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Model GST Laws – Law & Practice Part-1
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MODEL LAW GST – LAW & PRACTICE (PART-1)
1. History ............................................................................................................................................................ 2
Kelkar Committee Recommendations ................................................................................................................ 2
Empowered Committee of State Finance Ministers ........................................................................................... 3
2. GST Panels & their Reports ............................................................................................................................. 3
3. Model GST Law ............................................................................................................................................... 4
Goods & Service Tax Act’2016 ............................................................................................................................ 4
The Integrated Goods & Service Tax Act’2016 ................................................................................................... 5
4. Classes of Officers [Section-4] ........................................................................................................................ 6
Jurisdictions ........................................................................................................................................................ 6
Powers of Officers .............................................................................................................................................. 6
Powers of First Appellate Authority ................................................................................................................... 7
5. Levy and Collection of Central/State Goods and Services Tax [Section 7] ..................................................... 8
6. Composition Levy [Section 8] ......................................................................................................................... 8
7. Taxable Person [Section 9] ............................................................................................................................. 9
8. Power to Grant EMEXMPTION from Tax [Section 10] .................................................................................. 12
9. Remission of Tax on Supplies [Section 11] ................................................................................................... 13
10. Time of Supply of Goods [Section 12] ..................................................................................................... 14
Normal Supply of Goods ............................................................................................................................... 15
Continuous Supply of Goods [Section 12(3)] ................................................................................................ 15
Goods on Reverse Charge Basis [Section 12(5)] ........................................................................................... 16
Time of Supply cannot be Determined [Section 12(7)] ................................................................................ 16
11. Time of Supply of Services [Section 13] ................................................................................................... 17
Normal Supply Of Services ............................................................................................................................ 17
Continuous Supply of Goods [Section 13(3)] ................................................................................................ 18
Supply of Services on Reverse Charge Basis [Section 13(5)] ........................................................................ 19
Time of Supply cannot be Determined [Section 13(7)] ................................................................................ 19
12. Change in Rate of Tax in Respect of Supply of Services [Section 14] ...................................................... 20
If taxable services has been provided BEFORE the change in effective rate of Tax ..................................... 20
If taxable services has been provided AFTER the change in effective rate of Tax........................................ 20
13. Value of Taxable Supply [Section 15] ...................................................................................................... 21
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GST – LAW & PRACTICE
INTRODUCTION TO GST
"Goods and Services Tax" would be a comprehensive indirect tax on manufacture,
sale and consumption of goods and services throughout India, to replace taxes levied
by the Central and State governments. Goods and services tax would be levied and
collected at each stage of sale or purchase of goods or services based on the input
tax credit method. This method allows GST-registered businesses to claim tax credit
to the value of GST they paid on purchase of goods or services as part of their normal
commercial activity. Taxable goods and services are not distinguished from one
another and are taxed at a single rate in a supply chain till the goods or services reach
the consumer. Administrative responsibility would generally rest with a single authority
to levy tax on goods and services. Exports would be zero-rated and imports would be
levied the same taxes as domestic goods and services adhering to the destination
principle.
1. HISTORY
In 2000, the Vajpayee government set up the Empowered Committee of State Finance
Ministers with the aim of facilitating a switch from the existing national-level central
excise duty and state-level sales tax model to a value added tax (VAT) model.
KELKAR COMMITTEE RECOMMENDATIONS
Dr. Vijay Kelkar, was head of Kelkar Committee which submitted Roadmaps for Fiscal
Consolidations. This committee was set up in August’2012 which submitted reforms
for medium terms & fiscal consolidations. Among other various suggestions
recommendations for Indirect Taxes were as follows:
implementing the nationwide Goods and Services Tax (GST) recommended by
the 13th Finance Commission. This should increase output, exports and tax
revenues.
The committee recommends reforming union excise duties and service tax to
allow for integration into the GST regime. The standard tax rate of 12% should
be gradually phased down to the 8% proposed for the central GST.
Currently items on the negative list of services are exempt from tax. The list
should be reviewed and pruned
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Then, Finance Minister P. Chidambram, made announcement for introduction of GST
on 28.02.2006. It was then proposed to be introduced wef 01.04.2010.
EMPOWERED COMMITTEE OF STATE FINANCE MINISTERS
Task of designing GST was given to empowered committee of State Finance
Ministers. First discussion paper was released on 10.11.2009. All proposed GST Laws
have been developed on the basis of discussion paper.
