GST - Suraj

Inside
S. No. Particulars Page No.
A.01 – A.14
A INTRODUCTION to GST
A.15 – A.18
AA.01 – AA.16
AA PAYMENT OF TAX
AB.01 – AB.06
B.01 – B.32
B REGISTRATION
BB.01 – BB.08
C.01 – C.32
C SUPPLY UNDER GST
CC.01 – CC.08
D.01 – D.32
D CHARGE OF GST
DD.01 – DD.12
GST – By CA Suraj Agrawal SATC A.1
GST IN INDIA – AN INTRODUCTION

Taxes are broadly classified into Direct and Indirect Taxes
Indirect taxes are levied on consumption, expenditure or privilege but not on income or property.
Hitherto (Until now), a number of indirect taxes were levied in India, namely, excise duty, customs
duty, service tax, central sales tax (CST), value added tax (VAT), entry tax, purchase tax,
entertainment tax, tax on lottery, betting and gambling, luxury tax, tax on advertisements, etc.
However, Indirect taxation in India has witnessed a major change on July 01, 2017 to introduced a
unified indirect tax regime wherein a large number of Central and State indirect taxes have been
amalgamated into a single tax – Goods and Services Tax (GST).
The introduction of GST is a very significant step in the field of indirect tax reforms in India. Customs
duty will continue in post-GST regime.
Difference between Direct Taxes and Indirect Taxes
S. No. Direct Taxes Indirect Taxes
1 Payer of tax and sufferer of tax one and Payer of tax not sufferer of tax whereas
same (i.e. impact and incidence on the sufferer of tax is not paying directly to the
same person) Government (i.e. impact on one head
and incidence on other head)
2 Income based taxes Supply based taxes
3 Rate of taxes are different from person to Rate of duties are not differ from
person person to person
4 Entire revenue goes to Central Revenue source to Central Government

Government of India of India as well as State Governments
(i.e. CGST and SGST)
5 Previous year income assessed in the There is no previous year and

assessment year assessment year concept
6 Central Board of Direct Taxes (CBDT) is Central Board of Indirect Taxes &
an important part of Department of Customs (CBIC) is an important part of
Revenue and responsible for Department of Revenue and responsible
implementation of Direct Tax. for implementation of Indirect Tax.
7 Progressive nature. Regressive nature.
| SURAJ AGRAWAL TAX CLASS | LAXMI NAGAR | NEW DELHI | 011-47542530 | +91 85272 30445 |
FEATURES OF INDIRECT TAXES

5 Marks
(i) An important source of revenue: Indirect taxes are a major source of tax revenues for
Governments worldwide and continue to grow as more countries move to consumption
oriented tax regimes. In India, indirect taxes contribute more than 50% of the total tax revenues
of Central and State Governments.
(ii) Tax on commodities and services: It is levied on commodities at the time of manufacture or
purchase or sale or import/export thereof. Hence, it is also known as commodity taxation. It is
also levied on provision of services.
(iii) Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes. For
example, GST paid by the supplier of the goods is recovered from the buyer by including the tax
in the cost of the commodity.
(iv) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the price of
the commodity, most of the time the tax payer pays the same without actually knowing that he is
paying tax to the Government. Thus, tax payer does not perceive a direct pinch while paying
indirect taxes.
(v) Inflationary: Tax imposed on commodities and services causes an all-round price spiral. In other
words, indirect taxation directly affects the prices of commodities and services and leads to
inflationary trend.
(vi) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base. Majority of the
products or services are subject to indirect taxes with low thresholds.
(vii) Promotes social welfare: High taxes are imposed on the consumption of harmful products (also
known as ‘sin goods’) such as alcoholic products, tobacco products etc. This not only checks
their consumption but also enables the State to collect substantial revenue.
(viii) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich and the
poor have to pay the same rate of indirect taxes on certain commodities of mass consumption.
This may further increase the income disparities between the rich and the poor.
GENESIS OF GST IN INDIA
It has now been more than a decade since the idea of national Goods and Services Tax (GST) was
mooted by Kelkar Task Force in 2004. The Task Force strongly recommended fully integrated
‘GST’ on national basis.
Subsequently, the then Union Finance Minister, Shri P. Chidambaram, while presenting the Central
Budget (2007-2008), announced that GST would be introduced from April 1, 2010. Since then,
GST missed several deadlines and continued to be shrouded by the clouds of uncertainty.
The GST introduction, however, gained momentum in the year 2014 when the NDA Government
tabled the Constitution (122nd Amendment) Bill, 2014 on GST in the Parliament on 19th
December, 2014.
The Lok Sabha passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016.
Subsequent to ratification of the Bill by more than 50% of the States, Constitution (122nd
Amendment) Bill, 2014 received the assent of the President on 8th September, 2016 and
became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of
GST in India.
In the following year, on 27th March, 2017, the Central GST legislations – (a) Central Goods
and Services Tax Bill, 2017, (b) Integrated Goods and Services Tax Bill, 2017, (c) Union
Territory Goods and Services Tax Bill, 2017 and (d) Goods and Services Tax (Compensation
to States) Bill, 2017 were introduced in Lok Sabha.
Lok Sabha passed these bills on 29th March, 2017 and with the receipt of the President’s assent
on 12th April, 2017, the Bills were enacted. The enactment of the Central Acts was followed by
the enactment of the State GST laws by various State Legislatures.
France was the first country to implement GST in the year 1954. Within 62 years of its advent,
about 160 countries across the world have adopted GST because this tax has the capacity to raise
revenue in the most transparent and neutral manner.
WHAT IS GST
2 Marks Goods and services tax means a tax on supply of goods or services, or both, except taxes
on supply of alcoholic liquor for human consumption [Article 366 (12A) of Constitution of India].
Features: 3 Marks
GST is a value added tax levy on supply of goods or service or both.
GST is a destination based consumption tax.
GST offers comprehensive and continuous chain of tax credit.
GST where burden borne by final consumer.
GST eliminate cascading effect of tax.
GST brings uniform tax structure all over India.
GST does not differentiate between goods and services and thus, the two are taxed at a
single rate.
NEED FOR GST IN INDIA
The following deficiencies in the existing Indirect Tax Laws cause need to bring GST in India as
a cure for ills of existing Indirect Tax regime. 4 Marks
(1) Non-integration of VAT and Service Tax causes double taxation
(2) Non Inclusion of several Local Levies in State VAT such as Luxury Tax, Entertainment tax etc
(3) No CENVAT Credit after manufacturing stage to a dealer
(4) Cascading of taxes on account of levy of CST Inter-state purchases
(5) VAT was charged by dealer on value comprising of (basic value + excise duty charged by
manufacturer + profit by dealer)
(6) Double Taxation of a transaction as both goods and services
GST is a Cure for ills of existing Indirect Tax: 3 Marks

The given statement is true. Cascading affect of tax is one of the vital cause-to-cause ill of existing
Indirect Tax. It means, a tax that is levied on a good at each stage of the production process up to the
point of being sold to the final consumer. It is also known as tax on tax.
Simultaneous introduction of GST at both Centre and State levels has integrated taxes on goods and
services for the purpose of set-off relief and ensures that both the cascading effects of CENVAT and
VAT are removed and a continuous chain of set-off from the original producer’s point/ service provider’s
point upto the retailer’s level/ consumer’s level is established.
One of the fundamental features of GST is the seamless flow of input credit across the chain
(from the manufacture of goods till it is consumed) and across the country.
TAXES TO BE SUBSUMED IN GST
6 Marks
CENTRAL LEVIES TO BE SUBSUMED
a. Central Excise Duty
b. Additional Duties of excise (Goods of Special Importance)
c. Additional Duties of excise (Textiles & Textile Product)
d. Excise Duty under Medicinal & Toilet Preparation Act
e. Additional Duties of Custom - CVD & Special CVD levied under Custom Tariff Act 1975
f. Service Tax
g. Central Sales Taxes
h. Central Surcharges and Cesses in so far as they relate to Supply of Goods & Services
STATE LEVIES TO BE SUBSUMED
a. State Value Added Tax/Sales Taxes
b. Luxury Tax
c. Taxes on Advertisement
d. Entry Tax (All Forms)
e. Purchase Tax
f. Tax on Lottery, Betting & Gambling
g. Entertainment tax (Except those levied by local bodies)
h. State surcharges and cesses in so far as they relate to supply of goods & services
FRAMEWORK OF GST AS INTRODUCED IN INDIA
A. Dual GST:
India has adopted a dual GST which is imposed concurrently by the Centre and States, i.e. Centre
and States simultaneously tax goods and services.
Now, Centre has the power to tax intra-State sales in addition to services & States are empowered
to tax services in addition to goods. GST extends to whole of India.
B. CGST/SGST/UTGST/IGST
GST is a destination based tax applicable on all transactions involving supply of
goods and services for a consideration subject to exceptions thereof.
GST in India comprises of Central Goods and Service Tax (CGST) - levied and collected
by Central Government, State Goods and Service Tax (SGST) - levied and collected by
State Governments/Union Territories with State Legislatures and Union Territory Goods
and Service Tax (UTGST) - levied and collected by Union Territories without State
Legislatures, on intra-State supplies of taxable goods and/or services.
Inter-State supplies of taxable goods and/or services are subject to Integrated Goods
and Service Tax (IGST).
IGST is approximately the sum total of CGST and SGST/UTGST and is levied by Centre on
all inter-State supplies.
C. Legislative Framework
There is single legislation – CGST Act, 2017 for levying CGST. Similarly, Union Territories
without State legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar
Haveli, Daman and Diu and Chandigarh] are governed by UTGST Act, 2017 for levying UTGST.
States and Union territories with their own legislatures [Delhi and Puducherry] have their own
GST legislation for levying SGST.
Though there are multiple SGST legislations, the basic features of law, such as chargeability,
definition of taxable event and taxable person, classification and valuation of goods and services,
procedure for collection and levy of tax and the like are uniform in all the SGST legislations, as
far as feasible. This is necessary to preserve the essence of dual GST.
Note: State of Jammu & Kashmir is re-organised as UT of Jammu & Kashmir (With
legislation) & UT of ladakh (without legislation). However, UTGST Act is not yet amended in
this regard. SGST Act is continued to applicable here.
D. Registration
Every supplier of goods and/ or services is required to obtain registration in the State/UT from
where he makes the taxable supply if his aggregate turnover exceeds a specified limit during a
FY.
E. Composition Scheme
In GST regime, tax (i.e. CGST and SGST/UTGST for intra-State supplies and IGST for inter-State
supplies) is payable by every taxable person and in this regard provisions have been prescribed.
However, for providing relief to small businesses making intra-State supplies, a simpler
method of paying taxes and accounting thereof is also prescribed, known as Composition Levy.
F. Exemptions
Apart from providing relief to small-scale business, the law also contains provisions for granting
exemption from payment of tax on essential goods and/or services.
G. Manner of utilization of ITC

Input Tax Credit (ITC) of CGST and SGST/UTGST is available throughout the supply chain, but
cross utilization of credit of CGST and SGST/UTGST is not possible, i.e. CGST credit cannot be
utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be utilized for payment of
CGST.
However, cross utilization is allowed between CGST/SGST/UTGST and IGST, i.e. credit of IGST
can be utilized for the payment of CGST/SGST/UTGST and vice versa.
H. Seamless flow of credit

Since GST is a destination based consumption tax, revenue of SGST ordinarily accrues to the
consuming States.
The inter-State supplier in the exporting State is allowed to set off the available credit of IGST,
CGST and SGST/UTGST (in that order) against the IGST payable on inter-State supply made by
him.
The buyer in the importing State is allowed to avail the credit of IGST paid on inter-State purchase
made by him.
Thus, unlike the earlier scenario where the credit chain used to break in case of inter-State
sales on account of non-VATable CST, under GST regime there is a seamless credit flow in
case of inter-State supplies too.
The revenue of inter-State sale does not accrue to the exporting State and the exporting State
transfers to the Centre the credit of SGST/UTGST used in payment of IGST.
The Centre transfers to the importing State the credit of IGST used in payment of
SGST/UTGST.
Thus, the inter- State trade of goods and services (IGST) needed a robust settlement mechanism
amongst the States and the Centre.
A Common Portal was needed which could act as a clearing house and verify the claims and
inform the respective Governments to transfer the funds. This was possible only with the help of a
strong IT Infrastructure.
I. Compensation Cess 2 Marks

A GST Compensation Cess at specified rate has been imposed under the Goods and Services Tax
(Compensation to States) Cess Act, 2017 on the specified luxury items or demerit goods, like
pan masala, tobacco, aerated waters, motor cars etc., computed on value of taxable supply.
Compensation cess is leviable on intra-State supplies and inter-State supplies with a view to
provide for compensation to the States for the loss of revenue arising on account of
implementation of the GST.
GST Common Portal
5 Marks
Resultantly, Common GST Electronic Portal – www.gst.gov.in – a website managed by Goods and
Services Network (GSTN) [a non government private limited company incorporated under the
provisions of section 8 of the Companies Act, 2013] has been set by the Government to establish a
uniform interface for the tax payer and a common and shared IT infrastructure between the
Centre and States.
GST being a destination based tax, the interstate trade of goods and services (IGST) would need a
robust settlement mechanism amongst the States and the Centre. This is possible only when there is a
strong IT Infrastructure and Service back bone which enables capture, processing and exchange of
information amongst the stakeholders (including tax payers, States and Central Governments,
Accounting Offices, Banks and RBI). As a result Goods and Services Tax Network (GSTN) has
been set up.
Primarily, GSTN provides 3 front end services to the taxpayers namely Registration, Payment and
Return through GST Common Portal.
The functions of the GSTN include: 3 Marks

a) Facilitating Registration;
b) Filing of Return: Forwarding the returns to Central and State authorities;
c) Computation and settlement of IGST;
d) Matching of tax payment details with banking network;
e) Providing various MIS reports to the Central and the State Governments based on the taxpayer
return information;
f) Providing analysis of taxpayers' profile; and running the matching engine for matching, reversal and
reclaim of input tax credit.
However, it is important to note that the Common GST Electronic Portal for furnishing electronic way bill
is www.ewaybillgst.gov.in [managed by the National Informatics Centre, Ministry of Electronics &
Information Technology, Government of India]. E-way bill is an electronic document generated on the
GST portal evidencing movement of goods
BENEFITS OF GST – 5 Marks (NEW)
GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of industry,
Government and the consumer.
Benefits to economy
Creation of unified national market: GST aims to make India a common market with common tax
rates and procedures and remove the economic barriers thus paving the way for an integrated
economy at the national level.
Boost to ‘Make in India' initiative: GST gives a major boost to the ‘Make in India' initiative of the
Government of India by making goods and services produced in India competitive in the national as
well as international market. This will create India as a - Manufacturing hub.
Enhanced investment and employment: The subsuming of major Central and State taxes in GST,
complete and comprehensive setoff of input tax on goods and services and phasing out of Central
Sales Tax (CST) reduces the cost of locally manufactured goods and services and increases the
competitiveness of Indian goods and services in the international market and thus, gives boost to
investments and Indian exports. With a boost in exports and manufacturing activity, more employment
is generated and GDP is increased.
Simplified tax structure
Ease of doing business: Simpler tax regime with fewer exemptions along with reduction in multiplicity
of taxes under GST has led to simplification and uniformity. The uniformity in laws, procedures and tax
rates across the country makes doing business easier.
Certainty in tax administration: Common system of classification of goods and services ensures
certainty in tax administration across India.
Easy tax compliance

Automated procedures with greater use of IT: There are simplified and automated procedures for
various processes such as registration, returns, refunds, tax payments. All interaction is through the
common GSTN portal, therefore, less public interface between the taxpayer and the tax administration.
Reduction in compliance costs: The compliance cost is lesser under GST as multiple record-keeping
for a variety of taxes is not needed, therefore, there is lesser investment of resources and manpower in
maintaining records. The uniformity in laws, procedures and tax rates across the country goes a long
way in reducing the compliance cost.
Advantages for trade and industry

Benefits to agriculture and Industry: GST has given more relief to industry, trade and agriculture
through a more comprehensive and wider coverage of input tax set-off and service tax set-off,
subsuming of several Central and State taxes in the GST and phasing out of CST. The transparent and
complete chain of set-offs which results in widening of tax base and better tax compliance also leads to
lowering of tax burden on an average dealer in industry, trade and agriculture.
Mitigation of ill effects of cascading: By subsuming most of the Central and State taxes into a single
tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it
helps in mitigating the ill effects of cascading, improving competitiveness and improving liquidity of the
businesses.
Benefits to small traders and entrepreneurs:

GST has increased the threshold for GST registration for small businesses. Further, single registration
is needed in one State. Small businesses have also been provided the additional benefit of composition
scheme. With the creation of a seamless national market across the country, small enterprises have an
opportunity to expand their national footprint with minimal investment.
st
CONSTITUTION [101 AMENDMENT] ACT, 2016
Constitution (101st Amendment) Act, 2016 was enacted on 8th September, 2016, with following
significant amendments:
(a) Concurrent powers on Parliament and State Legislatures to make laws governing goods and
services. It means there will be dual control of State and Central authorities for all assessees
(b) As per Article 246A, the power to levy GST has been given to the Parliament as well as to
Legislature of every State.
CGST – enacted by Central Government of India.

IGST – enacted by Central Government of India.
SGST – enacted by respective State Governments
UTGST – enacted by Central Government of India
(c) IGST will be apportioned between Centre and the States in the manner provided by Parliament by
Law as per the recommendation of the GST Council.
(d) GST will be levied on all supply of goods and services except alcoholic liquor for human
consumption.
(e) The explanation to Article 269A of Constitution of India provides that the import of goods or
services will be deemed as supply of goods or services or both in the course of inter-State
trade or commerce.
In case of import of goods, IGST will be levied along with the Basic Customs duty. It means IGST
is levied in replacement of CVD + Spl. CVD. In case of import of servies only IGST will be
levied.
(f) Principles for determining the place of supply and when a supply takes place in the course of
inter-state trade or commerce shall be decided by the Parliament.
(g) The power to levy Central Excise duty on goods manufactured or produced in India is
available in respect of the following products:
a. Petroleum crude;
b. High speed diesel
c. Motor spirit (commonly known as petrol);
d. Natural gas;
e. Aviation turbine fuel; and
f. Tobacco and tobacco products.
However, once GST is imposed there will be no duty on manufacture of these goods.
(h) The power to impose tax on sale of the following products is still provided to the State
Governments:
a. Petroleum crude;
b. High speed diesel;
c. Motor spirit (commonly known as petrol);
d. Natural gas;
e. Aviation turbine fuel; and
f. Alcoholic liquor for human consumption.
However, once GST Council is recommend the date from which GST is imposed on these
products (except alcoholic liquor for human consumpiton), and no sales tax will be
imposed on these products.
Article 246A: Power to make laws with respect to Goods and Services Tax: 5 Marks
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 in the course of inter-State trade or
commerce.
Explanation-
The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of
article 279A, take effect from the date recommended by the Goods and Services Tax Council.
[GST on Petroleum Crude, High Speed Diesel, Motor Spirit (commonly known as Petrol), Natural Gas
and Aviation Turbine Fuel.]
Note:
1. This article grants power to Centre and State Governments to make laws with respect to GST
imposed by Centre or such State.
2. Centre has the exclusive power to make laws with respect to GST in case of inter-State
supply of goods and/or services.
Article 269A: Levy and collection of GST on Inter-State Supply
Article 269A stipulates that GST 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 GST Council.
In addition to above, import of goods or services or both into India will also be deemed to be
supply of goods and/ or services in the course of Inter-State trade or Commerce.
This will give power to Central Government to levy IGST on the import transactions which were
earlier subject to Countervailing duty (CVD) under the Customs Tariff Act, 1975.
Where an amount collected as IGST has been used for payment of SGST or vice versa, such
amount shall not form part of the Consolidated Fund of India. This is to facilitate transfer of
funds between the Centre and the States.
Parliament is empowered to formulate the principles regarding place of supply and when supply
of goods, or of services, or both occurs in inter-State trade or commerce.
Short Notes on GST Council – Article 279A 5 Marks
As per Article 279A of the Constitution of India, the President of India is empowered to constitute
Goods and Services Tax Council. The President of India constituted the GST Council on 15th
September, 2016.
The GST Council shall consist of Union Finance Minster as a Chairperson, Union Minister of State in
charge of Finance as a member, the State Finance Minister or State Revenue Minister or any other
Minister nominated by each State as a member of the Council. The GST Council shall select one of
them as Vice Chairperson of Council.
Guiding principle of the GST Council:

The mechanism of GST Council would ensure harmonization on different aspects of GST between the
Centre and the States as well as among States.
Functions of the GST Council: 3 Marks

GST Council is to make recommendations to the Central Government and the State Governments on
Tax rates
Exemptions
Threshold limits
Dispute resolution
GST legislations including rules and notifications etc.
It shall also recommend the date on which GST be levied on Petroleum Crude, High Speed
Diesel, Motor Spirit, Natural Gas and Aviation Turbine Fuel.
Even after the Introduction of GST
GST is levied on all goods and services, except alcoholic liquor for human consumption and petroleum
crude, diesel, petrol, ATF and natural gas.
Alcoholic liquor for human consumption: is outside the realm of GST. The manufacture/production
of alcoholic liquor continues to be subjected to State excise duty and inter-State/intra-State sale of the
same is subject to VAT/CST respectively.
Petroleum crude, diesel, petrol, ATF and natural gas: As regards petroleum crude, diesel, petrol,
ATF and natural gas are concerned, they are not presently leviable to GST. GST will be levied on
these products from a date to be notified on the recommendations of the GST Council.
Till such date, central excise duty continues to be levied on manufacture/production of petroleum
crude, diesel, petrol, ATF and natural gas and inter-State/intra-State sale of the same is subject to
CST/ VAT respectively.
Tobacco: Tobacco is within the purview of GST, i.e. GST is leviable on tobacco. However, Union
Government has also retained the power to levy excise duties on tobacco and tobacco products
manufactured in India. Resultantly, tobacco is subject to GST as well as central excise duty.
GST is not levied on sale/purchase of immovable property.
Class Notes
INTRODUCTION– SET A
1. Define 'intra State supply' and 'inter-State supply' under GST law. Is it correct to say that inter-State
supply attracts both CGST and SGST?
Solution:
Where the location of the supplier and the place of supply of goods or services are in the same State/Union
territory, it is treated as intra-State supply of goods or services respectively.
Where the location of the supplier and the place of supply of goods or services are in
(i) two different States or
(ii) two different Union Territories or
(iii) a State and a Union territory, it is treated as inter-State supply of goods or services respectively.
No, it is not correct to say that inter-State supply attracts both CGST and SGST as inter-State supply attracts
IGST. However, IGST is the sum total of CGST and SGST/UTGST.
2. Explain the concept of ‘Dual GST’
Solution:
Under dual GST model, GST is imposed concurrently by the Centre and States, i.e. Centre and States
simultaneously tax goods and services. Centre has the power to levy GST on inter-state supplies of goods
and/or services.
3. Bring out the salient features of cross utilization of Input Tax Credit (ITC) under the GST Law?
Solution:
(i) CGST credit cannot be utilized for payment of SGST/UTGST.
(ii) SGST/UTGST credit cannot be utilized for payment of CGST.
(iii) Credit of IGST can be utilized for the payment of CGST/SGST/UTGST and vice versa.
4. Govind, a registered supplier, is engaged in providing services in the neighbouring States from his
registered office located in Mumbai. He has furnished the following details in respect of the inward
and outward supplies made during a tax period:-
Particulars (`
`)
Inter-State supply of services 1,80,000
Receipt of goods and services within the State 1,00,000
Assume the rates of taxes to be as under:-

Particulars Rate
CGST 9%
SGST 9%
IGST 18%
Note:
(i) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(ii) All the conditions necessary for availing the input tax credit have been fulfilled.
Compute the net GST payable by Govind during the given tax period. Make suitable assumptions if
required.
Solution: Computation of net GST payable by Govind
Particulars `
IGST @ 18% payable on inter-State supply of services 32,400
[Being an inter-State supply, IGST is payable on the same [1,80,000 × 18%]
in terms of section 5 of the IGST Act, 2017]
Less:
ITC of CGST @ 9% paid on intra-State receipt of goods and services 9,000
[Cross utilisation of CGST towards IGST] [1,00,000 × 9%]
ITC of SGST @ 9% paid on intra-State receipt of goods and services 9,000

[Cross utilisation of SGST towards IGST] [1,00,000 × 9%]
Net GST payable in cash 14,400
Note:
1. CGST shall first be utilised towards payment of CGST and the amount remaining, if any, be utilised
towards the payment of IGST.
2. SGST shall first be utilised towards payment of SGST and the amount remaining, if any, may be utilised
towards the payment of IGST.
3. However, ITC of SGST/UTGST should be utilized for payment of IGST, only after ITC of CGST has
been utilized fully
[Section 49 of the CGST Act, 2017]
5. Shipra Traders is a registered supplier of goods in Assam. It purchased goods valued at ` 10,000 from
Kartik Suppliers located within the same State. Kartik Suppliers charged CGST & SGST separately in
its invoice. Subsequently, Shipra Traders sold goods valuing ` 9,500 to Rabina Manufacturers located
in Assam. 20% of the inputs purchased are still lying in stock and there was no opening stock of
goods. Rate of CGST and SGST on supply and purchase of goods is 9% each. Calculate the net GST
payable by Shipra Traders and input tax credit (ITC) to be carried forward, if any.
Solution:
Computation of net GST payable by Shipra Traders
Particulars CGST @ 9% SGST @ 9%

(`
`) (`
`)
GST payable on intra-State supply of goods 855 855
[Being an intra-State supply, CGST and CGST
is payable on the same] [9,500 × 9%] [9,500 × 9%]
Less: ITC on intra-State purchase of goods 900 900

[ITC of CGST and SGST paid on intra-State [10,000 × 9%] [10,000 × 9%]
purchase is available in full, even if some inputs
are lying in stock]
Net GST payable Nil Nil
Input tax credit carried forward in Electronic

Credit Ledger 45 45
6. Mr. A registered person under GST located in Tamil Nadu, sold goods worth ` 10,000 after
manufacture to Mr. C of Chennai (Intra State). Subsequently, Mr. C sold these goods to Mr. H of
Hyderabad for ` 17,500 (Inter state). Mr. H being a trader finally sold these goods to customer Mr. S of
Secunderabad for ` 30,000 (Intra state). Applicable rates of CGST= 9%, SGST=9% and IGST=18%. Find
the net tax liability of each supplier of goods and revenue to the government.
Solution:
Since, Mr. A supplied goods to Mr. C in Tamil Nadu itself, it is an intra-state sale and both CGST @ 9%
and SGST @ 9% will apply.
Mr. C of Chennai supplied goods to Mr. H of Hyderabad. Since, it is an interstate sale, IGST@18% will
apply.
Mr. H of Hyderabad (Telangana) supplied goods to Mr. S of Secunderabad (Telangana). Once again it is
an intrastate sale and both CGST @ 9% and SGST @ 9% will apply.
Statement showing Net tax liability of Mr. A and revenue to Government:

Value in IGST
Particulars (`
`) CGST in (` `) SGST in (`
`) in (`
`)
Mr. A to Mr. C 10,000 900 900 Nil
Less: ITC Nil Nil Nil Nil
Net liability of Mr. A 900 900 Nil
Revenue to Revenue to
Centre ` 900 Tamil Nadu ` 900
Statement showing net tax liability of Mr. C and revenue to the Government
Value
Particulars in (`) CGST in (`) SGST in (`) IGST in (`) Remarks
Mr. C to Mr. H 17,500 Nil Nil 3,150
Less: ITC -900 -900 -1,800 1st CGST, 2nd SGST
Net liability of Mr.
C Nil Nil 1,350
Since, Mr. C a dealer has used SGST of Tamil Nadu to the extent of ` 900/- in payment of IGST, Tamil
Nadu State (i.e. exporting State) has to transfer ` 900/- to the credit of the Centre.
Tamil Nadu (exporting state) revenue = Nil (i.e. ` 900 - ` 900)

<
Total revenue to the Centre = ` 3,150

(i.e. ` 1,350 + ` 900 received from Tamil Nadu + ` 900 CGST already collected from Mr. A in 1st Intra-State
supply)
Statement showing net tax liability of Mr. H and revenue to the Government
Value in CGST in SGST in IGST in
Particulars (`) (`) (`) (`) Remarks
Mr. H to Mr. S 30,000 2,700 2,700 Nil
st
Less: ITC (2,700) (450) (3,150) IGST credit 1 adjust
against IGST, next CGST
and SGST in any order.
As per Rule 88A, IGST

credit can be utilised now
against CGST & SGST in
any order.
Net liability of Mr. H Nil 2,250 Nil
Since, Mr. H a dealer has used IGST of ` 450/- to pay the SGST of Telangana State, the Centre has to
transfer ` 450/- to the Telangana State (i.e. importing State).
Net revenue to the Telangana State = ` 2,700 (i.e. ` 2,250 + ` 450)

Net Revenue to the Centre = ` 2,700 (i.e. ` 3,150 – ` 450)
Total revenue to the Government = ` 5,400 (i.e. ` 30,000 x 18%)

Note:
The order of utilisation of ITC is as under:-
(i) IGST credit should first be utilized towards payment of IGST.
(ii) Remaining IGST credit, if any, can be utilized towards payment of CGST and SGST/UTGST in any order
and in any proportion.
(iii) Entire ITC of IGST should be fully utilized before utilizing the ITC of CGST or SGST/UTGST.
(iv) ITC of CGST should be utilized for payment of CGST and IGST in that order.
(v) ITC of SGST /UTGST should be utilized for payment of SGST/UTGST and IGST in that order. However,
ITC of SGST/UTGST should be utilized for payment of IGST, only after ITC of CGST has been utilized
fully.
CGST credit cannot be utilized for payment of SGST/UTGST and SGST/UTGST credit cannot be
utilized for payment of CGST.
7. Mr. M of Madurai supplied goods/services for ` 24,000 to Mr. S of Salem. Mr. M purchased
goods/services for ` 23,600 (inclusive of CGST 9% and SGST 9%) from Mr. C of Chennai. Find the
following:
(1) Total price charged by Mr. M for supply of goods/services and
(2) Who is liable to pay GST?
(3) Net liability of GST.
Solution:
Particulars Value in (`)

