GST Law & Analysiswith Conceptual Procedures

BIMAL JAINISHA BANSAL

YOUNG GLOBAL’SYOUNG GLOBAL

YOUNG GLOBAL’S

YOUNG GLOBAL

Highlights of the Book

• Detailed commentary on Model GST Law with illustrations, diagramsand flowcharts.

• Discussion on various domains viz. inter-state/intra-state supply ofgoods and/or services, principles of place of supply & time of supply,exclusion and exemptions in GST, exports & imports under GST,determination of Revenue Neutral Rate (RNR) etc. in a pragmaticmanner through illustrations for easy digest

• DVD containing: PPT on Model GST Law, 2016 Video presentation on highlights of Model GST Law, supply,

taxable person, time of supply, place of supply etc. Appendices on Model GST Law, 2016, Constitution (101st)

Amendment Act, 2016, GST Draft Rules & Formats on registration, invoice, payment, returns and refunds, FAQs released by CBEC etc.

ABOUT THE BOOKThis edition of GST book extensively covers in-depth analyses of Model CGST/SGST and IGST Act, 2016 and the Draft Business Processes released by the Government of India. This edition comprehensively discusses all the key GST provisions along with impact, preparations required for GST and challenges ahead, providing an insight to the readers for assisting in smooth transition to GST.

KEY FEATURES OF THE BOOKl Detailed commentary on Model GST Law to encapsulate the provisions for easy

digestl Overview of present indirect taxes-shortcomings, cascading and double taxesl GST-need and necessity, what it is, how it works, etc., alongwith discussion on

challenges ahead l Detailed discussion on meaning and scope of the term ‘supply’ alongwith the

discussion on likely issuesl Detailed discussion on meaning of taxable persons, liability to be registered, exclusion

and compulsory registrationl Discussion on various domains viz. inter-state/intra-state supply of goods and/or

services, principles of place of supply & time of supply, exclusion and exemptions in GST, exports & imports under GST, determination of Revenue Neutral Rate (RNR) etc. in a pragmatic manner through illustrations for easy digest

l Discussion on flow of input tax credit in GST with multiple illustrationsl Business processes and procedural aspects of GST-registration, return, payment,

refund, demand & recovery, adjudication, appeals, etc., alongwith key suggestionsl Journal entries for various scenarios in GST to provide clarity from accounting

perspectivel Transitional issues and impact of GST on manufacturer, trader, service sector and

specifically on various sectors viz. alcohol, real estate, automobiles, telecom, FMCG, insurance, e-commerce etc.

l Section-by-section analyses of the Constitution (101st Amendment) Act, 2016 and its comparison with the 122nd Constitutional Amendment Bill, 2014

l Journey of GST including important milestones with way forward for GSTl Comprehensive FAQs to provide conceptual clarity on various aspects of GST in

easy and understandable wayl Appendices on Model GST Law, 2016, Constitution (101st Amendment) Act, 2016,

GST Draft Rules & Formats on registration, invoice, payment, returns and refunds, FAQs released by CBEC etc.

l DVD containing PPT on Model GST Law, video presentation on Highlights of Model GST Law, supply, taxable person, time of supply, place of supply, valuation, GST credit, impact on service sector etc.

October, 2016

Published byYOUNG GLOBAL PUBLICATIONSB-4, Basement, Vandhana Building, 11 Tolstoy Marg, New Delhi - 110 001Phone: +91-11-23324142, 41824268E-mail: info@youngglobals.comWebsite: www.bookskhoj.com Price `1795

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GST Law and Analysiswith Conceptual Procedures

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GST Law and Analysiswith Conceptual Procedures

Bimal JainFCA, FCS, LLB, B.Com (Hons.)

Isha BansalACS, LLB, B.Com (Hons.)

An Insight into Goods & Service Tax

YOUNG GLOBAL PUBLICATIONS

CA. Chitresh GuptaB. Com (H), FCA,

IFRS (Certified), IDT (Certified)

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vii

BIMAL JAIN

FCA, FCS, LLB, B.Com (Hons.) with 21 years of experience in Indirect Taxation – GST, Service tax, Excise, Customs, VAT/CST, Foreign Trade Policy, DGFT matters, etc.Bimal Jain, qualified as a Chartered Accountant in May 1994, and Company Secretary in December 2006 and LLB in December, 2009. He has worked in renowned companies viz. LG Electronics India Pvt. Ltd, Honda Motorcycle & Scooters India Pvt. Ltd, Hindustan Development Corporation Ltd, Khaitan & Company. Currently, he is the Chief Executive Director of A2Z Taxcorp LLP.

Bimal is a Chairman of the Indirect Tax Committee of PHD Chamber of Commerce, Chairman of the Corporate Advisory Committee of IPEM Group of Institutions, Member of Indirect Tax Committee of FICCI & Assocham, Special Invitee of Indirect Tax Committee of ICAI, and Member of eminent faculties in Indirect tax committee of ICAI/ ICSI/ ICMA.

He is awarded as Best Participant Award in MSOP – 117th Batch by ICSI, Business Leader Award by Amity School Noida, Best Speaker Award by NIRC – ICAI/ ICMA and Young Achievers Award at Igniting Minds, 2015.

He regularly writes articles on multiple indirect tax issues and has authored books, namely, Service Tax Voluntary Compliance Encouragement Scheme,

About the Authors

viii GST Law and Analysis - with Conceptual Procedures

2013 and another GST book titling ‘Goods and Services Tax – Introduction and Way Forward’.

He has also represented PHD Chamber of Commerce, Assocham, ICAI, ICSI before various Government Authorities/Committees viz. the Central Board of Excise and Customs, Ease of doing Business Committee, Empowered Committee of State Finance Ministers, etc.

Bimal’s core competency and area of expertise are indirect taxation, international and corporate taxation. He specializes in all aspects of GST, Excise, Service tax, Customs, Sales tax/VAT laws, Free trade/economic cooperation agreements, anti-dumping duty, foreign trade policy, etc.

He carries a blend of industrial and professional acumen, knowledge and experience in carrying out diagnostic review of business operations, opinion & advisory services, process review, structuring of various business models, litigation services at all appropriate forums including Commissioner(Appeals), CESTAT, High Court and representation made before the TRU/ CBEC/ DGFT, etc., for various matters concerning trade, industry and commerce.

ISHA BANSAL

ACS, LLB, B.Com (Hons.) with more than 5 years of experience in indirect taxation matters Isha, qualified as a Company Secretary and LLB, after obtaining a Bachelor’s degree in Commerce (Hons.) from University of Delhi in 2008. She worked as an intern with DLF group looking after company secretarial and legal matters before moving to indirect taxation for which she had interest and flair.

Thereafter, she joined A2Z Taxcorp LLP and is presently working as Senior Associate, providing legal and advisory services to various multinational companies in the areas of GST, Excise, Customs, VAT, Service tax, anti-dumping duty, foreign trade policy, etc. Her in-depth knowledge, drive and strategic insights have contributed immensely to the organizations she has worked with.

Isha has done extensive study on GST in India and has been following all the developments in the rollout of GST by the Indian Government. GST is therefore one of her core competency areas along with other indirect tax laws.

xlv

The DVD attached with the Book contains the following:

1. Comprehensive PPT on Model GST Law, 20162. Video Presentations on various aspects of Model GST Law and its impact:

• Goods and Services Tax (GST) - Need and Necessity• Overview of Dual GST Model in India• Highlights of Draft GST Law, 2016• Presentation on Draft GST Law - Levy, Taxable Event- Supply, Taxable

Person, Composition Scheme• GST Impact & Preparedness for Service Sector

3. GST Draft Rules and formats relating to registration, invoice and payments,released by CBEC on September 26, 2016:• Draft Registration Rules• Draft Registration Formats• Draft Payment Rules• Draft Payment Formats• Draft Invoice Rules• Draft Invoice Formats

4. GST Draft Rules and formats relating to returns and refunds, released byCBEC on September 27, 2016:• Draft Return Rules• Draft Return Formats

DVD Contains

DVD FREE WITH BOOK

xlvi GST Law and Analysis - with Conceptual Procedures

GSTR 9B ITC Mismatch Report

• Draft Refund Rules• Draft Refund Formats

5. The Constitution (101st Amendment) Act, 20166. Decoding of the Constitution (101st Amendment) Act, 2016 – Section by

section analyses and comparison with 122nd Constitutional Amendment Bill, 2014

7. Model CGST/SGST and IGST Act, 2016 along with Schedules and GSTValuation Rules

8. Draft Business Processes Report on registration, payment, returns andrefund, placed on public domain in the month of October, 2015

