit as self-assessed in the return of a registered person shall be credited to his
electronic credit ledger.
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.
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
5. The amount of input tax credit available in the electronic credit ledger of the registered person
Input tax credit Output tax liability

IGST • IGST
• CGST/SGST/UTGST
CGST • CGST
• IGST
SGST • SGST
• IGST
UTGST • UTGST
• IGST
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.

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
Section 49A Utilisation of input tax credit subject to certain conditions

Notwithstanding anything contained in section 49, the input tax credit on account of central tax,
State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax,
State tax or Union territory tax, as the case may be, only after the input tax credit available on
account of integrated tax has first been utilised fully towards such payment.
Section 49B Order of utilisation of input tax credit

Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and
clause (f) of sub- section (5) of section 49, the Government may, on the recommendations of the
Council, prescribe the order and manner of utilisation of the input tax credit on account of
integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of
any such tax.
Rule 88A: Order of utilization of input tax credit

Input tax credit on account of 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 Union territory tax, as the case may be, in any order.
Provided that the input tax credit on account of central tax, State tax or Union territory tax shall be
utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case
may be, only after the input tax credit available on account of integrated tax has first been utilised
fully.

Order of utilization of input tax credit as under:
Input tax credit on Output tax liability Output tax liability Output tax liability
account of on account of on account of central on account of State
integrated tax tax tax/UT tax
IGST (I) (II)- In any order
(III) Input tax credit on account of integrated tax to be completely exhausted mandatorily
CGST (V) (IV) Not permitted
SGST/UTGST (VII) Not permitted (VI)
Electronic liability register (Rule 85 of CGST Rules, 2017)

1. The electronic liability register specified under sub- section (7) of section 49 shall be
maintained in FORM GST PMT-01 for each person liable to pay tax, interest, penalty, late fee
or any other amount on the common portal and all amounts payable by him shall be debited to
the said register.
2. The electronic liability register of the person shall be debited by-
• the amount payable towards tax, interest, late fee or any other amount payable as per the
return furnished by the said person;
• the amount of tax, interest, penalty or any other amount payable as determined by a proper
officer in pursuance of any proceedings under the Act or as ascertained by the said person;
• the amount of tax and interest payable as a result of mismatch under section 42 or section
43 or section 50; or
• any amount of interest that may accrue from time to time.
2. Subject to the provisions of section 49, payment of every liability by a registered person as
per his return shall be made by debiting the electronic credit ledger maintained as per rule
86 or the electronic cash ledger maintained as per rule 87 and the electronic liability register
shall be credited accordingly.
3. The amount deducted under section 51, or the amount collected under section 52, or the
amount payable on reverse charge basis, or the amount payable under section 10, any
amount payable towards interest, penalty, fee or any other amount under the Act shall be
paid by debiting the electronic cash ledger maintained as per rule 87 and the electronic
liability register shall be credited accordingly.

4. Any amount of demand debited in the electronic liability register shall stand reduced to the
extent of relief given by the appellate authority or Appellate Tribunal or court and the
electronic tax liability register shall be credited accordingly.
5. The amount of penalty imposed or liable to be imposed shall stand reduced partly or fully,
as the case may be, if the taxable person makes the payment of tax, interest and penalty
specified in the show cause notice or demand order and the electronic liability register shall
be credited accordingly.
6. A registered person shall, upon noticing any discrepancy in his electronic liability ledger,
communicate the same to the officer exercising jurisdiction in the matter, through the
common portal in FORM GST PMT-04.
Electronic credit register (Rule 86 of CGST Rules, 2017)

1. The electronic credit ledger shall be maintained in FORM GST PMT-02 for each registered
person eligible for input tax credit under the Acton the common portal and every claim of input
tax credit under the Act shall be credited to the said ledger.
2. The electronic credit ledger shall be debited to the extent of discharge of any liability in
accordance with the provisions of section 49.
3. Where a registered person has claimed refund of any unutilized amount from the electronic
credit ledger in accordance with the provisions of section 54, the amount to the extent of the
claim shall be debited in the said ledger.
4. If the refund so filed is rejected, either fully or partly, the amount debited under sub- rule (3),
to the extent of rejection, shall be re-credited to the electronic credit ledger by the proper officer
by an order made in FORM GST PMT-03.
5. Save as provided in the provisions of this Chapter, no entry shall be made directly in the
electronic credit ledger under any circumstance.
6. A registered person shall, upon noticing any discrepancy in his electronic credit ledger,
communicate the same to the officer exercising jurisdiction in the matter, through the common
portal in FORM GST PMT-04.