Value charged for supply of goods/services 24,000
Add: CGST 9% 2,160
Add: SGST 9% 2,160
(1) Total price charged by Mr. M from Mr. S for local supply of
goods/services. 28,320
(2) Mr. M is liable to pay GST.
CGST
Particulars (`) SGST (`)
Output tax 2,160 2,160
Less: Input Tax Credit (ITC) (1,800) (1,800)
(3) Net tax liability of Mr. M 360 360
8. Discuss any two significant benefits of GST.
Solution:
GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of industry,
Government and the consumer. It will lower the cost of goods and services, give a boost to the economy and
make the products and services globally competitive.
The significant benefits of GST are discussed hereunder:
Refer Page A.10 (Newly added Paragraphs)
GST – By CA Suraj Agrawal SATC AA.1
PAYMENT OF TAX
The introduction of E-ledgers is a unique feature under the GST regime. Electronic Ledgers or E-
Ledgers are Statements of Cash (Electronic Cash Ledger) and Input Tax Credit (Electronic Credit
Ledger) in respect of each registered taxpayer. In addition, each taxpayer shall also have an Electronic
Tax Liability register (Electronic Liability Ledger).
Chapter X of the CGST Act prescribes the provisions relating to payment of tax containing Sections
49 to 53.
While Section 49 discusses the 3 ledgers namely the Electronic Cash Ledger, Electronic Credit
Ledger and Electronic Liability Register [3 Marks], Section 50 discusses about the interest on
delayed payment of tax. Section 51 lays down the circumstances in which tax deduction at source
(TDS) becomes mandatory. Section 52 deals with the circumstances when tax is to be collected at
source (TCS) by the Electronic Commerce Operator. Further, Section 53 deals with transfer of ITC.
Chapter IX of CGST Rules deals with provisions relating to payment of tax.
Provisions of payment of tax under CGST Act have also been made applicable to IGST Act vide
section 20 of the IGST Act.
FEW DEFINITIONS
Electronic Cash Ledger means the electronic cash ledger referred to in sub-section (1) of Section 49
[Section 2(43)].
Electronic Credit Ledger means the electronic credit ledger referred to in sub-section (2) of section 49
[Section 2(46)].
[4 Marks] 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-
the integrated goods and services tax charged on import of goods;
the tax payable under the provisions of sub-sections (3) and (4) of section 9;
the tax payable under the provisions of sub-section (3) and (4) of section 5 of the IGST Act;
the tax payable under the provisions of sub-section (3) and sub-section (4) of section 9 of the
respective State Goods and Services Tax Act; or
the tax payable under the provisions of sub-section (3) and sub-section (4) of section 7 of the
Union Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy [Section 2(62)].
Output Tax in relation to a taxable person, means the tax chargeable under this Act on taxable supply
of goods or services or both made by him or by his agent but excludes tax payable by him on reverse
charge basis [Section 2(82)].
Input Tax Credit means the credit of input tax [Section 2(63)].
Valid Return means a return furnished under sub-section (1) of section 39 on which self-assessed tax
has been paid in full [Section 2(117)].
PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS [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 or by such other mode and subject to such conditions and restrictions as may be
prescribed, shall be credited to the Electronic Cash Ledger.
(2) The ITC 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
or the rules made there under in such manner and subject to such conditions and within such time
as may be prescribed.
(4) [1 Marks]The amount available in the Electronic Credit Ledger may be used for making any
payment towards output tax (tax only) under this Act or under the Integrated Goods and
Services Tax Act in such manner and subject to such conditions and within such time as may be
prescribed.
(5) Section 49(5) - [5 Marks] The amount of ITC available in the Electronic Credit Ledger of the
registered person on account of-
(a) Integrated Tax (IGST) shall first be utilised towards payment of integrated tax and the
amount remaining, if any, may be utilised towards the payment of central tax and State tax, or
as the case may be, Union territory tax, in that order;
(b) the Central Tax (CGST) shall first be utilised towards payment of central tax and the amount
remaining, if any, may be utilised towards the payment of integrated tax;
(c) the State Tax (SGST) shall first be utilised towards payment of State tax and the amount
remaining, if any, may be utilised towards payment of integrated tax;
(d) the Union Territory tax (UTGST) shall first be utilised towards payment of Union territory tax
and the amount remaining, if any, may be utilised towards payment of integrated tax;
(e) the central tax (CGST) shall not be utilised towards payment of State tax or Union territory tax;
and
(f) the State tax or Union territory tax shall not be utilised towards payment of central tax.
As per CGST (Amendment) Act, 2018, ITC on account of SGST/UTGST can be utilized
towards payment of IGST only where the balance of the ITC on account of CGST is not
available for payment of 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 in such manner as may be prescribed.
(8) [3 Marks] Section 49(8) - Every taxable person shall discharge his tax and other dues under this
Act or the rules made thereunder in the following order, namely:-
(a) self-assessed tax, and other dues related to returns of previous tax periods;
(b) self-assessed tax, and other dues related to the return of the current tax period;
(c) any other amount payable under this Act or the rules made thereunder including the demand
determined under Section 73 or Section 74;
(9) Every person who has paid the tax on goods or services or both under this Act shall, unless the
contrary is proved by him, be deemed to have passed on the full incidence of such tax to the
recipient of such goods or services or both.
Explanation:
For the purposes of this Section,-
(a) the date of credit to the account of the Government in the authorised bank shall be deemed to
be the date of deposit in the electronic cash ledger;
(b) the expression,-
(i) “Tax Dues” means the tax payable under this Act and does not include interest, fee and
penalty; and
(ii) “Other Dues” means interest, penalty, fee or any other amount payable under this Act or
the rules made there under [1 Marks].
ITC of IGST to be fully utilised first [Section 49A of the CGST Act, 2017]
W.e.f 01/02/2019
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 49A starts with a non obstante clause, “Notwithstanding anything contained in section
49….” Thus, the provisions of section 49A would prevail over the provisions of section 49.]
Note: Section 49A provides that ITC of CGST and SGST shall be utilised only after the ITC of IGST
has been first utilised fully toward payment of IGST, CGST & SGST. Accordingly, Section 49A
provides single restriction that ITC of IGST must be first full exhausted before utilising the ITC
of CGST & SGST. Newly inserted section 49A does not provide order of utilisation of ITC.
Order of utilization of ITC [Section 49B of the CGST Act, 2017]
W.e.f 01/02/2019
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.”
New mechanism prescribed for utilisation of ITC

[Rule 88A inserted in the CGST Rules, 2017]
The amendment of Section 49 and insertion of new Section 49A vide the CGST (Amendment) Act,
2018 – which prescribe utilization of ITC of IGST in a particular order - resulted in accumulation of ITC
for one kind of tax in electronic credit ledger and discharge of liability for the other kind of tax through
electronic cash ledger in certain scenarios.
The newly inserted Section 49A of the CGST Act, 2017 provides that the ITC of IGST has to be
utilized completely before ITC of CGST/SGST can be utilized for discharge of any tax liability. Further,
as per the provisions of section 49 of the CGST Act, 2017, ITC of IGST has to be utilized first for
payment of IGST, then CGST and then SGST in that order mandatorily. This led to a situation, in
certain cases, where a taxpayer has to discharge his tax liability on account of one type of tax (say
SGST) through electronic cash ledger, while the ITC on account of other type of tax (say CGST)
remains un-utilized in electronic credit ledger.
Accordingly, in exercise of the powers conferred under newly introduced section 49B of the
CGST Act, 2017, a new rule 88A has been inserted in the CGST Rules, 2017.
The newly inserted rule 88A allows utilization of ITC of IGST towards the payment of CGST and
SGST/UTGST in any order subject to the condition that the entire ITC of IGST is completely exhausted
first before the ITC of CGST or SGST/UTGST can be utilized.
Manner of utilisation of ITC [Combined reading of section 49(5), 49A, 49B, Rule 88A]
Available IGST credit in the credit ledger should first be utilized towards payment of IGST.
Remaining amount, if any, can be utilized towards the payment of CGST and SGST/UTGST
in any order and in any proportion, i.e. ITC of IGST can be utilized either against CGST or
SGST.
Entire ITC of IGST is to be fully utilised first before the ITC of CGST or SGST/UTGST can be
utilized.
Available CGST Credit in the credit ledger shall first be utilized for payment of CGST.
Remaining amount if any, will be utilized for payment of IGST
Available SGST /UTGST credit in the credit ledger shall first be utilized for payment of
SGST/UTGST. Remaining amount if any, will be utilized for payment of IGST, only when
credit of CGST is not available for payment of IGST
Rule 85: Electronic Liability Register [Chapter IX: Payment of Tax of the CGST Rules]
(1) The Electronic Liability Register specified under Section 49(7) 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) [3 Marks] The Electronic Liability Register of the person shall be debited by:-
(a) the amount payable towards tax, interest, late fee or any other amount payable as per the
return furnished by the said person;
(b) 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;
(c) the amount of tax and interest payable as a result of mismatch under Section 42 or Section 43
or Section 50; or
(d) any amount of interest that may accrue from time to time.
(3) Subject to the provisions of Section 49, Section 49A & Section 49B, 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.
(4) 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. [2 Marks]
Rule 86: Electronic Credit Ledger
(1) The electronic credit ledger shall be maintained in FORM GST PMT-02 for each registered
person eligible for input tax credit under the Act on 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, Section 49A & Section 49B.
(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.
Rule 87 Electronic Cash Ledger
(1) The electronic cash ledger under sub-section (1) of section 49 shall be maintained in FORM GST
PMT-05 [1 Marks] for each person, liable to pay tax, interest, penalty, late fee or any other amount,
on the common portal for crediting the amount deposited and debiting the payment therefrom
towards tax, interest, penalty, fee or any other amount.
(2) Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-06 [1 Marks]
on the common portal and enter the details of the amount to be deposited by him towards tax,
interest, penalty, fees or any other amount.
(3) [5 Marks] The deposit under sub-rule (2) shall be made through any of the following modes,
namely:-
(i) Internet Banking through authorised banks;
(ii) Credit card or Debit card through the authorised bank;
(iii) National Electronic Fund Transfer (NEFT) or Real Time Gross Settlement (RTGS) from any
bank; or
(iv) Over the Counter payment through authorised banks for deposits up to ` 10,000 per
challan per tax period, by cash, cheque or demand draft.
The restriction for deposit up to ` 10,000 per challan in case of an Over the Counter payment
shall not apply to deposit to be made by -
(a) Government Departments or any other deposit to be made by persons as may be notified by the
Commissioner in this behalf;
(b) Proper officer or any other officer authorised to recover outstanding dues from any person,
whether registered or not, including recovery made through attachment or sale of movable or
immovable properties;
(c) Proper officer or any other officer authorised for the amounts collected by way of cash,
cheque or demand draft during any investigation or enforcement activity or any ad hoc deposit:
The challan in FORM GST PMT-06 generated at the common portal shall be valid for a period of
15 days.
Explanation For the purposes of this sub-rule, it is hereby clarified that for making payment of any
amount indicated in the challan, the commission, if any, payable in respect of such payment
shall be borne by the person making such payment.
(4) Any payment required to be made by a person who is not registered under the Act, shall be made
on the basis of a Temporary Identification Number generated through the common portal.
(5) On successful credit of the amount to the concerned government account maintained in the
authorised bank, a Challan Identification Number shall be generated by the collecting bank
and the same shall be indicated in the challan.
(6) On receipt of the Challan Identification Number from the collecting bank, the said amount shall be
credited to the electronic cash ledger of the person on whose behalf the deposit has been made
and the common portal shall make available a receipt to this effect.
(7) Any amount deducted under section 51 or collected under section 52 and claimed in FORM GSTR-
02 by the registered taxable person from whom the said amount was deducted or, as the case may
be, collected shall be credited to his electronic cash ledger in accordance with the provisions of
rule 87.
(8) Where a person has claimed refund of any amount from the electronic cash ledger, the said
amount shall be debited to the electronic cash ledger.
What are CPIN, CIN, BRN and E-FPB?
[2 Marks] CPIN stands for Common Portal Identification Number. It is created for every Challan
successfully generated by the taxpayer. It is a 14-digit unique number to identify the challan. CPIN
remains valid for a period of 15 days.
[2 Marks] CIN or Challan Identification Number is generated by the banks, once payment in lieu
of a generated Challan is successful. It is a 17-digit number that is 14-digit CPIN plus 3-digit
Bank Code.
CIN is generated by the authorized banks/Reserve Bank of India (RBI) when payment is actually
received by such authorized banks or RBI and credited in the relevant government account held
with them. It is an indication that the payment has been realized and credited to the appropriate
government account. CIN is communicated by the authorized bank to taxpayer as well as to
GSTN.
BRN or Bank Reference Number is the transaction number given by the bank for a payment
against a Challan
[2 Marks] E-FPB stands for Electronic Focal Point Branch. These are branches of authorized
banks which are authorized to collect payment of GST. Each authorized bank will nominate only
one branch as its E-FPB for pan India transaction.
The E-FPB will have to open accounts under each major head for all governments. Any
amount received by such E-FPB towards GST will be credited to the appropriate account held
by such E-FPB. For NEFT/RTGS Transactions, RBI will act as E-FPB.
Are manual Challans applicable as allowed earlier under the VAT regimes?
Manual or physical Challans are not allowed under the GST regime. It is mandatory to generate
Challans online on the GST Portal.
How many types of Challans are prescribed for various taxes and payments to be paid under
the GST regime?
There is single Challan prescribed for all taxes, fees, penalty, interest, and other payments to be
made under the GST regime.
Manner of utilization of amount reflected in Electronic Cash Ledger – Section 49(3)
The amount reflected in the electronic cash ledger may be used for making any payment towards tax,
interest, penalty, fee, or any other amount under the relevant tax head in the prescribed manner.
In the ledger, information is kept minor head-wise for each major head. The ledger is displayed major
head -wise i.e., IGST, CGST, SGST/UTGST, and CESS. Each major head is divided into five minor
heads: Tax, Interest, Penalty, Fee, and Others.
A registered taxpayer can make cash deposits in the recognized Banks through the prescribed modes
to the Electronic Cash Ledger using any of the Online or Offline modes permitted by the GST Portal.
The Cash deposits can be used for making payment(s) like tax liability, interest, penalties, fee, and
others.
How can the cash available in the Electronic Cash Ledger be utilised? Can a taxpayer utilise
the amount available in any minor head of a major head for any other minor head of the
same major head?
The amount available in the Electronic Cash Ledger can be utilised for payment of any liability for
the respective major and minor heads. For example, liability for the tax under SGST/UTGST can be
settled only from the available amount of cash under SGST/UTGST Major head.
Example: An amount of ` 1,000 is available under minor head ‘tax’ of major head ‘SGST/UTGST’ and
the taxpayer has a liability of ` 200 for minor head ‘interest’ under the same major head
‘SGST/UTGST’. Since, there is no amount available under minor head ‘interest’ under major head
“SGST/UTGST”, therefore, interest payment cannot be made from the amount available under ‘tax’ of
the same major head
Is transfer of funds between the major heads permissible for discharging liabilities?
Amount available under one major head (SGST/UTGST, CGST, IGST or CESS) cannot be utilised for
discharging the liability under any other major head. For example, amount available in SGST/UTGST
cannot be utilised for discharging liabilities under CGST, IGST, or CESS and vice versa
What happens if the taxable person files the return but does not make payment of tax?
In such cases, the return is not considered as a valid return. Section 2(117) defines a valid return to
mean a return furnished under sub- section (1) of section 39 on which self-assessed tax has been paid
in full. It is only the valid return that would be used for allowing input tax credit (ITC) to the recipient.
In other words, unless the supplier has paid the entire self -assessed tax and filed his return and
the recipient has filed his return, the ITC of the recipient would not be confirmed.
How do the new payment systems benefit the taxpayer and the Commercial Tax
Department?
[5 Marks]
No more queues and waiting for making payments as payments can be made online 24 X 7.
Instant online receipts for payments made online.
Tax Consultants can make payments on behalf of the clients.
Single Challan form to be created online, replacing the three or four copy Challan.
Revenue will come earlier into the Government Treasury as compared to the old system.
Greater transparency.
Online payments made after 8 pm will be credited to the taxpayer’s account on the same day.
INTEREST ON DELAYED PAYMENT OF TAX [SECTION 50]
(1) [2 Marks] 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 18%, as may be notified by the Government on the
recommendations of the Council.
[Notification No. 13/2017 CT dated 28.06.2017 has notified the rate of interest as 18% per
annum.]
(2) The interest under sub-section (1) shall be calculated, in such manner as may be prescribed, from
the day succeeding the day on which such tax was due to be paid.
(3) A taxable person who makes an undue or excess claim of ITC under Section 42(10) or undue or
excess reduction in output tax liability under Section 43(10), 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 24%, as may be notified by the Government on the recommendations of the Council.
[Notification No. 13/2017 CT dated 28.06.2017 has notified the rate of interest as 24% per
annum.]
Other relevant points:

The payment of interest in case of belated payment of tax should be made voluntarily i.e. even
without a demand.
The interest payable under this section shall be debited to the Electronic Liability Register.
The liability for interest can be settled by adjustment with balance in Electronic Cash Ledger but not
with balance in electronic credit ledger.
TAX WRONGFULLY COLLECTED AND PAID TO CENTRAL GOVERNMENT OR STATE

GOVERNMENT [SECTION 19 OF IGST ACT]
Payment of tax based on erroneous determination of ‘nature of supply’ is not permitted to be adjusted.
Remedy lies in refund.
Taxable person who has paid tax in error is entitled to refund by first restoring the discharge of
the correct tax due so that the incorrect tax paid reflects on the common portal as ‘paid in
excess’ and
(a) IGST paid in error will be refunded subject to conditions prescribed
(b) IGST payable due to payment of CGST & SGST/UTGST is exempted from payment of interest on
IGST due.
TRANSFER OF INPUT TAX CREDIT [SECTION 53 OF CGST ACT & SECTION 18 OF IGST
ACT]
If the amount of CGST is utilised towards dues of IGST then, in terms of section 53 of the CGST Act,
there shall be reduction in the amount of CGST, equal to the credit so utilized, and the Central
Government shall transfer such amount equivalent to the amount so reduced in CGST account to the
IGST account.
Similarly, if the amount of IGST is utilised towards dues of CGST/UTGST then, in terms of section 18 of
the IGST Act, there shall be reduction in the amount of IGST, equal to the credit so utilized, and the
Central Government shall transfer such amount equivalent to the amount so reduced in IGST account
to the CGST/UTGST account.
However, if the amount of IGST is utilised towards dues of SGST then, in terms of section 18 of the
IGST Act, there shall be reduction in the amount of IGST, equal to the credit so utilized, and will be
apportioned to the appropriate State Government and the Central Government shall transfer the
amount so apportioned to the account of the respective State Government.
AMENDMENTS MADE VIDE THE FINANCE (NO. 2) ACT, 2019
(Not yet effective for exam)
The Finance (No. 2) Act, 2019 has become effective from 01.08.2019. However, the amendments
made in the CGST Act and IGST Act vide the Finance (No .2) Act, 2019 would become effective
only from a date to be notified by the Central Government in the Official Gazette.
Amendment in Section 49 – Sub-section 10 & 11 are inserted: (Not yet effective for exam)
10. A registered person may, on the common portal, transfer any amount of tax, interest, penalty,
fee or any other amount available in the electronic cash ledger under this Act, to the electronic
cash ledger for integrated tax, central tax, State tax, Union territory tax or cess, in such form and
manner and subject to such conditions and restrictions as may be prescribed and such transfer
shall be deemed to be a refund from the electronic cash ledger under this Act.
11. Where any amount has been transferred to the electronic cash ledger under this Act, the same
shall be deemed to be deposited in the said ledger as provided in sub-section (1).
SATC Remarks: New sub-sections are being inserted in section 49 of the CGST Act to provide a
facility to the registered person to transfer an amount from one (major/minor) head to another
(major/minor) head in the electronic cash ledger.
New Section 53A: “Transfer of certain Amounts” (Not yet effective for exam)
Where any amount has been transferred from the electronic cash ledger under this Act to the electronic
cash ledger under the State Goods and Services Tax Act or the Union territory Goods and Services Tax
Act, the Government shall, transfer to the State tax account or the Union territory tax account, an
amount equal to the amount transferred from the electronic cash ledger, in such manner and within
such time as may be prescribed.”
SATC Remarks: A new Section 53A is being inserted in the CGST Act so as to provide for
transfer of amount between Centre and States consequential to amendment in section 49 of the
CGST Act allowing transfer of an amount from one head to another head in the electronic cash
ledger of the registered person.
Amendment in 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 18%, as may be notified by the Government on the recommendations of the
Council.
NEW Proviso: “Provided that the interest on tax payable in respect of supplies made during a
tax period and declared in the return for the said period furnished after the due date in
accordance with the provisions of section 39, except where such return is furnished after
commencement of any proceedings under section 73 or section 74 in respect of the said period,
shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.”.
New proviso is being inserted in section 50(1) of the CGST Act so as to provide for charging
interest only on the net cash tax liability, except in those cases where returns are filed
subsequent to initiation of any proceedings under section 73 or 74 of the CGST Act.
GST – By CA Suraj Agrawal SATC AB.1
PAYMENT OF TAX – SET A

(1) Which of these electronic ledgers are maintained online?
(a) Electronic liability register
(b) Electronic credit ledger
(c) Electronic cash ledger
(d) All of the above
(2) Deposits towards tax, penalty, interest, fee or any other amount are credited into the---------------------- of
a taxable person.
(3) Input tax credit as self-assessed in the return of the registered person shall be credited to which of
the following ledger?
(4) Which of the following items are debited to electronic credit ledger?
(a) Output tax
(b) Interest
(c) Penalty
(5) Balance in electronic credit ledger under SGST can be used against which liability?
(a) SGST Liability only
(b) SGST and IGST liability
(c) SGST, IGST and CGST liability
(d) None of the above
(6) Which input tax credit cannot be claimed against which output tax liability?
(a) IGST, SGST
(b) CGST, IGST
(c) SGST, IGST
(d) CGST, SGST
(7) Interest is payable on:-

(a) Belated payment of tax
(b) Undue/excess claim of input tax credit
(c) Undue/ excess reduction in output tax liability
(8) Which of the following liability cannot be adjusted against input tax credit of CGST?
(a) IGST
(b) SGST/UTGST
(c) All of the above
(9) Which of the following shall be discharged first, while discharging liability of a taxable person?
(a) All dues related to previous tax period
(b) All dues related to current tax period
(c) Demand raised under section 73 and 74
(d) No such condition is mandatory
(10)Interest is calculated:-
(a) From the day following the day on which tax becomes due to be paid
(b) From the last day such tax was due to be paid
(c) No period is specified
(11)Which of the following statement is true: Which date is considered as date of deposit of the tax dues
(a) Date of presentation of cheque or
(b) Date of payment or
(c) Date of credit of amount in the account of Government
(12)How many types of electronic ledger are there?
Answer:
(a) Electronic cash ledger
(c) Electronic liability register
(13)What are the main features of GST payment process?
(14)Explain the following terms in brief:
(a) E-FPB
(b) CPIN
(c) CIN
(15)Can one use input tax credit for payment of interest, penalty, and payment under reverse charge?
Answer:
No, as per Section 49(4) of the CGST Act, 2017 the amount available in the electronic credit ledger may be
used for making any payment towards ‘output tax’.
As per Section 2(82) of the CGST Act, 2017, output tax means, the CGST/SGST chargeable under this Act
on taxable supply of goods and/or services made by him or by his agent and excludes tax payable by him on
reverse charge basis. Therefore, input tax credit cannot be used for payment of interest, penalty, and
payment under reverse charge.
(16)Are principles of unjust enrichment applicable for payment made under GST?
Answer:
Yes, as per Section 49(9) of the CGST Act, 2017 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.
(17)State the name of output tax under GST, where any of the input tax credit under GST can be availed?
Answer:
IGST.
IGST, CGST, SGST, UTGST i.e. all input tax credit can be availed against output tax liability known as IGST.
(18)ABC limited filed the return for GST under section 39(1) for the month of November on 20th, December
showing self assessed tax of ` 2,50,000 which was not paid. Explain what are the implications for ABC
limited as per relevant provisions?
Answer:
As per section 2(117) of CGST Act, “valid return” means a return furnished under sub-section (1) of section 39
on which self-assessed tax has been paid in full.
Hence, in such a case, the return is not considered as a valid return and also input tax credit will not be
allowed to the recipient of supplies.
(19)IMP: Mr. X, a supplier of goods, pays GST under regular scheme. The amount of input tax credit (ITC)
available and output tax liability under different tax heads is as under:-
Head Output tax liability ITC

IGST 2,000 4,000
CGST 800 2,000
SGST/ UTGST 2,500 500
Compute the minimum GST payable in cash by Mr. X. Make suitable assumptions as required.
Answer:
Mr. X can use the ITC to pay his output tax liability. The order of utilisation of ITC is as under:-
fully.
Note: These notes are based on new provisions – Section 49, 49A, 49B & Rule 88A
Computation of minimum GST payable in cash
Particulars CGST (Rs) SGST (Rs) IGST (Rs)

GST payable 800 2,500 2,000
Less: ITC - (2,000)-IGST (2,000)-IGST
(800)-CGST (500) – SGST
Net GST payable in cash Nil Nil Nil
Since sufficient balance of ITC of CGST is available for paying CGST liability and cross utilization of ITC of
CGST and SGST is not allowed, it is beneficial to use ITC of IGST to pay SGST (after paying IGST liability) to
minimize cash outflow.
(20)M/s X Ltd. being a registered person supplying taxable goods in the following manner:
Particulars `
Intra-State supply of goods 18,00,000
Inter-State supply of goods 13,00,000
Intra-State purchases 13,00,000
Inter-State purchases 1,50,000
ITC at the beginning of the relevant tax period:

CGST 1,30,000
SGST 1,30,000
IGST 1,70,000
(i) Rate of CGST, SGST and IGST to be 9%, 9% and18% respectively.

(ii) Inward and outward supplies are exclusive of taxes.
(iii) All the conditions necessary for availing the input tax credit have been fulfilled.
Compute the net GST payable by M/s X Ltd during the tax period. Make suitable assumptions.
Answer:
Statement showing input tax credit (i.e. Electronic Credit Ledger)
Particulars CGST ` SGST ` IGST `

Opening balance 1,30,000 1,30,000 1,70,000
Add: ITC for the tax period 1,17,000 1,17,000 27,000
Total credit 2,47,000 2,47,000 1,97,000
Statement showing Net GST payable by M/s X Ltd for the tax period
Particulars CGST ` SGST ` IGST `

Output tax 1,62,000 1,62,000 2,34,000
Less: ITC allowed
IGST - - 1,97,000
CGST 1,62,000 37,000
SGST 1,62,000
Net GST liability Nil Nil Nil
Excess ITC c/f 48,000 85,000 Nil
Note:
X Ltd. can use the ITC to pay his output tax liability. The order of utilisation of ITC is as under:-
fully.
(21)Mr. A has output Tax Liability of ` 1,00,000/- towards CGST & SGST/UGST and ` 20,000 towards IGST
and also interest payable of ` 1,800/-. Explain the manner of discharge tax liability by Mr. A in the
following two independent cases:
1. Input tax credit available of CGST & SGST is ` 25,000/- each & IGST is ` 25,000/-
2. Input tax credit not available.
Answer:
Case 1:
In case Input Tax credit available-
Ledger Particulars CGST SGST IGST Interest

payable
Electronic liability ledger Output tax payable 50,000 50,000 20,000 1,800
Electronic credit ledger Input Tax Credit
IGST 5,000 - 20,000
CGST 25,000 - -
SGST - 25,000 -
Net output tax 20,000 25,000 -
liability
Electronic cash ledger Cash to be 20,000 25,000 - 1,800
deposited (Note-2)
Note-
1. Put above highlighted notes (common for all practicals)
2. Interest cannot be adjusted with Input Tax credit
Case 2:
Ledger Particulars CGST SGST IGST Interest
payable
Electronic liability Output tax 50,000 50,000 20,000 1,800
ledger payable
Electronic cash ledger Cash to be 50,000 50,000 20,000 1,800
deposited
(22)Y Ltd. is operating in two states Andhra Pradesh and Tamil Nadu. The tax liability for the month of Nov
2019 is as follows-
S.No Tax Liability Andhra Pradesh(`

`) Tamil Nadu(`
`)
1. Output CGST Payable 25,000 10,000
2. Output SGST Payable 10,000 5,000
3. Output IGST payable 3,000 2,500
4. Input CGST 8,000 13,000
5. Input SGST 15,000 1,500
6. Input IGST 12,000 16,000
Calculate the tax payable for the month of Nov 2019.
Answer:
Net Tax payable for the month of August is as follows-
Particulars Andhra Pradesh Tamil Nadu

IGST CGST SGST IGST CGST SGST
Output tax 3,000 25,000 10,000 2,500 10,000 5,000
Less: IGST 3,000 9,000 - 2,500 10,000 3,500
CGST - 8,000 - - -
SGST - - 10,000 - - 1,500
Balance after credit Adjustment NIL 8,000 NIL NIL NIL NIL
Net Tax payable in cash - 8,000 - - - -
Input credit carry forwarded to next month - - 5,000 - 10,000 NIL
Notes-
Y Ltd. can use the ITC to pay his output tax liability. The order of utilisation of ITC is as under:-
fully.
CGST & SGST Input tax credit of one State cannot be adjusted against Output CGST & SGST of other
state (same principle is applicable to IGST credit also).
(23)X Ltd. has following tax liabilities under the provisions of Act-
Particulars Amount (``)
(1) Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2019 1,00,000
(2) Interest & Penalty on delayed payment and filing of returns belonging to Aug. 2019 20,000
(3) Tax liability of CGST, SGST/UGST, IGST for supplies made during Sept. 2019 1,20,000
(4) Interest & Penalty on delayed payment and filing of returns belonging to Sep. 2019 20,000
(5) Demand raised as per Sec 73 or 74 under CGST Act, 2018 belonging to July 2019 8,00,000
(6) Demand raised as per the old provisions of Indirect Taxes 1,00,000
X Ltd. has ` 5,00,000 in Electronic cash ledger. Suggest X Ltd. in discharging the tax liability.
Answer:
Balance in Electronic cash ledger can be used in the following manner to discharge tax liability by X
Ltd.-
Particulars Amount (Rs)

Balance available in Electronic cash ledger 5,00,000
Less-
Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2019 (1,00,000)
Interest & Penalty on delayed payment and filing of returns belonging to August 2019 (20,000)
Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2019 (1,20,000)
Interest & Penalty on delayed payment and filing of returns belonging to September 2019 (20,000)
Demand raised as per section 73 or section 74 under CGST Act, 2018 (2,40,000)
Balance in electronic cash ledger Nil
The balance amount of ` 5,60,000 towards demand raised under section 73 or section 74 under CGST
Act, 2017 to be discharged before discharging liability of demand rose under old provisions of
Indirect Taxes.
GST – By CA Suraj Agrawal SATC B.1
REGISTRATION
Chapter VI - Registration [Sections 22 to 30] of the CGST Act stipulates the provisions relating
to registration.
Provisions of registration under CGST Act have also been made applicable to IGST Act vide
section 20 of the IGST Act.
INTRODUCTION
Under any taxation system,

(a) registration is the most fundamental requirement for identification of tax payers ensuring
tax compliance in the economy.
(b) Under indirect tax regime, without registration, a person can neither collect tax from his
customers nor claim any credit of tax paid by him.
(c) Registration legally recognizes a person as supplier of goods or services and legally
authorizes him to collect taxes from his customers and pass on the credit of the taxes
paid on the goods or services supplied to the purchasers/recipients.
(d) He can claim the input tax credit of taxes paid and can utilize the same for payment of
taxes due on supply of goods or services.
(e) There is seamless flow of input tax credit from suppliers to recipients at the national level.
Prior to introduction of GST

(a) a service provider was required to be registered with the Service Tax Department, while a
trader of goods had to be registered with the VAT Department. Similarly, a manufacturer of
goods has to be registered with Central Excise and VAT Department with respect to the
goods manufactured as also with the Service Tax Department in respect of services
availed which were taxed under reverse charge mechanism.
(b) The Central Excise law prescribed factory wise registration with few exceptions where
centralized registration was permitted, VAT laws provided for State-wise registrations
while the Service Tax law provided for either centralised or premise-wise registration.
The registration numbers allotted under central laws were PAN-based which was not the
case under State laws.
Under GST
(a) Registrations need to be taken State-wise, i.e. there are no centralized registrations under
GST.
(b) A business entity having its branches in multiple States will have to take separate State wise
registration for the branches in different States.
(c) Further, within a State, an entity with different branches would have single registration
wherein it can declare one place as Principal Place of Business (PPoB) and other
branches as Additional Place(s) of Business (APoB).
(d) However, a PAN based business entity having multiple place of business in a registration
State may obtain separate registration for each of its place of business otherwise a
given PAN based legal entity would have one registration number – Goods and Services Tax
Identification Number (GSTIN) per State.
Registration under GST is not tax specific, which means that there is single registration for
all the taxes i.e. CGST, SGST/UTGST, IGST and Cesses.
Certificate of Registration - 3 Marks

Certificate of registration shall be granted in Form GST REG-06. Certification of registration
contains Goods and Services Tax Identification Number (GSTIN):
Two characters for the State code
Ten characters for the PAN
Two characters for the entity code; and
One checksum character
Structure of GSTIN
Each taxpayer is assigned a state-wise PAN-based 15 digit Goods and Services Taxpayer
Identification Number (GSTIN).
Advantages of registration - 5 Marks
The following are advantages to a taxpayer who obtain registration under GST:
(i) He is legally recognized as supplier of goods or services or both.
(ii) He is legally authorized to collect taxes from his customers and pass on the credit of the taxes
paid on the goods or services supplied to the purchasers/recipients.
(iii) He can claim Input Tax Credit of taxes paid and can utilize the same for payment of taxes due
on supply of goods or services.
(iv) Seamless flow of Input Tax Credit from suppliers to recipients at the national level.
(v) Registered person is eligible to apply for Government bids or contracts or assignments.
(vi) Registered person under GST can easily gain trust from customers.
PERSONS LIABLE FOR REGISTRATION [SECTION 22]
3 Marks
Section 22(1) - Every supplier shall be liable to be registered under this Act in the State or Union
territory, other than special category States (Specified below), from where he makes a taxable
supply of goods or services or both, if his aggregate turnover in a financial year exceeds
` 20,00,000.
Where such person makes taxable supplies of goods or services or both from special category States
(Manipur, Mizoram, Nagaland, Tripura only w.e.f. 01/02/2019), he shall be liable to be registered if
his aggregate turnover in a financial year exceeds ` 10,00,000.
Government may, at the request of a Special Category State and on the recommendations of the
Council, enhance the threshold limit for Special Category States from ` 10 lakh to such amount,
not exceeding ` 20 lakh and subject to such conditions and limitations, as may be so notified.
[11 Special category States are specified in Article 279A(4)(g) of the Constitution - States of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, Himachal
Pradesh, Uttarakhand and Jammu and Kashmir]
Exemption from Registration upto Turnover of ` 40,00,000 (W.e.f. 01/04/2019)

In Notification No. 10/2019 – CT dated 7th March 2019, CBIC has provided exemption in exercise of
powers conferred under section 23(2) of the CGST Act, for person exclusively engaged in supply of
goods, having an aggregate turnover of ` 40 lacs from obtaining registration.
However, the above exemption is not available to following person:
Person required to take compulsory registration as per Section 24;

Person engaged in supply of ice-cream and other edible ice (whether or not containing
cocoa), pan masala and tobacco and manufactured tobacco substitutes;
Person engaged in intra state supply in states of Arunachal Pradesh, Manipur, Meghalaya,
Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand;
Person who has voluntarily obtained registration; and
Registered persons intending to continue their existing registration.
In Nutshell; the threshold limits for obtaining registration for suppliers exclusively engaged
in supply of goods in such states is as below (w.e.f 01/04/2019):
Threshold limits ` 10 Lacs for Manipur, Mizoram, Nagaland, Tripura.