9. 122nd Constitutional Amendment Bill, 2014, as introduced in Lok Sabha10. Select Committee Report on 122nd Constitutional Amendment Bill, 201411. 122nd Constitutional Amendment Bill, 2014, as reported by the Select

Committee of Rajya Sabha12. Key Amendments in the 122nd Constitutional Amendment Bill, 2014 by

Rajya Sabha13. Report on the Revenue Neutral Rate by CEA Dr. Arvind Subramanian led

Panel14. FAQs on GST released by CBEC on August 3, 2016 and September 21, 201615. GSTN ‘GST Eco-System & GST Suvidha Provider (GSP)’ Report16. CBEC Presentation on GST and Background material for GST

xiii

About the Authors viiPreface ixDVD Contains xlvGST – Great Step to Transformation xlvii

CHAPTER 1 Overview of Present Indirect Taxation in India - Shortcomings, Cascading and Double Taxes 1

CHAPTER 2 Overview & Need of GST - How GST can Solve Present Shortcomings 22

CHAPTER 3 Taxes to be subsumed in GST 35CHAPTER 4 Administration of GST 41CHAPTER 5 Intra-State Supply of Goods and/or Services 47CHAPTER 6 Inter-State Supply of Goods and/or Services 63CHAPTER 7 Taxable event under GST – Meaning and scope of supply 82CHAPTER 8 Taxable Person under GST and Reverse Charge Mechanism 153CHAPTER 9 Composition Levy under GST 184CHAPTER 10 Exclusions and Exemptions under GST 190CHAPTER 11 Input Tax Credit under GST – Availment and Utilisation 238CHAPTER 12 Valuation under GST 279CHAPTER 13 Exports and Imports under GST 305CHAPTER 14 Place of Supply of Goods and/or Services in GST 316

Content at a Glance

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xiv GST Law and Analysis - with Conceptual Procedures

CHAPTER 15 Time of Supply (Point of Taxation) of Goods and/or Services in GST 361

CHAPTER 16 Registration under GST 391CHAPTER 17 Payment of Tax under GST 435CHAPTER 18 Returns under GST 472CHAPTER 19 Refunds in GST 523CHAPTER 20 Tax Invoice, Credit and Debit Notes 566CHAPTER 21 Accounts, Records and Presumption as to Documents 579CHAPTER 22 Journal Entries under GST 594CHAPTER 23 Assessments and Audit 634CHAPTER 24 Demands and Recovery 656CHAPTER 25 Inspection, Search, Seizure and Arrest 701CHAPTER 26 Offences, Penalties, Prosecution and Compounding 716CHAPTER 27 Appeals and Revision 746CHAPTER 28 Advance Ruling and Settlement of Cases 780CHAPTER 29 Transitional Provisions in GST 808CHAPTER 30 Classification, Rates and Miscellaneous provisions 866CHAPTER 31 Robust Information Technology Infrastructure and GST 903CHAPTER 32 Impact of GST in General and on Various Sectors 927CHAPTER 33 Electronic Commerce 974CHAPTER 34 Job Work 990CHAPTER 35 Journey of GST in India 1002CHAPTER 36 Decoding of the Constitution (101st Amendment)

Act, 2016 1010CHAPTER 37 Preparation for GST and challenges ahead 1015CHAPTER 38 FAQs on GST 1024CHAPTER 39 Commentary on Model GST Law 1135

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About the Authors viiPreface ixDVD Contains liGST – Great Step to Transformation liii

CHAPTER 1 Overview of Present Indirect Taxation in India - Shortcomings, Cascading and Double Taxes

1.1 TAXATION – MEANING AND PURPOSE 11.2 PRESENT INDIRECT TAXATION IN INDIA –

A HYBRID STRUCTURE 21.3 SHORTCOMINGS IN PRESENT INDIRECT TAX STRUCTURE –

TRIGGERING THE NEED FOR TAX REFORM 161.3.1 Intense cascading of taxes – One of the major

shortcomings of present indirect taxation system 17Non-availability of credit of excise duty for VAT 17Non-availability of credit of service tax for VAT 18No credit of CST 18No credit of basic customs duty and customs cess 18No credit of VAT to service providers 18No credit of SBC to manufacturers and service providers 18No cenvat credit of Krishi Kalyan cess to manufacturers 19No credit to exempt sectors 19

1.3.2 Encroachment on each other’s territory by the centre and the state ending up in double taxation 19

Detailed Content

xvi GST Law and Analysis - with Conceptual Procedures

1.3.3 Interpretational and conceptual mist: classification and valuation issues 19

1.3.4 Lack of uniformity in the provisions and rates 201.3.5 Administrational difficulties 201.3.6 Hindrances in international competitiveness 20

CHAPTER 2 Overview & Need of GST - How GST can Solve Present Shortcomings

2.1 WHAT IS GST? 232.2 VARIOUS MODELS OF GST 23

2.2.1 Single GST 24A. National GST 24B. State GST 25

2.2.2 Dual GST 25A. Non-concurrent Dual GST 25B. Concurrent Dual GST 26

2.2.3 Quebec model 272.3 GST MODEL FOR INDIA – CONCURRENT DUAL GST 27

2.3.1 Modus-Operandi of Dual GST Model 272.4 HOW GST CAN HELP IN OVERCOMING THE SHORTFALLS

IN OUR PRESENT INDIRECT TAXATION STRUCTURE 292.4.1 Harmonization of taxation powers under GST -

abolition of multiple layers of taxes 292.4.2 Avoidance of double taxation 302.4.3 Minimal tax cascading and smooth input tax credit chain 312.4.4 Reduced complexity - common classification under

legislation 322.4.5 Development of common national market 322.4.6 Uniform compliance at low cost 332.4.7 Less complexities: a simple, transparent and easy

tax structure 332.4.8 Increase in global competitiveness and employment

opportunities 332.4.9 Boost to the government and economy 33

CHAPTER 3 Taxes to be subsumed in GST3.1 PRINCIPLES OF SUBSUMATION OF VARIOUS TAXES 353.2 TAXES LIKELY TO BE SUBSUMED/NOT TO BE SUBSUMED

IN TERMS OF THE CONSTITUTION (101ST AMENDMENT) ACT, 2016 36

3.3 RELEVANT PROVISIONS FOR TAX SUBSUMATION AS PER THE CONSTITUTIONAL AMENDMENT ACT 373.3.1 Relevant Articles of the Constitution 38

Detailed Content xvii

3.3.2 Union List under seventh schedule 383.3.3 State List under seventh schedule 39

CHAPTER 4 Administration of GST4.1 INTRODUCTION 414.2 ADMINISTRATION UNDER CGST AND IGST 414.3 ADMINISTRATION UNDER SGST 424.4 APPOINTMENT OF OFFICERS UNDER CGST/IGST AND SGST 434.5 POWER OF OFFICERS UNDER CGST/IGST AND SGST 44ANALYSIS 45

CHAPTER 5 Intra-State Supply of Goods and/or Services5.1 PRESENT INDIRECT TAX STRUCTURE 47

5.1.1 Intra-state transactions related to goods under the present scenario 48

5.1.2 Intra-state transactions related to services 495.2 INTRA-STATE SUPPLY OF GOODS AND/OR SERVICES

UNDER THE GST 505.2.1 Levy and collection of CGST/SGST - taxation of intra-state

supply of goods and/ or services under the GST regime 515.2.2 Availment and utilization of input tax credit of CGST

and SGST 535.2.3 Advantages of the proposed GST model for intra-

state supplies 555.3 PRESENT STRUCTURE VIS-À-VIS GST STRUCTURE FOR

INTRA-STATE SUPPLIES OF GOODS 555.3.1 Taxation under the present indirect tax structure 555.3.2 Taxation under the GST regime 57

5.4 PRESENT STRUCTURE VIS-À-VIS GST FOR INTRA-STATE SUPPLIES OF SERVICES 595.4.1 Taxation under the present indirect tax structure 605.4.2 Taxation under GST regime 61

CHAPTER 6 Inter-State Supply of Goods and/or Services6.1 INTRODUCTION 636.2 PRESENT INDIRECT TAX STRUCTURE 64

6.2.1 Concept and taxation of sale/purchase of goods for the inter-state transactions 64

6.2.2 Concept and taxation of rendering of services in case of inter-state transactions 68

6.3 INTER-STATE SUPPLY OF GOODS AND/OR SERVICES UNDER GST 696.3.1 Levy and collection of IGST - IGST model for taxing

inter-state supply of goods and/or services 70

xviii GST Law and Analysis - with Conceptual Procedures

6.3.2 Scope of the IGST model 71How to determine whether a supply is inter-state in nature? 71

6.3.3 How to set-off input tax credit 726.3.4 Advantages of the IGST model 73

6.4 IMPORTANT HIGHLIGHTS OF INTER-STATE TRANSACTIONS UNDER THE CONSTITUTION (101ST) AMENDMENT ACT, 2016 74

6.5 PRACTICAL ILLUSTRATION 756.5.1 Taxation under the present indirect tax structure 766.5.2 Taxation under GST regime 77

