ERRORLESS GST

BY CA PRANAV CHANDAK

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WHAT IS TAX [Not for Exams]

▪ A tax may be defined as a "pecuniary (monetary) burden laid upon individuals or property owners to
support the Government [Black's Law Dictionary]
▪ It is financial charge (fee) imposed by Government on income, commodity or activity.
▪ A tax "is not a voluntary payment or donation, but an enforced contribution.
▪ Thus, it can be said that Tax is “Compulsory Extortion of Money” by government.
▪ Taxes constitute basic source of revenue to the Government which are utilized for meeting expenses of
Government like defence, provision of education, health-care, facilities like roads, dams etc.
▪ They are levied & collected to fulfill the soci-economic objectives of the government.

DIFFERENCE B/W DIRECT TAX & INDIRECT TAX [Not for Exams]
Particulars Direct Tax Indirect Tax
Definition ▪ If tax is levied directly on income/wealth ▪ If tax is levied on price of a good or service,
of a person, it is a direct tax. it is an indirect tax.
Incidence & ▪ A tax is said to be direct when impact & ▪ A tax is said to be indirect when impact &
Impact incidence of tax are on same person. incidence of tax are on different person.
Levied on ▪ Income/wealth of the person. ▪ Price of Goods or Services
Burden ▪ There is No Shifting of burden. ▪ Burden is shifted to subsequent buyer.
▪ Directly borne by the taxpayer. ▪ Burden falls on final consumer.
Time of ▪ Collected on yearly basis. ▪ Collected at the time of sale/purchase of
Collection goods or rendering of services.
Examples ▪ Income tax, Tax on undisclosed foreign ▪ GST, Custom duty.
Income or Assets.

FEATURES OF INDIRECT TAX

Major Source of Revenue ▪ In India, IDT contribute > 50% of Total tax revenues of CG & SGs.

Tax on Commodities ▪ It is levied on commodities at the time of their manufacture/purchase or

sale or import/export & thus it is also called as commodity taxation.
[Goods & Services]
▪ It is also levied on provision of services.

Shifting of burden ▪ GST paid by the supplier of the goods is recovered from the buyer by
including the tax in the cost of the commodity.

No perception of direct ▪ Since the value of IDT is generally in-built in the prices of the commodity,
pinch most taxpayers pays them without knowing that they are paying tax to the
government.

Inflationary in nature ▪ IDT directly affects the prices of commodities & leads to inflationary trend.

Wider Tax base ▪ Majority of the products or services are subject to IDT with low threshold.

Promotes social welfare ▪ High taxes on harmful products (sin goods) [Ex: Tobacco & Alcohol products]

Regressive in nature ▪ Indirect taxes are not based on the principle of ability to pay.
▪ All consumers (Both Rich & Poor) have to pay same rate of indirect taxes.
▪ This may further increase income disparities b/w rich & poor.

Reduced Tax Evasion ▪ Since indirect taxes are already included in price of G&S

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HISTORY/GENESIS OF GST
2000 ▪ Atal Bihari Vajpayee (PM of India) mooted the concept of GST & set up a committee to
design GST model for India.

2003 ▪ CG formed a task force under Vijay Kelkar.

2004 ▪ Idea of fully integrated National GST was mooted by Kelkar Task Force based on VAT.
Taskforce was headed by Vijay L. Kelkar who was advisor to Finance Ministry.

Feb 2006 ▪ Union Finance Minister, Shri P. Chidambaram announced that GST would be
introduced from 1st April 2010 while presenting Central Budget (2006-07).

Mar 2011 ▪ The Constitution (115th Amendment) Bill, 2011 was introduced in Lok Sabha to give
concurrent taxing powers to Union & States. This Bill was subsequently lapsed.

Mar 2013 ▪ GSTN: A not for Profit, Non-Government, Private Ltd Company was incorporated
named Goods & Services Tax Network (GSTN) as Special Purpose Vehicle to provide
IT infrastructure & services for implementation of GST.

Dec 2014 ▪ The Constitution (122nd Amendment) Bill, 2014 seeking to amend Constitution to
introduce GST was introduced on 19th Dec 2014.

6 May 2015 ▪ The Constitution Amendment (122nd) Bill was passed by Lok Sabha on 6 May 2015.

3 Aug 2016 ▪ It was passed by Rajya Sabha on 3rd August 2016 (with some changes).

8 Aug 2016 ▪ Changes made were unanimously passed by Lok Sabha on 8th Aug 2016.

8 Sept 2016 ▪ After Bill was adopted by majority of the State Legislatures (by atleast 50% of the States),
final assent of President of India was given on 8th Sep, 2016; &
▪ The Constitution (122nd Amendment) Bill, 2014 became (101st Amendment) Act, 2016.

1 July 2017 ▪ GST law was made applicable in India from 1 July 2017.

8 July 2017 ▪ GST law was made applicable to J&K from 8 July 2017.

 Concept of GST was introduced first of all in France in 1954.

 India has adopted its GST model from Canada (DUAL GST Model).

CONCEPT/FEATURES OF GST IN INDIA

▪ Value Added Tax: levied on manufacture, sale & consumption of Goods & Services.

▪ Continuos Chain of Tax Credit: from original producer's/service provider's point upto
retailer's/consumer’s level. Only ‘value added’ at each stage of supply chain is taxed.

▪ Burden borne by Final Consumer: Final consumer bears the GST charged by the last supplier.

▪ No Cascading Effect: Since, only the value added at each stage is taxed under GST, there is no tax
on tax. Moreover, since there is only one tax, there cannot be cascasing effect.

▪ No Double (Multiple) Taxation: GST does not differentiate b/w goods & services & thus there cannot
be double taxation.

▪ Uniform Tax Structure all over India: One Nation, One Tax, One Market.

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NEED FOR GST IN INDIA [DEFICIENCIES IN EARLIER SYSTEM]

▪ Double Taxation of a transaction as both goods & services. [Ex: Hotel Business, Softwares.] (VAT + ST).
▪ Cascading of Taxes due to (i) Non-VATable CST & (ii) VAT charged on ‘Value + Excise Duty’.
▪ Set off of CENVAT & State VAT against the credit of one another was not possible as CENVAT was a
central levy & State-level VAT was a State levy.
▪ Several Local taxes in the states (Ex: Luxury tax, Entertainment tax) were not subsumed in State VAT.
▪ Non-integration of VAT & Service Tax: VAT on goods was not integrated with tax on services, at the
state level, to remove cascading effect on Service Tax.
▪ When goods were manufactured & sold, both Excise duty (CENVAT) & State-level VAT were levied.
▪ No CENVAT after manufacturing stage.

BENEFITS OF GST IN INDIA [One Nation, One Tax, One Market]

▪ Creation of Unified national market.
▪ Mitigation of cascading effect.

▪ Elimination of double (multiple) taxation → Removal of many Indirect taxes.

▪ Boost to ‘make in India’ initiative → Since Lower cost due to reduced taxes.

▪ Increase in government revenue → Since rates of GST are lower & thus more people will pay tax.
▪ It will boost export & manufacturing & thus generate more employment, leading to rise in GDP.

WHAT MAKES GST SO SPECIAL? → SEAMLESS FLOW OF CREDIT IN GST

▪ Since GST is destination based consumption tax, revenue of SGST ordinarily accrues to consuming States.
▪ Inter-State supplier in exporting State is allowed to set off the available credit of IGST, CGST &
SGST/UTGST (in that order) against the IGST payable on inter-State supply made by him.
▪ Buyer in importing State is allowed to avail the credit of IGST paid on inter-State purchases made by
him. Thus, unlike earlier scenario where the credit chain used to break in case of inter-State sales due
to non-VATable CST, under GST regime there is a seamless credit flow in case of inter-State supplies too.
▪ Revenue of inter-State sale does not accrue to the exporting State & 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.
Let us understand this whole process with the help of the example given below:

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A. INTRA-STATE SUPPLY: Supplier would charge dual GST [CGST + SGST] at specified rates
1. Supply of goods/services by A to B
Particulars Amount
Value charged for supply of goods/services Rs. 10,000
Add: CGST @ 9% + SGST @ 9% Rs. 900 + Rs. 900
Total price charged by A from B for local supply of goods/ services Rs. 11,800
CGST & SGST charged on B for supply of G/S will be remitted by A to appropriate account of CG & SG respectively.
A is the first stage supplier of goods/services and hence, does not have credit of CGST, SGST or IGST.
2. Supply of goods/services by B to C – Value addition @ 20%
B will avail credit of CGST & SGST paid by him on the purchase of goods/services from A & will utilise such credit
for being set off against CGST & SGST payable on the supply of goods/services made by him to C.
Particulars Amount
Value charged for supply of goods/ services (Rs. 10,000 x 120%) Rs. 12,000
Add: CGST @ 9% + SGST @ 9% Rs. 1080 + Rs. 1080
Total price charged by B from C for local supply of goods/ services Rs. 14160

Computation of CGST, SGST payable by B to Government

Particulars Amount
CGST payable Rs. 1080
Less: Credit of CGST Rs. 900
CGST payable to Central Government Rs. 180
SGST payable Rs. 1080
Less: Credit of SGST Rs. 900
SGST payable to State Government Rs. 180
Statement of revenue earned by CG & SG
Transaction Revenue to CG Revenue to SG
Supply of goods/services by A to B 900 900
Supply of goods/services by B to C 180 180
Total 1080 1080

B. INTER-STATE SUPPLY: Supplier would charge IGST at specified rates on the supply.
1. Supply of goods/services by X of State 1 to A of State 1
Particulars Amount
Value charged for supply of goods/services Rs. 10,000
Add: CGST @ 9% + SGST @ 9% Rs. 900 + Rs. 900
Total price charged by A from B for local supply of goods/ services Rs. 11,800
A is the first stage supplier of goods/services and hence, does not have credit of CGST, SGST or IGST.
2. Supply of goods/services by A of State 1 to b of State 2 – Value addition @ 20%
Particulars Amount
Value charged for supply of goods/ services (Rs. 10,000 x 120%) Rs. 12,000
Add: IGST @ 18% Rs. 2160
Total price charged by A from B for inter-state supply of goods/ services Rs. 14160
Computation of IGST payable to Government
Particulars Amount
IGST payable Rs. 2160
Less: Credit of CGST Rs. 900
Less: Credit of SGST Rs. 900
IGST payable to Central Government Rs. 360

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IGST charged on B of State 2 for supply of goods/services will be remitted by A of State 1 to the appropriate
account of CG. State 1 (Exporting State) will transfer SGST credit of Rs. 900 utilised in payment of IGST to CG.
3. Supply of goods/services by B of State 2 to C of State 2 – Value addition @ 20%
B will avail credit of IGST paid by him on the purchase of goods/services and will utilise such credit for being
set off against the CGST and SGST payable on the local supply of goods/services made by him to C.
Particulars Amount
Value charged for supply of goods/ services (Rs. 12,000 x 120%) Rs. 14,400
Add: CGST @ 9% Rs. 1,296
Add: SGST @ 9% Rs. 1,296
Total price charged by B from C for local supply of goods/services Rs. 16,992

Computation of CGST, SGST payable to Government

Particulars Amount
CGST payable Rs. 1,296
Less: Credit of IGST Rs. 1,296
CGST payable to Central Government Rs. Nil
SGST payable Rs. 1,296
Less: Credit of IGST (Rs. 2,160 – Rs. 1,296) Rs. 864
SGST payable to State Government Rs. 432
Note: CG will transfer IGST credit of Rs. 864 utilised in payment of SGST to State 2 (Importing State).
Statement of revenue earned by CG & SG
Transaction Revenue to CG Revenue to SG1 Revenue to SG 2
Supply of goods/services by X to A 900 900
Supply of goods/services by A to B 360
Transfer by State 1 to Centre 900 (900) 432
Supply of goods/services by B to C 864
Transfer by Centre to State 2 (864) 1,296
Total 1,296 Nil

TAXES TO BE SUBSUMED IN GST

Central Taxes State Taxes
Central Excise Duty State VAT (Sales Tax)
Central Sales Tax [levied by CG; collected by SG] Central Sales Tax [levied by CG; collected by SG]
Additional Duties of Excise (Goods of special Entry tax (all forms), Octroi or Local Body Tax.
importance)/(textile & textile products)
Excise Duty on Medicinal & Toilet Preparation Taxes on Lottery, Betting & Gambling
Additional duties of Customs (CVD) Purchase Tax & Luxury Tax
Special Additional duties of customs (SAD) Tax on advertisements
Service Tax Entertainment Tax (except those levied by local bodies)
Central Surcharge & Cess so far as they relate to State Surcharge & Cess so far as they relate to supply
supply of Goods & Service [Ex: KKC, SBC, EC] of Goods & Service

TAXES NOT TO BE SUBSUMED (i.e these Taxes will Continue to Apply)

Basics Customs Duty Excise Duty on Alcohol Electricity Duty
Stamp Duty & Property Tax Excise Duty on Petroleum Products

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ABOUT CONSTITUTION OF INDIA

About ‘Constitution of India’ [Not for Exams]
▪ India has a three-tier federal system comprising the Union Government, SGs & Local Government.
▪ Constitution of India is supreme law of India. All other laws made are subordinate to it.
▪ It consists of a Preamble, 25 parts containing 448 Articles & 12 Schedules.
▪ Power to levy & collect taxes emerges from Constitution of India.
▪ If any law is not in conformity with Constitution, it is called ultra vires & is illegal & void.
CONSTITUTIONAL PROVISIONS FOR TAXATION PURPOSE
Article Provision
265 ▪ It states that “no tax shall be levied or collected except by authority of law”.
245 ▪ It deals with relationship between Union & States.
1. Power to enact laws is conferred on Parliament & on State Legislature. It states that
Parliament may make laws for whole or any part of territory of India, & State
legislature may make laws for whole or any part of State.
2. No law made by Parliament shall be deemed to be invalid on ground that it would have
extra-territorial operation.
246 ▪ It gives the respective authority to Union & SG to levy tax.
▪ Seventh Schedule: It is classified into three lists:
List I [Union List] Matters on which Parliament (CG) has exclusive right to make laws.
List II [State List] Matters on which State legislatures has an exclusive right to make
laws.
List III Matters on which both Parliament & State have powers to make
[Concurrent List] laws.

246A(1) ▪ Concurrent power to levy GST has been given to Parliament & State.
246A(2) ▪ Exclusive power of Parliament (for Inter – State supply → IGST).

FRAMEWORK OF GST IN INDIA (Dual GST)

Dual GST ▪ India has adopted a Dual GST model as followed in Canada & Brazil.
▪ Centre & States simultaneously levy GST on taxable supply of G/&S which takes place
within a State/UT.
▪ Now, Centre has power to tax Intra-State Sales & States have power to tax services.

GST in ▪ GST in India comprises of:

India
Intra State Supply
CGST ▪ levied & collected by Central Government. CGST Act, 2017
SGST ▪ levied & collected by SGs or UTs with State SGST Act, 2017
Legislatures (Delhi, Pondicherry & Jammu Kashmir]
UTGST ▪ levied & collected by UTs without State Legislatures UTGST Act,
2017
Inter State Supply
IGST ▪ Levied & collected by CG on all inter-State supplies. ITGST Act,
▪ IGST will be apportioned b/w CG & SG in manner 2017
provided by Parliament as per recommendation of GST
Council. [Article 269A]
▪ PC Note: IGST = CGST + SGST/UTGST (approx).
PC Note: Import of G/&S into India will be deemed to be Inter-State supply of G/&S.

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GST Acts ▪ There are 35 GST Acts in India

Name of the Act No. of Act Tax
Central Goods & Services Tax Act, 2017 1 CGST
State Goods & Services Tax Act, 2017 31 SGST
Union Territory Goods & Services Tax Act, 2017 1 UTGST

Integrated Goods & Services Tax Act, 2017 1 IGST

The GST (Compensation to States) Act, 2017 1 GST Compensation Cess
▪ Though there are multiple SGST legislations, basic features of law (Ex: Chargeability,
Definition of taxable event & taxable person, classification & valuation of G&S, procedure
for collection & levy of tax etc). are uniform in all SGST legislations, (if feasible).
GST ▪ CGST & SGST would be levied at the rates to be jointly decided by CG & SG on
Rates recommendations of GST Council.
▪ Rates of IGST shall be decided by the Centre on the recommendations of the GST Council.
▪ Highest (Peak) rates of CGST & IGST have been provided in the law @ 20% and 40%.
▪ Tax rates have been fixed at 5%, 12%, 18% and 28%. Other rates are 0%, 0.25% & 3%.
Revenue Neutral Rate Basic Essential Demerit & Luxury Goods
Necessities Goods
18% 12% 5% 28% + Cess

PC Note: Union Territories in India are:

❖ UT with state legislature: Delhi, Puducherry, Jammu and Kashmir.
❖ UT without state legislature: Chandigarh, Dadra and Nagar Haveli and Daman & Diu, Lakshadweep,
Ladakh & Andaman & Nicobar.

WHAT IS GST?
▪ Goods & services tax means any tax on supply of G/&S except on alcoholic liquor for human consumption.
▪ Presently, GST is levied on all G/&S except alcoholic liquor for human consumption & Petroleum crude,
diesel, petrol, ATF and natural gas.
▪ GST will be levied on Petroleum Products (Petroleum crude, High Speed Diesel, Motor Spirit, Natural Gas
& Aviation Turbine Fuel) from Notified Date on recommendation of GST Council.
PC Note: Nothing is notified till now & thus NO GST will be levied on above products on date.
Till such Notified date, Central Excise Duty will continue to be levied on Manufacture/Production of
Petroleum Products & their Inter/Intra-State Sale is subject to CST/VAT respectively.
▪ Position of Some Specific Goods as on the date:
Goods Excise Duty VAT/CST GST
Alcoholic liquor for Human Consumption   ⌧
Petroleum crude, HSD, Motor Spirit, Natural Gas, ATF   ⌧
Tobacco & Tobacco Products  ⌧ 
Other Goods ⌧ ⌧ 
Note: Real estate sector has been kept out of GST. [No GST on sale/purchase of immovable property].

CLASSIFICATION OF GOODS AND SERVICES

▪ HSN (Harmonised System of Nomenclature) is used for classifying the goods under the GST.
▪ Chapters referred in Rate Schedules for goods are Chapters of First Schedule to Customs Tariff Act, 1975.
▪ A new Scheme of Classification of Services has been devised wherein the services of various descriptions
have been classified under various sections, headings & groups.
▪ Each group consists of various Service Codes (Tariff).

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GST COMPENSATION CESS

❖ GST (Compensation to States) Act, 2017 provides for a mechanism to compensate the States on account
of loss of revenue which may arise due to implementation of GST for a period of 5 years.
❖ It is levied by Central Government on Notified goods only on Intra/Inter state supply.
❖ It is levied on Specified Luxury items or Demerit Goods, like pan masala, tobacco, aerated waters, Coal,
Lignite, Motor Cars etc., computed on value of taxable supply.

GST Council: Article 279A

Constitution ▪ Article 279A empowers President to constitute a joint forum of Centre & States.
& ▪ The provisions relating to GST Council came into force on 12th September, 2016.
Enforcment
▪ The President constituted GST Council on 15th September, 2016.
▪ Chairman of GST Council → Union Finance Minister.
▪ Members of GST council → Union Minister of State in charge of Revenue/Finance,
Ministers in charge of Finance/Taxation or any other Minister nominated by each States
& UTs with SL.
Functions Make recommendations to Union & States on important issues like
(a) taxes, cesses & surcharges which may be subsumed in GST;
(b) Goods & Services that may be subjected to, or exempted from GST;
(c) Model GST Laws, Principles of levy, apportionment of GST & the principles that govern
the place of supply;
(d) Threshold limit of turnover below which G&S may be exempted from GST;
(e) Rates including floor rates with bands of GST;
PC Note: ◾ Tax rates; ◾ Exemptions; ◾ Threshold limits; ◾ Dispute resolution; ◾ GST legislations.
Decision ▪ Every decision of GST Council is taken by a majority of not less than ¾th of weighted
votes of members present & voting.
▪ Vote of Centre has a weightage of 1/3rd of total votes cast &
▪ Votes of all SGs together has a weightage of 2/3rd of total votes cast, in that meeting.
Article ▪ Special Category States → Assam, AP, J&K, Manipur, Meghalaya, Mizoram [MMM],
279A(4)(f) Nagaland, Sikkim, Tripura, Himachal Pradesh (HP), Uttrakhand (UK).
Article ▪ GST council shall recommend the date on which GST shall be levied on Petroleum
279A(4)(g) crude, High speed diesel, Motor spirit, Natural gas & Aviation Turbine Fuel.

GST COMMON PORTAL & GSTN

GST Common ▪ Common GST Electronic Portal (www.gst.gov.in) a website managed by Goods &
Portal Services Network has been set by the Government to establish uniform interface
for taxpayer; common & shared IT infrastructure b/w the Centre & States.
▪ This portal is one single common portal for all GST related services.
▪ It acts as a clearing house to verify claims & informs the respective governments
to transfer funds.
▪ A common GST system provides linkage to all State/ UT Commercial Tax
Departments, Central Tax authorities, Taxpayers, Banks & other stakeholders.
▪ The eco-system consists of all stakeholders starting from taxpayer to tax
professional to tax officials to GST portal to Banks to accounting authorities.

Accessibility of ▪ It is accessible over Internet by taxpayers & their CAs/Tax Advocates & over
Portal Intranet by Tax Officials etc.

Front end services GSTN provides 3 front end services (i) Registration (ii) Payment; (iii) Return.

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GOODS & SERVICE TAX NETWORK

What is GSTN ▪ GSTN is a non-Government, private limited company formed u/s 8 of Companies
Act, 2013, (not for profit companies).
▪ It is backbone of technology used for GST.

Functions of ▪ Facilitating registration; [Filing of application]

GSTN [IMP] ▪ Forwarding returns to CG & SG authorities; [Filing of Return]
▪ Computation & Settlement of IGST payment [Like a Clearing House]
▪ Matching of tax payment details with banking network;
▪ Providing various MIS reports to CG & SG based on taxpayer return information;
▪ Creation of Challan for tax payment
▪ Providing analysis of taxpayers' profile; & running matching engine for matching,
reversal & reclaim of input tax credit.
Note: All statutory functions like approval of registration, assessment, audit, appeal,
enforcement etc. will remain with respective tax departments.

GST SUVIDHA PROVIDERS/ASPs

▪ GSTN has selected certain IT, ITeS & financial technology companies, to be called GST Suvidha
Providers (GSPs).
▪ GSPs develop applications to be used by taxpayers for interacting with GSTN.
▪ They facilitate the taxpayers in uploading invoices as well as filing of returns and act as a single stop
shop for GST related services.
▪ They customize products that address the needs of different segment of users.
▪ GSPs may take the help of Application Service Providers (ASPs) who act as a link b/w taxpayers & GSPs.

QUESTION BANK
Q1. List the Central and State levies which will be subsumed in GST in India.

Q2. What are the taxes not to be subsumed in GST?

Q3. What is GSTN and its role in the GST regime? Discuss functions of GSTN.

Q4. Explain Dual GST Model & Composition of GST in India.

Q5. How many number of Acts (Legislations) are there in India?

Q6. Write a short note on “GST Compensation Cess.

Q7. Which are the commodities proposed to be kept outside the purview of GST?

Q8. Write a short note on “Constitution of GST Council & its functions.

Q9. What are the Front end services provided by GSTN?

Q10. Write a short note on “GST Suvidha Providers & ASPs”.

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Goods [Sec 2(52) of CGST Act]

▪ means every kind of ‘Movable Property’ other than ‘Money & Securities’
▪ includes ‘Actionable Claim’, growing crops, grass & things attached to or forming part of the land
which are agreed to be severed before supply or under contract of supply.
Services [Sec 2(102) of CGST Act]
▪ means anything other than goods, money & securities;
▪ but includes
1. Activities relating to use of money or Conversion of Money by cash or by any other mode,
2. Conversion of Money from one form/currency to another form/currency/denomination.
for which a separate consideration is charged.
Explanation: ‘Services’ includes facilitating or arranging transactions in securities.
Actionable claim [Section 2(1) of CGST Act r/w Section 3 of TOPA, 1882]
▪ means a claim to any debt;
▪ other than a secured debt by mortgage of immovable property or hypothecation or pledge pf movable
property; or to any beneficial interest in movable property not in (actual/constructive) possession of
claimant, which civil courts recognise as affording grounds for relief (whether such debt/beneficial
interest be existent/accruing/conditional/contingent).
Ex: Lottery, Gambling, Betting, Debentures, BOE, PN, Bank guarantee, FDR, Arrears of Rent, etc.
Money [Section 2(75) of CGST Act]

▪ means Indian legal tender or any foreign currency, Cheque, PN, BOE, draft, pay/money order, letter
of credit, traveller cheque, postal/electronic remittance or other recognised instrument etc.
▪ 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.
PC Note: Money & Securities → Neither Goods nor services.

Consideration [Sec 2(31) of CGST Act]

▪ includes any payment made or to be made (in money or otherwise) for supply of G/&S;
▪ ‘monetary value of any act or forbearance’ for supply of G/&S; whether by recipient or by any
other person (3 rd Party)
▪ but shall not include any subsidy given by CG/SG;
Note: Deposit given for supply of G/&S shall not be considered as payment made for such supply unless
supplier applies such deposit as consideration for said supply. Thus, Deposit will be considered as
payment made for supply → only if supplier applies such deposit as consideration for said supply.
[Refundable deposit is not subject to GST].
Circular: Work of Art given by artists to art galleries for exhibition is not supply since no consideration flows
from gallery to the artist. However, when a buyer selects a particular art work displayed at the gallery, then
actual supply takes place & applicable GST would be payable at the time of such supply.

Taxable supply [Sec 2(108)] Supply of G/&S which is leviable to tax under this Act.

Taxable territory [Sec 2(109)] Territory to which the provisions of this Act apply.

Supplier [Sec 2(105)] Person supplying G/&S & include agent of such supplier.

Family Spouse & children of the person & dependent parents, grand-
parents, brothers & sisters.

Principal [Section 2(88)] means a person on whose behalf an agent carries on the
business of supply or receipt of G/&S.

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Business [Sec 2(17)] Business includes: ↓

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar
activity (whether or not it is for a pecuniary benefit);
(b) any activity or transaction in connection with or incidental or ancillary to (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 & services in connection with commencement
or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members;
(f) admission of persons to any premises for a consideration;
(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.
(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.
Recipient [Sec 2(93)]
Cases Recipient
If Consideration is payable for supply of G/&S Person liable to pay the consideration
If No Consideration is payable for supply of Goods Person to whom goods are delivered or made
available or to whom possession or use of
goods is given or made available,
If No Consideration is payable for supply of Services Person to whom service is rendered
TAXABLE PERSON
❖ Meaning: Person who is registered or liable to be registered u/s 22 or 24.
▪ Thus, even an unregistered person who is liable to be registered is a taxable person.
▪ A person who is not liable to be registered, but has taken voluntary registration & got himself
registered is also a taxable person.
▪ Supply b/w two non-taxable persons does not constitute taxable supply.
▪ It is not necessary that supply should be made to another person. [Supplies made to self are also
taxable].

TAXABLE EVENT UNDER GST [It determines the point at which tax would be levied]
❖ A taxable event is any transaction or occurrence that results in a tax consequence.
❖ Taxable event under GST is “Supply of Goods or Services”. [No supply → No GST]
CONCEPT OF SUPPLY [Section 7]
❖ Definition of ‘supply’ is an inclusive definition & does not define term exhaustively.
❖ Clause (a) of Section 7(1) illustrates the forms of supply, but the list is not exhaustive.
❖ Meaning & Scope of supply can be understood in terms of following parameters:
▪ Supply of Goods or Services. [Note: Supply of anything other than G&S does not attract GST].
▪ Supply should be made for a consideration. [Some Exceptions are there]
▪ Supply should be made in the course/furtherance of business [Some Exceptions are there]
▪ Supply should be made by a taxable person. [Recipient can be a non-taxable person]
▪ Supply should be a taxable supply.
▪ Supply should be made within taxable territory.

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DEFINITION OF SUPPLY [Sec 7(1)(a)]

❖ Supply includes all forms of supply of Goods or Services such as
✓ Sale (transfer of property in goods for consideration), transfer,
✓ Barter (Goods with goods), exchange (Goods with partly goods & partly in money),
✓ License, Rental, Lease (with or without transfer of right to use) [Refer Schedule-II]
✓ Disposal [Sale, Pledge, giving away, use, consumption or any other disposition of a thing]
made or agreed to be made for consideration in the course or furtherance of business.

❖ Meaning of ‘in course or furtherance of business”

✓ GST is a tax on only commercial transactions.
✓ Thus, supply by individual in his personal capacity → No GST unless it falls in business.

Ex: Rishabh buys a car for his personal use & after a year sells it to a car dealer. Sale of car by Rishabh to car
dealer is not a supply under GST because supply is not made by Rishabh in the course or furtherance of business.
Ex: Manikarnika sold her old gold bangles & earrings to ‘Kalyan Jewellers’. Sale of old gold jewellery by individual
to a jeweller will not constitute supply as the same cannot be said to be in the course of business of the individual.
Ex: Sundaram Acharya, a famous actor, paints some paintings & 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.
Ex: 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’.
Q1. Discuss whether GST is applicable in the following transactions:
(a) Mr. PC deposits Rs. 1 lac in cash in his savings A/c with HDFC Bank, Pune.
(b) Transfer of derivatives by Mr. Raj for Rs. 4,10,000. Mr. Raj is a dealer in shares & security.
(c) Mr. Raju gives his vacant plot of land situated in a residential colony in Pune to ABC Ltd. (monthly rent being
Rs. 4,10,000). ABC Ltd. is a car distributor & plot of land is used by it for parking unsold cars.
(d) Mr. Rahul owns a vacant land in a village. It is given rent to Miss. Shrutika (monthly rent being Rs. 6,40,000).
She uses the land for agricultural activities. Annual income from this activity is more than Rs. 80 lacs.
Answer:
(a) Cash deposit in bank: It is a transaction in money. GST is not applicable on making a bank deposit.
(b) Transfer of derivatives - Derivatives are securities. GST is not applicable on transfer of securities.
(c) Renting of vacant land: Renting of residential plot for commercial use is chargeable to GST.
PC Note: Renting of residential dwelling units for use as residence is exempt from GST.
(d) Renting of agricultural land - Renting of agriculture land for agricultural activities is not chargeable to GST.

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IMPORT OF SERVICES FOR CONSIDERATION [Sec 7(1)(b)]

▪ Importation of services for a consideration whether or not in the course or furtherance of business shall
be treated as a supply.
▪ This is the only exception to the condition of supply being made in course or furtherance of business.
Ex: 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. Import of services by Ramaiyaa is supply u/s 7(1)(b) though it is
not in course or furtherance of business.

Q2. Mrs. Pragati received legal advice for personal problems & paid 1,000 pound as a legal fees to Miss. Unnati of
US. Explain whether the above activity of import of service would amount to supply u/s 7?
(a) Will your answer change if both of them are real sisters & no consideration is paid?
(b) What will be your answer if both of them are real sisters & Mrs. Pragati receives legal advice for her business
& she did not pay any consideration? [May 2018]
Ans: As per Section 7(1)(b), the term 'supply' includes import of services for a consideration whether or not in
the course or furtherance of business. Thus, legal advice received by Ms. Pragati for her personal services for a
consideration will be covered under the ambit of supply.
(a) In case Pragati & Unnati are real sisters & no consideration is paid: As per Section 7(1)(c) r/w Schedule I,
import of services by any person from a related person or from any of his other establishments outside India,
in the course or furtherance of business will be treated as supply.
In this case, though Pragati & Unnati are related person, legal service received will not be covered under the
ambit of supply, since the said services are not received by her in course or furtherance of business.
(b) In this case, Mrs. Pragati receives legal advice from her sister for her business without consideration, since it
is in course or furtherance of business, it will be covered under supply as per Section 7(1)(c) r/w Schedule I.

SUPPLY WITHOUT CONSIDERATION [Sec 7(1)(c) + Schedule I]

1 Para 1: Permanent Transfer/Disposal of Business Assets on which ITC is availed.
✓ This clause covers transfer of business assets from HC to SC for nil consideration.

PC Note: Permanent transfer/disposal of following business assets will not be deemed as supply:
(i) Business assets on which ITC is blocked/not available under GST
(ii) Business assets though eligible for ITC, but ITC has not been availed by such RP.

Ex: Dhruv gives old laptops being used in his business to his friend free of cost. This will qualify as supply
provided input tax credit has been availed by Dhruv on such laptops.
Ex: A dealer of AC permanently transfers the motor vehicle free of cost. ITC on said motor vehicle is
blocked. This transaction will not constitute a supply as ITC has been blocked on Cars.

CQ3. State whether the following transactions qualify as supply?

(a) XYZ & Co. a manufacturer of goods donated old computers to Charitable Schools on account of
renovation of office. Tire company has taken ITC on the computers so donated.
(b) Mr. Rahim purchased a car for Business use & after 2 years, he transferred he car for personal use at
home. Will the transaction be treated as supply? ITC has not been availed by Mr. Rahim.
(c) M/s T Ltd., is in the business of Hotel. He purchased AC for business purpose & after 2 years, he
transfers AC to director without consideration. ITC has been availed on AC machines.
Ans:
(a) Yes. As per Section 7(1)(c) r/w Schedule I, Permanent transfer or disposal of business assets where
ITC has been availed shall be treated as supply even if made without consideration. Hence, donation
of old computers to charitable schools shall qualify as supply since ITC has been availed by XYZ & Co.
(b) Since ITC has not been availed on such car at the time of its acquisition & it is not treated as supply.
(c) Yes, it shall be a deemed supply (as per Para 1 of Sec 7(1)(c) r/w Schedule I).

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2 Para 2: Supply b/w Related or Distinct Persons (if made in course or furtherance of business)
❖ Supply of Goods or Services b/w ‘Related persons’ or b/w ‘distinct persons’ as specified in section
25, will qualify as supply if it is made in the course/furtherance of business.

❖ Related Person [Explanation to sec 15]

Persons are deemed to be related persons in the following cases:
▪ Such persons are officers/directors of one another’s business.
▪ Such persons are legally recognised partners.
▪ Such persons are Employer & Employee [Discussed Later in Detail]
▪ 3rd person controls/holds (directly/indirectly) ≥ 25% voting shares of both of them
▪ One person controls (directly/indirectly) the other person.
▪ 3rd person controls (directly/indirectly) both of them.
▪ Such person together control (directly/indirectly) a 3rd person.
▪ Such persons are members of the same family.
▪ One of them is the sole agent/sole distributor/sole concessionaire of other.
Ex: Ms. Priya holds 30% shares of ABC Ltd. & 35% shares of XYZ Ltd. ABC Ltd. & XYZ Ltd. are related.
❖ Distinct Person [Section 25]
▪ A person who has obtained/is required to obtain more than one registration, whether in one
State/UT or more than one State/UT shall be treated as distinct persons, i.r.o each such
registration.
Ex: Mohan (CA), has a registered head office in Delhi. He has also obtained registration in West Bengal
i.r.o his newly opened branch office. Mohan shall be treated as distinct persons i.r.o registrations in
West Bengal & Delhi. Supply b/w Delhi office & West Bengal office, in course or furtherance of business
even without consideration will qualify as supply.
▪ Further, where a person who has obtained or is required to obtain registration in a State/UT
i.r.o an establishment, has an establishment in another State/UT, then such establishments
shall be treated as establishments of distinct persons.
Ex: X Enterprises, a registered supplier, owns AC restaurant in Maharashtra. It has opened a liquor
shop in Uttarakhand for trading of alcoholic liquor for human consumption. Since supply of alcoholic
liquor for human consumption in Uttarakhand is a non-taxable supply, Rishabh Enterprises is not
required to obtain registration w.r.t the same in Uttarakhand. In this case, AC restaurant in
Maharashtra & liquor shop in Raipur [though unregistered] shall be treated as establishments of
distinct persons. Supply by Maharashtra office to Uttarakhand office, in course or furtherance of
business even without consideration will qualify as supply.

❖ Stock transfers or Branch transfers (with different GST registration) = Supply

▪ Transactions b/w different locations (with separate GST registrations) of same legal entity.
Ex: Stock transfers or branch transfers) will qualify as ‘supply’ under GST as these are transactions
b/w distinct persons.
▪ Transfer b/w 2 units of a legal entity under single registration (apparently within same State)
will not be considered as supply.

❖ Supply of goods or services b/w an Employer & Employee

▪ Employer & employee are related persons as given in the definition of related person.
▪ However, Services provided by employee to employer in the course of employment are not
treated as supply of services [Specifically given in Schedule III of CGST Act]
▪ Gifts by an employer to an employee ≤ Rs. 50,000 in value in FY shall not be treated as supply
of G/&S. Thus Gifts > Rs. 50,000 → GST .
▪ Perquisites given by employer to employee: If perquisites (services) are given in the course
of Employment or provided in terms of the contract b/w the employer & employee & is part &
parcel of the cost-to company, it will not be subjected to GST.

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3 Para 3: Supply of Goods by Principal to his Agent or Vice Versa

✓ 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 agent
undertakes to receive such goods on behalf of principal) is considered as supply.
PC Note: Only supply of goods is covered in Para 3. Thus, Supply of services from Principal to
his Agent & vice versa would be treated as supply if there is a consideration.

Determining factor → Whether a particular P-A relation falls within scope of Para 3 depends on
“whether invoice for further supply of goods on behalf of principal is being issued by the agent or
not”. [whether or not the agent has the authority to pass or receive the title of the goods on behalf
of the principal].
Invoice for further supply is issued by Provision of goods from principal to agent
Agent to customer in his own name would fall within scope of Para 3 & thus would be
treated as supply.
Agent to customer in name of principal would not fall within scope of Para 3 & thus would
not be treated as supply.

Ex: A appoints B to procure certain goods from market. B identifies various suppliers who can provide
goods as desired by A & asks the supplier (Golu) to send the goods & issue invoice directly to A. Here, B
is only acting as the procurement agent, & has in no way involved himself in supply or receipt of goods.
Hence B is not an agent of A in terms of Para 3.

Ex: A C&F agent or commission agent takes possession of the goods from the principal & 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.

Ex: M/s Tintin, a banking company, appoints Mandaar (auctioneer) to auction certain goods. The
auctioneer arranges for the auction & identifies the potential bidders. The highest bid is accepted & the
goods are sold to the highest bidder by M/s Tintin. The invoice for the supply of the goods is issued by
M/s Tintin 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, Mandaar is not an agent of
M/s Tintin for the supply of goods in terms of Para 3. of Schedule I.

Ex: Gautam, an artist, appoints Gambhir (auctioneer) to auction his painting. Gambhir arranges for the
auction & identifies potential bidders. The highest bid is accepted & painting is sold to the highest bidder.
Invoice for the supply of the painting is issued by Gambhir on the behalf of Gautam but in his own name
& painting is delivered to the successful bidder.
In this scenario, Gambhir is not merely providing auctioneering services, but is also supplying the
painting on behalf of Gautam to the bidder, & has the authority to transfer the title of the painting on
behalf of Gautam. This scenario is covered under Para 3. of Schedule I.

CQ4. Mr A sells agricultural produce by using services of Mr B who is a commission agent as per
‘Agricultural Produce Marketing Committee Act’ of the State. Mr B identifies the buyers & sells the
agricultural produce on behalf of Mr. A for which he charges commission from Mr. A. Whether Mr. B is
an agent under Para 3?
Answer: As per APMC Act, commission agent is a person who buys or sells agricultural produce on behalf
of his principal, or facilitates buying & selling of agricultural produce on behalf of his principal & receives,
by way of remuneration, a commission or percentage upon the amount involved in such transaction.
If 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, commission agent (Mr. B)
doesn't fall under the category of agent covered under Para 3.

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CLARIFICATION: Scope of ‘Principal & Agent relationship’ in context of del-credere agent

▪ Meaning of Del-credere Agene (DCA): DCA is an agent who guarantees payment to principal
supplier. In order to guarantee timely payment to supplier, DCA can resort to various methods
including extending short-term transaction-based loans to buyer or paying supplier himself &
recovering amount from buyer with some interest at a later date. This loan is to be repaid by
buyer along with interest to DCA @ mutually agreed rate b/w DCA & buyer.

▪ Whether ‘DCA’ falls under the ambit of ‘Agent’ under Para 3 of Schedule I?

Invoice for supply of goods is issued by Position of DCA

Supplier to customer (either himself or DCA does not fall under ambit of agent & thus
through DCA) would not be treated as supply.

DCA to customer in his own name DCA would fall under ambit of agent thus would
be treated as supply.

▪ Whether Temporary short-term transaction-based loan extended by DCA to buyer, for which
interest is charged by DCA, is to be included in value of goods supplied by supplier (principal)?
Particulars Case 1: DCA is not an agent Case 2: DCA is an agent
Invoice issued by Supplier to buyer DCA to buyer (in his own name)
Transactions 1. Supply of goods from supplier 1. Supply of goods by supplier
involved (principal) to buyer; (principal) to DCA.
2. Supply of agency services from 2. Supply of goods by DCA to
DCA to supplier or both; buyer
3. Supply of extension of loan 3. Supply of agency services by
services by DCA to buyer. DCA to supplier or buyer or
both
4. Loan services by DCA to buyer
Clarification ▪ Short-term Loan provided by DCA ▪ Activity of extension of credit by
to buyer is a supply of service by DCA to buyer would not be
DCA to buyer on principal-to- considered as separate supply
principal basis & is an as it is in context of supply of
independent supply. goods made by DCA to buyer.
▪ Therefore, interest charged by ▪ Value of Interest for such credit
DCA would not form part of the would be included in value of
value of supply of goods supplied supply of goods by DCA to
(to the buyer) by the supplier. buyer.

4 Para 4: Importation of Services

▪ Import of services by (a taxable) ANY Person without consideration
▪ from a related person or from his establishments located outside India,
▪ in course or furtherance of business shall be treated as “supply”.
Ex: J Associates received legal consultancy services from its head office located in Malaysia. Head office
has rendered such services free of cost to its branch office. Since J Associates & head office are related
persons, services received by J Associates will qualify as supply even though no consideration was there.

Analysis of Import of Services

Section Nature of Service Consideration Business Test
Sec 7(1)(b) Import of Services Required Not required
Para 4 of Schedule Import of Services by any person from related Not Required. Required.
I of Sec 7(1)(c) Person or from any of his other Establishments
o/s India (distinct Person)

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→
▪ Free Samples 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).
▪ Input Tax Credit: ITC shall not be available to supplier on inputs, input services & capital goods to
extent they are used in relation to gifts or free samples distributed without any consideration. If activity
of distribution of gifts or free samples falls within scope of ‘supply’, on account of provisions contained
in Schedule I of said Act, supplier would be eligible to avail ITC.

▪ It may appear that in case of offers like ‘Buy One, Get One Free’, one item is being supplied free of cost.
▪ But it is a case of two or more individual supplies where a single price is being charged for entire supply.
▪ It can at best be treated as supplying two goods for price of one.
▪ Taxability of such supply will be dependent upon as to whether supply is a composite supply or a
mixed supply & rate of tax shall be determined u/s 8 of CGST Act.

CQ5. State whether the following activities constitutes supply.

(a) ABC Motors Ltd. engages Sunshine Cars Ltd, as an agent to sell cars on its behalf. For the purpose, ABC Motors Ltd.
has supplied 200 cars to the showroom of Sunshine Cars Ltd. located in Rajasthan.
(b) Hitkari Charitable Trust, a trust engaged in providing medical relief free of cost, donates books & stationery to
children living in slum area.
Answer:
(a) As per Section 7(1)(c) r/w Schedule I of CGST Act, 2017, Supply of goods by a principal to his agent where the
agent undertakes to supply such goods on behalf of the principal shall be treated as supply even if made without
consideration. In view of the same supply of cars by ABC Motors Ltd. to Sunshine Cars Ltd. will qualify as supply.
(b) Section 7 of the CGST Act provides that supply must be made for a consideration except the activities specified in
Schedule I & in course or furtherance of business. Since, both these elements are missing, donation of books &
stationery to children living in slum area would not amount to supply u/s 7 of the CGST Act.

CQ6. X is a well-known singer. Cine Society of Chennai gives him a life-time achievement award on January 1, 2019.
The award consists of a memento & a cheque of Rs. 25,00,000. Find out GST liability of X.
Ans: An award received in consideration for contribution over a life time or even a singular achievement carried out
independently or without reciprocity to the amount to be received will not comprise an activity for consideration.
Since it is not an activity for consideration, it is not "supply of service" & not chargeable to GST.

CQ7. Mr. B, a famous actor, recorded a song for a music company & sold the audio CD. Consideration for such sale was
to be donated to a Charitable Trust. Whether sale of CD to music company by the actor qualify as supply?
Ans: 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. Hence, sale of CD to music company by the
actor will qualify as supply.

Ex: Z Ltd. is a manufacturing company. Managing director of the company is Z. One of the cars (owned by the company)
is given to a (a friend of Z) for personal use. The car is used by A for a private journey b/w Mumbai & Pune. No
consideration is charged from A. As business asset is used by Z Ltd. for non-business purposes, it is supply of services.

CQ8. X is in the business of selling computer hardware in New Mumbai. He closes his business on November 25, 2018.
Immediately after November 25, 2018, he ceases to be a taxable person under GST. At the time of closer, the business
has the following stock-in-trade:
1. 20 unsold Dell computers (model: Optiplex 9099).
2. 84 unsold LG computer monitors (model: 7020 TP 30).
3. 38 unsold HP printers (model: 4250).
Value of above closing stock is Rs. 16,90,000. On the closure of business on November 25,2018, it would be deemed
that these goods have been supplied by X in the course of business.
However, this rule is not applicable if the business is transferred as a going concern to another person or business was
carried on by X as a personal representative of another person.

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Activiy/Transaction Type Supply of ↓

1 Transfer Any Transfer of Title in goods (Sale) Goods

Right to use goods without transfer of title in goods (Renting) Services

Any transfer of title in goods under an agreement which Goods

stipulates that property shall pass at future date upon payment
of full consideration as agreed. (Sale or return basis/HP basis)

2 Land & Building Lease, tenancy, easement, licence to occupy Land Services

Lease/letting out of building including a commercial, Services

industrial, residential complex (wholly/partly) for business

3 Treatment/Process Applied to another person’s goods (Job Work) Services

4 Transfer of Permanent Transfer of Business Asset [with or without Goods
Business Assets consideration]

Temporary Transfer of Business Asset (for private use/other Services

than business use) [with or without consideration]

Business Asset transferred by a person who ceases to be taxable Goods

person shall be deemed to be supplied by him, in the
course/furtherance of his business, immediately before he
ceases to be a taxable person.
Ex: Arun, a trader, is winding up his business. Any goods left in stock
shall be deemed to be supplied by him.
Exception:
(i) Business is transferred as going concern [It is Exempt]
(ii) Business carried on by personal representative.
5 (a) Renting of Immovable Property
▪ Renting of a commercial complex
▪ Renting of precincts of a religious place.
▪ Renting of property to an educational institution.
▪ Permitting use of immovable property for placing vending/dispensing machines.

(b) Construction of Complex, Building, Civil structure Except where entire

consideration has been received after issuance of completion certificate or after its Services
first occupation, whichever is earlier.
Ex: Mr PC, a promoter, sells a flat in his new building to Mr. A. Date of completion certificate
is 1.1.2019. Part of consideration is received on 31.12.2018 by Mr. PC. It will be treated as
supply. If entire consideration is received after 1.1.2019, then it would not qualify as supply.
Ex: KP Builders has constructed individual residential units for Rs. 1.2 crore per unit. Rs. 90
lacs per unit were received before issuance of completion certificate by the competent
authority & balance after completion.
PC Note: ‘Construction’ includes addition, alteration, replacement or remodeling etc.
(c) Temporary transfer or permitting use or enjoyment of any Intellectual Property
Right (IPR). [Ex: Temporary transfer of Patent]
(d) Development, designing, programming, customisation, adaptation, upgradation,
enhancement, implementation of IT software.

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(e) Agreeing to obligation to refrain from an act, or to tolerate an act or situation, or

to do an act.
Ex: Non-compete agreement. By virtue of a non-compete agreement, one party agrees, for
consideration, not to compete with the other in any specified products, services,
geographical location or in any other manner. Such action on the part of one person is
deemed supply of service & subject to GST.
Ex: Late delivery charges recovered from supplier for non-fulfillment of contract within
stipulated time.
Ex: Notice pay recovered from employee for leaving the job before agreed period of notice
for leaving a job.
(f) Transfer of right to use any goods for any purpose.

Ex: M/s Dev Ltd. agreed to sell its business to M/s RN Ltd., for a consideration of Rs. 50,00,000. M/s Dev Ltd. further
agrees that it will not conduct same or similar business for a period of 10 years, for which M/s RN Ltd., paid Rs.
20,00,000. Hence, M/s Dev Ltd., consideration is Rs. 70,00,000.
6 Following Composite Supplies: (a) Works Contract (b) Restaurant & Catering Services
7 Supply of Goods by Unincorporated AOP/BOI to a Member for Cash, deferred Goods
Payment or other valuable consideration.

Ex: Resident Welfare Association (RWA) of a Society supplies AC to its members at a concessional price.

Examples:
1. Mr. A is the owner of Xerox machine. He transferred the right to operate the Xerox machine to Mr. B for a
consideration of Rs. 10,000 per month for four months. Hence, ownership of the machine is not transferred
but the right in the machine is transferred. It is supply of service leviable to GST.
2. Mr. X is a dealer of new cars. He sells new cars for Rs. 8,25,000 agrees to reduce Rs. 1,25,000 on surrendering
of old car. Mr. Y who intends to buy new car worth Rs. 8,25,000 agreed to exchange his old car with new car.
It will be treated as Mr. Y has made supply of old car to dealer Mr. X & Mr. X has made supply of new car to Mr.
Y. If Mr. Y is registered person, he will be liable to pay GST on Rs. 1,25,000. Mr. X will be liable to pay GST on
Rs. 8,25,000 whether Mr. Y is a registered person or not.
3. Mr. X, a developer of information technology software & holder of licence thereon. License to use was given to
different clients: Rs. 18 lacs. Mr. X is liable to pay GST whether he transfer such right permanently/
temporarily.
4. A Chennai based company has been awarded mineral exploration contract for 18 months i.r.o specific sites in
Mumbai by a Mumbai based corporation (i.e. local authority). As a result, Chennai based company got licence
to extract mineral exploration for a period of 18 months. Mumbai based company supplied taxable services.
GST is liable to pay by Chennai based company on licence fee paid to supplier under RCM basis.

5. Mr. A owns a residential building in a prime commercial locality. Large vacant land in the backyard is given on
rent of Rs. 1,80,000 per month to a parking contractor, Mr. B who has set up a parking facility on the said land.
It is a taxable supply of service & hence, Mr. A is liable to pay GST.

6. Mr. X, the owner of a residential building in a commercial locality, Ground Floor is given on rent to Mr. Y for a
monthly rent of Rs. 60,000. Mr. Y uses the same as his residence. It is a supply of service. However, specifically
exempted from GST. Hence, Mr. X is not liable to pay GST.

7. M/s M Bank Ltd., given an asset under financial lease to M/s N Ltd. Repayment of financial lease made by the
customer to the bank Rs. 80 lakhs which includes a principal amount of Rs. 50 lakhs. Financial leases shall be
taxed as supply of services. M/s M Bank Ltd., is liable to pay GST.
8. X Ltd, is a publishing house. It gives printed sheets of a book to Y who owns a binding unit. Y will perform book
binding work as per direction of X for Rs. 50 per book. Process undertaken by Y is supply of services. This rule
will remain same regardless of the fact whether binding material is supplied by X Ltd. or purchased by Y from
outside.

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1 Services provided by Employee to Employer in course of or in relation to his employment.

▪ Service provided by Casual Workers (daily basis) who are employed by employer → treated as
services provided by worker in course of employment & thus NO GST.
▪ 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 course of employment & thus NO GST.
▪ Compensation for Premature Termination → treated as amounts paid in relation to services
provided by employee to employer in course of employment & thus NO GST.
▪ Non-Compete Fees: Any amount paid for not joining a competing business → Not in course of
employment & this liable to GST being paid for providing service of forbearance to act.
PC Note: Services provided on contract basis (principal to principal) are not services provided in the
course of employment & thus GST will be levied.
Ex: If employee provides his services on contract basis to associate company of employer, then these are not
services in course of employment & thus, it would be treated as supply.
CQ9. Mr. X is marketing head of Y Ltd., a car manufacturing company. As per employment contract, salary of X
is Rs. 3,50,000 per month. Besides, he gets commission, bonus & allowances. On October 19,2017, Y Ltd.
transfers a new car to X as Diwali gift (this gift is not covered by the employment agreement). Taxable value of
the gift as per section 15 is Rs. 19,90,000. Besides, Y Ltd. provides tea, coffee, light snacks during tea break to
all of its employees in office premises. Annual expenditure on this account is Rs. 4,10,000. State whether GST is
applicable?
Answer:
(a) Any amount paid by employer to the employee as per the terms of employment agreement is covered in
Negative list & thus no GST shall be payable on such amount. Thus Salary & commission, bonus &
allowances paid by Y Ltd. to Mr. X is not liable to GST.
(b) Supply of Car is not covered by employment agreement. Thus, Car transferred by Y Ltd. to X without
consideration is liable to GST (X & Y Ltd. are related persons - employer & employee) since VoS > Rs. 50,000.
(c) Provision of tea, coffee, light snacks is not subject to GST (since it is usual to be given during employment).

2 Services by any Court or Tribunal established under any law for the time being in force.
3 (a) Functions performed by MPs, MLAs, Members of Panchayats/Municipalities/other LAs.
(b) Duties performed by any person who holds any post in pursuance of the provisions of
Constitution in that capacity. [Ex: President, Vice President, PM, Chief Justice, Speaker of LS, Chief Election
Commissioner, C&AG of India, Chairman of UPSC, Attorney in that capacity].
(c) Duties performed by any person as a Chairperson/Member/Director in a body established by
CG/SG/LA & who is not deemed as employee before commencement of this clause.
4 Services of funeral, burial, crematorium or mortuary including transportation of deceased.
5 Sale of Land; & [subject to para 5(b) of Schedule II] Sale of building.
6 Actionable claims, other than lottery, betting & gambling.
▪ PC Note: Only Lottery, betting & gambling are treated as supply.
▪ All other actionable claims are outside the ambit of definition of supply.

7 Service by way of Grant of Alcoholic Liquor Licence by SG [Covered in Amendment Video]

▪ “Service by way of grant of alcoholic liquor licence by SG against consideration in form of licence
fee or application fee or whatever it is called” is neither supply of goods nor service. [NN 25/2019]
▪ Other Licenses: It may be noted that services provided by 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 RCM.

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CQ10. Sahara Ltd. NBFC transfers bad loans (unsecured) to Vasooli Capital Advisor Ltd. Does it qualify as supply?
Answer: Even though Actionable claims are covered in ‘goods’ but Schedule III specifically excludes actionable
claims other than lottery, gambling & betting. Transfer of unsecured loans would not amount to supply.

CQ11. X enters into a contract with DLF Construction Ltd. for purchase of a flat for which the payment has to be
made in 10 monthly installments of Rs. 30,00,000 each. 1st installment is paid at the time of signing of the contract
on July 1, 2018. The flat is likely to be completed during June 2019. On 1st Feb 2019, X transfers his right to Y after
paying 6 installments. Whether such activity of transfer by X to Y is treated as "declared supply" under Sch. II ?
Answer: Activity of transfer of right in flat by X to Y does not fall in ‘deemed supply’, as X is not providing any
construction service to Y. It is a case of transfer of interest in immovable property. Such transfer of immovable
property (or any interest) is outside the ambit of GST. However, on 6 installments paid to DLF by X (& subsequent
4 installments payable), GST will be applicable.

→
1. Services by way of any activity in relation to a function entrusted to a Panchayat under article 243G
or to a Municipality under article 243W of the Constitution for the said purpose.

2. Inter-State movement of various modes of conveyance b/w distinct person u/s 25(4) including:
Trains, Buses, trucks, tankers, trailers, vessels, containers, aircrafts for
(a) carrying goods or passengers or both; or
(b) Repairs & Maintenance, (Except where such movement is for further supply of same conveyance)
▪ Thus, above activity may not be treated as supply & IGST is not payable on such supply.
▪ However, applicable CGST/SGST/IGST shall be leviable on repairs & maintenance done for such
conveyance.

3. Inter-State movement of Rigs, Tools & Spares, & all goods on wheels [like cranes]
Point no. 2 shall mutatis mutandis apply to inter-State movement of rigs, tools & spares, & all goods
on wheels (except where movement of such goods is for further supply of same goods),

▪ Transfer of tenancy right against consideration (i.e tenancy premium) is treated as supply of service.
▪ It is a form of lease or renting of property & is specifically declared as service in Para 2. of Sch. II
▪ Although stamp duty & registration charges have been levied on such transfer of tenancy rights, it is
still subject to GST since merely because a transaction involves execution of documents which requires
registration & payment of stamp duty, would not preclude them from ‘scope of supply’.
▪ Transfer of tenancy rights cannot be treated as sale of L/B & thus it is not a negative list activity.

PC Note:
▪ Transfer of tenancy rights to a new tenant against consideration (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.

PC Note: 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.

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Composite ❖ It comprises
Supply ✓ two or more taxable supplies of G/&S or any combination thereof
[Sec 2(30)] ✓ naturally bundled & supplied in conjunction with each other in ordinary course of
business
✓ one of which is a principal supply.
❖ Tax Treatment → treated as a supply of such principal supply.
❖ GST Rate → Rate applicable to Principal supply will be levied on whole supply.
❖ Principal supply: Supply of G/&S which constitutes predominant element of a
composite supply & to which other supply forming part of that composite supply is
ancillary.
Ex: When a consumer buys a television set & he also gets mandatory warranty & a maintenance contract with TV,
this supply is a composite supply. In this example, supply of TV is the principal supply, warranty & maintenance
services are ancillary.
LED Television supplied with remote, wires & 1 Yr Warranty with AMC Rs. 1,00,000
GST (LED TV) @ 28% Rs. 28,000
Invoice Value Rs. 1,28,000
Ex: Once in a lifetime, I booked a flight ticket from Huyderabad to Nagpur. Ticket included service of food on
board, free insurance & use of airport lounge. It is a case of Composite supply. In this case, transport of
passenger constitutes principal supply & all other supplies are ancillary.
Mixed ❖ Mixed Supply comprises of -
Supply ✓ two or more individual supplies of G/&S or any combination thereof, made in
[Sec 2(74)] conjunction with each other by a taxable person
✓ for a single price
✓ where such supply does not constitute a composite supply.
❖ Tax Treatment → treated as supply of that particular supply which attracts highest
rate of Tax.
PC Note: Individual supplies are independent of each other & are not naturally bundled.
PC Note: Whole supply is taxable @ rate of supply with Highest Rate of Tax.

Example: Here rates have been mentioned only for illustration purpose. Actual GST rates may vary.
Bottles of Shampoo (GST @ 28%) Rs. 2000
Bottles of Conditioners (GST @ 28%) Rs. 1500
Comb (GST @ 5%) Rs. 200
Hair Dryer (GST @ 28%) Rs. 1250
Lipstick set (GST @ 28%) Rs. 1750
Nail Polish (GST @ 28%) Rs. 800
Tooth Powder (GST @ 12%) Rs. 500
Consolidated Value of Supply Rs. 8000
GST (Highest Rate = 28%) Rs. 2240
Invoice Value Rs. 10240

CQ12. 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. Transportation of
passenger is the principal supply. Rate of tax applicable to principal supply will be charged to whole bundle.
▪ Therefore, rate applicable to transportation of passengers by rail will be charged by IRCTC on booking of Rajdhani.