Important forms
Particular Form No.
Electronic liability ledger GST PMT-01
Electronic credit ledger GST PMT-02
Order for rejection of refund claimed GST PMT-03
Any discrepancy in electronic cash ledger, the person can communicate GST PMT-04
to the concerned officer in
Electronic cash ledger GST PMT-05
Electronic challan having details of payment of tax, late fees or penalty GST PMT-06
having Challan Identification Number
Where the bank account is debited but no Challan Identification Number GST PMT-07
is generated, may represent electronically
Interest on delayed payment of tax (Section 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 (18% per annum).
2. 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 (24% per
annum).
Various forms used under ITC

Particulars Form No.
Declaration of claim of ITC under section 18(1) GST ITC-01
Declaration for transfer of ITC under section 18(3) GST ITC-02
Declaration for intimation of ITC reversal under section 18(4) GST ITC-03
Details of goods sent to job work and received back GST ITC-04

Question 1:
Mr. Aamir , a supplier of goods, pays GST under regular scheme. Mr. Aamir is an inter-state
supplier and hence is not eligible to any threshold exemptions. He has made the following taxable
supplies:
Outward Taxable Supplies
Intra-State 12,00,000
Inter-State 4,50,000
He has also furnished the following details about his purchases

Purchases
Intra-State 4,50,000
Inter-State 75,000
He has opening balances of ITC as under

CGST Rs. 45,000
SGST Rs. 45,000
IGST Rs 1,05,000
If the supplies are exclusive of taxes (18% GST), compute his tax liability.
Solution:

Question 2: The following table represents tax liability with respect to Outward Taxable Supplies
Tax Liability
CGST SGST IGST
7,000 8,500 7,500
The following table represents ITC situation:

IGST CGST SGST
Total 6,000 8,000 7,500
Explain utilization of ITC
Solution:
Questions 3: R has a sum of Rs. 2,80,000 on account of input tax credit of CGST in the electronic
credit ledger. He has to pay the following tax liability:
Tax payable under Amount (Rs.)
IGST 1,10,000
SGST/UTGST 80,000
CGST 1,50,000
Determine the order of utilisation of the ITC available in electronic credit ledger
Solution:

Question 4: Shyam has a sum of Rs. 3,60,000 on account of input tax credit of SGST in the
electronic credit ledger. He has to pay the following tax liability:
IGST 1,40,000
SGST/UTGST 1,80,000
CGST 1,70,000
Solution:
Question 5: Sunny has a sum of Rs. 3,90,000 on account of input tax credit of IGST in the
electronic credit ledger. He has to pay the following tax liability
IGST 2,10,000
SGST/UTGST 1,80,000
CGST 1,40,000
Solution:

REFUND OF TAX
Refund of tax (Section 54)
1. Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount
paid by him, may make an application in FORM GST RFD-01 before the expiry of two years
from the relevant date.
2. A specialised agency of the United Nations Organisation or any Multilateral Financial
Institution and Organisation notified under the United Nations (Privileges and Immunities)
Act, 1947, Consulate or Embassy of foreign countries, entitled to a refund of tax paid by it on
inward supplies of goods or services or both, may make an application for such refund, before
the expiry of eighteen months from the last day of the quarter in which such supply was
received.
3. A registered person may claim refund of any unutilised input tax credit at the end of any tax
period.
Provided that no refund of unutilised input tax credit shall be allowed in cases other than
a. zero rated supplies made without payment of tax
b. 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)
Provided further that no refund of unutilised input tax credit shall be allowed in cases where the
goods exported out of India are subjected to export duty
4. If, on receipt of any such application, the proper officer is satisfied that the whole or part of
the amount claimed as refund is refundable, he may make an order in FORM GST RFD-06
accordingly and the amount so determined shall be credited to the applicant and if so payable
not refundable then the amount shall be credited to the Consumer Welfare Fund.
5. The proper officer may, in the case of any claim for refund on account of zero-rated supply of
goods or services or both made by registered persons, refund on a provisional basis, ninety
percent of the total amount so claimed