CHAPTER 7 Taxable event under GST – Meaning and scope of supply7.1 TAXABLE EVENT UNDER THE PRESENT INDIRECT

TAX STRUCTURE 827.2 “SUPPLY” – THE TAXABLE EVENT UNDER GST REGIME 847.3 MEANING AND SCOPE OF THE TERM ‘SUPPLY’ – SECTION 3 84

7.3.1 Inclusive definition of term ‘supply’ 867.3.2 Normal supply of goods and/or services: Section 3(1)(a) 87

I. All forms of supply 88II. Made or agreed to be made for a ‘consideration’ 91III. By a person 94IV. In the course or furtherance of ‘business’ 97Profession and Vocation – New terms included in the definition of term ‘business’ 98Scope of the term ‘in the course or furtherance of......’ 99

7.3.3 Import of service: Section 3(1)(b) 100No GST on importation of services for personal use up to specified amount 100GST on importation of services in the course or furtherance of business irrespective of any threshold amount 101 Conditions to be satisfied to qualify as ‘import of service’ 101

7.3.4 Supply without consideration: Section 3(1)(c) 1027.3.5 Supply of goods v/s supply of services: Section 3(2) 107

Double taxation under present regime 107A prominent ray of hope under GST 108Meaning of ‘goods’ under GST 108Meaning of ‘services’ under GST 109Actionable claim is a service and liable to GST – New taxability on the chart 112Unsecured debt transferred to a third person for a consideration is a service under GST 113Beneficial interest in moveable property 113Assignment of actionable claim - is it not a transaction in money? 114

Detailed Content xix

7.3.6 Matters to be treated as supply of ‘goods’ or ‘services’ 1147.3.7 Principal – Agent transaction under GST: Section 3(2A) 139

Agent liable to GST only when goods and/or services are received/supplied on behalf of principal 139

7.3.8 Power(s) of central/state government to specify nature of supply to be treated as supply of goods or services: Section 3(3) 140

7.3.9 Branded services by an aggregator: Section 3(4) 1407.3.10 Even self-supply to constitute supply under GST–

Analysis on branch/stock transfers 142Concept of branch/stock transfers 142Taxation of branch/stock transfers in the present regime 143Taxation of branch/stock transfers under GST 144

ANNEXURE I- RELEVANT EXTRACT OF THE EDUCATION GUIDE ON CONSTRUCTION SERVICES 148

CHAPTER 8 Taxable Person under GST and Reverse Charge Mechanism

8.1 DEFINITION OF ‘TAXABLE PERSON’ UNDER GST 1538.2 PERSONS REQUIRED TO BE REGISTERED UNDER GST –

SCHEDULE III TO THE MODEL CGST/SGST ACT 1578.2.1 Agriculturist out of GST net - not a taxable person 163

8.3 THRESHOLD EXEMPTION LIMITS TO CHARGE & PAY GST 1658.4 CENTRAL GOVERNMENT, STATE GOVERNMENT(S) AND

LOCAL AUTHORITY ARE TAXABLE PERSON 1688.5 PERSONS WHO SHALL NOT BE CONSIDERED AS

TAXABLE PERSONS 1748.6 REVERSE CHARGE MECHANISM UNDER GST 177

CHAPTER 9 Composition Levy under GST 9.1 COMPOSITION LEVY UNDER PRESENT INDIRECT

TAX STRUCTURE 1849.2 COMPOSITION LEVY UNDER GST 185

9.2.1 Turnover limit for composition scheme – Section 8 of the Model CGST/SGST Act 185Composition scheme to be adopted uniformly by all the registered taxable persons, having the same PAN 186No composition scheme in case of reverse charge liability 186No composition scheme for effecting inter-state transactions 187No composition scheme for casual dealers 187

9.2.2 Compounding dealers cannot enter into the credit chain 1879.2.3 Equivalent penalty in case of irregular availment of

composition scheme 187

xx GST Law and Analysis - with Conceptual Procedures

CHAPTER 10 Exclusions and Exemptions under GST10.1 EXCLUSIONS UNDER GST AND TREATMENT OF SPECIFIC GOODS 190

10.1.1 Relevant provisions pertaining to the treatment of specific goods under the Constitutional Amendment Act 191

10.1.2 Chief Economic Adviser led Panel on Revenue Neutral Rate bats for wider tax base under GST 193

10.1.3 Excerpts of various Discussions on Exclusion of Products and Treatment of Specific Products 194

10.1.4 Negative list of services 19610.2 EXEMPTIONS UNDER GST 198

10.2.1 Meaning of exemptions 19910.2.2 Exemptions under the GST regime—high degree of

precision required while determining exemptions 19910.2.3 Zero rating v Exemption 19910.2.4 CEA led Panel on RNR bats for lower exemptions under GST 201

10.3 TYPES OF EXEMPTIONS – BROAD OVERVIEW 20210.3.1 Threshold exemption limits under GST 20310.3.2 Goods/service specific exemption- Power to grant

exemption from tax under GST 203General exemptions in public interest by way of notification 204Absolute exemptions are mandatory to be availed 206Exemption in exceptional circumstances by way of special order 207Explanation inserted within 1 year to have retrospective effect 208Effective date of notification/order 208

10.3.3 Specified supplier’s exemption 209Small scale suppliers 209Deemed non-taxable person 209Governmental and public sector bodies 209

10.3.4 Area based exemptions 21010.4 REMISSION OF TAX ON SUPPLIES FOUND DEFICIENT

IN QUANTITY 213ANNEXURE - I: VARIOUS SUGGESTIONS/RECOMMENDATIONS MADE SO FAR ON GOODS/SERVICES SPECIFIC EXEMPTIONS 215ANNEXURE - II: EXEMPTIONS AVAILABLE UNDER THE EUROPEAN UNION COUNCIL DIRECTIVE 222

CHAPTER 11 Input Tax Credit under GST – Availment and Utilisation

11.1 MEANING OF INPUT TAX CREDIT AND INPUT TAX 239ITC allowed to every taxable person irrespective of a manufacturer/service provider/ seller 240

Detailed Content xxi

‘Business’ concept for availing ITC brought in GST 240ITC available on CGST & SGST on intra-state transactions and IGST on inter-state transactions 240

11.2 MEANING OF ‘INPUT’ UNDER GST 24111.3 MEANING OF ‘INPUT SERVICE’ UNDER GST 24211.4 MEANING OF ‘CAPITAL GOODS’ UNDER GST 24211.5 MANNER OF TAKING ITC AND UTILISATION THEREOF 245

11.5.1 General Provisions 245Only registered taxable person can claim ITC 245Conditions specified in sec 35 to be complied for claiming ITC 246Eligible amount of ITC shall be credited to electronic credit ledger 246Matching concept of inward supplies of buyer with outward supplies of supplier 247

11.5.2 ITC on opening stock of inputs at the time of registration 24711.5.3 ITC on opening stock of inputs in case of voluntary

registration 24911.5.4 ITC on opening stock of inputs on opting out of

composition scheme 25011.5.5 ITC reversal on closing stock of inputs on switching

to composition scheme 25111.5.6 ITC reversal on closing stock of inputs on goods and/or

services becoming absolutely exempt 25111.5.7 Proportionate ITC to the extent used for business

purposes admissible when partly used for other purposes 25211.5.8 ITC restricted to the extent of taxable supplies including

zero-rated supplies when partly used for non-taxable supplies including exempt supplies 253

11.5.9 Transfer of ITC in case of sale, merger, demerger, amalgamation etc. 254

11.5.10 Goods and services on which ITC shall not be admissible 25511.5.11 ITC not allowed if depreciation claimed on tax component

of cost of capital goods 26011.5.12 Removal of capital goods 26011.5.13 Availing ITC under GST – essential requirements 26211.5.14 Time limit for availing ITC under GST 26311.5.15 Recovery of ITC wrongly taken 26511.5.16 Distribution of ITC by input service distributor 26511.5.17 Manner of recovery of credit distributed in excess 267

Distribution of excess credit than available - Recoverable from ISD with interest 267

xxii GST Law and Analysis - with Conceptual Procedures

Excess distribution of credit to one or more supplier - recoverable from such supplier with interest 268

11.5.18 Transfer of ITC 268When CGST used for payment of IGST 268When SGST used for payment of IGST 268When IGST used for payment of CGST 268When IGST used for payment of SGST 269