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Examples:
Case Nature of Supply
Charger supplied along with mobile phone Composite supply
Gift pack comprising of chocolates & sweets Mixed supply
Ssale of TV Set with warranty and a maintenance contract along with TV Composite supply
Shopkeeper selling storage water bottles along with refrigerator. Mixed Supply
Supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated Mixed Supply
drink and fruit juices when supplied for a single price

Ex: ABC Ltd. entered into a contract with Mufti Ltd. for supply of readymade shirts packed in designer boxes at
Mufti’s outlet. Further ABC Ltd. insured these shirts during transit. In this case, supply of shirts, packing materials,
transport & insurance is a composite supply wherein principal supply is supply of goods.

CQ13. What are the guiding principles for determining whether a supply is a composite supply or mixed supply?
Answer:
Description Composite Supply Mixed Supply
Naturally bundled Yes No
Supplied together Yes Yes
Can be supplied separately No Yes
One is predominant supply for recipient Yes No
Each supply priced separately No No

CQ14. Space Bazar offers a free bucket with detergent purchased. Is it composite supply or mixed supply? Assume
rate of GST for detergent @28% & bucket @18%.
Answer:
▪ This is the case of a mixed supply as supply of bucket with detergent is not naturally bundled.
▪ These items can be sold separately.
▪ Product which has the higher rate, will apply on the whole mixed bundle.

CQ15. Mr. Ravi being a dealer in laptops, sold a laptop bag along with the laptop to a customer, for Rs. 55,000. CGST &
SGST for laptop @18% & for laptop bag @28%. What would be the rate of tax leviable? Also find GST liability.
Answer:
▪ Laptop bag is supplied along with laptop in the ordinary course of business. Thus it is composite supply, principal
supply being laptop & bag is an ancillary supply. Rate of tax of Laptop will be applicable to the whole supply.
▪ Hence, applicable rate of GST 18% on Rs. 55,000. CGST is Rs. 4,950 & SGST is Rs. 4,950.

CQ16. Determine whether the following supplies amount to composite supplies or mixed supply?
(a) A hotel provides 4-day & 3-night package in which facility of breakfast is provided alongwith room.
(b) A toothpaste company has offered the scheme office toothbrush alongwith the toothpaste.
Answer:
(d) Since supply of breakfast with room in hotel are naturally bundled, it is a ‘composite supply’.
(e) Since supply of toothbrush with toothpaste are not naturally bundled, it is a ‘mixed supply’.

CQ17. Mr. Ravi being a dealer in laptops, sold a laptop bag along with the laptop to a customer, for Rs. 55,000. CGST &
SGST for laptop @18% & for laptop bag @28%. What would be the rate of tax leviable? Also find GST liability.
Answer:
▪ Laptop bag is supplied along with the laptop in the ordinary course of business.
▪ Thus it is a case of composite supply, principal supply being laptop & the bag is an ancillary supply.
▪ Therefore, rate of tax to the whole supply would that as applicable to the laptop.
▪ Hence, applicable rate of GST 18% on Rs. 55,000. CGST is Rs. 4,950 & SGST is Rs. 4,950.

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▪ Servicing of cars involving supply of both goods (spare parts) & services (labour) where the value of Goods
& Services are shown separately.
▪ Goods & services would be liable to tax @ applicable rates to such goods & services separately.

Activities/transactions Principal supply

Supply of printed books, In such cases, only content is supplied by the publisher or the person who
pamphlets, brochures, owns the usage rights to the intangible inputs while the physical inputs
envelopes, annual reports, including paper used for printing belong to the printer, supply of printing
leaflets, cartons, boxes etc., [of the content supplied by the recipient of supply] is the principal supply
printed with design, logo, & therefore such supplies would constitute supply of service.
name, address or other
contents supplied by the In case of supply of printed envelopes, letter cards, printed boxes, tissues,
recipient of such printed napkins, wall paper etc. by the printer using its physical inputs including
goods paper to print the design, logo etc. supplied by the recipient of goods,
predominant supply is supply of goods & supply of printing of the content
[Printing Business] [supplied by recipient of supply] is ancillary to principal supply of goods &
therefore such supplies would constitute supply of goods. [CN 11/11/2017]

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]

Space for Class Notes:

Consideration:
1. Mr. X sells office furniture to Mr. Y on the condition that donation of Rs. 10,000 is payable by Mr. Y to a trust.
Rs. 10,000 is paid by Mr. Y by reason of purchase of furniture. Hence, Rs. 10,000 will be treated as
consideration for sale of furniture. Mr. X is liable to pay GST on Rs. 10,000 in addition to the value of furniture.
2. Alia Travels Pvt. Ltd., a travel agent books ticket for a customer Mr. Z. Travel agent raises invoice on customer
Mr. Z for transportation of passenger by air of Rs. 10,000 & his commission of Rs. 500. The entire amount of
Rs. 10,500 is not his consideration. The amount of Rs. 500 retained by the air travel is to be considered as his
consideration.
3. If refunded then, it is not a consideration. Therefore, the same does not attract GST. If tax has already been
paid the taxpayer would be entitled to refund. If not refunded then, it is relating to a service, attract GST.

Ex: X Ltd. is a manufacturing company. Sole distribution rights in the State of Tamil Nadu is given to Y Ltd. By
virtue of this agreement, goods manufactured by X Ltd. will be distributed in Tamil Nadu only by Y Ltd. On August
1,2017, the agreement is terminated. Under the termination agreement, X Ltd. will pay a consideration of Rs. 20
lacs in lieu of Y Ltd/s promise not to distribute similar goods of any other manufacturer in Tamil Nadu for a period
of 2 years. This is treated as deemed supply by Y Ltd. GST is applicable.

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QUESTION BANK
Q1. Whether provision of G/&S by a club or association or society to its members will be treated as supply or not?
Ans: Yes. Provision of facilities by a club, association, society or any such body to its members shall be treated as
supply. This is included in the definition of ‘business’ in section 2(17) of CGST/SGST Act.

Q2. Are self-supplies taxable under GST?

Ans: Inter-State self-supplies such as stock transfers, branch transfers or consignment sales shall be taxable under
IGST even though such transactions may not involve payment of consideration.
Note: Intra-state self-supplies are not taxable if separate registration is not obtained for different PoB.

Q3. State whether the following activities constitutes supply.

(a) Mr. X (an unregistered person) plans to pursue his higher education in US. He receives career consultancy services
from a US based consultant for Rs. 5,00,000.
(b) Archean Constructions Ltd. (a registered taxable person) receives architectural design supplied by a foreign
architect to design a residential house to be built in Hyderabad for a consideration of Rs. 50,00,000.
(c) Goods sent for a demonstration on returnable basis.
(d) Mr. A is the owner of Xerox machine. He transferred the right to operate the Xerox machine to Mr. B for a
consideration of Rs. 10,000 per month for four months.
Answer:
(a) Yes. As per Section 7(1)(b) of CGST Act, 2017, Supply includes import of services for a consideration whether or
not in the course or furtherance of business. Hence, in the above case it will be treated as supply.
(b) As per Section 7(1) (b) of CGST Act, 2017, Importation of services for a consideration whether or not in the course
or furtherance of business is covered under supply. In the above case it will be treated as supply.
(c) No. It would not be considered as supply, as there is no transfer of title involved.
(d) Ownership of the machine is not transferred but the right in the machine is transferred. It is supply of service.

Q4. State whether the following activities constitutes supply.

(a) Happy Ltd. provides management consultancy services without charge to Joy Ltd in which Happy Ltd. has
controlling rights. The said consultancy has been provided for benefit of entire group.
(b) XYZ Ltd, gives gift worth Rs. 5,00,000 to an employee. Would your answer be different if gifts of Rs. 45,000 has
been given to the employee.
(c) Mr. C, a practicing CA provided services to A Ltd. dealer of laptops. In return A Ltd., gives two laptops to Mr. C.
Answer:
(a) Yes. As per Section 7(1)(c) r/w Schedule I of CGST Act, 2017, Supply of goods or services b/w related persons is
treated as supply even if it is without consideration. Persons shall be deemed to be "related persons" if "one of
them directly or indirectly controls the other". Since Happy Ltd. has controlling rights of Joy Ltd., they will be
treated as related person & the said transaction will qualify as supply.
(b) As per Section 7(1)(c) r/w Schedule I of CGST Act, 2017, Supply of goods or services b/w related persons is treated
as supply even if it is without consideration when made in course or furtherance of business.
Persons shall be deemed to be "related persons" if such persons are employer & employee.
Thus, gift to an employee worth Rs. 5,00,000 will qualify as supply & such supply would be leviable to GST.
If gift of Rs. 45,000, it will not be treated as supply since it has been specifically provided that gifts not exceeding
Rs. 50,000 in value in a FY by an employer to employee shall not be treated as supply of G/&S.
(c) Here, two-way supply takes place. Mr. C is making taxable supply of service & A Ltd., is making taxable supply of
goods. Hence, tax is payable by both.

Q5. State whether the following activities constitutes supply.

(a) XYZ Ltd. having head office in Mumbai supplied goods worth Rs. 10 lacs to its branch office in Jaipur (Rajasthan).
(b) ABC Associates received management consultancy services from its head office located in Malaysia. The head office
has rendered such services free of cost to its branch office.
(c) Karishma Manufacturers have a factory in Jaipur & a depot in Delhi. Both these establishments are registered in
respective States. Finished goods are sent from the factory to the depot without consideration so that the same can
be sold.
Answer:
(a) As per Section 7(1)(c) r/w Schedule I of CGST Act, 2017, Supply of G/&S b/w distinct persons as specified in section
25, when made in course or furtherance of business will be treated as supply even if made without consideration.

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Where a person who has/is required to obtain registration in a State/UT i.r.o an establishment, has an
establishment in another State/UT, then such establishments shall be treated as establishments of distinct persons
[Section 25(5)]. Hence, branch transfer of goods from Maharashtra to Rajasthan will qualify as supply.
(b) As per Section 7(1)(c) r/w Schedule I of CGST Act, 2017, Import of services by any person from a related person
or from any of his other establishments outside India, in the course or furtherance of business will be treated as
supply even if made without consideration. Thus, management consultancy sendees received by ABC Associates
will qualify as supply even though head office has not charged anything from it & will be liable to GST.
(c) Supply of G/&S b/w related persons or b/w distinct persons as specified in section 25, is supply even without
consideration provided it is made in the course or furtherance of business.
Where a person who has/is required to obtain registration in a State/UT i.r.o an establishment, has an
establishment in another State/UT, then such establishments shall be treated as establishments of distinct persons
[Section 25(5)]. Thus, factory & depot of Karishma Manufacturers are establishments of two distinct persons.
Therefore, supply of goods from factory to depot without consideration, but in course of or in furtherance of
business, is supply u/s 7 of the CGST Act.

Q6. Manan is an Electronic Commerce Operator in Delhi. His father who is settled in London is a well-known lawyer.
Manan has taken legal consultancy from him free of cost with regard to his family dispute. Whether it would amount
to supply? Would your answer be different if Manan has taken advice i.r.o his business unit in Delhi?
Answer: Schedule I of CGST Act, provides that import of services by any 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. In the given
case, Manan has received legal consultancy from his father free of cost in a personal matter. Hence, services provided
by Manan's father to him would not be treated as supply u/s 7 of the CGST Act.
If Manan has taken advice with regard to his business unit, services provided by Manan's father to him would be treated
as supply as the same are provided in course of business though received from a related person.

Q7. Mr. C is in the business of selling electronic white goods. He closes down his business on 31st March 2019. Value of
unsold stock of electronic goods on that date is Rs. 9 lacs. Are there any GST implications?
Answer: Business Asset transferred by a person who ceases to be taxable person shall be deemed to be supplied by
him, in the course/furtherance of his business, immediately before he ceases to be a taxable person. Thus, it will be
assumed that the unsold stock has been supplied by C in the course of his business & GST shall be payable.

Q8. A builder has entered into agreement to sale a flat (carpet area 1900 sq ft) to the customer: It follows:
- Price of flat (including apportioned value of cost of land): Rs. 42,00,000 (includes Prime Location Charges namely
charges for getting sea view: Rs. 2,00,000).
- Charges for providing space for covered parking: Rs. 1,25,000.
- Builder received part payment before construction was completed & balance amount was received after obtaining
completion certificate from the Corporation. Find the GST liability (CGST 6% & SGST 6%)?
Answer: Construction of Complex, Building, Civil structure is treated as supply of service except where entire
consideration has been received after issuance of completion certificate or after its first occupation, whichever is
earlier. Thus, it is supply of service. Since services has been given to the customer, Builder is liable to pay GST.
CGST (Rs. 42,00,000 + 1,25,000) x 6% + SGST (Rs. 42,00,000 + 1,25,000) x 6% = Rs. 5,19,000.

Q9. M/s. ABC Ltd. provides the following relating to information technology software. Compute the value of taxable
service & GST liability (Rate of CGST 9% & SGST 9%).
(a) Development & Design of information technology software: Rs. 15 lacs;
(b) Sale of pre-packaged software, which is put on media: Rs. 52 lacs.
Answer: (a) & (b) both are treated as supply of Service.
Value of Taxable supply of service is Rs. 67 Lacs [i.e. Rs. 15 Lacs + 52 Lacs]
CGST is Rs. 6.03 lacs [i.e. Rs. 67 Lacs x 9%]. SGST is Rs. 6.03 lacs [i.e. Rs. 67 Lacs x 9%].

Q10. XYZ Ltd. a manufacturer of cosmetic products supplied a package consisting of hair oil (GST Rate: 18%), sun
screen cream (GST Rate: 28%), shampoo (GST Rate: 28%) & hair comb (GST Rate: 12%). Price per package is Rs. 500
(exclusive of taxes). 10,000 packages were supplied by the company to its dealers. Determine the nature of supply &
its tax liability.
Answer:
▪ This supply would be regarded as mixed supply since each of the goods in the package have individual identity &
can be supplied separately, but are deliberately supplied conjointly for single consolidated price.
▪ The tax rates applicable in case of mixed supply would be the rate of tax attributable to that one supply (goods, or
services) which suffers the highest rate of tax from amongst the supplies forming part of the mixed supply.

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▪ Therefore, the package will be chargeable to 28% GST.

▪ Total Taxable Value = Rs. 500 per package × 10,000 packages = Rs. 50 lacs. Tax liability @ 28% = Rs. 14 Lacs.

Q11. Discuss whether GST is applicable in the following transactions:

(a) X transfers 1,000 debentures of A Ltd. to Y for Rs. 4,75,000.
(b) Z transfers a plot of land situated in Madurai to B for a consideration of Rs. 40 lacs. Consideration is, however,
payable in installments.
Answer:
(a) GST is applicable on supply of goods &/or services. Debentures are securities. Securities are not neither treated as
goods nor services. Therefore, transfer of debentures by X is not subject to GST.
(b) Transfer of plot of land - Transfer of immovable property is not subject to GST.

Q12. X Ltd. paid penalty of Rs. 2 lacs u/s 49 of CGST Act to the Department in June 2018. Is it taxable under GST?
Ans: It is not a supply of service. Fine or penalty chargeable by Government or local authority imposed for violation of
statute, bye-laws, rules or regulations are not leviable to GST. Such fines or penalty are not recovered for tolerating
non-performance of a contract.

Q13. Discuss with reasons with brief whether the following statements are true or false -
SN Question Answer
1 Inter-State stock transfer is not subject to GST. False
2 Supply of goods is chargeable to GST. Likewise, supply of services is chargeable to GST. As both False
are chargeable to GST, distinction b/w ‘goods’ & ‘services’ has become absolutely irrelevant.
3 If consideration for supply of G/&S is nil, GST is also nil. False

Q14. X Ltd, supplies raw material to a job worker Y Ltd. for manufacture of alcoholic liquor for human consumption.
After completing the job-work, finished product of 5,000 beer bottles are returned to X Ltd., putting the retail sale price
as Rs. 200 on each bottle (inclusive of duties & taxes). Y Ltd. charged Rs. 100 per bottle as job work charges of carrying
out of intermediate production process of alcoholic liquor for human consumption from X Ltd. Find GST liability if GST
rate is 18% in the hands of Y Ltd.
Answer: GST cannot be levied on supply of ‘Alcoholic liquor for human consumption’. However, carrying out of
intermediate production process of alcoholic liquor for human consumption on job work basis attract GST.
GST = CGST @ 9% + SGST @ 9% = Rs. 45,000 + Rs. 45,000 = Rs. 90,000. [5,000 bottles x Rs. 100 x 9%]
Note: GST is not attracted on manufacture of alcoholic liquor. Since, it is the State subject, it will attract Excise Duty.

Q15. Raheja Developers constructs a commercial complex in Vijaywada. Completion certificate is issued by
municipality on 23rd March 2019. However, the occupants are using the complex for commercial purposes since
1st November 2018. The complex has 3 commercial flats which are sold to A Ltd, B Ltd & C Ltd. as follows:
Particulars Consideration Amount received during Amount received on/after
(if includes cost of land ) October 2018 November 1, 2018
Flat 1: A Ltd 92,00,000 1,00,000 91,00,000
Flat 2: B Ltd 94,00,000 94,00,000 Nil
Flat 3: C Ltd 91,00,000 Nil 91,00,000
Answer:
▪ Construction of Complex, building etc. is treated as supply of service except where entire consideration has been
received after issuance of completion certificate or after its first occupation, whichever is earlier.
▪ Thus if entire consideration has been received after issuance of completion certificate or after its first occupation,
whichever is earlier, GST will not be levied. Completion certificate is issued on 23rd March 2019.
▪ Commercial building was first occupied on 1st November 2018. Earlier date is 1st November 2018.
C Ltd: Entire consideration is received from C Ltd. after 1st November 2018. Consequently, service provided to C Ltd.
is not deemed supply under Schedule II & not chargeable to GST.
A Ltd & B Ltd: Supply of service to A Ltd. & B Ltd. is deemed supply under Schedule II & chargeable to GST.

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SOME IMPORTANT DEFINITIONS

1 Exempt Supply [Sec 2(47) of CGST Act]

▪ means supply which attracts nil rate of tax or

▪ which may be wholly exempt from tax u/s 11, or u/s 6 of IGST Act &
▪ includes non-taxable supply.

2 Reverse charge [Section 2(98) of CGST Act]

▪ liability to pay tax is on ‘recipient’ of supply of G/&S instead of supplier of such G/&S.

3 India

▪ Territory of India & its territorial waters (TWI);

▪ Seabed & sub-soil underlying such waters, Continental shelf,
▪ Exclusive economic zone or any other maritime zone
▪ Air space above its territory & TWI.

TWI → Area upto 12 nautical miles (NM) from base line of sea coast into sea. [1 NM = 1.853 Km]

EEZ → Area [beyond TWI (i.e 12NM)] upto 200 NM.

Continental shelf → Area of Seabed underlying EEZ.

Particulars Intra-State Supply Inter-State Supply

Meaning Location of supplier & PoS are in Location of supplier & PoS are in
(i) Same State or (i) Different States or (ii) Different UTs
(ii) Same UT (iii) A State & a UT [MH → A&N]

Applicability CGST + SCGT/(UTGST for UTs) IGST

PC Note
 Import of G/&S into India → Deemed as Inter-State supply of G/&S.
 Supply to or by SEZ developer/unit → Always deemed as Inter-State supply of G/&S.

Ex Supply Nature
1 Supplier is in Andaman (UT) & supply is made in Kerala Inter-State
2 Supplier is in Maharashtra & supply is made in Gujrat (PoS = Gujrat) Inter-State
3 Goods imported from China Inter-State
4 Goods sold by importer located in Noida to a person located in Ludhiana before bill of entry Inter-State
for clearance from the customs area is filed by the importer.
5 Supplies received in Domestic Tariff Area in Noida from SEZ unit located in Noida Inter-State
6 Supplies made to SEZ developer in Mihan Nagpur from Nagpur Inter-State
7 Supplier is in Pune & supply is made in USA (Special Case of Export) Inter-State

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CGST Act It extends to whole of India including J&K.

SGST Act SGST Act of a State/UT with State Legislature extends to whole of that State/UT.

IGST Act It extends to the whole of India including J&K.

UTGST Act It extends to All UTs without state legislature.

❖ State of J&K has been divided into (i) UT of J&K & (ii) UT of Ladakh.
❖ UT of J&K shall have their own legislature [i.e Considered as State in GST] & SGST Act will apply.
Thus, UT of J&K shall continue to charge SGST & CGST for intra- state supplies.
❖ UT of Ladakh shall be formed without legislature. Hence, it shall have status of UT & UTGST Act,
2017 shall be applicable to them. UTGST & CGST will be charged for supplies made in Ladakh.

PC Note: Supplies made from UT of J&K to Ladakh (& vice – versa), IGST shall be charged.

PC Note: “J&K SGST Act, 2017 shall apply to UT of J&K & UTGST Act, 2017 shall apply to UT of Ladakh”.

UT with State Legislature ❖ (1) Delhi; (2) Pondicherry; (3) Jammu & Kashmir.
❖ GST: Intra-state supply – CGST + SGST; Inter-state supply – IGST.

UT without State Legislature ❖ (1) Andaman & Nicobar Island; (2) Lakshadweep Island.
(3) Chandigarh; (4) Ladakh
(5) Dadra & Nagar Haveli & Daman & Diu
❖ GST: Intra-state supply – CGST + UTGST; Inter-state supply – IGST.

Sec Levy & Collection

▪ There shall be levied a tax called CGST on all intra-State supplies of G/&S,
▪ except on alcoholic liquor for human consumption,
▪ on value determined u/s 15 &
▪ at such rates notified by Government on recommendations of GST Council (Max. 20%)
▪ collected in such prescribed manner.

▪ Government may, on recommendations of GST Council, by notification,

▪ specify categories of supply of G&/S on which GST shall be paid on reverse charge basis
by recipient of such G/&S &
▪ all provisions of this Act shall apply to such recipient as if he is liable for paying tax in relation
to supply of such G/&S.

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▪ Government may, on recommendations of GST Council, by notification, specify a class of

registered persons who shall i.r.o. supply of specified categories of goods or services or both
received from an unregistered supplier,
▪ pay the tax on RCM basis as the recipient of such supply of goods or services or both; &
▪ 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.

▪ Government may, on recommendations of GST Council, by notification,

▪ specify categories of services, the tax on intra-State supplies of which shall be paid by
electronic commerce operator (ECO) if such services are supplied through it, &
▪ all provisions of this Act shall apply to such ECO as if he is supplier liable for paying tax in
relation to supply of such services.
Situation Person liable to pay tax
If ECO does not have a physical presence in TT Person representing such ECO for any
purpose in TT
If ECO does not have a physical presence in TT Person appointed by ECO in TT
& also he does not have a representative

Notified Services are:

1. Transportation of Passengers by a radio-taxi, motorcab, maxicab & Motor cycle.
2. Hotel Business (Unregistered).
3. House-Keeping Services (Unregistered).

Meaning of ECO:
▪ ECO is any person who owns/operates/manages an electronic platform for supply of G/&S.
▪ ECO display products & services on their electronic portal which are actually supplied by some
other person to the consumer.
▪ Consumers buy such goods/services through these portals.
▪ On placing order for a particular product/service, actual supplier supplies selected
product/service to consumer.
▪ Price is collected by ECO from consumer & thereafter given to actual supplier after deduction
their commission.

CQ1. A hotel provided accommodation in Himachal Pradesh, through ECO – Makemyyatra.com. Hotel is not
liable to get registered as per Section 22(1). Who is the person liable to pay GST in this case? Will your answer
be different if ECO Makemyyatra.com does not have a physical presence in India?
Ans: As per Section 9(5), person liable to pay GST is ECO i.e. Makemyyatra.com. All the provisions shall apply
to such ECO as if he is the supplier liable for paying tax in relation to such supply. If Makemyyatra.com does
not have a physical presence in India, person liable to pay tax is the person representing Makemyyatra.com.

MEANING OF REVERSE CHARGE MECHANISM (RCM)

▪ Reverse charge means the liability to pay tax is on the recipient of supply of G/S instead of the supplier.
▪ Generally, supplier is liable to pay GST. However, under RCM, liability to pay GST is on recipient of G/S.
▪ However, underlying principle of an indirect tax is that burden of such tax has to be ultimately passed on
to the recipient. GST being an indirect tax, this principle holds good for GST.
Therefore, under RCM, only the compliance requirements, [i.e. to obtain registration under GST, deposit
the tax with the Government, filing returns, etc.] have been shifted from supplier to recipient.

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There are 2 type of Reverse Charge scenarios provided in law

Sec. 9(3) Supply of specified categories of goods or services is covered by section 9(3) of CGST Act.

Sec. 9(4) Supply of specified categories of G/S made by an unregistered supplier to specified class of
registered recipients is covered by section 9(4) of CGST Act.

A. GOODS NOTIFIED UNDER RCM [Sec 9(3) of CGST Act & 5(3) of IGST Act]
- Cashewnuts [not shelled/peeled]; - Bidi wrapper leaves & tobacco leaves;
- Supply of Lottery; Silk yarn, used vehicles, - Seized & confiscated goods;
- Old & used goods, Waste & scrap, - Raw cotton, etc

SN Nature of Service Supplier (BY) Recipient [Person liable to pay GST]

1 Goods Transport Agency Goods Transport (a) Factory (Factories Act, 1948);
(GTA) by Road Agency paying 2.5% (b) Society (Societies Registration Act)
▪ who has not paid CGST @ 6% CGST
(c) Co-operative society
▪ who has not availed ITC. (d) Any body corporate
(e) P’ship Firm (including AOP/BOI)
(f) Casual Taxable Person in TT.
(g) Registered Person under GST

NO RCM on Transportation services provided by GTA to Department/establishment of

CG/SG/UT; LA; Governmental agencies which has taken registration under GST only for the
purpose of deducting tax u/s 51 & not for making a taxable supply of goods or services.
PC Note: Above services have been simultaneously exempted from payment of tax.

Meaning of Recipient: Person who pays or is liable to pay freight for transportation of goods by
road in goods carriage, located in TT shall be treated as the person who receives the service.
CQ2. ABC Ltd. availed service of XYZ Ltd. (GTA) for transportation of goods by road from Pune to Mumbai.
Ans: GST shall be paid by ABC Ltd. u/s 9(3) since it is liable to pay freight for transportation of goods. Thus ABC Ltd.
shall be treated as recipient of service. If GTA has paid GST under forward charge @ 12% then RCM shall not apply.

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2 Legal Services Individual Advocate Business Entity located in TT.

(including senior
advocate or firm of
advocates)

3 Services by Arbitral Tribunal Business Entity located in TT.

Arbitral Tribunal

4 Sponsorship Any Person Body Corporate or P’ship Firm in TT.

CQ3. ABC Ltd. paid Rs. 1,00,000 towards sponsorship of exhibition. What if Mr. A has paid Rs. 1,00,000
towards sponsorship of exhibition?
Ans: Sponsorship is received by ABC Ltd. so they are subject to reverse charge U/s 9 (3). If it is provided to
Mr. A then GST will be payable by supplier of service. Service provided by way of sponsorship to any body
corporate or partnership firm are subject to reverse charge.
5 Services supplied by CG, SG, CG, SG, UT, LA Business Entity located in TT.
UT/LA

Excluding ↓ - [No RCM in case of supply of these services]

(a) Renting of Immovable property &
(b) Specified services:
1. Services by Department of Posts by way of Speed post, Express parcel post, Life Insurance
& Agency Services provided to any person other than CG, SG, UT or LA;
2. Services in relation to Vessel/Aircraft, inside/outside the precincts of a port/ airport;
3. Transport of Goods/Passengers.

5A Services supplied by CG, SG, UT CG, SG, UT or LA Any Registered Person under GST.
or LA by way of renting of
immovable property
CQ4. Rental income received by Tamil Nadu State Government from renting an immovable property to
Mannappa Pvt. Ltd. (Turnover of the company was Rs. 22 lacs in preceding FY).
Ans: In case of Services supplied by CG/SG/UT/LA by way of renting of immovable property to a registered
person, RCM will be applicable (i.e recipient will be liable to pay GST). Hence, Mannappa Pvt. Ltd. will be liable
to pay GST under reverse charge mechanism.
5B Services of “Transfer of Any person Promoter
development rights or Floor
Space Index (FSI) for
construction of a project

5C Long term lease of land (≥ 30 Any person Promoter

years) against consideration in
the form of upfront amount
(called as premium, salami,
cost, price, development
charges) &/or periodic rent for
construction of a project by a
promoter.

6 Services supplied by a director Director Company or Body Corporate

Case 1 Services provided by independent directors/directors who are not employees of company

▪ Remuneration for such services is outside the scope of Schedule III & thus, are taxable.
▪ Such remuneration paid to the directors is taxable in hands of the company, on RCM.

Case 2 Director is an employee of the company (irrespective of name & designation)

▪ Examine whether all activities performed by the director are in the course of employer-
employee relation (‘contract of service’) or is there any element of ‘contract for service’.

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▪ Director’s remuneration which are declared as salaries in the books of a company &
subjected to TDS u/s 192 of Income-tax Act (IT Act), are not subject to GST.

 Director’s remuneration which is declared separately other than salaries & subjected to TDS u/s
194J as fees for professional or technical services are treated as consideration for providing
services which are outside the scope of Schedule III & is therefore, taxable under GST.
 Recipient of the said services (company) is liable to discharge the applicable GST on it on RCM.

7 Services supplied by Insurance Insurance Agent Insurance Company located in TT.

Agent

CQ5. Insurance company pay Rs. 1,00,000 commission to Mr. A whose turnover < threshold limit for registration.
Answer: Insurance company will be liable to pay GST under reverse charge basis u/s 9 (3).
8 Services supplied by Recovery Recovery agent Banking company or financial
Agent institution or NBFC located in TT.

9 Transfer or permitting use or Author (now deleted), Publisher,

enjoyment of copyright
Music Composer, Music company,
relating to original literary,
dramatic, musical or artistic Photographer, Producer etc. located in TT.
works etc. Artist etc.

PC Note: Author has been deleted from this entry & New Entry 9A has been inserted.

9A Transfer or permitting the use Author Publisher located in TT

or enjoyment of a copyright
relating to original literary
works to a publisher [Covered in Amendment Video]

However, Author can choose to pay tax under forward charge if –

❖ he has taken registration under GST &
▪ filed a declaration, in prescribed form, that he exercises the option to pay CGST on the
said service under forward charge in accordance with section 9(1) &
▪ to comply with all the provisions as they apply to a person liable for paying tax in relation
to supply of any G&/S & he shall not withdraw the said option within a period of 1 year from
the date of exercising such option.
❖ He makes a declaration on the invoice issued by him in prescribed form to the publisher.

10 Supply of Services by Members Members of RBI

of Overseeing Committee Overseeing
Committee constituted
by RBI

11 Services supplied by Individual Individual Direct Banking company or NBFC in TT.

Direct Selling Agents (DSAs) Selling Agents (DSAs)
other than BC, P’ship
firm or LLP

12 Services provided by Business Business facilitator Banking company, located in TT.

facilitator to a banking
company

13 Services provided by Agent of Agent of Business Business correspondent, located in

Business Correspondent Correspondent TT

14 Security Services (Services - Any person other than Any Registered Person, located in TT
Supply of security personnel) BC

Note: Tax has to be paid under RCM on gross amount charged (Security Personnel cost + PF + ESI
+ Service charges + other charges) by security service providers & not on service charges only.

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However, nothing contained in this entry shall apply to:

(i) Department or Establishment of CG/SG/UT; LA; Governmental agencies (which has taken
registration only for deducting tax u/s 51 & not for making a taxable supply of G&/S).
(ii) Registered person paying tax under composition scheme (Composition Dealer).
15 Renting of Motor Vehicle ▪ Any person other Any body corporate located in TT
provided to Body Corporate than Body Corporate
▪ paying CGST @ 2.5%
on renting of motor
vehicles with ITC of
only input service in
same line of business.
Service by way of renting of any motor vehicle designed to carry passengers where cost of fuel is
included in the consideration charged from service recipient are taxable at following two rates:
1. 5% (2.5% CGST + 2.5% SGST or 5% IGST) provided supplier of services has taken only the
limited ITC (of input services in the same line of business) OR
2. 12% (6% CGST + 6% SGST or 12% IGST) & in such case, there is no restriction on availing ITC
on goods & services used in supplying renting of motor vehicles service by supplier of service.

PC Note: When any service is placed under RCM, supplier shall not charge any tax from the service
recipient as this is the settled procedure in law under RCM. Thus supplier does not issue an invoice
charging GST @ 12% (6% CGST+ 6% SGST or 12% IGST) from recipient. [CN 130/49/2019]
16 Services of lending of ▪ Lender i.e a person Borrower i.e., a person who borrows
securities who deposit securities under Scheme through an
securities registered approved intermediary of SEBI
in his name or in the
name of any other
person authorised on
his behalf
▪ with approved
intermediary

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▪ for lending under the

Scheme of SEBI

PC Note: Import of Service

Any service supplied by any person who is located in non-taxable territory to any person other than non-
taxable online recipient located in taxable territory. Thus, in case of import of service, tax is payable by the
person importing such service.

CQ6. Comment on chargeability of following transaction:

(a) ABC Ltd. paid Rs. 1,00,000 to independent director.
(b) Government has provided Business support services to ABC Ltd. for Rs. 1,00,000.
(c) Insurance company selling insurance policies through an ECO & paying commission to ECO.
Answer:
(a) In this case GST shall be paid by ABC Ltd. under reverse charge u/s 9(3). Services supplied by a director of a
company or a body corporate to the said company or the body corporate, are subject to reverse charge.
(b) In this case GST shall be paid by ABC Ltd. under reverse charge u/s 9(3).
(c) ‘ECO’ shall not be termed as ‘insurance agent’ unless such ‘ECO’ is licensed u/s 42 of Insurance Act. Unless
‘ECO’ can be termed as ‘insurance agent’, RCM shall not be applicable.

CQ7. ABC Ltd. is GST registered with aggregate turnover of Rs. 4 crores. It has received the following services
from different persons during January 2019. Discuss the applicability of reverse charge to the above transactions.
(a) Service by Department of Posts by way of speed post
(b) For transportation of goods, ABC Ltd. paid Rs. 50,000 to Indian Railways.
(c) ABC Ltd. has availed Manpower services from XYZ Ltd. Will your answer differ if service provider is Mr. A.
(d) Renting of immovable property service provided by CG to ABC Ltd. (registered business entity).
Answer:
(a) Nature of service is speed post provided by Department of Posts. RCM not applicable to these services.
Supplier has to pay GST as forward charge.

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(b) Nature of service is transportation of goods provided by Indian Railways. RCM not applicable to these
services. Supplier has to pay GST as forward charge.
(c) XYZ Ltd. is liable to pay GST on services given to ABC Ltd. If it is provided by Mr. A, RCM will apply & ABC Ltd.
Will be liable to pay GST.
(d) GST on services supplied by CG/SG/UT/LA by way of renting of immovable property to a registered person
is payable under RCM. Therefore, GST is payable under RCM by the recipient – registered business entity.

CQ8. State the person liable to pay GST provided recipient is located in taxable territory & it is intra-state supply:
(a) Service of transportation of goods by road provided by GTA (registered) provided to a company (GST
Registered).
(b) Service of transportation of goods by road by GTA (unregistered) provided to a company (GST Registered).
(c) Mr. A is a senior advocate in Calcutta High Court. During Oct. 2018, he provides legal service to ABC associates
(a firm of advocates in Mumbai) for a fee of Rs. 5,00,000. Turnover of ABC associates for preceding FY is Rs.
36 lacs.
(d) Services provided by an arbitral tribunal to any business entity.
Answer:
(a) Yes, recipient company shall be liable to pay GST since GTA services have been subject to RCM as per Sec 9(3).
Thus even if GTA is GST registered, his service to company (company is body corporate) shall attract RCM.
(b) Yes, recipient company shall be liable to pay GST since GTA services have been subject to RCM as per Sec 9(3).
Service of transportation of goods by road by GTA to a body corporate shall attract RCM. Thus, in given case,
even if GTA is GST unregistered, his service to company (company is body corporate) shall attract reverse
charge.
(c) Legal services provided by senior advocate to a business entity is exempt if aggregate turnover in preceding
FY of such BE is upto Rs. 20 Lacs. In the given case, recipient advocate firm is a business entity with aggregate
turnover exceeding Rs. 20 Lacs. Thus, services to such advocate firm is not exempt & thus GST shall be
payable. However, such service are subject to RCM where client of advocate firm shall be deemed to be
recipient of such service (being actual litigant/applicant/ petitioner) & hence, shall be liable to pay GST on
services of senior advocate.
(d) Since GST on services provided or agreed to be provided by an arbitral tribunal to any business entity located
in TT is payable under RCM. In the given case, GST is payable by the recipient - business entity.

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▪ In order to determine the rate applicable on a particular supply of goods or services, one needs to first
determine the classification of such goods or services.

CLASSIFICATION OF GOODS [Read Once]

▪ Classification of goods means identification of the tariff item, sub-heading, heading & chapter in which
a particular product will be classified.
▪ Tariff item, sub-heading, heading & chapters referred in the Schedules of rate notification for goods
under GST are the Tariff item, sub-heading, heading & chapters of the First Schedule to the Customs
Tariff Act, 1975.
▪ Indian Customs Tariff is based on HSN. HSN stands for Harmonized System of Nomenclature.
▪ It is a multipurpose international product nomenclature developed by the World Customs
Organization (WCO) for the purpose of classifying goods across the World in a systematic manner.
▪ It comprises of about 5,000 commodity groups; each identified by a 6-digit code [code can be extended],
arranged in a legal & logical structure & is supported by well-defined rules to achieve uniform
classification.
▪ India has developed an 8-digit code of HSN.
▪ Along the lines of HSN, the Indian Customs Tariff has a set of Rules of Interpretation of the First
Schedule & General Explanatory notes. These rules & the general explanatory notes give clear direction
as to how the nomenclature in the schedule is to be interpreted. These Rules for Interpretation including
section & chapter notes & the General Explanatory Notes of the First Schedule apply to the
interpretation of the rate notification for goods under GST also.
▪ Consequently, under GST, goods are classified on the basis of HSN in accordance with the Rules for
Interpretation of the Customs Tariff.
▪ Once classification for a product has been determined on this basis, applicable rate has to be determined
as per the rate prescribed in the rate notification issued under GST.

CLASSIFICATION OF SERVICES [Read Once]

▪ A new Scheme of Classification of Services has been devised under GST. It is a modified version of the
United Nations Central Product Classification.
▪ Under this scheme, the services of various descriptions have been classified under various sections,
headings & groups. Chapter 99 has been assigned for services. This chapter has following sections:
Section 5 Construction Services.
Section 6 Distributive Trade Services; Accommodation, Food & Beverage Service; Transport
Services; Gas & Electricity Distribution Services.
Section 7 Financial & related services; real estate services; & rental & leasing services.
Section 8 Business & Production Services.
Section 9 Community, social & personal services & other miscellaneous services.
▪ Each section is divided into various headings which is further divided into Groups. Its further division
is made in the form of ‘Tariff item’/ Service Codes. Rate of tax is determined as per the Service Code in
which the service is classified.
▪ Gambling Services, Services of admission to entertainment events/sporting event attract 28% GST.
▪ Services not covered under any specific heading are taxed @ 18% (CGST @ 9% & SGST @ 9%).
CGST 0% 2.5% 6% 9% 14%
SGST 0% 2.5% 6% 9% 14%
Total 0% 5% 12% 18% 28%

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General Exemption ▪ If Government is satisfied that it is necessary in public interest to do,

[Sec 11(1)] ▪ it may (on recommendations of Council) by notification,
▪ exempt generally goods/services/both of any specified description
[Public Interest + ▪ either absolutely or subject to prescribed conditions (conditionally)
by Notification] ▪ from whole or part of tax leviable thereon
▪ with effect from specified date in such notification.
PC Note: Absolute Exemption are mandatory in nature while conditional
exemptions are at the option of the registered person.
Special Exemption ▪ If Government is satisfied that it is necessary in public interest to do,
[Sec 11(2)] ▪ it may, on recommendations of Council,
[by Special order] ▪ by special order in each case, under exceptional circumstances
▪ exempt from tax any goods/services/both on which tax is leviable.
PC Note: This exemption is applicable only in special cases.

Section 11(3) of CGST Act:

▪ Government may [for clarifying scope/applicability of notification/order issued u/s 11(1)/11(2)]
▪ insert an explanation in such notification or order,
▪ by notification at any time within 1 year of issue of such notification/order u/s 11(1)/11(2) &

Every such explanation shall have effect as if it had always been part of original notification/order.
PC Note: Explanation inserted within 1 year of issue will have retrospective effect.

CLARIFICATION ON EFFECTIVE DATE OF INSERTION OF EXPLANATION IN NOTIFICATION [AMD]

▪ Section 11(3) provides that Government may insert an explanation in any notification issued u/s 11,
for clarifying its scope or applicability, at any time within 1 year of issue of the notification & every such
explanation shall have effect as if it had always been the part of the first such notification.
▪ It is clarified that explanation inserted u/s 11(3) is effective from inception of the entry in notification &
not from the date from which the notification (that inserted said explanation) becomes effective.
Ex: Principal NN. 11/2017 CT (R) dated 28.06.2017 came into force w.e.f. 1.07.2017. Thereafter, a new entry - Entry
no. 3(vi) is inserted w.e.f. 21.09.2017. Subsequently, an explanation is also inserted w.r.t. entry no. 3(vi) on
26.07.2018. Although the effective date mentioned in the notification which inserted said explanation is 27.07.2018,
said explanation will be effective from the inception of entry in notification i.e. 21.09.2017 & not 27.07.2018.

▪ Indian National flag

▪ Live animals other than live horses
▪ Meat and edible meat offal, Fish, crustaceans, molluscs & other aquatic invertebrates
▪ Dairy produce; bird’s eggs; natural honey; edible products of animal origin
▪ Human hair, unworked, whether or not washed or scoured; waste of human hair
▪ Semen including frozen semen
▪ Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage
▪ Edible vegetables, roots and tubers [Potatoes, Tomatoes, Onions, garlic, Cabbages, cauliflowers]
▪ Edible fruit and nuts;
▪ Plastic bangles

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A SERVICES RELATED TO CHARITABLE & RELIGIOUS ACTIVITIES

1 Services by entity registered u/s 12AA of Income-tax Act, 1961 by way of charitable activities.
‘Charitable Activities’ mean activities relating to:
(i) PUBLIC HEALTH by way of:
A. Care or counseling of
▪ terminally ill/severely disabled (physical/mental) persons;
▪ persons afflicted with HIV/AIDS;
▪ persons addicted to dependence-forming substance (Drugs/alcohol);
B. Public awareness of preventive health, family planning or prevention of HIV;
(ii) ADVANCEMENT OF RELIGION, spirituality or yoga;
PC Note: If charitable/religious trusts primarily provide accommodation or serve food &
drinks; for consideration in any form including donation → GST .
 Holding of fitness camps or classes in aerobics, dance, music etc. → GST .

(iii) ADVANCEMENT OF EDUCATIONAL PROGRAM/SKILL DEVELOPMENT related to

▪ abandoned, orphaned or homeless children;
▪ physically or mentally abused and traumatized persons;
▪ prisoners; or
▪ persons over the age of 65 years residing in a rural area;

PC Note: Schools, colleges or any other educational institutions run by charitable trusts
by way of education or skill development of above-mentioned persons = Charitable activities
& income from such supplies will be wholly exempt from GST.

Activities of a school, college or an institution run by a trust which do not come under
charitable activities will not be exempt under this entry. However, such activities may be
exempt under Entry 66 of the Notification [discussed later].

(iv) PRESERVATION OF ENVIRONMENT including watershed, forests & wildlife.

PC Note:
1. Grant of Advertising rights on premises of charitable/religious trust or on publications of trust;
Admission to events, functions, celebrations, shows against admission tickets → GST .

2. Hostel services provided by trusts to students → Charitable activity ⌧. But, Hostel

accommodation services provided by trusts is exempt if declared tariff < Rs. 1,000 per day.
3. Arranging yoga & meditation camp by charitable trusts are exempt from GST as such
activities are covered in definition of charitable activities.
4. Residential programmes or camps [Fee charged includes cost of lodging & boarding] → Exempt
if primary purpose of such residential programmes is advancement of religion, spirituality or yoga.
However, if charitable or religious trusts primarily provide accommodation or serve food & drinks
against consideration in any form including donation, such activities will be taxable.
5. Hospitals managed by charitable trusts → Exemption available if it is exempted under entry 74.

2 Services by a person by way of

(a) Conduct of any Religious ceremony; (Pujari)
(b) Renting of Precincts of a religious place meant for general public (Temple) owned/managed
by registered charitable/religious trust or a trust/institution registered u/s 10(23C) (v) of
Income-tax Act or a body or an authority covered u/s 10(23BBA).

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However, GST will be payable in following cases:

(i) Renting of Rooms if charges are ≥ Rs. 1,000 per day > Rs. 1,000 per day;
(ii) Renting of Premises/Halls/mandapam/open area if charges are ≥ Rs. 10,000 per day;
(iii) Renting of Shops/other spaces for business if charges are ≥ Rs. 10,000 per month;

Ex: Durgadevi Trust, a religious trust registered u/s 12AA of the Income-tax Act, owns & manages a temple in
their locality. It rents the commercial shops located in the precincts of the temple for a rent of Rs. 10,000 per
month per shop. The consideration so received is liable to GST as the consideration is not less than Rs. 10,000.

PC Note: Donation for hosting advertisement promoting business of the donor → GST . But if
donation is received without such instructions or without a quid pro quo → NO GST.

Levy of GST on the service of display of name/placing of name plates of the donor in the premises
of charitable organisations receiving donation/gifts from individual donors
▪ Individual donors provide financial help or any other support in the form of donation/gift to
institutions such as religious institutions, charitable organisations, schools, hospitals, orphanages,
old age homes etc.
▪ Recipient institutions place a name plate or similar such acknowledgement in their premises to
express the gratitude.
▪ When name of the donor is displayed in recipient institution premises, in such a manner which can
be said to be an expression of gratitude & Public recognition of donor’s act of philanthropy & is
not aimed at giving publicity to the donor in such manner that it would be an advertising/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/gift to do anything (supply
a service). Therefore, there is no GST liability on such consideration.
Ex. Good wishes from Mr. Rajesh printed underneath a digital blackboard donated by Mr.
Rajesh to a charitable Yoga institution.
Ex. 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/donation is made to a charitable
organization, the payment has the character of gift/donation & the purpose is philanthropic (i.e.,
it leads to no commercial gain) and not advertisement, GST is not leviable.

3 Services by a specified organisation in respect of a religious pilgrimage facilitated by the

Government of India, under bilateral arrangement.

Specified organisations are:

▪ Kumaon Mandal Vikas Nigam Ltd, a Government of Uttarakhand Undertaking;
▪ ‘Haj Committee of India’ or ‘State Haj Committee including Joint State Committee’.
PC Note: Religious pilgrimage organised by any other charitable/religious trust are liable to GST.

4 Services by way of training or coaching in recreational activities relating to ALL forms of:
➢ Arts or Culture
➢ Sports by Registered Charitable Entities.
PC Note: Training/coaching in areas other than arts, culture or sports → GST 

PC Note: Unless specifically exempted, all G&S supplied to charitable/religious trusts → GST .

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CQ1. Discuss the treatment of following transaction by a registered religious trust.

Services Taxability
Renting of Executive room rent Rs. 900 per day [Note 1] Exempt
Renting of Pro-Executive room rent Rs. 1,000 [Note 1] Exempt
Renting of small community hall for Rs. 9,000 per day [Note 2] Exempt
Renting of large community hall for Rs. 12,000 [Note 2] Taxable
Trust has rented shop for Rs. 15,000 p.m. to sell goods required for performing religious ceremonies. Taxable
Meditation Hall provided on rent for Rs. 15,000 per day. ** [Note 3] Exempt
Amount received for yoga camps organized for elderly people Exempt
Amount received for activities relating to preservation of forests & wildlife Exempt
Amount received for advancement of educational programmes relating to abandoned, orphaned or Exempt
homeless children
Renting of residential dwelling for use as a residence – Rent Rs. 25,000 p.m. Taxable
Grant of tenancy rights in a residential dwelling for use as residential dwelling against tenancy Exempt
premium of Rs. 10,00,000.
Grant of tenancy rights in a commercial dwelling for use as residential dwelling against tenancy Taxable
premium of Rs. 10,00,000.

Notes:
1. Exemption is available for renting of rooms wherein the rent charged is less than Rs. 1,000 per day.
▪ Since Deluxe room rent is Rs. 900 per day, it is exempt.
▪ Since Super Deluxe room rent is Rs. 1,000 per day, it is exempt.
2. Exemption is available for renting of community halls wherein the rent charged is less than Rs. 10,000 per day.
▪ Renting of small community hall for Rs. 9,000 per day is exempt.
▪ Since Renting of large community hall is more than Rs. 10,000 per day, it is not exempt.
3. Since Meditation hall falls under the purview of precincts of religious place, limit of Rs. 10,000 is not applicable.
4. It is exempt. Exemption is available for renting of residential dwelling for use as a residence.
5. It is Taxable. If it is commercial dwelling, then it is not exempt.
PC Note: Any of the above points can be asked in the exams by framing it into question.

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1. Services by way of loding, unloading, packing storage or warehousing of Rice

2. Services by way of Warehousing of minor Forest Produce.

3. Services by way of fumigation in a warehouse of agricultural produce

4. Pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits & vegetables which
do not alter essential characteristics.

5. Services by National Centre for Cold Chain Development of cold chain knowledge dissemination.

6. Services relating to cultivation of plants & rearing of all life forms of animals (except horses) for
food, fibre, fuel, raw material or other similar products/agricultural produce by way of:
(a) Agricultural operations directly related to production of any agricultural produce including
cultivation, harvesting, threshing, plant protection or testing;
(b) Supply of farm labour;
(c) Processes carried at agricultural farm including tending, cutting, harvesting, drying, cleaning,
trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging & like
operations which do not alter essential characteristics of agricultural produce but only
make it marketable for primary market;
(d) Renting/leasing of agro machinery or vacant land with/without structure for being use in
agriculture or related activities;
(e) Loading, unloading, packing, storage or warehousing of Agricultural Produce;
(f) Agricultural Extension Services [Application of scientific research & knowledge to agriculture]
Ex: Training courses, kisan call centres, farm visits, on farm trials, kisan melas, kisan clubs, advisory
bulletins and the like.
(g) Services by any APMC or Board related to selling/marketing of agricultural produce.
However, renting of shops/other property by APMC → GST  (since not directly related)
(h) Services provided by Commission Agent for Sale/Purchase of Agricultural Produce.

Points to be noted:
1. Breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers
(floriculture) and horticulture, forestry, etc. → NO GST.
2. Agricultural produce means any produce out of cultivation of plants & rearing of animals (except
horses) on which
(a) No further processing is done or
(b) Processing which is usually done by a cultivator or producer & which does not alter its Essential
Characteristics, but makes it Marketable for Primary Market.
Ex: Cultivation, harvesting, threshing, testing, Tending, pruning, cutting, drying, cleaning, trimming.

❖ Following processes are liable to GST:

▪ Process which Alters the Essential Characteristics of Agricultural Produce.
Ex: Potato chips or tomato ketchup are manufactured through processes which alter the essential
characteristic of farm produce (potatoes and tomatoes).
▪ Process which makes agricultural produce marketable in retail market.
Processes of grinding, sterilizing, extraction packaging in retail packs of agricultural products,
which make agricultural products marketable in retail market is liable to GST.

7. Carrying out an Intermediate Production Process as Job Work in relation to Cultivation of Plants
& Rearing of all life forms of Animals (except rearing of horses) for food, fibre, fuel, raw material or
other similar products or agricultural produce.

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8. Services by way of Artificial Insemination of Livestock (other than horses).

9. Services by way of storage/warehousing of cereals, pulses, fruits, nuts & vegetables, spices, copra,
sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured
tobacco, betel leaves, tendu leaves, coffee and tea. [Amendment]

❖ Processed products such as tea, coffee beans or powder, pulses (dehusked or split), jaggery, spices, dry
fruits, cashewnuts etc. fall outside the definition of agricultural produce & therefore exemption from GST
is not available to their loading, packing, warehousing etc & thus GST will be levied.

❖ Milling of paddy into rice: Milling of paddy into rice changes its essential characteristics.
Therefore, milling of paddy into rice cannot be considered as an intermediate production process.
Thus, milling of paddy into rice is not eligible for exemption & thus GST will be levied.

CQ2. Discuss GST treatment of a Farmers Association engaged in providing services relating to agriculture.
Services Taxability
Cultivation of ornamental flowers Exempt
Packing of tomato & chili ketchup [Note 1] Taxable
Warehousing of potato chips [Note 2] Taxable
Sale of tea on commission basis [Note 3] Taxable
Packaging of pulses in 1 KG retail packing [Note 4] Taxable
Training of farmers on use of scientific tools & agro machinery [Note 5] Exempt
Leasing of vacant land to a stud farm (rearing of horses) Taxable
Grading of wheat according to its quality [Note 6] Exempt
Testing of samples from plants for pest detection [Note 7] Exempt
Rearing of silk worms & Breeding of fish Exempt
Supply of farm labour & Renting of Agro-machinery Exempt
Leasing of vacant land to a poultry farm [Note 8] Exempt
Charges for seed testing Exempt
Charges for soil testing of farm land Exempt
Commission received on sale of wheat Exempt
Charges for training of farmers on use of new pesticides & fertilizers through scientific research Exempt
Leasing of vacant land to a cattle farm Exempt
Charges for warehousing of rice Exempt
Charges for warehousing of cotton fabrics Taxable
Retail packing & labelling of fruits & vegetables Exempt
Services relating to cultivation of seeds. Exempt
Pre-conditioning & pre-cooling services of fruits & vegetables for refrigerated transport. Exempt

Notes:
1. Tomato is an agricultural produce. Tomato ketchup is not an agricultural produce. It is a processed product.
2. Potato is an agricultural produce. Potato chips are not an agricultural produce. It is a processed product. Potato
chips or tomato ketchup are manufactured through processes which alter essential characteristic of farm produce.
3. Services provided by Commission Agent for Sale/Purchase of Agricultural Produce is exempt. However, sale of tea
(not being an agricultural produce) attracts GST.
4. Such process is not necessary to pack pulses for making it marketable & thus attracts GST.
5. Agriculture extension services are exempt.
6. Grading doesn’t alter essential characteristics of agriculture produce but makes it marketable for primary market.
7. Agricultural operations directly related to production of any agriculture produce is exempt.
8. Leasing of vacant land to a poultry farm is exempt. Agriculture means rearing of all forms of animals other than
rearing of horses. Renting of vacant land is exempt when used for agriculture purpose.

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1 (a) Services provided by educational institution to its students, faculty & Staff;
(b) Services provided by educational institution by way of conduct of Entrance Examination
against consideration in the form of entrance fee;

Note: Canteen, maintenance etc. provided by Private Players to Educational Institution → GST 
2 Services provided to educational institution by way of
(i) Transportation of students, faculty & staff;
(ii) Catering, including any mid-day meals scheme sponsored by CG, SG, UT;
(iii) Security or cleaning or house-keeping services performed in such educational institution;
(iv) Services relating to admission to, or conduct of examination by, such institution; [Exempt to ALL]
(v) Supply of online Educational Journals or Periodicals.

PC Note: Exemption in (i), (ii), (iii) is available only to schools upto HSC or equivalent. [College ⌧]
Exemption in (v) is available only to college. [Schools upto HSC/approved vocational courses ⌧]

Educational institution means an institution providing services by way of:

(i) Pre-school education & education upto HSC or equivalent; [School upto 12th]
(ii) Education as a part of a curriculum for obtaining qualification recognised by any law in India;
[Degree courses by colleges, universities or institutions → GST ⌧ ; Private coaching → GST ]
(iii) Education as a part of an approved vocational education course.
Approved Vocational Education Course means
▪ Course run by ITI/ ITC affiliated to National Council for Vocational Training (NCVT) or State
Council for Vocational Training (SCVT) offering courses in designated trades.
▪ Modular Employable Skill Course, approved by NCVT, run by a person registered with
Directorate General of Training, Ministry of Skill Development & Entrepreneurship.

Private ITIs
▪ If education provided by Private ITIs is approved as vocational educational course → GST ⌧.
▪ Conduct of entrance examination by private ITIs for designated trades → GST ⌧.
▪ Admission to or conduct of examination services provided by private ITI to educational institutions
i.r.o such designated trade → GST ⌧. [Services in other than designated trades → GST ]

Government ITIs
▪ Services provided by Government ITI to trainees/students → GST ⌧ [as provided by CG/SG]
▪ This would cover both vocational training & examinations conducted by Government ITls.
Note: Central & State Boards are treated as ‘Educational Institution’ for conducting examination.

(iv) Indian Institute of Management (as they provide education as a part of a curriculum for obtaining
a qualification recognized by law). [Note: Only for long duration course (≥ 1 year)].
However, Short Duration/Short Term Executive Program → GST will be levied @ 18% (9% + 9%).

Maritime courses approved by DG Shipping conducted by Maritime Training Institutes of India [AMD]

▪ Maritime Training Institutes & their training courses are approved by Director General of Shipping
which are duly recognised under the provisions of the Merchant Shipping Act, 1958 r/w the Merchant
Shipping (standards of training, certification and watch-keeping for Seafarers) Rules, 2014.
▪ Therefore, Maritime Training Institutes are educational institutions & courses conducted by them
are exempt from GST under entry 66.

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SOME OTHER CLARIFICATIONS REGARDING EDUCATIONAL SERVICES

1 College/Hostel Mess services
Mess run by educational institution/students It is exempt from GST. [Since given to SSF]
Mess is outsourced to a third person It is taxable.
[Catering services given to educational institiution] [Note: Exempt if given to school upto HSC]
2 Fees for recruitment through campus interviews taken from companies → GST 
3 Boarding Schools [Education + Residence + Food] → NO GST on the entire consideration.
▪ This is composite supply if charges for education & lodging & boarding are inseparable.
▪ Such services are naturally bundled & supplied in ordinary course of business.
▪ Thus, principal supply being “education”, entire consideration for the supply will be exempt.
4 Dual Degree in a college [only one of which is recognized by law]

▪ Provision of dual qualifications is in nature of two separate services as curriculum & fees for each
of such qualifications are prescribed separately.
▪ Service in respect of each qualification would, therefore, be assessed separately.
▪ If an artificial bundle of service is created by clubbing two courses together (only one of which
leads to a qualification recognized by law), it shall be treated as a mixed supply.
PC Note: Incidental auxiliary courses provided by way of hobby classes or extra-curricular activities
will be an example of naturally bundled course, and therefore treated as composite supply.