6. The proper officer shall issue the order within sixty days (60 days) from the date of receipt of
application complete in all respects
7. Where any refund is due to a registered person who has defaulted in furnishing any return or
who is required to pay any tax, interest or penalty, which has not been stayed by any court,
Tribunal or Appellate Authority, the proper officer may—
a. withhold payment of refund due until the said person has furnished the return or paid
the tax, interest or penalty, as the case may be;
b. deduct from the refund due, any tax, interest, penalty, fee or any other amount which
the taxable person is liable to pay but which remains unpaid under this Act or under the
existing law
8. Where an order giving rise to a refund is the subject matter of an appeal or further proceedings
or where any other proceedings under this Act is pending and the Commissioner is of the
opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or
other proceedings on account of malfeasance or fraud committed, he may, after giving the
taxable person an opportunity of being heard, withhold the refund till such time as he may
determine.
9. Where a refund is withheld, the taxable person shall, be entitled to interest at such rate not
exceeding six percent (6% per annum).
10. Notwithstanding anything contained in this section, no refund shall be paid to an applicant, if
the amount is less than one thousand rupees
11. Where an order giving rise to a refund is the subject matter of an appeal or further proceedings
or where any other proceedings under this Act is pending and the Commissioner is of the
opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or
other proceedings on account of malfeasance or fraud committed, he may, after giving the
taxable person an opportunity of being heard, withhold the refund till such time as he may
determine.
12. Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding
anything contained in section 56, be entitled to interest at such rate not exceeding six percent
(6% per annum) if as a result of the appeal or further proceedings he becomes entitled to refund.
13. Notwithstanding anything to the contrary contained in this section, the amount of advance tax
deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of

section 27, shall not be refunded unless such person has, in respect of the entire period for
which the certificate of registration granted to him had remained in force, furnished all the
returns required under section 39.
14. Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-
section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.
Interest on delayed refund (Section 56)

1. If any tax ordered to be refunded under section 54 to any applicant is not refunded within sixty
days from the date of receipt of application, interest at such rate not exceeding six percent (6%
per annum) shall be payable in respect of such refund from the date immediately after the
expiry of sixty days from the date of receipt of application under the said sub-section till the
date of refund of such tax
2. Provided that where any claim of refund arises from an order passed by an adjudicating
authority or Appellate Authority or Appellate Tribunal or court which has attained finality and
the same is not refunded within sixty days from the date of receipt of application filed
consequent to such order, interest at such rate not exceeding nine percent (9% per annum)
shall be payable.
Consumer welfare fund (Section 57)

The Government shall constitute a Fund, to be called the Consumer Welfare Fund and there shall
be credited to the Fund:
a. the amount referred to in section 54
b. any income from investment of the amount credited to the Fund; and
c. such other monies received by it
Utilisation of fund (Section 58)

1. All sums credited to the Fund shall be utilised by the Government for the welfare of the
consumers.
2. The Government shall maintain proper and separate account and other relevant records in
relation to the Fund and prepare an annual statement of accounts.

ASSESSMENT
Self-assessment of tax (Section 59)
Every registered person shall self-assess the taxes payable under this Act and furnish a return for
each tax period.
Provisional Assessment (Section 60)

1. Where the taxable person is unable to determine the value of goods or services or both 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 shall pass an order,
within a period not later than ninety days from the date of receipt of such request, allowing
payment of tax on provisional basis at such rate or on such value as may be specified by him
2. The payment of tax on provisional basis may be allowed, if the taxable person executes a bond,
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 provisional order, pass the final assessment order after taking into
account such information as may be required for finalizing the assessment.
Provisional Assessment (Rule 98 of CGST Rules, 2017)

1. Every registered person requesting for payment of tax on a provisional basis in accordance
with the provisions of sub-section (1) of section 60 shall furnish an application along with
the documents in support of his request, electronically in FORM GST ASMT-01 on the
common portal, either directly or through a Facilitation Centre notified by the
Commissioner.
2. The proper officer may, on receipt of the application under sub-rule (1), issue a notice in
FORM GST ASMT-02 requiring the registered person to furnish additional information or
documents in support of his request and the applicant shall file a reply to the notice in
FORM GST ASMT – 03, and may appear in person before the said officer if he so desires.