11.6 ILLUSTRATIONS TO UNDERSTAND AVAILMENT AND UTILISATION OF INPUT TAX CREDIT IN GST 27011.6.1 Input tax credit when input goods are supplied within state 27011.6.2 Input tax credit when supplier supplies goods outside

the state 27011.6.3 Input tax credit when supplier has credit of IGST and

supplies goods within the state 27211.6.4 Input tax credit when supplier has credit of IGST and

supplies goods outside the state 27311.6.5 Input tax credit when input goods not fully utilized 27411.6.6 Input tax credit when supplier supplies goods intra

and inter State 27411.6.7 Input tax credit when supplier has credit of IGST and

supplies goods within the State as well as outside State 27611.6.8 Input tax credit when supplier supplies taxable

as well as exempted goods 27711.6.9 Input tax credit when supplier supplies goods within

India and outside India 278

CHAPTER 12 Valuation under GST 12.1 VALUATION UNDER THE PRESENT REGIME OF

INDIRECT TAXATION 27912.1.1 Valuation of goods under the present regime of

indirect taxation 28012.1.2 Valuation of services under service tax 286

12.2 VALUATION UNDER THE GST REGIME 28612.2.1 Consideration – Meaning, scope and importance 28712.2.2 Glimpse of the provisions which deals with the valuation

under the Model GST Law 28912.2.3 Basis of valuation under the GST regime –

Transaction Value 289Inclusion in the transaction value 289Exclusion from the transaction value 291

12.2.4 Valuation Rules – where transaction value is not determinable 291

Detailed Content xxiii

12.2.5 Method of determination of value 292(A) Transaction Value Method [r 3 of the

Model GST Valuation Rules] 293(B) Comparison Method [r 4 of the Model GST

Valuation Rules] 294(C) Computed Value Method [r 5 of the Model

GST Valuation Rules] 294(D) Residual Method [r 6 of the Model GST

Valuation Rules] 29412.2.6 Rejection of declared value 295

12.3 VALUATION IN CERTAIN CASES 30112.3.1 Pure agent 30112.3.2 Money changer 303

CHAPTER 13 Exports and Imports under GST13.1 EXPORTS OF GOODS AND/OR SERVICES UNDER GST 305

13.1.1 Meaning of ‘exports of goods’ and ‘export of services’ under GST 306Export of goods 306Export of services 306

13.1.2 Exports under GST to be zero-rated 30713.1.3 Deemed exports and its treatment under GST 307

Recommendation for treatment of supply of goods and/ or services to/by SEZs 309Recommendation for treatment of supply of goods and/ or services to/by EOUs 309

13.2 IMPORT OF GOODS AND/OR SERVICES UNDER GST 30913.2.1 Meaning of ‘import of goods’ and ‘import of services’

under GST 31013.2.2 Import of goods and/or services – to be treated as inter-

state supplies under GST 31213.2.3 Service tax, CVD and SAD are likely to be subsumed

under GST 31213.2.4 Duties on import of goods – Present regime v GST regime 31213.2.5 No GST on importation of services for personal use only

up to specified amount 31313.2.6 GST on importation of services in the course or furtherance

of business irrespective of any threshold amount 31313.2.7 Reporting import transactions in monthly return 31313.2.8 Major customs valuation principles adopted for goods

and/ or services under GST – a new mechanism for service sector 313

xxiv GST Law and Analysis - with Conceptual Procedures

13.3 IMPACT ON FOREIGN TRADE POLICY (FTP) 313Payment of taxes under GST by way of debit to export scrips should be allowed 314

CHAPTER 14 Place of Supply of Goods and/or Services in GST14.1 INTRODUCTION 31614.2 GST - A DESTINATION BASED CONSUMPTION TAX:

DETERMINING PLACE OF CONSUMPTION IS CRUCIAL 31714.2.1 Inter-state supply of goods: Present regime v GST regime 31814.2.2 Import of goods: Present regime v GST regime 31914.2.3 Inter-state supply of services: Present regime v

GST regime 31914.3 DETERMINATION OF PLACE OF SUPPLY FOR GOODS AND/OR

SERVICES 32114.3.1 Place of supply of goods – Section 5 of the Model IGST Act 321

Meaning of key terms 322Place of supply when movement of goods is involved 323Place of supply when goods are supplied by transfer of documents during movement of goods 324Place of supply when movement of goods is not involved 325Place of supply when goods are assembled or installed at site 326Place of supply when goods are supplied on board a conveyance 327

14.3.2 Place of supply of services – Section 6 of the Model IGST Act 327Meaning of key terms 328General Rule of place of supply of services 334Place of supply for immovable property related services or lodging in boat or vessel 335Place of supply of performance based services like restaurant, beauty treatment, health services etc. 340Place of supply of training and performance appraisal services 342Place of supply in case of admission to events 344Place of supply in case of organisation of events & assigning sponsorship of such events 345Place of supply of goods transportation services 348Place of supply of passenger transportation services 350Place of supply of services on board a conveyance 353Place of supply of telecommunication services including data transfer, broadcasting, cable and DTH services 354Place of supply of banking and other financial services 357Place of supply of insurance services 358

Detailed Content xxv

Place of supply of advertisement services to the central government, state government, a statutory body or a local authority 358

CHAPTER 15 Time of Supply (Point of Taxation) of Goods and/or Services in GST

15.1 INTRODUCTION 36115.2 CONCEPT OF TIME OF SUPPLY/POINT OF TAXATION 36215.3 TIME OF SUPPLY FOR GOODS 367

15.3.1 Time of supply – general provision 36815.3.2 Time of supply – continuous supply of goods 37115.3.3 Time of supply of goods - when GST is payable by

recipient under the reverse charge mechanism (RCM) 37215.3.4 Time of supply – where goods are being sent or taken

on approval or sale or return or similar terms 37415.3.5 Time of supply of goods – when not possible to

determine under the above provisions 37515.4 TIME OF SUPPLY FOR SERVICES 376

15.4.1 Time of supply of services – general provision 37715.4.2 Time of supply – continuous supply of services 38015.4.3 Time of supply - when GST is payable under RCM 38315.4.4 Time of supply – where supply of services ceases under

a contract before the completion of the supply 38515.4.5 Time of supply – When not possible to determine under

the above provisions 38515.5 CHANGE IN THE RATE OF TAX IN RESPECT OF SUPPLY

OF SERVICES 38615.5.1 Where taxable service provided before the change in

effective rate of tax 38615.5.2 Where taxable service provided after the change in

effective rate of tax 38715.6 TIME OF SUPPLY - WHEN NEW SERVICES BECOME TAXABLE 389

CHAPTER 16 Registration under GST16.1 GLIMPSE OF PROVISIONS PERTAINING TO REGISTRATION

UNDER GST 39216.2 REGISTRATION NUMBER/UNIQUE IDENTITY NUMBER 393

16.2.1 Multiple registrations within a state allowed subject to specific stipulations 394

16.2.2 Exception where Unique Identity Number will be granted instead of registration number 395

16.3 PERSONS WHO ARE REQUIRED TO GET REGISTERED 39716.3.1 Classes of registration 399

xxvi GST Law and Analysis - with Conceptual Procedures

A. Supplier whose aggregate turnover exceeds threshold limit 399

B. Migration of existing taxpayers to GST 403C. Transfer of business, whether on account of succession

or otherwise, to another person as a going concern 403D. Transfer pursuant to sanction of a scheme or an

arrangement for amalgamation or, as the case may be, de-merger of two or more companies by an order of a High Court 403

E. Mandatory registration 403F. Voluntary registration 406G. Registration in case of enforcement cases 406

16.4 PLACE OF REGISTRATION 40716.5 PROCEDURE FOR REGISTRATION 407

16.5.1 Registration procedures for new applicant 40716.5.2 Summarization of procedure for registration 419

16.6 EFFECT OF REGISTRATION APPLICATION FILED WITHIN 30 DAYS OR OTHERWISE 420

16.7 WHERE PERSON FAILS TO OBTAIN REGISTRATION 42116.8 PROCEDURES FOR GRANTING/REJECTING REGISTRATION

OR UIN 42116.9 PROVISION FOR A PERSON OPTING FOR COMPOSITION

SCHEME 42216.10 SPECIAL PROVISIONS RELATING TO CASUAL TAXABLE

PERSON AND NON-RESIDENT TAXABLE PERSON 42416.11 FACILITATION CENTRE AND TAX RETURN PREPARER SCHEME 426

16.11.1 Tax return preparer 42616.11.2 Facilitation Centres 427

16.12 AMENDMENT OF REGISTRATION 42716.13 CANCELLATION OF REGISTRATION 42916.14 REVOCATION OF CANCELLATION OF REGISTRATION 43216.15 OTHER POINTS - BLACK LISTING OF DEALERS 433