Threshold limits ` 20 Lacs for Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana, Uttarakhand.
Threshold limits ` 40 Lacs for all other states/union territories including Assam, J&K, HP
Meaning of Aggregate Turnover [Section 2(6)]
5 Marks Aggregate turnover means the aggregate value of all
(a) Taxable Supplies
(b) Exempt Supplies
(c) Exports of Goods or Services or both and
(d) Inter State Supplies
of persons having the same PAN computed on all India Basis
but excludes
(a) CGST
(b) SGST/UTGST
(c) IGST and
(d) Compensation Cess
(e) value of inward supplies on which tax is payable by a person (i.e. the Recipient) on
reverse charge basis
Note:
1. IMP: The Expression “Aggregate Turnover” includes all supplies made by the taxable person
whether on his own account or made on behalf of all his principals
2. If a person has more than one branch whether in the same State/Union Territory or in more
than one state or UT, he shall be liable to registration if the turnover of all the branches
exceeds specified limits.
3. If a person having place of business in different States across India has one branch in any of
the special category States (Manipur, Mizoram, Nagaland, Tripura only), the threshold limit
for GST registration will be reduced to ` 10 lakh.
4. Outward supplies taxable under reverse charge would continue to be part of the aggregate
turnover of the supplier of such supplies.
5. Value of exported goods/services, exempted goods/ services, Inter-State supplies between

distinct persons having same PAN to be included in aggregate turnover.
6. Exempted Supply 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 of the CGST Act or under
Section 6 of the IGST Act and includes non-taxable supply.
Few Examples
A. Rohan Oils, Telangana, is engaged in supplying machine oil as well as petrol. Supply of
petrol is not leviable to GST, but supply of machine oil is taxable. In order to determine
whether Rohan Oils is liable for registration, turnover of both the supplies – non -taxable as
well as taxable - would be taken into account and if the same exceeds ` 20 lakh, Rohan Oils
is liable for registration.
B. Mohini Enterprises has appointed M/s Bestfords & Associates as its agent. All the supplies
of goods made by M/s Bestfords & Associates as agent of Mohini Enterprises will also be
included in the aggregate turnover of M/s Bestfords & Associates.
Registration required only for a place of business from where taxable supply takes place
A person is required to obtain registration with respect to his each place of business in India from
where a taxable supply has taken place. However, a supplier is not liable to obtain registration if
his aggregate turnover consists exclusively of goods or services or both which are not taxable
under GST.
PERSONS LIABLE FOR REGISTRATION [SECTION 22] – Other Sub-Sections
(2) Every person who, on the day immediately preceding the appointed day, is registered or holds a
license under an existing law, shall be liable to be registered under this Act with effect from the
appointed day. [For this Section, appointed day is 22.06.2017]
(3) Where a business carried on by a taxable person registered under this 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.
Clarification that transfer/change in the ownership of business to include the transfer

/change in the ownership of business due to death of the sole proprietor
Section 29(1)(a) of the CGST Act provides that reason of transfer of business includes “death of
the proprietor”. Similarly, for uniformity and for the purpose of section 22(3) of the said Act, it is
clarified that transfer or change in the ownership of business under said section will include
transfer/change in the ownership of business due to death of the sole proprietor.
[Circular No. 96/15/2019 GST dated 28.03.2019]
(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to
sanction of a scheme or an arrangement for amalgamation / de-merger of two or more companies
pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be 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
Class Notes
COMPULSORY REGISTRATION IN CERTAIN CASES [SECTION 24] - IMP
6 Marks Notwithstanding anything contained in Section 22(1), the following categories of

persons shall be required to be registered under this Act- (means turnover is not relevant here)
(i) Persons making any Inter-State taxable supply;
(ii) Casual Taxable Persons (CTP) making taxable supply;
(iii) Persons who are required to pay tax under Reverse Charge;
(iv) Non-Resident Taxable Persons (NRTP) making taxable supply;
(v) E-commerce:
a. Every ECO (Electronic Commerce Operator) who is required to collect tax at source
under section 52 (Added w.e.f 01/02/2019),
b. Person who are required to pay tax under reverse charge under section 9(5) and
c. Persons who supply goods and/or services, other than supplies specified under section
9(5), through such ECO who is required to collect tax at source under section 52, but
threshold limit of `20 lakh (`10 lakh in case of notified Special Category States) is
available in case of suppliers supplying services through ECO.
(vi) Persons who are required to deduct tax under Section 51, whether or not separately
registered under this Act;
(vii) Persons who make taxable supply of goods or services or both on behalf of other taxable
persons whether as an agent or otherwise;
(viii) Input Service Distributor, whether or not separately registered under this Act
(ix) Every person supplying Online Information and Data base Access or Retrieval [OIDAR]
services from a place outside India to a person in India, other than a registered person;
and
(x) Such other person or class of persons as may be notified by the Government on the
recommendations of the Council
CONCEPT OF TAXABLE PERSON
As per Section 2(107) of the CGST Act, taxable person means a person who is registered or liable
to be registered under section 22 or section 24.
From the definition of ‘taxable person’ provided above, it may be inferred that even an
unregistered person who is liable to be registered is a taxable person. Similarly, a person not
liable to be registered, but has taken voluntary registration and got himself registered is also a
taxable person.
PERSONS NOT LIABLE FOR REGISTRATION [SECTION 23] – IMP

4 Marks
(1) The following persons shall not be liable to registration, namely:-
a) 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 this Act or under the Integrated Goods
and Services Tax Act
b) an agriculturist, to the extent of supply of produce out of cultivation of land
(2) The Government may, on the recommendations of the Council, by notification, specify the
category of persons who may be exempted from obtaining registration under this Act.
Agriculturist [Section 2(7)]:

means an Individual/HUF who undertakes cultivation of land-
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the
personal supervision of any member of the family.
Specified category of persons notified by the Government exempted from obtaining registration
Following category of persons have been notified as being exempted from obtaining
registration under GST law:
A. Persons making only reverse charge supplies

Persons who are only engaged in making supplies of taxable goods or services or both, the total
tax on which is liable to be paid on reverse charge basis by the recipient of such goods or
services or both under section 9(3) have been exempted from obtaining registration.
B. Persons making inter-State supplies of taxable services up to ` 20,00,000

The persons making inter-State supplies of taxable services and having an aggregate turnover,
to be computed on all India basis, not exceeding an amount of ` 20 lakh in a financial year have
been exempted from obtaining compulsory registration.
However, the aggregate value of such supplies, to be computed on all India basis, should not
exceed an amount of ` 10 lakh in case of specified special category States (Manipur, Mizoram,
Nagaland, Tripura only – w.e.f. 01/02/2019).
C. Casual Taxable Persons making taxable supplies of handicraft goods or persons making
inter-State supplies of specified handicraft goods up to ` 20,00,000
As we have seen earlier that as per section 24, a CTP or a person making inter-State supplies of
goods are liable to be registered compulsorily under GST irrespective of the threshold limit.
However, persons making inter-State supplies of specified handicraft goods & few notified
products (handmade) have been exempted from obtaining registration provided:
1. Aggregate value of such supplies, to be computed on all India basis, does not exceed an
amount of ` 20 lakh [` 10 lakh in case of specified Special Category States] in a FY.
2. such persons have obtained a PAN and have generated an e-way bill.
Further, CTPs making inter-State taxable supplies of specified handicraft goods & few
notified products (handmade) have also been exempted from obtaining registration provided
conditions specified above are fulfilled.
D. Persons making supplies of services through an ECO (other than supplies specified under
section 9(5) of the CGST Act) with aggregate turnover up to ` 20,00,000
Persons making supplies of services, other than supplies specified under section 9(5), through an
ECO who is required to collect tax at source under section 52, and having an aggregate turnover,
to be computed on all India basis, not exceeding ` 20 lakh [` 10 lakh in case of special category
States (Manipur, Mizoram, Nagaland, Tripura only) – w.e.f. 01/02/2019)] in a FY, have been
exempted from obtaining compulsory registration.
Therefore, all service providers, whether supplying intra-State, inter-State or through ECO, will be
exempt from obtaining registration, provided their aggregate turnover does not exceed ` 20
lakh ( ` 10 lakh in specified special category States).
Place of business: includes

A. a place from where the business is ordinarily carried on, and includes a warehouse, a
godown or any other place where a taxable person stores his goods, supplies or receives
goods or services or both; or
B. a place where a taxable person maintains his books of account; or
C. a place where a taxable person is engaged in business through an agent, by whatever

name called.
PROCEDURE FOR REGISTRATION [SECTION 25]
1 Every person who is liable to be registered under Section 22 or Section 24 shall apply for
registration in every such State or Union territory in which he is so liable within 30 days from the
date on which he becomes liable to registration, in such manner and subject to such conditions as
may be prescribed.
However, Casual Taxable Person (CTP) or a Non-Resident Taxable Person (NRTP) shall apply
for registration at least 5 days prior to the commencement of business.
Provided further that a person having a unit, as defined in the Special Economic Zones Act,
2005, in a Special Economic Zone or being a Special Economic Zone developer shall have to
apply for a separate registration, as distinct from his place of business located outside the
Special Economic Zone in the same State or Union territory (added w.e.f 01/02/2019).
2 A person seeking registration under this Act shall be granted a single registration in a State or
Union territory.
Further, 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 prescribed (added w.e.f 01/02/2019).
3 [Section 25(3)] A person, though not liable to be registered under section 22 or section 24 may get
himself registered voluntarily, and all provisions of this Act, as are applicable to a registered
person, shall apply to such person.
4 A person who has obtained or is required to obtain more than one registration, whether in one State
or Union territory or more than one State or Union territory shall, in respect of each such
registration, be treated as distinct persons for the purposes of this Act
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
establishments shall be treated as establishments of distinct persons for the purposes of this
Act.
Example: Mohan, a Chartered Accountant, has a registered head office in Delhi. He has also obtained
registration in the State of West Bengal in respect of his newly opened branch office. Mohan shall be treated
as distinct persons in respect of registrations in West Bengal and Delhi.
6 Every person shall have a Permanent Account Number issued under the Income- tax Act, 1961
in order to be eligible for grant of registration:
7 A Non-Resident Taxable Person may be granted registration under sub-section (1) on the basis of
such other documents as may be prescribed
8 [Section 25(8)] Where a person who is liable to be registered under this Act fails to obtain
registration, the proper officer may, without prejudice to any action which may be taken under this
Act or under any other law for the time being in force, proceed to register such person in such
manner as may be prescribed
9 Notwithstanding anything contained in sub-section (1),-

a) any 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 ; and
b) any other person or class of persons, as may be notified by the Commissioner,
shall be granted a Unique Identity Number (UIN) in such manner and for such purposes, including
refund of taxes on the notified supplies of goods or services or both received by them, as may be
prescribed.
FEW IMPORTANT POINTS
A. Under GST, the application for registration has to be submitted electronically at the GST Common
Portal “www.gst.gov.in” duly signed or verified through Electronic Verification Code (EVC)
[Aadhar OTP].
B. One registration per State

Registration needs to be taken State-wise, i.e. there are no centralized registrations under GST. A
business entity having its branches in multiple States will have to take separate State-wise
registration for the branches in different States.
Further, within a State, an entity with different branches would have single registration wherein it
can declare one place as Principal Place of Business (PPoB) and other branches as
Additional Place of Business (APoB).
C. Separate registration for multiple place of business within a State/UT may be granted
Rule 11 stipulates that any person having multiple places of business within a State/UT, requiring a
separate registration for any such place of business shall be granted separate registration in
respect of each such place of business subject to the following conditions, namely:
a. such person has more than one place of business as defined in section 2(85);
b. such person shall not pay tax under composition levy for any of his places of business if he is
paying tax under normal scheme for any other place of business.
c. Where any place of business of a registered person that has been granted a separate
registration becomes ineligible to pay tax under composition scheme, all other registered
places of business of the said person shall become ineligible to pay tax under said scheme.
d. all separately registered places of business of such person shall pay tax under the Act on
supply of goods or services or both made to another registered place of business of such
person and issue a tax invoice or a bill of supply, as the case may be, for such supply.
e. A registered person opting to obtain separate registration for a place of business shall submit a
separate application in prescribed form in respect of such place of business.
f. The provisions of rule 9 and rule 10 relating to the verification and the grant of registration
shall, mutatis mutandis, apply to an application submitted under this rule
D. IMP: Voluntary registration [Section 25(3)] 5 Marks
A person who is not liable to be registered under section 22 or section 24 may get himself
registered voluntarily. In case of voluntary registration, all provisions of this Act, as are
applicable to a registered person, shall apply to voluntarily registered person.
Voluntary registration is advantageous for the persons which supply of goods or services or
both to registered persons. The reason for the same is that by virtue of section 9(4) of the
CGST Act, in case of supplies received from unregistered supplier by registered recipient,
recipient has to pay the tax under reverse charge.
Therefore, business units would prefer receiving supplies from the registered persons only.
Thus, voluntary registration enables a supplier of goods or services or both to enhance
its B2B [Business to Business] transactions.
However, once a person obtains voluntary registration, he has to pay tax even though his
aggregate turnover does not exceed specified limit.
E. Unique Identity Number (UIN) [Section 25(9) & (10) read with CGST Rules] 5 Marks
Any specialized agency of the United Nations Organization or any Multilateral Financial
institution and organization as notified under the United Nations (Privileges and Immunities) Act,
1947, consulate or embassy of foreign countries and any other person notified by the
Commissioner, is required to obtain a UIN from the GSTN portal.
This UIN is needed for claiming refund of taxes paid on notified supplies of goods and/or
services received by them, and for such other purpose as may be notified.
UIN granted is a centralized UIN i.e. it shall be applicable to the territory of India.
The proper officer may, upon submission of an application in prescribed form or after filling up the
said form or after receiving a recommendation from the Ministry of External Affairs,
Government of India, assign a UIN to the said person and issue registration certificate within 3
working days from the date of submission of application.
Registered Person: means a person who is registered under Section 25 but does not
include a person having a Unique Identity Number
F. IMP: Suo-motu registration by the proper officer [Section 25(8) read with CGST Rules]
5 Marks Where, pursuant to any survey, enquiry, inspection, search or any other
proceedings under the Act, the proper officer finds that a person liable to registration under the
Act has failed to apply for such registration, such officer may register the said person on a
temporary basis and issue an order in prescribed form.
Such person shall either:

a) submit an application for registration in prescribed form within 90 days from the date of
grant of temporary registration, or
b) file an appeal against such temporary registration.
In case (b), if the Appellate Authority upholds the liability to registration, application for registration
shall be submitted within 30 days from the date of issuance of such order of the Appellate
Tribunal.
GSTIN thereafter granted shall be effective from the date of order of proper officer granting
temporary registration.
G. Procedure for registration [Section 25 read with CGST Rules]

Provisions relating to procedure for application for registration, verification of the application and
approval & issue of registration certificate are contained in the rules 8, 9 and 10 of the CGST
Rules, 2017 respectively. The same have to be read in conjunction with section 25 provisions.
However, procedure so laid down will not apply to:

Non-resident taxable person
A person required to deduct tax at source under section 51
A person required to collect tax at source under section 52
A person supplying online information and database access or retrieval services from a place
outside India to a non-taxable online recipient referred to in section 14 of IGST Act.
Procedure for registration prescribed under rules 8, 9 and 10 are also applicable to a person paying
tax under composition levy, every person seeking voluntary registration under section 25(3) as well
as a Casual Taxable Person.
Such persons shall apply for registration in Form GST REG 01. The application for registration in
FORM GST REG 01 is divided into two parts – Part A and Part B.
IMP: PROCEDURE FOR REGISTRATION
Part I 5 Marks
(a) Every person liable to get registered & person seeking voluntary registration shall, before applying
for registration declare his PAN, Mobile Number, Email-Address, State/UT in Part A of Form
GST REG-01 on GST Common Portal
(b) PAN is validated online by Common Portal from CBDT Database
(c) Mobile Number & Email verified through one time password sent to it
(d) Temporary Reference Number (TRN) is generated and communicated to the applicant on the
validated mobile number & email address
(e) Using TRN, applicant shall electronically submit application in Part B of the application form,
along with specified documents at the Common Portal
(f) On receipt of such application, an acknowledgment in the prescribed form shall be issued to the
applicant electronically. A Casual Taxable Person applying for registration gets a TRN for
making an advance deposit of tax in his electronic cash ledger and an acknowledgment is
issued only after deposit.
(g) Application shall be forwarded to the Proper Officer
(h) The procedure after receipt of application by the proper officer is discussed below
Part II
(a) Proper officer examines the application & accompanying documents
(b) If the same are found in Order, then proper officer will grant registration certificate in Form GST
REG-06 within 3 working days from the date of submission of application
(c) If documents are not in order, Proper officer issues notice electronically within 3 working
days from application date thereby seeking clarification, information or documents from the
applicant
(d) If applicant has furnished the clarification, information or documents within 7 working days from
the receipt of notice & proper office is satisfied then the proper officer will grant registration
certificate in Form GST REG-06 within 7 working days.
(e) If applicant has not furnished documents etc within 7 working days or documents so furnished are
not proper, then proper officer will reject the application for reasons to be recorded in
writing.
IMP: Deemed Approval of Application 3 Marks

If the proper officer fails to take any action-
- within 3 working days from the date of submission of application, or
- within 7 working days from the date of receipt of clarification, information or documents
furnished by the applicant,
the application for grant of registration shall be deemed to have been approved.
Information required while filing application for Registration
(a) Valid PAN
(b) Valid Indian Mobile Phone Number
(c) Valid E-mail Address
(d) Jurisdictional Details
(e) Place of Business
(f) Prescribed Documents & Information on all mandatory fields of Registration Application
(g) Valid Bank Account Number from India
(h) Indian Financial System Code (IFSC) number of the same bank & Branch
(i) At least one Proprietor/Partner/Director/Trustee/Karta/Member with corresponding PAN
(j) An Authorised Signatory who is resident of India with Valid Details including PAN
Bank Account details may be furnished after obtaining registration certificate [New rule 10A
inserted and rule 21 of the CGST Rules amended]
While applying for registration on GST portal, a person is required to furnish the details of his bank
account. This requirement has now been relaxed to a limited extent, by inserting a new rule 10A to the
CGST Rules.
In pursuance to the same, the registered person is allowed to furnish information with respect to details
of bank account, or any other information, as may be required on the common portal in order to comply
with any other provision, soon after obtaining certificate of registration and a GSTIN, but not later than
45 days from the date of grant of registration or the date on which the return required under
section 39 is due to be furnished, whichever is earlier.
This relaxation is not available for those who have been granted registration as TDS deductor/ TCS
collector under rule 12 or who have obtained suo-motu registration under rule 16.
In other words, a registered person has an option to give his bank account details after obtaining
registration, within 45 days from the date of grant of registration or the due date of furnishing return,
whichever is earlier.
However, if a person violates the provisions of rule 10A, his GST registration is liable to be
cancelled [Rule 21].
[Notification No. 31/2019 CT dated 28.06.2019]
Physical verification of business premises in certain cases after grant of Registration [Rule 25]
Where the proper officer is satisfied that the physical verification of the place of business of a registered
person is required after grant of registration, he may get such verification done and the verification
report along with other documents, including photographs, shall be uploaded in the prescribed form
on the GST Common Portal, within 15 working days following the date of such verification.
Issuance of registration certificate [Rule 10]

Where the application for grant of registration has been approved, a certificate of registration [duly
signed or verified through EVC by the proper officer] in FORM GST REG-06 showing the principal place
of business (PPoB) and additional place(s) of business (APoB) is made available to the applicant on the
Common Portal and a Goods and Services Tax Identification Number (hereinafter referred to as
“GSTIN”) i.e. the GST Registration No. is communicated to applicant, within 3 days after the
grant of registration.
Display of registration certificate and GSTIN on the name board [Rule 18]
Every registered person shall display his registration certificate in a prominent location at his PPoB and
at every APoB. Further, his GSTIN also has to be displayed on the name board exhibited at the
entry of his PPoB and at every APoB.
IMP: Effective date of Registration 4 Marks
Where an applicant submits application Effective date of registration is

for registration
Within 30 Days from the date he The date on which he becomes liable to Registration
becomes liable to registration
After 30 Days from the date he becomes Date of Grant of Registration

liable to registration
Example:
Sugam Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. The turnover of
Sugam Services Ltd. exceeded ` 20 lakh on 1st November. It is liable to get registered by 1st December
[30 days] in the State of Madhya Pradesh. It applies for registration on 28th November and is granted
registration certificate on 5th December. The effective date of registration of Sugam Services Ltd. is
1st November.
Example:
In above example, if Sugam Services Ltd. applies for registration on 3rd December and is granted
registration certificate on 10th December. The effective date of registration of Sugam Services Ltd.
is 10th December.
Deemed Registration [Section 26]
The grant of registration or UIN (Unique Identity Number) under the SGST Act / UTGST Act shall
be deemed to be a grant of registration or the UIN under this Act subject to the condition that the
application for registration or the UIN has not been rejected under this Act within the time
specified in Section 25(10).
Any rejection of application for registration or the UIN under the SGST Act / UTGST Act shall be
deemed to be a rejection of application for registration under this Act.
Special provisions for grant of registration in case of Non-Resident Taxable Person

(NRTP) and Casual Taxable Person (CTP) [Sections 25 & 27 read with CGST Rules]
Casual Taxable Person - 2 Marks: 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/UT where he has no fixed place of business
[Section 2(20)].
Non-Resident Taxable Person - 2 Marks: 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 [Section 2(77)].
NOTE:
A CTP does not have a fixed place of business in the State/UT where he undertakes supply though
he might be registered with regard to his fixed place of business in some other State/UT,
while a NRTP does not have fixed place of business/residence in India at all.
A CTP has to undertake transactions in the course or furtherance of business whereas the
business test is absent in the definition of NRTP.
Special Registration Provisions:
A. Both CTP and NRTP have to compulsorily get registered under GST irrespective of the threshold
limit, at least 5 days prior to commencement of business.
B. As per section 25(6), every person must have a PAN to be eligible for registration. Since NRTP will
generally not have a PAN of India, he may be granted registration on the basis of other
prescribed documents.
[He has to submit a self-attested copy of his valid passport along with the application signed by his
authorized signatory who is an Indian Resident having valid PAN. However, in case of a
business entity incorporated or established outside India, the application for registration shall be
submitted along with its tax identification number or unique number on the basis of which the
entity is identified by the Government of that country or its PAN, if available.]
Application will be submitted by NRTP in a different prescribed form whereas CTP will submit the
application for registration in the normal form for application for registration i.e. Form GST REG 01
and his registration of CTP will be a PAN based registration.
C. [IMP] - Period of validity of registration certificate granted to CTP/NRTP 3 Marks

Registration Certificate granted to CTP/NRTP will be valid for:
(i) Period specified in the registration application, or
(ii) 90 days from the effective date of registration
However, the proper officer may, on sufficient cause being shown by the said taxable person,
extend the said period of 90 days by a further period not exceeding 90 days in case application
is filed before the end of the validity of the registration granted.
D. CTP & NRTP will make taxable supplies only after the issuance of the Certificate of
Registration.
Advance Deposit of Tax

At the time of submitting the registration application, CTP/NRTP are required to make an advance
deposit of tax in an amount equivalent to the estimated tax liability of such person for the period
for which the registration is sought.
Such person will get a TRN for making an advance deposit of tax which shall be credited to his
electronic cash ledger. An acknowledgement of receipt of application for registration is issued
only after said deposit.
Note:
Where extension of time is sought, such registered taxable person will deposit an additional amount
of tax equivalent to the estimated tax liability of such person for the period for which the extension is
sought.
Clarification on issues under GST related to casual taxable person
Circular No. 71/45/2018-GST dt 26.10.2018

1. CBIC has clarified that the amount of advance tax, which a casual taxable person is required to
deposit while obtaining registration should be calculated after considering the due eligible ITC,
which might be available to such taxable person.
2. The Circular clarified that in case of long running exhibitions (for a period more than 180 days), the
taxable person cannot be treated as a CTP and thus such person would be required to obtain
registration as a normal taxable person, subject to certain conditions as prescribed in the said
circular.
AMENDMENT OF REGISTRATION [SECTION 28]
(1) Every registered person and a person to whom a Unique Identity Number (UIN) has been assigned
shall inform the proper officer of any changes in the information furnished at the time of registration
or subsequent thereto, in such form and manner and within a period of 15 days of such change
(2) The proper officer may, on the basis of information furnished under sub-section (1) or as
ascertained by him, approve or reject amendments in the registration particulars in such manner
and within such period as may be prescribed.
Approval of the proper officer shall not be required in respect of amendment of such particulars as
may be prescribed (non-Core Fields).
The proper officer shall not reject the application for amendment in the registration particulars
without giving the person an opportunity of being heard.
(3) Any rejection or approval of amendments under the SGST Act or the UTGST Act, as the case
may be, shall be deemed to be a rejection or approval under this Act.
Important Point:
a) In case of amendment of core fields of information, the proper officer may, on the basis of
information furnished or as ascertained by him, approve or reject amendments in the registration
particulars in the prescribed manner.
- Core fields of information (IMP) 3 Marks

Legal Name of Business
Address of PPoB/APoB
Addition, Deletion or Retirement of partners or Directors, Karta, Managing Committee, Board
of Trustees, Chief Executive Officer or Equivalent, responsible for day to day affairs of the
business
- If PO is of the Opinion that documents furnished are complete/correct for amendments, the PO
shall grant permission within 15 working days for amendment in registration certificate.
- If PO is of the Opinion that amendment is unwarranted or documents furnished are
incomplete/incorrect, the PO within 15 working days of receipt of application, will serve a
SCN why application for amendment should not be rejected
- If registered Person replies to the notice within 7 working days & reply is satisfactory the
registration certificate will be amended
- If reply is not received within 7 working days or reply is not satisfactory, then application shall
be rejected.
- Change of such particulars shall be applicable for all registrations of a registered person
obtained under provisions of this chapter on same PAN.
- Above Changes does not warrant cancellation of Registration under Section 29
- Mobile No. / Email address of authorised signatory can be amended only after online
verification through GST Portal
b) However, where change relates to non-core fields of information, registration certificate shall
stand amended upon submission of the application for amendment on the Common Portal.
c) IMP: If the proper officer fails to take any action

- within a period of 15 working days from the date of submission of the application, or
- within a period of 7 working days from the date of the receipt of the reply to the show cause
notice,
the certificate of registration shall stand amended to the extent applied for and the amended
certificate shall be made available to the registered person on the common portal.
d) Any particular of the application for registration shall not stand amended with effect from a date
earlier than date of submission of application for amendment on common portal except with order
of Commissioner for reasons to be recorded in writing and subject to conditions specified by
Commissioner in the said order.
NOTE:
Where a change in the constitution of any business results in change of PAN of a registered person,
the said person shall apply for fresh registration. The reason for the same is that GSTIN is PAN
based. Any change in PAN would warrant a new registration.
Cancellation or Suspension of Registration [Section 29]
(1) 3 Marks The proper officer may, either on his own motion or on an application filed by the
registered person or by his legal heirs, in case of death of such person, cancel the registration, in
such manner and within such period as may be prescribed, having regard to the circumstances
where:
(a) the business has been discontinued, transferred fully for any reason including death of the
proprietor, amalgamated with other legal entity, demerged or otherwise disposed of OR
(b) there is any change in the constitution of the business OR
(c) the taxable person, other than voluntarily registered person [registered under Section 25(3)], is
no longer liable to be registered under Section 22 or Section 24
Provided that during the pendency of the proceedings relating to cancellation of registration
filed by the registered person, the registration may be suspended for such period and in
such manner as may be prescribed
(2) 5 Marks The proper officer may cancel the registration of a person from such date, including
any retrospective date, as he may deem fit, where, -
(a) a registered person has done following contraventions:
(i) He does not conduct any business from the declared place of business or
(ii) He issues invoices/bill without supply of goods/services in violation of the provisions of
this Act or the Rules made there under,
(iii) If he violates the provisions of Section 171 of the CGST Act [Provisions relating to Anti-
Profeetering measure]
(b) a person paying tax under section 10 [Composition Levy] has not furnished returns for 3
consecutive tax periods
(c) any registered person, other than a person specified in clause (b), has not furnished returns
for a continuous period of 6 months
(d) any person who has taken voluntary registration under Section 25(3) has not commenced
business within 6 months from the date of registration
(e) registration has been obtained by means of fraud, wilful misstatement or suppression of
facts
Provided that the proper officer shall not cancel the registration without giving the person an
opportunity of being heard.
Provided further that during the pendency of the proceedings relating to cancellation of
registration, the proper officer may suspend the registration for such period and in such
manner as may be prescribed
Period & manner of Suspension of Registration
Further, with effect from 01.02.2019, new rule 21A of the CGST Rules, 2017 has been inserted
vide Notification No. 03/2019 CT dated 29.01.2019 which lays down the period and manner of
suspension of registration as follows:
1. Where registered person has applied for cancellation of registration:

Where a registered person has applied for cancellation of registration, the registration shall
be deemed to be suspended from:
a) the date of submission of the application or
b) the date from which the cancellation is sought, whichever is later,
pending the completion of proceedings for cancellation of registration.
2. Where cancellation of the registration has been initiated by the Department on their own
motion:
Where the proper officer has reasons to believe that the registration of a person is liable to be
cancelled, he may, after affording the said person a reasonable opportunity of being heard,
suspend the registration of such person with effect from a date to be determined by him,
pending the completion of the proceedings for cancellation of registration.
3. A registered person, whose registration has been suspended as above:

shall not make any taxable supply during the period of suspension and
shall not be required to furnish any return under Section 39.
4. The suspension of registration shall be deemed to be revoked upon completion of the

cancellation proceedings by the proper officer. Such revocation shall be effective from the
date on which the suspension had come into effect
Meaning of not making taxable supply during suspension of registration clarified. Registered
person required to issue revised tax invoice and file first return for supplies during suspension
period [Rule 21A of the CGST Rules]
Rule 21A provides that once a registered person has applied for cancellation of registration or the
proper officer seeks to cancel his registration, his registration shall remain suspended during pendency
of the proceedings relating to cancellation of registration filed. Such person shall not make any taxable
supply during the period of suspension and shall not be required to file any return [Rule 21A(3)].
An explanation has been inserted to this sub-rule (3) to rule 21A clarifying that the expression “shall not
make any taxable supply” shall mean that the registered person shall not issue a tax invoice and,
accordingly, not charge tax on supplies made by him during the period of suspension.
Further, a new sub-rule (5) has been inserted in said rule to provide that where any order having the
effect of revocation of suspension of registration has been passed, the provisions of section 31(3)(a)
[revised tax invoices] and section 40 [first return] in respect of the supplies made during the
period of suspension and the procedure specified therein shall apply.
(3) The cancellation of registration under this section shall not affect the liability of the person to pay tax
and other dues under this Act or to discharge any obligation under this Act or the rules made
thereunder for any period prior to the date of cancellation whether or not such tax and other
dues are determined before or after the date of cancellation.
(4) The cancellation of registration under the SGST Act or the UTGST Act, as the case may be, shall
be deemed to be a cancellation of registration under this Act.
(5) [Section 29(5)] 5 Marks Every registered person whose registration is cancelled shall pay an
amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the
(a) credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock 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, calculated in such manner as may be prescribed.
In case of capital goods or plant and machinery, the taxable person shall pay an amount equal to
the ITC taken on the said CGs or P&M, reduced by such percentage points as may be
prescribed (monthly basis - 60 months) OR the tax on the transaction value of such CGs or P&M
under section 15, whichever is higher.
Procedure for cancellation of registration
a. A registered person seeking cancellation of registration shall electronically submit the application
for cancellation of registration in prescribed form within 30 days of occurrence of the event
warranting cancellation.
b. He is required to furnish in the application the details of inputs held in stock or inputs contained in
semi-finished/finished goods held in stock and of capital goods held in stock on the date from
which cancellation of registration is sought, liability thereon, details of the payment, if any, made
against such liability and may furnish relevant documents thereof.
c. Where a person who has submitted an application for cancellation of his registration is no longer
liable to be registered, proper officer shall issue the order of cancellation of registration
within 30 days from the date of submission of application for cancellation.
d. Where the proper officer cancels the registration suo-motu, he shall not cancel the same without
giving a show cause notice and without giving a reasonable opportunity of being heard, to
the registered person. The reply to such show cause notice (SCN) has to be submitted within
7 days of service of notice.
If reply to SCN is satisfactory, proper officer shall drop the proceedings and pass an order in
prescribed form. However, where the person instead of replying SCN served for
contravention of the provisions contained in section 29(2)(b)/(c) furnishes all the pending
returns and makes full payment of the tax dues along with applicable interest and late fee,
the proper officer shall drop the proceedings and pass an order.
Where registration of a person is liable to be cancelled, proper officer shall issue the order of
cancellation of registration within 30 days from the date of reply to SCN.
e. The cancellation of registration shall be effective from a date to be determined by the proper
officer. He will direct the taxable person to pay arrears of any tax, interest or penalty including the
amount liable to be paid under section 29(5).
Revocation of Cancellation of Registration [Section 30 read with CGST Rules]
a. Where the registration of a person is cancelled suo-motu by the proper officer, such registered
person may apply for revocation of the cancellation to such proper officer, within 30 days from the
date of service of the order of cancellation of registration, at the GST Common Portal in the
prescribed manner.
b. However, in case registration was cancelled for failure of registered person to furnish returns,
before applying for revocation the person has to make good the defaults (by filing all pending
returns, making payment of all dues in terms of such returns alongwith interest, penalty, late fee,
etc.) for which the registration was cancelled by the officer.
c. If the proper officer is satisfied that there are sufficient grounds for revocation of cancellation,
he may revoke the cancellation of registration, by an order within 30 days of receipt of
application and communicate the same to applicant.
d. Otherwise, he may reject the revocation application. However, before rejecting the application, he
has to first issue SCN to the applicant who shall furnish the clarification within 7 working days of
service of SCN.
The proper officer shall dispose the application (accept/reject the same) within 30 days of
receipt of clarification.
e. The revocation of cancellation of registration under the SGST Act/ UTGST Act, as the case may
be, shall be deemed to be a revocation of cancellation of registration under CGST Act
Pending returns to be filed before revocation of cancellation of registration
[Rule 23 of the CGST Rules, 2017]
Rule 23 of the CGST Rules, 2017 provides the procedure for revocation of cancellation of
registration. First proviso to Rule 23(1) provided that if the registration has been cancelled on account
of failure of the registered person to furnish returns, no application for revocation of cancellation of
registration shall be filed, unless such returns are furnished and any amount in terms of such
returns is paid.
Two newly inserted provisos provide as follows:
All returns due for the period from the date of the order of cancellation of registration till the date of
the order of revocation of cancellation of registration shall be furnished by the said person within a
period of 30 days from the date of order of revocation of cancellation of registration.
However, where the registration has been cancelled with retrospective effect, the registered
person shall furnish all returns relating to period from the effective date of cancellation of
registration till the date of order of revocation of cancellation of registration within a period of 30
days from the date of order of revocation of cancellation of registration.
From the combined reading of aforesaid provisions, it can be inferred that where the
registration has been cancelled with effect from the date of order of cancellation of registration,
a) all returns due till the date of such cancellation are required to be furnished before the
application for revocation can be filed and
b) all returns required to be furnished in respect of the period from the date of order of
cancellation till the date of order of revocation of cancellation of registration have to be
furnished within a period of 30 days from the date of the order of revocation.
However, where the registration has been cancelled with retrospective effect, the application for
revocation of cancellation of registration can be filed, subject to the condition that all returns relating to
the period from the effective date of cancellation of registration till the date of order of revocation of
cancellation of registration shall be filed within a period of 30 days from the date of order of such
revocation of cancellation of registration
[Notification No. 20/2019 CT dated 23.04.2019 read with Circular No. 99/18/2019 GST dated
23.04.2019]
Class Notes
AMENDMENTS MADE VIDE THE FINANCE (NO. 2) ACT, 2019
The Finance (No. 2) Act, 2019 has become effective from 01.08.2019. However, the
amendments made in the CGST Act and IGST Act vide the Finance (No. 2) Act, 2019 would
become effective only from a date to be notified by the Central Government in the Official
Gazette. Such a notification has not been issued.
Therefore, the applicability or otherwise of such amendments for upcoming examinations

shall be announced by the Institute only after such notification is issued by the Central
Government.
In the table given below, the existing provisions relating to registration are compared with
the provisions as amended by the Finance (No. 2) Act, 2019.
Section 22(1) – Existing Provisions

Every supplier shall be liable to be registered under this Act in the State or Union territory, other than
special category States, from where he makes a taxable supply of goods or services or both, if his
aggregate turnover in a financial year exceeds twenty lakh rupees.
Provided that 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 a financial year
exceeds ten lakh rupees.
Provided further that the Government may, at the request of a special category State and on the
recommendations of the Council, enhance the aggregate turnover referred to in the first proviso
from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such
conditions and limitations, as may be so notified.
Section 22(1) – Amended provisions (Not yet applicable)
Second proviso and explanation Inserted
Provided also that the Government may, at the request of a State and on the recommendations
of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not
exceeding forty lakh rupees in case of supplier who is engaged exclusively in the supply of
goods, subject to such conditions and limitations, as may be notified.
Explanation- For the purposes of this sub-section, a person shall be considered to be engaged
exclusively in the supply of goods even if he is engaged in exempt supply of services provided
by way of extending deposits, loans or advances in so far as the consideration is represented
by way of interest or discount.
SATC Note:
Second proviso is being inserted to section 22(1) empowering Government to enhance the threshold
limit for registration from ` 20 lakh to ` 40 lakh at the request of a State & on the recommendations of
the GST Council, in case of a supplier who is engaged exclusively in the supply of goods, subject to
specified conditions.
Presently, the enhanced threshold limit has been made effective for some States by way of exemption
Notification No. 10/2019 CT dated 07.03.2019. One major relaxation proposed to be extended is
that a person shall be considered to be engaged exclusively in the supply of goods even if he
engaged in exempt supply of services provided by way of extending deposits, loans or
advances in so far as the consideration is represented by way of interest or discount.
Presently, this relaxation is not available under Notification No. 10/2019 CT.
New sub-sections (6A) to (6D) inserted in Section 25 (Not yet applicable)
Sub-section (6A):
Every registered person shall undergo authentication, or furnish proof of possession of
Aadhaar number, in such form and manner and within such time as may be prescribed.
Provided that if an Aadhaar number is not assigned to the registered person, such person shall
be offered alternate and viable means of identification in such manner as Government may, on
the recommendations of the Council, prescribe.
Provided further that in case of failure to undergo authentication or furnish proof of possession
of Aadhaar number or furnish alternate and viable means of identification, registration allotted
to such person shall be deemed to be invalid and the other provisions of this Act shall apply as
if such person does not have a registration.
Sub-section (6B):
On and from the date of notification, every individual shall, in order to be eligible for grant of
registration, undergo authentication, or furnish proof of possession of Aadhaar number, in such
manner as the Government may, on the recommendations of the Council, specify in the said
notification.
Provided that if an Aadhaar number is not assigned to an individual, such individual shall be
offered alternate and viable means of identification in such manner as the Government may, on
the recommendations of the Council, specify in the said notification.
Sub-section (6C):
On and from the date of notification, every person, other than an individual, shall, in order to be
eligible for grant of registration, undergo authentication, or furnish proof of possession of
Aadhaar number of the Karta, Managing Director, whole time Director, such number of partners,
Members of Managing Committee of Association, Board of Trustees, authorised representative,
authorised signatory and such other class of persons, in such manner, as the Government may,
on the recommendation of the Council, specify in the said notification
Provided that where such person or class of persons have not been assigned the Aadhaar
Number, such person or class of persons shall be offered alternate and viable means of
identification in such manner as the Government may, on the recommendations of the Council,
specify in the said notification.
Sub-section (6D):
The provisions of sub-section (6A) or sub-section (6B) or sub-section (6C) shall not apply to
such person or class of persons or any State or Union territory or part thereof, as the
Government may, on the recommendations of the Council, specify by notification.
Explanation—For the purposes of this section, the expression “Aadhaar number” shall have the
same meaning as assigned to it in clause (a) of section 2 of the Aadhaar (Targeted Delivery of
Financial and Other Subsidies, Benefits and Services) Act, 2016.
SATC Note:
New sub-sections are being inserted in section 25 of the CGST Act to make Aadhaar
authentication mandatory for specified class of new taxpayers and to prescribe the manner in
which certain class of registered taxpayers are required to undergo Aadhaar authentication.
GST – By CA Suraj Agrawal SATC BB.1
REGISTRATION – SET A
1. Mr. A has started supply of goods in Assam. He is required to obtain registration if his
aggregate turnover exceeds ____________ during a financial year.
a) ` 10 lakh
b) ` 40 lakh
c) ` 30 lakh
d) ` 50 lakh
2. Aggregate turnover includes:
a) Taxable supplies
b) Exempt supplies
c) Exports
d) All of the above
3. Which of the following persons are compulsorily required to obtain registration?

a) Persons making any inter-State taxable supply
b) Non-resident taxable persons making taxable supply
c) Casual taxable persons making taxable supply
d) All of the above
4. Which of the following persons are not liable for registration?
a) Any person engaged exclusively in supplying services wholly exempt from tax
b) Casual Taxable Person
c) Both (a) and (b)
d) None of the above
5. Rohan Toys is a registered supplier of goods in Delhi. It intends to attend a 7 days’ Business
Fair organised in Mumbai (next month) where it does not have a fixed place of business.
Examine which of the following statements are true for Rohan Toys:
a) Rohan Toys is not required to obtain registration in Mumbai for attending a 7 days’ Business
Fair.
b) Rohan Toys has to obtain registration as a casual taxable person for attending the
Business Fair.
c) Rohan Toys has to obtain a Unique Identification Number for attending the Business Fair.
d) None of the above
6. Determine the effective date of registration in following cases:
a) The aggregate turnover of A Ltd. (Supplier of services) of Delhi has exceeded ` 20 lakh
on 1st September. It submits the application for registration on 20th September.
Registration certificate is granted to it on 25th September.
Answer:
Every supplier of services becomes liable to registration if his turnover exceeds ` 20 lakh [in a
State/UT other than Special Category States] in a financial year [Section 22]. Since in the given
case, the turnover of A Ltd. exceeded ` 20 lakh on 1st September, it becomes liable to
registration on said date.
Further, since the application for registration has been submitted within 30 days from such date,
the registration shall be effective from the date on which the person becomes liable to
registration [Section 25 read with rule 10 of the Chapter III - Registration of CGST Rules, 2017].
Therefore, the effective date of registration is 1st September.
b) Mehta Teleservices is an internet service provider in Lucknow. Its aggregate turnover
exceeds ` 20 lakh on 25th October. It submits the application for registration on 27th
November. Registration certificate is granted to it on 5th December.
Answer:
Since in the given case, the turnover of Mehta Teleservices exceeds ` 20 lakh on 25th October,
it becomes liable to registration on said date.
Further, since the application for registration has been submitted after 30 days from the date
such person becomes liable to registration, the registration shall be effective from the date of
grant of registration. Therefore, the effective date of registration is 5th December.
7. State the time-period within which registration needs to be obtained in each of the following
independent cases:
a) Casual taxable person
b) Person making inter-State taxable supply
Answer:
Section 25(1) of the CGST Act stipulates the time-period within which registration needs to
be obtained in various cases. It provides the following time-limits:
In case of registration needs to be obtained

a person who is liable to be registered within 30 days from the date on which he
under section 22 or section 24 becomes liable to registration
a casual taxable person or a non- at least 5 days prior to the commencement

resident taxable person of business
In view of the aforesaid provisions:

(a) A casual taxable person must obtain registration at least 5 days prior to the commencement of
its business.
(b) As per section 24 of the CGST Act, person making inter-State taxable supply is liable to get
compulsorily registered. Therefore, such person must obtain registration within 30 days from the
date on which he becomes liable to registration.
8. In order to be eligible for grant of registration, a person must have a Permanent Account
Number issued under the Income- tax Act, 1961. State one exception to it.
Answer:
A Permanent Account Number is mandatory to be eligible for grant of registration. One exception to
this is a non-resident taxable person. A non-resident taxable person may be granted registration on
the basis of other prescribed documents instead of PAN. He has to submit a self-attested copy of
his valid passport along with the application signed by his authorized signatory who is an Indian
Resident having valid PAN and application will be submitted in a different prescribed form [Section
25(6) & (7)].
9. State which of the following suppliers are liable to be registered:

(a) Agent supplying goods on behalf of some other taxable person and its aggregate
turnover does not exceed ` 20 lakh during the financial year.
Answer:
Section 22 stipulates that every supplier becomes liable to registration if his turnover exceeds
` 20 lakh in a State/UT [` 10 lakh in Special Category States - Manipur, Mizoram,
Nagaland, Tripura only] in a financial year.
However, as per section 24, a person supplying goods/services or both on behalf of other
taxable persons whether as an agent or not is liable to be compulsorily registered even if its
aggregate turnover does not exceed ` 20 lakh during the financial
(b) An agriculturist who is only engaged in supply of produce out of cultivation of land.
Answer:
As per section 23, an agriculturist who is only engaged in supply of produce out of cultivation of
land is not required to obtain registration.
10. What are the advantage of taking registration in GST?
Answer:
(a) Legally recognized as supplier of goods or services.
(b) Proper accounting of taxes paid on the input goods or services which can be utilized for
payment of GST due on supply of goods or services or both by the business.
(c) Legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid
on the goods or services supplied to purchasers or recipients.
(d) Become eligible to avail various other benefits and privileges rendered under the GST laws.
11. Can a person without GST registration collect GST and claim ITC?
Answer:
No, a person without GST registration can neither collect GST from his customers nor can claim
any input tax credit of GST paid by him.
12. If a person is operating in different States, with the same PAN number, can he operate with
a single registration?
Answer:
No. Every person who is liable to take a registration will have to get registered separately for each
of the States where he has a business operation (and is liable to pay GST)
13. Is there a provision for a person to get himself voluntarily registered though he may not be
liable to pay GST?
Answer:
Yes. In terms of sub-section (3) of section 25, a person, though not liable to be registered under
sections 22 or 24 may get himself registered voluntarily, and all provisions of this Act, as are
applicable to a registered taxable person, shall apply to such person.
14. Can the Department, through the proper officer, suo-moto proceed to register of a person?
Answer:
Yes. In terms of sub-section (8) of section 25, where a person who is liable to be registered under
GST law fails to obtain registration, the proper officer may, without prejudice to any action which
may be taken under CGST Act, or under any other law for the time being in force, proceed to
register such person in the manner as is prescribed in the CGST Rules, 2017.
15. Whether the registration granted to any person is permanent?
Answer:
Yes, the registration certificate once granted is permanent unless surrendered, cancelled,
suspended or revoked.
16. Is it necessary for the UN bodies to get registration under GST?
Answer:
Yes. In terms of section 25(9) of the CGST Act, all notified UN bodies, Consulate or Embassy of
foreign countries and any other class of persons so notified would be required to obtain a unique
identification number (UIN) from the GST portal.
The structure of the said ID would be uniform across the States in conformity with GSTIN structure
and the same will be common for the Centre and the States. This UIN will be needed for claiming
refund of taxes paid on notified supplies of goods and services received by them, and for any other
purpose as may be notified.
17. What is the responsibility of the taxable person making supplies to UN bodies?
Answer:
The taxable supplier making supplies to UN bodies is expected to mention the UIN on the invoices
and treat such supplies as supplies to another registered person (B2B) and the invoices of the
same will be uploaded by the supplier.
18. What is the validity period of the registration certificate issued to a casual taxable person
and non- resident taxable person?
Answer:
In terms of section 27(1) read with proviso thereto, the certificate of registration issued to a “casual
taxable person” or a “non-resident taxable person” shall be valid for a period specified in the
application for registration or 90 days from the effective date of registration, whichever is earlier.
However, the proper officer, at the request of the said taxable person, may extend the validity of
the aforesaid period of 90 days by a further period not exceeding 90 days.
19. What happens when the registration is obtained by means of willful mis-statement, fraud or
suppression of facts?
Answer:
In such cases, the registration may be cancelled with retrospective effect by the proper officer
[Section 29(2)(e)].
20. Is there an option to take centralized registration for services under GST Law?
Answer:
No, the taxpayer has to take separate registration in every State from where he makes taxable
supplies
21. What could be the liabilities (in so far as registration is concerned) on transfer of a
business?
Answer:
The transferee or the successor shall be liable to be registered with effect from such transfer or
succession and he will have to obtain a fresh registration with effect from the date of such transfer
or succession [Section 22(3)].
22. At the time of registration, will the assessee have to declare all his places of business?
Answer:
Yes. The principal place of business and additional place of business have been separately defined
under the CGST Act respectively. The taxpayer will have to declare the principal place of business
as well as the details of additional places of business in the registration form.
23. What will be the time limit for the decision on the on-line registration application?
Answer:
If the information and the uploaded documents are found in order, the proper officer has to respond
to the application within 3 common working days. If he communicates any deficiency or
discrepancy in the application within such time, then the applicant will have to remove the
discrepancy / deficiency within 7 days of such communication. Thereafter, for either approving the
application or rejecting it, the proper officer has 7 days’ time from the date when the taxable person
communicates removal of deficiencies. In case no response is given by the proper officer within the
said time line, the portal shall automatically generate the registration.
24. What will be the time of response by the applicant if any query is raised in the online
application?
Answer:
If during the process of verification, one of the tax authorities raises some query or notices some
error, the same shall be communicated to the applicant and to the other tax authority through the
GST Common Portal within 3 common working days. The applicant will reply to the query/rectify
the error/ answer the query within a period of 7 days from the date of receipt of deficiency
intimation.
On receipt of additional document or clarification, the relevant tax authority will respond within 7
common working days from the date of receipt of clarification
25. Does cancellation of registration impose any tax obligations on the person whose
registration is so cancelled?
Answer:
Yes, as per section 29(5) of the CGST Act, every registered taxable person whose registration is
cancelled shall pay an amount, by way of debit in the electronic cash ledger, equivalent to the
credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished
goods held in stock or capital goods or plant and machinery on the day immediately preceding the
date of such cancellation or the output tax payable on such goods, whichever is higher.
In case of capital goods or plant and machinery, the taxable person shall pay an amount equal to
the ITC taken on the said CGs or P&M, reduced by such percentage points as may be prescribed
or the tax on the transaction value of such CGs or P&M under section 15, whichever is higher.
26. Mr. C of Tripura is trading on his own goods and also acting as an agent of Mr. B. Mr. C
turnover in the financial year 2019-20 is ` 12 lacs in his own account and ` 9 lacs on behalf
of principal. Whether Mr. C is liable to register compulsorily under GST law.
Answer:
In computing the total turnover, both the value of supply on his own account that is ` 12 lacs and
on behalf of principal ` 9 lacs will be aggregated. Hence, the aggregate turnover will be ` 21 lacs.
Mr. C is liable to register compulsorily under the GST law.
Note: Exemption limit of ` 40,00,000 as provided in Notification No. 10/2019 CT Dated

07/03/2019 is not applicable to a person engaged in supply of goods in Tripura state.
27. Mr. Rajan (Telangana) is a farmer with an annual turnover in relation to agriculture of `
18,00,000 lakh. Since this income is agriculture-related, the turnover is exempt from GST.
However, Mr. Rajan also supplies plastic bags worth of ` 2,50,000 (taxable goods) along
with his crop and charges separately for this. Mr. Rajan is required to register under GST?
Advise.
Answer:
Mr. Rajan is required to register under GST because his aggregate turnover exceeds the threshold
limit of ` 20 lakh.
Note: Exemption limit of ` 40,00,000 as provided in Notification No. 10/2019 CT Dated

07/03/2019 is not applicable to a person engaged in supply of goods in Telangana state.
28. Mr. X a dealer dealing with Intra State supply of goods and services has place of business in
India furnished the following information in the financial year 2019-20:
1. Sale of taxable goods by Head Office located in Chennai for ` 1,00,000
2. Supply of taxable services by Branch office at Bengaluru for ` 50,000
3. Supply of goods exempted from GST ` 10,000
4. Export of goods and services for ` 2,00,000
5. Sale of goods acting as agent on behalf of principal for ` 15,00,000
Answer:
Statement showing aggregate turnover in a Financial Year
Particulars Value in `
Sale of taxable goods by Head Office located in Chennai 1,00,000
Supply of taxable services by Branch office at Bengaluru 50,000
Supply of goods exempted from GST 10,000
Export of goods and services 2,00,000
Sale of goods acting as agent on behalf of principal 15,00,000
Aggregate turnover 18,60,000
Since, aggregate turnover does not exceeds ` 20 lakhs. Mr. X is not required to register
under GST.
29. IMP: M/s Moon Pvt. Ltd. incorporated in Chennai on 1st July 2019 has the following details
for the year 2019-20:
S.No. Particulars Value (` in lacs)

(i) Inter-State exempted supply of goods 4.0
(ii) Intra-State supplies of services 5.0
(iii) Non-taxable supplies 2.0
(iv) Exempted supplies of services 0.60
(v) Value of export of goods 7.0
M/s Moon Pvt. Ltd. is required to register compulsorily under GST Law, advise. Whether
your answer is different if S.No. (i) above, inter-State taxable supply goods for ` 4 lacs.
Answer:
Aggregate turnover is as follows:
Particulars Value (` in lacs)
(i) Inter-State exempted supply of goods 4.0
(ii) Intra-State supplies of services 5.0
(iii) Non-taxable supplies 2.0
(iv) Exempted supplies of services 0.60
(v) Value of export of goods 7.0
Aggregate turnover 18.60
Since, aggregate turnover of Moon Pvt. Ltd. does not exceeds ` 20 lakhs, registration is not
compulsory in the financial year 2018-19. (In case of Inter-state exempted supply, Section 24 is
not applicable)
In case of Inter State Taxable Supply of goods:
Yes. Our answer is different in the case of M/s Moon Pvt. Ltd. made inter state taxable supply of
goods. As per Sec. 24 of the CGST Act, 2017 Person making any inter-state taxable supply of
goods is required to register under GST Law irrespective of his aggregate turnover.
Therefore, M/s Moon Pvt. Ltd. is required to register under GST Law.
30. Mr. Gold runs a retail shop for handmade jewellery and is registered in Chennai. Mr. Gold is
planning to sell the jewellery at an exhibition in Mumbai, to be held from 1st January 2020 to
10th January 2020. Advise time with regard to registration and payment of GST.
Answer:
Mr. Gold should apply for registration as a casual taxable person within 5 days prior to the date of
commencing the exhibition on 1st January 2020. Mr. Gold should also make an advance deposit of
the estimated tax liability for the period from 1st January 2020 to 10th January 2020.
31. M/s X Ltd is an advertising company located in Chennai and is registered as a normal
taxable person there. Now, they have secured an assignment to manage digital marketing
for the Koti Deepothsavam Festival, which will take place in Hyderabad, Telangana. This will
require M/s X Ltd. to displace some resources in Hyderabad until the festival is over. Advise
M/s X Ltd. to obtain for separate registration in the State of Telangana.
Answer:
In this case, since M/s X Ltd does not have too many assignments coming from Hyderabad, they
can register as a Casual Taxable Person in Telangana for 90 days.
32. VERY IMP: Examine whether the supplier is liable to get registered in the following
independent cases:-
(i) Raghav of Assam is exclusively engaged in intra-State taxable supply of readymade
garments. His turnover in the current financial year (FY) from Assam showroom is ` 28
lakh. He has another showroom in Tripura with a turnover of ` 11 lakh in the current FY.
(ii) Pulkit of Panjim, Goa is exclusively engaged in intra-State taxable supply of shoes. His
aggregate turnover in the current financial year is ` 22 lakh.
(iii) Harshit of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala.
His aggregate turnover in the current financial year is ` 24 lakh.
(iv) Ankit of Assam is exclusively engaged in intra-State supply of taxable services. His
aggregate turnover in the current financial year is ` 25 lakh.
(v) Sanchit of Assam is engaged in intra-State supply of both taxable goods and services.
His aggregate turnover in the current financial year is ` 30 lakh.
Answer:
As per section 22 of the CGST Act, 2017 read with Notification No. 10/2019 CT dated 07.03.2019, a
supplier is liable to be registered in the State/Union territory from where he makes a taxable supply
of goods and/or services, if his aggregate turnover in a financial year exceeds the threshold limit.
The threshold limit for a person making exclusive intra - State taxable supplies of goods is
as under:-
(a) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(b) ` 20 lakh for the States of States of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim,
Telangana and Uttarakhand.
(c) ` 40 lakh for rest of India.
However, the higher threshold limit of ` 40 lakh is not available to persons engaged in making
supplies of ice cream and other edible ice, whether or not containing cocoa, Pan masala and
Tobacco and manufactured tobacco substitutes.
The threshold limit for a person making exclusive taxable supply of services or supply of
both goods and services is as under:-
(a) ` 10 lakh for the States of Mizoram, Tripura, Manipur and Nagaland.
(b) ` 20 lakh for the rest of India.
In the light of the afore-mentioned provisions, the answer to the independent cases is as
under:-
(i) Raghav is eligible for higher threshold limit of turnover for registration, i.e. ` 40 lakh as he is
exclusively engaged in intra-State supply of goods. However, since Raghav is engaged in
supplying readymade garments from a Special Category State i.e. Tripura, the threshold limit
gets reduced to ` 10 lakh.Thus, Raghav is liable to get registered under GST as his turnover
exceeds ` 10 lakh. Further, he is required to obtain registration in both Assam and Tripura as he
is making taxable supplies from both the States.
(i) The applicable threshold limit for registration for Pulkit in the given case is ` 40 lakh as he is
exclusively engaged in intra-State taxable supply of goods. Thus, he is not liable to get
registered under GST as his turnover is less than the threshold limit.
(ii) Harshit being exclusively engaged in supply of pan masala is not eligible for higher threshold
limit of ` 40 lakh. The applicable threshold limit for registration in this case is ` 20 lakh. Thus,
Harshit is liable to get registered under GST.
(iii) Though Ankit is dealing in Assam, he is not entitled for higher threshold limit for registration as
the same is applicable only in case of exclusive supply of goods while he is exclusively engaged
in providing services. Thus, the applicable threshold limit for registration in this case is ` 20 lakh
and hence, Ankit is liable to get registered under GST.
(iv) Since Sanchit is engaged in supply of both taxable goods and services, the applicable threshold
limit for registration in his case is ` 20 lakh. Thus, Sanchit is liable to get registered under GST
as his turnover is more than the threshold limit.
GST – By CA Suraj Agrawal SATC C.1
SUPPLY UNDER GST

GST Law, by levying tax on the ‘Supply’ of Goods and/or Services, departs from the historically
understood concepts of ‘taxable event’ under the State VAT Laws, Excise Laws and Service Tax
Laws i.e. sale, manufacture and service respectively.
In GST, the entire value of supply of goods and /or services is taxed in an integrated manner, unlike
the earlier indirect taxes, which were charged independently either on the manufacture or sale of
goods, or on the provisions of services.
The concept of ‘Supply’ is the key stone of the GST architecture. The provisions relating to
meaning and scope of supply are contained in Chapter III of the CGST Act read with various
Schedules given under the said Act:
Section 7 Meaning and Scope of Supply
Schedule I Matters to be treated as supply even if made without consideration
Schedule II Matters to be treated as supply of goods or as supply of services
Schedule III Matters or transactions which shall be treated neither as supply of goods
nor as supply of services [Negative List]
Section 8 Taxability of Composite and Mixed Supplies
Section 7: Meaning and Scope of Supply
(1) [Section 7(1)] “Supply” includes- 3 Marks

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
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 services for a consideration whether or not in the course or furtherance of
business, and
(c) the activities specified in Schedule I, made or agreed to be made without a
consideration.
(1A) where certain activities or transactions, constitute a supply in accordance with the
provisions of sub-section (1), they shall be treated either as supply of goods or supply of
services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1),-

(a) activities or transactions specified in Schedule III (Negative List); or
(b) such activities or transactions undertaken by the Central Government, a State Government
or any Local Authority in which they are engaged as public authorities, as may be
notified by the Government on the recommendations of the Council,
shall be treated neither as a supply of goods nor a supply of services.
In terms of Section 7(2) of the CGST Act, the Government has notified the following
activity or transaction undertaken by the State Governments in which they are engaged
as public authorities, to be treated neither as a supply of goods nor a supply of
service, namely:-
“Service by way of grant of alcoholic liquor licence, against consideration in the form of
licence fee or application fee or by whatever name it is called.”
[Notification No. 25/2019 CT (R) dated 30.09.2019/ Notification No. 24/2019 IT (R)
dated 30.09.2019]
(3) Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the
recommendations of the Council, specify, by notification, the transactions that are to be
treated as-
a. a supply of goods and not as a supply of services; or
b. a supply of services and not as a supply of goods.
[SATC Note: Definition of Supply has been retrospectively amended to provide that the activities listed
in schedule II will be taxable only if there is an underlying supply, and the schedule is relevant only
for classifying the supply between goods or services.]
The meaning and scope of supply taxable under GST can be understood in terms of
following parameters: 5 Marks
1. Supply should be of goods or services. Supply of anything other than goods or services like
money, securities etc. does not attract GST.
2. Supply should be made for a consideration.
3. Supply should be made in the course or furtherance of business.
4. Supply should be made by a taxable person.
5. Supply should be a taxable supply
Definitions - GOODS & SERVICES
Goods means every kind of movable property other than money and securities but includes
actionable claim, growing crops, grass and things attached to or forming part of the land which are
agreed to be severed before supply or under a contract of supply
[Sec. 2(52) of CGST Act] – 2 Marks
Services 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
Explanation - For the removal of doubts, it is hereby clarified that the expression “services”
includes facilitating or arranging transactions in securities
[Section 2(102) of CGST Act] – 2 Marks
Since securities are excluded from the definition of both ‘goods’ and ‘services’ in the
CGST Act, they are neither goods nor services. However, facilitating or arranging
transactions in securities is liable to GST.
Example: If some service charges or service fees or documentation fees or broking

charges or such like fees or charges are charged in relation to transactions in securities,
the same would be a consideration for provision of service and chargeable to GST.
CONSIDERATION
One of the essential conditions for the supply of goods and/or services to fall within the ambit of GST is
that a supply is made for a consideration. However, consideration does not always means money. It
covers anything which might be possibly done, given or made in exchange for something else. Further,
a consideration need not always flow from the recipient of the supply. It can also be made by a third
person.
Consideration 4 Marks: in relation to the supply of goods or services or both includes:
any payment made or to be made, whether in money or otherwise, in respect of, in response to, or
for the inducement of, the supply of goods or services or both, whether by the recipient or by any
other person but shall not include any subsidy given by the Central Government or a State
Government,
the monetary value of any act or forbearance, in respect of, in response to, or for the inducement
of, the supply of goods or services or both, whether by the recipient or by any other person but
shall not include any subsidy given by the Central Government or a State Government.
However, a deposit given in respect of the supply of goods or services or both shall not be
considered as payment made for such supply unless the supplier applies such deposit as
consideration for the said supply [Section 2(31) of CGST Act]
Money: means the Indian legal tender or any foreign currency, cheque, promissory note, bill of
exchange, letter of credit, draft, pay order, traveler cheque, money order, postal or electronic remittance
or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle
an obligation or exchange with Indian legal tender of another denomination but shall not include any
currency that is held for its numismatic value. [Section 2(75) of CGST Act]
Art works sent by artists to galleries for exhibition is not a supply - Circular
Artists give their work of art to galleries where it is exhibited for supply. However, no consideration
flows from the gallery to the artist when the art works are sent to the gallery for exhibition and therefore,
the same is not a supply.
It is only when a buyer selects a particular art work displayed at the gallery, that the actual supply
takes place and applicable GST would be payable at the time of such supply.
PERSON: includes [Section 2(84) of CGST Act]
a. an Individual;
b. a Hindu Undivided Family;
c. a Firm;
d. a Limited Liability Partnership;
e. an Association of Persons or a Body of Individuals, whether incorporated or not, in India or

outside India;
f. a Company;
g. any Corporation established by or under any Central Act, State Act or a Government
Company as defined in clause (45) of section 2 of the Companies Act, 2013;
h. any Body Corporate incorporated by or under the laws of a country outside India;
i. a Co-operative Society registered under any law relating to co-operative societies;
j. Society as defined under the Societies Registration Act, 1860;
k. Trust; and
l. a Local Authority;
m. Central Government or a State Government;
n. every Artificial Juridical Person, not falling within any of the above.
IN COURSE OR FURTHERANCE OF BUSINESS
Section 2(17) – Business includes – [5 Marks]
(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 (a) above;
(c) any activity or transaction in the nature of (a) above, whether or not there is volume, frequency,
continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital assets and services in connection with
commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members, as the case may be;
(f) admission, for a consideration, of persons to any premises; and
(g) services supplied by a person as the holder of an office which has been accepted by him in the
course or furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker or
activities of a licensed book maker in such club; and
Royal Turf Race Club is engaged in facilitating the wagering (betting) transactions on horses
placed through totalisator. For providing the service of facilitating wagering transactions, Royal
Turf Race Club gets commission which is deducted and retained by the club from the total bet
value. Said services amount to supply as the activities of a race club are included in business.
‘Totalisor’ is a computerised device that pools the wagers/bets (after deduction of charges and
statutory taxes) of various persons placing the bet and also divides the total wager amount to
be distributed to the winning persons.
(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
[Section 2(17) of CGST Act]
GST is essentially a tax only on commercial transactions. Hence, only those supplies that are in the
course or furtherance of business qualify as supply under GST. Resultantly, any supplies made by an
individual in his personal capacity do not come under the ambit of GST unless they fall within the
definition of business.
Any activity undertaken in course / for furtherance of business would constitute a supply. Since
‘business’ includes vocation, sale of goods or service even as a vocation is a supply under
GST.
Sundaram Acharya, a famous actor, paints some paintings and sells them. The consideration from
such sale is to be donated to a Charitable Trust – ‘Kind Human’. The sale of paintings by the actor
qualifies as supply even though it is a one-time occurrence.
Services provided by the club/association to its members for consideration is a supply.