CQ3. State whether the following activities are liabile to GST or not?
SN Services Taxability
1 Renting of immovable property to higher secondary school. Taxable
2 Transportation services provided to students of higher secondary school. Exempt
3 Catering services provided to educational institutions running approved vocational courses. Taxable
4 Security services provided to Pre-Nursery School. Exempt
5 Housekeeping & cleaning services in college providing recognized graduation degree. Taxable
6 Conducting of Examination of ICAI. Exempt
7 Development of course content of ICAI. Taxable
8 Training of Staff of Higher Secondary School. Taxable
9 Placement service provided to ICAI Taxable
10 Renting of immovable property to commercial coaching center Taxable
11 Receipts by way subscription of online educational journals/periodicals
(a) Rs. 5,00,000 is from educational institutions who provide degree recognized by any law Exempt
(b) Rs. 2,50,000 from Higher Secondary school. Taxable
12 Running a Boarding School Exempt
13 Conducting private tuitions Taxable
14 Education services for obtaining a qualification recognised by law of a foreign country Taxable
15 Fees from prospective employers for campus interview Taxable
16 Renting of furnished flats for temporary stay to different persons [Refer Note Below] Taxable
17 Hostel Fees received from students Exempt
18 Conducting modular employable skill course, approved by NCVT Exempt
19 ‘AIMS’ Coaching institute providing coaching in the field of science (no certificate was issued) Taxable
20 ‘PCA’ a coaching institute providing coaching in the field of commerce (certificate was awarded) Taxble
21 ‘Play Kids’ school providing educational upto primary level – Rs. 15 Lacs Exempt
It includes receipts from renting of premises to commercial coaching centre: Rs. 3 Lacs) Taxable
PC Note: Short stay by different persons in furnished flats is not renting of residential dwelling & thus, not exempt.

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1 Services by a Veterinary Clinic in relation to health care of animals or birds.

2 Services by way of:
(a) Health care services by
▪ Clinical Establishment, Authorised Medical Practitioner or Para-medics;
(b) Transportation of a patient in Ambulance, other than those specified in (a) above.
3 Services provided by Cord Blood Banks by way of Preservation of Stem Cells or related services.
4 Services provided by operators of common bio-medical waste treatment facility to clinical
establishment by way of treatment or disposal of bio-medical waste or incidental processes.
5 Services of public conveniences [Facilities of washrooms, lavatories, urinal or toilets]

MEANING OF SOME TERMS

1 Health Care Services
▪ Diagnosis/treatment/care for illness, injury, deformity, abnormality or pregnancy in any recognised
system of medicines in India &
▪ includes services of transportation of patient to & from a clinical establishment; [Ambulance]
▪ but does not include hair transplant or plastic surgery except to restore/reconstruct anatomy or
functions of body affected due to congenital defects, abnormalities, injury.
2 Clinical establishment Hospital, nursing home, clinic, sanatorium, pathological labs etc.
3 Paramedics Trained health care professionals [Nurse, physiotherapists, lab assistants]
4 Recognized systems of ◾ Allopathy; ◾ Homeopathy; ◾ Ayurveda; ◾ Naturopathy; ◾ Yoga;
medicines in India ◾ Siddha; ◾ Unani; ◾ Any other system recognized by CG.

SOME OTHER POINTS

1 Food Supplied ▪ Food supplied to patients = Composite supply of healthcare → GST ⌧
▪ Food supplied to any other person (visitors, staff of hospital) → GST 
2 Room Rent Rent of rooms provided to patients in hospitals → GST ⌧
3 Hospital Fees including retention money & fee/payments made to doctors → GST ⌧
4 Other Services Renting of shops, advertisement in hospitals → GST 

CQ4. Determine the taxability of the following services given by Apollo Hospitals:
Services Taxability
Services provided by cord blood bank of the nursing home by way of preservation of stem cells Exempt
Hair transplant services Taxable
Naturopathy treatments [Such treatment is a recognized system of medicine] Exempt
Plastic surgery to restore anatomy of a child affected due to an accident Exempt
Pranic healing treatments [Such treatment is not a recognized system of medicine] Taxable
Palliative care for terminally ill patients at patient's home (Palliative care is given to improve the Taxable
quality of life of patients who have a serious or life-threatening disease) [Refer Note Below]
Ambulance services to transport critically ill patients from various locations to nursing home Exempt
Mortuary Services -ve Listed
Note: It is immaterial whether health care service is provided at clinical establishment or at home. Pallative care is
exempt since it is given to improve quality of life of patients who have a serious or life-threatening disease.

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1 Services provided by CG, SG, UT, LA EXCLUDING the following services by/in relation to: ↓

(a) Department of Posts by way of

▪ Speed post,
▪ Express parcel post, Provided to a person other than CG, SG, UT
▪ Life insurance &
▪ Agency services [Distribution of MF, passport applications, collection of telephone & electricity bills]
(b) Aircraft/vessel, inside or outside the precincts of port or airport;
(c) Transport of Goods or Passengers; or
(d) Any service other than (a) to (c) provided to Business Entities.

CQ5. Discuss the taxability of the following services provided by a Post Office:
SN Services Taxability
(1) Basic mail services Exempt
(2) Transfer of money through money orders Exempt
(3) Operation of saving accounts Exempt
(4) Rural postal life insurance services Taxable
(5) Distribution of mutual funds, bonds & passport applications Taxable
(6) Issuance of postal orders Exempt
(7) Collection of telephone & electricity bills Taxable
(8) Pension payment services Exempt
(9) Speed post services Taxable
(10) Express parcel post services Taxable
(11) Express parcel service by department of post to Union Territory of Andaman. Taxable

PC Note: If such service is provided to a person (other than CG/SG/UT), it is chargeable to GST. If such service
is provided to CG/SG/UT, it is exempt from GST.
2 Services provided by CG, SG, UT, LA to Business Entity with ATO upto such amount in the
preceding FY as makes it eligible for exemption from registration;
This entry shall not be applicable to 1(a), 1(b) & 1(c) of above Entry & Renting of immovable property.

3 Services provided by CG, SG, UT, LA to CG, SG, UT or LA.

PC Note: Nothing contained in this entry shall apply to 1(a), 1(b) & 1(c) of the above Entry.

4 Services provided by CG, SG, UT, LA if consideration for such services ≤ Rs. 5,000.
Continuous supply of service → Exemption is available only if consideration charged for such
service ≤ Rs. 5,000 in a FY.
PC Note: Nothing contained in this entry shall apply to 1. (a), (b) & (c).

5 Supply of service by a Government Entity to

▪ CG, SG, UT, LA or
▪ any person specified by CG, SG, UT, LA for which consideration is received from CG, SG, UT, LA in
form of grants.

6 Services supplied by CG, SG, UT to their undertakings or PSUs

▪ by way of guaranteeing the loans taken by such undertakings or PSUs from FIs & Banks.
7 Services by old age home run by CG, SG, registered charitable trust to its residents (> 60 yrs)
▪ against consideration upto Rs. 25,000 per month per member,
▪ provided that consideration is inclusive of charges for boarding, lodging & maintenance.

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8 Services provided by CG, SG, UT, LA by way of:

▪ registration required under any law for the time being in force;
▪ testing, calibration, safety check or certification relating to protection or safety of workers,
consumers or public at large, including fire license, required under any law.
▪ issuance of passport, visa, driving license, birth certificate or death certificate.
▪ tolerating non-performance of a contract for which consideration in form of fines or liquidated
damages is payable to CG, SG, UT, LA under such contract. [Treated as supply of service]
▪ Assignment of right to use natural resources to individual farmer for cultivation & rearing all forms
of life forms except rearing of horses.

9 Services by CG, SG, UT by deputing officers after office hours or on holidays for inspection or
container stuffing for import export cargo on payment of Merchant Overtime charges.

10 Services provided by recognised rehabilitation professionals by way of rehabilitation, therapy or

counselling at medical establishments, educational institutions, rehabilitation centers established by
CG/SG/UT/registered charitable trust.

11 Services supplied by SG to Excess Royalty Collection Contractor (ERCC) by way of assigning right
to collect royalty on behalf of SG on mineral dispatched by mining leaseholders.
▪ At end of contract period, ERCC shall submit an account to SG & certify that GST deposited by
mining leaseholders on royalty > GST exempted on service provided by SG to ERCC of assignment
of right to collect royalty;
▪ If GST paid by mining leaseholders < GST exempted, exemption shall be restricted to amount =
amount of GST paid by mining leaseholders &
▪ ERCC shall pay difference b/w GST exempted on service provided by SG to ERCC of assignment of
right to collect royalty & GST paid by mining leaseholders on royalty.

PC Note: Services by Police or security agencies of Government to PSUs/private entities → GST .

Such services are taxable supplies & recipients are required to pay tax under RCM.

CQ6. Will the following activity attract GST?

Services Taxability
(a) State Police provided protection services to the Judges of HC on payment of Rs. 2,00,000. Exempt
(b) Chief Secretary to Finance Minister travelled from Delhi to Chennai by rail in an AC coach on Taxable
official trip. Cost of ticket is Rs. 1,200.
(c) Passport is issued by the Office of External Affairs Ministry under Passport Act, 1967 to individual. Exempt
The fee of Rs. 6,500 is paid by business entity in which such individual person is working.
(d) M/s X Ltd. paid penalty u/s 49 of the CGST Act, 2017 of Rs. 20 lacs to the Government Department Not
in Oct 2018. [Refer Note Below] Taxable
(e) Domicile Certificate for certifying the number of years during which the person has stayed in Exempt
State, has been obtained from District Collector’s Office, by paying fee of Rs. 5,500.
(f) Inspector of the Metrology Department verified the calibration of weighing scale & the weight & Exempt
collected charges of Rs. 7,500 from the shop owner under the The Legal Metrology Act, 2009.
(g) Department of Agriculture & Farmers’ Welfare provided Soil Conservation Service, Animal Exempt
Husbandry etc. to a farmer for Rs. 20,000 in relation to assignment of natural resources.
(h) For registration of a company whose nominal share capital does not exceeds Rs. 1,00,000, paid Exempt
registration fee of Rs. 5,000.

Note: It is not a supply of service. Fine or penalty chargeable by CG/SG/LA for violation of statute, laws, rules etc. are
not leviable to GST. Such fines or penalty are not recovered for tolerating non-performance of a contract.

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1 Service by Fair Price Shops to CG, SG or UT by way of sale of food grains, kerosene, sugar, edible
oil, under Public Distribution System (consideration being commission/ margin.

2 To CG, SG, UT under any insurance scheme for which total premium is paid by CG, SG, UT.

3 To CG, SG, UT under any training programme where all expenditure is borne by CG, SG, UT

4 Services provided by GSTN to CG, SG, UT for implementation of GST.

5 Pure services (except works contract or other composite supplies involving supply of goods)
▪ provided to CG, SG, UT, LA or Governmental authority or Government Entity
▪ by way of any activity:
- in relation to any function entrusted to a Panchayat under article 243G.
- in relation to any function entrusted to a Municipality under article 243W.

6 Composite supply of G&S (in which value of goods ≤ 25% of total value of composite supply)
▪ provided to CG, SG, UT, LA or Governmental authority or Government Entity
▪ by way of any activity:
- in relation to any function entrusted to a Panchayat under article 243G.
- in relation to any function entrusted to a Municipality under article 243W.

1 Construction & related services by way of Pure Labour Contracts of a civil structure or any other
original works pertaining to beneficiary-led individual house construction/enhancement under
‘Housing for All (Urban) Mission’ or Pradhan Mantri Awas Yojana.

2 Construction & related services by way of pure labour contracts of original works pertaining to
‘Single Residential unit’ otherwise than as a part of a residential complex.

3 Construction & related services supplied by Electricity Distribution Utilities for extending
electricity distribution network upto tubewell of farmer or agriculturalist.

4 Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer.

Condition for Constructed flats are sold before earlier of (i) issuance of completion certificate or
Exemption (ii) first occupation of project, & tax is paid on them.

Withdrawal of If flats are sold after issue of completion certificate. Such withdrawal shall be limited
Exemption to 1% of value (in case of affordable houses) & 5% of value (in case of other houses).

CQ7. A Ltd. owns a plot of land. For construction of a single residential unit, a works contract is given to B Ltd. for
Rs. 4.5 crore. Labour & material will be supplied by B Ltd. Construction will be completed within 2 years. 20% of
agreed consideration is paid at the time of signing the agreement. The balance of 8O% will be paid in instalments
depending upon completion of work.
Answer:
▪ Construction & related services by way of pure labour contracts of original works pertaining to ‘Single
Residential unit’ otherwise than as a part of a residential complex is exempt.
▪ However, if the contractor supplies material as well as labour, GST shall be payable.
▪ Thus, in this case, GST will be payable.

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1 Transport of passengers (with or without accompanied belongings)

▪ By Air [Starting or ending in airport located in Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, Tripura, Bagdogra located in West Bengal]
▪ Non-AC contract carriage (other than radio taxi) excluding tourism, tour, charter or hire.
▪ Non-AC Stage carriage.

2 Transportation of passengers by
(a) Railway other than (i) 1st class; or (ii) AC coach;
(b) Metro, monorail or tramway;
(c) Inland waterways;
(d) Public transport in vessel b/w places in India (other than predominantly for tourism)
PC Note: Transportation of passengers in normal public ships or other vessels that sail b/w places
located in India would be exempt even if some of the passengers on board are using the service
for tourism because predominantly, such service is not for tourism purpose.
However, services provided by leisure/charter vessels/a cruise, predominant purpose of which is
tourism, would be liable to GTS even if some of the passengers in such vessels are not tourists.
(e) Metered cabs or Auto rickshaws (including e-rickshaws power ≤ 4,000 watts).

3 Transportation of passengers to CG by Air starting or ending at a RCS (Regional Connectivity

Scheme) airport, against consideration in form of viability gap funding.
PC Note: Nothing contained in this entry shall apply on/after expiry of 3 years from date of
commencement of operations of the RCS airport as notified by the Ministry of Civil Aviation.

CQ8. Morganite Ltd. is engaged in providing service of transportation of passengers by following modes:
SN Services Taxability
1 Transportation of passengers by vessels in National Waterways [Note 1] Exempt
2 Transportation of passenger by AC Stage carriage Taxable
3 Transportation of passenger by non-AC stage carriage Exempt
4 Transportation of passengers by contract carriage for tourism Taxable
5 Transportation of passengers in Non-AC contract carriages Exempt
6 Transportation of passengers in Non-AC contract carriages for tourism Taxable
7 Transportation of passenger for Mumbai to Chennai port in a vessel & such service is not for Exempt
tourism purpose [Being public transport in vessel sailing in India & not for tourism]
8 Transportation of passenger in Metered Cab Exempt
9 Transportation of passengers in Radio Taxis Taxable
10 Transportation of passengers in air-conditioned contract carriages Taxable
11 Transportation of passengers by auto-rickshaw/e-rickshaw Exempt
12 Transport of passengers by general class Exempt
13 Transport of passengers by sleeper class Exempt
14 Transport of passengers by 1st Class AC coach Taxable
15 Transport of passengers by 2 tier AC coach Taxable
16 Transport of passengers by 3-tier AC coach Taxable

PC Note: Since National Waterways are covered in definition of inland Waterways.

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1 Services by way of transportation of goods by:

▪ Road [Except (a) GTA; (b) Courier agency]
▪ Inland waterways
2 Transportation by Rail or Vessel of the following goods:
▪ Relief materials meant for victims of natural or man-made disasters, calamities, accidents;
▪ Defence or military equipments;
▪ Registered newspaper or magazines;
▪ Railway equipments or materials;
▪ Agricultural produce;
▪ Milk, salt & food grain including flours, pulses & rice;
▪ Organic manure.
3 Services provided by GTA by way of transport of
▪ Relief materials meant for victims of natural or man-made disasters, calamities, accidents;
▪ Defence or Military equipments;
▪ Registered Newspaper or magazines;
▪ Agricultural Produce; Organic manure.
▪ Milk, Salt & food grain including flours, pulses & rice;
▪ Goods [If consideration from a single consignee for all such goods ≤ Rs. 750].
▪ Goods [If consideration charged on consignment transported in single carriage ≤ 1,500]
CQ9. Determine taxability for transport of goods by rail within India:
SN Services Taxability
1 Transport of postal mails & postal bags Taxable
2 Transportation of household effects Taxable
3 Transport of petroleum products Taxable
4 Transport of relief materials to flood affected areas Exempt
5 Transport of newspapers & magazines registered with registrar of newspapers Exempt
6 Transport of milk Exempt
7 Transport of alcoholic beverages Taxable
8 Transport of defence & military equipments Exempt
9 Transport of chemical fertilizers Taxable
10 Transport of tea Taxable
11 Transport of sugar Taxable
12 Transport of organic manure Exempt
13 Transport of baled cotton Taxable
14 Transport of other taxable goods (including demurrages) Taxable

CQ10. Compute the value of taxable supply & give reasons for taxability of services for Mahesh Transport Ltd.
engaged in business of transport of goods by road. No freight is received from any specified category of
consignor/consignee. Mahesh Transport Ltd. does avails ITC. GST @ 12%:
Pariculars Rs.
1. Total freight charges received by Mahesh Transport Ltd. 13,50,000
2. Freight charges received for transporting fruits 1,25,000
3. Freight for transporting small consignment for persons who paid < Rs. 750 for each consignment 75,000
4. Freight for transporting goods in small vehicles for persons who paid < Rs. 1,500 per trip 1,50,000

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Answer: Computation of Value of taxable supply & GST leviable thereon

Total freight received 13,50,000
Less: Freight charges received for transporting fruits being agricultural produce [Exempt] 1,25,000
+Less: Freight < Rs. 750 for each consignment (Exempt since the freight charged to a single consignee 75,000
does not exceed Rs. 750 & thus deducted from value of taxable supply)
Less: Freight for transporting goods in small vehicles for persons who paid < Rs. 1,500 per trip 1,50,000
(Exempt since freight on all consignments transported into a goods carriage doesn't exceed Rs. 1,500
& & thus deducted from value of taxable supply)
Total value of taxable supply 10,00,000
GST payable @ 12% 1,20,000

4 Services provided by GTA to unregistered person, including unregistered CTP other than:
▪ Factory (Factories Act, 1948); Society (Societies Registration Act); Co-operative society
▪ Any body corporate; P’ship Firm (including AOP/BOI); Registered CTP.
CRUX: GTA services provided to only an unregistered individual end consumer are exempt from GST.

5 ‘Transportation of Goods’ services provided by GTA to Department or Establishment of CG/SG/UT;

LA; Governmental Agencies which has taken GST registration only for deducting tax u/s 51 & not for
making a taxable supply of G&/S.

Meaning of GTA
▪ Any person who provides transport of goods by road & issues consignment note.
▪ Service of GTA includes not only actual transportation of goods, but also various intermediary & ancillary
services, such as, loading/unloading, packing/unpacking, transhipment & temporary warehousing,
which are provided in course of transport of goods by road.
▪ These services are not provided as independent services but as ancillary to principal service, namely,
transportation of goods by road.
▪ Invoice issued by GTA for providing said service includes value of intermediary & ancillary services.
PC Note: Individual truck/tempo operators who do not issue any consignment note are not GTAs.

CQ11. Discuss whether GST is leviable i.r.o transportation services provided by GTA:
SN Nature of service provided Taxability
1 Transportation of milk Exempted
2 Transportation of books on a consignment transported in a single goods carriage Taxable
3 Transportation of chairs for a single consignee in the goods carriage for Rs. 600 Exempt

1 Services provided by Reserve Bank of India. [Services provided by banks to RBI → GST ]
2 Services provided by Banking Company to Basic Saving Bank Deposit (BSBD) A/c holders under
Pradhan Mantri Jan Dhan Yojana (PMJDY).
3 Services by way of -
(a) Extending deposits, loans or advances consideration for which is represented by Interest or
Discount (other than interest involved in credit card services).
(b) Sale/Purchase of Foreign Currency amongst banks or authorised dealers of foreign exchange
or amongst banks & such dealers.
Services relating to sale/purchase of Foreign Currency provided to general public → GST 

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(c) Services by acquiring bank to any person in relation to settlement upto Rs. 2,000 in a single
transaction transacted through credit card, debit card, etc.
Acquiring bank: Any banking company, financial institution including non-banking financial
company or any other person, who makes the payment to any person who accepts such card.
(d) Services by Intermediary of financial services located in a multi services SEZ with International
Financial Services Centre (IFSC) status to a customer located o/s India for international
financial services in currencies other than Indian rupees (INR).
Intermediary of financial services in IFSC is a person [To be Read Once]
(a) who is permitted or recognized by Gov. of India or
(b) who is permitted or recognized by any Regulator appointed for regulation of IFSC; or
(c) who is treated as person resident o/s India under Foreign Exchange Management (International
Financial Services Centre) Regulations, 2015; or
(d) who is registered under IRDAI (IFSC) Guidelines, 2015 as IFSC Insurance Office; or
(e) who is permitted by SEBI under SEBI (IFSC) Guidelines, 2015.
PC Note:
1. Service charges/fees, documentation fees, broking charges, administrative charges, entry charges
are not exempt & thus, represent taxable consideration. GST will be levied on such charges.
2. Charges for late payment of outstanding dues on credit card: GST will be levied.
3. Any interest/delayed payment charges charged to the clients for delay in payment of brokerage
amount/settlement obligations/margin trading facility is exempt since settlement obligations or
margin trading facilities are transactions which are in the nature of extending loans or advances.

GST on Delayed payment charges in case of late payment of EMIs [Sec 15(2)(d)]

CQ12. Whether GST is applicable on Additional/Penal interest on overdue loan?

Answer: Value of supply shall include interest/late fee/penalty for delayed payment of any consideration
for any supply unless it is exempted u/e 27.

CQ13. Whether such penal interest would be exempt u/e 27 of exemption notification or it would be
taxable treating it as consideration for liquidated damages?
Answer:
▪ Services by way of extending deposits/loans/advances such that the consideration is represented by
way of interest/discount (other than interest involved in credit card services) is Exempt u/e 27.
▪ Interest means interest payable in any manner i.r.o any moneys borrowed/debt incurred (including a
deposit, claim or other similar right or obligation),
▪ but does not include any service fee/charge i.r.o moneys borrowed/debt incurred or i.r.o any credit
facility which has not been utilised.

Ex 1. Mr. X sells a mobile phone to Mr. Y. Cost of mobile phone is Rs. 40,000. Mr. X gives Mr. Y an option to pay
in instalments of Rs. 11,000 every month before 10th day of following month, over next 4 months (Rs. 11000 ×
4 = Rs. 44000). If there is any delay in payment by Mr. Y beyond scheduled date, Mr. Y would be liable to pay
additional/penal interest of Rs. 500 per month for the delay.
◆ We all know that Services by way of Extending deposits, loans or advances consideration for which is
represented by Interest or Discount (other than interest involved in credit card services) is exempt from GST.
In this case, Mr, X is not getting interest for extending any deposit, loan or advance. Mr. X is getting interest
from Mr. Y for delayed/deferred payment of consideration (which is not exempt). Thus, GST will be levied on
such interest. Thus, Value of Mobile phone = Rs. 44,000 & GST will be levied on Rs. 44,000.
◆ As per section 15, Interest, late fee, Penalty for delayed payment of any consideration for any supply. Thus,
penal interest is to be included in the value of supply [in terms of section 15(2)(d)]. Transaction b/w Mr. X &
Mr. Y is for supply of taxable goods (mobile phone). Accordingly, penal interest would be taxable as it would
be included in the value of the mobile, irrespective of the manner of invoicing.

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Ex 2. Mr. X sells a mobile phone to Mr. Y. Cost of mobile phone is Rs 40,000. Mr. Y has the option to avail a loan
at interest of 2.5% per month for purchasing the mobile from ABC Ltd. Terms of loan from ABC Ltd. allows Y
to repay the loan in 4 months & additional/penal interest @ 1.25% PM for any delay in payment.
In this case, ABC Ltd. is getting interest for extending loan to Mr. X. Thus, GST will be levied on such interest.
Thus, Value of Mobile phone = Rs. 40,000 & GST will be levied on Rs. 40,000.
Additional/Penal interest is charged for a transaction between Mr. Y & ABC Ltd. & same is getting covered
under exemption Entry 27. Thus, 'Penal interest' charged on a transaction between Mr. Y & ABC Ltd. would
not be subject to GST as the same would be covered under said exemption entry.
Note: Any service fee/charge like processing fees (if any) are levied by ABC Ltd. i.r.o transaction related to
extending deposits, loans/advances is not exempted from GST (only interest is exempt).

CQ14. Discuss the taxability of the following amount received by HDFC Bank Ltd. during the month of December 2018.
Services Taxability
Amount of commission received for debt collection service Taxable
Discount earned on bills discounted Exempt
Dealing in sale & purchase of forward contract Exempt
Charges received on credit card & debit card facilities extended Taxable
Penal interest recovered from the customers for the delay in repayment of loan Taxable
Commission received for service rendered to Government for tax collection Taxable
Interest earned on reverse repo transaction Exempt
Interest charged on late payment of credit card bill Taxable
Bank draft charges for transferring money from Pune to Mumbai. Taxable

1 Life insurance business services provided by way of annuity under National Pension System
2 Life insurance business services provided by Army, Naval & Air Force Group Insurance Funds to
members of Army, Navy & Air Force under Group Insurance Schemes of CG.
3 Life insurance services by Naval Group Insurance Fund to personnel of Coast Guard.

4 Services of life insurance provided/agreed to be provided by Central Armed Police Forces (under
Ministry of Home Affairs) Group Insurance Funds to their members under the Group Insurance
Schemes of the concerned Central Armed Police Force.

5 Life insurance business services provided under following schemes:

Janashree Bima Yojana Aam Aadmi Bima Yojana Varishtha Pension BimaYojana
Pradhan Mantri Jan Dhan Pradhan Mantri Vaya Pradhan Mantri Jeevan Jyoti Bima
Yogana Vandan Yojana Yojana
Life micro-insurance product having maximum amount of cover of Rs. 2,00,000;

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1 Services by Employees’ State Insurance Corporation to the governed persons.

2 Services by Employees PF Organisation to the governed persons.

3 Services by Coal Mines PF Organisation to the governed persons.

4 Services by NPS Trust to its members against consideration (administrative fee).

5 Services by IRDAI to insurers under IRDAI Act, 1999.

6 Services by SEBI by way of protecting the interests of investors in securities and to promote
development of, and to regulate, securities market.

1 Services by way of collection of contribution under Atal Pension Yojana.

2 Services by way of collection of contribution under any pension scheme of SG.

1 General insurance business services provided under following schemes:

Niramaya Health Insurance Scheme Pilot Scheme on Seed Crop Insurance
Universal Health Insurance Scheme Pradhan Mantri Fasal Bima Yojana (PMFBY)
Rashtriya Swasthya Bima Yojana Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna
Jan Arogya Bima Policy Central Sector Scheme on Cattle Insurance;
Scheme for Insurance of Tribals Agricultural Pumpset and Failed Well Insurance
Hut Insurance Scheme Restructured Weather Based Crop Insurance (RWCIS)
Coconut Palm Insurance Scheme Janata Personal Accident Policy & Gramin Accident Policy
Pradhan Mantri Suraksha Bima Group Personal Accident Policy for Self-Employed Women
Yojna
Bangla Shasya Bima Premia collected on export credit insurance

2 Services by way of Reinsurance of insurance schemes specified above.

1 Services by business facilitator/correspondent to banking company (w.r.t A/c in rural area);

2 Services by intermediary to business facilitator/correspondent w.r.t services mentioned above

3 Services by business facilitator/correspondent to insurance company in a rural area.

 BCs/BFs help villagers to open bank accounts & provide other banking services to them. They act as
an intermediary b/w bank & its customer. Banks, in turn, pay commission/ fee to the BCs/BFs.
 Banking company is the service provider to the ultimate customer in BF/BC model. Banking company
is liable to pay GST on entire value of fee charged to customers whether or not received via BF/BC.

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1 Upfront amount (called as premium, salami, cost, price, development charges or by any other name)
payable i.r.o service by way of granting of long-term lease of 30 years, or more) of industrial plots
or plots for development of infrastructure for financial business, provided by SG Industrial
Development Corporations or Undertakings or by any other entity having 20% or more ownership of
CG/SG/UT to industrial units or developers in any industrial or financial business area.

PC Note: Exemption on ‘upfront amount’ is available irrespective of whether such upfront amount is
payable or paid in one or more instalments, provided the amount is determined upfront.

CONDITIONS PRESCRIBED
▪ Provided that leased plots shall be used for the purpose for which they are allotted, that is, for
industrial or financial activity in an industrial or financial business area.
▪ Provided that SG concerned shall monitor and enforce the above condition, as per the order issued
by the State Government in this regard.
▪ Provided further that in case of any violation or subsequent change of land use, due to any reason
whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner
shall be jointly and severally liable to pay such amount of integrated tax, as would have been payable
on the upfront amount charged for the long-term lease of the plots but for exemption contained
herein, along with the applicable interest and penalty.
▪ Provided also that lease agreement entered into by original lessor with original lessee or subsequent
lessee, or sub-lessee, as well as any subsequent lease or sale agreements, for lease or sale of such
plots to subsequent lessees or buyers or owners shall incorporate in T&Cs, the fact that IGST was
exempted on long-term lease of the plots by the original lessor to the original lessee subject to above
condition & that the parties to the said agreements undertake to comply with the same.
2 Services of leasing of assets (wagons, coaches, locos) by IRFC to Indian Railways.

Legal services provided by Legal services provided to

1 Firm/Individual Advocate ▪ Advocate (all) or firm of advocates providing legal services;
other than senior advocate ▪ Any person other than BE;
▪ BE with Aggregate TO upto such amount in preceding FY as makes
it eligible for exemption from registration;
▪ CG, SG, UT, LA, Governmental Authority or Government Entity.
2 Senior Advocate OR ▪ Any person other than BE
Arbitral tribunal ▪ BE with Aggregate TO upto such amount in the preceding FY as
makes it eligible for exemption from registration;
▪ CG, SG, UT, LA, Governmental Authority or Government Entity.

PC Note: Legal services provided to a BE with aggregate turnover > 40/20/10 Lacs in preceding FY are liable
to GST. Further, tax is payable by the business entity on such services under RCM.

CQ15. Discuss whether the following services are chargeable to GST:

Services Taxability
Mr. A is an advocate (other than senior advocate) in Calcutta High Court. During December 2018, he Exempt
provides legal service to Mr. X & Co. (a firm of advocates in Kerala) for a fee of Rs. 1,45,000. Turnover
of M/s. X & Co. for preceding FY is Rs. 28 lacs
M/s X & Co. is a firm of advocates & located in Chennai. It provides legal service to Y& Co., a firm of Exempt
advocates, registered in Mumbai. Amount charged by X & Co. is Rs. 24 lacs.
Legal service provided by a law firm to a doctor in practice (whose turnover of last FY was Rs. 48 lacs). Taxable

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X is a senior advocate in the Bombay High Court. He provides legal service to a firm of advocates (legal Taxable
charges being Rs. 35 lacs).
X is an advocate. On January 17, 2018, he provides legal service to Mr. B, a senior Government officer Exempt
presently posted in Surat. Legal service pertains to a personal properly dispute of B & his cousins.

Notes:
1. Legal services provided by Firm/Individual advocate other than senior advocate to (i) Advocate (all) or
partnership firm of advocates providing legal services; (ii) Any person other than BE; (iii) BE with Aggregate
Turnover upto Rs. 20 lacs in preceding FY. (10 lacs for SCS); (iv) CG/SG/UT/LA/Governmental Authority & Entity.
2. Legal serevices provided by Senior Advocate to (i) Any person other than BE; (ii) BE with Aggregate Turnover upto
Rs. 20 lacs in preceding FY. (10 lacs for SCS); (iii) CG, SG, UT, LA, Governmental Authority or Government Entity.

Service by Service provided to

▪ National Skill Development Corporation ▪ National Skill Development Programme

▪ Sector Skill Council approved by NSDC implemented by NSDC

▪ Assessment agency approved by SSC/NSDC ▪ Vocational skill development course

▪ Training partner approved by SSC/NSDC ▪ Any other Scheme implemented by NSDC.

❖ Services of assessing bodies empanelled centrally by DGT, Ministry of Skill Development &
Entrepreneurship by way of assessments under Skill Development Initiative Scheme.
❖ Services provided by training providers under Deen Dayal Upadhyaya Grameen Kaushalya Yojana
(DDUGKY) implemented by Ministry of Rural Development, GoI by way of offering skill or vocational
training courses certified by the National Council for Vocational Training.

Services by sponsorship of sporting events organized by -

(a) National Sports federation/its affiliated federations [District, State, zone or Country level];
(b) Association of Indian Universities, Inter-University Sports Board, School Games Federation of India,
All India Sports Council Deaf, Paralympic Committee or Special Olympics Bharat;
(c) Central Civil Services Cultural & Sports Board; Indian Olympic Association;
(d) Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.

▪ In Folk or Classical art forms of music/dance/theatre if consideration charged ≤ Rs. 1,50,000.

▪ PC Note: Activities by an artist in other art forms (western music/dance, modern theatres, performance
of actors in films/tv serials, artists in still art forms (painting, sculpture) → GST .
▪ Service provided by an artist as Brand Ambassador → GST .

CQ16. Discuss the taxability of the following activities performed by Mr. Aamir, an artist:
Services Taxability
(a) Classical dance performance Exempt
(b) Performance in television serial [Taxable since not covered in folk or classical art forms] Taxable
(c) Services as brand ambassador Taxable
(d) Coaching in recreational activities relating to arts [WN 1] Exempt
(e) Sculpture making activities [Taxable as it is an activity in still art form] Taxable
(f) Western dance performance [Taxable since not covered in folk or classical art forms] Taxable

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1 Admission to museum, national park, sanctuary, tiger reserve, zoo, protected monument.

2 By way of right to admission to -

▪ Circus, Dance, or theatrical performance (including drama/ballet)
▪ Award function, Concert, Pageant, Musical performance, planetarium If Consideration ≤
Rs. 500 per person
▪ Recognized sporting event
▪ Any sporting event (other than recognised sporting event)

Recognised sporting event means any sporting event organized by:

(a) Recognised sports body [District, state, zone or country level]
(b) National sports federation/its affiliated federations [District, State, zone or Country level];
(c) Association of Indian Universities, Inter-University Sports Board, School Games Federation of India,
All India Sports Council Deaf, Paralympic Committee or Special Olympics Bharat;
(d) Central Civil Services Cultural and Sports Board; Indian Olympic Association;
(e) Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme.

Services provided to a Recognized Sports Body by -

(a) Player, referee, umpire, coach/manager for participation in sporting event organized by RSB.
(b) Another recognized Sports body.
PC Note: Selectors, commentators, curators, technical experts → GST ; IPL → GST .

Recognised sports body means -

▪ Indian Olympic Association; ◾ Sports Authority of India;
▪ National sports federation recg. by Ministry of Sports & Youth Affairs of CG & its affiliate federations
▪ National sports promotion organisations recognized by Ministry of Sports and Youth Affairs of CG
▪ International Olympic Association or federation recognized by International Olympic Association;
▪ Federation or a body which regulates a sport at international level and its affiliated federations.

CQ17. State whether the following services are exempt under GST or not:
Question Taxability
Services provided to a recognized sports body by an individual as a player Exempt
Services provided to a recognized sports body by an individual as a referee Exempt
Services provided to a recognized sports body by an individual as a umpire Exempt
Services provided to a recognized sports body by an individual as a coach Exempt
Services of a player to IPL Franchisee Taxable
Services by a recognized sports body to another recognized sports body Exempt
Services provided to a recognized sports body by an individual as a selector Taxable
Services provided to a recognized sports body by an individual as a commentator Taxable
Services provided to a charitable body by an individual as a player in subsidized fees Taxable

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1 Service by an unincorporated body or a non- profit entity registered under any law to its own
members by way of reimbursement of charges or share of contribution:

(a) as a trade union;

(b) for the provision of carrying out any activity which is exempt from levy of GST;
(c) upto Rs. 7,500 per month per member for sourcing of Goods or services or both from 3rd person
for common use of its members in a housing society or a residential complex.
If turnover of housing society > applicable threshold limit for registration, it needs to take registration under
GST. However, taking registration does not mean that housing society has to compulsorily charge GST in monthly
maintenance bills raised on its members. If services provided by it are exempt, then it is not required to charge
GST on the said services.
Ex: A society may be registered under GST, but if the monthly contribution received from the members is < Rs.
7,500/- (& amount is for the purpose of sourcing of G&S from a third person for the common use of its members),
no GST is to be charged by housing society on monthly bill raised by the society. However, if monthly
contribution exceeds > Rs. 7500, entire contribution is taxable. If maintenance charges are Rs. 9000 per month
per member, GST @ 18% shall be payable on Rs. 9000 & not on [Rs. 9000 – Rs. 7500] = Rs. 1500.
Further, if turnover of the society is < applicable threshold limit for registration or even if the turnover is beyond
the said threshold limit, but monthly contribution of all the individual members towards maintenance is < Rs.
7,500/- (such services being exempt) & society is providing no other taxable service to its members or outsiders,
then society (essentially exclusively providing wholly exempt services) need not take registration.
PC Note: Statutory dues such as property tax, electricity charges etc. forming part of monthly maintenance bill
raised by the society on its members would be excluded while computing aforesaid monthly limit of Rs. 7500.
2 Services provided by an unincorporated body or a non-profit entity engaged in:
(a) activities relating to welfare of industrial or agricultural labour or farmers; or
(b) promotion of trade, commerce, industry, agriculture, art, science, literature, culture, sports,
education, social welfare, charitable activities and protection of environment
to its own members against membership fee upto Rs. 1000 per member per year.

GST on monthly subscription/contribution (Maintenance) charged by RWA from its members

SN Issue Clarification
(a) Maintenance charges paid by Supply of service by RWA to its own members by way of
residents to RWA in housing society reimbursement of charges/share of contribution up to an
exempt from GST & if yes, is there an amount of Rs. 7,500 PM per member for providing G&S for
upper limit on amount of such the common use of its members in a housing society or a
charges for exemption to be available? residential complex are exempt from GST.
(b) A RWA has aggregate turnover of ≤ Rs. No. If ATO of RWA ≤ Rs. 20 Lacs in a FY, it shall not be
20 lacs in a FY. Is it required to take required to take registration & pay GST even if the amount
registration and pay GST on of maintenance charges > Rs. 7,500 PM per member.
maintenance charges if the amount of RWA shall pay GST on monthly subscription/contribution
such charges is more than Rs. 7500 charged from its members, only if such subscription is > Rs.
PM per member? 7,500 PM per member & ATO of RWA by way of supplying of
G&S is also > Rs. 20 lacs.
Annual turnover of RWA Monthly Charges Whether Exempt?
> Rs. 20 lacs > Rs. 7,500 No
≤ Rs. 7,500 Yes
≤ Rs. 20 lacs > Rs. 7,500 Yes
≤ Rs. 7,500 Yes
(c) Is RWA entitled to take ITC of GST RWAs are entitled to take ITC of GST paid by them on
paid on input services used by it for

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making supplies to its members & use ▪ Capital goods (generators, water pumps, lawn furniture)
such ITC for discharge of GST liability ▪ Goods (taps, pipes, other sanitary/hardware fillings etc)
on such supplies where the amount ▪ Input services such as repair & maintenance services.
charged such suppliesis > Rs. 7,500
per month per member?
(d) Person owns 2 or more flats in Person who owns 2 or more residential apartments in a
housing society/residential complex, housing society/residential complex shall normally be a
whether ceiling of Rs. 7,500 per member of the RWA for each residential apartment owned by
month per member on the him separately. The ceiling of Rs. 7,500 PM per member shall
maintenance for the exemption to be be applied separately for each residential apartment owned
available shall be applied per by him.
residential apartment/per person? Ex. If a person owns 2 residential flats in a residential
complex & pays Rs. 15,000 per month as maintenance
charges towards maintenance of each apartment to the RWA
(Rs. 7,500 per month i.r.o. each residential apartment),
exemption from GST shall be available to each apartment.

CQ18. Resident Welfare Association of Gokuldham Society in Mumbai provides following information for Nov. 2019:
Particulars Rs.
1 Monthly subscription collected from member families (Rs. 8,000 each from 100 families) 8,00,000
2 Electricity charges levied by State Electricity Board on the members of RWA 3,50,000
(It was collected from members & remitted to the Board on behalf of members)
3 Electricity charges levied by State Electricity Board on the RWA in respect of electricity consumed for 4,32,400
common use of lifts & lights in common area. [Bill was raised in the name of RWA. RWA collected the
said charges by apportioning them equally among 100 families & then remitted to the Board.]
4 Proceeds from sale of entry tickets to a musical performance conducted by the RWA in the park of 40,000
Gokuldham Society [Where the consideration for admission is ≤ Rs. 500 per person]
5 Other Services to non-members 2,92,000
Compute the value of taxable supply & GST liability of Gokuldham Society for November, 2019.
Note: (i) GST is included in the receipts of RWA. (ii) Time of supply falls in November, 2019. (iii) Rate of GST - 18%.
Answer: Computation of Value of taxable supply & GST liability
Monthly subscription charges [WN 1] 8,00,000
Electricity charges levied by State Electricity' Board on the members of RWA [WN 2] Nil
Amount collected towards electricity charges levied by State Electricity Board on RWA i.r.o electricity
consumed for common use of lifts & lights in common area [WN 3] 4,32,400
Proceeds from sale of entry tickets to musical performance held in park of Housing Society [WN 4] Nil
Other Services to non-members [Liable for GST] 2,92,000
Value of taxable supply inclusive of GST 15,24,400
Value of taxable supply (Rs. 15,24,400 × 100/118) (rounded off) 12,91,864
GST payable @ 18% 2,32,536

Working Notes:
1. If per month per member contribution of any or some members of a RWA exceeds Rs. 7,500, entire contribution of
such members whose per month contribution exceeds Rs. 7,500 would be taxable.
2. Services provided by a RWA in the name of its members, acting as a "pure agent" of its members, are excluded from
value of taxable supply available for the purposes of exemption provided under mega exemption notification.
3. In case of electricity bills issued in name of RWA i.r.o. electricity consumed for common use of lifts & lights in
common area, etc., exclusion from VoS would not be available, since there is no agent involved in these transactions.
4. Entry to entertainment events where the consideration for admission is ≤ Rs. 500 per person is exempt.

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1 Transfer of a going concern (running business), as a whole or independent part thereof.

Ex: Royal Hotel Group is in the business of running a chain of restaurants. It intends to sell its business as
a going concern. It would not be required to pay GST on such sale of its business.
2 Supply of services associated with transit cargo to Nepal & Bhutan (landlocked countries).
3 Services by way of Renting of residential dwelling for use as residence.
4 Services by a hotel, inn, guest house, club or campsite for residential or lodging purposes, having
Value of Supply of a unit of accommodation ≤ Rs. 1,000 per day or equivalent.
5 Services by way of giving on hire
(a) Motor vehicle (carrying > 12 passengers) to state transport undertaking only.
(aa) Electrically operated vehicle (EOV) meant to carry > 12 passengers to Local Authority.
(b) Means of transportation of Goods to GTA.
(c) Motor vehicle for transport of SSF to a person providing transportation services to schools.

6 Services by way of transportation of goods by an aircraft/vessel from customs station of clearance

in India to a place outside India upto 30.09.2019 upto 30.09.2020.

7 Service by way of access to a road or a bridge on payment of toll charges.

8 Service by way of access to a road or a bridge on payment of annuity.

9 Transmission/distribution of electricity by an electricity transmission/distribution utility.

▪ Application fee for releasing connection of electricity;
▪ Rental Charges against metering equipment;
▪ Testing fee for meters/transformers, capacitors etc.; GST 
▪ Labour charges from customers for shifting of meter or service line;
▪ Charges for duplicate bill.
10 Services provided by incubatee upto total turnover of Rs. 50 lacs in a FY subject to:
▪ Total turnover during preceding FY ≤ Rs. 50 lacs &
▪ 3 years has not elapsed from the date of entering into an agreement as an incubatee.
Incubatee: means an entrepreneur located in Technology Business Incubator (TBI)/ Science &
Technology Entrepreneurship Park (STEP) recognised by NSTEDB.

11 Taxable services, provided by TBI/STEP or bio-incubators.

CQ19. Amazon Ltd. a business incubatee provided following services in FY 2019-20 (after July 2019):
▪ Cloud computing: Rs. 25 lacs;
▪ Mobile application: Rs. 20 lacs;
▪ Social networking & location applications: Rs. 10 lacs.
Taxable value of services provided in preceding FY is Rs. 22 lacs.
Service provider enter into an agreement with STEP in FY 2018-19.
Find GST liability of Amazon Ltd. for FY 2019-20.
Answer: Statement showing GST liability for FY 2019-20
Particulars Taxable Service Explanation
Cloud computing services Nil Exempted up to Rs. 50 lacs
Mobile application services Nil Exempted up to Rs. 50 lacs
Social networking & location aware applications 5,00,000 Exempt upto Rs. 50 Lacs. Above Rs.
50 lacs, it is taxable in FY 2018-19
Taxable services 5,00,000

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12 Licensing, registration & analysis or testing of Food Samples.

13 Services by way of Collecting or Providing News by an independent journalist, PTI or UNI.

14 Services by way of providing information under the RTI Act.

15 Services of Public Libraries by way of lending of books, publications.

16 Services by organiser to any person in respect of a business exhibition held outside India.

17 Services by way of slaughtering of animals.

18 Services by a foreign diplomatic mission located in India.

19 Services by way of right to admission to events organised in FIFA U-17 Women's World Cup 2020.

20 Services provided by & to FIFA & its subsidiaries directly/indirectly related to any of the events under
FIFA U-17 Women’s World Cup 2020 to be hosted in India.
Conditions: Director (Sports), Ministry of Youth Affairs & Sports have to certify that services are
directly or indirectly related to any of the events under FIFA U-17 Women’s World Cup 2020.

21 Satellite launch services provided by –

- Indian Space Research Organisation;
- Antrix Corporation Ltd;
- New Space India Ltd will be exempt from GST.

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▪ It is a point in time when liability to charge tax arises.

▪ To understand concept of time of supply, we must first know time period for issuance of Tax Invoice.

(i) Date on which payment is entered (recorded) in the books of A/c of recipient (Supplier).
(ii) Date on which payment is credited to the bank A/c of recipient.

1 GENERAL CASE [Section 31(1)] Before or at the time of ↓

Case Time of issue of Invoice for Goods

(a) If supply involves Movement of Goods → Removal of goods for supply to the recipient

(b) In other cases, → Delivery of goods or making available to the recipient

Ex: Ritu Manufacturers, Delhi supplies goods to Prakhar Electronics, Haryana. Goods were removed from its
factory in Delhi on 23rd September. Ritu Manufacturers needs to issue a tax invoice on/before 23rd September.

2 CONTINUOUS SUPPLY [Section 31(4)] [Successive statements of A/Cs or Payments are involved]

→ Before or at the time each such statement is issued or each such payment is received.

(a) Date when Recipient indicates that he has accepted the supply of goods; whichever is earlier

(b) Within 6 months from the Date of Removal.

1 FORWARD CHARGE [SECTION 12(2)]

Earlier of (a) Date of Issue of Invoice by the supplier;

(b) Last Date on which invoice is required to be issued u/s 31.

PC Note:
1. No GST is payable on advances received for supply of goods under Forward charge.
2. Excess Payment Received upto Rs. 1,000.
If Payment received > value of goods in Invoice (excess being) upto Rs. 1,000; supplier can choose
to take date of invoice issued w.r.t such excess amount as ToS of goods for such excess value.
3. Supply shall be deemed to have been made to the extent it is covered by the invoice/payment.

Ex: A Ltd. enters into an agreement with B Ltd. to supply 100 kg of raw material. However, A Ltd. supplies
only 80 kg of raw material & issues the invoice for 80 Kgs. Supply would be deemed to have been made
i.r.o. 80 kg of raw material, i.e. to the extent covered by the invoice. Therefore, provisions relating to time of
supply will also be applicable to supply of 80 kg of raw material & not for entire 100 kg of raw material.

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CQ1. Determine ToS in each of the following independent cases if supply involves movement of goods.
SN Date of Removal Date of invoice Date when goods made available Date of Payment
1 01.02.2019 02.02.2019 03.02.2019 15.03.2019
2 03.02.2019 01.02.2019 04.02.2019 25.03.2019
3 04.03.2019 04.03.2019 06.03.2019 01.02.2019
Answer:
❖ As per sec 12(2), in case of forward charge, time of supply shall be earlier of:
(a) Date of Issue of Invoice by the supplier or
(b) Last Date on which invoice is required to be issued u/s 31.
❖ As per section 31, supplier of goods is required to issue invoice on/before removal of goods.
❖ Thus, in case of supply transaction involving movement of goods, time of supply shall be earlier of:
(a) Date of Issue of Invoice by the supplier or
(b) Date of Removal of Goods (which is the Last Date on which invoice is required to be issued u/s 31).
❖ Thus, date of payment & date when goods are made available to recipient becomes irrelevant in this question.
SN Date of Removal Date of invoice ToS Reason
Since invoice is not issued on/before the date of
1 01.02.2019 02.02.2019 01.02.2019
removal, ToS is date of removal of goods.
Since invoice is issued prior to date of removal of
2 03.02.2019 01.02.2019 01.02.2019
goods, ToS is date of issuance of invoice
Since invoice is issued prior to date of removal of
3 04.03.2019 04.03.2019 04.03.2019
goods, TOS is date of issue of invoice.
PC Note: No GST will be payable on advances received for supply of goods.

2 REVERSE CHARGE [SECTION 12(3)]

Earlier of (a) Date of Receipt of Goods;

(b) Date of Receipt of Payment;

(c) Date immediately following 30 days from date of issue of invoice (or any other
document in lieu thereof) by supplier.

PC Note: If it is not possible to determine ToS using sec 12(3), ToS = Date of entry in books of A/c of
the recipient of supply.

CQ2. Determine ToS in the following cases assuming that GST is payable under reverse charge:
SN Date of Invoice Date of Receipt Date of payment by recipient of goods
1 30.11.2018 02.12.2018 25.11.2018: Part payment made;
28.12.2018: Balance amount paid
2 01.11.2018 05.12.2018 Payment is entered in books of A/c on 25.11.2018 & debited
in recipient's bank account on 28.11.2018
3 30.11.2018 02.12.2018 Payment is entered in the books of A/c on 25.11.2018 &
debited in recipient's bank account on 20.11.2018
Answer: In case of RCM, ToS shall be earlier of -
(a) Date of Receipt of Goods
(b) Earlier of (i) Date on which Payment is entered in books of A/c of recipient.
(ii) Date on which Payment is debited from bank A/c of recipient.
(c) Date immediately following 30 days from date of issue of invoice by supplier

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SN Date of Date immediately Date of Date of payment ToS of goods

Invoice following 30 days Receipt of by recipient of goods
from date of invoice goods
1 30.11.2018 31.12.2018 02.12.2018 25.11.2018: Part payment; 25.11.2018: Part payment
28.12.2018: Balance Amt. 02.12.2018: Balance Amt.
2 01.11.2018 02.12.2018 05.12.2018 25.11.2018 25.11.2018
3 30.11.2018 31.12.2018 02.12.2018 20.11.2018 20.11.2018

Case Time of Supply

(a) If Supply is Identifiable at that point → Date of Issue of Voucher

(b) All other cases → Date of Redemption of Voucher

Case Time of Supply

(a) If GST Periodical Return has to be filed Date on which such return is to be filed
(b) All other cases Date on which GST is paid.
CQ3. Income-tax search was carried out at house of Mr. X working in MNC. Undisclosed assets were found,
which he claims as service income. Dates of service are not known. Find ToS if Mr. X voluntarily pays GST
during investigation.
Answer:
▪ If it is not possible to determine ToS & where periodical return is not to be filed (Mr. X, being an employee
in MNC is not a registered person), date of payment of tax is taken as the time of supply.
▪ Therefore, date when Mr. X pays the GST will be the time of supply.
→
Ex: Radha Traders sold goods to Shyam Sales on 6th June with a condition that interest @ 2% per month
will be charged if Shyam Sales failed to make payment within 15 days of delivery of goods. Goods were
delivered as also the invoice was issued on 6th June. Shyam Sales paid the consideration for goods on 6th
July along with interest. ToS for the goods sold is the date of issue of invoice i.e., 6th June & ToS for addition
in value by way of interest is date when such addition in value is received by Radha Traders i.e., 6th July.

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CQ4. Mr. X, a registered supplier supplied certain goods to Mr. Y on 6 months’ credit with a penalty clause in
agreement levying a penalty of 5% of the invoice value in case of delayed payment. Invoice was dated 01.11.2018.
Mr. Y could not make the payment on the due date due to unavoidable reasons. He however, made the payment
of the invoice value on 05.05.2019. Mr. X raised a debit note for the penalty amount. There being dispute on this,
the matter was in arbitration which was finally resolved with Mr. Y agreeing to pay half of the penalty amount.
Amount was paid by Mr. Y on 12.12.2019. Determine Time of Supply.
Answer:
▪ ToS for goods supplied: Date of invoice (assuming delivery of goods on date of invoice) i.e., 01-11-2018.
▪ Penalty: For penalty amount, ToS shall be ‘date of payment of Penalty’ i.e. 12.12.2019 [Section 12(6)].

1 GENERAL CASE [Section 31(2)] Before or after provision of service BUT ↓

Case Time of issue of Invoice for Services

(a) In Normal cases → within 30 days from date of Provision of Service.

(b) In case of Insurance, Banks & NBFC → within 45 days from date of Provision of Service.

Ex: Katyani Security Services Ltd. provides security services to Royal Jewellers for their Jewellery
Exhibition to be organized on 5th October. Katyani Security Services Ltd. needs to issue a tax invoice within
30 days of supply of security services, i.e. on or before 4th November.
2 CONTINUOUS SUPPLY [Sec 31(5)]

Case Time of issue of Invoice for Services

Due date of Payment is ascertainable from contract On/before due date of payment

Due date of Payment is not ascertainable from contract Before/at time of receipt of payment

Payment is linked to completion of an event On/before completion of that event

3 SUPPLY OF SERVICES CEASES BEFORE COMPLETION OF SUPPLY (under a contract) [Sec 31(6)]

At time when supply ceases & only to extent of supply made before such cessation.

CQ5. Mr. X had a contract for supplying services for 365 days for Rs. 36,500. However, after 50 days, he has
stopped supply of service. He has asked you for an advice as to whether he should raise an invoice or not?
Ans: Yes. Where a supply of service ceases before its completion, invoice has to be issued at the time when
the supply ceases, i.e., on 50th day. Invoice shall be issued to the extent of service provided before its
cessation.

1 FORWARD CHARGE [SECTION 13(2)]

Cases Time of Supply [Earlier of ↓]
(a) If invoice is issued within Time limit Date of (i) Issue of invoice or (ii) Receipt of Payment

(b) If invoice is not issued within Time limit Date of (i) Provision of service or (ii) Receipt of Payment
Points to be noted:
❖ If ToS cannot be found out using above provisions, ToS = Date of receipt of services as shown in
books of A/c of recipient.
❖ Supply shall be deemed to have been made to extent it is covered by invoice or payment.
❖ Excess Payment Received upto Rs. 1,000: Same as supply of goods.

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2 REVERSE CHARGE [SECTION 13(3)]

Earlier of (a) Date of receipt of payment

(a) or (b)
(b) 61st days from date of issue of invoice (or any other document in lieu thereof) by supplier

IMPORT OF SERVICE B/W ASSOCIATED ENTERPRISES (supplier is located outside India)

→ ToS = Earlier of (i) Date of entry of service in books of A/c of the recipient or (ii) Date of Payment.
PC Note: If it is not possible to determine ToS using sec 12(3), ToS = Date of Entry in books of A/c
of Recipient of Supply.

❖ VOUCHERS SUPPLIED BY SUPPLIER [Section 13(4)] → Same as ToS for Goods u/s 12(4).
❖ RESIDUAL CASES [Section 13(5)] → Same as ToS for Goods u/s 12(5).
❖ INTEREST, LATE FEE, PENALTY [Section 13(6)] → Same as ToS for Goods u/s 12(6).

▪ Insurance/banking companies/FIs/NBFCs/Telecom companies/notified supplier of services

▪ making taxable supplies b/w distinct person u/s 25,
▪ invoice may be issued (i) before or at time of recording such supply in books of A/c or
(ii) before expiry of quarter during which supply was made.

CQ6. If a supplier of goods has received Rs. 1,500 against an invoice of Rs. 1,100 on 25.07.2018 & date of invoice
of next supply to the said recipient is 14.8.2018. Find ToS in respect of excess amount over & above invoice value.
Answer:
▪ In the given case, supplier has received payment in excess of payment due as per invoice. Receipt of such excess
payment has resulted into receipt of advance in hands of supplier.
▪ Where amount received is in excess of invoice with amount upto Rs. 1,000, supplier has option to choose time of
supply as date of issue of fresh invoice for the said excess amount.
▪ Thus, time of supply w.r.t Rs. 400 shall be 14.08.2018 (date of invoicing of such supply).

CQ7. Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
SN Date of payment by recipient of services Date of Invoice
1 10.10.2018 29.08.2018
2 10.10.2018 01.08.2018
3 Part payment made on 30.08.2018 & balance amount paid on 01.11.2018 29.08.2018
4 Payment is entered in the books of A/c on 28.08.2018 & debited in recipient's bank 01.08.2018
account on 30.08.2018
5 Payment is entered in the books of A/c on 30.08.2018 & debited in recipient's bank 29.08.2018
account on 26.08.2018
Answer:
SN Date of Date immediately Date of Payment ToS
Invoice following 60 days from
invoice
1 29.08.2018 29.10.2018 10.10.2018 10.10.2018
2 01.08.2018 1.10.2018 10.10.2018 01.10.2018

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3 29.08.2018 29.10.2018 Part payment made on 30.08.2018 for part payment;

30.8.2018 & balance 29.10.2018 for balance
amount paid on 1.11.2018
4 01.08.2018 1.10.2018 28.08.2018 28.08.2018 (i.e. when payment is
entered in books of A/c of recipient)
5 29.08.2018 29.10.2018 26.08.2018 26.08.2018 (i.e. when payment is
debited in recipient's bank A/c)

CQ8. Gadiwala Ltd. is engaged in supply of cleaning services in residential premises. Investigation shows that
Gadiwala Ltd. carried out service of cleaning & repairs of tanks in Paradise society, for which society showed a
payment in cash on 25.12.2019 to them against work of this description. Dates of the work are not clear from the
records of Gadiwal Ltd. Gadiwala Ltd. have not issued invoice or entered the payment in their books of account.
Determine ToS.
Answer:
▪ ToS cannot be determined u/s 13(2)(a)/(b) as neither the invoice has been issued nor the date of provision of
service is available & date of receipt of payment in the books of supplier is not available.
▪ Therefore, ToS will be determined u/s 13(2)(c) i.e., date on which the recipient of service shows receipt of the
service in his books of account.
▪ ToS = 25.12.2018, the date on which Kamal Housing society records the receipt of service in its books of A/c.

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▪ As GST is levied as % of the value of supply, it becomes important to know how to arrive at value on
which tax is to be paid.
▪ Section 15 of CGST Act supplemented with Chapter IV: Determination of Value of Supply of CGST Rules
prescribes provisions for determining value of goods and services.
▪ When value cannot be determined u/s 15, same is determined using Valuation Rules [Chapter IV].

▪ Value of “Supply of G/S” = Transaction value (price actually paid/payable) if:

(i) Supplier & Recipient are not Related &
(ii) Price is Sole Consideration for supply.