2. GST PANELS & THEIR REPORTS
Further in February’2013 3 GST panels were constituted which are as follows:
In 2015, Reports were issued by these committees with respect to:
Refund Process
Registration
Payment Process
After considering all suggestions, Constitution (One Hundred & Twenty Second
Amendment) Bill 2014 was introduced in December’2014 by Finance Minister Arun
Jaitely with now revised implementation date of 01.04.2016. [Author Comments - Still
waiting for new Dates] This GST Bill was passed by Loksabha (Lower House) in 2015 but
GST Panel-1
•Determination of Revenue Neutral Rate (RNR)
•Place of Provision of Services Rules
GST Panel-2
•GST on Inter State Supplies
•GST on Imports
GST Panel-3
•Dual Administrative Controls
•Threshold Limits & Other Exemptions including list of common exempted items.
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still pending in Rajya Sabha (Upper House). After Rajya Sabha pass it, Union & States
have to pass GST Acts.
3. MODEL GST LAW
On June 14, 2016 the Finance Ministry has released the 'Model GST Law'. It outlines
the structure of the GST regime. Further, the draft of 'Integrated GST Bill, 2016' is
also released along with such Model GST laws. It also provides the framework for
levy and collection of CGST and SGST. "CGST" is the tax levied under the Central
Goods and Services Tax Bill, 2016. "IGST" is the tax levied under the Integrated
Goods and Services Tax Bill, 2016. This model law is 190 pages long.
Model Law is divided between:
GOODS & SERVICE TAX ACT’2016
Brief of this proposed legislation is as follows:
GOODS AND SERVICES TAX ACT, 2016
THE INTEGRATED GOODS AND SERVICES TAX ACT, 2016
GST Act25 Chapters162 Sections
1 Rules4 Schedules
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This has 4 Schedules which are:
It also have 1 Rules which is GST Valuation (Determination of the Value of
supply of Goods and Services) Rules, 2016.
THE INTEGRATED GOODS & SERVICE TAX ACT’2016
This act contains 11 chapters & 33 Section.
I Matters to be treated as supply without consideration.
II Matters to be treated as supply of goods or services.
III Liability to be registered
IV Activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person.
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ADMINISTRATION 4. CLASSES OF OFFICERS [SECTION-4]
There shall be different classes of Officers under the Central GST and States GST
Acts. They are as follows:
Under Central GST Under States GST (a) Principal Chief Commissioners of CGST or Principal Directors General of CGST
a) Commissioner of SGST
(b) Chief Commissioners of CGST or Directors General of CGST
b) Special Commissioners of SGST,
(c) Principal Commissioners of CGST or Principal Additional Directors General of CGST
c) Additional Commissioners of SGST,
(d) Commissioners of CGST or Additional Directors General of CGST
d) Joint Commissioners of SGST,
(e) First Appellate Authority e) Deputy Commissioners of SGST,
(f) Additional Commissioners of CGST or Additional Directors of CGST
f) Assistant Commissioners of SGST, and
(g) Joint Commissioners of CGST or Joint Directors of CGST
g) such other class of officers and persons as may be appointed for the purposes of this Act.
(h) Deputy Commissioners of CGST or Deputy Directors of CGST
(i) Assistant Commissioners of CGST or Assistant Directors of CGST
(j) such other class of officers as may be appointed for the purposes of this Act.
This list is indicative and there may be more officers as required.
JURISDICTIONS
The Commissioner shall have jurisdiction over the whole of the State of.
All other officers shall have jurisdiction over the whole of the State or over such
areas as the Commissioner may, by notification, specify.
POWERS OF OFFICERS
Subject to such conditions and limitations as may be imposed, an officer may
exercise the powers and discharge the duties conferred or imposed on him under
this Act
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POWERS OF FIRST APPELLATE AUTHORITY
Notwithstanding anything contained in this section, a First Appellate Authority shall
not exercise the powers and discharge the duties conferred or imposed on an officer
of Central Goods and Services Tax other than those specified in section 79 of this
Act.
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LEVY OF, AND EXEMPTION FROM TAXES Taxes shall be levied and exemptions shall be provide as defined.
5. LEVY AND COLLECTION OF CENTRAL/STATE GOODS AND SERVICES TAX [SECTION 7]
6. COMPOSITION LEVY [SECTION 8]
A registered person whose “aggregate turnover” in a financial year does not exceed
Rs. 50,00,000/- can opt for Composition.
Composition Scheme shall not be available for persons who are dealing in
inter-states supplies of goods and/or services.
Provided further that no such permission shall be granted to a taxable person unless
all the registered taxable persons, having the same PAN as held by the said taxable
person, also opt to pay tax under the provisions of this sub-section.