A Resident Welfare Association provides the service of depositing the electricity bills of the
residents in lieu of some nominal charges. Provision of service by a club or association or society to
its members is treated as supply as this is included in the definition of ‘business’.
SUPPLY BY A TAXABLE PERSON
A supply to attract GST should be made by a taxable person. Hence, a supply between two non-
taxable persons does not constitute taxable supply under GST.
The restriction of being a taxable person is only on the supplier whereas the recipient can be either
taxable or non-taxable. Further, there is no condition that supply needs to be made to another person,
i.e. supplies made to self are also taxable
[As per Section 2(107) of the CGST Act, taxable person means a person who is registered or liable
to be registered under section 22 or section 24.]
TAXABLE SUPPLY
For a supply to attract GST, the supply must be taxable. Taxable supply has been broadly defined
and means any supply of goods or services or both which, is leviable to tax under the GST Law.
Exemptions may be provided to the specified goods or services or to a specified category of persons/
entities making supply [Discussed in Chapter “Exemptions from GST”].
Importation of Services for Consideration whether or not in course or furtherance of

business
The connotation of ‘supply’ gets expanded significantly through the second part of section 7 i.e. 7(1)(b)
which brings within the ambit of ‘supply’, the importation of services for a consideration whether or
not in the course or furtherance of business.
This is the only exception to the condition of supply being in course or furtherance of business.
Example:
Ramaiyaa, a proprietor, has received the architect services for his house from an architect located in
New York at an agreed consideration of $ 5,000. The import of services by Ramaiyaa is supply under
section 7(1)(b) though it is not in course or furtherance of business.
Supply without Consideration – Deemed Supply [ Section 7(1)(c) & Schedule I ]
As per Schedule I, in the following 4 cases, supplies made without consideration will be treated
as supply under section 7 of the CGST Act: 4 Marks
I. Permanent Transfer/Disposal of Business Assets:

Any kind of disposal or transfer of business assets made by an entity on permanent basis
even though without consideration qualifies as supply.
(This clause is wide enough to cover transfer of business assets from holding to subsidiary
company for NIL consideration.)
However, it is important to note that this provision would apply only if input tax credit has been
availed on such assets.
Examples:
a) XYZ & Co. donates old laptops to Charitable Schools when new laptops are purchased by
business will qualify as supply provided input tax credit has been availed by XYZ & Co. on
such laptops.
b) A cloth retailer gives clothes from his business stock to his friend free of cost. In this case,
transfer of business stock would amount to ‘supply’ if he had claimed input tax credit on his
purchase of the business asset.
c) A dealer of air-conditioners permanently transfers an air conditioner from his stock in trade, for
personal use at his residence. The transaction will constitute a supply as it is a permanent
transfer/ disposal of business assets. The only condition is that input tax credit should
have been availed on such assets.
II. Supply between related person or distinct persons:

Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, will qualify as supply provided it is made in the course or furtherance
of business.
Provided that gifts not exceeding ` 50,000 in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both
Related persons:
Explanation to Section 15, related persons have been defined as follows:
(a) persons shall be deemed to be “related persons” if-
i. such persons are officers or directors of one another’s businesses;
ii. such persons are legally recognised partners in business;
iii. such persons are employer and employee;
iv. any person directly or indirectly owns, controls or holds 25% or more of the outstanding
voting stock or shares of both of them;
v. one of them directly or indirectly controls the other;
vi. both of them are directly or indirectly controlled by a third person;
vii. together they directly or indirectly control a third person; or
viii. they are members of the same family;
(b) the term “person” also includes legal persons;
(c) persons who are associated in the business of one another in that one is the sole agent or
sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to
be related.
Distinct Persons specified under Section 25

A person who has obtained/is required to obtain more than one registration, whether in one
State/Union territory or more than one State/Union territory shall, in respect of each such
registration, be treated as distinct persons.
Further, 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 establishments shall be treated as establishments of distinct persons.
Stock transfers or branch transfers:

Transactions between different locations (with separate GST registrations) of same legal entity
(eg., stock transfers or branch transfers) will qualify as ‘supply’ under GST
Example:
Raghubir Fabrics transfers 1000 shirts from his factory located in Lucknow to his retail showroom in
Delhi so that the same can be sold from there. The factory and retail showroom of Raghubir
Fabrics are registered in the States where they are located. Although no consideration is
charged, supply of goods from factory to retail showroom constitutes supply.
FAMILY: means
(a) Spouse and Children of the person and
(b) the parents, grandparents, brothers & sisters of the Person if they are wholly or
mainly dependent on the said person.
Supply of goods or services or both between an employer and employee:
By virtue of the definition of related person given above, employer and employee are related
persons. However, services provided by an employee to the employer in the course of or in relation
to his employment are not treated as supply of services [Schedule III of CGST Act].
Gifts by employer to employee

Schedule I provides that gifts not exceeding ` 50,000 in value in a financial year by an employer to
an employee shall not be treated as supply of goods or services or both. However, gifts of
value more than ` 50,000 made without consideration are subject to GST, when made in the
course or furtherance of business.
The term ‘gift’ has not been defined in the GST law. In common parlance, gift is made without
consideration, is voluntary in nature and is made occasionally. It cannot be demanded as a
matter of right by the employee and the employee cannot move a court of law for obtaining a gift.
As already mentioned that the services by an employee to the employer in the course of or in
relation to his employment is outside the scope of GST (neither supply of goods or supply of
services).
It follows therefrom that supply by the employer to the employee in terms of contractual
agreement entered into between the employer and the employee, will not be subjected to GST.
III. Supply of goods by a principal to his agent or vice-versa:

Agent: means a person, including a factor, broker, commission agent, arhatia, del credere agent,
an auctioneer or any other mercantile agent, by whatever name called, who carries on the
business of supply or receipt of goods or services or both on behalf of another [Section 2(5) of
CGST Act].
Principal: means a person on whose behalf an agent carries on the business of supply or receipt
of goods or services or both [Section 2(88) of CGST Act].
Supply of goods by a principal to his agent, without consideration, where the agent undertakes to
supply such goods on behalf of the principal is considered as supply.
Similarly, supply of goods by an agent to his principal, without consideration, where the agent
undertakes to receive such goods on behalf of the principal is considered as supply.
Example:
ABC Manufacturers Ltd. engages Raghav & Sons as an agent to sell goods on its behalf. For the
purpose, ABC Manufacturers Ltd. has supplied the goods to Raghav & Sons located in Haryana.
Supply of goods by ABC Manufacturers Ltd. to Raghav & Sons will qualify as supply even
though Raghav & Sons has not paid any consideration yet.
Points which merit consideration, in this regard, are as follows: Only supply of goods and not
supply of services is covered here. Supply of goods between principal and agent without
consideration is also supply.
Thus, the supply of services between the principal and the agent and vice versa would therefore
require “consideration” to be considered as supply and thus, to be liable to GST.
5 Marks
In order to determine whether a particular principal agent relationship falls within the ambit
of the “Para 3 of Schedule I” as discussed above or not, the deciding factor is whether the
invoice for the further supply of goods on behalf of the principal is being issued by the
agent or not? In other words, the crucial point is whether or not the agent has the authority to
pass or receive the title of the goods on behalf of the principal.
Where the invoice for further supply is being issued by the agent in his name then, any provision of
goods from the principal to the agent would fall within the fold of Para 3 above. However, it may
be noted that in cases where the invoice is issued by the agent to the customer in the name
of the principal, such agent shall not fall within the ambit of Para 3 above.
Similarly, where the goods being procured by the agent on behalf of the principal are invoiced in
the name of the agent then further provision of the said goods by the agent to the principal would
be covered by Para 3 above [Circular No. 57/31/2018 GST dated 04.09.2018].
The above clarification can be understood with the help of following scenario examples:
5 Marks
A. Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various
suppliers who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C) to
send the goods and issue the invoice directly to Mr. A. In this scenario, Mr. B is only acting as
the procurement agent, and has in no way involved himself in the supply or receipt of the
goods. Hence, in accordance with the provisions of this Act, Mr. B is not an agent of Mr. A for
supply of goods in terms of Para 3 of Schedule I.
B. M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The
auctioneer arranges for the auction and identifies the potential bidders. The highest bid is
accepted and the goods are sold to the highest bidder by M/s XYZ. The invoice for the supply
of the goods is issued by M/s XYZ to the successful bidder. In this scenario, the auctioneer is
merely providing the auctioneering services with no role played in the supply of the goods.
Even in this scenario, Mr. B is not an agent of M/s XYZ for the supply of goods in terms of Para
3 of Schedule I.
C. Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting. M/s B arranges for the
auction and identifies the potential bidders. The highest bid is accepted and the painting is sold
to the highest bidder. The invoice for the supply of the painting is issued by M/s B on the behalf
of Mr. A but in his own name and the painting is delivered to the successful bidder. In this
scenario, M/s B is not merely providing auctioneering services, but is also supplying the
painting on behalf of Mr. A to the bidder, and has the authority to transfer the title of the
painting on behalf of Mr. A. This scenario is covered under Para 3 of Schedule I.
D. A C&F agent or commission agent takes possession of the goods from the principal and issues
the invoice in his own name. In such cases, the C&F commission agent is an agent of the
principal for the supply of goods in terms of Para 3 of Schedule I. The disclosure or non-
disclosure of the name of the principal is immaterial in such situations.
E. Mr A sells agricultural produce by utilizing the services of Mr B who is a commission agent as

per the Agricultural Produce Marketing Committee Act (APMC Act) of the State. Mr B identifies
the buyers and sells the agricultural produce on behalf of Mr. A for which he charges a
commission from Mr. A. As per the APMC Act, the commission agent is a person who buys or
sells the agricultural produce on behalf of his principal, or facilitates buying and selling of
agricultural produce on behalf of his principal and receives, by way of remuneration, a
commission or percentage upon the amount involved in such transaction. In cases where the
invoice is issued by Mr. B to the buyer, the former is an agent covered under Para 3 of
Schedule I. However, in cases where the invoice is issued directly by Mr. A to the buyer, the
commission agent (Mr. B) doesn’t fall under the category of agent covered under Para 3.
Scope of principal and agent relationship under Schedule I of CGST Act, 2017 in the context of
del-credere agent
Circular No. 73/47/2018-GST Dated the 5th November, 2018
In commercial trade parlance, a DCA is a selling agent who is engaged by a principal to assist in supply
of goods or services by contacting potential buyers on behalf of the principal. The factor that
differentiates a DCA from other agents is that the DCA guarantees the payment to the supplier. In such
scenarios where the buyer fails to make payment to the principal by the due date, DCA makes the
payment to the principal on behalf of the buyer (effectively providing an insurance against default by the
buyer), and for this reason the commission paid to the DCA may be relatively higher than that paid to a
normal agent.
In order to guarantee timely payment to the supplier, the DCA can resort to various methods including
extending short-term transaction-based loans to the buyer or paying the supplier himself and recovering
the amount from the buyer with some interest at a later date. This loan is to be repaid by the buyer
along with an interest to the DCA at a rate mutually agreed between DCA and buyer.
Concerns have been expressed regarding the valuation of supplies from Principal to recipient where the
payment for such supply is being discharged by the recipient through the loan provided by DCA or by
the DCA himself.
Issues arising out of such loan arrangement have been examined and the clarifications on the
same are as below:
S.No. Issue Clarification

1 Whether a DCA falls As already clarified vide circular No. 57/31/2018-GST dated 4th
under the ambit of September, 2018, whether or not the DCA will fall under the
agent under Para 3 of ambit of agent under Para 3 of Schedule I of the CGST Act
Schedule I of the CGST depends on the following possible scenarios:
Act? In case where the invoice for supply of goods is issued
by the supplier to the customer, either himself or
through DCA, the DCA does not fall under the ambit of
agent.
In case where the invoice for supply of goods is issued
by the DCA in his own name, the DCA would fall under
the ambit of agent.
2 Whether the In such a scenario following activities are taking place:
temporary short-term 1. Supply of goods from supplier (principal) to recipient;
transaction based loan 2. Supply of agency services from DCA to the supplier or the
extended by the DCA recipient or both;
to the recipient 3. Supply of extension of loan services by the DCA to the
(buyer), for which recipient.
interest is charged by It is clarified that in cases where the DCA is not an agent under
the DCA, is to be Para 3 of Schedule I of the CGST Act, the temporary short-term
included in the value of transaction based loan being provided by DCA to the buyer is a
goods being supplied supply of service by the DCA to the recipient on Principal to
by the supplier Principal basis and is an independent supply.
(principal) where DCA
Therefore, the interest being charged by the DCA would not
is not an agent under
form part of the value of supply of goods supplied (to the
Para 3 of Schedule I of
buyer) by the supplier.
the CGST Act?
It may be noted that vide notification No. 12/2017-Central Tax
(Rate) dated 28th June, 2017, 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) has been exempted
3 Where DCA is an agent In such a scenario following activities are taking place:
under Para 3 of 1. Supply of goods by the supplier (principal) to the DCA;
Schedule I of the CGST 2. Further supply of goods by the DCA to the recipient;
Act and makes 3. Supply of agency services by the DCA to the supplier or the
payment to the recipient or both;
principal on behalf of 4. Extension of credit by the DCA to the recipient.
the buyer and charges
It is clarified that in cases where the DCA is an agent under
interest to the buyer
Para 3 of Schedule I of the CGST Act, the temporary short-term
for delayed payment
transaction based credit being provided by DCA to the buyer no
along with the value of
longer retains its character of an independent supply and is
goods being supplied,
subsumed in the supply of the goods by the DCA to the
whether the interest
recipient.
will form a part of the It is emphasised that the activity of extension of credit by the
value of supply of DCA to the recipient would not be considered as a separate
goods also or not? supply as it is in the context of the supply of goods made by the
DCA to the recipient.
It is further clarified that the value of the interest charged for

such credit would be required to be included in the value of
supply of goods by DCA to the recipient as per clause (d) of sub-
section (2) of section 15 of the CGST Act.
IV. Import of services by a person from a related person outside India:
3 Marks
Import of services by a person from a related person or from his establishments located outside
India, without consideration, in the course or furtherance of business shall be treated as
“supply”.
Example:
(a) ABC Associates received legal consultancy services from its head office located in Malaysia.
The head office has rendered such services free of cost to its branch office.
Since ABC Associates and the branch office are related persons, services received by ABC
Associates will qualify as supply even though the head office has not charged anything from it.
(b) Sumedha, a proprietor registered in Delhi, has sought architect services from his brother
located in US, with respect to his newly constructed house in Delhi. Although services have
been received by Sumedha without consideration from a related person, yet it will not qualify
as supply since the same has not been received in course or furtherance of business.
Activities or Transactions to be treated as supply of goods or as supply of services
[Schedule II]
Section 7(1A) of the Act refers to Schedule II for determining whether a particular transaction is
a supply of goods or supply of service. This helps in mitigating the ambiguities which existed in
earlier laws
Schedule II appended to the CGST Act enlists the matters/transactions to be treated as Supply
of either goods or services. The matters listed out are primarily those which had been entangled in
litigation in the earlier regime owing to their complex nature and susceptibility to double taxation.
These are as follows:- 5 Marks
A. Transfer of Title in goods Supply of Goods
B. Transfer of Right in goods/ undivided share in goods

without transfer of title in goods Supply of Services
C. Transfer of Title in goods under an agreement which

Supply of Goods
stipulates that property shall pass at a future date.
D. Lease, tenancy, easement, licence to occupy land

Supply of Services
E. Lease or letting out of building including a commercial,
industrial or residential complex for business or commerce,
wholly or partly (Lease rentals collected shall be taxable as Supply of Services
supply of services under GST)
F. Treatment or Process applied to another person’s goods

(‘Job Work’ performed by a job worker like dyeing of fabric
Supply of Services
in various colours)
G. Goods forming part of business assets are transferred or

disposed off by/under directions of person carrying on the
Supply of Goods
business so as no longer to form part of those assets,
whether or not for consideration
H. Goods held/used for business are put to private use or are

made available to any person for use for any purpose
other than business, by/under directions of person carrying
on the business, whether or not for consideration (A Supply of Services
director using car provided by the company for personal
travels.)
I. Goods forming part of assets of any business carried on

by a person who ceases to be a taxable person shall be
deemed to be supplied by him, in the course or
furtherance of his business, immediately before he
ceases to be a taxable person.
(A, a trader, is winding up his business. Any goods left in Supply of Goods
stock shall be deemed to be supplied by him and GST
shall be payable.)
Exceptions:
Business is transferred as a going concern to another
person.
Business is carried on by a personal representative
who is deemed to be a taxable person
J. (a) Renting of immovable property
(b) Construction of complex, building, civil structure,

etc.
Construction of a complex, building, civil structure or a
part thereof, including a complex or building intended
for sale to a buyer, wholly or partly, except where the
entire consideration has been received after
issuance of completion certificate, where required,
by the competent authority or after its first occupation,
The term construction includes additions,

alterations, replacements, or remodeling of any
existing civil structure [Paragraph 5(b) of Schedule II]
Supply of Services
(c) Temporary transfer or permitting use or enjoyment
of any intellectual property right
(d) Development, design, programming, customisation,

adaptation, upgradation, enhancement, implementation
of IT software (Supply of GST related software to
businesses for smooth processing of returns and
accounts is supply of service.)
(e) Agreeing to obligation to refrain from an act, or to

tolerate an act or situation, or to do an act.
(f) Transfer of right to use any goods for any purpose
K. Following composite supplies :-

Works contract services.
Works contract:
means a contract for building, construction,
fabrication, 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 Supply of Services
involved in the execution of such contract.
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
(Restaurant Services) [Paragraph 6(b) of Schedule
II]
L. Supply of goods by an unincorporated association or

body of persons to a member thereof for cash, deferred Supply of Goods
payment or other valuable consideration.
CBIC has clarified Taxability of ‘Tenancy Rights’/‘Pagadi’ under GST as under:
Pagadi system, i.e. transfer of tenancy rights against tenancy premium, is prevalent in some States.
The activity of transfer of tenancy right against consideration [i.e. tenancy premium] is squarely covered
under supply of service liable to GST. It is a form of lease or renting of property and such activity
is specifically declared to be a service in Schedule II i.e. any lease, tenancy, easement, licence
to occupy land is a supply of services.
Although stamp duty and registration charges have been levied on such transfer of tenancy rights, it
shall be still subject to GST since merely because a transaction/supply involves execution of
documents which may require registration and payment of registration fee and stamp duty, would not
preclude them from the ‘scope of supply’ and from payment of GST.
The transfer of tenancy rights cannot be treated as sale of land/ building in para 5 of Schedule III. Thus,
it is not a negative list activity and consequently, a consideration for the said activity shall attract levy of
GST.
To sum up, transfer of tenancy rights to a new tenant against consideration in the form of tenancy
premium is taxable. Further, services provided by outgoing tenant by way of surrendering the tenancy
rights against consideration in the form of a portion of tenancy premium is liable to GST.
[Circular No.44/18/2018 CGST dated 02.05.2018].
It is important to note that grant of tenancy rights in a residential dwelling for use as residence dwelling
against tenancy premium or periodic rent or both is exempt from tax [Entry 12 of Notification No.
12/2017 CT (R) dated 28.06.2017].
[In Pagadi system, the tenant acquires tenancy rights in the property against payment of tenancy
premium (pagadi). The landlord may be owner of the property, but the possession of the same lies with
the tenant. The tenant pays periodic rent to the landlord as long as he occupies the property. The
tenant also usually has the option to sell the tenancy right of the said property and in such a
case has to share a percentage of the proceed with owner of land, as laid down in their tenancy
agreement. Alternatively, the landlord pays to tenant the prevailing tenancy premium to get the
property vacated.]
Negative List under GST [Section 7(2)(a) read with Schedule III]
Activities or transactions which shall be treated neither as a supply of goods nor a supply of
services 5 Marks
1) Services by an employee to the employer in the course of or in relation to his employment.
2) Services by any Court (SC, HC, District Court etc) or Tribunal established under any law for the
time being in force.
3)
(a) Functions performed by the Members of Parliament, Members of State Legislature,
Members of Panchayats, Members of Municipalities and Members of other local authorities;
(b) Duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
(c) 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 paragraph 5(b) 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.
[Inserted by CGST (Amendment) Act 2018]
8) (a) Supply of warehoused goods to any person before clearance for home consumption;
(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.
[Inserted by CGST (Amendment) Act 2018]
[“The expression “warehoused goods” shall have the same meaning as assigned to it in
the Customs Act, 1962”]
Activities/transactions notified by the Government: [Section 7(2)(b)]
Such activities/ transactions undertaken by the Central Government, a State Government or

any local authority in which they are engaged as public authorities, as may be notified by
the Government on the recommendations of the Council shall be treated neither as a supply
of goods nor a supply of services.
Notification No. 14/2017 CT (R) dated 28.06.2017 has notified the services by way of any
activity in relation to a function entrusted to a Panchayat under article 243G of the
Constitution or to a Municipality under article 243W of the Constitution for the said
purpose.
Important Points:
i. Amounts received by an employee from the employer on premature termination of contract of
employment are treatable as amounts paid in relation to services provided by the employee to the
employer in the course of employment.
ii. Services provided by casual worker to employer who gives wages on daily basis to the worker
are services provided by the worker in the course of employment.
iii. Casual workers are employed by a contractor, like a building contractor or a security services
agency, who deploys them for execution of a contract or for provision of security services to a
client, respectively are services in the course of employment.
iv. Only services that are provided by the employee to the employer in the course of employment are
outside the ambit of supply. Services provided outside ambit of employment for a
consideration would qualify as supply. For example, if an employee provides his services on
contract basis to an associate company of the employer, then these are not services provided in
the course of employment and thus, it would be treated as supply.
Similarly, services provided on contract basis i.e. principal-to principal basis are not services
provided in the course of employment.
v. Any amount paid for not joining a competing business would be liable to be taxed being paid
for providing the service of forbearance to act.
Class Notes
COMPOSITE AND MIXED SUPPLIES [SECTION 8]
The tax liability on a composite or a mixed supply shall be determined in the following manner,
namely:- 3 Marks
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall
be treated as a supply of such principal supply; and
(b) a mixed supply comprising of two or more supplies shall be treated as supply of that particular
supply that attracts highest rate of tax.
Composite supply means a supply made by a taxable person to a recipient and:

comprises two or more taxable supplies of goods or services or both, or any combination thereof.
are naturally bundled and supplied in conjunction with each other, in the ordinary course of business
one of which is a principal supply [Section 2(30) of the CGST Act]. 2 Marks
Principal Supply 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.
Example: Suvarna Manufacturers entered into a contract with XYZ Ltd. for supply of readymade shirts
packed in designer boxes at XYZ Ltd.’s outlet. Further, Suvarna Manufacturers would also get them
insured during transit. In this case, supply of goods, packing materials, transport & insurance is a
composite supply wherein supply of goods is principal supply.
Example: When a consumer buys a television set and he also gets warranty and a maintenance
contract with the TV, this supply is a composite supply. In this example, supply of TV is the principal
supply, warranty and maintenance services are ancillary.
Example: A travel ticket from Mumbai to Delhi may include service of food being served on board, free
insurance, and the use of airport lounge. In this case, the transport of passenger, constitutes the pre-
dominant element of the composite supply, and is treated as the principal supply and all other supplies
are ancillary.
Works contract and restaurant services are classic examples of composite supplies. However, the
GST law identifies both as supply of services and such services are chargeable to specific rate of tax
mentioned against such services (works contract and restaurants).
How to determine whether the services are bundled in the ordinary course of business?
Whether the services are bundled in the ordinary course of business, would depend upon the normal or
frequent practices followed in the area of business to which services relate. Such normal and frequent
practices adopted in a business can be ascertained from several indicators some of which are listed
below:
The perception of the consumer or the service receiver - If large number of service receivers of
such bundle of services reasonably expect such services to be provided as a package, then such a
package could be treated as naturally bundled in the ordinary course of business.
Majority of service providers in a particular area of business provide similar bundle of services.
For example, bundle of catering on board and transport by air is a bundle offered by a majority of
airlines.
The nature of the various services in a bundle of services will also help in determining whether the
services are bundled in the ordinary course of business. If the nature of services is such that one of
the services is the main service and the other services combined with such service are in the nature
of incidental or ancillary services which help in better enjoyment of a main service.
For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of
clothing free of cost per day. Such service is an ancillary service to the provision of hotel
accommodation and the resultant package would be treated as services naturally bundled in the
ordinary course of business.
Other illustrative indicators, not determinative but indicative of bundling of services in the
ordinary course of business are:
There is a single price or the customer pays the same amount, no matter how much package
they actually receive or use.
The elements are normally advertised as a package.
The different elements are not available separately.
The different elements are integral to one overall supply. If one or more is removed, the nature
of the supply would be affected.
No straight jacket formula can be laid down to determine whether a service is naturally bundled in the
ordinary course of business. Each case has to be individually examined in the backdrop of several
factors some of which are outlined above. The above principles explained in the light of what
constitutes a naturally bundled service can be gainfully adopted to determine whether a particular
supply constitutes a composite supply under GST and if so what constitutes the principal supply so as
to determine the right classification and rate of tax of such composite supply.
For instance, in case of servicing of cars involving supply of both goods (spare parts) and services
(labour) where the value of goods and services are shown separately, CBIC has clarified that the goods
and services would be liable to tax at the rates as applicable to such goods and services separately
[Circular No. 47/21/2018 GST dated 08.06.2018].
Further, given below is the illustrative list determining what constitutes the principal supply in
the given composite supplies:
Activity/ transaction Principal supply

Supply of printed books, In the case of printing of books, pamphlets, brochures,
pamphlets, brochures, envelopes, annual reports, and the like, where only content is
annual reports, leaflets, cartons, supplied by the publisher or the person who owns the
boxes etc., printed with design, usage rights to the intangible inputs while the physical
logo, name, address or other inputs including paper used for printing belong to the
contents supplied by the recipient printer, supply of printing [of the content supplied by the
of such printed goods recipient of supply] is the principal supply and therefore
such supplies would constitute supply of service
In case of supply of printed envelopes, letter cards,

printed boxes, tissues, napkins, wall paper etc. by the
printer using its physical inputs including paper to
print the design, logo etc. supplied by the recipient of
goods, predominant supply is supply of goods and
the supply of printing of the content [supplied by the
recipient of supply] is ancillary to the principal supply of
goods and therefore such supplies would constitute
supply of goods. [Circular No. 11/11/2017 GST dated
20.10.2017]
Activity of bus body building The principal supply may be determined on the basis of
facts and circumstances of each case [Circular No.
34/8/2018-GST dated 01.03.2018]
Retreading of tyres Pre-dominant element is process of retreading which is a
supply of service. Rubber used for retreading is an
ancillary supply.
Supply of retreaded tyres, where the old tyres belong to

the supplier of retreaded tyres, is a supply of goods
[Circular No. 34/8/2018-GST dated 01.03.2018].
Mixed Supply means: 2 Marks

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
[Section 2(74) of the CGST Act].
The individual supplies are independent of each other and are not naturally bundled.
A supply can be a mixed supply only if it is not a composite supply. As a corollary (Finally) it can
be said that if the transaction consists of supplies not naturally bundled in the ordinary course of
business then it would be a mixed supply.
Example: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items
can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these
items are supplied separately.
Example: A shopkeeper selling storage water bottles along with refrigerator. Bottles and the
refrigerator can easily be priced and sold independently and are not naturally bundled. So, such
supplies are mixed supplies.
Clarification on doubts related to treatment of sales promotion schemes under GST
It has been noticed that there are several promotional schemes which are offered by taxable
persons to increase sales volume and to attract new customers for their products.
Taxability of two such schemes has been clarified as under:
A. Free samples and gifts:

It is a common practice among certain sections of trade and industry, such as, pharmaceutical
companies which often provide drug samples to their stockists, dealers, medical practitioners,
etc. without charging any consideration.
As per section 7(1)(a) of the CGST Act, the expression “supply” includes all forms of supply of
goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or
disposal made or agreed to be made for a consideration by a person in the course or
furtherance of business.
Therefore, the goods or services or both which are supplied free of cost (without any
consideration) shall not be treated as “supply” under GST (except in case of activities
mentioned in Schedule I of the CGST Act).
Accordingly, it is clarified that samples which are supplied free of cost, without any
consideration, do not qualify as “supply” under GST, except where the activity falls within the
ambit of Schedule I of the CGST Act.
B. Buy one get one free offer:

Sometimes, companies announce offers like ‘Buy One, Get One free’. For example, “buy one
soap and get one soap free” or “Get one tooth brush free along with the purchase of tooth
paste”.
As per section 7(1)(a) of the CGST Act, the goods or services which are supplied free of cost
(without any consideration) shall not be treated as “supply” under GST (except in case of
activities mentioned in Schedule I of the CGST Act).
It may appear at first glance that in case of offers like “Buy One, Get One Free”, one item is
being “supplied free of cost” without any consideration. In fact, it 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 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 of the CGST Act.
[Circular 92/11/2019 GST dated 07.03.2019]
Class Notes
LATEST DISCUSSION
TAXABILITY OF “COST PETROLEUM”
When an oil exploration & production contractor gets a license/lease to explore/mine the petroleum
crude and/or natural gas from the Government, it enters into a Production Sharing Contract (PSC)
with the Government. The relationship of the contractors with the Government is not that of partners but
that of licensor/lessor and licensee/lessee.
As per these PSCs, when a contractor discovers oil/gas, he is at first entitled to recover the contract
cost [expenses incurred in exploration, development, production and payment of royalty] involved in the
extraction of oil/gas from the total sale proceeds and thereafter, he is expected to share with the
Government the profit from his venture [known as profit petroleum], as per the PSC.
The value of petroleum which the contractor is entitled to take in a year for recovery of the contract
costs is called the cost petroleum. Further, the total value of petroleum produced and saved from the
contract area in a particular period, as reduced by cost petroleum, is called the profit petroleum.
The Government’s share of profit petroleum which is the consideration paid by the contractor to the
Central Government for the services of grant of license/lease to explore/mine petroleum crude
and/natural gas is exempt from GST.
The cost petroleum is not a consideration received by the contractor for the services provided to
Government and thus not taxable per se. The reason for the same is that the contractors carry
exploration and production of petroleum for themselves and not as a service to Government. They had
acquired the right to explore, exploit and sell petroleum in lieu of royalty and a share in profit petroleum
Service by way of grant of alcoholic liquor licence is neither a supply of goods nor a supply of
service
In terms of Section 7(2) of the CGST Act, the Government has notified the following activity or
transaction undertaken by the State Governments in which they are engaged as public authorities, to
be treated neither as a supply of goods nor a supply of service, namely:-
“Service by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or
application fee or by whatever name it is called.”
[Notification No. 25/2019 CT (R) dated 30.09.2019/ Notification No. 24/2019 IT (R) dated
30.09.2019]
Circular No. 121/40/2019 GST dated 11.10.2019 has clarified that the above special dispensation
applies only to supply of service by way of grant of liquor licenses by the State Governments as
an agreement between the Centre and States and has no applicability or precedence value in relation
to grant of other licenses and privileges for a fee in other situations, where GST is payable.
It may be noted that services provided by the Government to business entities including by way of grant
of privileges, licences, mining rights, natural resources such as spectrum etc. against payment of
consideration in the form of fee, royalty etc. are taxable under GST. Tax is required to be paid by the
business entities on such services under reverse charge.
Clarification in respect of goods sent/ taken out of India for exhibition or on consignment basis
for export promotion
As per section 7 of the CGST Act, for any activity or transaction to be considered a supply, it
must satisfy twin tests namely-
1. it should be for a consideration by a person; and
2. it should be in the course or furtherance of business.
The exceptions to the above are the activities enumerated in Schedule I of the CGST Act which are
treated as supply even if made without consideration.
Further, section 2(21) of the IGST Act defines “supply”, wherein it is clearly stated that it shall have the
same meaning as assigned to it in section 7 of the CGST Act.
Section 16 of the IGST Act deals with “Zero rated supply”. The provisions contained in the said
section read as under:
“Zero Rated supply” means any of the following supplies of goods or services or both, namely:–
a. export of goods or services or both; or
b. supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.
Therefore, it can be concluded that only such “supplies” which are either “export” or are
“supply to SEZ unit / developer” would qualify as zero-rated supply.
It is, accordingly, clarified that the activity of sending/ taking the goods out of India for exhibition or on
consignment basis for export promotion, except when such activity satisfy the tests laid down in
Schedule I of the CGST Act, do not constitute supply as the said activity does not fall within the
scope of section 7 of the CGST Act as there is no consideration at that point in time.
Since such activity is not a supply, the same cannot be considered as “Zero rated supply” as per the
provisions contained in section 16 of the IGST Act.
Levy of GST on the service of display of name or placing of name plates of the donor in the
premises of charitable organisations receiving donation or gifts from individual donors
Individual donors provide financial help or any other support in the form of donation or gift to institutions
such as religious institutions, charitable organisations, schools, hospitals, orphanages, old age homes
etc. The recipient institutions place a name plate or similar such acknowledgement in their premises to
express the gratitude.
When the name of the donor is displayed in recipient institution premises, in such a manner, which can
be said to be an expression of gratitude and public recognition of donor’s act of philanthropy and is not
aimed at giving publicity to the donor in such manner that it would be an advertising or promotion of his
business, then it can be said that there is no supply of service for a consideration (in the form of
donation). There is no obligation (quid pro quo) on part of recipient of the donation or gift to do anything
(supply a service). Therefore, there is no GST liability on such consideration.
Some examples of cases where there would be no taxable supply are as follows:-
i. “Good wishes from Mr. Rajesh” printed underneath a digital blackboard donated by Mr. Rajesh to
a charitable Yoga institution.
ii. “Donated by Smt. Malati Devi in the memory of her father” written on the door or floor of a room or
any part of a temple complex which was constructed from such donation.
In each of these examples, it may be noticed that there is no reference or mention of any business
activity of the donor which otherwise would have got advertised.
Thus, where all the three conditions are satisfied namely the gift or donation is made to a charitable
organization, the payment has the character of gift or donation and the purpose is philanthropic (i.e., it
leads to no commercial gain) and not advertisement, GST is not leviable.
Clarification on issue of GST on airport levies

Passenger service fee (PSF) is charged under rule 88 of Aircraft Rules, 1937 according to which the
airport licensee may collect PSF from embarking passengers at such rates as specified by the Central
Government. According to the rule the airport licensee shall utilize the said fee for infrastructure
and facilitation of the passengers.
User development fee (UDF) is levied under rule 89 of the Aircraft rules 1937 which provides that
the licensee may levy and collect, at a major airport, the User Development Fee at such rate as
may be determined under clause (b) of sub-section (1) of section 13 of the Airports Economic
Regulatory Authority of India Act, 2008. Though the rule does not prescribe the specific purpose of levy
and whether it is to be charged from the airlines or the passengers, however, it is seen from section
2(n) of Airports Economic Regulatory Authority of India Act, 2008, that the authority which manages
the airport is eligible to levy and charge UDF from the embarking passengers at any airport.
Further, Director General of Civil Aviation has clarified that in order to avoid inconvenience to
passengers and for smooth and orderly air transport/airport operations, the UDF shall be collected from
the passengers by the airlines at the time of issue of air ticket and the same shall be remitted to Airports
Authority of India in the line system/procedure in vogue. For this, collection charges of Rs. 5/- shall be
receivable by the airlines from AAI, which shall not to be passed on to the passengers in any manner.
The above facts clearly indicate that PSF and UDF are charged by airport operators for
providing the services to passengers.
Section 2(31) of the CGST Act states that “consideration” in relation to the supply of goods or services
or both includes any payment made or to be made, whether in money or otherwise, in respect of, in
response to, or for the inducement of, the supply of goods or services or both, whether by the recipient
or by any other person. Thus, PSF and UDF charged by airport operators are consideration for
providing services to passengers.
Thus, services provided by an airport operator to passengers against consideration in the form of UDF
and PSF are liable to GST. UDF was also liable to service tax.
The airport operators shall pay GST on the PSF and UDF collected by them from the passengers
through the airlines. Since, the airport operators are collecting PSF and UDF inclusive of GST,
there is no question of their not paying GST collected by them to the Government.
The collection charges paid by airport operator to airlines are a consideration for the services provided
by the airlines to the airport operator and airlines shall be liable to pay GST on the same under forward
charge. ITC of the same will be available with the airport operator.
Clarification on issue of GST on airport levies
It has been clarified that services provided by an airport operator to passengers against consideration in
the form of user development fee (USF) and passenger development fee (PSF) are liable to GST. PSF
and UDF being charges levied by airport operator for services provided to passengers, are collected by
the airlines as an agent and is not a consideration for any service provided by the airlines.
Thus, airline is not responsible for payment of GST on UDF or PSF provided the airline satisfies the
conditions prescribed for a pure agent under rule 33 of the CGST Rules. It is the licensee, that is the
airport operator which is liable to pay GST on UDF and PSF.
Airlines may act as a pure agent for the supply of airport services in accordance with rule 33 of the
CGST rules.
Accordingly, the airline acting as pure agent of the passenger should separately indicate actual amount
of PSF and UDF and GST payable on such PSF and UDF by the airport licensee, in the invoice issued
by airlines to its passengers. The airline shall not take ITC of GST payable or paid on PSF and UDF.
The airline would only recover the actual PSF and UDF and GST payable on such PSF and UDF by the
airline operator. The amount so recovered will be excluded from the value of supplies made by the
airline to its passengers.
In other words, the airline shall not be liable to pay GST on the PSF and UDF (for airport services
provided by airport licensee), provided the airline satisfies the conditions prescribed for a pure agent
under rule 33 of the CGST Rules.
The registered passengers, who are the ultimate recipient of the airport services, may take ITC of GST
paid on PSF and UDF on the basis of pure agent’s invoice issued by the airline to them.
GST – By CA Suraj Agrawal SATC CC.1
SUPPLY – SET A
1) Which of the following is not a supply as per section 7 of the CGST Act?
(a) Management consultancy services not in course or furtherance of business

(b) Import of service for consideration not in course or furtherance of business
(c) Both (a) and (b)
2) _____________ specifies the activities to be treated as supply even if made without consideration.
(a) Schedule I of CGST Act

(b) Schedule II of CGST Act
(c) Schedule III of CGST Act
3) Which of the following activity is outside the scope of supply and not taxable under GST?
(a) Services by an employee to the employer in the course of or in relation to his employment
(b) Services of funeral
(c) Actionable claims, other than lottery, betting and gambling.
4) Which of the following supplies are naturally bundled?
(a) Rent deed executed for renting of two different floors of a building-one for residential and another for
commercial purpose to same person
(b) Pack of watch, tie and belt
(c) Package of canned food such as burger, chocolates, sweets, cake etc.
5) A _______________ supply comprising of two or more supplies shall be treated as the supply of that
particular supply that attracts highest rate of tax.
(a) Composite
(b) Mixed
6) Which of the following activities is a supply of services?
(a) Transfer of right in goods/ undivided share in goods without transfer of title in goods
(b) Transfer of title in goods
(c) Transfer of title in goods under an agreement which stipulates that property shall pass at a future date.
7) What is the taxable event under GST?
Answer:
Taxable event under GST is Supply of goods or services or both. CGST and SGST/ UTGST will be levied on
intra-State supplies. IGST will be levied on inter-State supplies.
8) What is the tax treatment of composite supply and mixed supply under GST?
Answer:
Composite supply shall be treated as supply of the principal supply. Mixed supply would be treated as
supply of that particular goods or services which attracts the highest rate of tax.
| SURAJ AGRAWAL TAX CLASS | LAXMI NAGAR | NEW DELHI | 011-47542530 | +91 85272 30445|
9) Supply of all goods and/or services is taxable under GST. Discuss the validity of the statement.
Answer:
The statement is incorrect. Supplies of all goods and services are taxable except alcoholic liquor for
human consumption. Supply of petroleum crude, high speed diesel, motor spirit (commonly known as
petrol), natural gas and aviation turbine fuel shall be taxable with effect from a future date. This date would
be notified by the Government on the recommendations of the GST Council.
10) Whether transfer of title and/or possession is necessary for a transaction to constitute supply of
goods?
Answer:
Title as well as possession both have to be transferred for a transaction to be considered as a supply of
goods. In case title is not transferred, the transaction would be treated as supply of service in terms of
Schedule II of the CGST Act.
In some cases, possession may be transferred immediately but title may be transferred at a future date like in
case of sale on approval basis or hire purchase arrangement. Such transactions will also be termed as supply
of goods.
11) Examine whether the following activities would amount to supply under Section 7 of the CGST Act:
(a) Damodar Charitable Trust, a trust who gets the eye treatment of needy people done free of cost,
donates clothes and toys to children living in slum area.
(b) Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these establishments
are registered in respective States. Finished goods are sent from factory in Delhi to the Mumbai
depot without consideration so that the same can be sold.
(c) IMP: Raman is an Electronic Commerce Operator in Chennai. His brother who is settled in London
is a well-known lawyer. Raman has taken legal advice from him free of cost with regard to his
family dispute.
(d) Would your answer be different if in the above case, Raman has taken advice in respect of his
business unit in Chennai?
Answer:
(a) Section 7 of the CGST Act, inter alia, provides that supply must be made for a consideration except the
activities specified in Schedule I and in course or furtherance of business. Since, both these
elements are missing, donation of clothes and toys to children living in slum area would not amount to
supply under section 7 of the CGST Act.
(b) Schedule I of CGST Act, inter alia, stipulates that supply of goods or services or both between related
persons or between distinct persons as specified in section 25, is supply even without consideration
provided it is made in the course or furtherance of business.
Further, where a person who has obtained or is required to obtain registration in a State in respect of an
establishment, has an establishment in another State, then such establishments shall be treated as
establishments of distinct persons [Section 25 of the CGST Act].
In view of the same, factory and depot of Sulekha Manufacturers are establishments of two distinct
persons. Therefore, supply of goods from Delhi factory of Sulekha Manufacturers to Mumbai Depot
without consideration, but in course/furtherance of business, is Supply under Section 7 of the
CGST Act.
(c) Schedule I of CGST Act, inter alia, stipulates that import of services by a person from a related person
located outside India, without consideration is treated as supply if it is provided in the course or
furtherance of business.
Explanation to section 15, inter alia, provides that persons shall be deemed to be “related
persons” if they are members of the same family.
Further, as per section 2(49) of the CGST Act, 2017, family means, —
a. the spouse and children of the person, and
b. the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person.
In the given case, Raman has received free of cost legal services from his brother. However, in view of
section 2(49)(ii) above, Raman and his brother cannot be considered to be related as Raman’s brother is
a wellknown lawyer and is not wholly/mainly dependent on Raman.
Further, Raman has taken legal advice from him in personal matter and not in course or furtherance of
business.
Consequently, services provided by Raman’s brother to him would not be treated as supply under
section 7 read with Schedule I of the CGST Act.
(d) In the above case, if Raman has taken advice with regard to his business unit, services provided by
Raman’s brother to him would be treated as supply under section 7 of the CGST Act as the same are
provided in course or furtherance of business though received from a related person.
12) State whether the following supplies would be treated as supply of goods or supply of services as per
Schedule II of the CGST Act:
(a) Renting of immovable property

(b) Goods forming part of business assets are transferred or disposed of by/under directions of
person carrying on the business, whether or not for consideration.
(c) Transfer of right in goods without transfer of title in goods.
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a future
date.
Answer:
(a) Supply of services
(b) Supply of goods
(c) Supply of services
(d) Supply of goods
13) Determine whether the following supplies amount to composite supplies:

(a) A hotel provides 4 days-3 nights package wherein the facility of breakfast and dinner is provided
alongwith the room accommodation.
(b) A toothpaste company has offered the scheme of free toothbrush alongwith the toothpaste.
Answer:
Under composite supply, two or more taxable supplies of goods or services or both, or any combination
thereof, are naturally bundled and supplied in conjunction with each other, in the ordinary course of
business, one of which is a principal supply [Section 2(30) of the CGST Act].
In view of the same,
(a) since, supply of breakfast and dinner with the accommodation in the hotel are naturally bundled, said
supplies qualify as ‘composite supply’.
(b) since supply of toothbrush along with the toothpaste are not naturally bundled, said supplies do not
qualify as ‘composite supply’.
14) Whether goods supplied on hire purchase basis will be treated as supply of goods or supply of
services? Give reason.
Answer:
Supply of goods on hire purchase shall be treated as supply of goods as there is transfer of title, albeit at a
future date.
15) Akbar Travels Pvt. Ltd., a travel agent books ticket for a customer Mr. X. Travel agent raises invoice
on customer Mr. X for transportation of passenger by air of ` 10,000 and his commission of ` 500.
The entire amount of ` 10,500 is not his consideration. The amount of ` 500 retained by the air travel is to be
considered as his consideration.
16) M/s X Ltd., being an authorized dealer of the TATA brand, rendered services to buyer of car, but
payment is made to authorized dealer by the TATA Company.
It is called as consideration is given by third person. Therefore, it is treated as supply of service and liable to
tax in the hands of M/s X Ltd.
17) A Sports Club agrees to hire services of cricket player Mr. B for a consideration of ` 2 crores. In
addition to this, the agreement provides that the player shall be provided with the car valued for ` 20
lakhs. The entire value of ` 2.20 crores will be considered as consideration and subject to tax.
18) Mr. X sells office furniture to Mr. Y on the condition that donation of ` 10,000 is payable by Mr. Y to a
trust.
The amount of ` 10,000 is paid by Mr. Y is by reason of purchase of furniture. Hence, ` 10,000 will be treated
as consideration for sale of furniture. Thereby Mr. X is liable to pay GST on ` 10,000 in addition to the value
of furniture.
19) M/s Lakshman Ltd. agreed to sell its business to M/s Ram Ltd., for a consideration of ` 50,00,000. M/s
Lakshman Ltd. further agrees that it will not conduct same or similar business for a period of 10
years, for which M/s Ram Ltd., paid ` 20,00,000. Hence, M/s Lakshman Ltd., consideration is ` 70,00,000.
20) Mr. Rajesh during long drive with his wife Manju violated traffic rules and was imposed fine of ` 1,000.
The amount received as fine or penalty for violation of statutory provisions will not be considered as
consideration.
21) The following generally not considered as consideration:

Grant of pocket money
Gift or reward (which has not been given in terms of reciprocity) or
Amount paid on alimony for divorce
22) Subsidy given by the Government to benefit the farmers cannot be considered an additional
consideration:
The Government provides subsidy, for the benefit of farmers but it is given to the manufacturer of fertilizers
will not be considered as consideration.
23) X Ltd. supplied spare parts freely to replace during warranty period. Is it supply and chargeable to
GST?
Answer:
It is not supply. GST is not chargeable if free replacement is provided by a business to customers without
consideration under warranty.
24) Penalties levied on late or delayed payment of loans and advances are taxable supply?
Answer:
Yes. These are taxable under GST.
25) Online information and data base access or retrieval services, where import of free services from
Google and Facebook by Mr. Ram located in India, without any consideration. Is it subject to GST?
Answer:
These are not considered as supply and hence not attract GST.
Note: GST will be levied only when services are provided with consideration.
26) Import (Downloading) of a song for consideration for personal use by Mr. Bharath. Is it supply of
service?
Answer:
Yes. It is supply of service and IGST will be levied unless it is exempt.
Note: Services may be in the course or furtherance of business or not.
27) Mr. C of Chennai paid fees for on-line coaching obtained from a teacher located in USA for coaching
of Accountancy course for his son. Is it supply. If so who is liable to pay GST.
Answer:
Yes, it is supply. Even if receipt of this service is not for business or furtherance of business. Mr. C is not
liable to pay GST under reverse charge mechanism.
Note: It is exempt from GST.
28) Ramesh Apparels in Chennai, Tamil Nadu, avails fashion designing services of ` 50,00,000 from
Suresh Designs in Singapore. Is it supply. If so who is liable to pay GST.
Answer:
Yes. It is supply (i.e. import of service).
Ramesh Apparels in Chennai being recipient of service is liable to pay IGST.
29) Import of some services by an Indian branch from their parent company, in the course or furtherance
of business, without consideration. Is it taxable supply in India?
Answer:
Yes. It is a taxable supply in India and hence IGST will be levied.
Note: Import of services by a person from a related person or from any of his other establishments outside
India, in the course or furtherance of business will be subject to GST even if made without consideration (as
per Schedule I of CGST Act, 2017 i.e. point no. 4).
30) M/s X Ltd., upgrades the computer system. The existing computers and laptops, which do not support the
upgraded version, donated to a Trust. This amounts to permanent transfer of business assets. The same will
be treated as supply of goods and liable to GST in the hands of X Ltd., provided if company availed input tax
credit on such computers and laptops.
31) M/s Peter England Pvt. Ltd., being a trader in clothes permanently transfers 50% of its stock to a Society free
of cost. In this case, transfer of business stock would amount to supply if the company had availed input tax
credit on purchase of clothes.
32) Mr. Raj purchased a car for personal use and after a year sold it to a car dealer for ` 2 lac. Will the
transaction be a supply in terms of GST Act?
Answer:
This transaction is not a supply. Moreover, supply is made by the individual is not in the course or
furtherance of business. Further, no input tax credit was admissible on such car at the time of its acquisition
as it was meant for non-business use.
33) M/s A & Co., a sole proprietor, is in the business of selling furniture. Its owner took a set of furniture
to furnish his house permanently. Will the transaction be a supply in terms of GST Act?
Note: ITC on such furniture not availed.
Answer:
No, the transfer of the furniture by the owner without consideration is not a supply of goods, because credit is
not allowed in case of personal consumption of business assets under sec 17(5) (g) of CGST Act.
34) M/s B Ltd., is in the business of Hotel. He purchase AC for business purpose and after 2 years, he
transfer the AC to director without consideration. Will the transaction be a supply in terms of GST
ACT?
NOTE: AC machines on which ITC availed.
Answer:
Yes, it shall be a deemed supply (as per schedule I).
35) Related Person:

Any person directly or indirectly owns, controls or holds 25% or more of the outstanding voting stock
or shares of both of them:
M/s Ram & Co., holds 30,000 shares in M/s X Ltd. and 25,000 shares in Y Ltd.
Share Capital of M/s X Ltd: 1,00,000 Equity Shares of ` 10 each.
Share Capital of M/s Y Ltd: 80,000 Equity Shares of ` 10 each.
Since, M/s Ram Ltd., holds more than 25% of the share in the company X Ltd and Y Ltd, they will be
considered as related persons.
36) Reliable group has three companies namely M/s A Ltd., M/s B Ltd., and M/s C Ltd., as group companies and
M/s Reliable Ltd., as a parent company. M/s Reliable Ltd., holds 25% of the shares in each group
company.
Therefore, A, B & C companies will be considered as related persons.
37) Raman & Co., (a firm) employer who is represents his employee before the Income Tax authorities but
doesnot charge any professional fee in respect of the same. Is it supply? Liable to GST?
Answer:
It would constitute a taxable supply under GST and be subject to levy and collection of taxes. Employer &
employee is considered as related person and supply is taxable evenif there is no consideration.
38) Pragyan has received a sum of ` 5,00,000 from his employer on premature termination of his contract
of employment. Pragyan needs your advice as to whether such receipts are liable to GST.
Answer:
It is not a supply. As per Section 7(2)(a) of CGST Act, 2017 supply excludes services provided by the
employee to the employer in the course of employment (covered under Schedule III of CGST Act, 2017).
Hence, amounts so paid would not be chargeable to GST.
39) Mr. Raju, an employee provides his service on contract basis to an associate company of Vikram
Enterprises, the employer. The above activity is being carried out in lieu of specific monetary
consideration. Is it supply?
Answer:
Yes. It is supply of service. Since, Mr. Raju supplied services for consideration to associate company of
Vikram Enterprises but not to his employer.
40) Salary paid to partners by partnership firm is liable to GST?
Answer:
No. It is not supply. It is merely an appropriation of profit.
41) Mr. Ram, a Practicing Accountant, has a registered head office in Chennai. He has also obtained
registration in the State of Andhra Pradesh in respect of his branch office.
Mr. CMA Ram shall be treated as distinct persons in respect of registrations in Tamil Nadu and Andhra
Pradesh. Transactions between head office and branch office will be considered as supply of service even
though there is no consideration.
42) Mr. C of Chennai makes taxable supply of goods from Tamil Nadu exceeds ` 40 lakhs. Therefore, Mr. C will
be required to obtain registration in Tamil Nadu. Such person may have establishment is the State of
Telangana where no taxable supplies are made but only the establishment in Telangana helps in handling of
materials like procuring and storing.
Hence, establishment in Tamil Nadu and establishment in Telangana will be considered as distinct
person even when establishment in Telangana is not registered (Sec. 25(5) of CGST Act, 2017).
43) M/s C Ltd. has 3 branches A, B & C in different states. A in Telangana has run out of stock and B from
Andhra Pradesh transfers its excess stock. Is it supply of goods? GST will be levied?
Answer:
Yes. It is supply of goods and liable to IGST.
44) M/s Guideline Academy Pvt. Ltd., gives Diwali Gifts to each employee worth ` 75,000/-. Since, an employee
and employer are considered to be related persons, such gift treated as supply and would be leviable
to GST on the entire value.
45) Apte & Apte Ltd is located in India and holding 51% of shares of Wilson Ltd, a USA based company. Wilson
Ltd provides Business Auxiliary Services to Apte & Apte Ltd. will be treated as supply.
46) Sparsh Ltd. of Mumbai imports business support services from its head office located in USA. The
head office has rendered such services free of cost to its branch office.
Services received by Sparsh Ltd. will qualify as supply even though the head office has not charged anything
from it.
47) Renting of vacant land to a stud farm for ` 1,50,000.
Answer:
It is supply of service. GST is liable to pay.
48) Leasing of vacant land to a poultry farm for ` 76,000. [Exemption Chapter]
Answer:
It is a supply of service. However, specifically exempted from GST. It is an agricultural activity.
49) M/s. ABC Ltd. provides the following relating to information technology software. Compute the value
of taxable service and GST liability (Rate of CGST 9% and SGST 9%)?
(a) Development and Design of information technology software: ` 15 lakhs;
(b) Sale of pre-packaged software, which is put on media: ` 52 lakhs.
Answer:
(a) and (b) both are treated as supply of Service.
Value of Taxable supply of service is ` 67 Lakhs [i.e. ` 15 Lakhs + 52 Lakhs]
CGST is ` 6.03 lakhs

[i.e. ` 67 Lakhs x 9%].
SGST is ` 6.03 lakhs

[i.e. ` 67 Lakhs x 9%].
50) Shyam has given his tempos on hire to Mohan Brothers for transportation of foodstuff for ` 40,00,000.
He has also transferred the right to use such tempos to Mohan Brothers. Discuss whether Shyam is
liable to pay GST on the said transaction.
Answer:
It is treated as supply of service as title is not transferred. Shyam is liable to pay GST.
51) Booking of Air Tickets which involves cost of the meal to be provided during travel will be Composite supply
and tax will be calculated on the principle supply which in this case is transportation passengers
through flight.
52) M/s X Ltd. entered into a contract with M/s Y Ltd. for supply of goods. 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.
53) A Five-star hotel provides four days and three-night package, with breakfast. This is a composite supply as
the package of accommodation facilities and breakfast is a natural combination in the ordinary course of
business for a hotel. In this case, the hotel accommodation is the principal supply, and breakfast is
ancillary to the hotel accommodation.
The hotel accommodation attracts 18% tax and the restaurant service attracts 28% tax. As per the example,
hotel accommodation is the principal supply, and the entire supply will be taxed at 18%.
54) Mr. Ram being a dealer in laptops. Sold a laptop bag along with the laptop to a customer, for ` 55,000. CGST
and SGST for laptop @18% and for laptop bag @28%. What would be the rate of tax leviable? Also find the
GST liability.
Answer:
If the laptop bag is supplied along with the laptop in the ordinary course of business, the principal supply is
that of the laptop and the bag is an ancillary.
Therefore, it is a composite supply and the rate of tax would that as applicable to the laptop. Hence,
applicable rate of GST 18% on ` 55,000. CGST is ` 4,950 and SGST is ` 4,950
55) Diwali gift hamper which consist of different Items like sweets, chocolates, cakes, dry fruits packed in one
pack is Mixed supply as these items can be sold separately and it shall be treated as a supply of that
particular item which attracts the highest rate of tax.
56) M/s X Ltd. a dealer offer combo packs of shirt, watch, wallet, book and they are bundled as a kit and this kit is
supplied for a single price and the supply of one item does not naturally necessitate the supply of other
elements. Hence the supply is a mixed supply. Tax rate for a shirt, watch, wallet and book are 12%, 18%,
5% and Nil respectively. In this case, watch attracts the highest rate of tax in the mixed supply i.e., 18%.
Hence, the mixed supply will be taxed at 18%.
57) Mr. A booked a Rajdhani train ticket, which includes meal. Is it composite supply or mixed supply?
Answer:
It is a bundle of supplies. It is a composite supply where the products cannot be sold separately. The
transportation of passenger is, therefore, the principal supply. Rate of tax applicable to the principal supply
will be charged to the whole composite bundle.
Therefore, rate of GST applicable to transportation of passengers by rail will be charged by IRCTC on
the booking of Rajdhani ticket.
58) Big Bazar offers a free bucket with detergent purchased. Is it composite supply or mixed supply?
Assume rate of GST for detergent @28% and bucket @18%.
Answer:
This is a mixed supply. These items can be sold separately.
Product which has the higher rate, will apply on the whole mixed bundle.
GST – By CA Suraj Agrawal SATC D.1
CHARGE OF GST
INTRA STATE SUPPLY
Where the location of the supplier and the place of supply of goods or services are in the same
State/Union territory, it is treated as intra-State supply of goods or services respectively
INTER STATE SUPPLY

Where the location of the supplier and the place of supply of goods or services are in
(i) two different States or
(ii) two different Union Territories or
(iii) a State and a Union territory,
it is treated as inter-State supply of goods or services respectively.
EXTENT & COMMENCEMENT OF CGST ACT/ SGST ACT/ UTGST ACT
a) Central Goods and Services Tax Act, 2017 extends to the whole of India including State of
Jammu & Kashmir
India means
territory of India as referred to in Article 1 of the Constitution
its territorial waters (12NM),
seabed and sub-soil underlying such waters,
the air space above its territory and territorial waters
continental shelf, exclusive economic zone or any other maritime zone as referred to in the
Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones
Act, 1976 (200 NM)
b) State GST law of the respective State/Union Territory with State Legislature [Delhi and
Puducherry] extends to whole of that State/Union Territory.
[State includes a Union Territory with legislature (Section 2(103) of the CGST Act]
c) Union Territory Goods and Services Tax Act, 2017 extends to the Union territories of the
Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu,
Chandigarh and other territory, i.e. the Union Territories without State Legislature [Section 1 of
the UTGST Act].
Union Territory: means the territory of -

(a) The Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli;
(d) Daman and Diu;
(e) Chandigarh; and
(f) other territory.
Explanation: For the purposes of this Act, each of the territories specified in sub-clauses (a) to
(f) shall be considered to be a separate Union Territory [Section 2(114) of CGST Act].
Note: UTGST Act 2017 is not amendment to include UT of Ladakh. In other words, it is not
yet extended to UT of ladakh.
Class Notes
LEVY & COLLECTION OF CGST [SECTION 9 OF THE CGST ACT]
1. [Section 9(1)] Subject to the provisions of sub-section (2), there shall be levied a tax called the
CGST 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 u/s 15 and at such rates,
not exceeding 20%, as may be notified by the Government on the recommendations of the
Council & collected in such manner as may be prescribed and shall be paid by the taxable person.
2. [Section 9(2)] The central 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 Government on the recommendations of the
Council.
3. [Section 9(3)] The 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 (Here supplier may be register or unregistered)
4. [Section 9(4)]
W.e.f. 01/02/2019, The Government may, on the recommendations of the Council, by notification,
specify a class of registered persons who shall, in respect of supply of specified categories of
goods or services or both received from an unregistered supplier, pay the tax on reverse charge
basis as the recipient of such supply of 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 such
supply of goods or services or both.
[Amendment by CGST (Amendment) act 2018]
5. [Section 9(5)] 5 Marks The 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 ECO as if he is the supplier liable for paying the tax in
relation to the supply of such services.
Where an ECO does not have a physical presence in the taxable territory, any person
representing such electronic commerce operator for any purpose in the taxable territory shall be
liable to pay tax.
Where an ECO does not have a physical presence in the taxable territory and also does not
have a representative in the said territory, such ECO shall appoint a person in the taxable
territory for the purpose of paying tax and such person shall be liable to pay tax.
Class Notes
Tax payable by the ECO on notified services
Electronic Commerce Operators (ECO) display products as well as services which are actually
supplied by some other person to the consumer, on their electronic portal. The consumers buy such
goods/ services through these portals. On placing the order for a particular product/ service, the actual
supplier supplies the selected product/ service to the consumer. The price/ consideration for the
product/ service is collected by the ECO from the consumer and passed on to the actual supplier after
the deduction of commission by the ECO.
The Government may notify specific categories of services the tax on intra -State supplies of which
shall be paid by the electronic commerce operator (ECO) if such services are supplied through it. Such
services shall be notified on the recommendations of the GST Council.
Following categories of services supplied through ECO are notified for this purpose:
(a) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor
cycle;
(b) 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 under
section 22(1) of the CGST Act.
(c) services by way of house-keeping, such as plumbing, carpentering etc., except where the
person supplying such service through electronic commerce operator is liable for registration
under section 22(1) of the CGST Act.
Thus, when such services (point ‘b’ & ‘c’) are supplied through an ECO, CGST on the said supply
shall be paid by the ECO if the person supplying such service through ECO is not liable for
registration under section 22(1) of the CGST Act.
Class Notes
List of services taxable under reverse charge, i.e. the services where tax is
payable by the recipient:
Notification No. 13/2017 CT (R) dated 28.06.2017 (amended time to time) has notified the following
categories of supply of services wherein whole of the CGST shall be paid on reverse charge basis
by the recipient of services: 7/8 Marks
S. No. Category of Supply of Services Recipient of Services
1. Supply of services by a Goods Transport Agency Specified person located in