(a) Taxes: Any taxes, duties, cess, fees & charges (if charged separately) Except GST & related Cess.
(b) Payment to 3rd party by the Recipient on behalf of the supplier
▪ Any amount paid/payable by recipient to 3rd party
▪ which supplier is liable to pay in relation to such supply &
▪ such payment is not included in price.
Note: Amount paid by recipient to 3rd party will be added to VoS only when supplier is under contractual
liability to make payment to such third parties & said payment is in relation to such supply.
(c) Incidental expenses: Any amount charged for anything done by the supplier i.r.o supply of G/&S at
time of, or before delivery/supply of G/S.
Commission paid to agent & recovered from recipient.
Packing if charged by supplier to recipient.
Inspection or certification charges if billed to recipient of supply.
Installation & testing charges [Since charged for something done at time of making supply].
Weighment charges, loading & designing charges incurred before supply.
Outward freight, transit insurance:
1 Delivery of goods at buyer’s premises
▪ Goods + Delivery + Insurance = Composite supply; Principal supply is “supply of goods”.
▪ Thus, ‘Outward freight & Insurance charges’ becomes part of value of composite supply &
GST is payable on outward freight & insurance charges at rate as applicable for goods.
2 Ex-factory basis contract → Outward freight will not be included in value of supply since buyer
pays outward freight.
(d) Interest, late fee, Penalty for delayed payment of any consideration for any supply.
(e) Subsidies directly linked to the price [excluding subsidies provided by CG/SG]
Nature of Subsidy Treatment in Value
 Received from CG/SG Not added to the value of supply
Directly Linked to price of supply → Added to value
 Received from others
Not Linked to price of supply → Not added to value

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Time of Giving Discount Treatment

before or at the time of supply ▪ If such discount has been recorded (shown) in invoice issued for
such supply, it shall be excluded from VoS.

Discount given after supply ▪ If such discount is given as per agreement which existed at time of
such supply & specifically linked to relevant invoices &
▪ Proportionate ITC has been reversed by recipient.

1 Discounts including ‘Buy more, Save more’ offers

▪ Supplier offers staggered discount to his customers (increase in discount with increase in purchase).
▪ Such discounts are excluded to determine the value of supply.
Ex: Get 10 % discount for purchases above Rs. 5,000; 20% discount for purchases above Rs. 10,000; & 30%
discounts for purchases above Rs. 20,000. Such discounts are shown on the invoice itself.
▪ Some suppliers offer periodic/year ending discounts to their stockists, etc.
Ex: Get additional discount of 1% if you purchase 10,000 pieces in a year; get additional discount of 2% if
you purchase 15,000 pieces in a year.
▪ Such discounts are established in terms of an agreement entered into at/before the time of supply
though not shown on invoice as actual quantum of such discounts gets determined after the supply
has been effected & generally at year end. In commercial parlance, such discounts are colloquially
referred to as “volume discounts”. Such discounts are passed on by supplier through credit notes.
▪ Such Discounts offered by suppliers to the customers shall be excluded to determine VoS
provided they satisfy the parameters laid down in sec 15(3) of CGST Act, including reversal of ITC
by recipient of supply as is attributable to discount on the basis of documents issued by supplier.

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2 SECONDARY DISCOUNTS

▪ These are the discounts which are not known at the time of supply or are offered after supply.
Ex: M/s A supplies 10,000 packets of biscuits to M/s B at Rs. 10 per packet. Afterwards M/s A re-values it at
Rs. 9 per packet. Subsequently, M/s A issues credit note to M/s B for Rs. 1 per packet.
▪ Secondary discounts shall not be excluded while determining VoS as such discounts are not
known at the time of supply & conditions in sec 15(3)(b) of CGST Act are not satisfied.
▪ There is no impact on availability or otherwise of ITC in the hands of supplier in this case.

Issue: Issue for consideration is that whether credit notes(s) u/s 34(1) of CGST Act can be issued in such
cases even if conditions laid down in sec 15(3)(b) of CGST Act are not satisfied.
Clarification: Financial/commercial credit notes can be issued by supplier even if conditions mentioned
in sec 15(3)(b) of CGST Act are not satisfied.

1 Parle gives a discount of 30% on list price to its distributors. In an invoice, list price is mentioned as Rs. 200, on
which a discount of 30% is given. VoS = Rs. 140, as discount is allowed at time of supply & shown in invoice.
2 Agreement of Raju Appliances with its dealers is that sale of cookers over 1000 pieces in Diwali month will
entitle them to discount of 5% per cooker. Therefore, quantum of discount can be determined only at the end
of Diwali month. Since agreement relating to discount was in existence at the time of supply, & discount can be
worked out for each invoice, such post supply discount will be allowed as a deduction from VoS. Raju Electrical
Appliances can issue credit note for 5% of value of goods along with GST & claim adjustment of excess tax paid.
Dealer must reverse the proportionate ITC on the relevant stock to bring it in line with reduced tax.
3 Pink & Blue Pvt. Ltd (PBPL). sold goods to Orange Pvt. Ltd (OPL). on 15th January at Rs. 50,000 (exclusive of
taxes & discounts) & charged Rs. 9,000 as IGST @ 18%. Terms of supply stipulated that discount @ 2% will be
given to OPL if it makes the payment within 1 month of the supply. OPL avails ITC of Rs. 9,000 in January &
makes the payment for goods on 10th February. PBPL issues credit note for Rs. 1180 [Rs. 1,000 for value of
discount & Rs. 180 for proportionate IGST leviable thereon] to OPL on 11th Feb. After receiving credit note, OPL
reverses ITC of Rs. 180 attributable to the discount given by PBPL. PBPL can reduce its GST liability of Feb by
Rs. 180. OPL would have paid Rs. 57,820 (Rs. 50,000 + Rs. 9,000 - Rs. 1,000 - Rs. 180) to PBPL on 10th Feb.
4 In Ex. 3, if terms of supply did not provide for discount @ 2% for payment within 1 month but PBPL offers such
discount to OPL at the time of payment after negotiation, discount will not be allowed as a deduction from VoS.
PBPL will issue a commercial credit note for only the value of discount, i.e. for Rs. 1,000. OPL will not reverse
any ITC & PBPL will also not be able to reduce its GST liability for February. OPL would pay Rs. 58,000 (Rs.
50,000 + Rs. 9,000 – Rs. 1,000) to PBPL on 10th February.
5 A company announces turnover discounts after reviewing dealer performance during year. Discounts are based
on performance slabs & are given as cash-back. As these discounts were not known at time of supply, they will
not be deducted from VoS. Hence, company will not be able to adjust excess tax paid from its tax liability.

▪ If value of supply of G/&S cannot be determined u/s 15(1), it shall be determined in such manner as
may be prescribed.
▪ Applicability: (a) Supplier & recipient are related party; (b) Price is not sole consideration for supply.

▪ Agreement of banks with BC specifically prohibits BC from directly charging any fee to customers for
services rendered by them on behalf of the bank. However, banks are permitted to collect reasonable
service charges from the customers for such service (of BC/BF) in a transparent manner.
▪ Banking company is the service provider in BF/BC model operated by banking company.
▪ Thus, banking company is liable to pay GST on entire value of service charge or fee charged to customers
(whether or not received via BF or BC).

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QUESTION BANK
Q1. ABC buys the ‘Super Motor’ in Rajasthan from XYZ. Both agreed for the below conditions:
Value of Motor (excluding GST @ 10%) Rs. 3,00,000
Taxes other than GST (Not included in above value) Rs. 2,000
Below items are being paid by recipient though supplier is liable to pay:
Consultancy charges for erection/installation Rs. 2,000
Loading Charges Rs. 1,500
Testing Charges Rs. 500
Transit Insurance Charges Rs. 4,500
Inspection Charges Rs. 2,000
Subsidy received from Rajasthan Government (deducted from value) Rs. 10,000
Subsidy received from manufacturer for supply of power generator (deducted from value) Rs. 25,000
Trade discount shown in Invoice Rs. 2,000
Cash discount due to instant payment Rs. 5,500
If such supply is inter-State supply, calculate value of taxable supply. (assuming your working is inclusive of tax).
Answer:
Particulars Amount
Value of Motor 3,00,000
Add: Taxes (other than GST) paid [WN 1] 2,000
Add: Consultancy charges for erection [WN 2] 2,000
Add: Loading Charges [WN 2] 1,500
Add: Testing Charges [WN 2] 500
Add: Transit Insurance Charges [WN 2] 4,500
Add: Inspection Charges [WN 2] 2,000
Add: Subsidy received from manufacturer [WN 3] 25,000
Less: Trade Discount [WN 4] (2,000)
Less: Cash Discount [WN 5] (5,500)
Total Value (including GST Value) 3,30,000
Less: IGST @ 10% [Rs. 3,30,000 × 10%/110%] (30,000)
Taxable Value of Supply 3,00,000
Notes:
1. VoS shall include any taxes, duties, cesses, fees & charges levied under any law other than GST. [Sec 15(2)(a)]
2. Any amount charged for anything done by the supplier i.r.o the supply of goods at the time of, or before delivery of
goods shall be included in the value of taxable supply. Hence loading charges, consultancy charges, testing charges,
inspection charges & transit insurance charges shall be included in the value of taxable supply. [Sec 15(2)(c)]
3. Value shall include subsidies directly linked to the price excluding subsidies provided by CG/SG - Sec 15 (2)(e).
4. Value of the supply shall not include any discount which is given before or at the time of the supply if such discount
has been duly recorded in the invoice issued i.r.o such supply - Section 15(3)(a).
5. VoS shall not include any discount which is given after the supply has been effected, if such discount is established
in terms of an agreement entered into or before time of such supply & specifically linked to relevant invoices.

Q2. Haldiram Foods Pvt. Ltd. gets an order for supply of processed food from Resto Ltd. Haldiram foods Pvt. Ltd wants
the consignment tested for specified chemical residues & charges a testing fee of Rs. 15,000 from Resto Ltd. Haldiram
foods Pvt. Ltd argues that such testing fee should not from part of the consideration as it is a separate activity. Discuss?
Answer: Section 15(2)(c) mandates the addition of certain elements of transaction value to arrive at taxable value.
Section 15(2) specifies that amount charged for anything done by the supplier in respected of the supply at the time
of or before delivery of goods or supply of service shall be included in taxable value.
Since Haldiram foods Pvt. Ltd does the testing before the delivery of goods, the charges therefore will be included in
the taxable value. Therefore, Haldiram foods Pvt. Ltd’s argument is not correct. The testing fee of Rs. 15,000 should be
added to the price to arrive at taxable value of the consignment.

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Q3. ABC has provided the following details relating to goods sold: Calculate the value of taxable supply.
Particulars Amount
List price of the goods (excluding of taxes, subsidy & discounts) 50,000
Tax levied by Municipal Authority 5,000
CGST & SGST chargeable on the goods 9900
Packing charges (not included in the price above) 2,000
Subsidy received from NGO 2,500
Trade discount offered 2% on list price
Recipient pay brokerage at the request of supplier 10% on list price
Recipient pay freight & insurance charges on behalf of supplier 5,000
Answer: Statement showing calculation of value of taxable supply
Particulars Amount
List price of the goods (excluding of taxes & discounts) 50,000
Add: Tax levied by Municipal Authority {included in the value as per section 15 (2) (a)} 5,000
Add: Packing Charges {included in the value as per section 15 (2) (c)} 2,000
Add: Subsidy from NGO (since subsidy is received from a non-government, it is included in value) 2,500
Add: Recipient pay 10% brokerage on the request of supplier {included in value as per sec 15(2)(b)} 5,000
Add: Recipient pay freight & insurance charges on behalf of supplier 5,000
Less: Trade discount (since known at the time of supply, it is deductible from the value) 1,000
Value of Taxable Supply 68,500
Note: CGST & SGST is not includible in the value of supply as per section 15(2)(a).

Q4. Feather Products Ltd. Sells shoes to its dealers, to whom it charges the list price minus standard discount & pays
GST accordingly. When such shoes remain unsold with the dealers, it offers additional discount & pays GST accordingly.
When such shoes remain unsold with the dealers, it offers additional discounts on the stock as an incentive to push the
sales. Can this additional discount be reduced from the price at which the goods were sold & concomitant tax
adjustment made?
Answer: The discounts were not known or agreed at the time of supply of goods to the dealers. Therefore, such
discount cannot be reduced from the price on which tax had been paid in terms of section 15(3).

Q5. ABC is facing serious liquidity problems & requests XYZ to pay within 2 days. It offers additional 1% cash discount.
XYZ agrees & pays.
Answer: As per section 15 (3) (b), this discount was not known at the time of supply, & so it cannot be claimed as a
deduction from the transaction value for GST calculation.

Q6. Floral Advertisers conceptualised & designed the advertising campaign for a new product launched by Jupiter
Stampings Pvt. Ltd. for a consideration of Rs. 25,00,000. Floral Advertisers owed Rs. 4,50,000 to one of its vendors in
relation to the advertising service provided by it to Jupiter Stampings Pvt. Ltd. Such liability of Floral Advertisers was
discharged by Jupiter Stampings Pvt. Ltd. Jupiter Stampings Pvt. Ltd. delayed the payment of consideration & thus, paid
Rs. 50,000 as interest. Assume the rate of GST to be 18%. Determine VoS made by Floral Advertisers.
Answer: Computation of value of taxable supply
Service charges 25,00,000
Payment made by Jupiter Stampings Pvt. Ltd to vendor of Floral Advertisers [Liability of the supplier 4,50,000
being discharged by the recipient, is includible in the value in terms of section 15(2)(b)]
Interest for delay in payment of consideration [Includible in the value in terms of sec 15(2)(d)[ [WN] 42,373
Value of taxable supply 29,92,373
Note: Interest for delay in payment of consideration will be includible in value of supply but the time of supply
of such interest will be the date when such interest is received in terms of sec 13(6). Such interest has been
assumed to be inclusive of GST & value computed by making back calculations [Interest/100 + tax rate) × 100].

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Q7. ABC Ltd. is a cookies manufacturing company in Pune. It generally gives a trade discount of 20% in the list
price when goods are purchased by a distributor. It offers “New New Year 2019” discount under which a special
Christmas discount of 10% is given on the list price of all products to its distributors in addition to normal
discount of 20%. A Ltd., a distributor from Madhya Pradesh, purchases 100 packets of cookies (list price Rs. 400
per packet) on 30th Nov 2018 & 200 packets of the same biscuits on 1st Dec 2018. GST @ 18%. Determine VoS.
Answer: Statement showing computation of value of supply
Particulars 100 Packets on 12.12.2018 200 Packets on 1.1.2019
Listed Price of Cookies 40,000 80,000
Less: Trade Discount @ 20% (-) 8,000 (-) 16,000
Less: New Year Discount @ 10% NA (-) 8,000
Value of Taxable Supply 32,000 56,000

Q8. Determine the value of taxable supply as per Section 15 of the CGST Act, 2017 & the Rules thereof:
Contracted sale price of goods (including CGST & SGST @ 12%) 11,32,000
Contracted sale price includes the following elements of cost:
(i) Drawings & design 10,000
(ii) Primary packing 15,000
(iii) Protective packing at recipient’s request for safe transportation 5,000
(iv) Fright & insurance from ‘place of removal’ to buyer’s premises 20,000
Other information:
(a) A discount of Rs. 12,000 of given by the supplier before the time of supply of goods. CGST & SGST is levied @ 12%.
(b) Commission paid by recipient as per supplier’s request: Rs. 5,000.
(c) Freight & insurance charges borne by recipient on behalf of supplier: Rs. 45,000.
(d) Subsidy received from Central Government for setting up factory in backward region: Rs. 25,000.
(e) Subsidy received from third party to recipient: Rs. 50,000.
(f) Late fees for delayed payment: Rs. 1,000. [It has been waived off by the supplier].
Answer: Computation of Assessable value
Particulars Amount in Rs.
Contracted sale price of goods 10,32,000
Less: Discount given before the time of supply of goods. (12,000)
Add: Commission paid by recipient as per supplier’s request [WN 3] 5,000
Add: Fright & insurance from ‘place of removal’ to buyer’s premises [WN 3] 45,000
Add: Subsidy received from third party [WN 4] 50,000
Add: Late fees for delayed payment [WN 5] Nil
Value including GST 11,20,000
Less: GST @ 12% [Rs. 11,20,000 x 12 ÷ 112] (1,20,000)
Value of Taxable Supply 10,00,000
Note:
1. Any amount charged for anything done by the supplier i.r.o supply of goods at the time/before delivery of goods
shall be included in VoS [Section 15(2)(c)]. Hence drawing & design charges, cost of packing (even at buyer’s
request) shall form a part of transaction value. Since, these are already included in value, no adjustment is required.
2. As per Sec 15(3)(a), value of supply shall not include any discount which is given before/at the time of supply.
3. Any amount that supplier is liable to pay in relation to such supply but which has been incurred by the recipient &
not included in the price for the goods shall be included in the value of supply [Section 15(2)(b)]
Hence, the following expenses i.e. commission paid to agent on instruction of supplier & freight & insurance charges
incurred by recipient on behalf of supplier shall be included as a part of value of taxable supply.
4. Value of supply shall include subsidies directly linked to the price excluding subsidies provided by CG & SG. Thus,
subsidy received from CG for setting up factory in backward region shall not be included in value of supply. Whereas
subsidy received from third party to recipient will be included in the value of taxable supply.
5. Late fee is includible in VoS. But since it has been waived off by the supplier, it cannot be included in value of supply.

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Q9. X, is an architect & based at Mumbai. During December 2017, he has prepared building plan of a new hotel Taj
which will be constructed near Nariman Point in Mumbai. He charged Rs. 55 lacs from Taj. In addition, Taj has provided
travellers cheques of Rs. 10 lacs (which can be used only outside India) & complementary voucher for stay of 3 nights
at Taj (value of voucher is Rs. 44,000). X is of the view that only monetary consideration of Rs. 55 lacs is chargeable to
GST @ 18% & value of travellers cheques/complementary stay voucher is not taxable. Discuss.
Answer: Consideration can be received in money or in kind. Mr. X is not correct in this case.
Monetary consideration 55,00,000
Value of travellers cheques 10,00,000
Value of complementary stay voucher 44,000
Taxable value of supply 65,44,000

Q10. ABC footwear, a registered supplier of Kanpur, has a non-moving stock worth Rs. 10,00,000 of a particular variety
of shoes that are out of fashion. It has not been able to find market inspite of huge discount offered. It was able to sell
this stock at a very low price of Rs. 2,00,000 to a retailer in Maharashtra with a condition that the retailer would display
hoardings of ABC footwear in all their retail outlets in the State. Determine taxable value of supply.
Answer: In this case, supplier & recipient are not related persons. Although a condition is imposed on the recipient on
effecting the sale, such a condition has no bearing on contract price. This is a case of distress sale, & in such a case, it
cannot be said that the supply is lacking ‘sole consideration’. Therefore, the price of Rs. 2 Lacs will be accepted as VoS.

Q11. Mezda Banners, an advertising firm, gives an interest-free credit period of 30 days for payment by the customer.
Its customer ABC paid for the supply 32 days after the supply of service. Mezda Banners waived the interest payable
for delay of 2 days. The Department wants to add interest for two days as per contract. Should notional interest be
added to the taxable value?
Answer: This is a supply that is valued as per transaction value u/s 15(1) as the price is the sole consideration for the
supply & the supply is made to unrelated person. The concept of transaction value has been expanded to include certain
elements like interest which are actually payable. Once waived, the interest is not payable & is therefore, not to be
added to transaction value.

Q12. ABC Gas sells cooking gas cylinders. Subsidy directly transferred to the account of the customer whose account
are linked with Aadhar card. Selling price per cylinder is Rs. 900. Customer received subsidy Rs. 300 directly from
Government to his bank account. Net outflow of the buyer is Rs. 600. Find the value of supply of goods (per cylinder)
in the hands of ABC Gas. Calculate assessable value to levy tax.
Answer: Supplier is liable to pay GST on transaction value which shall be exclusive of subsidy received from
government. However, exclusion of subsidy is applicable if Government is paying that to the supplier. In this case,
Government has not paid subsidy to the supplier, rather it has been paid to the buyer directly. Supplier is not impacted
by such subsidy. Hence, transaction value is Rs. 900 per cylinder.

Q13. X provides computer maintenance service since 2002 in Odisha. During the month ending March 31, 2018, he
provides computer maintenance service in Puri to A Ltd. X receives Rs. 25,000 from A Ltd. & Rs. 16,40,000 from holding
company of A Ltd. A Ltd. is of the view that only Rs. 25,000 is chargeable to tax (GST on Rs. 25,000 @ 18% will be paid
by A Ltd.). Find out GST liability on the assumption that any additional liability will be borne by X.
Answer: Consideration received for an activity carried by a person from another person is chargeable to GST. It is not
necessary that the supplier of service should receive consideration from the recipient of service. Consideration can be
paid by any other person on behalf of the recipient of service. Consequently, even Rs. 16,40,000 received from holding
company of recipient of service is chargeable to tax. GST liability will be calculated as follows -
Consideration paid by A Ltd. Rs. 25,000
Consideration paid by holding company [since GST on this consideration is not additionally Rs. 13,89,830
paid, taxable value of supply = Rs. 16,40,000 x 100/118)]
Taxable value of supply Rs. 14,14,830
GST [CGST (9% of Rs. 14,14,830) = 1,27,335 + SGST (Odisha) (9% of Rs. 14,14,830) = 1,27,335 Rs. 2,54,670
Total Rs. 16,69,500

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Q14. A Inc. is an American car manufacturing company. It has a branch in Hyderabad. Mr. X is HRD head of Hyderabad
branch. For the year ending March 31, 2018, CTC of X (as per employment agreement) is as follows:
Salary 36,00,000
Residential accommodation 6,00,000
Employer's contribution towards provident fund 6,00,000
Conveyance facility (reimbursement up to Rs. 40,000 per month) 5,40,000
Cost to company (CTC) 4,80,000
A Inc. maintains a gym near Hyderabad office. Employees (& their family members) of the Hyderabad office can
use gym facility. Cost to the company for maintaining this facility in Hyderabad is approximately Rs. 27,00,000
per year. On January 1, 2018, A Inc. gifts a new car to Mr. X (price: Rs. 12,65,000 before GST). Gym facility & gift
of car are not covered by CTC as well as employment agreement. Mr. X owns a commercial flat in Hyderabad. It is
given on rent to A Inc. (monthly rent being Rs. 1,00,000). Discuss whether GST is applicable?
Determine GST for January 2018 (assume GST rate is 28% for car & 18% for others):
1. Supply of employment service to A Inc.
2. Renting of commercial flat by X to A Inc.
3. Salary paid by A Inc.
4. Residential accommodation, conveyance facility & gym facility provided by A Inc. to X.
5. Gift of car by A Inc. to X.
Answer:
1. Supplies covered by employment agreement: Service provided by X to A Inc. is neither supply of goods nor supply
of services. Remuneration paid by A Inc. to Mr. X within CTC/employment agreement is, therefore, not taxable.
Consequently, expenditure on salary: Rs. 36,00,000, expenditure on residential accommodation: Rs. 6,00,000 &
conveyance: Rs. 4,80,000 is not subject to GST. All these supplies are covered by employment agreement.
Employer's contribution towards PF is outside the purview of GST.
2. Supply is not covered by employment agreement: are subject to GST:
Particulars Supply by X Supply by A Inc.
Renting of commercial flat by X (GST is applicable, GST rate is 18%) 18,000 -
Gym facility (it is not covered by employment agreement)
However, GST is not applicable as It is difficult to find recipient of service. - -
Gift of car (GST is applicable) [Note 1] [12.65 Lacs × 28%] - 3,54,000
Note 1: Even if consideration is nil, supply between related persons is chargeable to GST. Employer & employee are
treated as related person. Gift by employer to employee up to Rs. 50,000 in a FY is not chargeable to tax.

Q15. X Ltd. has provided following services in the preceding FY:

(1) Manpower supply services to Higher Secondary School for Rs. 12,00,000.
(2) House keeping services to Kidzee (i.e. Pre-school education) for Rs. 9,00,000.
In the current FY, X Ltd. has received advertisement services from Indian Railways of Rs. 75,000. Discuss.
(a) Who is liable to pay GST? (b) Total tax liability if any?
(c) If Total turnover in Preceding FY is Rs. 11,10,000, find GST liability in current FY? Note: GST Rate = 18%.
Answer: Turnover of X Ltd. in preceding FY = (Rs. 12 lacs + Rs. 9 lacs) = Rs. 21,00,000. Thus it is a taxable person.
(a) Since Turnover of preceding FY of X. Ltd > Rs. 20 lacs, Recipient (i.e X Ltd) is liable to pay GST under RCM.
(b) GST 18% on Rs. 75,000 = Rs. 13,500.
(c) GST liability is Nil, since aggregate turnover in preceding FY does not exceeds Rs. 20 lacs.

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▪ ITC is considered to be the lifeline of the GST regime. In fact, it is the provisions of ITC, which essentially
make GST a value added tax i.e., collection of tax at all points of supply chain after allowing credit of
tax paid at earlier points.
▪ To avoid cascading effect, input tax credit is available.
▪ It is based on VAT concept of allowing input tax credit on inputs, input services & capital goods.
▪ Recipient of G/S can avail credit of GST charged by the supplier of Goods or Services & Capital goods.

Capital Goods ▪ Goods whose value is capitalized in the books of A/c of person claiming ITC &
[Sec 2(19)] ▪ which are used or intended to be used in course or furtherance of business.
Input [Sec 2(59)] ▪ Any goods (other than capital goods) used in course or furtherance of business.
Input Service ▪ Any service
[Sec 2(60)] ▪ used or intended to be used by supplier in course or furtherance of business.
Input Tax ▪ in relation to a registered person means CGST/SGST/IGST/UTGST charged on
[Sec 2(62)] any inward supply of G/S made to him & includes:
✓ IGST charged on Import of goods; [BCD → nahi aayega]
✓ Tax payable u/s 9(3) & 9(4) of CGST Act & SGST Act [RCM];
✓ Tax payable u/s 5(3) & 5(4) the IGST Act;
✓ Tax payable u/s 7(3) & 7(4) the UTGST Act;
▪ but does not include tax paid under composition levy (scheme).
Output tax ▪ in relation to a taxable person, means tax chargeable under this Act on:
[Sec 2(82)] ✓ taxable (outward) supply of G/S made by him or by his agent
✓ but excludes tax payable on RCM basis.
Inward supply Receipt of G/S or both whether by purchase, acquisition or any other means with
[Sec 2(67)] or without consideration.

Zero-rated supply means any of following supplies of goods or services or both

[Sec 16(1) of IGST] ▪ Export of G/&S;
▪ Supply of G/&S to SEZ developer or SEZ unit.
Export of Service It means the supply of any service when:
[Sec 2(6) of IGST] ▪ Supplier of service is located in India;
▪ Recipient of service is located outside India;
▪ PoS of service is outside India;
▪ Payment for such service has been received in convertible foreign exchange;
▪ Supplier & recipient of service are not merely establishments of a distinct person;
Works contract Contract for building, construction, fabrication, completion, erection, installation,
[Sec 2(108)] fitting out, improvement, modification, repair, maintenance, renovation, alteration
or commissioning of any immovable property wherein transfer of property in goods
(whether as goods/in some other form) is involved in the execution of such contract.
Plant & Machinery ▪ means apparatus, equipment & machinery fixed to earth by foundation or
structural support that are used for making outward supply of G/&S & includes
such foundation and structural supports
▪ but excludes
✓ Land, building or any other civil structures; Telecommunication towers
✓ Pipelines laid outside the factory premises

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Registered Person + ▪ Every RP shall be entitled to take credit of Input tax charged on any inward
supply of G/& S to him
Business +
▪ which are used (intended) in course/furtherance of business &
ECL
▪ said amount shall be credited to Electronic Credit Ledger of such person.
[Sec 16(1)]
Note: Tax paid on G/&S which are used for non-business purposes → No ITC.

Ex: Mr. K of Kolkata sold taxable goods to Mr. C of Chennai. Mr. C being a buyer of goods is eligible to claim the IGST
as credit on purchases based on the tax invoice issued by Mr. K of Kolkata.

Tax Invoice [Sec ▪ RP must have tax invoice or debit note of G/&S issued by a registered
16(2)(a)] supplier or such other prescribed tax paying documents in Possession.

Receipt of G/&S [Sec ▪ RP must have received the goods or services or both.
16(2)(b)]
▪ ‘Bill to Ship to’ Transactions:

Goods If goods are delivered by supplier to the recipient (3 rd party)

on the direction of buyer (such RP) before/during movement
of goods → It shall be deemed that RP has received the goods.

Services If services are provided by the supplier to any person (3 rd

Party) on the direction of & on account of such registered
person → It shall be deemed that RP has received the services.

Ex: A is a trader who places an order on B for a consignment of soda ash. A receives a buying order from C for the
same quantity of soda ash. A instructs B to deliver the goods to C & in turn he raises an invoice on C. Though the
goods are not physically received at the premises of A, section 16(2)(b) allows ITC of such goods to A.

Ex: Registered head office (New Delhi) of ABC Pvt. Ltd. enters into a contract with DEF Pvt. Ltd. of New Delhi for
repair & maintenance of computers systems installed at its registered branch office in Bengaluru, Karnataka. DEF
Pvt. Ltd. issues an invoice on ABC Pvt. Ltd., New Delhi for the services provided by it. Though actual services are
received by branch office & not by HO, section 16(2)(b) allows ITC of such repair & maintenance services to HO.

Payment of Tax to ▪ Output tax charged on such supply by the supplier of G/&S has been
Government [16(2)(c)] actually paid to Government (in cash/by using ITC admissible).

Filing of RoI [16(2)(d)] ▪ Registered person (taking ITC) must have filed his return u/s 39.

Payment to Supplier ▪ Recipient of G/&S shall pay an amount of ‘Value of supply + GST’ to the
supplier of G/&S within 180 days from date of issue of invoice.
[Rule 37]
▪ Otherwise, ITC availed by recipient shall be added to his output tax
liability, along with interest thereon.
▪ Interest @ 18% → from date of availing credit till date of payment.
▪ If payment is made after 180 days, recipient can avail ITC after payment.
▪ Part-payment → Proportionate credit would be allowed.

CONSEQUENCES OF NON-PAYMENT TO THE SUPPLIER [RULE 37]

▪ Registered person, who has availed ITC on any inward supply of G/S &
▪ who does not pay ‘Value + Tax’ to the supplier within 180 days from the date of invoice,
▪ shall furnish in FORM GSTR-2
 details of such supply; amount of value not paid &
 amount of ITC availed proportionate to such unpaid amount
▪ for the month immediately following 180 days from date of issue of invoice.

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Ex: ABC Ltd. purchase goods from XYZ Ltd. for Rs. 10 Lacs + GST @ 12% on 18th July 2018 & received invoice
on 18th July 2018 & has taken credit on 20th Aug 2018 at the time of payment of GST but ABC limited has not
made payment to XYZ limited within 180 days from the date of invoice i.e. 18th July 2018. In this case, 180 days
shall expire on 13.1.2019 (July: 14, Aug: 31, Sep: 30, Oct: 31, Nov: 30, Dec: 31, Jan: 13) i.e. in the month of
January 2019. ABC Ltd. should report it in the month of Feb 2019 & should pay Rs. 1,20,000 on 20th March 2019
along with Interest on Rs. 1,20,000 @ 18% per annum for 7 months i.e. from 20th August to 20th March.
CQ1. A registered supplier of taxable goods supplied goods valued Rs. 1,12,000 (inclusive of CGST Rs. 6,000 & SGST
Rs. 6,000) to PQR Ltd. under forward charge on 12.11.2018 for which tax invoice was also issued on the same date.
Inputs were received by PQR Ltd. on 12.11.2018. PQR Ltd. availed credit of Rs. 12,000 on 15.12.2018. But PQR Ltd.
did not make any payment to the supplier. Is PQR Ltd. eligible to avail ITC on such supply? Discuss ITC implications
if PQR Ltd. makes the payment of Rs. 1,12,000 to the supplier on 15.09.2019. [CA Final Nov. 2018]
Answer: Yes, PQR Ltd. can avail ITC on the receipt of taxable supply of goods. But it is required to pay the
consideration along with tax within 180 days from the date of issue of invoice.
(i) If PQR Ltd. does not make payment within 180 days from the date of invoice: As per Rule 37, a registered
person, who has availed of ITC on any inward supply of G/&S, but fails to make payment to the supplier within
180 days from date of issue of invoice shall furnish the details of such supply & amount of ITC proportionate to
such unpaid amount, availed of, in FORM GSTR-2 in succeeding month after expiry of 180 days.
In this case since PQR Ltd. does not make any payment within 180 days from date of invoice i.e. upto 11 th May
2019, therefore amount equal to ITC availed by PQR Ltd. shall be added towards its output tax liability along
with interest for the month of June, 2019 in which details of such supplies are required to be furnished.
Interest shall be calculated @ 18% [as given u/s 50(1) for the period starting from date of availing credit till the
date when ITC added to the output tax liability is paid.
Amount of Input tax [A] 12,000
Date of availing credit [B] 15.12.2018
Date of payment of ITC added to output tax liability [C] 15.06.2019
No. of days for which interest to be paid [D] = [B] - [C] 182
Interest @ 18% to be paid on 15-07-2019 (Rs. 12000 × 18% × 182/365) 1,077

(ii) Re-credit of Input tax if payment made after 180 days: If PQR Ltd. makes payment on 15.9.2019 (i.e after 180
days from date of issue of invoice), then it shall be entitled to avail the credit of input tax.

EXCEPTIONS: Condition of payment of ‘value + GST’ within 180 days does not apply:
(a) Supplies on which tax is payable under RCM basis;
In (b) & (c) → Deemed to be paid
(b) Deemed supplies without consideration;
(c) Additions made to ‘value’ on account of supplier’s liability being paid by recipient.

↓
ITC on invoices pertaining to FY or debit note issued in a FY can be availed at any time till
(a) On/before due date of filing return for the month of September following the end of FY.
(b) Date of filing of relevant annual return.
Note: Time limit does not apply to claim for re-availing of credit which was reversed earlier [Rule 37(4)]

 Annual return of a FY is to be filed by 31 st December of next FY. Thus, Annual return of FY 2019-20
is to be filed by 31st December 2020.

Ex: Hercules Machinery delivered a machine to XYZ in Jan. 2021 under Invoice no. 49 dated 28th Jan, 2021 for
Rs. 4,15,000 + GST & undertook trial runs & calibration of machine as per requirements of XYZ. The amount
chargeable for post-delivery activities was covered in a debit note raised in April 2021 for Rs. 50,000 + GST.
XYZ did not file its annual return till October, 2021. Time limit to avail ITC i.r.o. tax paid on supply for Invoice
No. 49 = 20th Oct. 2021. Since the debit note is received in next FY, time limit for taking ITC on Rs. 50,000 is 20th
October, 2022; being earlier of date of filing annual return for preceding FY or the return for September.

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CQ2. XYZ Ltd. purchased goods valuing Rs. 6,00,000 (exclusive of CGST & SGST @ 9% each) under the cover of
invoice dated 25.12.2018. The company made payment to the supplier on the same date. Since there was a doubt
regarding admissibility of ITC on such inputs, company did not take ITC at the time of receipt of input. The
company obtained clarification from a legal consultant who opined that the goods were eligible as inputs under
ITC Rules. The opinion was received on 05.05.2019. The company now wants to avail ITC of the tax paid on such
inputs. Can it do so? It is known that Company has filed its annual return for the year 2018-19 on 12.08.2019.
Answer:
❖ Time limit for taking ITC as per section 16(4) is:
(a) Due date of filing return u/s 39 for September following the end of FY to which such invoice pertains; or
(b) Date of furnishing of relevant annual return, whichever is earlier.
❖ In this case, inputs were purchased on 25.12.2018. Thus, ITC on such inputs can be taken on earlier of:
(a) 20.10.2019 being due date of furnishing return of month of September, 2019; or
(b) 12-08-2019 being the date of furnishing of annual return.
❖ Thus, XYZ Ltd. can avail ITC of tax on inputs till 12.8.2019.
❖ Therefore, it can avail credit of CGST Rs. 54,000 & SGST of Rs. 54,000 on 5.5.2019.

1 Goods in Lots (against RP shall be entitled to take ITC upon receipt of last lot/instalment.
same invoice)

2 Depreciation If Depreciation is claimed on ‘Cost + GST’ ITC will NOT be allowed

If Depreciation is claimed on ‘Cost’ only ITC will be allowed

3 Normal & Abnormal Normal Loss Entire ITC is allowed.

Loss (in transit)
Abnormal Loss ITC is not allowed to the extent of abnormal loss

CQ3. M/s C Ltd. Chennai procured goods 10,000 Kgs @ Rs. 100 per Kg. from M/s D Ltd. of Delhi. These goods
came to M/s C Ltd. of Chennai in following manner: Invoice shows 10,000 Kgs. & GST @18%.
Date of dispatch No. of Kgs Date of receipt Normal loss Abnormal loss Received
10th Oct 2,000 15th Nov 2 Kgs Nil 1,998 Kgs
2nd Nov 5,000 20th Nov 5 Kgs Nil 4,995 Kgs
3rd Dec 3,000 1st Jan 1 Kgs 20 Kgs 2,979 Kgs
(a) Can M/s C Ltd. can avail the proportionate credit on 15th Nov & 20th Nov?
(b) When will M/s C Ltd. be eligible for input tax credit & How much credit is allowed to M/s C Ltd?
Answer:
(a) M/s C Ltd. cannot take proportionate credit on the quantity received on 15th Nov & 20th Nov.
(b) M/s C Ltd. is eligible to avail ITC on 1st Jan.
ITC allowed = [(10,000 Kgs x Rs. 100) x 18% x 9980 kgs/10,000 kgs] = Rs. 1,79,640.

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1 ITC shall be availed by RP including ISD on the basis of any of the following documents:
(a) Invoice issued by supplier of Goods or services or both u/s 31;
(b) Invoice issued by recipient (under RCM) subject to payment of tax or Revised Invoice
(c) Debit note issued by a supplier u/s 34.
(d) Bill of entry or any similar document prescribed under Customs Act, 1962;
(e) ISD invoice or credit note or any other document issued by ISD [Rule 54(1)].
2 Provided that if the said document does not contain all specified particulars but contains details of
▪ Amount of tax charged,
▪ Description of goods or services,
▪ Total VoS of G/&S, Minimum requirements to claim ITC.
▪ GSTIN of supplier & recipient;
▪ PoS in case of inter-State supply
ITC may be availed by such registered person.
PC Note: ITC cannot be denied due to certain clerical mistakes in the invoice by the supplier.

3 No ITC of GST paid towards demands involving Fraud

No ITC shall be availed by RP of any tax that has been paid in pursuance of any order where any
demand has been confirmed on account of fraud, willful misstatement, suppression of facts.

4 Restriction on availment of ITC on invoices/DN whose details are not uploaded by supplier

ITC availed by RP i.r.o. invoices/DN, the details of which have not been uploaded by supplier u/s
37(1) shall not exceed 5% of eligible credit available i.r.o. invoices/DN, the details of which has
been uploaded by the supplier u/s 37(1).
PC Note: ITC allowed on invoices not uploaded by supplier ≤ 5% of ITC on invoices uploaded.

ITC that can be availed i.r.o invoices/DNs whose details have not been uploaded by suppliers in
GSTR-1 = Lower of: (a) or (b)
(a) 5% of eligible ITC i.r.o invoices/DNs whose details have been uploaded by suppliers in GSTR-1
or using Invoive furnishing facility (IFF).
(b) ITC on invoices/DNs whose details have not been uploaded by the supplier.

Case Amount of ITC to be claimed by recipient

Where invoice/DN has been uploaded Full ITC, if all other conditions of availing ITC are fulfilled
by the supplier in his GSTR-1 or IFF

Where invoice/DN has not been 5% of eligible ITC available i.r.o uploaded invoices/DNs
uploaded by supplier in his GTSR-1 or reflected in GSTR-2A.
IFF However, ITC so claimed should not exceed actual eligible
ITC available i.r.o the invoices not uploaded.

PC Note: Only Eligible ITC relflected in GSTR-2A of the recipient shall be considered.

SOME OTHER CLARIFICATIONS RELATED TO RULE 36(4)

 Restriction is not imposed through common portal & it is the responsibility of the taxpayer claiming
credit to avail ITC on self-assessment basis.
 Restriction shall be applied only on invoices/DN, details of which are required by supplier to be
uploaded u/s 37(1). Therefore, taxpayer may avail full ITC i.r.o. IGST paid on imports, documents
issued under RCM, credit received from ISD etc. which are outside the ambit of section 37(1).
 ITC u/r 36(4) shall be calculated on total eligible ITC from all suppliers against all supplies
whose details have been uploaded by the supplier. Therefore, restriction is not on supplier basis.

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 Calculation would be based only on those invoices on which ITC is available & thus invoices on
which ITC is not available [Ex: Sec 17(5)] are ignored for calculation of 5% of eligible ITC available.
 Amount of ITC i.r.o. invoice/debit note whose details have not been uploaded shall not exceed 5%
of eligible ITC i.r.o. invoice/debit note which have been uploaded by supplier u/s 37(1) as on due
date of filing Form GSTR-1 by the supplier for said tax period. The same can be ascertained as
per GSTR 2A showing ITC on the due date of filing GSTR-1.
Ex: Due date for filing GSTR-1 for the month of January, 2020 is 11.02.2020. Now, ITC i.r.o. invoice/debit
note which have not been uploaded by supplier shall be maximum of 5% of total ITC reflected in GSTR
2A as on 11.02.2020.

CQ4. Mr. Vijay, a registered supplier, receives 100 invoices (for inward supply of G/S) involving GST of Rs. 10
lacs, from various suppliers during the month of October 2020.
Out of 100 invoices, 80 invoices involving GST of Rs. 6 lacs have been uploaded by the suppliers (all suppliers)
in their respective GSTR-1 filed on the prescribed due date therefor.
Compute ITC that can be claimed by Mr. Vijay in his GSTR-3B for the month of October 2020 to be filed by 20th
November 2020 assuming that GST of Rs. 10 lacs is otherwise eligible for ITC:
Answer:
ITC to be claimed by Mr. Vijay in his GSTR-3B for Oct 2020 to be filed by 20th Nov 2020 to be computed as:
Invoices ITC involved in invoices ITC that can be availed
In respect of 80 invoices uploaded in GSTR-1 Rs. 6 lacs Rs. 6 lacs [Note 1]
In respect of 20 invoices not uploaded in GSTR-1 Rs. 4 lacs Rs. 0.3 lakh Note 2]
Total Rs. 10 lacs Rs. 6.3 lacs

Note:
(i) ITC i.r.o invoices uploaded by the suppliers in their GSTR-1, full ITC can be availed.
(ii) As per rule 36(4), ITC i.r.o invoices not uploaded by the supplier in their GSTR-1 has to be restricted to 5% of
eligible ITC i.r.o invoices uploaded in GSTR-1. Thus, ITC i.r.o 20 invoices not uploaded in GSTR-1, ITC has been
restricted to Rs. 0.3 lacs [5% of Rs. 6 lacs].

CQ5. Mr. Ajay, a registered supplier, receives 100 invoices (for inward supply of G/S) involving GST of Rs. 10 lacs,
from various suppliers during the month of October 2020. Out of 100 invoices, 85 invoices involving GST of Rs.
9.7 Lacs have been uploaded by the suppliers (all suppliers) in their respective GSTR-1 filed on the prescribed
due date therefor. Compute the ITC that can be claimed by Mr. Ajay in his GSTR-3B for the month of October 2020
to be filed by 20th November 2020 assuming that GST of Rs. 10 lacs is otherwise eligible for ITC:
Answer:
ITC to be claimed by Mr. Ajay in GSTR-3B for Oct. 20XX to be filed by 20th Nov 20XX is to be computed as:
Invoices ITC involved in invoices ITC that can be availed
In respect of 85 invoices uploaded in GSTR-1 Rs. 9.7 lacs Rs. 9.7 lacs [Note 1]
In respect of 15 invoices not uploaded in GSTR-1 Rs. 0.30 lacs Rs. 0.30 lacs [Note 2]
Total Rs. 10 lacs 10 lacs

Note:
(i) ITC i.r.o. invoices uploaded by the suppliers in their GSTR-1, full ITC can be availed.
(ii) ITC i.r.o. invoices not uploaded has to be restricted to 10% of eligible ITC i.r.o. invoices uploaded in GSTR-1.
However, in this case, 5% of eligible ITC i.r.o invoices uploaded in GSTR-1 [Rs. 0.485 lacs (5% of Rs. 9.5 lacs)]
exceeds actual ITC [Rs. 0.30 lacs] i.r.o 15 invoices not uploaded in GSTR-1, ITC availed should be limited to
actual amount of ITC i.e 0.30 Lacs.

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17(1) G/S used partly for business purpose & partly for other purposes

▪ ITC proportionate to business purpose shall be allowed. [Non-Business → NO ITC]

Ex: A registered person (partnership firm) purchases 5 laptops. 1 laptop is being used by son of one
partners of firm. ITC will not be available on such laptop as it is used for personal purposes.
17(2) G/S used partly for making taxable supplies (including zero-rated supplies) & partly for
making Exempt supplies

▪ G/S used for making ‘taxable supplies & zero-rated supply’ → ITC Allowed.
▪ NO ITC on G/S used for making ‘Exempt Supplies’.

17(3) Value of Exempt Supplies u/s 17(2) shall include: [ITC shall be reversed]

▪ Supply made under RCM;

▪ Transactions in Securities;
▪ Sale of Land; & Sale of Building [subject to clause (b) of paragraph 5 of Schedule II]
Explanation: ‘Value of Exempt Supply’ shall not include the value of activities/transactions
specified in Schedule III (Negative List), except those specified in paragraph 5 of the said Schedule.
[Thus, Value of Exempt Supply shall include activities specified in paragraph 5].
PC Note: No ITC needs to be reversed on Schedule III activities except sale of L&B.
Ex: Out of 10 containers purchased by a registered person engaged in taxable supply of goods, 3 are
used for storing non-taxable goods (exempt supply) such as petroleum. ITC on 7 containers can be
availed. However, ITC on 3 containers used for non-taxable goods cannot be availed.

17(4) BANKS/FIs/NBFCs engaged in supply of services of accepting deposits, giving

loans/advances shall have 2 options [Option once exercised cannot be changed during FY]

Option 1: To comply with the provisions of Section 17(2);

Option 2: Avail 50% eligible ITC on Inputs, IS & Capital goods in that month & rest shall lapse.

PC Note: 2nd Proviso: Restriction of 50% shall NOT apply to tax paid on supplies made by one
registered person to another registered person having the SAME PAN (Branches).

Rule 38 [Chapter V: ITC of CGST Rules] – Procedures to follow if 2nd option is chosen

(a) They shall not avail ITC of

▪ GST paid on inputs, IS used for Non-business purpose.
▪ ITC attributable to supplies specified in sec 17(5) in GSTR-2. [Blocked Credit]
(b) They shall avail 100% ITC of tax paid on inputs & IS [referred. in 2nd proviso to sec 17(4)].
[Supply made by a registered person to another registered person having SAME PAN]
(c) On Remaining Inputs & IS, admissible ITC = 50% of input tax paid [other than (b)].

CQ6. ABC Bank has availed credit of Rs. 25 lacs in Dec 2018. Total credit, out of which Rs. 5 lacs pertain to non-
business purpose & Rs. 7 Lacs pertain to credit availed under 2nd proviso of section 17(4).
Find the total ITC eligible to ABC Bank. [Note: ABC Bank opted to avail ITC @ 50% of eligible credit].
Answer: Statement showing eligible ITC to ABC Bank for the month of December 2018:
Particulars ITC Amount
ITC attributable to non-business purpose (ITC not allowed) Nil
ITC from its other establishment (ITC fully allowed) 7,00,000
Other ITC [25 lacs – 5 lacs – 7 lacs) x 50%] 6,50,000
Total ITC allowed in Form GSTR-2 13,50,000

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1. MOTOR VEHICLES
(a) ITC Blocked Motor vehicles used for transportation of PERSONS with seating capacity ≤ 13
persons (including driver).

(b) ITC Allowed When such motor vehicles are used for making following taxable supplies:
▪ Further supply of such motor vehicles (Sale);
▪ Transportation of passengers (Taxi Business);
▪ Imparting training on driving motor vehicles (Driving School).

PC Note:
1. ITC on motor vehicles for transportation of persons with seating capacity > 13 persons (including
driver) used for any purpose is allowed.
2. ITC on any other motor vehicle used for any purpose is allowed. (Ex: motor vehicle used for
transportation of goods, dumpers, tippers etc).

Examples:
1. ITC on cars purchased by a manufacturing company for official use of its employees is blocked.
2. ITC on cars purchased by a car dealer for sale to customers is allowed.
3. ITC on cars purchased by company engaged in renting cars for transportation of passengers, is allowed.
4. ITC on cars purchased by a car driving school is allowed.
5. ITC on bus purchased by company for transportation of employees from their home to office & back is allowed.
6. ITC on trucks purchased by a company for transportation of its finished goods is allowed.

2. VESSELS & AIRCRAFTS

(a) ITC Blocked Other than specified below.

(b) ITC Allowed Vessels & Aircraft when used for making following taxable supplies:
▪ Further supply of such vessels or aircraft (Sale);
▪ Transportation of passengers;
▪ Imparting training on navigating/flying such vessels/aircraft;
▪ Transportation of goods.
Ex. 1: ITC on aircraft purchased by a manufacturing company for official use of its CEO is blocked.
Ex. 2: ITC on aircraft purchased by an Aviation School providing training on flying aircrafts, is allowed.

3. INSURANCE, SERVICING, REPAIR & MAINTENANCE

(a) ITC Blocked General insurance, servicing, repair & maintenance relating to –
- Motor vehicles for transportation of persons with seating capacity ≤ 13 persons
(including driver);
- Vessels & Aircraft
(b) ITC Allowed ▪ Such services relating to motor vehicles for transportation of persons with seating
capacity ≤ 13 persons (including driver) when used for purposes mentioned in (b)
of Motor Vehicle above.
▪ Such services relating to vessels or aircraft when used for purposes mentioned in
(b) of Vessel & Aircraft above.
▪ Such services when received by a taxable person engaged:

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(i) In manufacture of such motor vehicles, vessels or aircraft; or

(ii) In supply of general insurance services i.r.o such motor vehicles, vessels or
aircraft insured by him.
PC Note:
1. ITC is not allowed on services of general insurance, servicing, repair & maintenance relating to motor
vehicles, vessels or aircraft, ITC on which is not allowed.
2. ITC is allowed on services of general insurance, servicing, repair & maintenance relating to motor
vehicles, vessels or aircraft, ITC on which is allowed.

Examples:
1. ITC on general insurance taken on a car used by employees of a manufacturing company for official purposes,
is blocked.
2. ITC on maintenance & repair services availed by a company for a truck used for transporting its FG is allowed.

4. Membership of Club, Health & Fitness Centre

(a) ITC Blocked Membership of Club, Health & Fitness Centre
(b) ITC Allowed Such services are provided by employer to employees under statutory obligation

5. Travel Benefit
(a) Blocked Travel benefits extended to employees on vacation [Ex: Leave/home travel concession]
(b) Allowed When such services are provided by employer to employees under statutory obligation

6. Others
(a) Blocked Food & beverages Outdoor catering Beauty treatment Plastic (Cosmetic) surgery
Health services Life insurance and health insurance
Leasing, renting or hiring of motor vehicles/vessels/aircraft on which ITC is blocked
(b) Allowed ▪ Such goods and/or services when used by a registered person for making an outward
taxable supply of the same category of goods and/or services (sub-contracting) or as an
element of a taxable composite or mixed supply.
▪ When such goods and/or services are provided by an employer to its employees under
a statutory obligation.
PC Note:
1. ITC on such G&/S when used for any purpose other than those mentioned in (b) of 6 above is not allowed
2. When such G&/S are provided by employer to employees without any statutory obligation, ITC is blocked.
Examples:
1. AB & Co., a caterer of Amritsar, has been awarded a contract for catering in a marriage to be held at Ludhiana.
The firm has given the contract for supply of snacks, to be served in the marriage, to CD & Sons, a local caterer of
Ludhiana. ITC on such outdoor catering services availed by AB & Co., is allowed.
2. ITC on outdoor catering services availed by company for team development event for its employees, is blocked.
3. ITC on outdoor catering service availed by a company to run a canteen in its factory. The Factories Act, 1948
requires the company to set up a canteen in its factory. ITC on such outdoor catering is allowed.

CQ7. XYZ Ltd. conducted its 50th AGM at its head office in New Delhi & availed services of Delicious caterers on that
occasion. Delicious caterers charged Rs. 15,00,000 plus GST @18% for the supply of outdoor catering services. You
are required to advice XYZ Ltd. if it can avail Input tax credit of the GST paid on outdoor catering service.
Answer: As per section 17(5)(b), ITC shall not be available i.r.o supply of outdoor catering service. Hence, XYZ Ltd.
is not entitled to avail ITC of GST paid on outdoor catering services availed from Delicious caterers.

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(c) Works Contract services for construction of immovable property (other than P&M) Except where
it is input service for further supply of works contract service.
ITC is allowed in the following cases:
(a) It is an input service for further supply of works contract service (sub-contracting). [i.e only a
works contractor can avail ITC on works contract services received by him]
(b) Immovable property is Plant & Machinery. Thus, ITC on works contract services used for
construction of such plant and machinery is allowed.
(c) When the value of works contract service is not capitalized. In this case, ITC is allowed to all
recipients irrespective of their line of business.
PC Note: If re-construction, renovation, additions or alterations or repairs are not capitalized, it
would not tantamount to construction under GST law.
Examples:
1. ITC on works contracts services availed by a software company for construction of its office, is blocked.
2. CD & Co., a works contractor of Noida, has been awarded a contract for construction of a commercial
complex in Lucknow. The firm avails services of EF & Co., a local works contractor of Lucknow, for the
construction of complex. ITC on such works contract services availed by CD & Co., is allowed.
3. ITC on works contract services availed by an automobile company for construction of a foundation on
which a machinery (to be used in production process) is to be mounted permanently, is allowed.
4. ITC on works contract services availed by a manufacturing company for construction of pipelines to be
laid outside its factory, is blocked.
5. A consulting firm has availed services of a works contractor for repair of its office building. The company
has booked such expenditure in its profit and loss account. ITC on such services is allowed.
6. A telecommunication company has availed services of a works contractor for repair of its office building.
The company has capitalized such expenditure. ITC on such services is blocked.

CQ8. PQ Ltd. is engaged in supply of works contract services for construction of immovable property. It
gives a part of the construction work to a sub-contractor. The sub-contractor charges GST in his invoice to
PQ Ltd. You are required to advice PQ Ltd. if it can avail ITC of the GST charged to it by the sub-contractor.
Ans: As per section 17(5)(c), ITC shall not be available i.r.o works contract services when supplied for
construction of immovable property. However, ITC is allowed where it is an input service for further supply
of works contract service. In given case, services supplied by sub-contractor have been used by PQ Ltd. for
supply of works contract service. Thus, PQ Ltd. can avail ITC on input service provided by sub-contractor.
(d) Self-construction of Immovable property: ITC is not available.

Goods or services received by a taxable person for construction of immovable property (other than
P&M) on his own account including when such G/S are used in course of business.
PC Note: ITC is available when the construction is not on own account; or is of P&M.

Examples:
1. A company buys material and hires a contractor to construct an office building to house the plant
supervisory staff. Input tax paid on such goods and services is not allowed as credit.
2. A company buys cement, tiles etc. and avails the services of an architect for construction of its office
building. ITC on such goods and services is blocked.
3. MN & Constructions procures cement, paint, iron rods and services of architects and interior designers
for construction of a commercial complex for one of its clients. ITC on such G & S is allowed to MN & Co.
4. A company buys cement, tiles etc. & avails services of an architect for renovation of its office building.
The company has booked such expenditure in its profit and loss account. ITC on such G/&S is allowed.
5. ITC on G/&S used by automobile company for construction of a foundation on which a machinery (to be
used in the production process) is to be mounted permanently, is allowed.
(e) Composition Scheme: G/S on which tax has been paid u/s 10

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(f) Goods or services or both received by NRTP Except on goods imported by him.
PC Note: ITC on goods imported by NRTP is allowed; ITC on services imported by him is blocked.

(g) Personal Purpose: G/&S used for personal consumption.

(h) Goods lost, stolen, destroyed, written off; disposed of by way of gift/free samples

(i) Any tax paid in accordance with the provisions of Sections 74, 129 & 130.

▪ Sec 74: SCN issued in case of fraud, to recover the GST.

▪ Sec 129: Tax is paid, when goods are under detention for further investigation.
▪ Sec 130: Tax paid, when the goods or conveyance are being confiscated.
PC Note: Sec 73: SCN issued in cases other than fraud to recover GST. Thus ITC .

Examples:
Nature of service ITC Comment
Cement used for construction of administration building Not allowed Building is not P&M.
Cement is used for foundation of pillars supporting boiler Allowed Structural support for P&M = P&M
Works contract services is provided by sub-contractor to Allowed Since used for providing work
contractor contract service
Setting up telecommunication tower; Pipelines laid outside Not Allowed Specifically excluded from P&M
factory premises; telecommunication towers

1 Free Samples & Gifts

▪ ITC shall not be available to the supplier on the inputs, IS & capital goods to the extent they are
used in relation to the gifts or free samples distributed without any consideration.
▪ However, where the activity of distribution of gifts or free samples falls within the scope of “supply”
on account of the provisions contained in Schedule I, ITC shall be available.
2 Buy one get one free offer

▪ ITC shall be available to the supplier for the inputs, input services & capital goods used in
relation to supply of goods or services or both as part of such offers.
3 Discounts including ‘Buy more, save more’ offers
▪ ITC shall be available to the supplier for such inputs, input services & capital goods used in
relation to the supply of G/&S on such discounts.
4 Secondary discounts
▪ Such discounts shall not be excluded VoS & thus GST is leviable on such discounts.
▪ These are the discounts which are not known at the time of supply.
▪ ITC shall be available to supplier.

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Sec Persons eligible to take Goods entitled to ITC Conditions

credit
Inputs held in stock or As on
CG

18(1)(a) Person who has applied for Inputs held in stock & Day immediately
registration within 30 days inputs contained in semi- preceding date ITC to be
from date on which he finished/FG held in stock from which he availed within
becomes liable to becomes liable to 1 year from the
registration & has been pay tax date of issue of
granted such registration invoice by
18(1)(b) Person who obtains Inputs held in stock & Day immediately supplier [Sec
Voluntary Registration Inputs contained in semi- preceding date of 18(2)]
finished/FG held in stock grant of
registration

Ex: Mr. Z becomes liable to pay tax on 1st August and has obtained registration on 15th August. Mr. Z is eligible
for ITC on inputs held in stock and as part of semi-finished goods or finished goods held in stock as on 31st
July. Mr. Z cannot take ITC on capital goods.
Ex: Mr. A applies for voluntary registration on 5th June & obtains registration on 22th June. Mr. A is eligible for
ITC on inputs held in stock and as part of semi-finished goods or finished goods held in stock as on 21st June.
Mr. A cannot take ITC on capital goods.
18(1)(c) RP who ceases to pay tax Inputs held in stock & Day immediately ITC to be
u/s 10 [Composition tax] & Inputs contained in semi- preceding date availed within
switches to regular scheme finished/FG held in stock from which he 1 year from the
& Capital Goods becomes liable to date of issue of
pay tax under invoice by
regular scheme supplier [Sec
18(2)]
18(1)(d) RP whose exempt supplies Inputs held in stock & Day immediately
become Taxable supplies Inputs contained in semi- preceding the date
finished/FG held in stock from which such ITC on capital
relatable to such exempt supply becomes Goods will be
supply & Capital goods taxable reduced by 5%
exclusively used for per quarter of
such exempt supply a year or part
from date of
invoice.