3. The proper officer shall issue an order in FORM GST ASMT-04 allowing the payment of
tax on a provisional basis indicating the value or the rate or both on the basis of which the
assessment is to be allowed on a provisional basis and the amount for which the bond is to
be executed and security to be furnished not exceeding twenty-five per cent. of the amount
covered under the bond.
4. The registered person shall execute a bond in accordance with the provisions of sub-
section (2) of section 60 in FORM GST ASMT-05 along with a security in the form of a
bank guarantee for an amount as determined under sub-rule (3):
Provided that a bond furnished to the proper officer under the State Goods and Services Tax Act
or Integrated Goods and Services Tax Act shall be deemed to be a bond furnished under the
provisions of the Act and the rules made thereunder.
5. The proper officer shall issue a notice in FORM GST ASMT-06, calling for information
and records required for finalization of assessment under sub-section (3) of section 60 and
shall issue a final assessment order, specifying the amount payable by the registered person
or the amount refundable, if any, in FORM GST ASMT-07.
6. The applicant may file an application in FORM GST ASMT-08 for the release of the
security furnished under sub-rule (4) after issue of the order under sub-rule (5).
7. The proper officer shall release the security furnished under sub-rule (4), after ensuring
that the applicant has paid the amount specified in sub-rule (5) and issue an order in FORM
GST ASMT–09 within a period of seven working days from the date of the receipt of the
application under sub-rule (6).
Scrutiny of returns (Section 61)

1. The proper officer may scrutinize the return and related particulars furnished by the registered
person to verify the correctness of the return and inform him of the discrepancies noticed, if
any, seek his explanation thereto.
2. In case the explanation is found acceptable, the registered person shall be informed
accordingly and no further action shall be taken in this regard
3. 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 registered
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 or proceed to determine the tax and other dues under section 73 or section 74
Scrutiny of returns (Rule 99 of CGST Rules, 2017)
(1) Where any return furnished by a registered person is selected for scrutiny, the proper officer
shall scrutinize the same in accordance with the provisions of section 61 with reference to the
information available with him, and in case of any discrepancy, he shall issue a notice to the said
person in FORM GST ASMT-10, informing him of such discrepancy and seeking his explanation
thereto within such time, not exceeding thirty days from the date of service of the notice or such
further period as may be permitted by him and also, where possible, quantifying the amount of tax,
interest and any other amount payable in relation to such discrepancy.
(2) The registered person may accept the discrepancy mentioned in the notice issued under sub-
rule (1), and pay the tax, interest and any other amount arising from such discrepancy and inform
the same or furnish an explanation for the discrepancy in FORM GST ASMT- 11 to the proper
officer.
(3) Where the explanation furnished by the registered person or the information submitted under
sub-rule (2) is found to be acceptable, the proper officer shall inform him accordingly in FORM
GST ASMT-12.
Assessment of non-filers of return (Section 62)

1. 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 a period of five years from the date specified
under section 44 for furnishing of the annual return for the financial year to which the tax not
paid relates.
2. Where the registered 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 but the liability for payment of interest or for payment of late fee shall
continue.