(GTA) [not paying CGST @ 6%] in respect of the taxable territory.
transportation of goods by road to
a) any Factory registered under or governed by the The person who pays or is
Factories Act, 1948; or liable to pay freight for the
b) any Society registered under the Societies transportation of goods by
Registration Act 1860 or under any other law for road in goods carriage,
the time being in force in any part of India; or located in the taxable territory
c) any Co-operative Society established by or under shall be treated as the
any law; or person who receives the
d) any Person registered under the CGST Act or the service for the purpose of
IGST Act or the SGST Act or the UTGST Act; or this notification.
e) any Body Corporate established, by or under any
NOTE:
law; or
GTA has agreed to pay
f) any Partnership Firm (including LLP) whether
GST@12% (CGST@6% &
registered or not under any law including
SGST@6%), then reverse
association of persons; or
charge mechanism is not
g) any Casual Taxable Person
applicable on specified
person paying freight. Under
reverse Charge, GST Rate
is 5%
W.e.f. 01.01.2019, Reverse charge mechanism (RCM) shall not apply to services
provided by a GTA, by way of transport of goods in a goods carriage by road to –
a) a Department/establishment of the Central Government/ State Government/ Union
territory; or
b) local authority; or
c) Governmental agencies,
which has taken registration under the CGST Act, 2017 only for the purpose of
deducting tax under section 51 and not for making a taxable supply of goods or
services.
It may be noted that the said services have been simultaneously exempted from
payment of tax vide Notification No. 28/2018 CT (R) dated 31.12.2018. Thus, there will
be no tax liability in this case.
2. Services supplied by an individual advocate including a Any business entity located

senior advocate or firm (including LLP) of advocates in the taxable territory.
by way of legal services, directly or indirectly to any
business entity located in the taxable territory The business entity located in
the taxable territory who is
“Legal service” means any service provided in relation to litigant, applicant or
advice, consultancy or assistance in any branch of law, in petitioner, as the case may
any manner and includes representational services before be, shall be treated as the
any court, tribunal or authority. person who receives the
legal services for the purpose
of this notification.
3. Services supplied by an arbitral tribunal to a business Any business entity located

entity. in the taxable territory.
4. Services provided by way of sponsorship to any body Any body corporate or

corporate or partnership firm (including LLP) partnership firm (including
LLP) located in the taxable
territory.
5. Services supplied by the Central Government, State Any business entity located
Government, Union territory or local authority to a in the taxable territory.
business entity excluding-
(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 the Central Government, State A person Registered under
Government, Union territory or local authority by way GST.
of renting of immovable property
6. Services supplied by a director of a company/body The company or a body

corporate to the said company/body corporate corporate located in the
taxable territory.
7. Services supplied by an insurance agent to any person Any person carrying on

carrying on insurance business insurance business, located
in the taxable territory
8. Services supplied by a recovery agent to a banking A banking company or a

company or a financial institution or a nonbanking financial institution or a
financial company nonbanking financial
company, located in the
taxable territory
9. Supply of services by a an author music composer, Publisher, Music Company,

photographer, artist or the like by way of transfer or Producer or the like, located
permitting the use or enjoyment of a copyright covered in the taxable territory.
under section 13(1)(a) of the Copyright Act, 1957
relating to original literary, dramatic, musical or artistic
works to a music company, producer or the like
9A. W.e.f. 01/10/2019 - Supply of services by an author by Publisher located in the

way of transfer or permitting the use or enjoyment of a taxable territory
copyright covered under clause (a) of sub -section (1)
of section 13 of the Copyright Act, 1957 relating to
original literary works to a publisher
However, an author can choose to pay tax under forward charge if-
i. he has taken registration under the CGST Act and filed a declaration, in the
prescribed form, that he exercises the option to pay CGST on the said service
under forward charge in accordance with section 9(1) of the CGST Act and to
comply with all the provisions as they apply to a person liable for paying the
tax in relation to the supply of any goods and/or services and that he shall
not withdraw the said option within a period of 1 year from the date of
exercising such option;
ii. he makes a declaration on the invoice issued by him in prescribed form to

the publisher.
10. Services supplied by the members of Overseeing Reserve Bank of India
Committee constituted by the Reserve Bank of India to
Reserve Bank of India
11. Services supplied by Individual Direct Selling Agents A banking company or a

(DSAs) other than a body corporate, partnership or limited NBFC, located in the
liability partnership (LLP) firm to bank or non-banking taxable territory
financial company (NBFCs).
12. Services provided by Business facilitator to a banking A banking company,

company located in the taxable territory
13. Services provided by an agent of business A business correspondent

correspondent to business correspondent located in the taxable territory
14. W.e.f. 01/04/2019, Services supplied by any person by Promoter

way of transfer of development rights or Floor Space
Index (FSI) (including additional FSI) for construction
of a project by a promoter
15. W.e.f. 01/04/2019, Long term lease of land (30 years or Promoter
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.
16. Security services (services provided by way of supply of A Registered person,

security personnel) provided by any person other than a located in the taxable
body corporate to a registered person territory
However, nothing contained in this entry shall apply

to:
i. (a) a Department or Establishment of the Central
Government or State Government or Union
territory; or
(b) local authority; or
(c) Governmental agencies;
which has taken registration under the CGST Act,
2017 only for the purpose of deducting tax under
section 51 of the said Act and not for making a
taxable supply of goods or services; or
ii. a registered person paying tax under composition
scheme.
17. W.e.f. 01/10/2019 Any body corporate

Services provided by way of renting of a motor vehicle located in the taxable
provided to a body corporate territory
Supplier:
Any person other than a body corporate, who is
paying CGST @ 2.5% on renting of motor vehicles
with input tax credit only of input service in the same
line of business
18. W.e.f. 01/10/2019 Borrower i.e., a person who

Services of lending of securities under Securities borrows the securities
Lending Scheme, 1997 (“Scheme”) of Securities and under the Scheme through
Exchange Board of India, as amended an approved intermediary
of SEBI
Lender i.e., a person who deposits the securities
registered in his name or in the name of any other
person duly authorised on his behalf with an approved
intermediary for the purpose of lending under the
Scheme of SEBI.
Note:
1. Limited Liability Partnership formed and registered under the provisions of the Limited Liability
Partnership Act, 2008 shall also be considered as a partnership firm or a firm.
2. Renting of immovable property means allowing, permitting or granting access, entry,

occupation, use or any such facility, wholly or partly, in an immovable property, with or without the
transfer of possession or control of the said immovable property and includes letting, leasing,
licensing or other similar arrangements in respect of immovable property.
3. All the above services have also been notified for reverse charge under IGST Act.
NEW: Clarification regarding taxability of supply of securities under Securities Lending Scheme,
1997
READING ONLY
Securities and Exchange Board of India (SEBI) has prescribed the Securities Lending Scheme, 1997
for the purpose of facilitating lending and borrowing of securities. Under the Scheme, lender of
securities lends to a borrower through an approved intermediary to a borrower under an agreement for
a specified period with the condition that the borrower will return equivalent securities of the same
type or class at the end of the specified period along with the corporate benefits accruing on the
securities borrowed.
The transaction takes place through an electronic screen-based order matching mechanism provided
by the recognised stock exchange in India. There is anonymity between the lender and borrower
since there is no direct agreement between them.
The lenders earn lending fee for lending their securities to the borrowers. The security lending
mechanism is depicted in the diagram below: -
LENDER Approved Intermediary Borrower
In the above chart:

i. Lender is a person who deposits the securities registered in his name or in the name of any other
person duly authorised on his behalf with an approved intermediary for the purpose of lending
under the scheme.
ii. Borrower is a person who borrows the securities under the scheme through an approved
intermediary.
iii. Approved intermediary is a person duly registered by the SEBI under the guidelines/scheme
through whom the lender will deposit the securities for lending and the borrower will borrow the
securities;
It may be noted for the purpose of GST Act, “securities” shall have the same meaning as assigned to it
in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956.
The definition of services as per Section 2(102) of the CGST Act, is extracted as below:
“Services” 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;
Explanation:
For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or
arranging transactions in securities;
Securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 are
not covered in the definition of goods under section 2(52) and services under section 2(102) of the
CGST Act. Therefore, a transaction in securities which involves disposal of securities is not a
supply in GST and hence not taxable.
The explanation added to the definition of services w.e.f. 01.02.2019 i.e., “includes facilitating or
arranging transactions in securities” is only clarificatory in nature and does not have any bearing on the
taxability of the services under discussion (lending of securities) in past since 01.07.2017 but relates to
facilitating or arranging transactions in securities.
The activity of lending of securities is not a transaction in securities as it does not involve
disposal of securities. The Scheme under the Securities Lending Scheme, 1997 doesn’t treat
lending of securities as disposal of securities and therefore is not excluded from the definition
of services.
The lender temporarily lends the securities held by him to a borrower and charges lending fee for the
same from the borrower. The borrower of securities can further sell or buy these securities and is
required to return the lended securities after stipulated period of time. The lending fee charged from
the borrowers of securities has the character of consideration and this activity is taxable in GST
since 01.07.2017.
Apart from above, the activities of the intermediaries facilitating lending and borrowing of securities for
commission or fee are also taxable separately.
For the past period i.e. from 01.07.2017 to 30.09.2019, GST is payable under forward charge by the
lender and request may be made by the lender (supplier) to SEBI to disclose the information about
borrower for discharging GST under forward charge. The nature of tax payable shall be IGST.
With effect from 1st October 2019, the borrower of securities shall be liable to discharge GST under
reverse charge mechanism. The nature of GST to be paid shall be IGST under reverse charge
mechanism.
GST Rates
GST Rates prescribed for various goods:

Broadly, 6 rates of CGST have been notified for goods, viz., 0.125%, 1.5%, 2.5%, 6%, 9% and 14%.
Some items have been kept at Nil rate. Equivalent rate of SGST/ UTGST will also be levied.
GST Rates prescribed for various services:

Broadly, 4 rates of CGST have been notified for services, viz., 2.5%, 6%, 9% and 14%. Equivalent rate
of SGST/ UTGST will also be levied.
Classification of cut pieces of fabrics under GST (Unstitched Salwar Suits)

It has been represented that before becoming readymade articles or an apparel, the fabric is cut from
bundles or thans and sold in that unstitched state. The consumers buy these sets or pieces and get it
stitched to their shape and size. Fabrics are classifiable under chapters 50 to 55 of the First Schedule
to the Customs Tariff Act, 1975 on the basis of their constituent materials.
Mere cutting and packing of fabrics into pieces of different lengths from bundles or thans, will not
change the nature of these goods and such pieces of fabrics would continue to be classifiable under the
respective heading as the fabric
COMPOSITION LEVY [SECTION 10 OF THE CGST ACT] (Section 10)
The objective of composition scheme is to bring simplicity and to reduce the compliance cost
for the small taxpayers.
Suppliers opting for composition levy need not worry about the classification of their goods or
services or both, the rate of GST applicable on the same, etc. They are not required to raise
any tax invoice, but simply need to issue a Bill of Supply.
At the end of a quarter, the registered person opting for composition levy would pay a
certain specified percentage of his turnover of the quarter as tax, without availing the benefit
of input tax credit.
1. [Section 10(1)] 5 Marks Notwithstanding anything to the contrary contained in this Act but
subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose
aggregate turnover in the preceding financial year did not exceed ` 1,50,00,000 (w.e.f
01/04/2019), may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9,
an amount of tax calculated at such rate as may be prescribed, but not exceeding-
a. 0.5% of the turnover in State or turnover in Union territory in case of a manufacturer

(Manufactures excludes manufacturer of ice cream, aerated water (w.e.f. 01/10/2019), Pan
masala & Tobacco)
b. 2.5% of the turnover in State or turnover in Union territory in case of persons engaged in
restaurant services (not serving alcohol)
and
c. 0.5% of the turnover of taxable supply of goods or services in State or turnover in Union
territory in case of other suppliers
subject to such conditions and restrictions as may be prescribed.
W.e.f. 01/02/2019, a person who opts to pay tax under clause (a) or clause (b) or clause
(c) may supply services (other than those referred to in clause (b) of paragraph 6 of
Schedule II), of value not exceeding ten percent of turnover in a State or Union territory in
the preceding financial year or five lakh rupees, whichever is higher. [Applicable CGST Rate
will be 0.5%]
Example:
Ramsewak is engaged in supply of goods. His aggregate turnover in preceding FY is ` 60
lakh. Since his aggregate turnover in the preceding FY does not exceed ` 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 of
not exceeding:
a. 10% of ` 60 lakh, i.e. ` 6 lakh
or
b. ` 5 lakh,
whichever is higher.
Thus, he can supply services upto a value of ` 6 lakh in current FY. If the value of services
supplied exceeds ` 6 lakh, he becomes ineligible for the composition scheme and has to opt
out of the composition scheme.
Note:
1. Above Rates are composite rates specified under Rule 7 of the CGST Rules 2017. An
equivalent amount of SGST is also payable)
2. Turnover limit for composition levy shall be ` 75 lakh in respect of 8 of the Special
Category States (except Assam, Himachal Pradesh & JK)
3. Turnover in case of traders has been defined as ‘Turnover of taxable supplies of goods’.
‘Aggregate turnover’ Vs. ‘Turnover in a State’:
The aggregate turnover is different from turnover in a State. The former is used for determining the
threshold limit for registration and eligibility for composition scheme as well as for option to pay tax
at concessional rate under Notification No. 2/2019 CT (R) dated 07.03.2019.
However, once a person is eligible for composition levy, the amount payable under composition
levy would be calculated on the basis of ‘turnover in the State/UT’.
2. [Section 10(2)] 5 Marks The registered person shall be eligible to opt under sub-section (1),
if-
(a) save as provided in sub-section (1), he is not engaged in the supply of services other
than Restaurant Services
(b) he is not engaged in making any supply of Goods which are not leviable to tax under this Act
(c) he is not engaged in making any inter-State outward supplies of goods
(d) he is not engaged in making any supply of goods through an ECO who is required to
collect tax at source under section 52; and
(e) he is not a manufacturer of such goods as may be notified by the Government on the
recommendations of the Council (manufacturer of ice cream, aerated water (w.e.f.
01/10/2019), Pan masala & Tobacco)
(f) he is neither a casual taxable person nor a non-resident taxable person. (Added by
Finance (No. 2) Act 2019 – Not yet effective)
3. Where more than one registered persons are having the same Permanent Account Number (issued
under the Income-tax Act, 1961), the registered person shall not be eligible to opt for composition
scheme unless all such registered persons opt to pay tax under that sub-section.
4. The composition scheme shall lapse with effect from the day on which his aggregate turnover
during a financial year exceeds the limit specified [Section 10(3)].
5. A taxable person (opted for composition scheme) shall not collect any tax from the recipient on
supplies made by him (cannot issue tax invoice) nor shall he be entitled to any credit of input
tax [Section 10(4)].
6. If the proper officer has reasons to believe that a taxable person has paid tax under sub-section
(1) despite not being eligible, such person shall, in addition to any tax that may be payable by him
under any other provisions of this Act, be liable to a penalty and the provisions of section 73 or
section 74 shall, mutatis mutandis, apply for determination of tax and penalty [Section 10(5)].
Interest income to be excluded while computing aggregate turnover for determining

eligibility for composition scheme - “Interest income not to render a person ineligible
for composition scheme”
It clarifies that the value of supply of exempt services by way of extending deposits, loans or
advances in so far as the consideration is represented by way of interest or discount, shall not
be taken into account –
a. for determining the eligibility for composition scheme under second proviso to Sec 10(1).
Under this proviso, a registered person opting for composition scheme may supply services
[other than restaurant services] of value not exceeding 10% of the turnover in the preceding
financial year in a State/Union territory or ` 5 lakh, whichever is higher.
Thus, while computing value of services [other than restaurant services] as referred in second
proviso to section 10(1), interest on loans/deposit/advances will not be taken into account.
b. in computing aggregate turnover in order to determine eligibility for composition scheme

[Order No. 01/2019 CT dated 01.02.2019]
This clarification is now incorporated by way of explanation in Section 10 of the CGST Act by
the Finance (No. 2) Act, 2019 (Not yet effective).
Intimation of opting for composition levy [Rules 3 & 4]
(i) Intimation by person applying for registration: Any person who is not registered and applies for
registration may give an option to pay tax under composition levy in Part B of the registration
form, viz., FORM GST REG-01. The same shall be considered as an intimation to pay tax under
Composition Levy. Such intimation shall be considered only after the grant of registration to the
applicant and his option to pay tax under composition levy shall be effective from the date from
which registration is effective.
(ii) Intimation by a registered person: A registered person who opts to pay tax under composition
levy scheme shall electronically file an intimation in prescribed form on the Common Portal
[www.gst.gov.in], prior to the commencement of the FY for which said option is exercised.
Any intimation in respect of any place of business in a State/UT shall be deemed to be an

intimation in respect of all other places of business registered on the same PAN.
The option to pay tax under composition levy shall be effective from the beginning of the FY.
Conditions and restrictions for composition levy [Rule 5 of CGST Rules 2017]
Person opting for composition levy has to comply with the following conditions: 5 Marks
He is neither a Casual Taxable Person nor a Non-Resident Taxable Person
Goods held in stock by him have not been purchased from an unregistered supplier and where
purchased, he pays the tax under reverse charge under Section 9(4).
He shall pay tax (normal rate) under section 9(3)/9(4) (reverse charge) on inward supply of
goods or services or both.
He was not engaged in the manufacture of goods as notified under section 10(2)(e), during the
preceding FY. The following goods are notified:
Ice Cream and other edible ice, whether or not containing cocoa
Aerated water (w.e.f. 01/10/2019),
Pan Masala
Tobacco & manufactured Tobacco substitutes
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; and
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 place or
places of business.
Validity of composition levy [Section 10(3) read with rule 6]
A. Withdrawal from the composition scheme by a taxpayer who ceases to satisfy any of the
prescribed conditions
The option exercised by a registered person to pay amount under composition levy shall remain
valid so long as he satisfies all the conditions mentioned in the relevant section and rules. For
instance, the option to pay tax under composition scheme lapses from the day on which aggregate
turnover of a registered person exceeds the specified limit (` 1.5 crore/ ` 75 lakh) during the FY.
Such person is required to pay tax under regular scheme under section 9(1) from the day he
ceases to satisfy any of the conditions prescribed for composition levy. He shall issue tax invoice
for every taxable supply made thereafter. Further, he is required to file an intimation for withdrawal
from the scheme in prescribed form within 7 days of the occurrence of such event.
The effective date from which withdrawal from the composition scheme shall take effect shall be
the date indicated by him in his intimation, but such date may not be prior to the commencement of
the financial year in which such intimation is being filed.
B. Withdrawal from the composition scheme by a taxpayer who intends to withdraw from the
said scheme
The registered person who intends to withdraw from the composition scheme shall, before the date
of such withdrawal, file an application in prescribed form.
The effective date from which withdrawal from the composition scheme shall take effect shall be
the date indicated by him in his application but such date may not be prior to the commencement of
the financial year in which such application for withdrawal is being filed.
C. Denial of option to pay tax under the composition scheme by tax Authorities
Where the proper officer has reasons to believe that the registered person was not eligible to pay
tax under composition scheme or has contravened the provisions of the CGST Act or provisions of
this Chapter, he may issue a show cause notice (SCN) to such person. Upon receipt of reply to
SCN, he shall pass an order either accepting the reply, or denying the option to pay tax under
composition scheme from the date of the option or from the date of the event concerning such
contravention, as the case may be.
In case of denial of option to pay tax under composition levy by the tax authorities, the effective
date of such denial shall be from a date, including any retrospective date, as may be determined by
tax authorities. However, such effective date shall not be prior to the date of contravention of the
provisions of the CGST Act/ CGST Rules.
In each of the above cases, such person may furnish a statement in prescribed form 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/denied, within a period of 30 days from the
date from which the option is withdrawn/ or from the date of the order denying composition
scheme.
Imposition of penalty in case of irregular availment of the composition scheme
[Section 10(5) read with CGST Rules]
1. If a taxable person has paid tax under the composition scheme though he was not eligible for the
scheme, the person would be liable to penalty and the provisions of section 73 or 74 of the
CGST Act shall be applicable for determination of tax and penalty.
2. Where the proper officer has reasons to believe that the registered person was not eligible to
pay tax under composition levy or has contravened the provisions of the Act/provisions of this
Chapter, he may issue a show cause notice to such person in prescribed form.
3. Upon receipt of the reply to such show cause notice from the registered person in prescribed form,
the proper officer shall issue an order in prescribed form within 30 days of the receipt of such
reply, either accepting the reply, or denying the option to pay tax under composition levy
from the date of the option or from the date of the event concerning such contravention, as the
case may be.
Effective date in case of denial of composition option by tax authorities

In case of denial of option to pay tax under composition levy by the tax authorities, it has been clarified
that the effective date of such denial shall be from a date, including any retrospective date, as may be
determined by tax authorities.
However, such effective date shall not be prior to the date of contravention of the provisions of the
CGST Act/ CGST Rules
[GST Circular]
Composition scheme for supplier of services with a tax rate of 6% having annual
turnover in preceding year upto Rs 50 lakhs
- Notification No. 2/2019-Central Tax (Rate) dated 07/03/2019
Effective from 01/04/2019
With effect from 01.04.2019, Notification No. 2/2019 CT (R) dated 07.03.2019 has provided an option
to a registered person whose aggregate turnover in the preceding financial year is upto ` 50 lakh and
who is not eligible to pay tax under composition scheme, to pay tax @ 3% on first supplies of
goods and/or services upto an aggregate turnover of ` 50 lakh made on/after 1st April in any FY,
subject to specified conditions. [Effective Rate 6% (CGST+SGST)]
For the purpose of determining eligibility to pay tax at specified rate, the term “first supply of goods or
services or both” shall include supplies from the first day of April of a financial year to the date from
which he becomes liable for registration under the said Act. However, it does not include for
determining tax payable.
Further, value of supply of exempt services by way of extending deposits, loans or advances in so far
as the consideration is represented by way of interest or discount, shall not be taken into account.
The above benefit is available subject to following conditions:

aggregate turnover in the preceding financial year was ` 50 lakhs or below;
person is not eligible to pay tax under section 10(1) of the CGST Act;
person is not engaged in making any supply which is not leviable to tax;
person is not engaged in making any inter-State outward supply;
person is neither a casual taxable person nor a non-resident taxable person;
person is not engaged in making any supply through an electronic commerce operator who
is required to collect tax at source; and
person is not engaged in making supply of icecream and other edible ice (whether or not
containing cocoa), aerated water (w.e.f. 01/10/2019), pan masala and tobacco and
manufactured tobacco substitutes.
In addition to above following shall be applicable:

Where a registered person opts to pay tax at the rate of 6% then such rate of tax is payable by
all such registered person having same PAN (i.e. applicable for all the branches).
Such person shall pay tax on all outward supplies at the rate of 6% notwithstanding any other
notification issued under section 9(1) or under section 11 of the CGST Act.
Such registered person will be liable to pay tax under RCM at the applicable rates.
Issue bill of supply with the description “taxable person paying tax in terms of notification
No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies”.
Such person is neither eligible to collect tax nor he is entitled to claim any ITC.
This option is now incorporated in the CGST Act by the Finance (No. 2) Act, 2019 by inserting
new sub-section (2A) in section 10. (Not yet effective)
Composition taxpayers and tax payers paying tax under Notification No. 2/2019 CT dated
01.03.2019 to file return annually and make payment quarterly
A special procedure for furnishing of return and payment of tax has been prescribed for the
following persons:
a. registered persons paying composition tax
b. registered person paying tax by availing the benefit of Notification No. 02/2019 CT (R) dated
07.03.2019.
Such persons will:

a. furnish a statement (GST CMP-08) in the prescribed form containing details of payment of self
assessed tax, for every quarter (or part of the quarter), by 18th day of the month succeeding
such quarter.
b. furnish a return (GSTR 4) for every financial year (or part of the financial year), on or before 30th
day of April following the end of such financial year.
The registered persons paying tax by availing the benefit of Notification No. 02/2019 CT (R) dated
07.03.2019 will be deemed to have complied with the provisions of section 37 and section 39 of the
CGST Act, 2017 if they have furnished the prescribed statement and GSTR 4 as mentioned
above.
In view of the above-mentioned special procedure, Rule 62 of CGST Rules, 2017 which prescribed the
provisions for quarterly return by the composition supplier has also been amended. The amended rule
62 whose heading has been changed to “Form and manner of submission of statement and
return” provides as under:
(i) Every registered person paying tax under section 10 or paying tax by availing the benefit of
Notification No. 02/2019 CT (R) dated 07.03.2019 shall electronically furnish -
a) a statement in the prescribed form containing details of payment of self-assessed tax, for every
quarter (or part of the quarter), by 18th day of the month succeeding such quarter; and
b) a return (GSTR 4) for every financial year (or part of the financial year), on or before 30th day
of April following the end of such financial year.
(ii) Every registered person furnishing the statement under sub-rule (1) shall discharge his liability
towards tax or interest payable by debiting the electronic cash ledger.
(iii) The return furnished under sub-rule (1) shall include the-
a) invoice wise inter State and intra-State inward supplies received from registered and
unregistered persons; and
b) consolidated details of outward supplies made.
(iv) A registered person who has opted to pay tax under section 10 or by availing the benefit of
Notification No. 02/2019 CT (R) dated 07.03.2019 from the beginning of a financial year shall,
where required, furnish the details of outward and inward supplies and return under rules 59, 60
and 61 relating to the period during which the person was liable to furnish such details and returns
till the due date of furnishing the return for the month of September of the succeeding financial year
or furnishing of annual return of the preceding financial year, whichever is earlier.
(v) A registered person opting to withdraw from the composition scheme at his own motion or
where option is withdrawn at the instance of the proper officer shall, where required, furnish
a statement in the prescribed form for the period for which he has paid tax under the
composition scheme till the 18th day of the month succeeding the quarter in which the date of
withdrawal falls and furnish GSTR 4 for the said period till the 30th day of April following the
end of the financial year during which such withdrawal falls.
(vi) A registered person who ceases to avail the benefit of Notification No. 02/2019 CT (R) dated
7.03.2019, shall, where required, furnish a statement in the prescribed form for the period for
which he has paid tax by availing the benefit under the said notification till the 18th day of the
month succeeding the quarter in which the date of cessation takes place and furnish GSTR 4 for
the said period till the 30th day of April following the end of the financial year during which
such cessation happens.
Intimation for Composition levy and Effective Date: (3 Marks)
Procedure for opting for composition levy is provided in Rule 3 and 4 of CGST Rules, 2017. The
assessee can be divided into 2 categories as follows:
A. Registered under GST and person switches to Composition Scheme: must follow the
following:
(a) Intimation in FORM GST CMP - 02 for exercise option
(b) Statement in FORM GST ITC - 3 for details of ITC relating to inputs lying in stock, inputs
contained in semi-finished or finished goods within 60 days of commencement of the
relevant financial year
B. For persons who applied for fresh register under GST to opt scheme: For fresh registration
under the scheme, intimation in FORM GST REG - 01 must be filed.
As per rule 3(5) of CGST Rules 2017 intimation sent by any place of business in any State shall be
deemed to be intimation in respect of other place of business under same PAN.
Intimation in every year is not required.
Effective date for opting composition Scheme:

Assessee filing intimation Effective date of composition levy
Form GST CMP-01 Appointed Date
Registered Person Beginning of financial year
Form GST REG-01 Effective date shall be from the date fixed under Rule 10(2) or
(3 Marks) Rule 10(3) of Chapter III of CGST Rules, 2017.
Rule 10(2) provides that if person has applied for registration

within 30 days from the date when he is liable to obtain
registration, the effective date is when he is liable to be
registered.
Example
If a person is liable to be registered on 1st Oct 2019 and he has
applied for registration on 17th Oct 2019, the date of registration will
be 1st Oct 2019. As a result effective date of registration for
composition levy is 1st Oct 2019.
Rule 10(3) provides that the applicant has submitted an

application for registration after the expiry of 30 days from the
date of his becoming liable to registration; the effective date of
registration shall be the date of the grant of registration.
Validity of Composition Levy (4 Marks)
As per Rule 6 of Chapter II of CGST Rules, 2017 provides that option exercised by the person to pay
tax on composition basis remain valid as long as he satisfies the conditions.
A. If Conditions are satisfied

Composition levy allowed
B. If conditions are not satisfied

Pay tax as per normal rates.
Issue tax invoice for taxable supply
within 7 days file Form GST CMP-4 as intimation
The option to pay tax under composition scheme lapses from the day on which his
aggregate turnover during the FY exceeds the specified limit of ` 1.5 Cr or ` 75 lakhs as
the case may be.
C. Self Withdrawal from Scheme

Before the date of withdrawal, file an application Form GST CMP-4 as intimation within 7
days.
D. Proper officer has reason to believe taxpayer is not eligible for the composition levy
Issue Show Case Notice in Form GST CMP-05
Within 15 days taxpayer must file reply in Form GST CMP-06
Issue order within 30 day in Form GST CMP-07 either by accepting or denying the
composition levy.
Every person who has furnished an intimation or filed an application for withdrawal or a person
in respect of whom an order of withdrawal of option has been passed in FORM GST CMP-07,
may electronically furnish at the common portal, 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
Manufacturer of aerated water & supplier of aerated water cannot opt to pay tax under
composition levy and Notification No. 2/2019 CT (R) dated 07.03.2019 respectively - NEW
As per Section 10(2)(e) of CGST Act read with Notification No. 14/2019 CT dated 07.03.2019, a
manufacturer of following goods cannot opt for composition scheme:
1. Ice cream and other edible ice, whether or not containing cocoa
2. Pan Masala
3. All goods i.e. Tobacco and manufactured tobacco substitutes
Further, as per Notification No. 2/2019 CT (R) dated 07.03.2019, a registered person making supplies
of the above goods is also not eligible to pay concessional tax under the said notification.
With effect from 01.10.2019, Notification No. 14/2019 CT dated 07.03.2019 and Notification No.
2/2019 CT (R) dated 07.03.2019 have been amended to include aerated water in the above list of
negative goods.
Thus, now a manufacturer of aerated water will also not be eligible to opt for composition
scheme. Likewise, a supplier of aerated water will also not be eligible to pay concessional tax
under Notification No. 2/2019 CT (R) dated 07.03.2019.
[Notification No. 43/2019 CT dated 30.09.2019 & Notification No. 18/2019 CT (R) dated 30.09.2019]
EXTENT AND COMMENCEMENT OF IGST [SECTION 1 OF IGST ACT]
Integrated Goods and Services Tax Act, 2017 extends to the whole of India including Jammu &
Kashmir. IGST is levied on the inter-State supply of goods or services or both.
LEVY & COLLECTION OF IGST [SECTION 5 OF THE IGST ACT]

(ONLY FOR CMAs)
1. Subject to the provisions of sub-section (2), there shall be levied a tax called the Integrated Goods
and Services Tax on all Inter-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
(Transaction Value) of the Central Goods and Services Tax Act and at such rates, not exceeding
40%., as may be notified by the Government on the recommendations of the Council and
collected in such manner as may be prescribed and shall be paid by the taxable person.
Integrated tax on goods imported into India shall be levied and collected in accordance with the
provisions of Section 3 of the Customs Tariff Act, 1975 on the value as determined under the
said Act (Custom Act, 1962) at the point when duties of customs are levied on the said goods
under section 12 of the Customs Act, 1962. (IGST shall be levied as additional duty of customs in
addition to basic customs duty under the Customs Tariff Act, 1975)
[Inter-State supply of alcoholic liquor for human consumption is outside the purview of IGST]
2. The integrated 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 Government on the recommendations of the
Council.
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.
specify a class of registered persons who shall, in respect of supply of specified categories
of goods or services or both received from an unregistered supplier, pay the tax on reverse
charge basis as the recipient of such supply of 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 such supply of goods or services or both. [effective from 01/02/2019]
specify categories of services, the tax on inter-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 ECO as if he is the supplier liable for paying the tax in relation to the
supply of such services.
Where an ECO does not have a physical presence in the taxable territory, any person
representing such ECO for any purpose in the taxable territory shall be liable to pay tax.
Where an ECO does not have a physical presence in the taxable territory and also does not
have a representative in the said territory, such ECO shall appoint a person in the taxable
territory for the purpose of paying tax and such person shall be liable to pay tax.
List of services taxable under reverse charge [Notification No. 10/2017 IT (R) dated 28.06.2017]
Notification No. 10/2017 has notified specified categories of supply of services wherein whole of the
IGST shall be paid on reverse charge basis by the recipient of services.
All the services which have been notified for reverse charge purposes under CGST Act have also been
notified for reverse charge under IGST Act. Further, following 2 services are additionally included
for IGST purposes:
(ONLY FOR CMAs)
S. No. Category of Supply of Services Supplier of Services Recipient of Services

1. Any service supplied by any Any person located in a Any person located in
person who is located in a non- non-taxable territory the taxable territory
taxable territory to any person other than non-
other than non-taxable online taxable online
recipient. recipient.
(3 Marks)
2. Services supplied by a person A person located in non- Importer as defined in
located in non- taxable territory taxable territory section 2(26) of the
by way of transportation of Customs Act, 1962,
goods by a vessel from a place located in the taxable
outside India up to the customs territory.
station of clearance in India
[Importer, in relation to any goods at any time between their importation and the time when they are
cleared for home consumption, includes any owner, beneficial owner or any person holding
himself out to be the importer (Section 2(26) of the Customs Act, 1962)]
Notification No. 14/2017 IT (R) dated 28.06.2017 has notified the following categories of services
supplied through ECO for the purpose of Section 5(5) of IGST Act:
(a) Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor
cycle;
(b) 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 ECO is liable for registration under Section 20 of the IGST Act
read with section 22(1) of the CGST Act.
(c) Services by way of house-keeping, such as plumbing, carpentering etc., except where the
person supplying such service through ECO is liable for registration under Section 20 of the
IGST Act read with section 22(1) of the CGST Act.
Thus, when such services (point ‘b’ & ‘c’) are supplied through an ECO, IGST on the said supply
shall be paid by the ECO if the person supplying such service through ECO is not liable for
registration under relevant Act.
Reverse charge in respect of Supply of Goods (ONLY FOR CMAs)
Notification No. 4/2017 CT (R) dated 28.06.2017 as amended has notified the following categories
of supply of Goods wherein whole of the CGST shall be paid on reverse charge basis by the
recipient of Goods:
S. No. Description of supply of Goods Supplier of goods Recipient of supply
1 Cashew nuts, not shelled or peeled Agriculturist Any Registered Person
2 Bidi wrapper leaves (tendu) Agriculturist Any Registered Person
3 Tobacco leaves Agriculturist Any Registered Person
4 Silk yarn Any person who Any Registered Person

manufactures 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, Lottery distributor or

Union Territory or selling agent.
any local authority
6 Used vehicles, seized and confiscated Central Any registered person

goods, old and used goods, waste Government, State
and scrap Government, Union
territory or a local
authority
7 Priority Sector Lending Certificate Any registered Any registered person

[These are not securities] person
[Note: PSLC are akin to freely

tradeable duty scrips, Renewable
Energy Certificates, REP license or
replenishment license, which
attracted GST.]
Class Notes
Class Notes
GST – By CA Suraj Agrawal SATC DD.1
CHARGE OF GST – SET A

1. What is the maximum rate of CGST prescribed under CGST Act?
(a) 20%
(b) 28%
(c) 24%
(d) 40%
2. Which of the following taxes levied on intra-State supply?