Ex: Mr. B, a registered taxable person, was paying tax under composition scheme upto 30th July. However, w.e.f.
31st July, Mr. B becomes liable to pay tax under regular scheme. Mr. B will be eligible for ITC on inputs held in
stock and inputs contained in semi-finished/FG held in stock and on capital goods as on 30th July. ITC on capital
goods will be reduced by 5% per quarter from the date of the invoice.
18(3) Change in constitution of RP due to sale, merger, demerger, amalgamation, lease, transfer of
business or death of sole proprietor with specific provision for transfer of liabilities, such RP
shall be allowed to transfer unutilised ITC in his ECL to such sold, merged, demerged,
amalgamated, leased or transferred business, successor.
18(4) If any RP who has availed ITC opts to pay tax u/s 10 or where G/&S supplied by him
become wholly exempt,
▪ he shall pay an amount (by way of debit in ECL) or electronic cash ledger,
▪ equivalent to ITC i.r.o inputs held in stock & inputs contained in semi-finished/FG held in
stock and on capital goods as reduced by such percentage points as may be prescribed,
▪ on the day immediately preceding date of exercising of such option or date of such exemption
Provided that after payment of such amount, balance ITC lying in his ECL shall lapse.

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Ex: Capital goods have been in use for 4 years, 6 month and 15 days. The useful remaining life in months = 5 months
ignoring a part of the month. ITC taken on such capital goods = C. ITC attributable to remaining useful life = C x 5/60.
18(6) Supply of Capital Goods/P&M on which ITC has been taken
RP shall pay an amount:
(i) ITC taken on such capital goods/P&M as reduced by 5% per quarter of a year or part
(ii) Tax on the transaction value of such capital goods or P&M determined u/s 15. (Higher)
Note: If refractory bricks, moulds & dies, jigs & fixtures as scrap are supplied, taxable
person may pay tax on transaction value of such goods determined u/s 15.

CQ9. ABC Ltd. becomes liable to pay tax on 1st Oct 2018 & has obtained registration on 20th Oct 2018. GST paid
on goods lying in the premises of ABC Ltd. as on 30th September 2018 are as follows:
Raw material: Rs. 1 Lacs (Rs. 15,000 GST pertaining to invoice dated 1st May 2017) Capital goods: Rs. 3 Lacs
Raw material in WIP: Rs. 1,50,000 RM in FG: Rs. 2 Lacs

You are required to answer the following:

(a) Eligible amount of ITC;
(b) Time limit to submit declaration on common portal.
(c) Whether any certification required while availing the credit, if so from whom.
Answer:
(a) Eligible ITC is Rs. 4,35,000 (Rs. 1,00,000 - Rs. 15,000 + Rs. 1,50,000 + Rs. 2,00,000). ITC on input in stock is
admissible U/s 18(1)(a) of CGST Act, 2017.
As per section 18(2), a registered person shall not be entitled to take ITC i.r.o any supply of G/&S to him after
the expiry of 1 year from the date of issue of tax invoice relating to such supply. Thus, Rs. 15,000 pertaining
to invoice dated 1st May 2017 is not eligible ITC. ITC on Capital Goods is not admissible for new registration.
(b) For availment of ITC in such case, declaration in Form GST ITC-01 shall be submitted on common portal
within 30 days of becoming eligible to avail ITC.
(c) Declaration regarding ITC shall be duly certified by a practicing CA or a Cost Accountant if the aggregate value
of the claim on account of central tax, State tax, Union territory tax & integrated tax exceeds Rs. 2,00,000.
Since, ITC is Rs. 4,50,000, certificate from a practicing Chartered Accountant or a Cost Accountant is required.

CQ10. ABC Traders paying tax under composition scheme crosses the threshold & becomes liable to pay tax
under regular scheme on 01-04-2019, Can it avail Input tax credit & if so calculate the amount of ITC available?
Particulars CGST SGST
Inputs lying in stock (invoice dated 12-03-2019) 3,600 3,600
Capital goods procured on 25-09-2018 invoice dated 25-09-2018 7,200 7,200
Inputs lying in semi finished goods in stock (Invoice dated 12-12-2018) 2,400 2,400

Answer: As per Section 18(1)(c), where any registered person ceases to pay tax u/s 10, he shall be entitled to
take credit of input tax i.r.o inputs held in stock, inputs contained in semi-finished or finished goods held in stock
& on capital goods on the day immediately preceding the date from which he becomes liable to pay tax u/s 9.
Therefore, in given case, ABC traders shall be entitled from 01-04-2019 to avail credit available as on 31-03-2019.
As per Rule 40 of the CGST Rules, 2017, the capital goods credit is to be claimed after reducing the tax paid on
such capital goods by 5% points per quarter of a year or part thereof from the date of invoice or such other
documents on which the capital goods were received by the taxable person.

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Input tax credit available to ABC Traders i.r.o inputs

Particulars ITC (CGST + SGST) Eligible
Inputs lying in stock 7,200 7,200
Inputs lying in semi finished goods in stock (Invoice dated 12.12.2018) 4,800 4,800
Total Input tax credit available 12,000 12,000
Input tax credit available to ABC Traders i.r.o capital goods (amount in Rs)
Date of invoice of capital goods 25-09-2018
Date from which ABC traders are liable to pay tax u/s 9 01-04-2019
No. of quarters from date of invoice 3
CGST & SGST paid on capital goods procured on 25-09-2018 14,400
ITC to be reduced by Rs. 14,400 × 5% × 3 quarters 2,160
Credit (CGST & SGST) available on capital goods 12,240

CQ11. M/s. XYZ a registered dealer engaged in supplying exempted goods to its customers. On 17.06.2019,
exemption notification was rescinded & goods were liable for tax. M/s. XYZ has to make e-payment of tax on due
date i.e., on 20.07.2019. Determine eligible credit for June, 2019 if the following information is provided:
Value (exclusive of CGST SGST IGST @
Particulars
CGST/SGST/IGST) @6% @6% 12%
Value of Inputs lying in stock as on 16.06.2019. All inputs - -
1,00,000 12,000
were procured after 01.03-.2019
Value of inputs contained in semi-finished goods lying in 1,35,000 8,100 8,100
stock as on 16.06.2019 but only inputs worth Rs. 85,000 in
semi-finished goods were procured after 16.06.2018
Inputs received on 31.01.2019 lying in finished goods in 1,55,000 9,300 9,300 -
stock on 16.06.2019
Capital goods procured in 10.12.2018 which is exclusively - - 96,000
8,00,000
used in supplying exempted goods
Answer: As per Section 18(1)(d), where an exempt supply of goods or services or both by RP becomes a taxable
supply, such person shall be entitled to take credit of input tax i.r.o inputs held in stock & inputs contained in
semi-finished or FG held in stock relatable to such exempt supply & on capital goods exclusively used for such
exempt supply on the day immediately preceding the date from which such supply becomes taxable.
As per Rule 40(1) (a) of CGST Rules, 2017, ITC on capital goods, shall be claimed after reducing the tax paid on
such capital goods by 5% points per quarter of a year or part thereof from the date of invoice or such other
documents on which the capital goods were received by the taxable person.
Computation of ITC of CGST/SGST/IGST available to M/s. XYZ i.r.o inputs & capital goods
Particulars CGST SGST IGST Eligible ITC
ITC on value of inputs lying in stock [Since all inputs were 12,000 12,000
acquired within 1 year prior to effective date on which the goods
became taxable, hence, entire ITC would be allowed.]
ITC on value of inputs contained in semi-finished goods [WN 1] 5,100 5,100 - 10,200
ITC on value of inputs lying in stock of FG [Inputs received on 9,300 9,300 18,600
31.1.2019 lying in FG in stock on 16.6.2019 as all inputs were
acquired within 1 year prior to the effective date on which the
goods become taxable, therefore, entire ITC would be allowed]
Credit (IGST) available on capital goods [WN 2] - - 81,600 81,600
Total Input tax credit available 14,400 14,400 93,600 1,22,400

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Working Notes:
1. ITC on the value of inputs contained in semi-finished goods - Out of the total stock of Rs. 1,35,000, inputs
totaling to Rs. 50,000 are older than 1 year from the effective date on which the goods became taxable.
Therefore, ITC to this extent stands disallowed. ITC on inputs contained in stock of Rs. 85,000 would be eligible.
[Eligible credit = Rs. 8,100 × Rs. 85,000 ÷ Rs. 1,35,000 each i.r.o CGST & SGST].
2. Credit available i.r.o capital goods:
Date of invoice of capital goods 10.12.2018
Date from which the exempt goods become taxable 17.06.2019
No. of quarters or part thereof from date of invoice 3
Percentage points to be reduced (5% per quarter) 15%
IGST paid on capital goods used exclusively in relation to goods exempted up to 16.06.2019 96,000
ITC to be reduced by 15% 14,400
Amount of Input tax credit available i.r.o capital goods 81,600

CQ12. PQR Ltd. a registered person supplying taxable goods in Jaipur has opted to pay tax on composition scheme
u/s 10 with effect from 28.2.2019. It provides following information relating to balance of ITC lying on 27.2.2019:
Inputs lying in stock as such valued (inclusive of CGST & SGST @ 12%) Rs. 1,68,000
Inputs contained in FG where tax invoice is not available relating to such inputs but it is known Rs. 89,600
that market price of such inputs (inclusive of CGST & SGST @ 12%) on 28.2.2019 is
Input tax on capital goods purchased on 25-10-2018 Rs. 72,000
Balance in ECL Rs. 1,10,000
Decide whether PQR Ltd. is eligible for ITC lying on 27-02-2019.
Answer: As per sec. 18(4), where any registered taxable person who has availed of ITC opts to pay tax under
composition scheme, he shall pay an amount (by way of debit in ECL or electronic cash ledger) equivalent to the
credit of input tax i.r.o inputs held in stock & inputs contained in semi-finished or FG held in stock & on capital
goods, taking useful life of capital goods 5 years, on the day immediately preceding the date of exercising such
option. Therefore, in given case PQR Ltd. is required to pay following amounts:
Inputs lying in stock (Rs. 1,68,000 × 12 ÷ 112) 18,000
Inputs contained in finished goods lying in stock (Rs. 89,600 × 12 ÷ 112) [WN] 9,600
Input tax on Capital goods used for 4 months & 2 days, taking residual life as 5 years (Rs. 72,000 ×
55 ÷ 60) (55 months being remaining residual life of capital goods) 66,000
Amount to be paid by PQR Ltd. (CGST + SGST) 93,600
It can be paid by utilizing balance in ECL. Balance credit in ECL = Rs. 16,400 (Rs. 1,10,000 - Rs. 93,600) shall lapse.
Note: As per Rule 44(3), where tax invoices related to the inputs lying in stock are not available, registered person
shall estimate the amount u/r 44(1) based on market price of goods on the date of opting for composition scheme.

CQ13. Goods manufactured by Royal Ltd. have been exempted from GST with effect from 01.05.2019. Earlier
these goods were liable to CGST & SGST @ 6% respectively. The inputs used in manufacturing were also liable to
CGST & SGST @ 6% respectively. Following information is provided on 30.04.2019:
1. Inputs costing Rs. 1,12,000 (inclusive of CGST & SGST) are lying in stock.
2. Inputs costing Rs. 80,640 (inclusive of CGST & SGST) are held in process.
3. Finished goods valuing Rs. 5,60,000 are in stock, the input cost (inclusive of CGST & SGST) is 50% of the value.
4. ITC on capital goods lying in stock is Rs. 72,000. These goods were purchased on 01.08.2018.
5. Balance in Electronic Credit Ledger is Rs. 1,52,000.
Department has asked Royal Ltd. to reverse the credit taken on inputs referred above. However, Royal Ltd.
contends that credit once validly taken is indefeasible & not required to be reversed. Decide.
What would your answer be if balance in ECL A/c as on 30.04.2019 is Rs. 1,00,000?

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Answer: As per section 18(4), where any registered person who has availed ITC & G/&S supplied by him become
wholly exempt, he shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger,
equivalent to the credit of input tax i.r.o inputs held in stock & inputs contained in semi-finished or finished goods
held in stock & on capital goods taking useful life of capital goods 5 years, on the day immediately preceding the
date of such exemption. The balance of ITC, if any, lying in his electronic credit ledger shall lapse.
Accordingly, Royal Ltd. will have to pay an amount computed as follows:
Inputs lying in stock (Credit = Rs. 1,12,000 × 12 s-112) (Net purchase price, exclusive of tax) 12,000
Inputs in process (Rs. 80,640 × 12 + 112) 8,640
Inputs contained in finished goods lying in stock (Rs. 5,60,000 × 50% × 12 ÷ 112) 30,000
Input tax on Capital goods used for 9 months taking residual life as 5 years (Rs. 72,000 × 51 ÷ 60) 61,200
(51 months being remaining residual life of capital goods)(Rule 44 of CGST Rules, 2017)
Amount to be paid by Royal Ltd. 1,11,840
It can be paid by utilizing balance in ECL. Balance credit = Rs. 1,52,000 - Rs. 1,11,840 = Rs. 40,160 shall lapse.
If balance in ECL is Rs. 1,00,000: Royal Ltd. will have to pay Rs. 11,840 (Rs. 1,11,840 - Rs. 1,00,000) in cash.

CQ14. XYZ Ltd. a supplier of goods has purchased capital goods under cover of invoice dated 1.10.2018 for Rs.
4,13,000 (inclusive of GST @ 18%). After taking it for business use, said capital goods were supplied for Rs.
2,85,000 on 26.4.2019. Explain Input tax credit treatment in this case. What would be your answer if capital goods
being Refractory Bricks are removed as scrap at a transaction value of Rs. 25,000 on 29-03-2019?
Answer: As per Section 18(6) of CGST Act r/w Rule 40(2), in case of supply of capital goods, on which ITC has
been taken, the registered person shall pay an amount equal to higher of:
(a) ITC taken on such capital goods - 5% for every quarter or part from date of issue of invoice for such goods; or
(b) Tax on transaction value of such capital goods determined u/s 15.
Computation of amount of tax payable by XYZ Ltd.
Date of Invoice of purchase of capital goods 01-10-2018
Date of Supply of capital goods after taking into use 26-04-2019
No. of Quarters from the date of issue of invoice for such goods 3
CGST & SGST paid on purchase of Capital Goods [ Rs. 4,13,000 × 18 + 118] 63,000
Reduced by Rs. 63,000 × 5% × 3 quarters 9,450
Amount of CGST & SGST [A] 53,550
Transaction Value on supply of Capital Goods u/s 15 2,85,000
CGST & SGST payable on supply of Capital Goods @ 18% [B] 51,300
Amount to be payable (higher of A or B) 53,550

(b) As per section 18(6), where refractory bricks, moulds & dies, jigs & fixtures are supplied as scrap, there shall
be no requirement for reversal of ITC, taxable person may pay tax on the transaction value of such goods
determined u/s 15. In given case, refractory bricks are cleared as scrap, manufacturer shall pay an amount equal
to tax leviable on transaction value i.e. CGST Rs. 25,000 × 9% = Rs. 2,250 & SGST Rs. 25,000 × 9% = Rs. 2,250.

REVERSAL OF ITC IN CASE OF CANCELLATION OF REGISTRATION

▪ Cancellation of registration also requires reversal of ITC on inputs held in stock/ contained in semi-finished
goods/FG held in stock, capital goods or P&M on the day immediately preceding the cancellation date.
▪ Amount to be reversed on inputs & CG is computed in the manner as applicable for Section 18(4) & 18(6).
▪ Such amount is then compared with output tax payable on such goods & higher of the two amounts is
finally paid by RP.

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1 ITC claimed as per sec 18(1) on inputs held in stock or inputs contained in semi-finished or FG held
in stock, or credit claimed on capital goods in accordance with sec 18(1)(c)/(d) shall be subject to
following conditions, namely
(a) ITC on capital goods, in terms of sec 18(1)(c)/(d) shall be claimed after reducing tax paid on such
capital goods by 5% per quarter or part from date of invoice on which capital goods were received
by taxable person.
(b) RP shall within 30 days from date of becoming eligible to avail ITC u/s 18(1) or within further
period as may be extended by Commissioner by a notification, shall make a declaration,
electronically, on common portal in FORM GST ITC- 01 to effect that he is eligible to avail ITC.
Provided that any extension of time limit notified by Commissioner of State tax or Commissioner
of Union territory tax shall be deemed to be notified by Commissioner.
(c) Declaration under clause (b) shall clearly specify the details relating to inputs held in stock or
inputs contained in semi-finished or finished goods held in stock, or as case may be, capital
goods on day immediately preceding date -
1. from which he becomes liable to pay tax under provisions of the Act, in the case of a claim
u/s 18(1)(a);
2. of grant of registration, in case of a claim u/s 18(1)(b);
3. from which he becomes liable to pay tax u/s 9 in case of a claim u/s 18(1)(c)
4. from which supplies made by registered person becomes taxable, in the case of a claim u/s
18(1)(d).
(d) Details furnished in declaration under clause (b) shall be duly certified by a practicing CA/CMA
if aggregate value of claim on account of CGST, SGST, UTGST & IGST > Rs. 2 Lacs;
(e) ITC claimed as per 18(1)(c)/(d) shall be verified with corresponding details furnished by
corresponding supplier in FORM GSTR- 1 or in FORM GSTR- 4, on common portal.

2 Amount of credit in case of supply of capital goods or P&M for section 18(6), shall be calculated by
reducing input tax on said goods @ 5% for every quarter or part from date of issue of invoice
for such goods.

1 ▪ A registered person shall, in event of sale, merger, de-merger, amalgamation, lease or transfer or
change in ownership of business for any reason,
▪ furnish details of sale, merger, de- merger, amalgamation, lease or transfer of business, in FORM
GST ITC-02, electronically on the common portal
▪ along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to
the transferee:
Provided that in case of demerger, ITC shall be apportioned in the ratio of value of assets of new
units as specified in demerger scheme.
Explanation: It is hereby clarified that the “value of assets” means the value of the entire assets of
the business, whether or not input tax credit has been availed thereon.

2 Transferor shall also submit a copy of certificate issued by practicing CA/CMA certifying that sale,
merger, de-merger, amalgamation, lease or transfer of business has been done with a specific
provision for transfer of liabilities.

3 Transferee shall (on common portal) accept the details so furnished by transferor & on such
acceptance, unutilized credit specified in FORM GST ITC-02 shall be credited to his ECL.

4 Inputs & capital goods so transferred shall be duly recorded by the transferee in his books.

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1 ▪ RP with separate registration for multiple places of business as per rule 11 & intends to transfer,
either wholly or partly, the unutilised ITC lying in his ECL to any or all of newly registered place of
business, shall furnish within 30 days from obtaining such separate registrations, the details in
FORM GST ITC-02A electronically on the common portal, either directly or through a Facilitation
Centre notified in this behalf by the Commissioner:
▪ ITC shall be transferred to newly registered entities in the ratio of the value of assets held by
them at the time of registration.
▪ Value of Assets means the value of the entire assets of the business (whether or not ITC has
been availed thereon).

2 ▪ Newly registered person (transferee) shall, on the common portal, accept the details so furnished
by the registered person (transferor) & upon such acceptance, unutilised ITC specified in FORM
GST ITC-02A shall be credited to his electronic credit ledger.

1 Amount of ITC relating to inputs held in stock, inputs contained in semi-finished & FG held in stock,
& Capital goods held in stock shall, for the purposes of section 18(4) be determined as:

for inputs held in stock & inputs ITC shall be calculated proportionately on the basis of
contained in semi- finished & FG corresponding invoices on which credit had been availed by
held in stock registered taxable person on such inputs

for capital goods held in stock ITC involved in remaining useful life in months shall be
computed on pro-rata basis, taking useful life as five years.

2 Such amount specified in (1) shall be determined separately for ITC of CGST, SGST, UTGST, IGST.

3 Where tax invoices related to inputs held in stock are not available, registered person shall estimate
amount under sub-rule (1) based on prevailing market price of goods on effective date of occurrence
of any of events specified in section 18(4) or section 29(5).

4 Amount determined under sub-rule (1) shall form part of output tax liability of RP & details of amount
shall be furnished in GST ITC-03, where such amount relates to any event specified in section 18(4)
& in GSTR-10, where such amount relates to cancellation of registration.

5 Details furnished in accordance with sub-rule (3) shall be certified by practicing CA/CMA.

6 ITC for purposes of section 18(6) relating to capital goods shall be determined in same manner as
specified in clause (b) of sub-rule (1) & amount shall be determined separately for ITC of CGST, SGST,
UTGST & IGST:
If amount so determined is more than tax determined on transaction value of capital goods, amount
determined shall form part of output tax liability & shall be furnished in FORM GSTR-1.

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UTILIZATION OF INPUT TAX CREDIT

1 PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS [SECTION 49(5)]
(a) ITC of IGST shall first be utilised towards payment of IGST & amount remaining (if any) may be
utilised towards the payment of CGST & SGST in that order.
(b) ITC of CGST shall first be utilised towards payment of CGST & amount remaining (if any) may be
utilised towards the payment of IGST;
(c) ITC of SGST shall first be utilised towards payment of SGST & amount remaining (if any) may be
utilised towards payment of IGST;
Note: ITC of SGST shall be utilised towards payment of IGST only where the balance of ITC of
CGST is not available for payment of IGST;
(d) ITC of UTGST shall first be utilised towards payment of UTGST & amount remaining (if any) may
be utilised towards payment of IGST;
Note: ITC of UTGST shall be utilised towards payment of IGST only where the balance of ITC of
CGST is not available for payment of IGST;
(e) CGST shall not be utilised towards payment of SGST or UTGST &
(f) SGST or UTGST shall not be utilised towards payment of CGST.
2 UTILISATION OF ITC SUBJECT TO CERTAIN CONDITIONS [SECTION 49A]
➢ ITC of CGST, SGST/UTGST shall be utilised towards payment of IGST, CGST, SGST/UTGST (as
the case may be) only after ITC of IGST has first been utilised fully towards such payment.
3 ORDER OF UTILIZATION OF ITC [RULE 88A]
➢ ITC of IGST shall first be utilised towards payment of IGST & amount remaining (if any) may be
utilised towards the payment of CGST & SGST/UTGST in any order.
➢ Provided that ITC CGST, SGST/UTGST shall be utilised towards payment of IGST, CGST,
SGST/UTGST only after ITC of IGST has first been utilised fully.
4 RESTRICTIONS ON UTILISATION OF ITC [RULE 86A] [NN 75/2019 CT dated 26.12.2019]
❖ A new rule 86A has been inserted to empower the Commissioner/officer (not below the rank of an
Assistant Commissioner) authorised by him, to impose restrictions on utilization of ITC available
in ECL if he has reasons to believe that such ITC has been fraudulently availed or is ineligible.
❖ Restrictions can be imposed in the following circumstances:
1. ITC has been availed on the basis of tax invoices/valid documents:
▪ issued by a non-existent supplier or by a person not conducting any business from the
registered place of business; or
▪ without receipt of goods or services or both; or
▪ the tax in relation to which has not been paid to the Government.
2. Registered person availing ITC has been found non-existent or not to be conducting any
business from the registered place of business; or
3. Registered person availing ITC is not in possession of tax invoice/valid document.
❖ If ITC is so availed, restrictions can be imposed by not allowing such ITC to be used for discharging
any liability u/s 49 or not allowing refund of any unutilised amount of such ITC.
❖ Such restrictions can be imposed for a period upto 1 year from date of imposing such restrictions.
❖ However, Commissioner/officer authorised by him, can withdraw such restriction if he is satisfied
that conditions for imposing the restrictions no longer exist.

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ITC of ↓ Output tax liability ↓

IGST CGST SGST/UTGST
IGST 1 2 – In any order and in any proportion
3. ITC of IGST to be completely exhausted mandatorily
CGST 5 4 Not permitted
SGST/UTGST 7 Not permitted 6
[Only after ITC of CGST has been
utilized fully]
IMPORTANT POINTS:
❖ ITC of IGST should first be utilized towards payment of IGST.
❖ Remaining ITC of IGST (if any) can be utilized towards the payment of CGST & SGST/UTGST in
any order & in any proportion. Thus, Remaining ITC of IGST can be utilized:
▪ first towards payment of CGST and then towards payment of SGST; or
▪ first towards payment of SGST and then towards payment of CGST; or
▪ towards payment of CGST & SGST simultaneously in any proportion [Ex: 50: 50/30:70/40:60 etc.
❖ ITC of CGST, SGST/UTGST can be utilized towards payment of IGST, CGST, SGST/UTGST only
after the ITC of IGST has first been utilized fully.
❖ Cross-utilization of credit is available only between CGST - IGST & SGST/UTGST - IGST.

CQ15. Amount of ITC available and output tax liability under different tax heads:
Head IGST CGST SGST Total
Output tax liability 1,000 300 300 1600
ITC 1300 200 200 1700
Option 1
ITC of Discharge of output Discharge of output Discharge of output SGST Balance of
IGST liability CGST liability liability ITC
IGST 1000 200 100 0
ITC of IGST has been completely exhausted
CGST 0 100 - 100
SGST/UTGST 0 - 200 0
Total 1000 300 300 100

Option 2:
ITC of Discharge of output Discharge of output Discharge of output Balance of
IGST liability CGST liability SGST liability ITC
IGST 1000 100 200 0
ITC of IGST has been completely exhausted
CGST 0 200 - 0
SGST/UTGST 0 - 100 100
Total 1000 300 300 100
PC Note: There can be other options also for utilization of ITC of IGST against CGST and SGST liabilities. In this
example, two options for utilizing ITC of IGST against CGST and SGST liabilities are shown.

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 Rule 86B limits the use of itc available in ECL for discharging output tax liability.
 The aforesaid rule starts with non-obstante clause & has an over-riding impact on any other provision
of the rules.

1 Registered person shall not use amount available in ECL to discharge his liability towards output tax
in excess of 99% of such tax liability, where value of taxable supply (other than exempt supply &
zero-rated supply) in a month exceeds Rs. 50 lacs.

PC Note: ITC that can be adjusted against Output tax liability has been reduced from 100% to 99%. 1%
amount of output tax liability has to be paid through E- cash ledger only.

Ex Total value of inter-State supply of Raman & Sons for the month of February 2021 is of Rs. 100 lacs
taxable @ 18% IGST. Thus, total output tax liability of Raman & Sons is Rs. 18 lacs. Amount available
in electronic credit ledger is Rs. 20 lacs (IGST).
In terms of restriction imposed by rule 86B, Raman & Sons can discharge 99% of its output tax
liability, i.e. Rs. 17,82,000 (99% of Rs. 18,00,000) from the amount available in electronic credit
ledger. However, it has to mandatorily discharge the balance 1% of the output tax liability i.e. ₹
18,000 (1% of Rs. 18,00,000) through electronic cash ledger only.

Exceptions: [This restriction shall not apply in following cases:]

(a) Where the said person/proprietor/karta/MD/any of its 2 partners, WTDs, members of Managing
Committee of Associations or Board of Trustees have paid more than Rs. 1 lacs as income tax in
each of the last 2 FYs for which time limit to file ROI u/s 139(1) has expired.
(b) Where RPs has received a refund of > Rs. 1 lac in preceding FY on account of unutilised ITC of (i)
zero rated supplies made without payment of tax or (ii) inverted duty structure.
PC Note: Refund should have been received in the preceding financial year.
(c) If RP has paid more than 1% of total output tax liability using electronic cash ledger upto the said
month in the current financial year applied cumulatively, upto the said month in current FY.
Ex: Assuming a scenario wherein in FY 2021-22 upto August 2021, total output tax liability payable is
Rs. 30 lacs & such registered person has deposited Rs. 1 lac through electronic cash ledger and
balance through electronic credit ledger, rule 86B would not be applicable in September 2021 [if the
turnover during this month exceeds Rs. 50 lacs], since payment made in cash is more than 1% of total
output tax liability. (1% of Rs. 30 lakhs is Rs. 30,000).
PC Note: Aforesaid exception needs to be evaluated in ‘current financial year’, and hence, for the
month of April of any financial year, the said exception will not be applicable. Accordingly, registered
person would be required to pay minimum 1% of output liability through E-cash ledger unless the RP
is covered under any of the other exceptions or if taxable turnover in a month is < Rs. 50 Lacs.
(d) Where RP is (i) Government Department; (ii) PSU (iii) LA; (iv) Statutory body.
However, Commissioner or an officer authorised by him in this behalf may remove the said restriction
after such verifications & such safeguards as he may deem fit.

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Place of ▪ Place from where business is ordinarily carried on & includes warehouse, godown (or any
Business other place) where taxable person stores his goods, supplies or receives G/&S.
Sec 2(85)
▪ Place where a taxable person maintains his books of account; or
▪ Place where a taxable person is engaged in business through agent.

Fixed ▪ means a place (other than registered place of business)

Establish- ▪ which is characterised by sufficient degree of permanence & suitable structure in terms of
ment
human & technical resources
[Sec 2(50)]
▪ to supply services, or to receive & use services for its own needs.

Principal ▪ means place of business specified as principal place of business

Place of ▪ in the certificate of registration.
Business

Registered ▪ means a person who is registered u/s 25,

Person ▪ but does not include a person having a Unique Identity Number.

Casual ▪ A person who occasionally undertakes transactions involving supply of G/&S

Taxable ▪ in course or furtherance of business,
Person
▪ whether as principal, agent or in any other capacity,
▪ in a State/UT where he has no fixed place of business [Section 2(20)]
PC Note: CTP cannot exercise the option to pay tax under composition levy.

Non- ▪ Any person who occasionally undertakes transactions involving supply of G/&S
Resident ▪ whether as principal or agent or in any other capacity,
Taxable
Person ▪ but who has no fixed place of business or residence in India.
PC Note: He cannot exercise option to pay tax under composition levy.

▪ Registration in GST is PAN based. Once a supplier is liable to register, he has to obtain registration in
each of the States/UTs in which he operates under the same PAN.
▪ There is no concept of a centralized registration. Supplier is required to obtain State-wise registration.
▪ A supplier has to obtain registration in every State/UT from where he makes a taxable supply provided
his aggregate turnover exceeds a specified threshold limit. Thus, he is not required to obtain registration
from a State/UT from where he makes a non-taxable supply.
▪ Normally, Supplier is required to obtain single registration in a State/UT. However, where he has
multiple places of business in a State/UT, he has two options:
1. Either to get a single registration for the said State/UT [wherein it can declare one place as principal
place of business (PPoB) & other branches as additional place(s) of business (APoB)] or
2. to get separate registrations for each place of business in such State/UT.
▪ Registration under GST is not tax specific. Thus, there is single registration for all the taxes i.e. CGST,
SGST/UTGST, IGST & GST compensation cess.

▪ Only Registered Person can collect taxes from customers & pass on ITC of G/S supplied to recipients.
▪ Only Registered Person can claim ITC of taxes paid & can utilize same for payment output tax liability.

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PERSON LIABLE FOR REGISTRATION [SECTION 22]

ATO > 20 Lacs ▪ Supplier is liable to get registered in the state/UT (other than special category states)
from where he makes taxable supply of Goods or Services or both
▪ if his aggregate turnover in current FY > Rs. 20 Lacs.
▪ For Special Category State: Limit of registration is Rs. 10 Lacs.

Note: For Section 22, Special Category States are: Mizoram, Manipur, Tripura (MMT) & Nagaland.
NN 10/2019 ▪ Any person who is engaged in exclusive supply of goods shall be required to get
registered when aggregate turnover in current FY exceeds Rs. 40 lacs.
▪ The Increased Limit of Rs. 40 Lacs is subject to prescribed T&C.

NN 10/2019 is not applicable in following cases & thus Threshold Limit is Rs. 20 Lacs:
(a) Persons required to take compulsory registration u/s 24 of the CGST Act.
(b) Person who has opted for voluntary registration or such registered persons who intend to continue
with their registration under the CGST Act.
(c) Supplier of ice cream, Pan masala & Tobacco products.
(d) Persons engaged in making Intra-State supplies in the States of -
- Uttarakhand, Arunachal Pradesh; Puducherry & Telangana; Meghalaya, Sikkim;
- Manipur, Mizoram, Nagaland, Tripura → [Limit of Rs. 10 Lacs].
PC Note: Suppliers making Inter-State supply of goods are liable to compulsory registration & are thus
covered in (a) above.
Explanation – For the purposes of this sub-section, a person shall be considered to be engaged
exclusively in supply of goods even if he is engaged in exempt supply of services by way of extending
deposits, loans or advances in so far as the consideration is represented by way of interest or discount.

CQ1. Determine whether XYZ Ltd incorporated in Rajasthan is liable to be registered under GST Law:
Particulars Rs.
(1) Intra-State supply of goods chargeable with GST @ 5% 5,51,000
(2) Intra-State supply of goods which are wholly exempt from GST u/s 11 of CGST Act, 2017 6,00,000
(3) Intra-State supply of goods chargeable with Nil rate 8,50,000
Answer:
❖ Every supplier shall be liable to be registered in a State/UT from where he makes a taxable supply of G/&S
if his aggregate turnover in a FY exceeds Rs. 20 lacs.
Computation of Aggregate turnover
Intra-State supply of goods chargeable with GST @5% 5,51,000
Intra-State supply of goods which are wholly exempt from GST 6,00,000
Intra-State supply of goods chargeable with Nil rate of GST 8,50,000
Total Value of supplies 20,01,000
❖ Since ATO of the company exceeds Rs. 20 lacs, it is liable to get itself registered under GST Law.
Existing Law ▪ Every person who is registered or holding a license under existing indirect tax law.

Transfer of ▪ Business carried on by registered person

Business
▪ is transferred due to succession or otherwise to another person as going concern,
▪ transferee or successor shall be liable for registration
▪ w.e.f the date of such transfer or succession.

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Amalgam-tion ▪ In case of transfer pursuant to sanction of scheme for amalgamation or demerger of

or demerger two or more companies pursuant to order of HC, Tribunal or otherwise,
▪ transferee shall be liable to be registered,
▪ w.e.f date on which ROC issues certificate of incorporation.
PC Note: Registration is required only for place of business from where taxable supply takes place.

Particulars States Threshold limit for persons engaged

Exclusively in supply of in supply of services or
goods both G&S
States other Puducherry + Telangana Rs. 20 Lac Rs. 20 Lac
than Special Others Rs. 40 Lac Rs. 20 Lac
Category States
Special Category Manipur Rs. 10 Lac Rs. 10 Lac
States as per Mizoram Rs. 10 Lac Rs. 10 Lac
Section 22
Nagaland Rs. 10 Lac Rs. 10 Lac
Tripura Rs. 10 Lac Rs. 10 Lac
Other States J&K Rs. 40 Lac Rs. 20 Lac
Assam Rs. 40 Lac Rs. 20 Lac
Himachal Pradesh Rs. 40 Lac Rs. 20 Lac
AP & UK Rs. 20 Lac Rs. 20 Lac
Meghalaya Rs. 20 Lac Rs. 20 Lac
Sikkim Rs. 20 Lac Rs. 20 Lac

Examples Supplier engaged in Aggregate Threshold Registration

turnover limit required?
P of Assam Exclusively in supply of Shoes Rs. 22 Lac Rs. 40 Lac ×
Exclusively in supply of Pan Masala Rs. 22 Lac Rs. 20 Lac ✓
Exclusively in supply of taxable services Rs. 22 Lac Rs. 20 Lac ✓
in supply of both taxable G&S Rs. 22 Lac Rs. 20 Lac ✓
S of Telangana exclusively in supply of toys Rs. 22 Lac Rs. 20 Lac ✓
exclusively in supply of ice cream Rs. 22 Lac Rs. 20 Lac ✓
exclusively in supply of taxable services Rs. 22 Lac Rs. 20 Lac ✓
in supply of both taxable G&S Rs. 22 Lac Rs. 20 Lac ✓
A of Manipur exclusively in supply of paper Rs. 12 Lac Rs. 10 Lac ✓
exclusively in supply of tobacco Rs. 12 Lac Rs. 10 Lac ✓
exclusively in supply of taxable services Rs. 12 Lac Rs. 10 Lac ✓
in supply of both taxable G&S Rs. 12 Lac Rs. 10 Lac ✓

PC Note:
❖ Threshold limit of a person having places of business in more than one State/UT in India gets reduced
to Rs. 10 lacs only when such person makes taxable supplies of goods or services or both from any of the
Special Category States as per section 22.
❖ However, in case he makes exempt/non-taxable supply from a Special Category State & taxable supplies
from a State other than Special Category State, threshold limit shall not be so reduced.

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CQ2. Raghav of Assam is exclusively engaged in intra-State supply of readymade garments. Its turnover in current
FY from Assam showroom is Rs. 28 Lacs. It has another showroom in Tripura with a turnover of Rs. 11 Lacs in
current FY. Since Raghav is engaged in supplying garments from a Special Category State, applicable threshold
limit for him gets reduced to Rs. 10 Lacs. Further, Raghav is liable to get registered under GST in both Assam &
Tripura on his aggregate turnover crossing the threshold limit of Rs. 10 lacs.

CQ3. Uday Enterprises is engaged in supply of taxable goods in Maharashtra. It also supplies alcoholic liquor for
human consumption from Nagaland. Its turnover in current FY is Rs. 34 Lacs in Maharashtra & Rs. 8 Lacs in
Nagaland. Since Uday Enterprises is exclusively engaged in making taxable supplies of goods from Maharashtra,
the applicable threshold limit for obtaining registration is Rs. 40 Lacs. However, threshold limit will not be
reduced to Rs. 10 Lacs in this case, as supply of alcoholic liquor for human consumption from Nagaland (one of
the Special Category States) are non-taxable supplies. In given case, since aggregate turnover of Uday Enterprises
exceeds threshold limit of Rs. 40 Lacs, it is liable to obtain registration. It will obtain registration in Maharashtra,
but is not required to obtain registration in Nagaland as he is not making any taxable supplies from said State.

❖ Aggregate turnover: includes total turnover of all units/branches of a person with same PAN & it is
computed on all India basis.
❖ Here, ‘Aggregate turnover’ shall include all supplies made by taxable person, whether on his own
account or made on behalf of all his principals.
Ex: Mr. A has appointed Mr. B & Associates as his agent. All the supplies of goods made by Mr. B & Associates as
agent of Mr. A will also be included in aggregate Turnover of Mr. B.
❖ Supply of Goods (after completion of job work) by a registered job worker → treated as supply of goods
by ‘Principal’ & it shall not be included in aggregate T/O of registered job worker.
❖ Aggregate turnover Vs. Turnover in State:
▪ Aggregate turnover → Used for determining limit for registration & eligibility for composition scheme.
▪ State Turnover → Used as basis for calculation of tax payable under composition levy.

CQ4. Pure Oils, Delhi has started supply of machine oils & high-speed diesel in April, 20XX. The following details
have been furnished by it for the said month. Determine whether Pure Oils is liable for registration.
Particulars Amount excluding GST
Supply of machine oils in Delhi Rs. 2,00,000
Supply of high-speed diesel in Delhi Rs. 4,00,000
Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi Rs. 3,75,000
Supply made by Pure Oils from its branch located in Delhi Rs. 1,80,000
CQ5. What if Pure Oils has a branch in Nagaland from where he supplies machine oils amounting to Rs. 2,50,000?
Answer: Computation of Aggregate turnover (AT)
Particulars Amount
Supply of machine oils in Delhi [Intra-state supply of taxable goods & thus includible in AT] 2,00,000
Supply of high speed diesel in Delhi [Intra-state supply of goods which is non-taxable under GST. 4,00,000
[Non-taxable supply is included in the definition of Exempt Supply & thus includible in AT]
Supply made through Fortis Lubricants - an agent of Pure Oils in Delhi [Transfer of goods to agent 3,75,000
for further supply is also treated as ‘supply’. Sec 7(1)(c) r/w Schedule I (Para 3) covers transfer
of goods to agent. It is an intra-state supply of goods which is taxable. It shall be includible in ATO]
Supply made by Pure Oils from its branch located in Delhi [Supply is made from branch office in 1,80,000
Punjab. Since ATO is computed on all India basis (establishments operating with same PAN), it
shall be includible in ‘aggregate turnover’]
Aggregate Turnover 11,55,000

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As per section 22, every supplier is liable to be registered in the State/UT from where he makes a taxable supply
of G/&S, if his aggregate turnover in a FY exceeds Rs. 20 lacs (Rs. 40 Lacs for exclusive supplier of goods).
Since the aggregate turnover is not exceeding Rs. 20 Lacs, Pure Oils is not liable to be registered.
Answer to CQ5: In case where Pure Oils has a branch in Nagaland from where it supplies machine oils amounting
to Rs. 2,50,000, then aggregate turnover in that case will be 14,05,000 (11,55,000 + 2,50,000). Further, in this
situation, the applicable threshold for registration will be Rs. 10 lacs as Nagaland is one of the specified Special
Category States. Thus, in such situation Pure Oils, Delhi shall be liable to be registered.

1 Person making any Inter-State taxable supply.

Note: However, limit of Rs. 20/10 lacs is available in case of Inter-State supply of taxable
Services & Specified Handicraft Goods.

2 Casual Taxable Persons making taxable supply.

Note: However, limit of Rs. 20/10 lacs is available in case of Inter-State taxable supply of Specified
Handicraft Goods & availing the benefit of NN 10/2019.

3 Persons who are required to pay tax under Reverse Charge.

Note: If a person is engaged exclusively in making supplies, tax on which is payable on RCM basis is
not required to obtain registration

4 Non-resident taxable person making taxable supply

5 Electronic Commerce;

(a) Every ECO who is required to collect tax at source u/s 52 [AMD];
(b) Persons who supply G/&S through ECO who is required to collect tax at source u/s 52 [other
than specified u/s 9(5)].
But, threshold limit of Rs. 20 lacs (Rs. 10 lacs: MMT, Nagaland) is available in case of suppliers
supplying only services through ECO.

6 Persons required to deduct tax at source u/s 51 (whether or not separately registered under GST)

7 Persons making taxable supply of G/&S on behalf of other taxable person (as agent/otherwise)

8 Input Service Distributor (ISD) [whether or not separately registered under GST]

9 Every person supplying OIDAR services

▪ from a place outside India
▪ to a person in India (other than registered person)

10 Person required to pay tax on RCM basis u/s 9(5) of CGST;

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CQ6. Examine, with reason, whether registration is required in the following independent cases:
(a) Aadhav Computers of Gujarat is providing computer maintenance service. Aggregate turnover of Aadhav
Computers is Rs. 15 lacs which comprises both inter-State and intra-State supply.
(b) Soft Wings of West Bengal, exclusively trading in garments, supplies its taxable goods in various States of
India from its outlet in West Bengal. Aggregate turnover of Soft Wings is Rs. 35 lacs.
Answer:
(a) Registration is compulsory for suppliers engaged in inter-State supply. However, as per Notification No.
10/2017 IT dated 13.10.2017, threshold exemption of Rs. 20 lacs [Rs. 10 lacs in case of Special Category States
of Mizoram, Tripura, Manipur and Nagaland] is available in case of inter-State supply of taxable services.
Therefore, Aadhav Computers (ATO: Rs 15 lacs) is not required to obtain registration even though it is
engaged in inter-State supply of taxable services.
(b) Threshold limit for registration in the State of West Bengal for the persons engaged exclusively in supply of
goods, is Rs. 40 lacs. However, registration is compulsory if supplier is engaged inter-State supply of goods
irrespective of ATO. Threshold exemption is not available in case of inter-State supply of taxable goods. Thus,
Soft Wings is required to obtain registration.

Example:
Supplier to ECO ECO Representative Registration
of ECO in India required by
(Even if
aggregate T/O ≤
Rs. 20/10 lacs)
1 Mr. P provides his taxi service in Mumbai through AB Cab USA A & Co., Mumbai (i) AB Cab USA
AB Cab USA. Aggregate T/O of Mr. P is – (ii) A & Co.,
(i) > Rs. 20/10 Lacs (ii) ≤ Rs. 20/10 Lacs Mumbai
2 Y Ltd. (it owns a hotel) provides lodging facility in Rooms Inc., B (Hyderabad) (i) Rooms Inc
Bengaluru through rooms Inc (a USA based USA USA
website) [ATO of Y Ltd. ≤ Rs. 20/10 Lacs] (ii) B Hyderabad
3 Z [house-keeping service provider in Chennai] HK Ltd., Dhoni, (i) HK Ltd Dubai
provides services through housekeeping.com Dubai individual of (ii) Dhoni of
(Dubai based website) [ATO of Z ≤ Rs. 20/10 Lacs] Ranchi Ranchi
4 PQ Ltd. Supplies G/S in India through Ezee Ezee Ltd., D Ltd., (i) Ezee Ltd.
(Singapore based website) (not covered by above Singapore Chandigarh (ii) D Ltd.
cases)
(iii) PQ Ltd. (if it
ATO of PQ Ltd is (i) > Rs. 20/10 Lacs (ii) ≤ Rs. 20/10 is supplier of
Lacs goods) [Note 3]

Notes:
1. In Case 1, Mr. P is required to get registration only if his aggregate turnover > Rs. 20 lacs/Rs. 10 lacs.
2. Y Ltd. (in Case 2) & Z (in Case 3) are not required to get registration (their aggregate T/0 ≤ Rs. 20/10 Lacs)
3. In Case 4, if PQ Ltd. is supplier of services & aggregate turnover ≤ Rs. 20/10 Lacs, registration is not required.
4. In Case 1 – 3, GST on supplies shall be paid by ECO (through its Indian representative). All the provisions of
GST shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation
to the supply of such services. This rule is given by section 9(5).
5. In Case 4, ECO is required to collect 1% of "net value of taxable supplies" (net of supply returned) made
through it, where the consideration with respect to such supplies is to be collected by such operator.

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PERSONS NOT LIABLE FOR REGISTRATION [SECTION 23]

1. Person engaged exclusively in supply of Non-taxable or Exempt G/&S.

Ex: Madhur Oils is exclusively engaged in supplying petrol. Supply of petrol is not leviable to GST. Thus, Madhur
Oils is not liable for registration as it is engaged exclusively in supplying wholly exempt goods.
Ex: Supply of services by way of charitable activities → Not liable for registration.
CQ7. Whether a person dealing in online commodities like metal, food grain etc. at the Commodities Exchange is
required to take registration?
Ans: No, the same will be covered under the definition of securities.
2. Agriculturist (Individual/HUF), to the extent of ‘supply of produce out of cultivation of land’.

Ex: Deshbandhu is an agriculturist engaged in cultivation of wheat in his field in Punjab. He was exclusively
engaged in supply of wheat cultivated in his field in the previous year. Thus, he was not liable to registration as
he was exclusively engaged in supply of produce out of cultivation of land.
In current year, he decides to start trading in rice along with supplying his wheat produce. His turnover in current
year is Rs. 32 lacs from supply of wheat produced & Rs. 9 lacs from trading of rice.
Since he is engaged in trading of rice, he is not covered u/s 23 above. Threshold limit for registration applicable
to a person exclusively engaged in supply of goods in Punjab is Rs. 40 lacs. Aggregate turnover of Deshbandhu in
current year is Rs. 41 lacs [32 lacs + 9 lacs] which > threshold limit. Thus, he is liable to registration.
3. Persons making only RCM supplies. [Under RCM, tax is payable by the recipient]

Ex: Manikaran Transporters is a Goods Transport Agency (GTA) engaged exclusively in supplying GTA services
liable to tax under reverse charge [since tax is payable on GTA services @ 5% in the given case]. Thus, it is exempt
from registration as it is engaged exclusively in making supplies, tax on which is liable to be paid on RCM.
Further, Manikaran Transporters supplies said service to Diwakar Manufacturing Pvt. Ltd. whose aggregate
turnover does not exceed threshold limit. Since Diwakar Manufacturing Pvt. Ltd. has to pay tax on GTA services
[@ 5%] under RCM, it is required to obtain registration mandatorily irrespective of its aggregate turnover.
4. Persons making inter-State supplies of taxable services upto Rs. 20/10 Lacs.
Ex: Dhola & Co., located in Delhi, is engaged in supply of taxable goods in the neighbouring States of Punjab &
Haryana. Its aggregate turnover in current FY is Rs. 10 lacs. Since it is engaged in making inter-State taxable
supply of goods, it is required to register mandatorily under GST irrespective of its aggregate turnover.
However, if in above case, Dhola & Co. is engaged in inter- State supply of taxable services instead of goods, it will
be eligible for exemption from registration till its aggregate turnover does not exceed Rs. 20 lacs.
5. CTP making taxable supplies of specified handicraft goods upto Rs. 20/10 Lacs.
6. Person making Inter-state supplies of specified handicraft goods upto Rs. 20/10 Lacs.
Note: Such person must have obtained a PAN & generated an e-way bill.
Ex: Ariza Pvt. Ltd., located in Madhya Pradesh, is a supplier of taxable & notified handicraft goods. It supplies
these goods in the neighbouring States of Uttar Pradesh & Orissa. Its aggregate turnover in the month of April is
Rs. 15 lacs. Although Ariza Pvt. Ltd. is engaged in making inter-State supplies of taxable goods, it is not liable to
obtain registration till its aggregate turnover does not exceed Rs. 20 lacs.

CQ8. Mr. A sells agricultural produce by utilizing the services of Mr. B who is a commission agent as per APMC
Act of the State. Mr. B identifies the buyers & sells the agricultural produce on behalf of Mr. A for which he charges
a commission from Mr. A. In cases where the invoice is issued by Mr. B to the buyer, Mr. B is an agent as covered
under Para 3. of Schedule I. Hence, services supplied by commission agent Mr. B on behalf of the principal without
consideration shall be deemed to be a supply.
Registration requirements of the commission agents in such cases have been clarified as follows:
Since services provided by commission agent for sale/purchase of agricultural produce are exempt, such
commission agents (even when they qualify as agent under Schedule I) are not liable to be registered.
Person is liable for mandatory registration if he makes taxable supply of G/&S on behalf of other taxable persons.
Accordingly, commission agent will be liable to get mandatorily registered when both foll n conditions are
satisfied:

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(i) Principal should be a taxable person; (ii) supplies made by the commission agent should be taxable.
However, generally, a commission agent under APMC Act makes supplies on behalf of an agriculturist who is not
a taxable person if he supplies produce out of cultivation of land. Thus, a commission agent, who is making
supplies on behalf of non-taxable person [viz. agriculturist], is not liable for compulsory registration under this
provision.
Where a commission agent is liable to pay tax under RCM, such agent will be required to get registered
compulsorily.

CQ9. B is an advocate. He provides legal services to Tata Chemicals (annual receipt from consultancy being Rs.
35 lacs). He does not have any other income. In this case, aggregate turnover is more than Rs. 20 lacs. However,
registration is not required (B is only engaged in providing legal services, GST on which is payable by Tata
Chemicals, the recipient of supply, under reverse charge mechanism).

CQ10. C is an advocate. He provides legal services to Tata Chemicals (annual receipt from consultancy being Rs.
35 Lacs). Besides, he has rental income of Rs. 500 from letting out of commercial property. He does not have any
other income. In this case, aggregate turnover is Rs. 35,00,500. Registration is required. C is not exclusively
engaged in making taxable supply, GST on which is payable by recipient. Apart from providing legal service, C is
also engaged in renting of immovable property.

CQ11. Examine whether the supplier is liable to get registered in the following independent cases:
(a) Raghav of Assam is exclusively engaged in intra-State supply of readymade garments. His TO in current FY
from Assam showroom is Rs. 28 lacs. He has another showroom in Tripura with TO of Rs. 11 lacs in current
FY.
(b) Pulkit of Goa is exclusively engaged in intra-State supply of shoes. His aggregate TO in current FY is Rs. 22
lacs.
(c) Harshit of Himachal Pradesh is exclusively engaged in intra-State supply of pan masala. His aggregate
turnover in the current FY is Rs. 24 lacs.
(d) Ankit of Assam is exclusively engaged in intra-State supply of taxable services. His aggregate turnover in the
current FY is Rs. 25 lacs.
(e) Sanchit of Assam is engaged in intra-State supply of both taxable G&S. His aggregate TO in current FY is Rs.
30 lacs.
Answer:
❖ As per section 22 r/w NN 10/2019, a supplier is liable to be registered in the State/UT from where he makes
a taxable supply of G/&S, if his aggregate turnover in current FY exceeds the threshold limit.
Threshold limit for a person making exclusive intra - State taxable supplies of goods is as under:
▪ Mizoram, Tripura, Manipur & Nagaland: Rs. 10 lacs
▪ Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana & Uttarakhand: Rs. 20 lacs
▪ Rest of India: Rs. 40 lacs
However, higher limit of Rs. 40 lacs is not available to persons engaged in making supplies of ice cream, Pan
masala & Tobacco & manufactured tobacco substitutes.
❖ Threshold limit for a person making exclusive taxable supply of services or supply of both G&S is as under:
▪ Mizoram, Tripura, Manipur & Nagaland: Rs. 10 lacs; Rest of India: Rs. 20 lacs.

(a) Since Raghav is engaged in supplying readymade garments from a Special Category State i.e. Tripura,
threshold limit is Rs. 10 lacs. Thus, Raghav is liable to get registered under GST as his turnover exceeds Rs.
10 lacs. Further, he is required to obtain registration in both Assam & Tripura as he is making taxable supplies
from both States.
(b) Threshold limit for registration for Pulkit Rs. 40 lacs 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.
(c) Threshold limit for registration is Rs. 20 lacs since Harshit is exclusively engaged in supply of pan masala.
Thus, Harshit is liable to get registered.
(d) Mr. Ankit is exclusively engaged in intra-State supply of taxable services. Thus, he is not eligible for higher
limit of Rs. 40 Lacs. Threshold limit for registration is Rs. 20 lacs & hence, Ankit is liable to get registered.
(e) Since Sanchit is engaged in supply of both taxable goods & services, threshold limit for registration is Rs. 20
lacs. Thus, Sanchit is liable to get registered under GST as his turnover is more than the threshold limit.

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CQ12. Examine whether the supplier is liable to get registered in the following independent cases:
(a) Agent supplying goods on behalf of some other taxable person & its aggregate turnover does not exceed Rs.
20 lacs during current FY.
(b) Mr. AC is having a rental income from residential house given on rent of Rs. 12 Lacs & he is also having a
kirana shop which has a turnover of Rs. 10 Lacs.
(c) Kuldeep is a trader & he is trading 100% in alcohol for human consumption. His turnover from supply of
alcohol for human is Rs. 2 Crore.
(d) Mr. A is a salaried employee (salary income being Rs. 1 crore). Besides, he owns a residential property which
is let out for residential purposes for annual rent being Rs. 30 lacs.
Answer:
(a) Person supplying goods/services or both on behalf of other persons whether as an agent or not is liable to be
compulsorily registered even if its aggregate turnover does not exceed Rs. 20 lacs during current FY.
(b) Aggregate turnover of Mr. AC = Rs. 12 Lacs (from exempt supply of rent from residential property) + Rs. 10
Lacs (from taxable supply of Kirana Store). Therefore, Gaurav would be liable to be registered in GST as his
aggregate turnover is more than Rs. 20 Lacs.
(c) Alcohol for human consumption is a non-taxable supply as it is not leviable to tax under the law. Exempt
supply includes non-taxable supply. Any person engaged exclusively in business of supplying G/&S that are
not liable to tax or wholly exempt from tax would not be required to be registered. Thus Kuldeep, exclusively
supplying Alcohol for human consumption (which is not liable to tax) would not be liable to be registered.
(d) Aggregate turnover is Rs. 30 lacs as rent received from residential property renting. Since service of renting
of residential property for residential purpose is exempt supply, Mr. A shall be exempt from registration as
section 23 provides for exemption from registration where a person is exclusively engaged in making exempt
supplies. Since Mr. A is not making supply of any taxable services, he is not liable for registration.

CQ13. Examine whether the liability to register compulsorily u/s 24 arises in each of the independent cases:
(a) Meenu, a supplier in Maharashtra, is exclusively engaged in supply of potatoes produced out of cultivation of
her own land, within Maharashtra and also outside Maharashtra.
(b) Jinu Oils, Gujarat, is engaged in supplying machine oil as well as petrol. Further, it provides services of refining
of oil to customers. Total turnover of supply of machine oil is Rs 10 Lacs, supply of petrol is Rs 5 Lacs and
supply of services is Rs 6 Lacs.
(c) Tilu is working as an agent, he is supplying taxable goods as an agent of Tiku (who is registered taxable
person) and its aggregate turnover does not exceed Rs 20 Lacs during the financial year.
Answer:
(a) Section 24 provides that persons making any inter-state taxable supply of goods are required to obtain
registration compulsorily under GST laws irrespective of the quantum of aggregate turnover. However, as
per section 23, an agriculturist, to the extent of supply of produce out of cultivation of land, is not liable to
registration. Meenu is exclusively engaged in cultivation and supply of potatoes. Thus, she is not liable to
registration irrespective of the fact that she is engaged in making inter-State supply of goods. Further, Meenu
will not be liable to registration, in the given case, even if her turnover exceeds the threshold limit.
(b) Section 24 specifies the categories of persons who are required to be mandatorily registered under GST
irrespective of the quantum of their aggregate turnover. In the given case, Jinu Oils does not fall in any of the
specified categories. Therefore, it is not required to obtain registration compulsorily under GST.
However, as per section 22 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. Threshold limit for a person making supply
is Rs 10 Lacs for the States of Mizoram, Tripura, Manipur & Nagaland and Rs 20 Lacs for the rest of India.
Thus, applicable threshold limit for the State of Gujarat is Rs 20 Lacs for supply of both goods & services.
Further, ATO includes exempted turnover of goods or services.
Accordingly, Jinu Oils is liable obtain registration since its aggregate turnover [Rs 21 Lacs (including turnover
of exempt supply of petrol)] exceeds the threshold limit of Rs 20 Lacs.
(c) Section 24 provides that persons who make taxable supply of goods and/or services on behalf of other taxable
persons whether as an agent or otherwise are required to obtain registration compulsorily irrespective of
the quantum of aggregate turnover. Therefore, Tilu will be mandatorily required to obtain registration.

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REGISTRATION & ITS PROCEDURE [SECTION 25, 26 & 27]

State-wise ▪ There are no centralized registrations under GST.
Registration ▪ A business entity having its branches in multiple States will have to take separate
State-wise registration for the branches in different States.

CQ14. Is there an option to take centralized registration for services under GST Law?
Ans: No, the tax paper has to take separate registration in every State from where he makes taxable supplies.
Separate ▪ Within a State, entity with different branches would have single registration;
Registration However, he can declare one place as Principal PoB & other branches as APoB.
for different PoB ▪ Provided that a person having multiple places of business in a State or UT MAY
within a State be granted a separate registration for each such place of business.
(OPTIONAL)
▪ Separate registration for each place of business shall be granted provided all
separately registered places of business of such person pay tax on supply of
goods/services/both made to another registered place of business, of such
person & issue a tax invoice/bill of supply, for such supply.
▪ Separate registration application needs to be filed for each place of business.

CQ15. Amit, a taxable person, is operating in Tamilnadu, Punjab & West Bengal, with the same PAN. Can he
operate with a single registration in West Bengal?
Ans: No. Amit cannot operate with a single registration in West Bengal if he is making taxable supplies from
Tamilnadu & Punjab also. 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 & is liable to pay GST. However, if he is not making
taxable supplies from T amilnadu & Punjab, he can operate with a single registration in West Bengal.