Rule 100(1): The order of assessment made under section 62 shall be issued in FORM GST
ASMT-13 and a summary thereof shall be uploaded electronically in FORM GST DRC-07
Assessment of unregistered persons (Section 63)

Where a taxable person fails to obtain registration even though liable to do so or whose registration
has been cancelled under section 29 but who was liable to pay tax, the proper officer may proceed
to assess the tax liability of such taxable person to the best of his judgment for the relevant tax
periods and issue an assessment order within a period of five years from the date specified under
section 44 for furnishing of the annual return for the financial year to which the tax not paid relates:
Rule 100(2): The proper officer shall issue a notice to a taxable person in accordance with the
provisions of section 63 in FORM GST ASMT-14 containing the grounds on which the assessment
is proposed to be made on best judgment basis and after allowing a time of fifteen days to such
person to furnish his reply, if any, pass an order in FORM GST ASMT-15
Summary of assessment in special cases (Section 64)

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 Commissioner or 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 may
adversely affect the interest of revenue
2. 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 liable to pay tax and any other amount due
under this section.
3. On an application made by the taxable person within thirty days from the date of receipt of
order passed under sub-section (1) or on his own motion, if the Additional Commissioner or
Joint Commissioner considers that such order is erroneous, he may withdraw such order and
follow the procedure laid down in section 73 or section 74.

Rule 100(3): The order of assessment under sub-section (1) of section 64 shall be issued in FORM
GST ASMT-16 and a summary of the order shall be uploaded electronically in FORM GST DRC-
07.
Rule 100(4): The person referred to in sub-section (2) of section 64 may file an application for
withdrawal of the assessment order in FORM GST ASMT-17
Rule 100(5): The order of withdrawal or, as the case may be, rejection of the application under
subsection (2) of section 64 shall be issued in FORM GST ASMT-18

AUDIT
Meaning of Audit (Section 2(13))
It means the examination of records, returns and other documents maintained or furnished by the
registered person under this Act or the rules made thereunder or under any other law for the time
being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input
tax credit availed, and to assess his compliance with the provisions of this Act or the rules made
thereunder.
Audit by tax authorities (Section 65)

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 in FORM GST ADT-01 not less
than fifteen working days prior to the conduct of audit.
4. The audit under sub-section (1) shall be completed within a period of three months from the
date of commencement of the audit
5. 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
6. On conclusion of audit, the proper officer shall, within thirty days, inform the registered person
in FORM GST ADT_02, 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

Special Audit (Section 66)
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
in FORM GST ADT-03 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.
3. 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
4. The registered person shall be given an opportunity of being heard in respect of any material
gathered on the basis of special audit which is proposed to be used in any proceedings against
him under this Act or the rules made thereunder
5. The expenses of the examination and audit of records under, 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, 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.
Note: On conclusion of special audit, the registered person shall be informed of the findings of
the special audit in FORM GST ADT-04

ADVANCE RULING
Authority of Advance Ruling (Section 96)

Subject to the provisions of this Chapter, for the purposes of this Act, the Authority for advance
ruling constituted under the provisions of a State Goods and Services Tax Act or Union Territory
Goods and Services Tax Act shall be deemed to be the Authority for advance ruling in respect of
that State or Union territory.
The Central Government and the State Government shall appoint officer of the rank of Joint
Commissioner as member of the Authority for Advance Ruling.
Application for advance ruling (Section 97)

1. An applicant desirous of obtaining an advance ruling under this Chapter may make an
application in FORM GST ARA-01 and accompanied by fees of Rs. 5,000, stating the question
on which the advance ruling is sought.
2. The question on which the advance ruling is sought under this Act, shall be in respect of,––
a. classification of any goods or services or both;
b. applicability of a notification issued under the provisions of this Act;
c. determination of time and value of supply of goods or services or both;
d. admissibility of input tax credit of tax paid or deemed to have been paid;
e. determination of the liability to pay tax on any goods or services or both;
f. whether applicant is required to be registered;
g. whether any particular thing done by the applicant with respect to any goods or services or both
amounts to or results in a supply of goods or services or both, within the meaning of that term.
Procedure on receipt of application (Section 98)