CHAPTER 17 Payment of Tax under GST 17.1 INTRODUCTION 43517.2 PROVISIONS FOR PAYMENT OF TAX, INTEREST, PENALTY

ETC. UNDER GST 437 Two types of challans i.e. one for GST and other for non-GST

would be used under GST 437 Glimpse of provision pertaining to payment of tax under

the Model GST Law 43817.2.1 Payment of tax, interest, penalty and other amounts 438

Detailed Content xxvii

Amount credited to the electronic cash ledger and its utilization 438Amount credited to the electronic credit ledger and its utilization 439Refund of balance in the cash or credit ledger 439All liabilities of a taxable person shall be recorded and maintained in an electronic register 439

17.2.2 Ascertainment of the liability of IGST, CGST or SGST 43917.2.3 Due date for payment of tax 44017.2.4 Order of discharging tax and other dues 44117.2.5 Deemed passing of incidence of tax to the recipient

immediately on payment of tax 44117.2.6 Meaning of the expression ‘tax dues’ 442

17.3 PAYMENT PROCESSES UNDER GST 44217.3.1 Modes of payment 44217.3.2 Payment across departmental counter 45917.3.3 Penalty mechanism for defaulting banks 46017.3.4 Banking arrangement 46017.3.5 Proposed accounting system under GST 46117.3.6 Reconciliation 463

Reconciliation by GSTN 463Reconciliation by accounting authorities 463Resolution of reconciliation outcomes (i.e. discrepancies noted during the reconciliation process) 463

17.3.7 Recording by tax authorities 46417.3.8 Challan 464

All modes of payment to use system generated electronic challan 464Modes of creation of tax challan 465

17.3.9 RBI to play the role of aggregator 46717.3.10 Summarization of the payment process 468

17.4 INTEREST ON DELAYED PAYMENT OF TAX 46817.5 INTEREST IN CASE OF AN UNDUE OR EXCESS CLAIM OF INPUT TAX

CREDIT 46817.6 PAYMENT OF TAX DEDUCTION AT SOURCE (TDS) 468

CHAPTER 18 Returns under GST18.1 FILING OF RETURNS UNDER PRESENT INDIRECT

TAXATION REGIME 47218.2 FILING OF RETURNS UNDER GST 474

18.2.1 Who is required to file return? 47418.2.2 Legal obligation of a taxable person for filing GST return 475

xxviii GST Law and Analysis - with Conceptual Procedures

18.2.3 Types of returns required to be filed under GST 47518.2.4 First return 47618.2.5 Furnishing details of outward supplies made by

registered taxable person [GSTR-1] 47718.2.6 Furnishing details of inward supplies made by taxpayer

[GSTR-2] 48618.2.7 Monthly Return (Periodic) [GSTR-3] 49218.2.8 Quarterly return by a registered taxable person paying

tax under composition scheme [GSTR-4] 49518.2.9 Return by non-resident foreign taxpayers [GSTR-5] 49718.2.10 Monthly return by ISD [GSTR-6] 49718.2.11 Monthly return by a registered taxable person who is

required to deduct tax at source [GSTR-7] 49918.2.12 Annual Return [GSTR-8] 50018.2.13 Final return (who applies for cancellation of registration) 50118.2.14 Summarization of the returns required to be filed by

each taxpayer 50218.2.15 Other relevant provisions 502

Return cannot be filed unless valid previous period returns were filed 502Due date of payment of tax 502Return to be treated as invalid return for allowing ITC if tax not paid 503 Even ‘Nil return’ required to be filed 503No revision of monthly/quarterly return 503

18.2.16 Claim of ITC and provisional acceptance thereof 504No utilization of credit allowed unless valid return has been filed 505

18.2.17 Matching, reversal and reclaim of ITC 50518.2.18 Matching, reversal and reclaim of reduction in output

tax liability 50718.2.19 Where will the taxpayer file return? 50918.2.20 Steps for return filing 51018.2.21 Generation of acknowledgement number on

submission of return 51118.2.22 Contents of Invoice level information to be captured

in the Return 51118.2.23 Processing of return 51518.2.24 Notice to return defaulter 51618.2.25 Levy of late fees 51618.2.26 Tax return preparers 51718.2.27 Summarization - periodicity of return filing 518

Detailed Content xxix

CHAPTER 19 Refunds in GST19.1 MEANING OF THE TERM ‘REFUND’ 52419.2 SITUATIONS WHERE REFUNDS WOULD ARISE 524

(A) Excess payment of tax due to mistake or inadvertence 525(B) Export (including deemed export) of goods and/or services

under claim of rebate or refund of accumulated credit of tax when goods and/or services are exported 526

(C) Finalization of provisional assessment 534(D) Refund of pre-deposit for filing Appeal including refund

arising in pursuance of an Appellate Authority’s order 535(E) Payment of tax during investigation but no/reduced

liability arises at the time of finalization of investigation/ adjudication 536

(F) Refund for tax payment on purchase by UN Bodies, supplies to CSD Canteens, Para Military Forces Canteens, etc. 538

(G) Tax credit on inputs used for manufacturing/generation/ production/creation of tax free supplies or non- GST supplies 539

(H) Refund of carry forward input tax credit 540(I) Refund on account of year end or volume based incentives

provided by the supplier through credit notes 541(J) Tax refund for International Tourists 542

19.3 REFUND FORMS 54319.4 TIME PERIOD FOR FILING OF REFUND 54319.5 RELEVANT DATE FOR FILING REFUND APPLICATION 544

19.5.1 Analysis of relevant date under Draft Business Process for Refund and the Model GST Law 546

19.6 APPLICATION SHALL BE ACCOMPANIED BY THE RELEVANT DOCUMENT AND DECLARATION 550

19.7 NUMBER OF COPIES OF APPLICATIONS TO BE FILED 55119.8 REQUIREMENT FOR TAXPAYER TO KEEP A COPY OF

REFUND APPLICATION FOR THE PRESCRIBED PERIOD 55119.9 RECEIPT OF REFUND APPLICATION AND PROCEDURE

FOR GENERATING PROOF OF RECEIPT OF APPLICATION FOR REFUND 551

19.10 PROCEDURE AND THE TIME WITHIN WHICH PRELIMINARY SCRUTINY OF SUBMISSION OF THE RELEVANT DOCUMENTS IS CARRIED OUT 553

19.11 PROCEDURE FOR DEALING WITH REFUND THEREAFTER INCLUDING EXAMINATION OF PRINCIPLE OF “UNJUST ENRICHMENT” 553

xxx GST Law and Analysis - with Conceptual Procedures

19.12 MINIMUM AMOUNT BELOW WHICH REFUND SHALL NOT BE GRANTED 554

19.13 SANCTIONING OF REFUND 55419.14 TIME LIMIT FOR PASSING ORDER 55719.15 VERIFICATION AND CONTROL (REFUND AUDIT) 55819.16 INTEREST ON DELAYED REFUNDS 56119.17 ADJUSTMENT OF REFUND IF REGISTERED TAXABLE

PERSON IS IN DEFAULT 56219.18 REFUND CAN BE WITHHELD WHERE REFUND IS SUBJECT

TO APPEAL OR FURTHER PROCEEDING AND LIKELY TO ADVERSELY AFFECT THE REVENUE 563

19.19 RECOVERY OF ERRONEOUS REFUND 56319.20 CONSUMER WELFARE FUND 56319.21 UTILIZATION OF THE FUND 56319.22 TRANSITIONAL PROVISIONS 564

CHAPTER 20 Tax Invoice, Credit and Debit Notes20.1 INVOICING ASPECTS UNDER PRESENT INDIRECT

TAXES REGIME 56720.2 INVOICING ASPECTS UNDER GST 571

20.2.1 Invoicing for supply of taxable goods 57120.2.2 Invoicing for supply of taxable services 57220.2.3 Provision of issuance of revised invoice against the

invoice already issued 57220.2.4 Certain cases where a bill of supply shall be issued

instead of tax invoice 57320.2.5 Invoicing by input service distributor (“ISD”) 57320.2.6 ‘Tax invoice’ to include ISD document, supplementary

or revised invoice 57320.2.7 Amount of tax to be indicated in tax invoice and other

documents 57420.3 CREDIT AND DEBIT NOTES 575

20.3.1 Credit note 57620.3.2 Debit note 57720.3.3 Details of credit and debit notes to be given in return 577

CHAPTER 21 Accounts, Records and Presumption as to Documents21.1 MAINTENANCE OF ACCOUNTS AND RECORDS UNDER