Section 2(6) “aggregate turnover” means the aggregate value of all taxable and
non-taxable supplies, exempt supplies and exports of goods and/or services of a
person having the same PAN, to be computed on all India basis and excludes taxes,
if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may
be;
Explanation.- Aggregate turnover does not include the value of supplies on which tax
is levied on reverse charge basis and the value of inward supplies.
On Intra-State Sale of Goods or Services
• CGST or SGST
• @Rate specified in Schedule
Payable
• CGST/SGST shall be paid by every taxable person
Reverse Charge
• On Certain categories
• as may be notified by Central/State Government
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Section 2(42) “exempt supply” means supply of any goods and/or services which
are not taxable under this Act and includes such supply of goods and/or services
which are specified in Schedule of the Act or which may be exempt from tax under
section 10.
A taxable person to whom the provisions of sub-section (1) apply shall not collect
any tax from the recipient on supplies made by him nor shall he be entitled to any
credit of input tax.
7. TAXABLE PERSON [SECTION 9]
This section defines taxable person and threshold limit for their turnover.
Taxable Person means a person who carries on any business at any place in India
and who is registered or required to be registered under Schedule III of this act.
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Limits for Taxability is as follows:
Note: Agriculturist shall not be considered as a taxable person.
Registered Person
Turnover Rs. 10 Lakhs
Taxable Person
Registered Person
Turnover Rs. 5 Lakhs
Taxable Person
All over India (Except North East including Sikkim)
North East Including Sikkim
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Can Central Government or State Government or Local Authority be
considered as Taxable Person?
Yes, as per Section 9(2) “The Central Government, a State Government or any local
authority shall be regarded as a taxable person in respect of activities or transactions
in which they are engaged as public authorities other than the activities or transactions
as specified in Schedule IV to this Act.”
Persons shall not be considered as Taxable
Person
Employee Providing service to Employer
any person engaged in the business of
exclusively supplying goods and/or services
that are not liable to tax
any person receving servies for personal use, other than for use in the course or furtherance of
his business.
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8. POWER TO GRANT EMEXMPTION FROM TAX [SECTION 10]
This section defines EXEMPTION from DUTY => Duty foregone by Central or a
State Government in Public Interest
Sec. 10(1) GENERAL EXEMPTION
Section 10(2) AD-HOC EXEMPTION
Coverage of Goods or Service
Any goods or Service Any Goods or Service
Circumstances leading to issuance of exemption
Public Interest Public Interest + Circumstances of Exceptional Nature
Mode of Granting Exemption
Notification in Official Gazette [Such notifications are called Exemption Notification]
Special Order [Such orders are called Exemption Order]
Date from which Exemption will come into force
Sec. 10(4) Exemption becomes effective from date of its issuance, unless otherwise provided.
No specific legal provision Current Position in Indirect Taxes Assessee makes a request for consideration of his case for ad-hoc exemption Government consider the request and finds it a fit case issues Ad-Hoc exemption:
Subsequent clarification in Exemption Notification / Order [Section 5(3)]
Clarification as to SCOPE or APPLICABILITY may be done by INSERTION of an EXPLANATION
Such clarification if inserted within 1 year, it shall have RETROSPECTIVE EFFECTB (as it shall be deemed to be part of the original notification/order from the very beginning]
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9. REMISSION OF TAX ON SUPPLIES [SECTION 11]
This section deals with Remission* of tax on supplies found deficient in quantity due
to natural causes**. Rules shall be made having regard to the nature of supply and fix
the limit or limits of percentage beyond which no remission shall be allowed.
*Remission means waiver or cancellation of Duty legally payable.
[Author’s Note: Current Excise Laws allows Remission of Duty on Goods lost or Destroyed by
Natural Causes or by Unavoidable accidents. Model GST Law speaks only about Natural Causes. So
Unavoidable Accidents might be covered by rules made in this regard]
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TIME & VALUE OF SUPPLY This chapter deals with Time of Supply of Goods, Services and Value of Taxable
Supply along with Changes in Rate of Tax in respect of supply of Services. Provisions
relating to time and value of supply are contained in Section 12 to 14.
10. TIME OF SUPPLY OF GOODS [SECTION 12]
The provisions are broadly similar to present laws. The liability to pay CGST/SGCT
on the goods shall arise AT THE TIME OF SUPPLY.