1. On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the
concerned officer and, if necessary, call upon him to furnish the relevant records:
2. The Authority may, after examining the application and the records called for and after hearing
the applicant or his authorised representative and the concerned officer or his authorised

representative, by order, either admit or reject the application:
Provided that the Authority shall not admit the application where the question raised in the
application is already pending or decided in any proceedings in the case of an applicant under any
of the provisions of this Act:
3. A copy of every order shall be sent to the applicant and to the concerned officer.
4. Where an application is admitted, the Authority shall, after examining such further material as
may be placed before it by the applicant or obtained by the Authority and after providing an
opportunity of being heard to the applicant or his authorised representative as well as to the
concerned officer or his authorised representative, pronounce its advance ruling on the question
specified in the application.
5. Where the members of the Authority differ on any question on which the advance ruling is
sought, they shall state the point or points on which they differ and make a reference to the
Appellate Authority for hearing and decision on such question.
6. The Authority shall pronounce its advance ruling in writing within ninety days from the date
of receipt of application.
7. A copy of the advance ruling pronounced by the Authority duly signed by the members and
certified in such manner as may be prescribed shall be sent to the applicant, the concerned
officer and the jurisdictional officer after such pronouncement.
Appellate authority of advance ruling (Section 99)

Subject to the provisions of this Chapter, for the purposes of this Act, the Appellate Authority for
Advance Ruling constituted under the provisions of a State Goods and Services Tax Act or a Union
Territory Goods and Services Tax Act shall be deemed to be the Appellate Authority in respect of
that State or Union territory.
Appeal to appellate authority (Section 100)

1. The concerned officer, the jurisdictional officer or an applicant aggrieved by any advance
ruling pronounced, may appeal to the Appellate Authority.
2. Every appeal under this section shall be filed within a period of thirty days from the date on
which the ruling sought to be appealed against is communicated to the concerned officer, the
jurisdictional officer and the applicant:

Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by a
sufficient cause from presenting the appeal within the said period of thirty days, allow it to be
presented within a further period not exceeding thirty days.
Form and manner of appeal to the appellate authority for advance ruling (Rule 106 of CGST
Rules, 2017)
1. An appeal against the advance ruling issued under sub-section (6) of section 98 shall be made
by an applicant on the common portal in FORM GST ARA-02 and shall be accompanied by a fee
of ten thousand rupees to be deposited in the manner specified in section 49.
2. An appeal against the advance ruling issued under sub-section (6) of section 98 shall be made
by the concerned officer or the jurisdictional officer referred to in section 100 on the common
portal in FORM GST ARA-03 and no fee shall be payable by the said officer for filing the appeal.
3. The appeal referred to in sub-rule (1) or sub-rule (2), the verification contained therein and all
the relevant documents accompanying such appeal shall be signed,-
c. in the case of the concerned officer or jurisdictional officer, by an officer authorised in
writing by such officer; and
d. in the case of an applicant, in the manner specified in rule 26.
Order of appellate authority (Section 101)

1. The Appellate Authority may, after giving the parties to the appeal or reference an opportunity
of being heard, pass such order as it thinks fit, confirming or modifying the ruling appealed
against or referred to.
2. The order shall be passed within a period of ninety days from the date of filing of the appeal.
3. Where the members of the Appellate Authority differ on any point or points referred to in
appeal or reference, it shall be deemed that no advance ruling can be issued in respect of the
question under the appeal or reference.
4. A copy of the advance ruling pronounced by the Appellate Authority duly signed by the
Members and certified in such manner as may be prescribed shall be sent to the applicant, the
concerned officer, the jurisdictional officer and to the Authority after such pronouncement.

Rectification of advance ruling (Section 102)
The Authority or the Appellate Authority may amend any order passed by it under section 98 or
section 101, so as to rectify any error apparent on the face of the record, if such error is noticed by
the Authority or the Appellate Authority on its own accord, or is brought to its notice by the
concerned officer, the jurisdictional officer, the applicant or the appellant within a period of six
months from the date of the order.
Applicability of advance ruling (Section 103)

The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter
shall be binding only—
a. on the applicant who had sought it in respect of any matter referred to in sub-section (2) of
section 97 for advance ruling;
b. on the concerned officer or the jurisdictional officer in respect of the applicant.
Advance ruling to be void in certain cases (Section 104)

1. Where the Authority or the Appellate Authority finds that advance ruling pronounced by it
under has been obtained by the applicant or the appellant by fraud or suppression of material
facts or misrepresentation of facts, it may, by order, declare such ruling to be void ab-initio
and thereupon all the provisions of this Act or the rules made thereunder shall apply to the
applicant or the appellant as if such advance ruling had never been made.
2. A copy of the order made under sub-section (1) shall be sent to the applicant, the concerned
officer and the jurisdictional officer.
Powers of authority and appellate authority (Section 105)

The Authority or the Appellate Authority shall, for the purpose of exercising its powers
regarding—
a. discovery and inspection;
b. enforcing the attendance of any person and examining him on oath;
c. issuing commissions and compelling production of books of account and other records,
have all the powers of a civil court under the Code of Civil Procedure, 1908.