THE PRESENT INDIRECT TAXATION REGIME 57921.2 ACCOUNTS AND RECORDS UNDER GST 583

21.2.1 Accounts and other records 58321.2.2 Period of retention of accounts 588

Detailed Content xxxi

21.3 PRESUMPTION AS TO DOCUMENTS 59021.3.1 Presumption as to documents in certain cases 59021.3.2 Admissibility of micro films, facsimile copies of

documents and computer printouts as documents and as evidence 591

CHAPTER 22 Journal Entries under GST22.1 OVERVIEW OF SCENARIOS 59522.2 BASIC JOURNAL ENTRIES 59622.3 SCENARIO WITH ILLUSTRATION 600

22.3.1 Purchase and supply of goods and services - within the state (intra-state supply of goods and services) 600

22.3.2 Purchase and supply of goods and services - outside the state (inter-state supply of goods and services) 602

22.3.3 Purchase of goods and services - within the state and supply of goods and services - outside the state 604

22.3.4 Purchase of goods and services - outside the state and supply of goods and services - within the state 606

22.3.5 Purchase of goods and services – within and outside the state and supply of goods and services – within and outside the state 609

22.3.6 Export of goods and services 612CASE I. Purchase of goods and services - within the state and export of such goods and services 612CASE II. Purchase of goods and services - outside the state and export of such goods and services 614CASE III. Purchase of goods and services–within and outside the state and export of such goods and services 616

22.3.7 Import of goods and services 618CASE I. Import of goods and services and supply of goods and services – within the state 618CASE II. Import of goods and services and supply of goods and services – outside the state 622CASE III. Import of goods and services and supply of goods and services – within and outside the state 625

22.3.8 Import of goods and services and export of goods and services 629

22.3.9 Miscellaneous entries 632

CHAPTER 23 Assessments and Audit23.1 TYPES OF ASSESSMENT 635

23.1.1 Self-assessment 63523.1.2 Provisional assessment 638

xxxii GST Law and Analysis - with Conceptual Procedures

23.1.3 Best judgement assessment 641Assessment of non- filers of return 641Assessment of unregistered persons 643

23.1.4 Summary assessment in certain special cases 64323.1.5 Re-assessment 64323.1.6 General provisions 644

Scrutiny of returns 644Assessment proceedings, etc. not to be invalid on certain grounds 644

23.2 AUDIT 64623.2.1 Meaning of term ‘Audit’ 64823.2.2 Audit by tax authorities 64823.2.3 Special audit 652

Notice of special audit 652Time period for submission of audit report 652Extension of time period for submission of audit report 652Special audit can be conducted irrespective of accounts already audited under any other provision or law 653Opportunity of being heard to be given before using the findings of special audit in any proceedings 653Expenses incidental etc., to be determine and paid by the commissioner 653Initiation of action against the taxable person 653

CHAPTER 24 Demands and Recovery24.1 DEMANDS AND RECOVERY 656

24.1.1 Determination of tax not paid or erroneously refunded etc. for any reason other than fraud or any wilful- misstatement or suppression of facts 657

24.1.2 Determination of tax not paid or erroneously refunded etc. by reason of fraud or any wilful- misstatement or suppression of facts 666

24.1.3 General provisions relating to demand of tax 67724.1.4 Provisions of sec 51(A), sec 51(B), sec 51(C) shall

apply, mutatis mutandis, to the recovery of interest 68024.1.5 Tax collected but not deposited with the central or

state government 68024.1.6 Tax wrongfully collected and deposited with the

central or a state government 68324.1.7 Recovery of tax 68324.1.8 Payment of tax and other amount in installments 68824.1.9 Transfer of property to be void in certain cases 68824.1.10 Tax to be first charge on property 689

Detailed Content xxxiii

24.1.11 Provisional attachment to protect revenue in certain cases 68924.1.12 Continuation of certain recovery proceedings 690

24.2 LIABILITY TO PAY IN CERTAIN CASES 69124.2.1 Liability in case of transfer of business 69124.2.2 Liability in case of amalgamation/merger of companies 69224.2.3 Liability in case of company in liquidation 69324.2.4 Liability of partners of firm to pay tax 69424.2.5 Liability of guardians, trustees etc. 69524.2.6 Liability of Court of Wards etc. 69624.2.7 Liability if a person liable to pay tax dies 69724.2.8 Liability in case of Hindu Undivided Family or

Association of Person 697

CHAPTER 25 Inspection, Search, Seizure and Arrest25.1 MEANING OF IMPORTANT TERMS 70125.2 POWER OF INSPECTION, SEARCH AND SEIZURE 703

25.2.1 Power to search and seize goods, documents or books or things 705

25.2.2 Power to seal or break open the door of any premises, etc. during seizure operation 705

25.2.3 Person entitled to make copies or take extracts of seized documents 706

25.2.4 Seized goods to be returned, if no notice is given within 60 days of seizure or within such extended period 706

25.2.5 Disposing of seized perishable goods or goods of hazardous nature etc., by the proper officer 706

25.2.6 Preparation of inventory of seized perishable goods or goods of hazardous nature etc., by proper officer 707

25.2.7 Applicability of provisions of the Code of Criminal Procedure 707

25.3 INSPECTION OF GOODS IN MOVEMENT 70825.3.1 Person in charge of conveyance to carry prescribed

documents, where the value of goods is more than INR 50,000/- 708

25.3.2 Production of documents for verification to proper officer 70825.4 POWER TO ARREST 708

25.4.1 Authorization to arrest 70825.4.2 Person arrested for cognizable offence to be produced

before magistrate within 24 hours of arrest 70925.4.3 Power to release a person on bail in case of non-

cognizable and bailable offence 70925.4.4 Arrest in accordance with provision of the Code

of Criminal Procedure 709

xxxiv GST Law and Analysis - with Conceptual Procedures

25.5 POWER TO SUMMON PERSONS TO GIVE EVIDENCE AND PRODUCE DOCUMENTS 71025.5.1 Power to summon persons 71025.5.2 Persons summoned shall be bound to attend, either in

person or by authorized representative and to state truth 71025.5.3 Deemed judicial proceedings 711

25.6 ACCESS TO BUSINESS PREMISES 71125.6.1 Power to access business premises to inspect books

of account, documents etc. 71125.6.2 Submission of records for scruitiny 711

25.7 OFFICERS REQUIRED TO ASSIST CGST/SGST OFFICERS 712

CHAPTER 26 Offences, Penalties, Prosecution and Compounding26.1 OFFENCES AND PENALTIES UNDER GST 716

26.1.1 Specific offences and penalties 71626.1.2 General penalty 72126.1.3 Summarization of the penalty provisions in respect

of offences committed 72226.1.4 General disciplines related to penalty 72326.1.5 Detention of goods and conveyances and levy of penalty 72426.1.6 Confiscation of goods and levy of penalty 72626.1.7 Confiscation of conveyances 72726.1.8 Confiscation or penalty not to interfere with

other punishments 72726.2 PROSECUTION AND COMPOUNDING OF OFFENCES 727

26.2.1 Prosecution 72826.2.2 Cognizance of offences 74026.2.3 Presumption of culpable mental state 74026.2.4 Relevancy of statements under certain circumstances 74126.2.5 Offences by companies and certain other persons 74126.2.6 Compounding of offences 742

CHAPTER 27 Appeals and Revision27. 1 HIERARCHY OF APPELLATE AUTHORITY UNDER GST 74727.2 FIRST APPELLATE AUTHORITY 748

27.2.1 Revisional powers of the commissioner 75527.3 APPELLATE TRIBUNAL 758

27.3.1 Constitution of the National Appellate Tribunal 75827.3.2 Appeals to the appellate tribunal 75927.3.3 Orders of appellate tribunal 76427.3.4 Procedure of filing appeal to appellate tribunal 766

27.4 COMMON PROVISIONS FOR CGST/SGST 76827.4.1 Interest on delayed refund of pre-deposit 768

Detailed Content xxxv

27.4.2 Appearance by authorized representatives 76927.5 HIGH COURT 772

27.5.1 Appeal to the high court 77227.5.2 Power of the high court to formulate the question

of law, hear appeal and give decision 77327.5.3 Determination of issues by high court 77327.5.4 Appeal to be heard by bench of at least two judges 77427.5.5 Action to be taken on basis of certified copy of

the judgement 77427.5.6 Applicability of the Code of Civil Procedure, 1908 774

27.6 SUPREME COURT 77427.6.1 Appeal to the Supreme Court 77427.6.2 Hearing before the Supreme Court 77527.6.3 Cost of appeal 77527.6.4 Action to be taken on basis of certified copy of

the judgement 77527.7 OTHER COMMON PROVISIONS 776

27.7.1 Sums due to be paid notwithstanding appeal, etc. 77627.7.2 Exclusion of time taken for copy of the order 77627.7.3 Appeal not to be filed in certain cases 77627.7.4 Non appealable decisions and orders 777