CQ16. When a person engaged in the provision of services having registration in the Maharashtra goes to
Kolkata to provide services to its client & stays therefore a period of 3 months & also take a residence in that
State is required to take separate registration in that State.
Ans: No, mere residence is not a business establishment & therefore registration in West Bengal is not needed.
Distinct Persons ▪ A person who has obtained/is required to obtain more than one registration,
OR whether in one State/UT or more than one State/UT shall be treated as distinct
Establishments persons (in respect of each such registration).
of Distinct ▪ Further, where a person who has obtained/is required to obtain registration in a
Persons State/UT i.r.o. an establishment, has establishment in another State/UT, then
[25(4) & 25(5)] such establishments shall be treated as establishments of distinct persons.

Composition levy in case of separate registration for different PoB in a state/UT

▪ If one of the business verticals of taxable person is paying tax under normal levy [Sec 9], all other
business vertical shall pay tax under normal levy only.
▪ If one of the business vertical [separately registered] becomes ineligible for composition levy, all other
business verticals would also become so ineligible.
PAN ▪ PAN is mandatory to be eligible for grant of registration.
[Sec 26(6)] Exception:
✓ Person required to deduct tax at source (TDS) u/s 51 can get registration by
using his TAN (issued under the Income-tax Act).
✓ NRTP can apply for registration by using a valid passport (& need not have a
PAN number in India). [Sec 26(7)]
✓ Business entity incorporated or established o/s India, has to submit the
application for GST registration 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 Permanent Account Number (if available).

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Unique Identity ▪ Any specialized agency of UNO or any Multilateral FI & organization as notified
Number (UIN) under UN (Privileges & Immunities) Act, 1947, consulate/embassy of foreign
countries & any other person notified by Commissioner is required to obtain a
UIN from GSTN portal.
▪ This UIN is needed for claiming refund of taxes paid on notified supplies of G/S
received by them, & for other notified purposes.
▪ UIN granted is a centralized UIN (it shall be applicable to the territory of India)
▪ A person having UIN is not registered person & thus, is not a taxable person.
▪ Proper officer may (upon submission of an application or after receiving a
recommendation from the Ministry of External Affairs, Government of India) assign
a UIN to the said person & issue registration certificate within 3 working days
from the date of submission of application.

SEZ unit or ▪ A person who owns a SEZ unit or who is SEZ developer shall have to apply for a
SEZ Developer separate registration, as distinct from his place of business located outside SEZ
in same State or Union territory.
& ISDs
▪ ISDs shall make a separate application for registration as such ISD.

CQ17 Suvarna Industries is engaged in manufacturing activities in Uttar Pradesh. It has two manufacturing
units in UP - one in SEZ & another outside SEZ. Under GST, one registration per State is required. However,
since in this case, one of the two units of Suvarna Industries is located in SEZ, it will have to compulsorily make
a separate application for registration as a place of business distinct from unit located outside SEZ.
Voluntary ▪ A person who is not liable to be registered may get himself registered voluntarily.
registration ▪ However, once a person obtains voluntary registration, he has to pay tax even
[Sec 25(3)] though his aggregate turnover does not exceed Rs. 20/10 lacs.

Suo-motu ▪ If pursuant to any survey, enquiry, inspection, search or any other proceedings
registration by under the Act, PO finds that a person liable to registration under the Act has failed
proper officer to apply for such registration, PO may register said person on a temporary basis.
[Sec 25(8) r/w ▪ Such person shall either:
rule 16]
(a) submit an application for registration within 90 days from the date of grant of
temporary registration, or
(b) file an appeal against such temporary registration.
However, if Appellate Authority upholds (continue) 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 granted shall be effective from the date of order of PO granting temporary
registration.

When to apply Type of person When to apply

Person liable to register u/s 22/24 within 30 days from the date on which he
becomes liable to registration.

CTP or NRTP at least 5 days prior to commencement of

business.

Voluntary Registration When he desires so.

Effective date of Cases Effective date

registration
[Rule 10] If application is submitted within 30 days from Date of becoming liable to
the date of becoming liable to registration registration

If application is submitted after 30 days from the Date of grant of registration

date of becoming liable to registration

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CQ18. Determine the effective date of registration in the following independent cases:
(a) Aggregate turnover of Varun Industries of Mumbai has exceeded Rs. 20 Lacss on 1 st Aug 2018. It submits
the application for registration on 20th Aug 2018. Registration certificate granted on 25th Aug 2018.
(b) Sweta InfoTech Services are the provider of internet services in Pune. Aggregate turnover of them exceeds
Rs. 20 lacs on 25th Sep 2018. It submits the application for registration on 27th Oct 2018. Registration
certificate is granted on 5th Nov 2018.
Answer:
(a) Every supplier becomes liable to registration if his turnover exceeds Rs. 20 lacs [in a State/UT other than
Special Category States] in a FY. Since in the given case, turnover of Varun Industries exceeded Rs. 20 lacs
on 1st August, it becomes liable to registration on said date.
Since application for registration has been submitted within 30 days from such date, effective date of
registration shall be the date on which person becomes liable to registration. Therefore, effective date of
registration is 1st August, 2018.
(b) Since in the given case, turnover of Sweta InfoTech Services exceeds Rs. 20 lacs on 25th September, 2018,
it becomes liable to registration on said date. Further, since application for registration has been submitted
after 30 days from the date such person becomes liable to registration, registration shall be effective from
the date of grant of registration. Therefore, effective date of registration is 5th November, 2018.

Deemed ▪ Grant of registration/UIN under any SGST Act/UTGST Act is deemed to be

Registration registration/UIN granted under CGST Act provided application for registration
[Section 26] has not been rejected under CGST Act.

CQ19. Sugam Services Ltd. is engaged in taxable supply of services in Madhya Pradesh. Turnover of Sugam
Services Ltd. exceeded Rs. 20 lacs on 1st November. It is liable to get registered by 1st Dec. [30 days] in Madhya
Pradesh. It applies for registration on 28th November & is granted registration certificate on 5th December.
Effective date of registration of Sugam Services Ltd. is 1st November.
In above example, if Sugam Services Ltd. applies for registration on 3rd Dec & is granted registration certificate
on 10th Dec. Effective date of registration is 10th December.

Bank A/c details may be furnished after obtaining registration certificate [Rule 10A inserted
& Rule 21 amended] (NN 31/2019)

❖ While applying for registration on GST portal, a person is required to furnish details of his bank A/c.
❖ This requirement has now been relaxed to a limited extent, by inserting a new rule 10A.

❖ Now, RP is allowed to furnish information w.r.t details of bank A/c on the common portal within
▪ 45 days from the date of grant of registration or
Whichever is Earlier
▪ Due date of furnishing return u/s 39.
▪ This relaxation is not available for those who have been granted registration as TDS deductor/TCS
collector u/r 124 or who have obtained suo-motu registration u/r 16.

Note: Person violates the provisions of rule 10A, his GST registration is liable to be cancelled [Rule 21].

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▪ There is a simplified registration procedure under GST. However, in an endeavor to curb fly-by-night
operators & to increase compliance, aadhaar e-KYC based registration has been introduced.
▪ W.e.f 21.08.2020, aadhaar authentication has been made mandatory for new applicants (whether an
individual applicant or an applicant other than individual) in order to be eligible for grant of registration.
▪ Aadhaar Authentication process has been introduced for the persons applying for GST registration as
normal taxpayer/composition/CTP/ISD/SEZ Developer/Unit etc, in Form GST REG 01.
▪ Applicants, who, either do not provide Aadhaar, while applying for new registration or whose Aadhar
authentication fails in validation, would be subjected to site verification by the tax department. However,
tax authority, based on the documents produced, can grant registration.
▪ Subsequently, existing registrants will also be required to undergo aadhaar authentication otherwise
their registration shall be deemed to be invalid. However, no notification has been issued yet prescribing
the manner of undergoing aadhaar authentication of already registered persons.

A PERSONS REQUIRED TO UNDERGO AADHAAR AUTHENTICATION

As per section 25(6A), (6B) & (6C), following persons are required to undergo aadhaar authentication:
(i) New applicant

❖ Every RP shall undergo authentication or furnish proof of possession of Aadhaar number, in

such form and manner prescribed u/r 8 & within such time as may be prescribed.
❖ Rule 8(4A): Where an applicant opts for authentication of Aadhaar number, he shall, while
submitting an application for registration, undergo authentication of Aadhaar number. Said
authentication is required to be eligible for grant of registration.
Date of submission of the application in such cases shall be earlier of:
(a) Date of authentication of the Aadhaar number,
(b) 15 days from the submission of the application in Part B of Form GST REG-01
❖ Individual Applicant → He shall undergo authentication of his own aadhaar number.
❖ Applicant is other than individual → Authentication will be of aadhaar number of the Karta,
MD, WTD, such number of partners, Members of Managing Committee of Association, Board
of Trustees, authorised representative, authorised signatory & such other notified class of
persons [authorised signatory of all types, Managing and Authorised partners of a
partnership firm & Karta of HUF have been so notified].

(ii) Persons already registered

Every registered person shall undergo authentication/furnish proof of possession of Aadhaar

number, in prescribed form and manner and within the prescribed time.

B Where Aadhaar number is not assigned

(i) In case of new applicant

❖ If an aadhaar number is not assigned to a new applicant – either (i) individual or (ii)
person/class of persons (other than individual), such individual/person/class of persons shall
be offered alternate and viable means of identification in the manner specified in rule 9.
❖ First proviso to rule 9(1) provides that where a person fails to undergo authentication of
aadhaar number or does not opt for authentication of Aadhaar number, the registration shall
be granted only after physical verification of the principal place of business in the prescribed
manner (specified in rule 25 discussed subsequently).
❖ However, in lieu of the physical verification of the place of business, the proper officer may
carry out the verification of such documents as he may deem fit. For this, he needs to record
the reasons in writing and needs to take the approval of an officer not below the rank of
Joint Commissioner [Second proviso to rule 9(1)].

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❖ Further, in such case, a notice (in prescribed form) seeking clarifications/ information/
documents from the applicant may be issued by the proper officer not later than 21 days
from the submission of the application for registration [Proviso to rule 9(2)].

(ii) In case of an already registered persons

❖ If an Aadhaar number is not assigned to an existing registered person, such person shall be
offered alternate and viable means of identification in the prescribed manner.
❖ In case of failure to undergo aadhaar authentication/furnish proof of possession of Aadhaar
number/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.

C Persons/class of persons exempt from aadhaar authentication

❖ Section 25(6D) stipulates that above provisions shall not apply to such person or class of persons
or any State or Union territory or part thereof, as may be notified.
❖ Following have been notified in this regard: [Amendment]
- A person who is not a citizen of India
- Department or establishment of State Government or Central Government
- Local authority
- Statutory body
- Public Sector Undertaking
- A person applying for Unique Identity Number

D How aadhaar authentication is done?

❖ Once registration application is submitted, GST system sends "link" to the concerned persons at
their GST registered Mobile No. & Email mentioned in GST application for aadhaar authentication.
❖ On clicking verification link, a window for Aadhaar Authentication will open where they have
entered Aadhaar Number & OTP received by them on the mobile number linked with Aadhaar.
❖ Taxpayers need to complete Aadhaar authentication of all Promoters/Partners/Authorized
Signatories/Karta etc. as mentioned in the application to avail this option.
❖ On successful authentication, demographic data is fetched from Aadhaar to GST System.

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PART 1

Applicability Procedure for registration prescribed u/r 8, 9 & 10 are also applicable to a
▪ Person paying tax under composition levy;
▪ Every person seeking voluntary registration & CTP.
Non – ▪ NRTP;
Applicabilty ▪ Person required to deduct tax at source u/s 51 or collect tax at source u/s 52;
▪ Person supplying OIDAR services from o/s India to a non-taxable online recipient.
Application ▪ Application for registration in GST REG 01 is divided into 2 Parts (i) A & (ii) B.
▪ Application for registration has to be submitted electronically at Common Portal duly
signed/verified through Electronic Verification Code (EVC) [Aadhar OTP].
Documents Permanent Account Number (PAN), mobile number, e-mail address, State/UT.
Verification PAN → from CBDT database; Mob. No. & E-mail → OTP sent on it.

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TRN ▪ Temporary Reference Number is generated & communicated to the applicant.

▪ Applicant shall electronically submit application in Part B along with specified
documents at the Common Portal using TRN.
Acknowledge ▪ On receipt of such application, an acknowledgement in the prescribed form shall be
-ment issued to the applicant electronically.
▪ CTP gets a TRN for making an advance deposit of tax in his electronic cash ledger &
an acknowledgement is issued only after said deposit.
Forwarded Application shall be forwarded to the Proper Officer.
PART 2

Examination by ▪ If application & accompanying documents are found to be in order, PO shall grant
PO registration to applicant within 7 working days from date of submission of
application for registration without site verification if applicant successfully
validates his aadhar authentication.
▪ in case where applicant fails to undergo/ does not opt for Aadhaar authentication
or PO deems it fit to carry out site verification, registration is granted within 30
days of application after verification of site & prescribed documents

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Deficiency in ▪ If application is found to be deficient, PO issues notice electronically in Form GST

application REG-03 within 7 working days from application submission date thereby seeking
clarification, information or documents from the applicant.
▪ Notice may be issued not later than 30 days from application submission date
in case where a person fails to undergo Aadhaar authentication/does not opt for
Aadhaar authentication or PO deems it fit to carry out site verification.

Clarification by ▪ Applicant shall furnish clarification, information or documents electronically, in

applicant Form GST REG-04, within 7 working days from the date of receipt of notice.
▪ If PO is satisfied with clarification, information, etc., he may grant registration to
applicant within 7 working days from the date of receipt of such clarifications.

Rejection by PO ▪ Where no reply is furnished by the applicant (or where the proper officer is not
satisfied with the clarifications), the proper officer may reject such application &
inform the applicant electronically in Form GST REG-05.
Deemed approval ▪ If PO fails to take any action in the following cases within stipulated time, the
of Application for application for grant of registration shall be deemed to have been approved –
Registration
1 In case where registration is to be granted within 30 days from the
after physical verification of the premises of a date of submission of
person – application.
- who fails to undergo aadhar authentication
or does not opt for Aadhaar authentication
OR
- where PO deems it fit to carry out physical
verification of places of business
2 in cases where a person successful undergoes within 7 working days
authentication of Aadhaar number or is from the date of
exempt from Aadhaar authentication submission of application.
3 in cases where PO issues notice seeking within 7 working days
clarification, information or documents from from the date of receipt
the applicant of clarification,
information or documents.
PC Note:
❖ Thus, in case of successful authentication of Aadhaar & no SCN being issued,
registration will be deemed to be approved within 7 working days. However, if
Aadhar authentication is not opted for/aadhaar authentication fails in
validation/PO deems it fit to carry out site verification and no SCN is issued,
registration will be deemed to be approved within 30 days by tax official.
❖ Tax Officer can issue SCN within 7 working days, for grant of registration, in
cases of successful Aadhar authentication. However, in cases when taxpayer
do not opt to provide Aadhaar/when Aadhar authentication fails/ PO deems it
fit to carry out site verification, he can issue SCN upto 30 days. In both cases,
applicants can submit their reply within 7 working days from issue of SCN.
Registration ▪ Where the application for grant of registration has been approved, a certificate of
certificate registration in Form GST REG-06 will be issued.
[Rule 10] ▪ It shows the principal place of business & additional place or places of business
& is made available to the applicant on the common portal & a Goods & Services
Tax Identification Number (GSTIN) shall be assigned.
▪ GSTIN contains the following characters: [15 characters]

2 characters for State code; 10 characters for PAN or TAN

2 characters for the entity code 1 checksum character

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CQ20. At the time of registration, will the assessee have to declare all his places of business?
Ans: Yes. Taxpayer will have to declare the principal place of business as well as the details of additional places
of business in the registration form.

CQ21. Is it necessary for the Government organization to get registration?

Ans: Yes, the government organizations which are required to deduct tax at source u/s 51 of GST Law, shall
mandatorily obtain registration under the Act.

❖ Every RP shall display his registration certificate in prominent location at his PPoB & every APoB.
❖ GSTIN has to be displayed on the name board exhibited at the entry of his PPoB & at every APoB.

❖ Where PO is satisfied that physical verification of PoB of a person is required due to –

- failure of Aadhaar authentication or
- due to not opting for Aadhaar authentication before the grant of registration or
- due to any other reason after the grant of registration,
he may get such verification of the place of business, in the presence of the said person, done.
❖ Verification report along with other documents, including photographs, shall be uploaded on GST
Common Portal, within 15 working days following the date of such verification.

Compulsory ▪ CTP & NRTP making taxable supply in India has to take compulsory registration as
Registration there is no threshold limit for registration.

Application ▪ CTP is required to obtain GST registration under a special category at least 5 days
prior to the undertaking business.
▪ There is no special form. CTP can use GST REG-01 used by other taxable persons.
▪ NRTP is required to obtain GST registration at least 5 days prior to commencing
business using a valid passport.
▪ NRTP cannot use normal form used by other taxable persons for registration.
▪ GST REG-09 is required to befilled.

Advance ▪ CTP & NRTP has to make advance deposit of tax equivalent to the estimated tax
Payment liability for the period for which registration is sought.

Validity of ▪ Registration shall be valid for period specified in application or 90 days from
Registration effective date of registration, whichever is earlier. [Max. Extension of 90 days]
▪ NRTP: Application in FORM GST REG-11 shall be submitted electronically through
Common Portal, either directly or through Facilitation Centre notified by the
Commissioner, before the end of validity of registration granted to him.
▪ CTP & NRTP shall make an advance payment of tax equivalent to estimated tax liability
for extended period of registration.

CQ22. Should a casual taxable person or non-resident taxable person apply for registration in every State from
which that person is operating or is the registration common for all the States?
Ans: In terms of sec 22(1) r/w sec 25(1), such persons need to obtain a separate registration in every such States.

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❖ Where there is any change in any of the particulars furnished in application for registration/UIN,
registered person shall, within a period of 15 days of such change, submit an application electronically
in Form GST REG-14, along with the documents relating to such change.
❖ If change related to core fields of information, PO may approve or reject amendments in the
registration particulars. Such amendment shall take effect from the date of occurrence of event
warranting such amendment (if approved by PO).
❖ Core field of Information means:
(a) Legal name of business; (b) Address of PPoB or APoB; (c) Addition, deletion or retirement of partners
or directors, Karta, Managing Committee, Board of Trustees, CEO or equivalent.
❖ If change relates to non-core fields of information, registration certificate shall stand amended upon
submission of the application for amendment on the Common Portal.

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❖ If change in constitution of any business results in change of PAN of registered person, the said
person shall apply for fresh registration.
❖ Where the proper officer is of the opinion that the amendment sought is not warranted (or the
documents furnished therewith are incomplete), he may, within 15 working days serve a notice in Form
GST REG-03. This SCN can be replied within 7 working days (in Form GST REG-04).
❖ Any rejection/approval of amendments under SGST shall be deemed to be a rejection/approval under
CGST.
❖ If PO fails to take action within the time-limits given above, certificate of registration shall stand
amended to the extent applied for & amended certificate shall be made available to registered person.

PC Note:
❖ Application for amendment of registration cannot be filed for change in PAN because GST registration
is PAN-based. Fresh application for registration is required in case there is change in PAN. Thus. where
a change in constitution of business results in change of PAN of RP, he shall apply for fresh registration.
❖ Application for amendment of registration cannot be filled if there is change in PoB from one State to
another because GST registrations are state-specific. If one wishes to relocate his business to another
state, he must voluntarily cancel his registration & apply for fresh registration in relocating state.

On application PO may cancel registration in following cases:

by RP (Legal ✓ Business has been discontinued, transferred fully for any reason (including death
representative) of the proprietor, amalgamated, demerged or otherwise disposed of).
✓ There is any change in the constitution of the business.
✓ Taxable person is no longer liable to be registered u/s 22 or 24 or intends to opt-
out of registration voluntarily made u/s 25(3).

➢ Provided that during pendency of the proceedings relating to cancellation of registration filed by
registered person, registration may be suspended for such period & in such prescribed manner.
➢ Thus, taxpayer is freed from the routine compliances, including filing returns, under GST law during
pendency of the proceedings related to cancellation of registration.

EFFECTIVE DATE OF SUSPENSION OF REGISTRATION

A 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) date of submission of the application
(b) date from which the cancellation is sought, whichever is later
pending the completion of proceedings for cancellation of registration.

B Where cancellation of Registration has been initiated by the Department on its own motion:
1. Where PO has reasons to believe that the registration of a person is liable to be cancelled, he
can now suspend registration of such person, pending the cancellation proceedings, without
affording the said person a reasonable opportunity of being heard [Sub-rule (2) amended].
2. Where, a comparison of the returns furnished by RP u/s 39 with:
(a) details of outward supplies furnished in Form GSTR-1; or
(b) details of inward supplies derived based on the details of outward supplies furnished by
his suppliers in their Form GSTR-1,
or such other analysis, as may be carried out show that there are significant differences or
anomalies indicating contravention of the provisions of the CGST Act or the rules made

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thereunder, leading to cancellation of registration of the said person, his registration shall be
suspended.
Said person shall be intimated in prescribed form by sending a communication to his e-mail
address.
In this intimation for suspension & notice for cancellation of registration, the said differences
& anomalies are highlighted & said person is asked to explain, within a period of 30 days, as
to why his registration shall not be cancelled [New sub-rule (2A)].
3. In a case where the cancellation is initiated by the Department on its own & registration of a
person has been suspended, such person shall not be granted any refund u/s 54 of the CGST
Act, during the period of suspension of his registration [New sub-rule (3A)].
4. Sub-rule (4) provides that suspension of registration shall be deemed to be revoked upon
completion of the cancellation proceedings by PO w.e.f. the date on which the suspension had
come into effect. A proviso has been inserted to rule 21A(4) which provides as follows:
Suspension of registration may be revoked by the proper officer, anytime during the pendency
of the proceedings for cancellation, if he deems fit.

Summary
1. Suspension possible without OOBH if PO has reasons to believe that registration is liable to be
cancelled.
2. If comparison of GSTR-3B with GSTR-1 GSTR-2A show significant differences or anomalies indicating
contravention of CGST Act or rules, leading to cancellation of registration, registration shall be
suspended.
3. No refund u/s 54 shall be granted during the period of suspension of his registration
4. Suspension of registration shall be deemed to be revoked upon completion of cancellation
proceedings by PO w.e.f. the date on which the suspension had come into effect.

❖ A registered person, whose registration has been suspended as above:

▪ shall not make any taxable supply during the period of suspension &
▪ shall not be required to furnish any return under section 39.

❖ Suspension of registration shall be deemed to be revoked upon completion of cancellation proceedings

by PO. Such revocation shall be effective from the date on which suspension had come into effect.

❖ In cases where the cancellation is initiated by the Department on its own and registration of a person
has been suspended, such person shall not be granted any refund under section 54, during the period
of suspension of his registration.

Meaning of not making taxable supply during suspension of registration: [Rule 21A] [NN 49/2019]
▪ Rule 21A provides that once a registered person has applied for cancellation of registration or the PO
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
▪ Such person 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 to provide that where any order having the effect of
revocation of suspension of registration has been passed, provisions of Sec 31(3)(a) [revised tax
invoices] & Sec 40 [first return] i.r.o. supplies made during period of suspension & procedure specified
therein shall apply.

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Cancellation in PO may cancel the registration from such date (including retrospective date) if –
case of default
- Registered person has contravened prescribed provisions of the Act or rules;
[Rule 21] - Person paying tax under Composition scheme has not furnished returns for 3
consecutive years;
- RP (other than composition scheme) has not furnished returns for continuous
period of 6 months;
- Where any person (who has taken voluntary registration) has not commenced
business within 6 months from the date of registration.
- Registration has been obtained by means of fraud, wilful misstatement or
suppression of facts
- does not conduct any business from the declared place of business,
- issues invoice without supply of G/S in violation of the provisions of this Act.
- violates the provisions of section 171. (relating to anti-profeetering measure)
- violates the provision of rule 10A (discussed earlier in this chapter).
- RP avails ITC in violation of section 16 of the CGST Act or rules made thereunder.
- RP furnishes details of outward supplies in Form GSTR-1 for one or more tax
periods which is in excess of the outward supplies declared by him in his valid
return u/s 39 for the said tax periods. [PC Note: Mismatch of GSTR-1 & GSTR-3B]
- RP violates the provision of New Rule 86B [99% wala].
PC Note: Opportunity of being heard shall be given before cancellation.
Suspension of Registration during pendency of Proceedings: Same as Above.

No Discharge of Cancellation does not discharge liability of taxpayer for any period prior to the date of
liability cancellation (whether or not such tax & other dues are determined before or after the
date of cancellation).
CQ23. PO cancelled registration of Naman Associates on 11th October. Tax dues of Naman
Associates for July-Sep quarter (determined by PO on 16th December) are Rs. 50,000.
Cancellation of registration shall have no effect on his liability of tax dues of Rs. 50,000
even though tax dues are determined after cancellation of registration.
Concurrent Cancellation of registration under SGST Act/UTGST Act shall be deemed to be a
Cancellation cancellation of registration under CGST Act.
Payment of dues Every RP whose registration is cancelled shall pay amount equivalent to higher of:
(a) Reversal of ITC claimed in respect of inputs held in stock & inputs contained in
semi-finished or FG held in stock or capital goods or P&M or
(b) Output tax payable on such goods on immediately preceding day of cancellation.

PC Note: In case of Capital Goods or P&M, amount payable shall be reduced by 5%

per quarter or part. Such payment can be made by way of debit in ECL or cash ledger.

UIN ❖ Person to whom a UIN has been granted u/r 17 cannot apply for cancellation.

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(1) Any RP whose registration is cancelled by PO on his own motion, may apply to such officer for
revocation of cancellation of registration within 30 days from date of service of cancellation order.
Note: If registeration is cancelled due to non-filing of return, application for revocation can be filed
only after such returns are filed & tax is deposited with interest, penalty & late fee i.r.o said returns.

Provided that RP who was served notice u/s 29(2) in the manner as provided in clause(c) or clause
(d) of sub-section (1) of section 169 & who could not reply to the said notice, thereby resulting in
cancellation of his registration certificate and is hence unable to file application for revocation of
cancellation of registration u/s 30(1), against such order passed up to 31.03.2019, shall be allowed
to file application for revocation of cancellation of the registration not later than 22.07. 2019.

(2) PO may by order, either revoke cancellation of registration or reject the application within 30 days
of receipt of application & communicate the same to applicant.
In case of rejection: PO has to issue SCN to the applicant who shall furnish the clarification within
7 working days of service of SCN.

(3) Revocation of cancellation of registration under SGST/UTGST Act shall be deemed to be a revocation
of cancellation of registration under CGST Act.

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▪ RP needs to file such returns before applying for revocation of cancellation.

▪ Registration may have been cancelled by PO
(a) either from the date of order of cancellation of registration or
(b) from a retrospective date.

(a) Where registration has been cancelled w.e.f the date of order of cancellation of registration
❖ Common portal does not allow furnishing of returns after effective date of cancellation, but returns
for the earlier period (i.e. period before date of cancellation mentioned in cancellation order) can
be furnished after cancellation of registration.
❖ Where registration is cancelled w.e.f date of order of cancellation of registration, person applying
for revocation of cancellation has to furnish all returns due till date of such cancellation before
application for revocation can be filed & has to pay any amount due as tax, in terms of such
returns along with any interest, penalties or late fee payable in respect of the said returns.
❖ However, since the portal does not allow to furnish returns after the date of cancellation of
registration, all returns due for 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 30 days from the
date of the order of revocation.
CQ24. Registration of Naman Associates was cancelled by the proper officer by an order dated 1st June for
its failure to furnish returns. Registration was cancelled with effect from 1st June itself. It applied for
revocation of cancellation of registration & order for revocation of cancellation of Naman Associates is
passed on 31st July. In this case, Naman Associates shall be required to furnish all the returns for the period
from 1st June to 31st July within a period of 30 days from 31st July, i.e. by 30th August.
(b) Where the registration has been cancelled with retrospective effect
❖ It is not possible to furnish returns before filing application for revocation of cancellation of
registration.
❖ In that case, application for revocation of cancellation of registration is allowed to be filed, subject
to the condition that all returns relating to the period from effective date of cancellation of
registration till the date of order of revocation of cancellation of registration shall be filed within
30 days from the date of order of such revocation of cancellation of registration.
CQ25. Registration of Naman Associates was cancelled by the proper officer by an order dated 1st June for
its failure to furnish returns. The registration was cancelled with effect from 1st January itself. It applied
for revocation of cancellation of registration and the order for revocation of cancellation of Naman
Associates is passed on 31st July. In this case, Naman Associates shall be required to furnish all the returns
for the period from 1st January to 31st July within a period of 30 days from 31st July, i.e. by 30th August.

PC Note:
✓ UIN Holders (i.e. UN Bodies, Embassies & Other Notified Persons), GST Practitioner cannot apply for
revocation of cancelled registration.
✓ In case the registration is cancelled on the request of the taxpayer or his legal heir, one cannot apply
for revocation of cancelled registration.

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1 Aggregate It includes aggregate value of –

Turnover - All Taxable Supplies;
[Sec 2(6)]
- Exempt supplies [i.e Nil Rated + Wholly Exempt + Non-taxable Supply]
- Exports of Goods or services or both [Zero-rated Supply]
- Inter-State supplies of Persons having Same PAN [Stock transfer or branch transfers]
be computed on ALL INDIA basis
It Excludes -
- Value of Inward supplies on which tax is payable by a person on RCM basis.
- CGST, SGST, UTGST, IGST & GST Cess.
- Value of exempt services by way of extending deposits, loans or advances;
consideration for which is represented by interest or discount
PC Note: Value of Inward supplies on which tax is payable under RCM basis by a person shall not be
included in his Aggregate Turnover.
PC Note: Value of exempt services by way of extending deposits, loans or advances; consideration for
which is represented by interest or discount, shall not be taken into account for calculating ATO.
2 Turnover Aggregate value of –
in - All Taxable Supplies;
State/UT
- Exempt supplies made within a State or UT by a taxable person;
[Sec 2(112)]
- Exports of G/&S;
- Inter-State supplies made from State/UT by the said taxable person
- but Excludes CGST, SGST, UTGST, IGST & GST Cess.
PC Note: Value of Inward supplies on which tax is payable under RCM basis by a
person shall not be included in his Turnover in State/UT.
PC Note: Value of exports & inter-State supplies might be relevant only while determining ATO of
preceding FY. They are not relevant for determining ATO of current FY in which composition dealer has
opted for composition levy as he is not permitted to make inter-State supplies & exports in current FY.
CQ1. PC Ltd. is a manufacturing concern in Pune. In FY 2018-19, total value of supplies including inward supplies
taxed under RCM are Rs. 1,60,00,000. (exclusive of taxes). Calculate Aggregate Turnover.
Particulars Rs.
(1) Intra State Supplies made under forward charge 70,00,000
(2) Intra State Supplies made which are which are chargeable to GST at Nil rate 50,00,000
(3) Intra state Supplies which are wholly exempt u/s 11 of CGST Act, 2017 30,00,000
(4) Value of inward supplies on which tax payable under RCM 10,00,000
Answer: As per Section 2(6) of the CGST Act, 2017, "Aggregate turnover" means the aggregate value of: All taxable
supplies (excluding the value of inward supplies on which tax is payable by a person on RCM), Exempt supplies,
Exports of goods or services or both, & Inter-State supplies of persons having the same PAN to be computed on all
India basis but excludes CGST, SGST, UTGST, IGST & GST Compensation Cess.
Computation of Aggregate Turnover
1. Supplies made under forward charge Rs. 70,00,000
2. Supplies made which are which are chargeable to GST at Nil rate Rs. 50,00,000
3. Supplies which are wholly exempt u/s 11 of CGST Act, 2017 Rs. 30,00,000
4. Value of inward supplies on which tax payable under RCM (specifically excluded) Nil
Total Rs. 1,50,00,000

PC Note:
 To determine eligibility for Composition scheme, Aggregate Turnover shall be considered.
 If person is eligible for opting composition scheme, tax shall be paid separately for different offices.

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Ex: Mr. Prithviraj has offices in Maharshtra & Goa. He makes intra-state supply of goods from both offices. To
determine whether ‘Prithviraj’ is eligible to avail benefit of composition scheme, turnover of both offices would
be considered & if it does not exceed Rs. 1.5 crores, Prithviraj can opt to avail composition scheme for both offices.
But he will have to pay GST separately for Maharashtra & Goa on the basis of Turnover in State.

Objectives of Composition Scheme

▪ To bring simplicity & to reduce the compliance cost for the small taxpayers.
Benefits of Composition Scheme
▪ Supplier opting for composition scheme are not required to worry about classification of goods or
services, rates of GST applicable on their goods or services.
▪ They are not required to raise any tax invoice; however, they need to issue a Bill of Supply in which no
tax can be charged from the recipient.
▪ Yearly filing of Return (GSTR 4) & Quarterly Payment of Tax.
PC Note
▪ Composition Dealers cannot avail the benefit of Input Tax Credit.
▪ Registration under GST is compulsory for opting for composition scheme.

1 Eligibility ▪ Registered person, whose Aggregate turnover in Last FY ≤ Rs. 1.5 crore.
▪ Eligibility Limit for Special Category States is as follows:
ATO Limit Name of Special category states
Rs. 75 Lacs Manipur, Meghalaya, Mizoram (MMM);
Tripura, Arunachal Pradesh, Sikkim (TAPS)
Uttarakhand & Nagaland (UK & Nagaland)
Rs. 1.5 Crores Assam, Himachal Pradesh & Jammu & Kashmir
Rs. 1.5 Crores Other States & UTs.
2 Rate of Category of Registered person CGST Rate
GST
Manufacturers [other than manufacturers Ice 0.5% of Turnover in State/UT
cream, pan masala & tobacco, Aerated Water]
Restaurant service [referred in clause (b) of Para 6 2.5% of Turnover in State/UT
of Schedule II]
Any other supplier [Traders] 0.5% of Turnover of Taxable
Supplies of G&S in State/UT
3 Non- (a) Supply of services other than restaurant services.
Eligibility
(b) Supplier of goods OR SERVICES which are not leviable to tax under GST.
[Sec 10(2)]
(c) Person Making Inter-State Supply of goods OR SERVICES
(d) Persons supplying goods OR SERVICES through ECO
(e) Manufacturers of Ice cream, pan masala & tobacco, Aerated Water.
(f) Person who is CTP/NRTP.
PC Note: If more than one registered persons are having same PAN, registered person
shall not be eligible to opt for composition scheme unless all such registered persons
opt to pay tax under composition scheme. [@PC: मिलेगा तो सब को, नही से मकसी को नही]
PC Note: There is no restriction on composition supplier to receive inter-state
supply of goods or services or both.

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[Second proviso to Sec 10(1) r/w sec 10(2)(a)]

❖ Fundamentally, composition scheme for goods can be availed i.r.o. goods & only restaurant service.
❖ However, there are cases where a manufacturer/trader is also engaged in supply of services other than
restaurant service though % of such supply of services is very small as compared to supplies of goods.
❖ There may also be cases where a restaurant service provider is also engaged in supplying a small
percentage of other services.
❖ With a view to enable such taxpayers to avail of the benefit of composition scheme for goods, second
proviso to section 10(1) permits marginal supply of services [other than restaurant services] for a
specified value along with the supply of goods and/or restaurant service, as the case may be.
❖ Registered person opting for composition scheme are permitted to supply services (other than
restaurant services) of specified value not exceeding: [Higher of (a) or (b)]
(a) 10% of Turnover in State/UT in Preceding FY or (b) Rs. 5 Lacs

SN Turnover in preceding FY Limit for Supply of Services in Current FY

1 Upto 50 Lacs Rs. 5 Lacs
2 More than 50 Lacs but upto 1.5 Cr 10% of State/UT turnover in preceding FY.

Example: Mr. PC has opted for composition scheme in FY 2019-20. His ATO in FY 2018-19 is Rs. 60 lacs. In FY
2019-20, he can supply services (other than restaurant services) upto a value of not exceeding:
(a) 10% of Rs. 60 lacs [i.e. Rs. 6 lacs] OR (b) Rs. 5 lacs {Whichever is higher}. Thus, he can supply services upto
a value of Rs. 6 lacs in FY 2019-2020.
If value of services supplied exceeds Rs. 6 lacs, he becomes ineligible for composition scheme.
PC Note: It can be inferred that where the turnover of a registered person opting for composition
scheme for goods is upto Rs. 50 lacs in preceding FY, he can supply services [other than restaurant
services] upto a maximum value of Rs. 5 lacs in current financial year.

Value of exempt supply of 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 –
(i) For determining eligibility to pay tax u/s 10(1) for composition scheme under second proviso.
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.
(ii) in computing aggregate turnover in order to determine eligibility for composition scheme.

Space for Class Note:

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1 Eligibility ▪ Registered person who is not eligible to pay tax u/s 10(1) & 10(2) &
▪ Aggregate turnover in Last FY ≤ Rs. 50 Lacs &
▪ who is exclusively engaged in supplying services other than restaurant services &

2 Rate of ▪ 6% (3% + 3%) of the turnover in State/UT

GST
▪ on first supplies of G&/S upto Aggregate turnover of Rs. 50 lacs made on/after
1st April in any FY.

3 Non- (a) Supplier of goods or services which are not leviable to tax under GST.
Eligibility
(b) Person Making Inter-State Supply of goods or services

(c) Persons supplying goods or services through ECO [who collect tax u/s 52]

(d) Manufacturers of notified goods or supplier of notified services.

Notified goods are: Ice cream, pan masala & tobacco, Aerated Water.

(e) Person who is CTP/NRTP.

PC Note: If more than one registered persons are having same PAN, registered person
shall not be eligible to opt for composition scheme unless all such registered persons
opt to pay tax under composition scheme. [@PC: मिलेगा तो सब को, नही से मकसी को नही]

PC Note: There is no restriction on composition supplier to receive inter-state supply

of G/S.
4 Other ▪ RP shall not collect any tax from the recipient on outward supplies made by him.
Conditions
▪ RP shall not be entitled to ITC.
▪ RP shall issue a bill of supply instead of tax invoice. It shall have following words at
its top - ‘taxable person paying tax u/s 10(2A), not eligible to collect tax on supplies’.
5 Tax 1. CGST @ 3% + SGST/UTGST @ 3% on
Payable
▪ All outward supplies - First supplies of G&/S upto ATO of Rs. 50 lacs made on or
after 1st April in any FY regardless of any exemption available to such supplies or
any notification issued u/s 9(1) &
2. CGST on inward supplies u/s 9(3) or 9(4) [RCM basis] at the applicable rates.

CQ2. Taxpayer ‘Padmavati’ is a salon stylist, who has opted for composition levy for services, having one branch
– B1 in Vasant Kunj, Delhi & another branch – B2 in Gurgaon, Haryana. Total turnover of two branches in last FY
was Rs. 45 lacs (Rs. 25 lacs + Rs. 20 lacs). Turnover of branches B1 & B2 in the first quarter of current FY is Rs. 5
lacs & Rs. 10 lacs respectively. Compute GST payable under composition levy u/s 10(2A) by ‘Padmavati’.
Answer:
Branch Location Turnover in previous FY Turnover in 1st quarter of this FY Total tax (@ 6%)
B1 Delhi Rs. 25 lacs Rs. 5 lacs Rs. 30,000
B2 Haryana Rs. 20 lacs Rs. 10 lacs Rs. 60,000
Total Rs. 45 lacs Rs. 15 lacs Rs. 90,000

First Supplies of G/&S made from 1st April of FY to date of becoming liable for registration for ↓
Determining Eligibility of First supplies of G&/S shall include the supplies from 1st April of a FY to the
a person to pay tax date from which he becomes liable for registration
Determining Tax payable First supplies of G&/S shall not include the supplies from 1st April of a FY
to the date from which he becomes liable for registration.

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CQ3. Mr. PC is not a registered person during FY 2018-19. From 1st April 2019, new FY commences. Upto August
2019, he achieves the aggregate turnover of Rs. 20 Lacs & is liable for registration under GST Laws w.e.f. 1st Set.
2019. In September 2019, he made outward supply of Rs. 30 Lakhs. From 1st October 2019 to March 2020, he
made outward supply of Rs. 55 lacs. Compute GST implications u/s 10(2A).
Answer:
▪ As per section 10(2A), registered person whose aggregate turnover in preceding FY is upto Rs. 50 lacs & who
is not eligible to pay tax under composition scheme u/s 10 can pay tax @ 3% (3% + 3%) on first supplies of
G&/S upto Aggregate turnover of Rs. 50 lacs made on/after 1st April in any FY, subject to specified conditions.
▪ His turnover of Rs 50. Lacs for recognising his benefit u/s 10(2A) will be counted from 1st April 2019.
▪ However, tax shall be payable only for the supplies made during September (i.e. on Rs. 30 lacs).
▪ Limit of Rs. 50 Lacs exhausted in Sept. 2019 (Rs. 20 Lacs before registration & Rs. 30 Lacs after registration).
▪ From 1st october 2019 onwards (i.e on Rs. 55 lacs), tax shall be payable under normal provisions of GST as
applicable for regular dealers.

Ex: A photographer ‘Champak’ has commenced providing photography services in Delhi from April this year. His
turnover till December is: (i) April-June: Rs. 20 lacs; (ii) July-Sept: Rs. 30 lacs; (iii) Oct-Dec: Rs. 20 lacs.
▪ In the given case, since Champak has started the supply of services in the current financial year, his aggregate
turnover in the preceding FY is Nil.
▪ Consequently, in the current FY, he is eligible for composition scheme for services. He becomes eligible for the
registration when his aggregate turnover exceeds Rs. 20 lacs.
▪ While registering under GST, he opts for composition scheme for services.
▪ For determining his turnover of the State for payment of tax under composition scheme for services, turnover
of April-June quarter [Rs. 20 lacs] shall be excluded as the value of supplies from the first day of April of a FY
upto the date when such person becomes liable for registration under GST are to be excluded for this purpose.
▪ On next Rs. 30 lacs [turnover of July-Sept quarter], he shall pay tax @ 6% [3% CGST and 3% SGST], i.e. CGST
Rs. 90,000 & SGST Rs. 90,000.
▪ By the end of July-Sept quarter, his aggregate turnover reaches Rs. 50 lacs.
▪ Consequently, his option to avail composition scheme for services shall lapse by the end of July-Sept quarter
and thereafter, he is required to pay tax at the normal rate of 18%. Thus, the tax payable for Oct-Dec quarter is
Rs. 20 lacs × 18%, i.e. Rs. 3,60,000.
PC Note: While computing aggregate turnover for determining Champak’s eligibility to pay tax under composition
scheme, value of supplies from the first day of April of a financial year up to the date when such person becomes liable
for registration under this Act (i.e. turnover of April-June quarter), are included.

CQ4. Determine whether the supplier in the following cases are eligible for composition levy provided their turnover
in preceding year does not exceed Rs. 1.5 crore: [ICAI SM Ex. Q9]
(a) Mohan Enterprises is engaged in trading of pan masala in Rajasthan & is registered in same state
(b) Sugam Manufacturers has registered offices in Punjab & Haryana & supplies goods in neighbouring states?
Answer:
(a) A supplier engaged in the manufacture of notified goods u/s 10(2)(e) [Ice cream & Pan masala & Tobacco] during
preceding FY is not eligible for composition scheme. Since Mohan Enterprises is engaged in trading of Pan masala
& not in the manufacture & his turnover does not exceed Rs. 1.5 crores, he is eligible for composition scheme.
(b) Since supplier of inter-State outward supplies of goods is not eligible for composition levy, Sugam Manufacturers
is not eligible for composition levy.

CQ5. Taxpayer ‘Tolaram’ is a manufacturer having one unit – A1 in UP & another unit – A2 in MP. Total turnover of
two units in last FY was Rs. 115 lacs (Rs. 85 lacs + Rs. 30 lacs). Turnover of Unit A1 & A2 in the first quarter of this FY
was Rs. 5 lacs & Rs. 10 lacs respectively. Compute the amount payable under composition levy by Taxpayer ‘Tolaram’.
Answer:
Unit Location Turnover in previous FY Turnover in 1st quarter of this FY Total Tax (@1%)
A1 UP Rs. 85 lacs Rs. 5 lacs Rs. 5,000
A2 MP Rs. 30 lacs Rs. 10 lacs Rs. 10,000
Rs. 115 lacs Rs. 15 lacs

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CQ6. Whether the following supplier are eligible to opt for composition scheme:
(a) Supplier of restaurant services (intra-state supply) – serving food & non- alcoholic as well as alcoholic beverages.
(b) Supplier of handicraft goods (intra-state supply).
(c) Mr. A is an artist. Trade Fair is organized by Bombay Exhibition in Mumbai. Mr. A wants to display & sell his
paintings in Trade Fair. His turnover in Trade Fair is not likely to be more than Rs. 15 lacs.
(d) Mr. A is in the business of manufacture of pan masala. With effect from February 2019, he wants to manufacture
biscuits for rural market along with pan masala. He wants to opt for Composition Scheme w.e.f April 2019. His
annual turnover (even after commencement of biscuits manufacture) will not be more than Rs. 72 Lacs.
(e) Mr. A is in the business of manufacture of biscuits. He is registered under GST under normal provisions. His annual
turnover is Rs. 60 Lacss. With effect from April 2019, he wants to opt for Composition Scheme. He owns a flat in a
commercial building & gets monthly rent of Rs. 1,00,000.
Answer:
(a) Though supplier of services of restaurant & catering are qualified for composition scheme, but supplier engaged
in making non-taxable supply is not eligible. Supply of alcoholic beverages is non-taxable supply under GST. Thus,
restaurant serving food & non-alcoholic as well as alcoholic beverages shall not be eligible for composition.
(b) Supplier of any goods (making intra-state supply) is eligible to opt for composition scheme. Thus, supplier of
handicraft goods is eligible to opt for composition scheme.
(c) Mr. A is a “casual taxable person”. A casual taxable person making taxable supply in India has to take compulsorily
registration u/s 24. For CTP, there is no threshold limit of ATO. He is liable to pay GST even if his turnover is not
likely to more than Rs. 20 Lacs. As per Sec 10, a casual table person is not eligible to avail composition scheme.
(d) Mr. A manufactures pan masala. Manufacturer of ice-cream, pan masala & tobacco products, cannot opt for
Composition Scheme. Thus Mr. A cannot opt for composition scheme.
(e) Mr. A has turnover from manufacture of biscuits. Besides, he has rental income from commercial property which
is chargeable to GST. Mr. A, registered person, is engaged in supply of commercial renting service & he can
maximum have Rs. 6,00,000 (10% of Rs. 60 Lacs or Rs. 5 Lacs whichever is higher) service income. Thus, he cannot
opt for composition scheme.

CQ7. A person availing composition scheme in Haryana during a financial year crosses the turnover of Rs. 1.5
crores during the course of the year i.e. he crosses the turnover of Rs. 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? [ICAI SM Ex. Q8]
Answer: No. Option to pay tax under composition scheme lapses from the day on which ATO of the person
availing composition scheme during FY exceeds Rs. 1.5 crore. Once he crosses the threshold, he is required to file
an intimation for withdrawal from the scheme in prescribed form within 7 days of the occurrence of such event.
Every person who has furnished such an intimation, may electronically furnish at the common portal, a statement
in prescribed form containing details of stock of inputs & inputs contained in semi-finished or FG held in stock
him on the date on which the option is withdrawn, within 30 days from the date from which option is withdrawn.

▪ He was not engaged in manufacture of notified goods u/s 10(2)(e) during the preceding FY.
✓ Ice cream; Pan masala; Tobacco & manufactured substitutes, Aerated Water.
▪ He shall pay tax u/s 9(3) or 9(4) (reverse charge) on Inward supply of G/&S (in addition to composition tax)
▪ He is neither a CTP nor NRTP.
▪ He shall mention words ‘composition taxable person, not eligible to collect tax on supplies’ at top
of bill of supply issued by him;
▪ He shall mention words “composition taxable person” on every notice or signboard displayed at a
prominent place at his principal place of business & at every additional place or places of business.
▪ Goods held in stock by him have not been purchased from unregistered supplier. However, if goods
are purchased from unregistered supplier, he shall pay tax on such goods on RCM basis u/s 9(4).

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1 Till all prescribed Option of composition levy shall remain valid so long as all conditions of said
T&Cs are satisfied section & these rules are satisfied.

2 Lapse of scheme From the day on which ATO during FY exceeds Rs. 1.5 Crore/75 Lacs.
Ex: A person availing composition scheme during FY crosses turnover of Rs. 1.5 crore on 9th December.
Option availed shall lapse from the day on which his ATO during FY exceeds Rs. 1.5 crore (9th December).
3 Consequences of ▪ Pay GST under regular scheme u/s 9(1) from the day he ceases to satisfy any
Lapse of scheme of conditions prescribed for composition levy.
▪ Issue tax invoice for every taxable supply made thereafter.
▪ file an intimation for withdrawal from scheme in prescribed form within 7 days
of occurrence of such event.

4 Effective date of ▪ Effective date from which withdrawal from the composition scheme shall take
withdrawal from effect shall be the date indicated by him in his application.
scheme ▪ But such date may not be prior to the commencement of FY in which such
application for withdrawal is being filed.

5 Denial of option to ▪ Where proper officer has reasons to believe that registered person was not
pay composition eligible to pay tax under composition levy or has contravened provisions of
tax by tax Act/provisions of this Chapter, he may issue a show cause notice (SCN) to
authorities such person in prescribed form.
▪ Upon receipt of reply to such SCN from registered person, PO shall issue
order in prescribed form within 30 days of receipt of such reply, either
(a) accepting reply, or
(b) denying option to pay tax under composition levy from date of option or
from date of event concerning such contravention (as case may be).
▪ In case of denial of option to pay tax under composition levy by tax authorities,
effective date of such denial shall be from a date as may be determined by tax
authorities (including any retrospective date).
▪ However, such effective date shall not be prior to the date of contravention of
the provisions of the CGST Act/ CGST Rules

5 ITC on stock in ▪ He shall furnish a statement, within 30 days of withdrawal of option,

Hand containing details of such stock held on common portal.
▪ Allowed to avail ITC of stock of inputs & inputs contained in semi-finished or
FG held in stock by him & on capital goods held by him on date of withdrawal.

Applicant Intimation Effective date of composition levy

New ▪ Such URP may give an option to pay tax under ▪ Date from which registration is
Registration composition levy in Part B of registration form, viz., effective
FORM GST REG-01. ▪ Intimation shall be considered
▪ It shall be considered as an intimation to pay tax only after the grant of
under Composition Levy. registration to the applicant.

Exisiting ▪ Electronically on Common Portal prior to the ▪ From the beginning of FY

Registration commencement of FY for which option is exercised.
▪ He shall also furnish a statement in accordance with
the provisions of Rule 44(4) within 60 days from
commencement of relevant FY. [Discussed in ITC]

PC Note: 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 same PAN.

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❖ Where more than one registered person are having same PAN, GST on supplies made by all such
registered persons shall be paid under composition scheme [i.e All branches shall pay tax @ 3%].
PC Note: Composition scheme shall be adopted uniformly by all registered persons having same PAN.
❖ In computing ATO to determine eligibility of a registered person to pay GST under composition scheme,
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.
❖ Composition scheme supplier cannot collect tax from recipient of G/&S. Taxable person opting for
composition scheme is not entitled to any ITC on tax paid under composition levy [Section 10(4)].
❖ Penalty for Irregular Availment of Composition Scheme [Sec 10(5)]: If a taxable person has paid tax
under composition scheme though he was not eligible for scheme, person would be liable to penalty
& provisions of section 73 or 74 of CGST Act shall be applicable for determination of tax & penalty.

CQ8. 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 Rs. 45 lacs. With reference to the provisions of the CGST Act, 2017,
examine whether Mr. Ajay can opt for the composition scheme under section 10(1) &10(2) of the CGST Act, 2017
in the current financial year? Or whether he is eligible to avail benefit of composition scheme under section
10(2A)? 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 Rs. 35 lacs.
Will your answer be different if Mr. Ajay procures few items required for providing repair services from
neighbouring State of Madhya Pradesh? [ICAI SM Ex. Q11]
Answer:
▪ Section 10(1) provides that a registered person, whose aggregate turnover in the preceding financial year did
not exceed Rs. 1.5 crore (Rs. 75 lacs 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, as per proviso to section 10(1), person who opts to pay tax under composition scheme may supply
services other than restaurant services, of value not exceeding 10% of the turnover in a State or Union territory
in the preceding financial year or Rs. 5 lacs, whichever is higher.
▪ In the given case, since Mr. Ajay is an exclusive supplier of services other than restaurant services [viz. repair
services], he is not eligible for composition scheme under section 10(1) & 10(2).
▪ However, section 10(2A) provides an option to a registered person (subject to certain conditions) whose
aggregate turnover in the preceding financial year is upto Rs. 50 Lacs and who is not eligible to pay tax under
composition scheme under section 10(1) & 10(2), to pay tax @ 3% [Effective rate 6% (CGST+ SGST/UTGST)]
of the turnover of supplies of goods and services in the State or Union territory.
▪ Thus, in view of the above-mentioned provisions, Mr. Ajay is eligible to avail the composition scheme under
section 10(2A) as his aggregate turnover in the preceding FY does not exceed Rs. 50 Lacs and he is not eligible
to opt for the composition scheme under section 10(1) & 10(2).
▪ Thus, tax payable by him as per the composition scheme u/s 10(2A) is Rs. 2,10,000 [6% of Rs. 35 lacs].
▪ Registered person cannot opt for composition scheme under section 10(2A), if, inter alia, he is engaged in
making any inter-State outward supplies. However, there is no restriction on inter-State procurement of goods.
▪ Answer will remain the same even if Mr. Ajay procures few items from neighboring State of Madhya Pradesh.

CQ9. Sultan & Sons, a partnership firm, in Nagpur, Maharashtra is a wholesaler of a taxable product ‘P’ and
product ‘Q’ exempt by way of a notification, in the State of Maharashtra. Its aggregate turnover in the preceding
financial year is Rs. 130 Lacs. The firm wishes to opt for composition scheme under sub- sections (1) & (2) of
section 10 of the CGST Act. However, its accountant is of the view that a person engaged in making supply of
exempt goods is not eligible for the said scheme. Assume that Sultan & Sons is not engaged in manufacture of
goods as notified u/s 10(2)(e). Discuss. [ICAI SM Ex. Q7]

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Answer:
▪ The view taken by the accountant of Sultan & Sons is not valid in law.
▪ A registered person with an aggregate turnover in a preceding financial year up to Rs. 1.5 crore is eligible for
composition levy, under section 10(1) & 10(2), in Delhi. Further, such person must not be engaged in making
any supply of goods which are not leviable to tax under this Act and must not be engaged in making any inter-
State outward supplies of goods, for being eligible to pay tax under said scheme.
▪ In the given case, the aggregate turnover of Sultan & Sons does not exceed Rs. 1.5 crore.
▪ Further, it is engaged in making only intra-State supply of goods and Product P supplied by it is taxable and
Product Q supplied by it is leviable to tax though exempted by way of notification.
▪ Therefore, it is eligible for composition levy under section 10(1) & 10(2) in the current year.

CQ10. M/s United Electronics, a registered dealer, is supplying all types of electronic appliances in the State of
Karnataka. Their aggregate turnover in the preceding financial year by way of supply of appliances was Rs. 120
Lacs. The firm also expects to provide repair and maintenance service of such appliances from the current
financial year. Examine:
(a) Whether the firm can opt for the composition scheme, under section 10(1) and 10(2) of the CGST Act, 2017,
for the current financial year, as the turnover may include supply of both goods and services?
(b) If yes, up to what amount, the services can be supplied? [ICAI SM Ex. Q12]
Answer (a):
▪ The registered persons, whose aggregate turnover in the preceding financial year did not exceed Rs. 1.5 crore,
may opt to pay tax under composition levy, under section 10(1) and 10(2).
▪ The scheme can be availed by an intra-State supplier of goods and supplier of restaurant service.
▪ However, the composition scheme permits supply of marginal services (other than restaurant services) for a
specified value along with the supply of goods and restaurant service, as the case may be.
▪ Thus, M/s United Electronics can opt for composition scheme for the current financial year as its aggregate
turnover is less than Rs. 1.5 crore in the preceding FY & it is not engaged in inter- State outward supplies.
Answer (b):
▪ Registered person opting for composition scheme u/s 10(1) can also supply services (other than restaurant
services) for a value up to 10% of the turnover in preceding FY or Rs. 5 lacs, whichever is higher, in current FY.
▪ Thus, M/s United Electronics can supply repair and maintenance services up to a value of Rs. 12 lacs [10% of
Rs. 20 lacs or Rs. 5 lacs, whichever is higher] in the current financial year.

CQ11. Legal Fees is received by Sushrut, an advocate, from M/s. Tatva Trading Company having turnover of Rs.
50 lacs in preceding F. Y. Who is the person liable to pay tax? [ICAI SM Ex. Q5]
Answer:
▪ GST on legal services supplied by an advocate [Mr. Sushrut] to any business entity [M/s. Tatva Trading
Company] located in the taxable territory is payable on reverse charge basis.
▪ Therefore, person liable to pay GST is the recipient of services, i.e., M/s. Tatva Trading Company.

CQ12. Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an LLP. Determine the
person liable to pay tax. [ICAI SM Ex. Q3]
Answer:
▪ In case of services provided by any person by way of sponsorship to any body corporate or partnership firm,
GST is liable to be paid under RCM by such body corporate or partnership firm located in the taxable territory.
▪ Further, for RCM, LLP is also be considered as a partnership firm. Therefore, in the given case, WE-WIN Cricket
Academy is liable to pay GST under reverse charge.

CQ13. 'Safe Trans', a Goods Transport Agency, transported goods of Kapil & Co., a partnership firm, which is not
registered under GST. Determine the person liable to pay tax. [ICAI SM Ex. Q4]
Answer:
▪ In case of services provided by GTA i.r.o. transportation of goods by road to, inter alia, any partnership firm
whether registered or not under any law; GST is liable to be paid by such partnership firm.
▪ Therefore, Kapil & Co. is liable to pay GST under reverse charge.

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▪ Under GST regime, an "invoice" or "tax invoice" means the tax invoice referred to in section 31.
▪ Tax invoice is an essential document for the recipient to avail ITC.
▪ Invoice is an important indicator of the time of supply.
▪ There is no prescribed format for Tax Invoice. Only certain fields are prescribed as mandatory fields.
▪ Invoices may be issued manually or electronically. Issuance of electronic invoices is not mandatory.
▪ It is not necessary that only a person supplying G/S needs to issue an invoice. Under GST, any
registered person buying goods or services from an unregistered person needs to issue a payment
voucher at the time of making payment & tax invoice on the date of receipt of G/&S.

Tax Invoice If a registered person is making supplies or receiving supplies from unregistered persons,
then a tax invoice needs to be issued by such registered person.

Bill of If a registered person is dealing only in exempted supplies or is availing the composition
Supply scheme (composition dealer), then bill of supply is to be issued in lieu of tax invoice.

No Invoice If value of supply < Rs. 200, invoice or a bill of supply need not be issued. (T&C)*

Advance Registered person (on receipt of advance payment) w.r.t any supply of G/S shall issue a
receipt voucher or any other document evidencing receipt of such payment.