Types of Supply
Normal SupplyContinuous
SupplyReverse Charge
Time cannot be determined
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NORMAL SUPPLY OF GOODS
The time of supply shall be EARLIEST of the following dates:
CONTINUOUS SUPPLY OF GOODS [SECTION 12(3)]
Section 2(30) “continuous supply of goods” means a supply of goods which is
provided, or agreed to be 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.
In case of Continuous supply of goods where successive statements of accounts or
successive payments are involved; the time of supply shall be;
o the date of expiry of the period to which such successive statements of
accounts; or
o successive payments relate.
Date on which Goods are removed
Date on which
Invoice is Issued
Date on which
Payments is Received.
Date on which the Recepient shows
the Receipt of Goods in his
Books of Account.
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GOODS ON REVERSE CHARGE BASIS [SECTION 12(5)]
Time of Supply on Reverse Charge Basis will be EARLIEST of the following:
TIME OF SUPPLY CANNOT BE DETERMINED [SECTION 12(7)]
Where it is NOT POSSIBLE to determine the time of supply of goods, in that case
the time of supply shall be:
in case where a periodical return has to be filed, be the date on which such
return is to be filed, or
in any other case, be the date on which the CGST/SGST is paid.
Date of Receipt of
Goods
Date of which the payment is
made
Date of Receipt of
Invoice
Date on debit in the
Books of Accounts
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11. TIME OF SUPPLY OF SERVICES [SECTION 13]
The provisions are broadly similar to present laws. The liability to pay CGST/SGCT on
Services shall be determined AT THE TIME OF SUPPLY.
NORMAL SUPPLY OF SERVICES
The time of supply of Services shall be EARLIEST of the following dates:
Types of Supply
Normal SupplyContinuous
SupplyReverse Charge
Time cannot be determined
Earl
iest
of
the
follo
win
g Invoice Issued in Prescribed Time
Date of Issue of Invoice
Date of Receipt of Payments
Invoice not issued within Prescribed Time
Date of Completion of Service
Date of Receipt of Payments
In Other CaseDate of booking in Recipents Books.
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CONTINUOUS SUPPLY OF GOODS [SECTION 13(3)]
Section 2(31) “continuous supply of services” means a supply of services which is
provided, or agreed to be provided, continuously or on recurrent basis, under a
contract, for a period exceeding three months with periodic payment obligations and
includes supply of such service as the Central or a State Government may, whether
or not subject to any condition, by notification, specify.
In case of Continuous supply of services the time of supply shall be
Earl
iest
of
the
Follo
win
g
Due Date of Payment Asertainable from Contract
Date on which Payment is liable to be made
Whether any invoice is raised or not
Whether any payment has been received or not
Due Date of Payment is not Ascertainable from Contract
each such time when the supplier of service receives
the payment.
issues an invoice
In Other CaseWhere payment is linked to
completion of an eventthe time of completion of
that event.
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SUPPLY OF SERVICES ON REVERSE CHARGE BASIS [SECTION 13(5)]
Time of Supply of Services on Reverse Charge Basis will be EARLIEST of the
following:
TIME OF SUPPLY CANNOT BE DETERMINED [SECTION 13(7)]
Where it is NOT POSSIBLE to determine the time of supply of services, in that case
the time of supply shall be:
in case where a periodical return has to be filed, be the date on which such
return is to be filed, or
in any other case, be the date on which the CGST/SGST is paid.
Date of Receipt of Services
Date on which the payment is
made
Date of Receipt of
Invoice
Date on debit in the
Books of Accounts
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12. CHANGE IN RATE OF TAX IN RESPECT OF SUPPLY OF SERVICES [SECTION 14]
The provisions are broadly similar to present Rules 5 and 7 of Point of Taxation
Rules’2011.
IF TAXABLE SERVICES HAS BEEN PROVIDED BEFORE THE CHANGE IN EFFECTIVE RATE OF TAX
Time of Issue of Invoice
Time of Receipt of Payments
Point of Taxation / Applicable Rates
After After Earlier of:
Date of Payment; or
Date of issuing of Invoice
Before After Date of issuing of Invoice
After Before Date of Payment
IF TAXABLE SERVICES HAS BEEN PROVIDED AFTER THE CHANGE IN EFFECTIVE RATE OF TAX
Time of Issue of Invoice
Time of Receipt of Payments
Point of Taxation / Applicable Rates
Before Before Earlier of:
Date of Payment; or
Date of issuing of Invoice
After Before Date of issuing of Invoice
Before After Date of Payment
*****END of PART-1*****
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This should not be taken as any advice from our concern. We shall not be liable
for any loss if occurred for laws stated in this document.
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