CHAPTER 28 Advance Ruling and Settlement of Cases28.1 ADVANCE RULING 780

28.1.1 Who can be an applicant under advance ruling provisions? 78128.1.2 Application and fee for advance rulings 78328.1.3 Question for which advance ruling can be sought 783

28.2 CONSTITUTION OF AUTHORITY AND APPELLATE AUTHORITY FOR ADVANCE RULING 78428.2.1 Authority for advance ruling 78428.2.2 Appellate authority for advance ruling 785

28.3 POWERS OF AUTHORITY AND APPELLATE AUTHORITY 78628.3.1 Powers of Civil Court as given under the Code of

Civil Procedure, 1908 [Section 104(1) of the Model CGST/SGST Act] 786

28.3.2 Powers of civil court under the Code of Criminal Procedure and proceedings to be treated as judicial proceedings under the Indian Penal Code, 1860 [Section 104(2) of the Model CGST/SGST Act] 787

28.3.3 Power to regulate own procedure 78728.4 PROCEDURE ON RECEIPT OF APPLICATION FOR

ADVANCE RULING 78728.5 APPEAL TO THE APPELLATE AUTHORITY 789

xxxvi GST Law and Analysis - with Conceptual Procedures

28.6 ORDERS OF THE APPELLATE AUTHORITY 78928.7 APPLICABILITY OF ADVANCE RULING 79028.8 RECTIFICATION OF ORDER OF ADVANCE RULING 79128.9 CIRCUMSTANCES WHEN THE ORDER OF ADVANCE

RULING WILL BE VOID 79228.10 SETTLEMENT OF CASES 792

28.10.1 Constitution of National Goods and Services Tax Settlement Commission 793

28.10.2 Jurisdiction of settlement commission 79428.10.3 Decisions to be by majority 79528.10.4 Application for settlement of cases 796

Who can file application for settlement of cases? 797Format of application and information to be contained therein 797Cases when an application cannot be filed to settlement commission? 797

28.10.5 Procedure for settlement on receipt of an application under sec 15 of the Model IGST Act 798

28.10.6 Order by the Settlement Commission 80028.10.7 Powers of the Settlement Commission 802

To order provisional attachment to protect revenue 802To reopen completed proceedings 803To grant immunity from prosecution and penalty 803To send a case back to the IGST officer 804Powers of a civil court for purpose of discovery, inspection, issuing commissions etc. 805Power to regulate own procedure 806

28.10.8 Bar on subsequent application for settlement in certain cases 806

CHAPTER 29 Transitional Provisions in GST29.1 PRESENT CENTRAL/STATE OFFICERS TO BE DEEMED

GST OFFICERS 81029.2 MIGRATION OF EXISTING TAXPAYERS TO GST 81129.3 STATUS OF EXISTING INPUT CREDIT LYING UNDER

CENVAT AND VAT 81629.3.1 Amount of cenvat credit carried forward in a return

to be allowed as input tax credit 81729.3.2 Unavailed cenvat credit on capital goods, not carried

forward in a return, to be allowed in certain situations 81929.3.3 Credit of eligible duties and taxes in respect of inputs

held in stock to be allowed in certain situations 823

Detailed Content xxxvii

29.3.4 Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme 828

29.3.5 Amount payable in the event of a taxable person switching over to composition scheme 831

29.4 Exempted goods returned to the Place of Business on or after the Appointed Day 833

29.5 Duty paid goods returned to the Place of Business on or after the Appointed Day 834

29.6 Transitional provisions for inputs and semi-finished and finished goods lying with Job Worker on Appointed Day 83529.6.1 Inputs removed for job work and returned on or after

the appointed day 83529.6.2 Semi-finished goods removed for job work and returned

on or after the appointed day 83629.7 FINISHED GOODS REMOVED FOR CARRYING OUT

CERTAIN PROCESSES AND RETURNED ON OR AFTER THE APPOINTED DAY 838Direct removal of goods after processing from such other premises 839

29.8 ONGOING CONTRACTS/AGREEMENTS, PURCHASE ORDERS, WORK ORDERS 83929.8.1 Issue of supplementary invoices, debit or credit notes where

price is revised in pursuance of a contract 83929.8.2 Progressive or periodic supply of goods or services 84129.8.3 Treatment of retention payments 84229.8.4 Treatment of long term construction/works contracts 844

29.9 PENDING REFUND CLAIMS TO BE DISPOSED OF UNDER EARLIER LAW 846

Amount accruing to be paid in cash (CGST)/ refunded in accordance with State VAT laws (SGST) 846

Rejected portion of refund claim shall lapse 84829.10 PENDING LITIGATIONS 848

29.10.1 Claim/recovery of Cenvat credit to be disposed of under the earlier law 849

29.10.2 Finalization of proceedings relating to output duty liability 85029.10.3 Treatment of the amount recovered or refunded in

pursuance of assessment or adjudication proceedings 85129.10.4 Treatment of the amount recovered or refunded

pursuant to revision of returns 85129.11 CREDIT DISTRIBUTION OF SERVICE TAX BY ISD 85229.12 TAX PAID ON GOODS/CAPITAL GOODS LYING WITH

AGENTS TO BE ALLOWED AS CREDIT 852

xxxviii GST Law and Analysis - with Conceptual Procedures

29.13 TREATMENT OF BRANCH TRANSFERS 85329.14 GOODS SENT ON APPROVAL BASIS RETURNED ON OR

AFTER THE APPOINTED DAY 85329.15 NO DEDUCTION OF TAX AT SOURCE ON PAYMENT

RECEIVED AFTER APPOINTED DAY 85429.16 IMPORT OF SERVICES OR INTER-STATE SUPPLY OF

GOODS AND/OR SERVICES MADE ON OR AFTER THE APPOINTED DAY 854

29.17 REPEAL AND SAVING 85629.17.1 Excise and sales tax to continue on few products 85629.17.2 Acts to be repealed 858

Transitional provisions under the Constitution (101st Amendment) Act, 2016 enables centre and states to continue their levies under existing laws for a period of 1 year 859

29.18 UNITS ENJOYING INCENTIVES / CONCESSIONS / TAX HOLIDAYS 86029.18.1 Claiming total exemption/exemption on value addition

only/exemption by way of deferment in payment of state VAT or CST 860

29.18.2 Continuation of exemption by export oriented units (EOU) 86129.19 OTHER MATTERS ON WHICH GST MAY HAVE IMPACT 861

29.19.1 Public sector undertakings (PSUs) 86129.19.2 Units located in exclusive zones 86229.19.3 Natural resource based industries 862

29.20 CREATING AWARENESS/IMPARTING TRAINING OR EDUCATION ON GST 86229.20.1 Assessees 86329.20.2 Tax administrators at the state and the central level 86329.20.3 Tax professionals, return preparers and other

professionals such as tax practitioners, advocates 86329.20.4 Consumers of goods and services 86329.20.5 Policy makers 86329.20.6 State governments 863

CHAPTER 30 Classification, Rates and Miscellaneous provisions30.1 CLASSIFICATION UNDER GST 866

30.1.1 Need for Classification 86630.1.2 Classification of goods under GST 867

General rules of classification 868Non-statutory principles 869

30.1.3 Classification of services under the GST 87030.2 REVENUE NEUTRAL RATE 872

30.2.1 Importance of RNR 872

Detailed Content xxxix

30.2.2 Factors effecting determination of RNR 87330.2.3 Recommendation of the select panel of Rajya Sabha 87430.2.4 CEA led panel recommends RNR at 15%-15.5% -

The report bats for lower exemptions and higher threshold for GST 875

30.3 MISCELLANEOUS PROVISIONS 87830.3.1 GST compliance rating 87930.3.2 Furnishing of information return 88030.3.3 Power to collect statistics 88330.3.4 Disclosure of information required under section 119 88430.3.5 Test purchase of goods and/or services 88530.3.6 Drawal of samples 88530.3.7 Burden of proof 88630.3.8 Persons discharging functions under the act shall be

deemed to be public servants 88730.3.9 Indemnity – no legal proceeding against any goods

and services tax officer 88730.3.10 Disclosure of information by a public servant 88730.3.11 Publication of information respecting persons in

certain cases 88930.3.12 Rectification of mistakes or errors apparent from record 89130.3.13 Bar of jurisdiction of civil courts 89230.3.14 Levy of fees 89330.3.15 Power of central (or state) government to make rules 89330.3.16 General power to make regulations 89730.3.17 Delegation of powers 89730.3.18 Instructions to GST officers 89730.3.19 Removal of difficulties 89830.3.20 Service of notice in certain circumstances 89830.3.21 Rounding off of tax etc. 90030.3.22 Effect of amendments, etc., of rules, notifications or orders 90030.3.23 Publication of rules and notifications and laying of rules

before parliament/state legislature 90130.3.24 Application of certain provisions of the CGST Act, 2016 90130.3.25 Power to make rules 90130.3.26 Interest on delayed payment of tax 90230.3.27 Tax wrongfully collected and deposited with the central or a

state government 902

CHAPTER 31 Robust Information Technology Infrastructure and GST31.1 INTRODUCTION 90331.2 NEED FOR ROBUST IT INFRASTRUCTURE AND