1. Name, address and GSTIN of the supplier.

2. A consecutive serial number (not exceeding 16 characters, in one or multiple series, containing
alphabets or numerals or special characters & any combination thereof, unique for a FY).
3. Date of its issue.
4. If recipient is registered - Name, address and GSTIN or UIN of the recipient.
5. If recipient is unregistered & value of taxable supply ≥ Rs. 50,000: Name & Address of the recipient
& address of delivery, along with the name of the State and its code.
6. If recipient is unregistered & value of taxable supply < Rs. 50,000: Name & address of the recipient
and the address of delivery, along with the name of the State and its code (if the recipient requests
that such details be recorded in the tax invoice).
7. Harmonised System of Nomenclature (HSN) code for goods or services:
Annual TO in last FY ≤ 5 Cr > 5 Cr
No. of digits of HSN Code For B2B Supply → 4 For B2B Supply → 6
For B2C Supply → 4 (Optional) For B2C Supply → 6

PC Note: RP having ATO upto Rs. 5 crores in previous FY have been exempted from the requirement
of mentioning the HSN Code in the manner specified in above table in a tax invoice issued by him
under the said rules in respect of supplies made to unregistered persons.
8. Description of goods or services.
9. Quantity in case of goods and unit or Unique Quantity Code thereof.
10. Total value of supply of goods or services or both.
11. Taxable value of supply of G/S taking into account discount or abatement, if any.
12. Rate of tax (CGST, SGST, IGST, UTGST or GST cess).

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13. Amount of tax charged i.r.o taxable G/S (CGST, SGST, IGST, UTGST or GST cess).
14. PoS along with the name of State (in case of inter-State supply).
15. Address of delivery where the same is different from the place of supply.
16. Whether the tax is payable on reverse charge basis.
17. Signature or digital signature of the supplier or his authorised representative.
18. If E-Invoice is issued → Quick Response code, having embedded Invoice Reference No. (IRN) in it.
Note: Signature or digital signature shall not be required in the case of issuance of electronic invoice.

Goods Services
❖ In Triplicate ❖ In Duplicate
▪ Original for Recipient ▪ Original for Recipient
▪ Duplicate for Transporter ▪ Duplicate for Supplier
▪ Triplicate for Supplier
❖ Serial number of invoices issued during a year shall be furnished electronically in GSTR-1.

❖ A registered person may not issue a tax invoice if –

- Value of goods or services or both supplied < Rs 200,
- Recipient is not a registered person &
- Recipient does not require invoice
❖ Instead, such registered person shall issue a Consolidated Tax Invoice for such supplies at the close
of each day in respect of all such supplies.
❖ However, this option is not available to a supplier engaged in making supply of services by way of
admission to exhibition of cinematograph films in multiplex screens.
PC Note: Above provision is also applicable to Bill of Supply.

CQ1. Gemini Traders is a registered trader dealing in stationery items & has made following sales during the day:
SN Recipient of supply Amount
(1) Kamlesh Traders [a registered retail dealer under composition levy] 185
(2) Kalpesh Stationers [an unregistered trader] 425
(3) Hussain - Painter [unregistered] 675
(4) Shanti Charitable Trust [an unregistered entity] 195
(5) Manisha - a Student [unregistered] 140
None of the recipients require a tax invoice. Determine i.r.o which of the above supplies, Gemini Traders may
issue a Consolidated Tax Invoice instead of Tax Invoice at the end of the day? [ICAI SM Q2]
Answer: Gemini Traders can issue a Consolidated Tax Invoice only w.r.t. supplies made to Shanti Charitable Trust
[worth Rs. 195] & Manisha [worth Rs. 140] as the VoS to these recipients < Rs. 200 as also these recipients are
unregistered & don't require a tax invoice. As regards the supply made to Kamlesh Traders, although the VoS to
it is less than Rs. 200, Kamlesh Traders is registered under GST & thus, Consolidated Tax Invoice cannot be issued.
Consolidated Tax Invoice cannot be issued for supplies of goods made to Kalpesh Stationers & Hussain although
both of them are unregistered. The reason for the same is that the value of goods supplied is not less than Rs. 200.

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❖ GST Council approved the proposal to introduce electronic-invoice (hereinafter called as e-invoice)
in a phased manner in its 37th meeting held on 20th September, 2019.
❖ Accordingly, steps have been taken to introduce 'e-invoicing' for reporting of business to business
(B2B) invoices to GST System, beginning from 1st January 2020 on voluntary basis.
❖ W.e.f 1st October, 2020, there is a switch from voluntary to mandatory e-invoicing for certain notified
category of taxpayers.
❖ Who shall issue E-Invoice: All registered businesses with ATO (based on PAN) in any preceding FY
(from 2017-18 onwards) > Rs. 50 Crore (hereinafter referred to as ‘notified persons’) will be required
to issue e-invoices.

1 Meaning of E-Invoice
▪ E-invoicing is not generation of invoice by a government portal.
▪ Taxpayers will continue to create their GST invoices on their own Accounting/Billing/ERP Systems
as per e-invoice schema.
▪ These invoices will then be reported to ‘Invoice Registration Portal (IRP)’.
▪ On such reporting, IRP will generate a unique ‘Invoice Reference Number (IRN)’, digitally sign it
and return the e-invoice to the supplier.
▪ A GST e-invoice will be valid only with a valid IRN.
▪ Presently, invoices, credit notes and debit notes, when issued by notified persons (to registered
persons (B2B) or for the purpose of exports) are covered under E-invoice.
▪ Though different documents are covered, for ease of reference & understanding, the system is
referred as ‘e-invoicing’.
2 Advantages of E-invoicing

▪ Auto-reporting of invoices into GST return and auto-generation of e-way bill (wherever required).
▪ Under e-invoicing, business has to report the B2B invoice data only once in the e-invoice form and
the same is reported in multiple forms (GSTR-1, e-way bill etc.).
▪ E-way bill can be auto-generated using e-invoice data.
▪ GSTR-1 can also be auto- populated with E-invoice data. It will become part of the business process
of the taxpayer.
▪ Consequently, there will be a substantial reduction in transcription errors as same data will get
reported to tax department as well as to buyer to prepare his inward supplies (purchase) register.
▪ On receipt of information through GST System, buyer can do reconciliation with his Purchase
Order. Thus, it will facilitate standardisation & inter-operability leading to reduction of disputes
among transacting parties, improve payment cycles, reduction of processing costs and thereby
greatly improving overall business efficiency.
▪ Further, since a complete trail of B2B invoices is available with the Department, it will enable the
system-level matching of input tax credit and output tax thereby reducing the tax evasion.
▪ E-invoicing will eliminate the fake invoices. Claiming fictitious input tax credit (ITC) by raising fake
invoices is also one of the biggest challenges currently faced by tax-authorities. The e-invoice
system will help to curb the actions of unscrupulous taxpayers and reduce the number of fraud
cases as the tax authorities will have access to data in real-time.

3 E-invoicing statutory provisions

▪ Rule 48(4) stipulates that the e-invoice shall be prepared by notified class of registered persons,
by uploading such particulars as contained in Form GST INV-01 on the Common GST Electronic
Portal & obtain an IRN (Invoice Reference Number), in prescribed manner.

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▪ However, Commissioner may, on the recommendations of the Council, by notification, exempt a

person or a class of registered persons from issuance of e-invoice under rule 48(4) for a specified
period, subject to such conditions and restrictions as may be specified in the said notification.
▪ Every invoice, issued by above persons, in any manner other than the manner specified in the rule
48(4) shall not be treated as an invoice.
▪ Where e-invoicing is applicable, there is no need of issuing invoice copies in triplicate/duplicate.

4 Class of persons notified to mandatorily issue e-invoice

▪ RP (except specified class of persons), whose ATO in any preceding FY exceeds Rs. 50 crores,
has been notified as class of persons who shall prepare e-invoice i.r.o. B2B supplies (supply of
goods or services or both to a registered person) or for exports. Thus, presently, such notified
persons are not required/allowed to report B2C invoices. However, they will be brought under e-
invoice in the next phase.
▪ Further, e-invoicing is also not applicable to invoices issued by Input Service Distributor (ISD).
▪ If invoice issued by a notified person is i.r.o. supplies made by him tax on which is payable under
reverse charge u/s 9(3), e-invoicing is applicable.
▪ Specified class of persons (not required to issue E-Invoice): SEZ & insurer or banking company
or financial institution including NBFC, GTA, supplier of passenger transportation service, person
supplying services by way of admission to exhibition of cinematograph films in multiplex screens.
CQ2. A taxpayer (say a firm of advocates) having ATO in a FY of more than Rs. 50 crores is
supplying services to a company (who will be discharging tax liability as recipient under RCM), such
invoices have to be reported by said tax payer (since it is a notified person) to IRP.
▪ On the other hand, where specified category of supplies are received by notified person from
URP [attracting RCM u/s 9(4)] or through import of services, e-invoicing doesn’t arise/not
applicable.
▪ E-invoicing is also not applicable for import of goods (Bills of Entry).

5 EXEMPTION FROM E-INVOICING

▪ Special Economic Zone units (& not SEZ developers)

▪ Insurer or banking company or financial institution including NBFC
▪ GTA supplying services in relation to transportation of goods by road in a goods carriage
▪ Supplier of passenger transportation service
▪ Person supplying services by way of admission to exhibition of cinematograph films in multiplex.
PC Note: Above mentioned entities are not required to issue e-invoices even if their turnover
exceeds Rs. 50 Crores in the preceding financial year.
Further, in case of supplies made by notified persons to SEZ units, e-invoices need to be issued.
CQ3. Maharaja Private Ltd has a SEZ unit & a DTA unit (both having same PAN). Aggregate total
turnover of Maharaja Private Ltd > Rs. 50 crores (considering both GSTINs). However, turnover of
DTA unit is below Rs. 20 crores for preceding FY. In this scenario, SEZ unit is exempt from E-invoicing.
However, e-invoicing will be applicable to DTA Unit because aggregate turnover of the legal entity
in this case is > Rs. 50 crores. Eligibility is based on aggregate annual turnover on the common PAN.

6 How E-invoice is generated?

▪ Taxpayer first prepares & generates his invoice using his own ERP/accounting/billing system or
manual system. Invoice must conform to E-invoice schema (standard notified format) and must
have the mandatory parameters.
▪ Details of this invoice are uploaded/reported by the taxpayer to the Invoice Registration Portal
(IRP). This way taxpayer registers his supply transaction on IRP. On uploading, IRP returns the E-
invoice with a unique ‘Invoice Reference Number (IRN)’ after digitally signing E-invoice & adding
a QR Code. Then, supplier shares the e-invoice with the receiver (along with QR Code).

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7 How E-invoice data is consumed by GST System for generation of EWB or populating relevant
parts GST Returns?

▪ IRP sends the e-invoice data along with IRN to the GST System as well as to E-Way Bill System.
▪ GST system will auto-populate them into GSTR-1 of the supplier & GSTR-2A of respective receivers.
With source marked as ‘e-invoice’, IRN and IRN date will also be shown in GSTR-1 and GSTR-2A.
▪ E-invoice schema includes parameters (Ex: ‘Transporter ID’ & ‘Vehicle No. etc.) that are required
for creating & generating EWB. These can be entered if available with seller, at the time of
generation of E-invoice so that EWB can be created using this data without further requirement.
▪ E-invoice reporting software allows reporting of E-invoice & generation of EWB with same data.

8 Cancellation/amendment of reported invoice

▪ Seller can cancel IRN for E-invoice already reported by reporting it on IRP within specified time.
▪ Amendment of E-invoice already uploaded on IRP will be done only on GST portal.
▪ Amendment of invoices is not possible through the IRP.

9 Implications for businesses

▪ E-invoicing does not mean that invoice needs to be prepared/generated on Government portal.
▪ It is only intimating the Government portal that invoice has been issued to the buyer, by
registering that particular invoice on the Government portal.
▪ Consequently, businesses will continue to issue invoices as they were doing earlier.
▪ Necessary changes on account of e-invoicing requirement (i.e. to enable reporting of invoices to
IRP & obtain IRN), be made by ERP/Accounting & Billing Software providers in their respective
software. They need to get the updated version having this facility.

10 Meaning of E-invoice Schema

▪ Businesses use various accounting/billing software, each generating and storing invoices in their
own electronic formats. These different formats are neither understood by GST System nor by the
systems of suppliers and receivers.
Ex: An invoice generated by SAP system cannot be read by a machine which is using ‘Tally’ system,
unless a connector is used. With more than 300 accounting/billing software products, there was
no way to have connectors for all.
▪ ‘E-invoicing’ was introduced aiming at machine-readability & uniform interpretation. To ensure
this complete ‘inter-operability’ of e-invoices across the entire GST eco-system, an invoice
standard is a must.
▪ By this, e-invoices generated by one software can be read by any other software, thereby
eliminating the need of fresh/manual data entry. Since, there was no such standard for e-invoice
available earlier, as a first step, a standard/format for e-invoice has been finalized.
▪ This uniform standard format (containing specified fields) applicable for all the businesses across
the country is known as ‘e-invoice schema’. It is notified as Form GST INV-1. E-invoice schema
mandates what particulars shall be reported in electronic format to IRP.
▪ Invoice details in prescribed schema to be reported to IRP in JSON format (JavaScript Object
Notation). ‘JSON’ can be understood as a common language for systems/machines to communicate
between each other and exchange data.

11 Invoice Registration Portal (IRP)

▪ IRP is the website for uploading/reporting of invoices by the notified persons.

▪ Following IRPs have been notified for the purpose of preparation of the e-invoice:
www.einvoice1.gst.gov.in www.einvoice2.gst.gov.in www.einvoice3.gst.gov.in
www.einvoice4.gst.gov.in www.einvoice5.gst.gov.in www.einvoice6.gst.gov.in

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www.einvoice7.gst.gov.in www.einvoice8.gst.gov.in www.einvoice9.gst.gov.in

www.einvoice10.gst.gov.in
12 Invoice Reference Number

▪ GST invoice will be valid only with a valid IRN. IRN is different from invoice number.
▪ Invoice no. (Ex: ABC/1/2019-20) is assigned by supplier & is internal to business. Its format can
differ from business to business and also governed by relevant GST rules.
▪ IRN, on other hand, is a unique reference number (hash) generated and returned by IRP, on
successful registration of E-invoice.
13 Overall work flow of E-invoice generation, its reporting/registration & receipt of confirmation:
A. Interaction between the business (supplier) and the Invoice Registration Portal (IRP).

B. Interaction b/w IRP & GST or EWB Systems & Buyer.

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❖ E-invoicing system is also available for the E-Commerce Operators (ECO) to report the invoices
to the Invoice Registration portal, generated by them on behalf of the suppliers.
❖ Bulk uploading of invoices to IRP is also possible.

14 QR CODE

▪ Upon successful registration of invoice on IRP, it will return a signed e-invoice to the supplier with
IRN and QR Code.
▪ IRN is embedded in the QR Code which shall be extracted and printed on the invoice.
▪ QR code enables quick view, validation & access of the invoices from the GST system from hand-
held devices.
▪ Digitally signed QR code will have a unique IRN which can be verified on central portal as well as
by an offline app by the officer.
▪ This will be helpful for tax officers checking the invoice offline on the roadside where internet may
not be available all the time.
▪ The QR code consists of the following e-invoice parameters:
- GSTIN of supplier
- GSTIN of recipient
- Invoice number as given by supplier
- Date of generation of invoice
- Invoice value (taxable value and gross tax)
- Number of line items
- HSN code of main item (the line item having highest taxable value)
- Unique Invoice Reference Number (hash)
- Date of generation of IRN

15 DYNAMIC QR CODE

▪ All B2C invoices issued by RP whose ATO in any preceding FY (from 2017-18 onwards) exceeds Rs.
500 crores are proposed to have a QR code from December 1, 2020.
▪ Sixth proviso to rule 46 has empowered the Government to specify that tax invoice shall have
Quick Response (QR) code.
▪ It has been notified (w.e.f. 01.12.2020) that invoice issued by a registered person (except specified
class of persons), whose ATO in a FY > Rs. 500 crores, i.r.o. B2C supplies (supply of goods or
services or both to an unregistered person) shall have Dynamic QR code.
▪ A Dynamic Quick Response (QR) code made available to buyer by such registered person through
digital display (with payment cross- reference) shall be deemed to be having QR code. The purpose
of this provision is to enable and encourage digital payments where buyer can scan the dynamic
QR code and make payment from mobile wallet directly. Today, many shops have static QR code
at the payment counter which is scanned by the buyer, but buyer has to enter the amount to be
paid to the shop in mobile payment App.
▪ Dynamic QR code will have the payment details & thus ‘scan & pay’ in one go is possible. This
has no relevance or applicability to the e-invoicing in respect to B2B supplies by notified class of
taxpayers.
▪ Dynamic QR Code will be generated by the seller himself either on the Point of Sale (PoS) machine
or the invoice issued.

NON-APPLICABILITY OF REQUIREMENT OF DYNAMIC QR CODE

Dynamic QR code is not applicable to an invoice issued to URP by following suppliers:
(i) Insurer or banking company or financial institution including NBFC.

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(ii) GTA supplying services in relation to transportation of goods by road.

(iii) Supplier of passenger transportation service.
(iv) Person supplying services by way of admission to cinematograph films in multiplex screens.
(v) Supplier of OIDAR services.

No Dynamic QR code in case of Exports: As regards the supplies made for exports, though such
supplies are made by a registered person to an unregistered person, however, since e-invoices are
required to be issued i.r.o. supplies for exports treating them as B2B supplies, Dynamic QR code
requirement will not be applicable to them.

Parameters/details required to be captured in the Dynamic QR Code:

Supplier GSTIN number Invoice number, invoice date & Total Invoice value
Supplier UPI ID GST amount along with breakup i.e. CGST, SGST, IGST,
CESS, etc.
Payee’s Bank A/c number & IFSC

Further, Dynamic QR Code should be such that it can be scanned to make a digital payment.

Compliance with Dynamic QR Code requirements in certain cases:

If supplier has issued invoice having Dynamic QR Code for payment, said invoice shall be deemed to
have complied with Dynamic QR Code requirements.

Case 1 If a supplier provides/displays Dynamic QR Code, but customer opts to make payment
without using Dynamic QR Code, & supplier provides the cross reference of such
payment made without use of Dynamic QR Code on the invoice.

In cases where supplier, has digitally displayed Dynamic QR Code & customer pays for
the invoice:
(i) using any mode like UPI, credit/debit card or online banking or cash or combination
of various modes of payment, with or using Dynamic QR Code, & supplier provides a
cross reference of the payment (transaction id along with date, time & amount of
payment, mode of payment like UPI, Credit card, Debit card, online banking etc.) on
the invoice; or
(ii) in cash, without using Dynamic QR Code & supplier provides a cross reference of
the amount paid in cash, along with date of such payment on the invoice;
invoice shall be deemed to have complied with requirement of Dynamic QR Code.

Case 2 If a supplier makes available to customers an electronic mode of payment, where

though Dynamic QR Code is not displayed, but details of merchant as well as
transaction are displayed/captured otherwise.

In such cases, if cross reference of payment made using such electronic modes is made
on invoice, invoice shall be deemed to comply with requirement of Dynamic QR Code.

Case 3 In case of pre-paid invoices (Payment made before issuance of the invoice)

If cross reference of the payment received (either through electronic mode or through
cash or combination thereof) is made on the invoice, then invoice would be deemed to
have complied with the requirement of Dynamic QR Code.

For Case 2 & 3: Where payment is made after generation/issuance of invoice, supplier shall
provide Dynamic QR Code on the invoice.
Case 4 Once ECO or online application has complied with Dynamic QR Code requirements,
whether the suppliers using such E-commerce portal or application will still be
required to comply with the requirement of Dynamic QR Code?

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▪ Dynamic QR code requirements apply to each supplier/RP separately, if such person

is liable to issue invoices with Dynamic QR Code for B2C supplies.
▪ In case, supplier is making supply through ECO or application, & the said supplier
gives cross references of the payment received i.r.o. the said supply on the invoice,
then such invoices would be deemed to have complied with the requirements of
Dynamic QR Code.
▪ In cases other than pre-paid supply i.e. where payment is made after generation/
issuance of invoice, the supplier shall provide Dynamic QR Code on the invoice.

❖ Bill of supply is similar to tax invoice except that bill of supply does not contain any tax amount.
❖ A bill of supply is issued in cases where tax cannot be charged:
▪ Registered person is selling exempted goods/services.
▪ Registered person who has opted for composition scheme u/s 10(1).
▪ Registered person who has opted to pay tax u/s 10(2A).

CONTENTS OF BILL OF SUPPLY

▪ Name, address and GSTIN of the supplier
▪ A consecutive serial number (not exceeding 16 characters, in one or multiple series, containing
alphabets or numerals or special characters & any combination thereof, unique for a FY).
▪ Date of its issue.
▪ Name, address & GSTIN or UIN of the recipient (If recipient is registered)
▪ Description of goods or services & Harmonised System of Nomenclature (HSN) code for G/&S
▪ Taxable value of supply of G/S taking into account discount or abatement, if any.
▪ Signature or digital signature of the supplier or his authorised representative.
Note: Signature or digital signature shall not be required in case of issuance of electronic invoice.

❖ PC Note: If RP is supplying taxable & exempted G/S to unregistered person → he can issue a single
“invoice-cum-bill of supply” for all such supplies [Rule 46A].

❖ Every registered person who has been granted registration with effect from a date earlier than the date
of issuance of certificate of registration to him, may issue Revised Tax Invoices.
❖ Such invoices shall be issued against the invoices already issued during said period.
❖ Revised Tax Invoices shall be issued within 1 month from the date of issuance of registration certificate
❖ Registered person may issue a revised invoice against the invoice already issued from effective date of
registration till date of issuance of certificate of registration within 1 month from the date of issuance
of certificate of registration.
❖ This provision is necessary to fill time lag b/w date of grant of certificate of registration & effective date
of registration.
❖ For supplies made by such person during this intervening period, the law enables the issuance of a
revised invoice, so that ITC can be availed by the recipient on such supplies.

CQ4. Sarabhai Private Ltd. commenced business of supply of goods on 1st April in Delhi. Its turnover exceeded
the applicable threshold limit on 3rd September. Thus, it became liable to registration on 3rd September. It
applied for registration on 29th September and was granted registration certificate on 5th October. Since it
applied for registration within 30 days of becoming liable to registration, registration granted is effective from
3rd September. Sarabhai Private Ltd. may issue Revised Tax Invoices i.r.o taxable supplies effected b/w 3 rd
September & 5th October.

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Consolidated Revised Tax Invoices

▪ RP may issue a Consolidated Revised Tax Invoice i.r.o all taxable supplies made to an unregistered
recipient during such period.
▪ However, in case of inter-State supplies, a consolidated Revised Tax Invoice cannot be issued i.r.o all
unregistered recipients if value of a supply > Rs. 2,50,000.

CQ5. AB Ltd. Engaged in the supply of gifts articles provides you the following details: [ICAI SM Q1]
SN Particulars Date
1. Date of Commencement of the business 1.8.2019
2. Turnover exceeds Rs. 10,00,000 on 15.8.2019
3. Turnover exceeds Rs. 20,00,000 on 5.9.2019
4. Application for registration made on 28.9.2019
5. Registration certificate granted on 6.10.2019
AB Ltd. seeks your advice as to how it should raise revised tax invoices for supplies made. Is there any specific provision
for issuance of revised tax invoices to unregistered customers? Explain.
Answer:
▪ A supplier whose aggregate turnover in a FY exceeds Rs. 20 Lacs in a State/UT [Rs. 10 Lacs in 4 special category
states] is liable to apply for registration within 30 days from the date of becoming liable to registration (i.e., the
date of crossing the threshold limit of Rs. 20 Lacs/Rs. 10 Lacs) as per section 22 of CGST Act, 2017.
▪ Where the application is submitted within 30 days, effective date of registration is the date on which the person
becomes liable to registration; otherwise, it is the date of grant of registration.
▪ Every registered person who has been granted registration with effect from a date earlier than the date of issuance
of registration certificate to him, may issue revised tax invoices i.r.o taxable supplies effected during this period
within 1 month from the date of issuance of registration certificate.
▪ Since AB Ltd. has made the application for registration within 30 days of becoming liable for registration, effective
date of registration becomes the date on which the company becomes liable to registration i.e. 5.9.2019.
▪ Thus AB Ltd. may issue revised tax invoices against the invoices already issued during the period between effective
date of registration (5.9.2019) & date of issuance of registration certificate (6.10.2019), within 1 month from
6.10.2019.
▪ Further, AB Ltd. may issue a consolidated revised tax invoice i.r.o all taxable supplies to URP.

❖ Whenever a registered person receives an advance payment with respect to any supply of G/S, he has
to issue ‘receipt voucher’ or any other document evidencing th receipt of such payment.
❖ Proviso to Rule 50 of the CGST Rules, 2017, if at the time of receipt of advance,
Rate of tax is not determinable Tax may be paid @ 18%.

Nature of supply is not determinable It shall be treated as inter-State supply.

CONTENTS OF RECEIPT VOUCHERS

1. Name, address and GSTIN of the supplier.
2. A consecutive serial number (not exceeding 16 characters, in one or multiple series, containing
alphabets or numerals or special characters & any combination thereof, unique for a FY).
3. Date of its issue.
4. If recipient is registered - Name, address and GSTIN or UIN of the recipient.
5. Description of goods or services.
6. Amount of advance taken
7. Rate of tax (CGST, SGST, IGST, UTGST or GST cess).
8. Amount of tax charged i.r.o taxable G/S (CGST, SGST, IGST, UTGST or GST cess).

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9. PoS along with the name of State (in case of inter-State supply).
10. Whether the tax is payable on reverse charge basis.
11. Signature or digital signature of the supplier or his authorised representative.
Note: Signature or digital signature shall not be required in case of issuance of electronic invoice.

❖ If Advance is received by registered dealer & receipt voucher is issued by him to the payee;
❖ But subsequently no supply is made and no tax invoice is issued.
❖ Such registered person may issue to the other party, a refund voucher against such payment.

CONTENTS OF REFUND VOUCHERS

1. Name, address and GSTIN of the supplier.
2. A consecutive serial number (not exceeding 16 characters, in one or multiple series, containing
alphabets or numerals or special characters & any combination thereof, unique for a FY).
3. Date of its issue.
4. If recipient is registered - Name, address and GSTIN or UIN of the recipient.
5. Name & date of receipt voucher issued.
6. Description of goods or services i.r.o which refund is made.
7. Amount of refund made.
8. Rate of tax (CGST, SGST, IGST, UTGST or GST cess).
9. Amount of tax charged i.r.o taxable G/S (CGST, SGST, IGST, UTGST or GST cess).
10. Whether the tax is payable on reverse charge basis.
11. Signature or digital signature of the supplier or his authorised representative.
Note: Signature or digital signature shall not be required in case of issuance of electronic invoice.

❖ Invoice: Registered person [who is liable to pay tax under RCM u/s 9(3)/(4)] shall issue an invoice on
the date of receipt of G/&S i.r.o G/&S RECEIVED by him from unregistered supplier.
❖ Payment voucher: Such registered person also has to issue a payment voucher “at the time of making
payment to the supplier”.
❖ Consolidated Invoice: Consolidated invoice may be issued at the end of a month for supplies covered
u/s 9(4) (Aggregate value of such supplies > Rs. 5,000 in a day from all/any suppliers).

CONTENTS OF PAYMENT VOUCHERS

1. Name, address and GSTIN of the supplier.
2. A consecutive serial number (not exceeding 16 characters, in one or multiple series, containing
alphabets or numerals or special characters & any combination thereof, unique for a FY).
3. Date of its issue.
4. Name, address and GSTIN or UIN of the recipient.
5. Description of goods or services.
6. Amount paid.
7. Rate of tax (CGST, SGST, IGST, UTGST or GST cess).
8. Amount of tax charged i.r.o taxable G/S (CGST, SGST, IGST, UTGST or GST cess).
9. PoS along with the name of State (in case of inter-State supply).
10. Signature or digital signature of the supplier or his authorised representative.
Note: Signature or digital signature shall not be required in case of issuance of electronic invoice.

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(i) A builder/promoter must purchase 80% of inputs and input services used in supplying the service
from registered persons. In case of shortfall, he’s required to pay tax under reverse charge on all such
inward supplies (to the extent short of 80% of the inward supplies from registered supplier).
(ii) Where cement is received from an unregistered person, promoter/builder has to pay tax on supply of
such cement on reverse charge basis and
(iii) GST on capital goods is payable by the promoter on reverse charge basis.

Following suppliers may issue a tax invoice, but they are also permitted to issue any other document in
lieu of tax invoice, by whatever name called:

Supplier Document in lieu of Tax invoice

Optional information Mandatory information

Insurer/Banking ▪ Serial number of invoices) ▪ Customer may avail numerous

Company/FIs/NBFC ▪ Address of recipient of service. services from bank/insurer in a given
tax period. Consolidated tax
▪ Signature or digital signature of invoice/statement may be issued for
supplier shall not be required in the supply of services made during a
case of issuance of a consolidated month at the end of the month.
tax invoice or any other document
in lieu thereof. ▪ Other prescribed information for Tax
Invoice u/r 46.

GTA Service Provider ▪ Gross weight of consignment

in relation to ▪ Name of consignor & consignee
transportation of
goods by road in a ▪ Registration No. of goods carriage in
goods carriage which the goods are transported
▪ Details of goods transported
▪ Place of origin & destination
▪ GSTIN of person liable for paying tax
▪ Other Prescribed information for a
tax invoice u/r 46

Supplier of Passenger ▪ Serial No. of invoices/ document) ▪ Invoice shall include ticket (any form)
transportation service ▪ Address of recipient of service. ▪ Other Prescribed information for a tax
invoice u/r 46.
▪ Signature of supplier shall not be
required in case of issuance of ticket.

RP supplying services ▪ Details of recipient of service ▪ Supplier is required to issue an

by way of admission electronic ticket & such ticket shall
to exhibition of be deemed to be a tax invoice.
cinematograph films ▪ Other Prescribed information for a
in multiplex screens tax invoice u/r 46.

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▪ A registered person has an option to issue consolidated tax invoice for supplies at the close of each day
where value of G/S supplied is < Rs. 200 recipients is unregistered & does not require tax invoice [in
terms of Sec 31(3)(b) of the CGST Act r/w 4 th proviso to rule 46].
▪ W.e.f 1.9.2019, 4th proviso to rule 46 has been amended to disallow this option to a supplier engaged in
making supply of services by way of admission to exhibition of cinematograph films in multiplex screens.
▪ Further, with effect from 01.09.2019, a new sub-rule (4A) has been inserted in rule 545. Accordingly,
a registered person who is supplying services by way of admission to exhibition of cinematograph films
in multiplex screens shall be required to issue an electronic ticket. The said electronic ticket is deemed
to be a tax invoice, even if such ticket does not contain the details of the recipient of service but
contains the other information as mentioned under rule 46.
▪ Moreover, supplier of such services in a screen other than multiplex screens also has been given an
option to follow above procedure.

❖ Where one or more tax invoices has been issued for supply of any G/S or both;
❖ Subsequently it is found that i.r.o such supply
(a) Taxable value in invoice > taxable value of supply; OR A Dealer may issue
One Credit note for
(b) Tax charged in invoice > Tax payable on such supply multiple Invoices.
(c) Recipient has returned the goods,
(d) G/S or both are found to be deficient
supplier may issue a one or more credit notes for supplies made in FY to the recipient.
❖ A registered person who issues such a credit note has to declare details of such credit note in the return
for the month during which such credit note has been issued but not later than
(a) September following the end of FY in which such supply was made OR
(b) Date of furnishing of relevant annual return [whichever is earlier]
❖ Tax liability of registered person will be adjusted in accordance with the credit note issued.
❖ However, no reduction in output tax liability of the supplier shall be permitted, if incidence of tax
& interest on such supply has been passed on to any other person.

PC Note: Credit note(s) are not permitted to be issued in case secondary discounts are allowed by the
supplier since the tax liability of the supplier does not get reduced in such case. However, supplier can
issue financial/commercial credit note(s) to reduce VoS payable by the recipient to supplier.

❖ Where one or more tax invoices has been issued for supply of any G/S or both;
❖ Subsequently it is found that i.r.o such supply
(a) Taxable value in invoice < taxable value of supply; OR
(b) Tax charged in invoice < Tax payable on such supply
supplier may issue one or more debit notes for supplies made in FY to the recipient.
❖ A registered person who issues such a debit note has to declare details of such debit note in the
return for the month during which such debit note has been issued.
❖ Tax liability of registered person will be adjusted in accordance with the debit note issued.

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CQ6. Kartik, a registered supplier provides following information regarding invoices issued by it during March:
1. Value of supply charged in invoice no. 1 was Rs. 2,50,000 against the actual taxable value of Rs. 2,30,000.
2. Tax charged in invoice no. 4 was Rs. 32,000 against the actual tax liability of Rs. 68,000 due to wrong HSN code
being chosen while issuing invoice.
3. Value charged in invoice no. 8 was Rs. 3,20,000 as against the actual value of Rs. 4,20,000 due to wrong quantity
considered while billing.
Kartik & Co. asks you to answer the following:
(a) Who shall issue a debit/credit note under CGST Act?
(b) Whether debit note or credit note has to be issued in each of the above circumstances?
(c) What is the maximum time-limit available for declaring the credit note in the GST Return?
Answer:
(a) Debit/credit note shall be issued by RP who has supplied the goods and/or services, i.e. Kartik & Co.
(b) Yes, debit/credit note need to be issued in each of the circumstances as under:
1. Credit note is required to be issued as taxable value in invoice no. 1 exceeds actual taxable value.
2. Debit note is required to be issued as tax charged in the invoice no. 4 is less than actual tax payable.
3. Debit note is required to be issued as value of supply charged in the invoice no. 8 is less than actual value.
(c) Details of the credit note cannot be declared later than return for the month of September following the end
of FY in which such supply was made or date of furnishing of the relevant annual return, whichever is earlier.

▪ Name, address and GSTIN of the supplier

▪ Nature of the document
▪ A consecutive serial number containing alphabets or numerals or special characters or any
combination thereof, unique for each FY.
▪ Date of issue of the document
▪ Name, address & GSTIN/UIN of the recipient (if registered)
▪ Name & address of recipient; delivery address along with State name & code (unregistered)
▪ Serial number and date of the corresponding tax invoice or bill of supply.
▪ Value of taxable supply of G/S; rate of tax & amount of tax credited or debited to the recipient.
▪ Signature or digital signature of the supplier or his authorized representative.

Rule 55 gives the cases goods may be removed on delivery challan & invoice may be issued after delivery.
Nature of Supply Delivery challan to be Particulars of delivery challan
issued
1. Supply of liquid gas Serially numbered not ▪ Date & number of delivery challan
where quantity at time exceeding 16 characters in ▪ Name, address & GSTIN of consigner.
of removal from PoB of one or multiple series at the
▪ Name, address & GSTIN of consignee
supplier is not known, time of removal of goods for
transportation. ▪ HSN code & description of goods,
2. Transportation of goods
for job work, ▪ Quantity (provisional, where the exact
quantity being supplied is not known)
3. Transportation of goods
for reasons other than ▪ Taxable value
by way of supply, ▪ Rate & amount of GST where
4. Other Notified supplies transportation is for supply to consignee
▪ PoS in case of inter- state movement
▪ Signature

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Triplicate Copy Original copy Duplicate copy Triplicate copy

For Consignee For Transportor For Consignor

Declaration in EWB Where goods are being transported on a delivery challan in lieu of invoice, the
same shall be declared in E-Way Bill.

Tax invoice to be Where goods being transported are for supply to the recipient but tax invoice
issued after delivery could not be issued at the time of removal of goods for supply, supplier shall
of goods issue a tax invoice after delivery of goods.

Goods transported in Where goods are being transported in SKD/CKD condition or in batches/ lots,
SKD/CKD condition (a) Supplier shall issue the complete invoice before dispatch of the first
or in batches or lots consignment;
(b) Supplier shall issue delivery challan for each of subsequent consignments,
giving reference of invoice;
(c) Each consignment shall be accompanied by copies of the corresponding
delivery challan along with a duly certified copy of the invoice; &
(d) Original copy of the invoice shall be sent along with the last consignment.

❖ Suppliers of jewellery etc. who are registered in one State may have to visit other States (other than
their State of registration) & need to carry the goods (such as jewellery) along for approval. In such
cases, if jewellery etc. is approved by the buyer, then supplier issues a tax invoice only at the time of
supply. Since the suppliers are not able to ascertain their actual supplies beforehand & while
ascertainment of tax liability in advance is a mandatory requirement for registration as CTP, supplier
is not able to register as a casual taxable person. Such goods are also carried within the same State for
the purposes of supply.
❖ It is clarified that goods which are taken for supply on approval basis can be moved from PoB of
registered supplier to another place within the same State or to a place outside the State on a delivery
challan along with E-Way Bill (wherever applicable) & invoice may be issued at the time of delivery of
goods. Person carrying goods for such supply can carry the invoice book with him so that he can issue
the invoice once the supply is fructified [Circular No. 10/10/2017 GST dated 18.10.2017].
❖ Similarly, Where artists supply art works in different States - other than the state in which they are
registered as a taxable person & if art work is selected by buyer, then supplier issues a tax invoice only
at the time of supply, it is clarified that the art work for supply on approval basis can be moved from
PoB of registered person (artist) to another place within the same State or to a place outside the State
on a delivery challan along with E-Way Bill & invoice may be issued at the time of actual supply of art
work.

❖ A person who is not a registered person shall not collect in respect of any supply of goods or services
or both any amount by way of tax under this Act.
❖ No registered person shall collect tax except in accordance with the provisions of this Act or the rules
made thereunder.
CQ7. Rujuta is engaged in providing grooming services. She is not registered under GST law as her turnover
is below threshold limit. Rujuta cannot collect tax on grooming services provided by her as a person who is
not a registered person cannot collect any amount by way of tax under this Act i.r.o. any supply of G/&S.

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▪ A waybill is a receipt or a document giving details & instructions relating to the shipment of a
consignment of goods.
▪ It includes details like name of consignor, consignee, point of origin & destination of consignment & route.
▪ E-Way Bill is a compliance mechanism by way of a digital interface in which the person causing the
movement of goods uploads the relevant information prior to the commencement of movement of
goods and generates e-way bill on the GST portal.
▪ E-Way bill is an electronic document generated on GST portal evidencing movement of goods.
▪ Once E-Way bill is generated, it cannot be edited for any mistake. However, it can be cancelled within
24 hours of generation.
▪ E-Way Bill may be updated with vehicle number any number of times.

▪ Physical interface to pave way for digital interface resulting in elimination of state check-posts.
▪ It will facilitate faster movement of goods
▪ It will improve the turnaround time of trucks and help the logistics industry by increasing the average
distances travelled, reducing the travel time as well as costs.

▪ E-way Bill is generated electronically in Form GST EWB 01 on www.ewaybillgst.gov.in.

▪ Facility of generation, cancellation, updation & assignment of e-way bill is available to supplier,
recipient & transporter.
▪ E-way Bill can be generated through various modes like Web (Online), Android App, SMS, using Bulk
Upload Tool & API (Application Program Interface) based site to site integration etc.
▪ Person who generates e-way bill should be a registered person on GST portal & he should register on
the e-way bill portal.
▪ If transporter is not registered person under GST it is mandatory for him to get enrolled on e-waybill
portal (https://ewaybillgst.gov.in) before generation of the e-way bill.

 If there is a movement of goods of consignment value > Rs. 50,000

▪ in relation to a ‘supply’,
▪ for reasons other than a ‘supply’, (Ex: return)
▪ due to inward ‘supply’ from an unregistered person;
the registered person who causes such movement of goods shall furnish the information relating to the
said goods as specified in Part A of GST EWB-01 before commencement of such movement.
PC Note: E-Way bill can be generated even if value of goods < Rs. 50,000. [NOT COMPULSORY]

MEANING OF ‘CONSIGNMENT VALUE’

▪ Value determined in accordance with the provisions of section 15,
▪ declared in invoice, bill of supply or delivery challan issued i.r.o said consignment;
▪ also includes GST (if any) in the document
▪ but exclude ‘value of exempt supply of goods’ where invoice is issued i.r.o both exempt & taxable supply
of goods.

CQ1. Bhanupratap Shoe Manufacturers, registered in Punjab, sold shoes to a retail seller in Gujarat, at a value
of Rs. 48,000 (excluding GST leviable @ 18%) and wants to send the consignment of such shoes to Gujarat. The
consignment value will be Rs. 56,640 [Rs. 48,000 × 118%]. Since the movement of goods is in relation to supply
of goods and the consignment value exceeds Rs. 50,000, e-way bill is mandatorily required to be issued.

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CQ2. Sindhi Textiles of Ludhiana, registered in Punjab, sends cloth to a job worker in Jalandhar, Punjab on a
delivery challan. The value of cloth mentioned in the delivery challan is Rs. 48,000. Since the movement of
goods is for reasons other than supply, the value given in the delivery challan is adopted for the purposes of
the e-way bill. Such value does not exceed Rs. 50,000. Consequently, e-way bill is not required to be issued.

PERSON CAUSING MOVEMENT OF GOODS

Case Movement caused by
Supplier is registered & undertakes to transport the goods Supplier
Recipient arranges transport Recipient
Goods are supplied by unregistered supplier to registered recipient Registered Recipient

Inter-State movement of Where goods are sent by a principal located in one State/UT to a job worker
Goods by Principal to Job located in any other State/UT, e-way bill shall be generated either by the
Worker principal or job worker (if registered).

Inter-State Transport of Where handicraft goods are transported from one State/UT to another
Handicraft goods State/UT, e-way bill shall be generated.

Cases Who shall generate E-way bill?

1 If Goods are transported by registered person Registered person transporting the goods shall
(Either by supplier or by recipient) [whether in generate E-way bill by furnishing information in
his own conveyance or hired one or a public Part B of GST EWB-01.
conveyance, by road]

2 If E-Way bill is not generated by RP & Goods E-way bill shall be generated by transporter on the
are handed over to the transporter basis of information furnished by RP in Part A

3 If both ‘consignor’ & ‘consignee’ have not E-way bill shall be generated by transporter by
created E-way bill filling out PART A of GST EWB-01 on the basis of
invoice/bill of supply/delivery challan.

4 Goods are transported by Air, Ship, Railways E-way bill shall be generated by the registered
person, being the supplier or the recipient, who
shall, either before or after the commencement of
movement, furnish, information in part B.

5 Goods are supplied by unregistered supplier to Compliance to be done by Recipient as if he is the

registered recipient Supplier.

PC Note: If Goods are transported by railways, there is no requirement to carry e-way bill along with the
goods, but railways have to carry invoice or delivery challan or bill of supply along with goods.
Railways shall not deliver goods unless e-way bill is produced at the time of delivery.

❖ If transporter is generating EWB, but he is not registered person, it is mandatory for him to get enrolled
on EWB portal before generation of the e-way bill to get 15-digit Unique Transporter Id called TRANSIN.
❖ TRANSIN or Transporter id is a unique number generated by EWB system for unregistered transporter,
once he enrolls on the system which is similar to GSTIN format and is based on State code, PAN and
check sum digit. This TRANSIN or Transporter id can be shared by transporter with his clients, who may
enter this number while generating e-waybills for assigning goods to him for transportation.

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 Information furnished in Part A of the e-way bill shall be made available to the registered supplier on the
common portal who may utilize the same for furnishing the details in Form GSTR-1 [Rule 138(8)].
 However, when the information has been furnished by an unregistered supplier/unregistered recipient,
he shall be informed electronically, if mobile number or E-mail is available [Proviso to rule 138(8)].

❖ Although bill-to-ship-to transactions could sometimes result in twin-supply transactions, they require
a single EWB since the movement is singular.
❖ In the e-way bill form, there are two portions under the ‘to’ section.
❖ In left-hand-side: ‘Billing to’ GSTIN and trade name is entered; and
❖ In right-hand-side: ‘Ship to’ address of the destination of the movement is entered.
❖ The other details are entered as per the invoice.
❖ If ‘ship-to’ State is different from ‘Bill-to’ State, tax components are entered as per the details of the ‘bill-
to’ person (Bill-to State).
Ex: If “Bill-to” location is inter-state for the supplier, IGST is entered & if “Bill-to” person is located in same State
as supplier, then SGST & CGST are entered irrespective of place of delivery.
❖ In a typical “Bill to Ship to” model of supply, there are three persons involved in a transaction:
1. ‘A’ is the person who has ordered ‘B’ to send goods directly to ‘C’.
2. ‘B’ is the person who is sending goods directly to ‘C’ on behalf of ‘A’.
3. ‘C’ is the recipient of goods.
In this scenario, 2 supplies are involved & accordingly 2 tax invoices are required to be issued:
Invoice -1: Issued by ‘B’ to ‘A’; Invoice -2: Issued by ‘A’ to ‘C’.

❖ It is clarified that as per CGST Rules, 2017 either ‘A’ or ‘B’ can generate the E-Way Bill but it may be
noted that only one e-Way Bill is required to be generated as per the following procedure:

Case 1: E-Way Bill is generated by ‘B’, following fields shall be filled in Part A of GST EWB-01:
Bill From Bill from: In this field details of ‘B’ are supposed to be filled.
Dispatch From Dispatch from: This is the place from where goods are actually dispatched. It may
be the principal or additional place of business of ‘B’.
Bill To Bill to: In this field details of ‘A’ are supposed to be filled.
Ship To Ship to: In this field address of ‘C’ is supposed to be filled.
Invoice Details Invoice Details: Details of Invoice-1 are supposed to be filled

Case 2: E-Way Bill is generated by ‘A’, following fields shall be filled in Part A of GST EWB-01:
Bill From In this field details of ‘A’ are supposed to be filled.
Dispatch From This is the place from where goods are actually dispatched. It may be the principal
or additional place of business of ‘B’.
Bill To In this field details of ‘C’ are supposed to be filled.
Ship To In this field address of ‘C’ is supposed to be filled.
Invoice Details Details of Invoice-2 are supposed to be filled
Ex: Goods supplied from Baroda to intermediate in Chennai but directly delivered to Kolkata. EWB to be
generated ‘before’ commencement of movement with ‘bill to Chennai’ and ‘ship to Kolkata’ and the GSTIN of
original supplier (Baroda) and intermediate (Chennai).
Ex: Car sold by Dealer in Bangalore to Bank in Mumbai but delivered to Lessee in Bangalore. EWB to be issued
‘before’ commencement of movement with ‘bill to Mumbai’ and ‘ship to Bangalore’.

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1 Part A is to be furnished by registered person who is causing movement of goods.

❖ It comprises of the following details:
▪ GSTIN of supplier & recipient; Place of delivery (indicating PIN Code also); Value of goods;
▪ Document (Tax invoice, Bill of Supply, Delivery Challan or Bill of Entry) number & date,
▪ HSN code & Reasons for transportation, etc
❖ Information in Part-A may be furnished:
▪ by the transporter, on authorization received from such registered person or
▪ by ECO or courier agency on an authorization received from consignor (where goods to be
transported are supplied through such e-commerce operator or a courier agency).

2 Part B (transport details) to be furnished by the person who is transporting the goods.
❖ It comprises of the following details:
▪ Transporter document no. (Goods Receipt/Railway Receipt/Airway Bill/Bill of Lading No.)
▪ Vehicle number (in case of transport by road).

→
❖ If goods are transported for a distance of upto 50 km within the State/UT
▪ from PoB of consignor to PoB of transporter for further transportation
▪ from PoB of transporter finally to PoB of the consignee.

❖ Consignor or recipient or transporter (before transfer & further movement) shall update the details of
conveyance in Part B of e-way bill on common portal.
❖ Press Release No. 144/2018 dated 31.03.2018 → Consignor/recipient (who has furnished the
information in Part A) or transporter, may assign e-way bill number to another registered transporter
for updating the information in Part B for further movement of the consignment. However, once the
details of the conveyance have been updated by the transporter in Part B, e-way bill cannot be assigned
to another transporter.

Ex: A consignor is required to move goods from City X to City Z. He appoints Transporter A for movement of
his goods. Transporter A moves the goods from City X to City Y. For completing the movement of goods i.e.,
from City Y to City Z, Transporter A now hands over the goods to Transporter B. Thereafter, the goods are
moved to the destination i.e. from City Y to City Z by Transporter B. In such a scenario, only one e-way bill
would be required. Part A can be filled by the consignor and then the e-way bill will be assigned by the
consignor to Transporter A. Transporter A will fill the vehicle details, etc. in Part B and will move the goods
from City X to City Y. On reaching City Y, Transporter A will assign the said e-way bill to the Transporter B.
Thereafter, Transporter B will be able to update details of Part B. Transporter B will fill the details of his vehicle
& move the goods from City Y to City Z.

CQ3. Mr. Shah, a consignor, is required to move goods from Ahmedabad (Gujarat) to Nadiad (Gujarat). He
appoints Mehta Transporter for movement of goods. Mehta Transporter moves the goods from Ahmedabad
(Gujarat) to Kheda (Gujarat). For completing the movement of goods from Kheda (Gujarat) to Nadiad (Gujarat),
Mehta Transporter now hands over the goods to Parikh Transporter. Explain the procedure regarding e-way
bill to be followed by consignor and transporter as per provisions of GST law and rules made thereunder.
Answer:
▪ In the given scenario, only one e-way bill is required to be issued.

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▪ Part A can be filled by either Mr. Shah or recipient of goods or Mehta Transporter on the appropriate
authorisation.
▪ Where the goods are transferred from one conveyance to another, the consignor or the recipient, who has
provided information in Part A, or the transporter shall, before such transfer and further movement of goods,
update the details of conveyance in the e-way bill on the common portal in Part B.
▪ Thus, on reaching Kheda, Mr. Shah or the recipient of the goods, who has filled Part A of the e-way bill, or
Mehta Transporter can, before the transfer and further movement of goods, update the details of conveyance
in Part B of the e-way bill.
▪ The consignor or the recipient, who has furnished the information in Part A, or the transporter, may assign
the e-way bill number to another registered or enrolled transporter for updating the information in Part B
for further movement of the consignment.
▪ Thus, on reaching Kheda, Mr. Shah or the recipient of the goods, or Mehta Transporter can assign the said e-
way bill to Parikh Transporter who will thereafter update the details of conveyance in Part B.
▪ However, upon updation of the details of the conveyance by Parikh transporter in Part B, Mr. Shah or
recipient, as the case may be, who has furnished the information in Part A shall not be allowed to assign the
e-way bill number to another transporter.

▪ Consignor transporting goods to or from between place of business & a weighbridge for weighment at
a distance of 20 kms, accompanied by a Delivery challan.
▪ Mode of transport is non-motor vehicle.
▪ Goods transported from Customs port, airport, air cargo complex or land customs station to Inland
Container Depot (ICD) or Container Freight Station (CFS) for clearance by Customs.
▪ Goods transported under Customs supervision or under customs seal
▪ Goods transported under Customs Bond from ICD to Customs port; from a custom station to another.
▪ Transit cargo transported to or from Nepal or Bhutan
▪ Movement of goods caused by defence formation under Ministry of defence as consignor/ consignee.
▪ Empty Cargo containers are being transported
▪ Movement of empty cylinders for packing of LPG other than for supply
▪ Goods being transported by rail where the Consignor of goods is CG/SG/LA.
▪ Transport of certain specified goods: Includes exempt supply of goods, goods not treated as supply
as per Schedule III (negative list), Certain schedule to CGST notifications.
▪ Goods [other than de-oiled cake], being transported, are exempt from tax [5 Petroleum Products]
▪ Goods specifed as exempt from E-Way bill requirements in respective State/UT GST Rules.
▪ where the goods being transported are the ones given below:
LPG for supply to household and non- domestic exempted category (NDEC) customers
Kerosene oil sold under PDS
Postal baggage transported by Department of Posts
Natural or cultured pearls; Precious or semi-precious stones; Precious metals & metals clad
with precious metal (Chapter 71)
Jewellery, goldsmiths’ and silversmiths’ wares and other articles (Chapter 71)
Currency
Used personal and household effects
Coral, unworked (0508) and worked coral (9601)]

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❖ After EWB has been generated, where multiple consignments are intended to be transported in one
conveyance, the transporter may indicate the serial number of e-way bills generated in respect of each
such consignment electronically on the common portal and a consolidated e-way bill in GST EWB-02
may be generated by him on the said common portal prior to the movement of goods [Rule 138(6)].
❖ Consolidated e-way bill is a document containing the multiple e-way bills for multiple consignments
being carried in one conveyance (goods vehicle). That is, the transporter carrying multiple consignments
of various consignors and consignees in a single vehicle can generate and carry a single document -
consolidated e-way bill instead of carrying separate document for each consignment in a conveyance.
❖ Consolidated EWB is like a trip sheet and it contains details of different e-way bills in respect of various
consignments being transported in one vehicle and these e-way bills will have different validity periods.
❖ Hence, Consolidated EWB does not have any independent validity period. Further, individual
consignment specified in the Consolidated EWB should reach the destination as per the validity period
of the individual EWB.
❖ Further, where consignor/consignee has not generated EWB in Form GST EWB-01 & aggregate of the
consignment value of goods carried in the conveyance is more than Rs. 50,000, transporter, except in
case of transportation of goods by railways, air and vessel, shall, in respect of inter-State supply,
generate the e-way bill in Form GST EWB-01 on the basis of invoice or bill of supply or delivery challan,
as the case may be, and may also generate a consolidated e-way bill in Form GST EWB-02 on the
common portal prior to the movement of goods [Rule 138(7)].
❖ However, where the goods to be transported are supplied through an e-commerce operator or a courier
agency, the information in Part A of Form GST EWB-01 may be furnished by such e-commerce operator
or courier agency [Proviso to rule 138(7)]. [This provision is not yet effective]

Type of Conveyance Distance within country Validity from Relevant Date

(i) Over dimensional cargo Upto 20 Kms 1 Day

(ii) Multimodal shipment in which at For every additional 20 Kms or Additional 1 Day
least one leg involves transport by part
ship

Normal Cargo [If not covered Upto 200 Kms 1 Day

above] (i.e Other than Over
dimensional cargo or multimodal For every additional 200 Kms Additional 1 Day
shipment in which at least one leg or part
involves transport by ship)

Ex: RP has to transport goods from its warehouse to its depot located at a distance of 500 km. In the given case,
if e-way bill was generated before 01.01.2021, it would have been valid for 5 days. However, an e-way bill
generated on or after 01.01.2021 would be valid for only 3 days.
❖ Relevant Date: Date on which the e-way bill has been generated and the period of validity shall be
counted from the time at which the e-way bill has been generated and each day shall be counted as
the period expiring at midnight of the day immediately following the date of generation of e-way bill.
Ex 1: Suppose an e-way bill is generated at 23:58 hrs. on 14th March. Then first day would end on 12:00
midnight of 15-16 March. Second day will end on 12:00 midnight of 16 -17 March and so on.
❖ Validity of E-way bill starts when first entry is made in Part-B (Vehicle entry orfirst transport document
no. entry is made for first time. Validity is not re-calculated for subsequent entries in Part-B.
Ex 2: A consignor hands over his goods for transportation on Friday to transporter. However, the assigned
transporter starts the movement of goods on Monday. The validity period of e-way bill starts only after the
details in Part B are updated by the transporter for the first time. In the given situation, Consignor can fill
the details in Part A on Friday and handover his goods to the transporter. When the transporter is ready to
move the goods, he can fill Part B i.e. the assigned transporter can fill the details in Part B on Monday and
the validity period of the e-way bill will start from Monday [CBIC Press Release dated 31.03.2018].

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▪ Validity of E way bill can be extended also.

▪ Transporter may extend the validity period after updating the details in Part B, if required.
▪ Transporter can extend it either 8 hours before expiry or within 8 hours after its expiry.
❖ Meaning of Over dimensional cargo: Cargo carried as a single indivisible unit & which exceeds the
dimensional limits prescribed in rule 93 of Central Motor Vehicle Rules, 1989.

❖ E-way bill generated under this rule or

under rule 138 of GST Rules of any State/UT shall be valid in every State & UT [Rule 138(13)].

❖
▪ E-way bill is not valid for movement of goods without vehicle number on it.
▪ Once E-way bill is generated, it cannot be edited for any mistake. However, it can be cancelled
within 24 hours of generation.
▪ E- Way Bill may be updated with vehicle number any number of times.
▪ The latest vehicle number should be available on e-way bill and should match with the vehicle
carrying it in case checked by the department.
▪ If multiple invoices are issued by the supplier to recipient for movement of goods of more than one
invoice of same consignor & consignee, multiple e-way bills have to be generated. That is, for each
invoice, one EWB has to be generated, irrespective of the fact whether same or different consignors
or consignees are involved. Multiple invoices cannot be clubbed to generate one EWB. However,
after generating all these e-way bills, one consolidated e-way bill can be prepared for transportation
purpose, if goods are going in one vehicle.

❖ The details of the e-way bill generated shall be made available to the
(a) Registered Supplier: If information in Part A has been furnished by recipient/transporter;
(b) Registered recipient: If information in Part A has been furnished by supplier/transporter;
on the common portal & supplier/recipient (as the case may be) shall communicate his acceptance or
rejection of the consignment covered by the e-way bill.
❖ If the person to whom the information in Part-A is made available, does not communicate his
acceptance or rejection within specified time, it shall be deemed that he has accepted the said details.
❖ Time-limit specified is (Earlier of)
(a) Time of delivery of goods
(b) 72 hours of the details being made available to him on the common portal

❖ If goods are either not transported or are not transported as per the details furnished in E-way bill after
generation of E-way bill, e-way bill may be cancelled electronically on common portal within 24 hours
of its generation. [Rule 138(9)].
❖ However, an e-way bill cannot be cancelled if it has been verified in transit.
❖ Unique EWB No. generated is valid for 15 days for updation of Part B [Second proviso to rule 138(9)].

❖ Invoice/Bill of Supply/Challan related to the consignment of goods

❖ Transport by road: Transporter ID or Vehicle number
❖ Transport by rail, air, ship: Transporter ID, Transport document no. & date on document.

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1 Person in charge of a conveyance shall carry:

(a) invoice or bill of supply or delivery challan, as the case may be; and
(b) Copy of EWB in physical form or e-way bill number in electronic form or mapped to a Radio
Frequency Identification Device embedded on to the conveyance in notified manner by the
Commissioner (except for movement of goods by rail or by air or vessel) [Rule 138A(1)]

2 RP may obtain ‘Invoice Reference No’ from common portal by uploading a tax invoice issued by him
in FORM GST INV-1 & produce the same for verification by the proper officer in lieu of the tax invoice
& such number shall be valid for 30 days from the date of uploading.
Invoice Reference Number in lieu of tax invoice: In case, E-invoice is issued, Quick Response (QR)
code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for
verification by the proper officer in lieu of the physical copy of such tax invoice [Rule 138A(2)].

3 In such case, RP will not have to upload the information in Part A of E-Way bill for generation of E-
Way bill & the same shall be auto-populated by common portal on the basis of the information
furnished in FORM GST INV-1.
4 Commissioner may, by notification, require a class of transporters to obtain a unique Radio Frequency
Identification Device and get the said device embedded on to the conveyance & map EWB to Radio
Frequency Identification Device prior to the movement of goods.
5 Commissioner may, by notification, require person-in-charge of the conveyance to carry the following
documents instead of EWB: (a) Tax invoice or Bill of supply or Bill of Entry (imported goods) ; OR
(b) Delivery challan (where goods are transported for reasons other than by way of supply)

Examples:
1. Goods imported from China arrive at Mumbai port. These goods are transported from Mumbai port to factory in
Pune. It is intra-State movement from Mumbai to Pune. Requirement of EWB is to be determined under SGST Law.
2. Goods are sold from Lucknow by Supplier to Customer in Delhi with instructions for these goods to be delivered to
job-worker in Noida. This is an inter- State supply from Lucknow to Delhi but an intra-State movement within UP
– Requirement of EWB to be determined under the State GST Law.
3. Generator installed in basement of building being sold to Landlord on termination of lease agreement. EWB will
NOT BE REQUIRED as there is ‘no movement’ in this supply.
4. Contractor carrying portable crane to customer site, both located in same State, is intra-State movement –
Requirement of EWB to be determined under the State GST Law.
5. Laptop carried by an employee in Delhi, having no other branches, to client-location in Bangalore on business. This
movement is not supply but is incidental to ‘services of employee to employer’ under schedule III. EWB will NOT
BE REQUIRED for this movement. Contract-staff carrying company laptop not excluded from EWB requirement.
6. LPG cylinders transported from dealership to bottling plant of Oil Company, is ‘excluded’ from EWB & thus, EWB
will not be required. But, EWB will be required for movement of cylinders supplied by fabricator to Oil Company.