(a) CGST
(b) SGST/UTGST
(d) IGST
3. What is the threshold limit of turnover in the preceding financial year to be eligible for
composition levy in Delhi?
(a) ` 20 lakh
(b) ` 30 lakh
(c) ` 50 lakh
(d) ` 1.5 Crore
4. Which of the following is not included in aggregate turnover?

(a) Exempt supplies of goods or services or both
(b) Export of goods or services or both
(c) Inter-State supply of goods or services or both
(d) Value of inward supplies on which tax is paid under reverse charge
5. IGST is levied on:

(a) Inter-State supplies
(b) Intra-State Supplies
6. _________________ is levied on the import of goods and/or services.

(a) IGST
(b) CGST and SGST
(c) CGST and UTGST
7. The maximum rate of IGST can be:
(a) 20%
(b) 30%
(c) 40%
8. On supply of which of the following items, GST shall be levied with effect from such date as
may be notified by the Government on the recommendations of the Council:
(a) Petroleum crude
(b) Alcoholic liquor for human consumption
9. GST is payable by the recipient under reverse charge on:
(a) Sponsorship services
(b) Transport of goods by rail
(c) Transport of passengers by air
10. State person liable to pay GST in the following independent cases provided recipient is
located in the taxable territory:
(a) Services provided by an arbitral tribunal to any business entity.
(b) Sponsorship services provided by a company to an individual.
(c) Renting of immovable property service provided by the Central Government to a
registered business entity.
Solution:
(a) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business
entity located in the taxable territory is payable under reverse charge, in the given case, GST
is payable by the recipient - business entity.
(b) GST on sponsorship services provided by any person to any body corporate or partnership
firm located in the taxable territory is payable under reverse charge. Since in the given case,
services have been provided to an individual, reverse charge provisions will not be attracted.
GST is payable under forward charge by the supplier – company.
(c) GST on services supplied by way of renting of immovable property by the Central Government,
State Government, Union Territory, or local authority to any registered person is payable under
reverse charge. Hence, in the given case, GST is payable by the recipient – registered business
entity.
11. A person availing composition scheme in Haryana during a financial year crosses the
turnover of ` 1.5 Crore during the course of the year i.e. he crosses the turnover of ` 1.5
Crore in December? Will he be allowed to pay tax under composition scheme for the
remainder of the year, i.e. till 31st March?
Solution:
No. The option to pay tax under composition scheme lapses from the day on which the aggregate
turnover of the person availing composition scheme during the financial year exceeds the specified
limit (`
` 1.5 Crore). He is required to file an intimation for withdrawal from the scheme in
prescribed form within 7 days from the day on which the threshold limit has been crossed.
12. IMP: Determine whether the supplier in the following cases are eligible for composition levy
provided their turnover in preceding year does not exceed ` 1.5 Crore:
a) Mohan is engaged in providing legal services in Rajasthan and is registered in the same
State.
b) Sugam Manufacturers has registered offices in Punjab and Haryana and supplies goods
in neighbouring States.
c) Mohan Enterprises is engaged in trading of pan masala in Rajasthan and is registered in
the same State
Solution:
a) A supplier of services engaged in the supplies other than the supplies referred to in clause (b) of
paragraph 6 of Schedule II of CGST Act i.e. 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, is not eligible for composition levy.
However, w.e.f. 01/04/2019, the scheme permits supply of other marginal services for a
specified value along with the supply of goods and restaurant service, as the case may
be. Such marginal services can be supplied for a value up to 10% of the turnover in the
preceding year or ` 5 lakh, whichever is higher.
In the given case, since Mr. Mohan is a supplier of only legal services, he is not eligible for
composition scheme even though his aggregate turnover in the preceding FY does not exceed `
1.5 crore.
Note: He may opt for benefits under Notification No. 2/2019 CT(R) dated 07/03/2019 if
aggregate turnover doesn’t exceeds ` 50 Lakhs in preceding FY as he is not eligible for
composition levy under Section 10. Sub-section (2A) of section 10 as introduced by
Finance (No. 2) Act 2019 is not yet effective.
b) Since supplier of inter-State outward supplies of goods is not eligible for composition levy,
Sugam Manufacturers is not eligible for composition levy.
c) A supplier engaged in the manufacture of goods as notified under section 10(2)(e), during
the preceding FY is not eligible for composition scheme. Ice cream and other edible ice,
whether or not containing cocoa, aerated water (w.e.f. 01/10/2019), Pan masala and Tobacco
and manufactured tobacco substitutes are hereby notified.
However, in the given case, since Mohan Enterprises is engaged in trading of pan masala
and not manufacture and his turnover does not exceed ` 1.5 crore, he is eligible for
composition scheme subject to fulfillment of specified conditions.
13. Subramanian Enterprises has two registered places of business in Delhi. Its aggregate
turnover for the preceding year for both the places of business was `120 lakh. It wishes to
pay tax under composition levy for one of the place of business in the current year while
under normal levy for other. You are required to advice Subramanian Enterpises whether he
can do so?
Solution:
A registered person with an aggregate turnover in a preceding financial year up to ` 1.5 crore is
eligible for composition levy in Delhi. Since the aggregate turnover of Subramanian Enterprises
does not exceed ` 1.5 crore, it is eligible for composition levy in the current year. However, all
registered persons having the same Permanent Account Number (PAN) have to opt for composition
scheme. If one such registered person opts for normal scheme, others become ineligible for
composition scheme.
Thus, Subramanian Enterprises either have to opt for composition levy for both the places of
business or under normal levy for both the places of business.
14. VERY IMP: On the basis of amended provisions: Mr. Ajay has a registered repair centre
where electronic goods are repaired/serviced. His repair centre is located in State of
Rajasthan and he is not engaged in making any inter-State supply of services. His aggregate
turnover in the preceding financial year (FY) is ` 45 lakh.
With reference to the provisions of the CGST Act, 2017, examine whether Mr. Ajay can opt
for the composition scheme in the current financial year (FY)? Is he eligible to avail benefit
of concessional payment of tax under Notification No. 2/2019 CT (R) dated 07.03.2019?
Considering the option of payment of tax available to Mr. Ajay, compute the amount of tax
payable by him assuming that his aggregate turnover in the current financial year is ` 35
lakh.
Will your answer be different if Mr. Ajay procures few items required for providing repair
services from neighbouring State of Madhya Pradesh?
Solution:
Section 10 of the CGST Act, 2017 provides that a registered person, whose aggregate turnover in
the preceding financial year did not exceed ` 1.5 crore (` 75 lakh in Special Category States
except Assam, Himachal Pradesh and Jammu and Kashmir), may opt to pay, in lieu of the tax
payable by him, an amount calculated at the specified rates.
However, if, inter alia, such registered person is engaged in the supply of services other than
restaurant services, he shall not be eligible to opt for composition levy.
Further, w.e.f 01/04/2019, the scheme permits supply of other marginal services for a
specified value along with the supply of goods and restaurant service, as the case may be.
Such marginal services can be supplied for a value up to 10% of the turnover in the
preceding year or ` 5 lakh, whichever is higher.
In the given case, since Mr. Ajay is a supplier of only repair services, he is not eligible for
composition scheme even though his aggregate turnover in the preceding FY does not exceed ` 1.5
crore.
However, with effect from 01.04.2019, Notification No. 2/2019 CT (R) dated 07.03.2019 has
provided an option to a registered person whose aggregate turnover in the preceding financial year
is upto ` 50 lakh and who is not eligible to pay tax under composition scheme, to pay tax @ 3%
[Effective rate 6% (CGST+ SGST/UTGST)] on first supplies of goods and/or services upto an
aggregate turnover of ` 50 lakh made on/after 1st April in any FY, subject to specified conditions.
Thus, in view of the above mentioned provisions, Mr. Ajay is eligible to avail the benefit of
concessional payment of tax under Notification No. 2/2019 CT (R) dated 07.03.2019 as his
aggregate turnover in the preceding FY does not exceed ` 50 lakh and he is not eligible to
opt for the composition scheme.
Thus, the amount of tax payable by him under Notification No. 2/2019 CT (R) dated 07.03.2019 is `
2,10,000 [6% of ` 35 lakh].
A registered person cannot opt for Notification No. 2/2019 CT(R) dated 07.03.2019, if inter alia, he
is engaged in making any inter-State outward supplies. However, there is no restriction on inter-
State procurement of goods. Hence, answer will remain the same even if Mr. Ajay procures
few items from neighbouring State of Madhya Pradesh.
Note: Sub-section (2A) of section 10 as introduced by Finance (No. 2) Act 2019 is not yet
effective.
15. VERY IMP: On the basis of amended provisions: Examine whether the suppliers are eligible
for composition scheme in the following independent cases. Is there any other option
available for concessional tax payment with any of these suppliers, wherever composition
scheme cannot be availed?
(a) M/s Devlok, a registered dealer, is dealing in intra-State trading of electronic appliances
in Jaipur (Rajasthan). It has turnover of ` 130 lakh in the preceding financial year. In the
current financial year, it has also started providing repairing services of electronic
appliances.
(b) M/s Narayan & Sons, a registered dealer, is running a “Khana Khazana” Restaurant near
City Palace in Jaipur. It has turnover of ` 140 lakh in the preceding financial year. In the
current financial year, it has also started dealing in intra -State trading of beverages in
Jaipur (Rajasthan).
(c) M/s Indra & bro, a registered dealer, is providing restaurant services in Uttarakhand. It
has turnover of ` 70 lakh in the preceding financial year. It has started providing intra-
State interior designing services in the current financial year and discontinued rendering
restaurant services.
(d) M/s Him Naresh, a registered dealer, is exclusively providing intra-state architect
services in Uttarakhand. It has turnover of ` 40 lakh in the preceding financial year.
Solution:
As per section 10 of the CGST Act, 2017, the following registered persons, whose aggregate
turnover in the preceding financial year did not exceed ` 1.5 crore, may opt to pay tax under
composition levy.
(a) Manufacturer,
(b) Persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II
(restaurant services), and
(c) Any other supplier eligible for composition levy.
Thus, essentially, the composition scheme can be availed in respect of goods and only one
service namely, restaurant service.
However, the scheme permits supply of other marginal services for a specified value along
with the supply of goods and restaurant service, as the case may be. Such marginal services
can be supplied for a value up to 10% of the turnover in the preceding year or ` 5 lakh,
Further, the registered person should not be engaged in making any inter-State outward supplies of
goods.
Furthermore, an option of availing benefit of concessional payment of tax has been provided to a
registered person whose aggregate turnover in the preceding financial year is upto ` 50 lakh and
who is not eligible to pay tax under composition scheme. Said person can pay tax @ 3% [Effective
rate 6% (CGST+ SGST/UTGST)] on first supplies of goods and/or services up to an aggregate
turnover of ` 50 lakh made on/after 1st April in any financial year (FY), subject to specified
conditions vide Notification No. 2/2019 CT dated 07.03.2019 as amended. One of such condition is
that the registered person should not be engaged in making any inter-state outward taxable
supplies.
In view of the above-mentioned provisions, the answer to the given independent cases is as
under:-
(a) The turnover limit for composition scheme in case of Jaipur (Rajasthan) is ` 1.5 crore. Thus, M/s
Devlok can opt for composition scheme as its aggregate turnover is less than ` 1.5 crore.
Further, since the registered person opting for composition scheme can also supply services
(other than restaurant services) for a value up to 10% of the turnover in the preceding year or
` 5 lakh, whichever is higher, in the current financial year, M/s Devlok can supply repair
services up to a value of ` 13 lakh [10% of ` 130 lakh or ` 5 lakh, whichever is higher] in
the current financial year.
(b) In the given case:-
(i) the turnover in the preceding year is less than the eligible turnover limit, i.e. ` 1.5 crore.
(ii) the supplier is engaged in providing restaurant service which is an eligible supply under
composition scheme.
(iii) the supplier wants to engage in trading of goods which is also an eligible supply under
composition scheme.
Thus, M/s Narayan & Sons is eligible for composition scheme.
(c) The turnover limit for composition scheme in case of Uttarakhand is ` 75 lakh. Further, a
registered person who is exclusively engaged in supplying services other than restaurant
services are not eligible for composition scheme. Thus, M/s Indra & bro cannot opt for
composition scheme under Section 10.
Further, the benefit of concessional tax payment under Notification No. 2/2019 CT dated
07.03.2019 is available in case of a registered person whose aggregate turnover in the
preceding financial year does not exceed ` 50 lakh.
Thus, in view of the above- mentioned provisions, M/s Indra & bro cannot avail the benefit of
concessional tax payment as its aggregate turnover in the preceding financial year is more than
` 50 lakh.
(d) An exclusive service provider can opt for the composition scheme only if he is engaged in
supply of restaurant services. The composition scheme permits supply of marginal
services for a specified value, but only when the same are supplied along with goods
and/or restaurant service.
Since M/s Him Naresh is exclusively engaged in supply of services other than restaurant
services, it is not eligible for composition scheme even though its turnover in the preceding
year is less than ` 75 lakh, the eligible turnover limit for Uttarakhand.
However, since M/s Him Naresh is not eligible to opt for composition scheme, its aggregate
turnover in the preceding financial year does not exceed ` 50 lakh and it is exclusively engaged
in supply of services other than restaurant services, M/s Him Naresh is entitled to avail
benefit of concessional payment of tax under Notification No. 2/2019 CT (R) dated
07.03.2019.
16. M/s X Ltd. being a manufacturer of laptops has four factories in Chennai, Salem, Coimbatore
and Madurai.
Place Previous Yr. Turnover (FY 2018-19)

` in lakhs (Including Taxes @ 18%)
Chennai 57.91
Salem 12.00
Coimbatore 8.00
Madurai 10.00
Chennai –II 83.60
Total 171.51
M/s X Ltd is eligible for composition levy in the current year.
Answer:
Aggregate turnover (Excluding GST) = 171.51 x 100/118 = ` 145.35 lakh
Note: Since, Aggregate turnover in the preceding financial year does not exceed ` 1.5 crore
and hence, M/s X Ltd. is eligible for composition Scheme.
17. M/s Y Ltd. being a trader of laptops has two units in Chennai and in Mumbai.
Place P.Y. Turnover

` in lakhs (Excluding taxes)
Chennai 52.00
Mumbai 12.00
You are required to answer the following:
(a) M/s Y Ltd is eligible for composition levy in the current year.
(b) If so, M/s Y Ltd can opt composition scheme for Chennai location and normal scheme
for Mumbai.
(c) Need to give separate intimations for opting composition scheme in each State.
Answer:
(a) Yes. M/s Y Ltd is eligible to avail the composition scheme in both the States namely Tamil
Nadu and Maharashtra.
Since, M/s Y Ltd. has same PAN, and his aggregate turnover does not exceeds ` 1.5 crore is
eligible for composition levy, even though the company has multiple registrations under
GST.
(b) No. M/s Y Ltd cannot opt composition scheme for one location normal scheme for another
location. Where more than one registered persons are having the same Permanent Account
Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to
opt for the scheme under sub-section (1) of Section 10 of CGST Act, 2017 unless all such
registered persons opt to pay tax under that sub-section.
(c) Intimation to opt composition scheme in respect of any place of business in any state or union
Territory shall be deemed to be intimation in respect of all other places of business registered
on the same permanent account number. Hence, there is no need to give separate
intimation for each state.
18. Hotel King Pvt., Ltd. provider of restaurant services in New Delhi. They also serve beer,
whisky and so on. Turnover in the preceding previous year is ` 67 lakhs. Hotel King Pvt. Ltd.
is eligible for composition scheme in the current year.
Answer:
Hotel King Pvt. Ltd., is not eligible for composition scheme. Since they are supplying the
product, which is not levied to GST (namely beer, whisky).
19. Mr. C of Chennai is a retailer dealing with cell phones. He supplies goods to the person
located in Chennai and Pondicherry. Aggregate turnover in the preceding financial year is
` 45 lakhs. Mr. C wants to opt for composition scheme in the current financial year.
Answer:
No. When the person makes inter-State supply of goods benefit of composition scheme is
prohibited. Therefore, Mr. C will not be entitled to the benefit of composition scheme.
20. Peter England is a trader who sells his ready-made clothes online on Amazon India (an
Electronic Commerce Operator). He received an order for ` 12,00,000 in the previous year.
Peter England also supplied goods from there out lets. Aggregate turnover of the company
in the previous year was ` 21,00,000. Peter England is eligible for composition scheme.
Answer:
No. Peter England engaged in making supply of goods through an electronic commerce
operator who is required to collect tax at source under section 52 of CGST Act, 2017. Hence,
Peter England is not eligible for composition scheme.
21. Hot Breads Pvt. Ltd is the supplier of bakery products registered in the current financial year
(2019-20) w.e.f. 1st Jan 2020. In the month of Jan 2020 total taxable supplies ` 88 lakhs.
Answer the following:
(a) Company is eligible for Composition Scheme?
(b) If so company wants to pay tax @ 1% being a trader. However, the Deputy
Commissioner of Central Tax contended that the assessee is liable to pay tax @ 5%
under the Food and Restaurant Services category? Advise.
Answer:
(a) Hot Breads Pvt. Ltd. is eligible for composition levy in the current year.
(b) The supply of food and restaurant services category is the only service included under the
composition scheme. For a business to be categorised as food and restaurant services, there
needs to be an element of service involved.
In the given case, supply of bakery products, there is only a supply of goods i.e. food
items but there is no element of supply of service. Hence supply of bakery products is
eligible to pay GST @1%, under the Traders category and not Food and Restaurant
Services category.
Therefore, department contention is not correct.
22. If a person is liable to be registered on 11th Oct 2019 and he has applied for registration on
17th Oct 2019, what is the effective date of registration for composition levy.
Answer:
Effective date of registration for composition levy is 11th Oct 2019.
23. A person is liable to be registered on 1st Oct 2019 and he has applied for registration on 17th
Nov 2019. Registration granted on 20th Nov 2019. What is the effective date of registration if
he wants to opt composition levy.
Answer:
The effective date of registration will be the date of grant of registration as application is not made
within 30 days. As a result effective date of registration will be effective date for opting for
composition scheme (i.e. 20th Nov 2019) provided no discrepancies found.
24. VERY IMP: Mr. Ram is running a consulting firm and also a readymade garment show room,
registered in same PAN. Turnover of the showroom is ` 120 lakh and Receipt of the
consultancy firm is ` 12 Lakh in the preceding financial year. You are required to answer the
following:
(a) Mr. Ram is eligible for Composition Scheme?
(b) Whether it is possible for Mr. Ram to opt for composition only for Showroom?
(c) Rework, if Mr. Ram is running a restaurant and well as readymade garment show room,
whether he is eligible for composition?
(d) If the turnover of garment showroom is ` 135 Lakh in the preceding financial year and
there is no consulting firm whether he is eligible for Composition?
Answer:
As per section 10 of the CGST Act, 2017, the following registered persons, whose aggregate
turnover in the preceding financial year did not exceed ` 1.5 crore, may opt to pay tax under
composition levy.
(a) Manufacturer,
(b) Persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II
(restaurant services), and
(c) Any other supplier eligible for composition levy.
Thus, essentially, the composition scheme can be availed in respect of goods and only one
service namely, restaurant service.
However, the scheme permits supply of other marginal services for a specified value along
with the supply of goods and restaurant service, as the case may be. Such marginal services
can be supplied for a value up to 10% of the turnover in the preceding year or ` 5 lakh,
In view of the above-mentioned provisions, the answer to the given is as under:-
(a) Aggregate turnover in preceding financial year is 1.32 crores which does not exceeds 1.5
crores. Mr. Ram is eligible for composition scheme in current financial year provided Value of
consultancy services does not exceeds 10% of the turnover in the preceding year or ` 5
lakh, whichever is higher.
(b) No. Mr. Ram cannot opt composition scheme for one location & normal scheme for another
location. Where more than one registered persons are having the same Permanent Account
Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to
opt for the scheme under sub-section (1) of Section 10 of CGST Act, 2017 unless all such
registered persons opt to pay tax under that sub-section
(c) Restaurant services and readymade garments show room are eligible for the
composition scheme. Hence Mr. Ram is eligible for Composition Scheme. Since, his
aggregate turnover is ` 132 lakhs (i.e. less than ` 1.5 crore).
(d) Yes, Mr. Ram is eligible for composition scheme as turnover of his firm does not exceed
` 1.5 crore in the preceding F.Y.
25. Mr. Rahim is dealer who is selling taxable goods, exempted goods and non-taxable goods
(i.e. Liquor). His turnover in the preceding financial year is ` 35 lakh, ` 10 lakh, ` 15 lakh
goods which are leviable to GST, exempted and non-taxable respectively. Whether Mr.
Rahim is eligible for Composition Scheme?
Answer:
If a person is selling the goods, which are not leviable to tax under GST, then he is not eligible to
opt for composition scheme. In this case aggregate turnover not exceeds ` 1.5 crore even though,
Mr. Rahim is not eligible for composition Scheme.
26. Mr. H registered in Hyderabad, who is selling goods from Telangana to Tamil Nadu. Turnover
of Mr. H is ` 73 Lakh in the preceding financial year. Whether Mr. H is eligible for
Composition? Whether your answer will change if Mr. H is making purchase from Tamil
Nadu and selling goods in Telangana?
Answer:
Mr. H is not eligible for composition as he is making interstate outward supply. If Mr. H is making
purchase form Tamil Nadu then he is eligible for composition as there is restriction on
outward interstate supply not on inward interstate supply.
27. Turnover of Mr. X in the preceding financial year is ` 49 Lakh. Mr. A has opted for
Composition Scheme. During the year on 18th February 2020, turnover of Mr. X exceeds
` 1.5 crore. What compliances are required to carry by Mr. X.
Answer:
Mr. X is required to do the following compliances:
1. File a FORM GST CMP-04 within 7 days i.e. before 25th February 2020.
2. Details of stock and capital goods, as on the 18th February, 2020, are required to file in FORM
GST ITC-01 within 30 days i.e. before 20th March 2020 to take the credit of input on the
same.
28. M/s X Pvt. Ltd., is a manufacturer having two units namely Unit-A in Andhra Pradesh and
another Unit-B in Tamil Nadu. Total turnover of two units in last Financial Year was ` 95 lakh
` 10 lakh of Unit – A + ` 85 lakh of Unit – B).
(`
Total turnover of two units in the First quarter of this financial year was ` 15 lakh (`
` 5 lakh
of Unit – A + ` 10 lakh of Unit – B). Applicable rate of CGST 9% and SGST 9%. Find the Net
liability of X Pvt. Ltd.
Note: M/s X Pvt. Ltd., is not availing input tax credit.
Answer:
Since, the company is not availing the benefit of input tax credit the said company can pay
GST under composition levy under Sec. 10(1) of the CGST Act, 2017. Applicable rate of
CGST 0.5% and SGST 0.5%.
Unit Location Turnover in the previous Turnover in 1st Quarter of the Total tax (@ 1%)
F.Y. F.Y. 0.5% 0.5%
A AP 10 lakh 5 lakh 2,500 2,500
B TN 85 lakh 10 lakh 5,000 5,000
29. Senior Advocate supplied services of ` 1,50,000/- to business entity for Legal services.
Business entity has ITC of ` 7,000. Senior Advocate has registered office in Chennai.
Business entity is located in Madurai (Same state).
Find the following:

(a) Who is liable to pay GST?
(b) Net GST liablity?
Note:
(i) all services rendered in the month of Oct 2019.
(ii) Turnover of business entity in the previous year ` 43 lakh.
(iii) Applicable rate of GST @18%
Answer:
As per Notification No. 13/2017 (as amended), in case services are supplied by Senior advocate to
Business entity, Business entity located in taxable territory will be liable to pay GST under reverse
charge.
Further, exemption under Notification No. 12/2017 (as amended) is also not available as Turnover
of Business entity exceeds 20 Lakhs in previous year.
(a) Business entity being recipient of service is liable to pay GST.
(b) Net GST liability of the business entity:

CGST 9% on ` 1,50,000 = ` 13,500/-
SGST 9% on ` 1,50,000 = ` 13,500/-
Note: recipient is not allowed to utilize ITC against his GST liability. However, after payment
of GST under RCM, the same can be availed as ITC against his outward supplies.
30. With reference to the provisions of GST law (w.e.f. 1-7-2017), briefly explain as to who is the
person responsible to pay GST in the following:
(i) Legal services are provided by Senior Advocates to business entities.
(ii) Representation services are provided by Senior Advocates to any business entity.
(iii) Were Contracts for representation service provided by the Senior Advocates to any
business entity has been entered into through another advocate or firm of advocates.
Answer:
Service Service recipient Nature of Taxability Person responsible to
provider service pay GST
(i) & (ii) Business Entity Representation Taxable Recipient of service,

Senior (whose turnover services supply of which is the business
Advocate exceeds ` 20 Lakh in service entity, who is litigant,
P.Y.) applicant or petitioner.
(iii) Recipient of service that is the business entity, who is the litigant, applicant or
petitioner, is liable to pay GST.
Note: Previous year turnover more than ` 20 lacs (in case of special category States is ` 10
lakh).
31. GT Jewellers Ltd. paid ` 50 lakhs for sponsorship of Miss India beauty pageant in Mumbai to
a Stylish & Co., a partnership firm. It is taxable supply, if so who is liable to pay GST.
Answer:
Yes. It is taxable supply of service. GST is liable to pay recipient of supply of service namely GT
Jewellers Ltd. under RCM as per Notification No. 13/2017 (as amended).
32. IMP: M/s Shakshi Associates a recovery agent (located in Chennai) empanelled by State
Bank of India, Local Head Office, Nungambakkam, Chennai. The following service supplied
M/s Shakshi Assocates in the month of Nov 2019 are as follows:
(1) Fee of ` 2,25,825 for supply of services in relation to recovery of dues from the
defaulting Borrowers at the place of business/occupation and if such Borrowers is/are
unavailable at the place of business then at his/ her residence.
(2) Supply of services with regard to demand for recovery or taking possession of the
security from defaulting Borrowers, for which separate fee charge from the bank `
55,175/-
Find the following:

(a) Is it supply of service.
(b) If so, who is liable to pay GST.
(c) Find the GST liability
Note: Assume applicable rate of GST for recovery agent services @18%.
Answer:
(a) Yes. It is taxable supply of service
(b) State Bank of India being recipient of service is liable to pay GST under RCM as per
Notification No. 13/2017 (as amended)
(c) GST liabiliity = ` 50,580 [i.e ` 2,25,825 + ` 55,175) x 18%]
33. Amended: Mr. Suraj Agrawal (not a registered person) has written a book on Indirect Taxes
which is published by M/s Agrawal Publications of New Delhi.
You are requried to find the following:

(a) who is liable to pay GST?
(b) Rework, if publisher is located in New York, then who is liable to pay GST?
Answer:
(a) M/s Agrawal Publications of New Delhi being recipient of service is liable to pay GST under
RCM as per Notification No. 13/2017 (as amended). Option of forward charge is not
applicable to Author as he is not registered.
(b) If M/s Virat Law Publications located in New York then it is treated as export of service
provided payment received in convertible foreign currency. Otherwise, tax will be payable by
the author. No RCM as recipient is located outside India.
34. IMP: CA. Ram received ` 2,05,200 (after TDS @10%) from client on 1st Nov 2019 for taxable
services rendered in the month of July 2019. Find the GST liability. Applicable rate of CGST
9% and SGST 9%.
Answer:
Payment received net of TDS u/s 194J = 2,05,200

Add: TDS u/s 194J (refer WN) = 19,000
Gross value of Bill (i.e. inclusive of GST) = 2,24,200
CGST (2,24,200 x 9/118) = 17,100
SGST (2,24,200 x 9/118) = 17,100
Working Note:
Assume taxable value of supply X
Add: CGST & SGST 0.18x
Value of Bill 1.18x
Less: TDS @10% on X (u/s Sec 194J of the Income Tax Act, 1961) -0.1X
Net Paid 1.08X
X (i.e. 2,05,200/1.08) [i.e. taxable value of supply) 1,90,000
TDS u/s 194J 10% on ` 1,90,000 19,000

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Inside

S. No. Particulars Page No.

GST IN INDIA – AN INTRODUCTION

Difference between Direct Taxes and Indirect Taxes

S. No. Direct Taxes Indirect Taxes

2 Income based taxes Supply based taxes

4 Entire revenue goes to Central Revenue source to Central Government

5 Previous year income assessed in the There is no previous year and

7 Progressive nature. Regressive nature.

FEATURES OF INDIRECT TAXES

NEED FOR GST IN INDIA

(1) Non-integration of VAT and Service Tax causes double taxation

(3) No CENVAT Credit after manufacturing stage to a dealer

(4) Cascading of taxes on account of levy of CST Inter-state purchases

(6) Double Taxation of a transaction as both goods and services

GST is a Cure for ills of existing Indirect Tax: 3 Marks

a. Central Excise Duty

b. Additional Duties of excise (Goods of Special Importance)

c. Additional Duties of excise (Textiles & Textile Product)

d. Excise Duty under Medicinal & Toilet Preparation Act

g. Central Sales Taxes

STATE LEVIES TO BE SUBSUMED

a. State Value Added Tax/Sales Taxes

d. Entry Tax (All Forms)

f. Tax on Lottery, Betting & Gambling

g. Entertainment tax (Except those levied by local bodies)

G. Manner of utilization of ITC

H. Seamless flow of credit

I. Compensation Cess 2 Marks

The functions of the GSTN include: 3 Marks

Easy tax compliance

Advantages for trade and industry

Benefits to small traders and entrepreneurs:

CGST – enacted by Central Government of India.

Article 269A: Levy and collection of GST on Inter-State Supply

Guiding principle of the GST Council:

Functions of the GST Council: 3 Marks

Even after the Introduction of GST

GST is not levied on sale/purchase of immovable property.

2. Explain the concept of ‘Dual GST’

Assume the rates of taxes to be as under:-

Solution: Computation of net GST payable by Govind

ITC of SGST @ 9% paid on intra-State receipt of goods and services 9,000

Net GST payable in cash 14,400

Particulars CGST @ 9% SGST @ 9%

Less: ITC on intra-State purchase of goods 900 900

Net GST payable Nil Nil

Input tax credit carried forward in Electronic

Statement showing Net tax liability of Mr. A and revenue to Government:

Tamil Nadu (exporting state) revenue = Nil (i.e. ` 900 - ` 900)

Total revenue to the Centre = ` 3,150

As per Rule 88A, IGST

Net revenue to the Telangana State = ` 2,700 (i.e. ` 2,250 + ` 450)

Total revenue to the Government = ` 5,400 (i.e. ` 30,000 x 18%)

Particulars Value in (`)

(2) Mr. M is liable to pay GST.

8. Discuss any two significant benefits of GST.

The significant benefits of GST are discussed hereunder:

Refer Page A.10 (Newly added Paragraphs)