Procedure of Authority and Appellate Authority (Section 106)
The Authority or the Appellate Authority shall, subject to the provisions of this Chapter, have
power to regulate its own procedure.

THE GOODS AND SERVICES TAX
(COMPENSATION TO STATES ACT), 2017
Short title, extent and commencement (Section 1)

1. This Act may be called the Goods and Services Tax (Compensation to States) Act, 2017.
2. It extends to the whole of India.
3. It shall come into force on such date as the Central Government may, by notification in the
Projected growth rate (Section 3)

The projected nominal growth rate of revenue subsumed for a State during the transition period
shall be fourteen per cent. per annum (14% p.a.)
Base year (Section 4)

For the purpose of calculating the compensation amount payable in any financial year during the
transition period, the financial year ending 31st March, 2016, shall be taken as the base year.
Projected revenue for any year (Section 6)

The projected revenue for any year in a State shall be calculated by applying the projected growth
rate over the base year revenue of that State.
Illustration.—If the base year revenue for 2015-16 for a concerned State, calculated as per section
5 is one hundred rupees, then the projected revenue for financial year 2018-19 shall be as follows—
Projected Revenue for 2018-19=100 (1+14/100)3
Calculation and release of compensation (Section 7)

1. The compensation under this Act shall be payable to any State during the transition period.
2. The compensation payable to a State shall be provisionally calculated and released at the end
of every two months period, and shall be finally calculated for every financial year after the
receipt of final revenue figures, as audited by the Comptroller and Auditor-General of India:

3. The loss of revenue at the end of every two months period in any year for a State during the
transition period shall be calculated, at the end of the said period, transition period.
4. In case of any difference between the final compensation amount payable to a State upon
receipt of the audited revenue figures from the Comptroller and Auditor-General of India, and
the total provisional compensation amount released to a State in the said financial year, the
same shall be adjusted against release of compensation to the State in the subsequent financial
year.
5. Where no compensation is due to be released in any financial year, and in case any excess
amount has been released to a State in the previous year, this amount shall be refunded by the
State to the Central Government and such amount shall be credited to the Fund in such manner
as may be prescribed.
Levy and collection of cess (Section 8)

1. There shall be levied a cess on such intra-State supplies of goods or services or both, as and
such inter- State supplies of goods or services or both as provided and collected in such manner
as may be prescribed, on the recommendations of the Council, for the purposes of providing
compensation to the States for loss of revenue arising on account of implementation of the
goods and services tax with effect from the date from which the provisions of the Central
Goods and Services Tax Act is brought into force, for a period of five years or for such period
as may be prescribed on the recommendations of the Council.
Provided that no such cess shall be leviable on supplies made by a taxable person who has decided
to opt for composition levy under section 10 of the Central Goods and Services Tax Act.
2. The cess shall be levied on such supplies of goods and services as are specified in column (2)
of the Schedule, on the basis of value, quantity or on such basis at such rate not exceeding the
rate set forth in the corresponding entry in column (4) of the Schedule, as the Central
Government may, on the recommendations of the Council, by notification in the Official
Gazette, specify.

Crediting proceeds of cess to Fund (Section 10)
1. The proceeds of the cess leviable under section 8 and such other amounts as may be
recommended by the Council, shall be credited to a non-lapsable Fund known as the Goods
and Services Tax Compensation Fund, which shall form part of the public account of India
and shall be utilised for purposes specified in the said section.
2. All amounts payable to the States under section 7 shall be paid out of the Fund.
3. Fifty per cent. of the amount remaining unutilised in the Fund at the end of the transition period
shall be transferred to the Consolidated Fund of India as the share of Centre, and the balance
fifty per cent. shall be distributed amongst the States in the ratio of their total revenues from
the State tax or the Union territory goods and services tax, as the case may be, in the last year
of the transition period.
4. The accounts relating to Fund shall be audited by the Comptroller and Auditor- General of
India or any person appointed by him at such intervals as may be specified by him and any
expenditure in connection with such audit shall be payable by the Central Government to the
Comptroller and Auditor-General of India.