COMPUTERIZATION 904

xl GST Law and Analysis - with Conceptual Procedures

31.3 IMPORTANT ISSUES FOR COMPREHENSIVE IT INFRASTRUCTURE 905

31.4 BENEFITS OF AN INTEGRATED IT INFRASTRUCTURE 90631.5 ESTABLISHMENT OF GOODS AND SERVICES TAX

NETWORK (GSTN) 90731.6 RECOMMENDATION OF THE SELECT COMMITTEE ON

CONSTITUTION OF GSTN AND IT PREPAREDNESS 907

CHAPTER 32 Impact of GST in General and on Various Sectors32.1 IMPACT OF GST – GENERALLY 928

32.1.1 Impact of GST on manufacturers 92832.1.2 Impact of GST on service providers 93132.1.3 Impact of GST on traders 933

32.2 IMPACT OF GST ON SPECIFIC SECTORS 93532.2.1 Alcohol industry 93532.2.2 Petroleum industry 93832.2.3 Tobacco industry 94132.2.4 Real estate industry 94332.2.5 Power – Electricity sector 94732.2.6 Fast moving consumer goods (FMCG) industry 95032.2.7 Textile industry 95332.2.8 Financial services industry 95532.2.9 Agricultural sector 95832.2.10 Telecommunication industry 96132.2.11 Transport/Logistics sector 96532.2.12 Entertainment/media industry 96732.2.13 Pharmaceutical industry 96932.2.14 Automobile sector 97132.2.15 Cement industry 973

CHAPTER 33 Electronic Commerce33.1 INTRODUCTION 97433.2 TYPES OF E-COMMERCE 974

33.2.1 Business-to-Business (B2B) 97433.2.2 Business-to-Consumer (B2C) 97533.2.3 Business-to-Government (B2G) 97533.2.4 Consumer-to-Consumer (C2C) 97633.2.5 Consumer-to-Business (C2B) 97633.2.6 M-commerce (mobile commerce) 976

33.3 E-COMMERCE BUSINESSES BROADLY OPERATE UNDER TWO MODELS 97733.3.1 Market place model 97733.3.2 Fulfilment center model 977

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33.4 TAX TREATMENT OF E-COMMERCE TRANSACTION UNDER THE PRESENT INDIRECT TAXATION REGIME 978

33.5 KEY ISSUES FACED BY E-COMMERCE 97833.5.1 Levy of Service tax on e-commerce transactions 97833.5.2 Levy of VAT/CST on e-commerce transactions 97933.5.3 Levy of entry tax on online purchases 98033.5.4 Restrictions on claim of credit by suppliers 980

33.6 SPECIFIC PROVISION FOR E-COMMERCE UNDER GST 98033.7 MEANING OF SOME OF THE RELEVANT TERMS 981

33.7.1 Aggregator 98133.7.2 Brand name or trade name 98133.7.3 Branded services 98133.7.4 Electronic commerce 98133.7.5 Electronic commerce operator 981

33.8 COLLECTION OF TAX AT SOURCE BY E-COMMERCE OPERATOR 98233.8.1 Mode of recovery 98233.8.2 Time limit for payment 98233.8.3 Monthly Statements 98233.8.4 Deposition of amount shall be deemed to be a payment

of tax on behalf of the concerned supplier 98333.8.5 Matching of the statement of operator and supplier 98333.8.6 Discrepancy between details of operator and supplier 98333.8.7 Where any amount has been added to the output tax

liability of the supplier, he is liable to pay tax along with interest 983

33.8.8 Power of any authority not below the rank of Joint Commissioner to ask for details from the operator 984

33.8.9 Operator shall furnish details within 5 working days 98433.8.10 Penalty if the operator fails to furnish the information

as required by the notice 98433.9 CHALLENGES LIKELY TO BE FACED BY E-COMMERCE

SECTOR UNDER GST 984

CHAPTER 34 Job Work34.1 INTRODUCTION 99034.2 PROVISIONS UNDER PRESENT INDIRECT TAXES REGIME 99134.3 SPECIFIC PROVISION FOR JOB WORK UNDER GST 99334.4 CONCEPT OF JOB WORK UNDER GST 99334.5 SPECIAL PROCEDURE FOR REMOVAL OF GOODS FOR JOB WORK 99434.6 TAKING INPUT TAX CREDIT IN RESPECT OF INPUTS

SENT FOR JOB WORK 99634.6.1 Input tax credit of inputs sent to job worker 996

Provision under the present regime 996

xlii GST Law and Analysis - with Conceptual Procedures

Provision under the Model GST Law 99634.6.2 Input tax credit of capital goods sent to job worker 996

Provision under the present regime 996Provision under the Model GST Law 997

34.6.3 If the inputs or capital goods are not received back by the “principal” within the time specified 997

34.6.4 Snapshot of job work in present regime v job work in GST 100034.7 TRANSITIONAL PROVISIONS 1001

CHAPTER 35 Journey of GST in India35.1 STATUS OF JOURNEY AS ON DATE 100235.2 SNAPSHOT OF IMPORTANT MILESTONES OF JOURNEY TO GST 1005

CHAPTER 36 Decoding of the Constitution (101st Amendment) Act, 2016

36.1 INTRODUCTION 101036.2 KEY AMENDMENTS TO THE GST BILL VIDE THE

CONSTITUTION (101ST AMENDMENT) ACT, 2016 101136.3 SECTION-WISE ANALYSES OF THE CONSTITUTION

(101ST AMENDMENT) ACT, 2016 1014

CHAPTER 37 Preparation for GST and challenges ahead37.1 GETTING GST READY 101537.2 LIKELY IMPACT OF GST AND FOCUS AREAS 101637.3 HOW TO GO ABOUT FOR GST – ACTION PLAN 101737.4 TO-DO LIST FOR DEPARTMENTS AND GOVERNMENT

AUTHORITIES 101937.4.1 Initial preparation 101937.4.2 Creating awareness and imparting education 101937.4.3 IT Infrastructure and computerization 1019

37.5 CHALLENGES AHEAD 102037.5.1 GST Council powers only recommendatory in nature 102037.5.2 Exemptions and exclusions under GST 102137.5.3 Deciding the Revenue Neutral Rate (RNR) 102137.5.4 Finalising principles of place of supply 102237.5.5 Finalising principles of time of supply 102237.5.6 Extensive training to tax administration staff 102237.5.7 Goods and Services Tax Network (GSTN) 102237.5.8 Providing platform for deliberation with trade on

likely issues under the Model GST law 1023

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CHAPTER 38 FAQs on GST38.1 FAQS ON GST & ITS NEEDS 102438.2 FAQS ON THE CONSTITUTION (101ST AMENDMENT)

ACT, 2016 102738.3 FAQS ON GST COUNCIL 102838.4 FAQS ON MODUS OPERANDI OF GST 103038.5 FAQS ON RATES UNDER GST - REVENUE NEUTRAL

RATE (RNR) 103538.6 FAQS ON TERM “SUPPLY” 103638.7 FAQS ON EXPORTS AND IMPORTS 104338.8 FAQS ON VALUATION OF SUPPLY OF GOODS AND/

OR SERVICES 104638.9 FAQS ON TIME OF SUPPLY 105538.10 FAQS ON PLACE OF SUPPLY 106238.11 FAQS ON EXCLUSIONS AND EXEMPTIONS UNDER GST 106938.12 FAQS ON REGISTRATION UNDER GST 107338.13 FAQS ON PAYMENT OF TAX 108238.14 FAQS ON INPUT TAX CREDIT 109138.15 FAQS ON REFUNDS 110238.16 FAQS ON RETURN 110738.17 FAQS ON JOB WORK 112038.18 FAQS ON TRANSITIONAL PROVISIONS 1125

CHAPTER 39 Commentary on Model GST Law39.1 COMMENTARY ON MODEL CGST/SGST ACT, 2016 113539.2 COMMENTARY ON MODEL IGST ACT, 2016 1682