THE UNION TERRITORY GOODS AND
SERVICES TAX ACT, 2017
Short title, extent and commencement (Section 1)
1. This Act may be called the Union Territory Goods and Services Tax Act, 2017.
2. It extends to the Union territories of the Andaman and Nicobar Islands, Lakshadweep, Dadra
and Nagar Haveli, Daman and Diu, Chandigarh, Ladakh and other territory.
3. It shall come into force on such date as the Central Government may, by notification in the
Note: Delhi, Jammu & Kashmir and Puducherry are the Union Territories, but this Act will not be
applicable there as they have their own State Legislature and Government. State GST would be
applicable in their case.
Levy and Collection (Section 7)

1. Subject to the provisions of sub-section (2), there shall be levied a tax called the Union territory
tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic
liquor for human consumption, on the value determined under section 15 of the Central Goods
and Services Tax Act and at such rates, not exceeding twenty per cent., as may be notified by
the Central Government on the recommendations of the Council and collected in such manner
as may be prescribed and shall be paid by the taxable person.
2. The Union territory tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect
from such date as may be notified by the Central Government on the recommendations of the
Council.
3. The Central Government may, on the recommendations of the Council, by notification, specify
categories of supply of goods or services or both, the tax on which shall be paid on reverse
charge basis by the recipient of such goods or services or both and all the provisions of this
Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the
supply of such goods or services or both.

4. The Union territory tax in respect of the supply of taxable goods or services or both by a
supplier, who is not registered, to a registered person shall be paid by such person on reverse
charge basis as the recipient and all the provisions of this Act shall apply to such recipient as
if he is the person liable for paying the tax in relation to the supply of such goods or services
or both. (Provision deferred)
5. The Central Government may, on the recommendations of the Council, by notification, specify
categories of services the tax on intra-State supplies of which shall be paid by the electronic
commerce operator if such services are supplied through it, and all the provisions of this Act
shall apply to such electronic commerce operator as if he is the supplier liable for paying the
tax in relation to the supply of such services:
Payment of Tax (Section 9)

The amount of input tax credit available in the electronic credit ledger of the registered person on
account of, —
Input tax credit Output tax liability
IGST • IGST
• CGST/SGST/UTGST
UTGST • UTGST
• IGST
The Union territory tax shall not be utilised towards payment of central tax

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Introduction

It is a compulsory contribution to state (i.e. government) revenue, levied by the government on

In the world, there are three structures to implicate tax rates-

Progressive systems Income Tax Rate

Regressive systems Income Tax Rate

Flat / Constant systems Income Fixed Tax Rate

Types of taxes in India

Direct Tax Indirect Tax

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Taxes subsumed in Goods and Services Tax

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8. November 2012 - A “Committee on GST Design”, consisting of the officials of the

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23. April 2017 - Parliament passed the following four bills-

• July 2017- Goods and Services Tax became a reality.

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Functions of Goods and Services Tax Council

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The authority to levy a tax is derived from the Constitution of India

Schedule VII of Constitution of India

List 1 List 2 List 3

Union List State List Concurrent List

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After inserting Article 246A and 269A

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2. It extends to the whole of India

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Business (Section 2(17))

Goods (Section 2(52))

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Scope of Supply (Section 7)

(1) For the purpose of this Act, “supply” includes

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S. No. Provision Whether supply of goods or

1(b) Any transfer of right in goods or of undivided share in Supply of service

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7. Raheja builders (a registered taxable person) receives architectural design supplied by a

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Applicable rate of tax: The higher rate of tax will be applicable

AQUAA CARE (SURAT) RO TECHNOLOGIES PRIVATE LIMITED, (2019)- AAR GUJARAT

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1. Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor

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4 Sponsorship Services Any person Any body corporate or partnership firm

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