❖ Commissioner or an officer empowered by him may authorize PO to intercept any conveyance to verify the e-
way bill in physical or E-form for all inter-State & intra-State movement of goods.
❖ Commissioner shall get Radio Frequency Identification Device readers installed at places where verification
of movement of goods is required to be carried out & verification of movement of vehicles shall be done
through such device readers where the e-way bill has been mapped with the said device.
❖ Physical verification of conveyances shall be carried out by PO as authorised by Commissioner or officer
empowered by him in this behalf:
❖ On receipt of specific information on evasion of tax, physical verification of a specific conveyance can also be
carried out by any other officer after obtaining necessary approval of Commissioner or authorised officer.
❖ After interception of the vehicle, officer has 3 days time to prepare & submit summary report of inspection
in Part B of Form EWB-03. Such period can be extended by 3 days by Commissioner or authorised officer.

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❖ If physical verification of goods being transported on any conveyance has been done during transit at
one place within a State/UT, no further physical verification of the said conveyance shall be carried out
again in that State/UT unless specific information relating to tax evasion is made available subsequently.
❖ Summary report of every inspection of goods in transit shall be recorded online by PO in Part A within
24 hours of inspection & final report in Part B shall be recorded within 3 days of such inspection.
❖ Extension of Time: Commissioner or any other authorised officer may on sufficient cause being shown,
extend time for recording of final report in Part B for a further period not exceeding 3 days.
❖ 24 hours/3 days shall be counted from midnight of the date on which vehicle was intercepted.

❖ Blocking of EWB generation facility means disabling a taxpayer from generating EWB. A user will not
be able to generate EWB for a GSTIN if the said GSTIN is not eligible for EWB as per rule 138E. GSTINs
of such blocked taxpayers cannot be used to generate the e-way bills either as consignor or consignee.
❖ No person (including a consignor, consignee, transporter, ECO or courier agency) shall be allowed to
furnish information in Part A of GST EWB-01 i.r.o. following RPs (whether as a supplier or recipient):
▪ Person paying tax under composition scheme u/s 10(1) or u/s 10(2A) who has not furnished the
statement for payment of self-assessed tax for 2 consecutive quarters;
▪ Person paying tax under regular scheme has not furnished returns for 2 tax periods;
▪ Person paying tax under regular scheme has not furnished GSTR-1 (Statement of outward supplies)
for any 2 months or quarters (as the case may be).
▪ A person whose registration has been suspended under the provisions of rule 21A.
❖ However, Commissioner (jurisdictional commissioner) may, on receipt of an application from a
registered person in prescribed form, on sufficient cause being shown and for reasons to be recorded
in writing, by order, in prescribed form allow furnishing of the said information in Part A of Form GST
EWB-01, subject to prescribed conditions and restrictions. An order rejecting said request shall not
be passed without giving the said person a reasonable opportunity of being heard. Permission granted
or rejected by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed
to be granted or, as the case may be, rejected by the Commissioner.

❖ In case of transportation of goods by railways, goods will not be delivered unless the e-way bill is
produced at the time of delivery.
❖ Where goods move from DTA unit to SEZ unit (or vice versa) located in same State, there is no
requirement to generate an e-way bill (this exemption is applicable only if state has exempted the same.)
❖ E-way bill in case of storing of goods in godown of transporter:
➢ If consignee/recipient taxpayer stores his goods in the godown of the transporter, then the
transporter’s godown has to be declared as APoB by the recipient taxpayer.
➢ In such cases, mere declaration by the recipient taxpayer to this effect with the concurrence of the
transporter in the said declaration will suffice.
➢ Where the transporter’s godown has been declared as APoB by the recipient taxpayer, the
transportation under the e-way bill shall be deemed to be concluded once the goods have reached
the transporter’s godown (recipient taxpayer’ additional place of business).
➢ Hence, e-way bill validity in such cases will not be required to be extended.
➢ When the goods are transported from transporters’ godown which has been declared as APoB of
recipient taxpayer to any other premises of the recipient, relevant provisions of EWB shall apply.
❖ Hence, whenever goods move from transporter’s godown (i.e, recipient taxpayer’s APoB) to the recipient
taxpayer’s any other PoB, a valid e-way bill shall be required, as per the State-specific e-way bill rules.

Rule 55A → Person-in-charge of the conveyance shall carry a copy of tax invoice or bill of supply (if such
person is not required to carry e-way bill) with him during transportation of goods.

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Nature of supply Taxes to be paid Credited to

Intra-state supply CGST + SGST/UTGST CGST → CG; SGST → Concerned SG.

Inter-state supply IGST Component of both CGST & SGST.

PC Note: Once a taxpayer is registered on common portal (GSTN), two E-Ledgers (Cash & Credit ledger) &
Electronic tax liability register will be automatically opened & displayed on his dash board.

Amount credited to E-Cash Ledger Amount utilized for

▪ Every deposit made towards Making any payment towards
▪ tax, interest, penalty, late fee etc ▪ Tax,
▪ by a person by internet banking or by using ▪ Interest, penalty, fees or any other amount
credit/debit cards; NEFT; RTGS or by other mode which is payable.
▪ shall be credited to his E-cash ledger. [Sec 49(1)] [Sec 49(3)]

❖ E-Cash Ledger contains a summary of all the deposits/payments made by a taxpayer.

❖ Payment of challan ≤ Rs. 10,000 can be done over the counter with cash/cheques/DD through
authorised banks; Payments > Rs. 10,000 can be made through digital mode only.
Note: Restriction for deposit of upto Rs. 10,000 per challan in case of over the counter payment shall
not apply to deposit to be made by –
- Government Departments
- PO or any other officer authorised to recover outstanding dues from any person;
- PO 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:
❖ E-Cash ledger shall be maintained in FORM GST PMT-05 on common portal for crediting amount
deposited & debiting payments towards tax, interest, penalty, fees etc. [Rule 87(1)]
❖ Person depositing the amount in E-Cash ledger shall generate a challan in FORM GST PMT-06 on
common portal & enter the details of the amount to be deposited by him towards tax, interest, penalty,
fees etc. Any person, or a person on his behalf, can generate a challan in prescribed form 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.
❖ Such challan 14-digit unique Common Portal Identification Number (CPIN) & shall be valid 15 days.
❖ There is single Challan prescribed for all taxes, fees, penalty, interest & other payments under GST.
❖ Unregistered person shall make payment on the basis of a temporary identification number.
❖ If a person has claimed refund of any amount from E-Cash ledger, such amount shall be debited to E-
Cash ledger.

Manner of utilization of amount reflected in Electronic Cash Ledger

▪ Ledger is displayed major head-wise [IGST, CGST, SGST/UTGST, and CESS].
▪ Each major head is divided into five minor heads: Tax, Interest, Penalty, Fee, and Others.
▪ Information is kept minor head-wise for each major head.

Sec 49(5) Students are advised to Refer Section 49(5) in Chapter “INPUT TAX CREDIT”

Sec 49(6) Balance in electronic cash ledger or electronic credit ledger after payment of tax, interest,
penalty, fee or any other amount payable may be refunded as per sec 54.

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❖ ITC as self-assessed in the return of a RP shall be credited to his electronic credit ledger [Sec 49(2)]
❖ Credit in this ledger can be used to make payment of ONLY TAX & not other amounts such as interest,
penalty, fees etc [Sec 49(4)].
❖ ITC cannot be utilised for tax payable under reverse charge mechanism.
❖ E-Credit ledger shall be maintained in FORM GST PMT-02 for each RP eligible for ITC on the common
portal and every claim of ITC shall be credited to the said ledger.
❖ E-Credit ledger shall be debited to the extent of discharge of any liability as per section 49/49A/49B.
❖ Where a registered person has claimed refund of any unutilized amount from E-Credit ledger as per
section 54, such amount (to the extent of the claim) shall be debited in the said ledger.

❖ All liabilities of taxable person under GST shall be recorded & maintained in this ledger [Sec 49(7)].
❖ ORDER OF ADJUSTMENT IN SETTLING TAX LIABILITY
1. First self-assessed tax; & other dues related to returns of previous tax periods
2. Self-assessed tax, and other dues related to the return of the current tax period;
3. Any other amount payable under this Act including the demand determined u/s 73/74.
Note: ‘Tax dues’ means the tax payable under this Act and does not include interest, fee and penalty;
‘Other dues’ means interest, penalty, fee or any other amount payable under this Act or rules made
❖ It shall be maintained in FORM GST PMT-01 for each person liable to pay tax, interest, penalty, late
fee etc. on the common portal and all amounts payable by him shall be debited to the said register.
❖ E-Liability register of the person shall be debited by:
▪ Tax, interest, late fee etc. payable as per the return furnished by the said person;
▪ Tax, interest, penalty etc. payable as determined by PO in pursuance of any proceedings
▪ Tax & interest payable as a result of mismatch u/s 42/43/50;
▪ Interest that may accrue from time to time.
❖ Payment of every liability by a registered person as per his return shall be made by debiting E-Credit
ledger or E-Cash ledger & E-Liability register shall be credited accordingly.
Note: Amount deducted u/s 51; amount collected u/s 52; amount payable on RCM basis; amount
payable u/s 10; amount payable towards interest, penalty, fee etc. shall be paid by debiting E-Cash
ledger & E-Liability register shall be credited accordingly.
❖ Every person who has paid the tax on G/S shall be deemed to have passed on full incidence of such
tax to the recipient of such G/S [Sec 49(9)].

CQ1. Are principles of unjust enrichment applicable for payment made under GST?
Ans: 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.

CQ2. X Ltd. has following tax liabilities under the provisions of Act-
SN Particulars Amount
1. Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2018 1,00,000
2. Interest & Penalty on delayed payment and filing of returns belonging to August 2018 20,000
3. Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2018 1,20,000
4. Interest & Penalty on delayed payment & filing of returns belonging to September 2018 20,000
5. Demand raised u/s 73/74 under CGST Act, 2017 belonging to July 2018 8,00,000
6. Demand raised as per the old provisions of Indirect Taxes 1,00,000
X Ltd. has Rs. 5,00,000 in Electronic cash ledger. Suggest X Ltd. in discharging the tax liability.

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Answer: Balance in Electronic cash ledger can be used in following manner to discharge tax liability
Particulars Amount
Balance available in Electronic cash ledger 5,00,000
Less:
Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2018 (1,00,000)
Interest & Penalty on delayed payment and filing of returns belonging to August 2018 (20,000)
Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2018 (1,20,000)
Interest & Penalty on delayed payment and filing of returns belonging to September 2018 (20,000)
Demand raised u/s 73/74 under CGST Act, 2018 (2,40,000)
Balance in electronic cash ledger Nil

❖ RP may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount
available in E-Cash ledger under this Act, to electronic cash ledger for IGST, CGST, SGST, UTGST or
cess, in such form and manner and subject to such conditions and restrictions as may be prescribed.
❖ Such transfer shall be deemed to be a refund from the electronic cash ledger under this Act.
❖ 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 section 49(1). [Section 49(11)]
ANALYSIS:
❖ New sections 49(10) & 49(11) w.e.f 01.01.2020 vide FA 2019 provides a facility to the RP to transfer an
amount from one (major/minor) head to another (major/minor) head in E-cash ledger.
❖ Amount available in E-cash ledger can be utilised for payment of any liability for major & minor heads.
Ex: If RP has made a deposit of tax erroneously i.e. by virtue of human error, under a particular head instead
of a specific head, the same can be transferred to the respective intended head vide Form GST PMT-09.
❖ This Form can be used either for -
- transfer of erroneous deposits under any minor head of a major head to any other minor head of
same or other major heads or
- for any of the amounts already lying unutilised under any of the minor heads in E-Cash ledger.
Ex: RP has deposited a sum of Rs. 1,000 under the head of ‘Interest’ column of CGST & Rs. 1,000 under the
head of ‘Interest’ column of SGST, instead of the head ‘Fee’. Such amount can be transferred using Form GST
PMT-09 for making a transfer to the head ‘Fee’. The said transfer is required using the above Form, because
when the Registered person has to make the remittance of Tax/Interest/Penalty/ Fee/ Other amount at a
stage ‘Offset Liabilities’ in any of the GST Returns/ Forms for Tax payments through Electronic Cash Ledger,
adequate amount should be available under the respective head of account.
❖ Prior to the above amendment, RP has to claim a refund of such erroneous deposit or unutilized
amounts using prescribed Form & make a fresh deposit of tax for utilization under appropriate head.
❖ New section 53A provides for transfer of amount b/w Centre & States consequential to amendment
in section 49 allowing transfer of an amount from one head to another head in E-cash ledger of RP.

CQ3. M/s. Daksha Enterprises has made a cash deposit of Rs. 10,000 under minor head 'tax' of major head
'SGST’. It has a liability of ` 2,000 for minor head "Interest" under the major head "SGST". State whether M/s.
Daksha Enterprises can utilise the amount available for payment of interest.
Answer:
▪ Registered person is allowed to transfer the amount available under any minor head of a major head to any
of the minor head of the same or other major head as per Section 49(10) of the CGST Act vide Form PMT-09.
▪ Therefore, in the given case, amount of ` 10,000 available under minor head ‘tax’ of major head ‘SGST’ can be
utilised for payment of liability of ` 2,000 under minor head ‘interest’ of the same major head, after making
a due transfer entry using Form GST PMT-09 from the minor head of ‘tax’ to ‘interest’.

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▪ Where any amount has been transferred from electronic cash ledger under this Act to the electronic
cash ledger under SGST Act or UTGST Act, 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.

Section Case Rate

50(1) Delayed payment of tax 18% p.a.

50(3) Interest on undue or excess claim of ITC u/s 42(10); 24% p.a.
Interest on undue or excess reduction in output tax liability u/s 43(10)

Points to Remember:
1. Interest u/s 50(1) shall be calculated from next day of due date of payment of tax.
2. Interest payable for actual period of delay, not for whole month.
3. Interest is payable even if duty is paid before issue of show cause notice.

Provided that interest on tax payable i.r.o. supplies made during a tax period & 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 proceeding u/s 73 or section 74
i.r.o. the said period, shall be levied on that portion of tax that is paid by debiting the E-cash ledger.
Analysis: When RP has paid his taxes through a return specified u/s 39 belatedly, interest shall be
applicable only on net taxes paid through E- cash ledger & not on gross taxes paid for such tax period.

CQ4. Mr. Alok, a registered supplier of taxable goods, filed GSTR 3B for January, 2020 on 15 thApril, 2020. The
prescribed due date to file the said GSTR 3B was 20th February, 2020. Amount of net GST payable, in Cash i.e. E-
Cash Ledger on supplies made by him for the said month worked out to be Rs. 36,500 which was paid on 15thApril,
2020. Compute the amount of interest payable by Mr. Alok. Ignore the effect of leap year, if applicable in this case.
Answer:
▪ Interest is payable in case of delayed payment of tax @ 18% per annum from the date following the due date
of payment to the actual date of payment of tax.
▪ Thus, the amount of interest payable by Mr. Alok is as under:
- Period of delay = 21st February, 2020 to 15th April, 2020 = 54 days.
▪ Hence, amount of interest = Rs. 36,500 x 18% x 54/365 = Rs. 972

CQ5. M/s ABC Ltd., have filed their GSTR 3B for the month of July, 2020 within the due date prescribed u/s 39 i.e.
20.08.2020. Post filing of the return, the registered person has noticed during September 2020 that tax dues for
the month of July, 2020 have been short paid for Rs. 40,000. M/s ABC Ltd., has paid the above shortfall of Rs.
40,000, through GSTR 3B of September 2020, filed on 20.10.2020 [Payment through Cash ledger - Rs. 30,000 &
Credit ledger - Rs. 10,000]. Examine the Interest payable under the CGST Act, 2017.
What would be your answer if, GSTR 3B for July 2020 has been filed belatedly on 20.10.2020 & self-assessed tax
of Rs. 40,000 has been paid on 20.10.2020 [Payment through E-cash ledger – Rs. 30,000 & ECL- Rs. 10,000]
Notes:
1. There exists adequate balance in Electronic Cash & Credit ledger as on 31.07.2020 for the above short fall.
2. No other supply has been made nor tax payable for the month of July, 2020 other than ` 40,000/- missed out
to be paid on forward charge basis.
3. Ignore the effect of leap year, if applicable in this case.

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Answer:
▪ Interest is payable u/s 50 in case of delayed payment of tax @ 18% p.a from the date following the due date of
payment to the actual date of payment of tax.
▪ As per proviso to sub-section (1) of Section 50, interest is payable on the net tax liability paid in cash, only if
the return to be filed for a tax period under Section 39, has been filed after the due date to furnish such return.
▪ In the above scenario, M/s ABC Ltd., has defaulted in making the payment for Rs. 40,000 on self-assessment
basis in the return for the month of July, 2020. Accordingly, interest is payable on the gross liability and proviso
of sub- section 50(1) shall not be applicable.
▪ Thus, the amount of interest payable by M/s ABC Ltd., is as under:
- Period of delay = 21st August, 2020 to 20th October, 2020 = 60 days
▪ Hence, amount of interest = Rs. 40,000 x 18% x 60/365 = Rs. 1184.
Alternatively, if M/s ABC Ltd., have filed the return for the month of July,2020 on 20.10.2020, beyond the
stipulated due date of 20.08.2020 and if the self- assessed tax for July, 2020 has been paid on 20.10.2020, Interest
under proviso to Section 50(1) shall be payable on the tax paid through Electronic Cash Ledger only.
- Hence Interest is payable from 21st August 2020 till 20th October 2020 = 60days.
- Amount of interest = Rs. 30,000 x 18% x 60/365 = Rs. 888.

CQ6. M/s AB Ltd reduced Rs. 1,50,000 from output tax liability in contravention of provisions of sec 42(10) for
April 2018, which is ineligible credit. A show cause notice was issued by Tax Department to pay tax along with
interest. M/s AB Ltd. paid the tax and interest on 31st July, 2018. Calculate Interest liability (Ignore Penalty).
Answer: A taxable person who makes an undue or excess claim of input tax credit shall pay interest @ 24% p.a.
on such undue or excess claim in terms of section 50.
▪ Period of interest will be from the date following the due date of payment to the actual date of payment of tax.
▪ Due date of payment is 20th May, 2018. Period for which interest is due = 21st May to 31st July, 2018 = 72 days.
▪ Thus, interest liability = Rs. 1,50,000 x 24% x 72/365 = Rs. 7,101 (approx.)

▪ If 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 & CG 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 IGST Act, there shall be reduction in the amount of IGST, equal to the credit so utilized & CG shall
transfer such amount equivalent to the amount so reduced in IGST account to CGST/UTGST account.
▪ However, if amount of IGST is utilised towards dues of SGST then, in terms of section 18 of IGST Act,
there shall be reduction in the amount of IGST, equal to the credit so utilized, & will be apportioned to
appropriate SG & CG shall transfer the amount so apportioned to the account of respective SG.

▪ In case the Commissioner or an officer authorised by him in this behalf, not below the rank of an
Assistant Commissioner, has reasons to believe that ITC available in ECL has been fraudulently availed
or is ineligible, he may prohibit use of ITC for discharge of any liability u/s 49 or for claim of any refund
of any unutilised amount.
▪ Such provisions have been discussed in detail in Chapter 6: ITC under Heading: How ITC is Utilized.

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▪ Mode for transfer of information to tax administration;

▪ Compliance verification program of tax administration;
▪ Finalization of the tax liabilities of the taxpayer within stipulated period of limitation;
▪ Providing necessary inputs for taking policy decision;
▪ Management of audit and anti- evasion programs of tax administration.

1. GSTN portal (www.gst.gov.in )

2. Offline utilities provided by GSTN All Returns under GST laws are to be filed Electronically.
3. GST Suvidha Providers (GSPs)

GSTR Particulars Frequency Due Date

1 Details of Outward Supplies of taxable G/S (Sec 37) Monthly 10th of the next month
2 Details of inward supplies of taxable G/S effected Monthly 15th of the next month
claiming ITC (Section 38).
3 Monthly return on the basis of finalization of details Monthly 20th of the next month
of outward supplies & inward supplies along with
payment of amount of tax (Section 39(1)].
3B Simple return Monthly 20th of the next month
4 Return for compounding taxable person Quarterly 18th of the month succeeding
[Section 39(2) of the CGST Act, 2017] quarter

5 Return for Non-Resident foreign taxable person Monthly 20th of next month OR within
[Section 39(5) of the CGST Act, 2017] 7 days after last day of the
period of registration specified
u/s 27(1), whichever is earlier
6 Return for ISD [Section 39(4)] Monthly 13th of the next month
7 Return for authorities deducting tax at source Monthly 10th of the next month
(Section 39(3) of the CGST Act, 2017)
8 Details of supplies effected through ECO & amount Monthly 10th of the next month
of tax collected
9 Annual Return (section 44) Annually 31st December of next FY
Who Files: Registered Person [other than ISD,
TDS/TCS Taxpayer, CTP & NRTP].
10 Final Return (Section 45) Once Within 3 Months of the date of
[When registration is cancelled or surrendered] cancellation or Date of
cancellation order, whichever
is later.
11 Details of Inward supplies to be furnished by a Monthly 28th of the month following the
person having UIN & claiming refund. month for which statement is
filed
Note: For CA – INTER, only GSTR-1/3B/4/5/9/10 are relevant.

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Who shall ❖ Every Registered Person + CTP shall furnish details of outward supplies Except ↓
file
▪ ISD
▪ NRTP
▪ Composition Dealer u/s 10 GSTR - 1 NOT
▪ Person deducting tax at source u/s 51 (TDS) REQUIRED
▪ Person collecting tax at source u/s 52 [ECO (not being agent)]
▪ Supplier of OIDAR Services
Frequency ❖ Monthly. Due date for filing GSTR-1 for a month is 11th of the next month.
❖ QRMP: Quarterly by Small tax payers with ATO upto Rs. 5 Cr in Preceding FY.
Due Date for filing GSTR-1 for a quarter is 13th of the month succeeding the quarter.

Due Date ❖ On or before 10th of the immediately succeeding month.

PC Note:

▪ GSTR-1 of a month can be filed any time b/w 1 st – 10th day of succeeding month.
▪ GSTR-1 cannot be filed during the period from 11th – 15th day of succeeding month
▪ A taxpayer cannot file GSTR-1 before the end of Current Tax Period.
Exception to this rule:
(1) CTP after the closure of their business
(2) Cancellation of GSTIN of normal taxpayer (after confirming receipt of application)

Ex: Details of outward supplies pertaining to the month of October will be required to be furnished on or before
10th Nov & GSTR-1 for October cannot be filed b/w 11th Nov to 15th November.
 DD for filing quarterly GSTR-1 by RPs having ATO ≤ Rs. 1.5 crores in preceding or current FY = 13th of
the month succeeding the end of quarter. [Applicable for quarters ending Dec. 2020 & March 2021]
 Due date for filing monthly GSTR-1 by RPs having ATO > Rs. 1.5 crores in preceding or current FY =
11th day of the month succeeding such month [From October, 2020 to March, 2021]
 Time limit for furnishing the details of outward supplies in Form GSTR-1 are: [w.e.f. 01.01.2021]

Class of Registered Person Time limit for furnishing GSTR-1 for each quarter/tax period
RPs opting for QRMP scheme 13th day of the month succeeding such tax period
Others 11th day of the month succeeding such tax period

Basic ▪ GSTIN; Legal name & Trade name; Aggregate T/O in previous year; Tax period
Details ▪ Details of documents issued; HSN-wise summary of outward supplies;
▪ Advances received/advances adjusted
Content ▪ Outward supplies including zero rated supplies & deemed export, export made
▪ Inter-State supplies; Return of inward supplies &
▪ Relevant debit/credit notes or supplementary invoices for the month.

Uploading of Nature B2C B2B

invoices Intra state Consolidated details for each rate of tax
Inter state Invoice value > Rs. 2.5 Lacs → Invoice wise details Invoice wise
Invoice value ≤ Rs. 2.5 Lacs → Consolidated details for details
each rate of tax for each state (State-wise summary)

▪ For B2B supplies, all invoices will have to be uploaded because recipient will take ITC.
▪ For B2C supplies, uploading in general may not be required as buyer will not be taking ITC.

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Ex: Mr. XY makes intra-State taxable supplies for Rs. 10,000 & Rs. 50,000 to Mr. AB, a registered person & Rs.
1,00,000 to Mr. DE, an unregistered person. He also makes inter-State taxable supplies for Rs. 2,60,000 & Rs.
45,000 to Mr. RS, a registered person & Rs. 1,50,000 to Mr. OP, an unregistered person. Mr. XY will report
invoice- wise details of intra-State supplies made to Mr. AB & inter-State supplies made to Mr. RS, in GSTR-1.

Some other Points:

▪ Invoices can be uploaded any time during tax period & not just at the time of filing of GSTR-1.
▪ Invoices can be modified/deleted any number of times till submission of GSTR-1 of a tax period.
▪ Uploaded invoice details are in a draft version till GSTR-1 is submitted & can be changed.
▪ Scanned copies of invoices are not required to be uploaded. Only certain prescribed fields of information
from invoices need to be uploaded [Ex: Invoice no., date, taxable value, rate & amount of tax etc].
▪ Description of each item in the invoice will not be uploaded. Only HSN code in respect of supply of goods
& accounting code in respect of supply of services will have to be fed.

Communi- Details of outward supplies for a month furnished by the supplier are communicated &
cation to made available electronically (auto populated) to respective recipients in Part A of Form
Recipient GSTR-2A/Form GSTR-4A (in case of composition dealer/NN 2/2019) through the
common portal after 10th day of succeeding month (due date of filing of GSTR-1).

Amendment Particulars furnished in GSTR-1 of the prior period can be amended by way of
table Amendment tables given in GSTR-1 of subsequent periods.

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Errors If supplier discovers any error or omission, he shall rectify the same in the tax period
during which such error or omission is noticed; & pay tax & interest (in case of short
payment) in the return to be furnished for such tax period.

Time Limit (a) Date of filing of monthly return u/s 39 for September following the end of FY to which
for such details pertain OR
Rectification
(b) Date of filing of relevant Annual Return [whichever is Earlier]

Ex: An entity has furnished annual return for FY 2018-19 on 15th Aug of succeeding FY 2019-20. An error is
discovered in respect of a transaction pertaining to Nov of FY 2018-19. Entity has filed the returns for Sep of FY
2019-20 on 20th Oct of FY 2019-20. In this case, the rectification of the error pertaining to the transaction in Nov of
FY 2018-19 cannot be rectified beyond 15th Aug of FY 2019-20.

PC Note:

❖ GSTR 1 needs to be filed even if there is no business activity (Nil Return) in the tax period.
❖ Taxpayer opting for voluntary cancellation of GSTIN will have to file GSTR-1 for active period.
❖ In cases where a taxpayer has been converted from a normal taxpayer to composition taxpayer, GSTR
1 will be available for filing only for the period during which taxpayer was registered as normal taxpayer.
GSTR 1 (for said period) even if filed with delay would accept invoices for the period prior to conversion.
❖ Nil GSTR-1 can be filed through SMS using registered Mobile No. of taxpayer. GSTR-1 submitted through
SMS is verified by Registered Mobile No. based OTP facility. Nil GSTR-1 does not have any entry.

By whom Taxable Person including those under RCM & IGST with relevant debit/credit notes
Frequency Monthly
Due Date On or before 15th of the immediately succeeding month.
Matching Details of GSTR-2 will mostly be auto-populated from GSTR-1 of the counter-party making
mechanism supplies.
Auto-populated details can be modified, validated, deleted & additional invoices or
debit/credit can also be added in case such details are missed out by the supplier.

By whom ❖ Every Registered Person + CTP shall file monthly return Except ↓

▪ ISD
▪ NRTP
▪ Composition Dealer u/s 10 GSTR 3 NOT
REQUIRED
▪ Person deducting tax at source u/s 51 (TDS)
▪ Person collecting tax at source u/s 52 [ECO (not being agent)]
▪ Supplier of OIDAR Services

Frequency Monthly

Due Date On/before 20th of the month succeeding the relevant calendar month/part thereof.

Deferred Filing of GSTR-3 has been deferred by GST Council.

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By Whom Every Registered Person who are required to file GSTR-3.

Frequency Monthly

Due Date On/before 20th of the immediately succeeding month.

Content Summarized details of

▪ Outward supplies & inward supplies liable to RCM
▪ Inter-State supplies made to unregistered persons, composition dealers & UIN holders
▪ Values of exempt, nil-rated & non-GST inward supplies
▪ Eligible ITC
▪ Payment of tax; TDS/TCS credit
PC Note: GSTR-3B does not require invoice-wise data of outward supplies.

✓ GSTR-3B cannot be revised.

✓ Tax liability of GSTR-3B must be paid by last date of filing GSTR-3B for that month.
✓ Nil GSTR-3B can be filed through an SMS using registered mobile No. of the taxpayer.
PC Note GSTR-3B submitted through SMS is verified by registered mobile number-based OTP
facility. Nil GSTR-3B does not have any entry in any of its tables [AMENDMENT]
✓ Taxpayer may file Nil Form GSTR-3B, anytime on or after the 1st of the subsequent
month for which the return is being filed for.

QUARTERLY RETURN MONTHLY PAYMENT (QRMP) SCHEME [W.E.F. 01.01.2021]

❖ QRMP Scheme is an optional return filing scheme, introduced for small taxpayers having aggregate
annual turnover (PAN based) of upto Rs. 5 crores in current & preceding FY to furnish their Form
GSTR-1 & Form GSTR-3B on quarterly basis while paying their tax on a monthly basis through a simple
challan.
❖ This will significantly reduce compliance burden on such taxpayers as now taxpayers need to file only
four GSTR-3B returns instead of 12 GSTR-3B returns in a year.
❖ Similarly, they would be required to file only 4 GSTR-1 returns since Invoice Filing Facility (IFF) is
provided under this scheme. [To be studied later in detail]
❖ Opting of QRMP scheme is GSTIN wise.
Distinct persons can avail QRMP scheme option for one or more GSTINs.
It implies that some GSTINs for a PAN can opt for QRMP scheme & remaining GSTINs may not opt for
the said scheme.

Eligibility ▪ RPs (other than OIDAR) whose ATO is upto Rs. 5 crores in preceding FY.
▪ If opted, such RP shall furnish a return for every quarter from Jan 2021 onwards &
pay tax due every month.
PC Note: For computing ATO, details furnished in returns for tax periods in the
preceding FY shall be taken into account. [GST Portal will show if eligible]

Lapse of ▪ RP whose ATO crosses Rs. 5 Cr during a quarter in a FY becomes ineligible to furnish
option quarterly return from the next quarter (not the next month).
▪ He shall opt for furnishing of return on a monthly basis, electronically, on common portal,
from the first month of the next quarter.

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Time to ▪ RP intending to opt for QRMP scheme for any quarter shall indicate his preference for
exercise furnishing quarterly return from 1st day of 2nd month of preceding quarter till last day of
QRMP 1st month of quarter for which option is being exercised.
scheme
Ex: A RP intending to avail of QRMP scheme for the quarter ‘July to September’ can
exercise his option from1st May to 31st July.
Space for Class Example:

▪ However, where such option has been exercised once, said RP shall continue to furnish
the return on a quarterly basis for future tax periods, unless he –
(a) becomes ineligible for this scheme as per conditions & restrictions notified;
(b) opts for furnishing of return on a monthly basis, electronically, on GST portal.

Conditions 1. RPs under QRMP scheme must have furnished the return for preceding month, as due on
the date of exercising such option.
Ex: If RP intending to avail of QRMP scheme for the quarter ‘July to September’ is
exercising his option on 27th July for the said quarter, he must have furnished the return
for the month of June which was due on 22nd/24th July.
2. RPs under QRMP scheme are not required to exercise the option every quarter. Where
such option has been exercised once, they shall continue to furnish return as per
selected option for future tax periods, unless they revise the said option.

FORM & MANNER OF FURNISHING DETAILS OF OUTWARD SUPPLIES (GSTR 1) [RULE 59

SUBSTITUTED WITH A NEW RULE]
INVOICE FURNISHING FACILITY (IFF)
▪ IFF is not mandatory, but an optional facility made available to RPs under QRMP scheme.
▪ Taxpayers opting for QRMP scheme may furnish details of such outward supplies to a RP, as he may
consider necessary for 1st & 2nd months of a quarter using IFF.
▪ Details of invoices furnished using IFF in first 2 months of the quarter are not required to be furnished
again in GSTR-1 for the said quarter.
Ex: RP who has availed QRMP scheme wants to declare 2 invoices out of total 10 invoices issued in 1st
month of quarter since recipient of supplies covered by those 2 invoices desires to avail ITC in that
month itself. Details of these 2 invoices may be furnished using IFF. Details of remaining 8 invoices
shall be furnished in GSTR-1 of said quarter. 2 invoices furnished in IFF shall be reflected in GSTR-2B
of concerned recipient of 1st month of the quarter & remaining 8 invoices furnished in GSTR-1 shall be
reflected in GSTR-2B of the concerned recipient of the last month of the quarter.
▪ Invoices pertaining to last month of a quarter are to be uploaded in GSTR-1 only.
▪ RP may choose to furnish details of outward supplies made during a quarter in GSTR-1 only w/o IFF.

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▪ No IFF: However, if a RP does not opt to upload invoices using IFF, then he has to upload invoice
details for all 3 months of the quarter in Form GSTR-1.
▪ Facility of furnishing details of invoices in IFF has been provided to allow details of such supplies to
be duly reflected in GSTR-2A & GSTR-2B of the concerned recipient.
▪ In case where a buyer has made purchases from a person opting for QRMP scheme, he could not have
claimed full ITC. But due to introduction of IFF, such delay will not occur as details submitted using
IFF will be reflected in GSTR-2A, GSTR-2B, GSTR-4A or GSTR-6A of recipients.
▪ Taxpayer has to submit B2B invoice details of both inter-State & intra-State supply transactions along
with DN & CN of B2B invoices issued during the month.
▪ Details of outward supplies furnished using IFF shall include -
(a) Invoice wise details of inter-State & intra-State supplies made to the RPs;
(b) DN & CN issued during the month for such invoices issued previously.
▪ Taxpayers using IFF can upload invoice details upto a cumulative value of Rs. 50 lacs in each of the
first 2 months of the quarter.
▪ Invoices are to be furnished in IFF b/w 1st day of succeeding month till 13th day of succeeding month.
After 13th, this facility for furnishing IFF for previous month would not be available.
Ex: For the month of July, this facility would be available from 1st August till 13th August. Similarly, for
the month of August, such facility will be available from 1 st Sep till 13th Sept.

Cases where RP shall not be allowed to furnish details of outward supplies in GSTR-1/IFF

➢ RP shall not be allowed to furnish the details of outward supplies in GSTR-1, if he has not furnished
the return in Form GSTR-3B for preceding 2 months.
➢ RP opting for QRMP scheme shall not be allowed to furnish details of outward supplies under in Form
GSTR-1 or using IFF, if he has not furnished the return in Form GSTR-3B for preceding tax period.
➢ RP who is restricted from using the amount available in ECL to discharge his liability towards tax in
excess of 99% of such tax liability u/r 86B shall not be allowed to furnish details of outward supplies
in GSTR-1 or using IFF, if he has not furnished the return in Form GSTR-3B for preceding tax period.

FORM & MANNER OF ASCERTAINING DETAILS OF INWARD SUPPLIES – GSTR-2A & GSTR-
2B [RULE 60 SUBSTITUTED WITH A NEW RULE]

GSTR-2A ▪ Form GSTR-2A is a system generated statement of inward supplies for a recipient. This
statement is updated on a real time basis.

▪ Details become available to the recipient to view/download & are updated incrementally
as & when supplier(s) upload or change details in their respective form of
return/statement, for the given tax period.

▪ Details of outward supplies furnished by supplier in Form GSTR-1 or using IFF is made
available electronically to concerned RPs (recipients) in GSTR-2A, GSTR-4A & GSTR-6A.

▪ Details of invoices furnished by NRTP in GSTR-5 & by ISD in GSTR-6, details of TDS by
deductor furnished in GSTR-7 & details of TCS by ECO in GSTR-8 are made available to
the recipient, deductee or concerned person, in Form GSTR-2A.

▪ New: Further, details of IGST paid on import of goods or goods brought in DTA from SEZ
unit/developer on Bill of Entry are also made available in GSTR-2A.

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GSTR-2B ▪ Form GSTR-2B, an auto-drafted statement containing details of ITC is made available to
RP (recipient) for every month. It is a static statement & is available only once a month.
▪ It consists of -
(i) Details of outward supplies furnished by the suppliers in Form GSTR-1, other than a
supplier who has opted for QRMP scheme, b/w the day immediately after the due
date of furnishing of Form GSTR-1 for the previous month to due date of furnishing of
GSTR-1 for the month.
(ii) Details of outward supplies furnished by his supplier who has opted for QRMP scheme,
in GSTR-1 or using IFF, as the case may be
(a) for 1st month of quarter b/w the day immediately after DD of filing of GSTR-1 for
preceding quarter to DD of filing details using IFF for 1st month of the quarter;
(b) for 2nd month of quarter, b/w the day immediately after DD of filing details using
IFF for 1st month of the quarter to due date of filing details using IFF for 2nd month
of the quarter;
(c) for 3rd month of quarter, b/w the day immediately after DD of filing of details
using IFF for 2nd month of the quarter to DD of filing of GSTR-1 for the quarter.
▪ Details of IGST paid on import of goods or goods brought in DTA from SEZ unit/developer
on a bill of entry in the month.
▪ Form GSTR-2B consists of all documents filed by suppliers/ISD in their Form GSTR-1, 5 & 6,
between the cut-off dates. It also consists of import data for the period which are
received within 13th of the succeeding month.
▪ In case of monthly Form GSTR-1, the cut-off date is 00:00 hours on 12th of the relevant
month to 23:59 hours, on 11th of the succeeding month. Whereas for quarterly Form GSTR-
1/IFF, Form GSTR-5 & Form GSTR-6, the cut-off date is 00:00 hours on 14th day of relevant
month to 23:59 hours, on 13th day of succeeding month.
▪ The details filed in Form GSTR-1 & 5 (by supplier) & Form GSTR-6 (by ISD) would reflect in
the next open Form GSTR-2B of the recipient irrespective of supplier’s/ISD’s date of filing.

Ex: If a supplier opting for QRMP files an invoice dated 15th July on 13th August, it will get reflected in GSTR-
2B of July (generated on 14th August). If the document is filed on 14th August, the document will be reflected
in Form GSTR-2B of August (generated on 14th September).

Statement in Form GSTR-2B for every month shall be made available to the RP
(i) for 1st & 2nd month of a quarter, a day after DD of furnishing details of outward supplies for said month,
- in IFF by a RP opting for QRMP, or
- in GSTR-1 by a RP other than opting for QRMP, whichever is later.
(ii) in 3rd month of the quarter, a day after DD of furnishing of details of outward supplies for the said
month, in Form GSTR-1 by a RP opting for QRMP.
Ex: For the quarter July-September, Form GSTR-2B for a RP (recipient) who has received supplies from
QRMP suppliers as well as from other suppliers will be generated as follows:

Month July August September

Date of generation of GSTR-2B 14th August 14th September 14th October

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FORM & MANNER OF FILING RETURN GSTR-3B [RULE 61 SUBSTITUTED WITH A NEW RULE]

▪ Due Date for Filing Return

 Taxpayer opting for QRMP: Quarterly GSTR- 3B on or before 22nd or 24th of the month succeeding
the quarter for which return is furnished (Refer the Table given below for details**).
 Other taxpayers: Monthly GSTR-3B on/before 20th of the month succeeding the month for which
return is furnished.

▪ Due Date for Taxpayers Opting for QRMP Scheme

Class of Registered Person Due Date
RPs whose PPoB is in States of Chhattisgarh, MP, Gujarat, Maharashtra, 22nd day of the
Karnataka, Goa, Kerala, TN, Telangana, AP, UT of Daman & Diu, Dadra & Nagar month succeeding
Haveli, Puducherry, Andaman & Nicobar Island or Lakshadweep. such quarter.
RPs whose PPoB is in States of HP, Punjab, UK, Haryana, Rajasthan, UP, Bihar, 24th day of the
Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, month succeeding
Assam, West Bengal, Jharkhand, Odisha, UT-J&K, Ladakh, Chandigarh or Delhi. such quarter

▪ Every RP required to furnish return shall, discharge their liability towards tax, interest, penalty, fees
etc. payable under GST law by debiting ECL or E-cash ledger & include the details in return.

▪ Every RP under QRMP shall pay tax due under proviso to section 39(7) [discussed subsequently], for
each of first 2 months of the quarter, by depositing the said amount in Form GST PMT-06, by the 25th
day of the month succeeding such month.

▪ While making a deposit in Form GST PMT-06, such a RP may -

(a) for 1st month of quarter, take into account the balance in E- cash ledger.
(b) for 2nd month of quarter, take into account the balance in E-cash ledger excluding tax due for 1st
month.

▪ At the time of filing the return for the said quarter in Form GSTR- 3B, amount deposited by RP in the
first 2 months of the quarter shall be debited. This amount is debited solely for the purposes of
offsetting the liability furnished in that quarter’s Form GSTR-3B. However, any amount left after filing
of that quarter’s Form GSTR-3B may either be claimed as refund or may be used for any other purpose
in subsequent quarters.

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MONTHLY PAYMENT OF TAX

RP under the QRMP Scheme would be required to pay the tax due in 1st month or 2nd month or both the
months of the quarter by depositing the tax due in Form GST PMT-06.
Payment is to be made by 25th day of the month succeeding such month. While generating challan,
taxpayers should select “Monthly payment for quarterly taxpayer” as reason. RP can use any of the
following 2 options for monthly payment of tax during the first 2 months.

1 Fixed sum ▪ Facility is available on GST portal for generating auto-generated/pre-filled challan
method in GST PMT-06. Challan amount is calculated by the system which cannot be edited.
▪ Amount is equal to:
(i) 35% of tax paid in cash in return for preceding quarter where return was
furnished quarterly; or
(ii) Tax liability paid in cash in the return for the last month of the immediately
preceding quarter where the return was furnished monthly.
Ex: In case the last return filed was on quarterly basis for quarter ending March:
Tax paid in cash in last quarter (Jan Tax required to be paid in each month
-March) (April & May i.e First 2 months)
CGST 100 CGST 35
SGST 100 SGST 35
IGST 500 IGST 175
Cess 50 Cess 17.5

Ex: In case the last return filed was monthly for tax period March:
Tax paid in cash in March) Tax required to be paid in each month
(April & May i.e First 2 months)
CGST 50 CGST 50
SGST 50 SGST 50
IGST 80 IGST 80
Cess - Cess -

▪ However, no such amount may be required to be deposited –

- for 1st month of quarter if balance in E-Cash ledger or ECL is adequate for the
tax liability for the said month or where there is nil tax liability;
- for 2nd month of quarter, if balance in E-Cash ledger or ECL is adequate for
cumulative tax liability for 1st & 2nd month of quarter or where there is nil tax.
▪ Monthly tax payment would not be available to RPs who have not furnished return
for a complete tax period preceding such month. Complete tax period means a tax
period in which the person is registered from first day till last day of tax period.

2 Self- ▪ The said person can pay tax due by considering tax liability on inward & outward
Assessment supplies & ITC available, in Form GST PMT-06.
Method ▪ In order to facilitate ascertainment of the ITC available for the month, an auto-
drafted ITC statement has been made available in Form GSTR-2B, for every month.

Note: RP under QRMP is free to avail either of 2 payment methods above in any of 2 months of quarter.

APPLICABILITY OF INTEREST - For RP making payment of tax by opting Fixed Sum Method
▪ No interest would be payable if tax due is paid in first 2 months of quarter by way of depositing auto-
calculated fixed sum amount by due date. In other words, if while furnishing return in Form GSTR-3B,

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it is found that in any or both of first 2 months of the quarter, tax liability net of available credit on
the supplies made/received was higher than the amount paid in challan, then, no interest would be
charged provided they deposit system calculated amount for each of the first 2 months & discharge
their entire liability for the quarter in Form GSTR-3B of the quarter by the due date.
▪ If tax is not paid by DD, interest is payable at 18% from DD of filing GST PMT-06 till date of payment.
▪ Further, in case Form GSTR-3B for the quarter is furnished beyond the due date, interest would be
payable as per the provisions of section 50 of the CGST Act for the tax liability net of ITC.

Ex: RP, who has opted for QRMP Scheme, had paid a total amount of Rs. 100 in cash as tax liability in
previous quarter of Oct - Dec. He opts to pay tax under fixed sum method. He therefore Pays Rs. 35 each
on 25th Feb & 25th March for discharging tax liability for first 2 months of quarter viz. Jan & Feb.
In his quarterly return, it is found that liability based on outward & inward supplies for Jan was Rs. 42.
However, no interest would be payable for deficit (i.e. Rs. 5 & Rs. 7 respectively) discharged in these 2
months provided that he discharges his entire liability for the quarter in GSTR-3B of the quarter by DD.
RP, who has opted for QRMP Scheme, had paid a total amount of Rs. 100 in cash as tax liability in previous
quarter. He opts to pay tax under fixed sum method. He therefore pays Rs. 35 each on 25th Feb & 25th
March for discharging tax liability for first 2 months of quarter viz. Jan & Feb.
In his quarterly return, it is found that total liability for the quarter net of available credit was Rs. 125,
but he files return on 30th April. Interest would be payable at applicable rate on Rs. 55 [125- 70] (deposit
made in cash ledger in first & second month)] for the period b/w DD of quarterly GSTR 3B & 30TH April.
APPLICABILITY OF INTEREST - For RP making payment of tax by opting Self- Assessment Method
▪ Interest amount would be payable as per the provision of section 50 for tax or any part thereof (net
of ITC) which remains unpaid/paid beyond DD for first 2 months of the quarter.
▪ Interest payable, if any, shall be paid through Form GSTR-3B.
APPLICABILITY OF LATE FEE [NN 82, 84 & 85/2020 CT all dated 10.11.2020 & CN 143/13/2020]
▪ Late fee is applicable for delay in furnishing of return/details of outward supply as per section 47.
▪ As per QRMP scheme, requirement to furnish the return under the proviso to section 39(1) is quarterly.
▪ Late fee would be applicable for delay in furnishing of said quarterly return/details of outward supply.
▪ It is clarified that no late fee is applicable for delay in payment of tax in first 2 months of the quarter.

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By Whom Every Registered Person paying tax under composition scheme u/s 10(1) or 10(2A).

Frequency Annually. By 30th day of April following the end of such FY.

Quarterly statement for payment of self-assessed tax: Persons required to file GSTR-4 are also
required to furnish a statement in FORM GST CMP-08 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.
Basic ▪ GSTIN; Legal name and Trade name
Content ▪ TDS credit received [Table 9]
▪ Tax payable & paid [Table 10]; Interest, Late fees payable & paid [Table 11]
▪ Refund claimed from Electronic cash ledger [Table 12]
▪ Debit entries in electronic cash ledger for tax/interest payment [Table 13]
Content ▪ Invoice-wise details of all inward supplies including RCM supplies [Table 4].
▪ Consolidated details of outward supplies (intra-state) [Table 6]
▪ Tax on outward supplies (net of advances & goods returned)
▪ Consolidated statement of advances paid/adjusted on receipt of supply [Table 8]
▪ Amendements of inward & outward supplies for earlier tax period [Tables 5 & 7]

Note: Amendments in outward supplies not be reported invoice-wise. But it would be necessary to mention
the relevant past quarter in which the error had occurred & sought to be rectified.

▪ Inward supplies of a composition supplier received from registered persons filing GSTR-
GSTR 4A 1 will be auto populated in FORM GSTR-4A.
▪ Composition supplier can view auto-populated details of inward supplies in GSTR-4A.
Statements If a registered person opts for composition scheme from the beginning of FY, he will have
for prior to furnish statements/return relating to period prior till: [Earlier of]
period (a) Due date of furnishing return for September of succeeding FY OR
(b) Furnishing of annual return of preceding FY.
Note: Composition dealer will not be eligible to avail of ITC on receipt of invoices or debit notes from the
supplier for the period prior to his opting for the composition scheme.
Statements Composition dealer (withdrawing from composition scheme) will have to furnish GSTR-4 &
in case of GST CMP-08 relating to the period prior to his exiting from composition levy till:
EXIT
GSTR-4: 30th April following the end of FY during which such withdrawal/cessation falls.
GST CMP-08: 18th of the month succeeding the quarter in which date of withdrawal falls.
PC Note ❖ Since a composition dealer u/s 10(1) or 10(2A) is not eligible to take ITC, he will
discharge his tax liability only by debiting electronic cash ledger.
❖ Filing of GST CMP-08 is mandatory for all taxpayers who have opted to pay tax under
composition scheme, even if there is no business activity in any particular tax period.
For such tax period(s), a Nil GST CMP-08 is required to be filed.
❖ A Nil GST CMP-08 does not have any entry in any of its tables.
❖ A Nil GST CMP-08 can be filed through an SMS using the registered mobile number of
the taxpayer. A Nil GST CMP-08 submitted through SMS is verified by registered mobile
number-based OTP facility.

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Frequency Monthly

Due Date of ▪ Within 20 days after the end of calendar month OR

filing Return
▪ Within 7 days after last day of validity period of registration [whichever is earlier]

Content Details of outward supplies and inward supplies

Payment Tax, interest, penalty, fees etc. shall be paid till the last date of filing GSTR 5.
However, NRTP or CTP are required to make advance deposit of tax of an estimated tax
liability for a period for which registration is sought/extended period.

PC Note NRTP is not required to file annual return.

Due date for ▪ Due dates for payment of tax i.r.o persons required to file GSTR- 3B & GSTR-5 are linked
payment of with the due dates for filing of such returns i.e., the last dates (due dates) of filing such
tax returns are also due dates for payment of tax i.r.o persons required to file such returns.
▪ In case of persons paying tax u/s 10(1) & 10(2A), due date for payment of tax & filing of
GSTR-4 is delinked. While GSTR-4 for a FY is required to be filed by 30th April of following
year, tax for a quarter is to be paid by 18th of the month succeeding such quarter.

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❖ Purpose of Section 40: To enable RP to declare the taxable supplies made by him for the period b /w
the date on which he became liable to registration till date on which registration has been granted so
that ITC can be availed by the recipient on such supplies.
❖ Firstly, RP may issue Revised Tax Invoices against the invoices already issued during said period
within 1 month from date of issuance of certificate of registration [Sec 31(3)(a) r/w rule 53]
❖ Further, section 40 provides that registered person shall declare his outward supplies made during
said period in the first return furnished by him after grant of registration.
❖ The format for this return is the same as that for regular return.
Note: When a person becomes liable to registration after his turnover crosses Rs. 20/10 lacs, he may
apply for registration within 30 days of becoming liable.

By Whom Every Registered Person shall furnish Annual Return Except

▪ CTP & NRTP
▪ Input Service Distributor
ANNUAL RETURN NOT REQUIRED
▪ Person paying tax u/s 51 (TDS)
▪ Person paying tax u/s 52 (TCS)
▪ Person supplying OIDAR services from outside India to URP in India.

Due Date 31st December of the next FY.

Reconciliation Every registered person who is required to get his accounts audited by CA/CMA (if his
Statement aggregate T/O during FY > Rs. 2 crores) is required to furnish electronically
(i) Audited annual accounts & (ii) A Reconciliation Statement.

By Whom Every registered person who is required to furnish return u/s 39(1) & whose registration
has been surrendered or cancelled shall file a Final Return.

Due Date Final Return has to be filed within 3 months of: [Later of (a) or (b)]
(a) Date of cancellation OR (b) Date of order of cancellation

UIN issued for Details to be furnished by person having UIN

Claiming refund of taxes paid Details of Inward taxable supplies of G/S on which refund has been
on inward supplies claimed along with application for such refund claim.

Other purposes (not for Such person shall furnish the details of inward supplies of taxable G/S as
refund of taxes paid) may be required by PO.

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Particulars Requirements & Consequences

Notice to ▪ Notice shall be given to RP who fails to furnish Normal Return u/s 39; Annual Return
Defaulters (Sec u/s 44; Final Return u/s 45; TCS statement u/s 52;
46) ▪ Such RP shall furnish such return within 15 days.

Late fees for Any RP who fails to furnish following by the due date shall pay Late fees:
delay in filing (a) Outward Supplies Statement u/s 37; (b) Returns u/s 39; (c) Final Return u/s 45
(a), (b), (c)
Late Fee = Lower of (a) Rs. 100 per day or (b) Rs. 5,000.

Delay in filing (a) Rs. 100 per day or

Annual Return (b) 0.25% of turnover (in state/UT) [whichever is Lower]

▪ In GST, there is NO Concept of Revised Return. Any need to revise a return may arise due to change in
a set of invoices or debit/credit notes. In GST, system allows a person to change the details of those
transactions (invoices or debit/credit notes) that are required to be amended.
▪ They can be amended in any of the future GSTR-1 in the tables specifically provided for the purposes of
amending previously declared details.
▪ Omission/incorrect particulars discovered in the returns filed u/s 39 can be rectified in return to be
filed for the month/quarter during which such omission/incorrect particulars are noticed.
▪ Any tax payable as a result of such error/omission will be required to be paid along with interest.

PC Note: Section 39(9) does not permit rectification of error or omission discovered on account of scrutiny,
audit, inspection or enforcement activities by tax authorities. Hence, assesse may not be able to pass on
ITC to the receiver for tax payments made by him in pursuance of any of the aforementioned situations.

TIME LIMIT FOR RECTIFICATION [Earlier of (1) or (2)]

1. Due date of filing of return for the month of September/quarter ending September following the end of
FY [i.e. 20th October of next FY] or
2. Actual date of filing of the relevant annual return.

CQ1. Ms. Pragya, a taxpayer registered under regular scheme (Section 9), files GSTR-3B for the month of
October on 20th November. After filing the return, she discovers that the value of a taxable supply has been
under-reported therein. Ms. Pragya now wants to file a revised GSTR-3B. Examine the scenario.
Answer:
Under GST law, a return once filed cannot be revised. However, the details of those transactions that are
required to be amended can be changed in any of the future GSTR- 1s. For this purpose, specific tables are
provided in GSTR-1 to amend previously declared details.
Thus, Ms. Pragya cannot revise GSTR-3B filed by her for the month of October. However, she can amend the
details of the taxable supply, which was under- reported, in GSTR-1 for the month of November. The tax
payable on account of such error will be paid along with interest in GSTR-3B for the month of November.

PC Note:
1. Return furnished u/s 39(1) on which full self- assessed tax has been paid → Considered as valid return.
2. Filing of returns for current month is possible only after filing returns of previous month(s).
3. Taxpayer needs to electronically sign submitted returns [otherwise it will be considered not-filed].
4. Taxpayers can electronically sign their returns using
▪ DSC (mandatory for all companies & LLPs),
▪ E-sign (Aadhaar-based OTP verification),
▪ EVC (Electronic Verification Code sent to registered mobile no. of authorized signatory).

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❖ RP may authorise an approved GSTP to furnish information on his behalf to Government.

❖ GSTN will provide separate user ID & Password to GSTP to enable him to work on behalf of his clients
without asking for their user ID & passwords. They can do all the work on behalf of taxpayers as
allowed under GST Law.
❖ A taxpayer may choose a different GSTP by simply unselecting the previous one and then choosing a
new GSTP on GST portal.
❖ A GSTP enrolled in any State/UT shall be treated as enrolled in the other States/UTs.

ELIGIBILITY CRITERIA FOR GSTP

❖ A person who is:

▪ Indian Citizen; Person of Sound Mind; Not Adjudicated as insolvent & not been convicted &
❖ Person satisfying ANY of the following conditions:
▪ Retired officer of Commercial Tax Department of any SG/CBEC who had worked in a post not lower
than rank of a Group-B gazetted officer for ≥ 2 years.
▪ Enrolled as a Sales Tax Practitioner or Tax Return Preparer under the earlier indirect tax law for a
period of not less than 5 years.
▪ Has aquired any of the prescribed qualifications
- Graduate/PG or equivalent examination having a degree in Commerce, Law, Banking including
Higher Auditing, Business Administration, Business Management from any Indian University
established by any law for the time being in force
- Degree examination of any Foreign University recognised by any Indian University as equivalent
to the degree examination mentioned above.
- Any degree examination of Indian University or Foreign University recognized by any Indian
University as equivalent of the degree examination.
- Has passed final examination of ICAI/ ICSI/ Institute of Cost Accountants of India.
- Any other examination notified by Government on recommendation of GST Council.

ACTIVITIES UNDERTAKEN BY GSTP ON BEHALF OF REGISTERED PERSON

▪ Furnish details of outward & inward supply

▪ Furnish monthly, quarterly, annual or final return
▪ Make deposit in electronic cash ledger
▪ File a refund claim
▪ Application for registration amendment/cancellation (only after prior approval of RP)
▪ Appear as authorised representative before any officer of Department, Appellate Authority or Appellate
Tribunal, on behalf of such RP (if he is enrolled as GSTP u/r 83).
▪ furnish information for generation of e-way bill;
▪ furnish details of challan in the prescribed form;
▪ file an application for amendment or cancellation of enrolment under rule 58 &
▪ file an intimation to pay tax under composition scheme or withdraw from the said scheme.

FURNISHING RETURNS THROUGH GSTP

When a registered person opts to furnish his return through GSTP, such registered person:
▪ Gives his consent in prescribed form to any GSTP to prepare & furnish his return.
▪ Before confirming submission of any statement prepared by GSTP, RP shall ensure that the facts
mentioned in the return are true & correct. [Deemed confirmation if RP did not respond].
▪ GSTP can undertake only such tasks as indicated in the prescribed form.

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▪ The registered person may, at any time, withdraw such authorization.

Note: Any statement furnished by GSTP shall be made available to RP on GST Common Portal. For every
statement furnished by GSTP, confirmation shall be sought from RP over email or SMS.
Responsibility for correctness of any particulars furnished in the return or other details filed by the GSTP
continues to rest with registered person on whose behalf such return and details are furnished.

PROCEDURE FOR ENROLMENT AS GSTP

▪ An application may be made electronically through common portal for enrolment as GSTP.
▪ Application shall be scrutinised & GST practitioner certificate shall be granted.
▪ If application is rejected, proper reasons shall have to be given.
▪ Enrolment once done remains valid till it is cancelled.
▪ Any person who has been enrolled as GSTP by virtue of him being enrolled as Sales Tax Practitioner or
TRP under earlier Indirect Tax law shall remain enrolled only for 30 months from appointed date
unless he passes the said examination within 30 months. [AMD]
▪ No person enrolled as a GSTP shall be eligible to remain enrolled unless he passes such examination
conducted at such periods by NACIN.

CQ3. Mr. Akash obtains registration under regular scheme (Section 9). He asks Mr. Mohan, his tax manager, to
pay GST on quarterly basis. However, Mr. Mohan advises Mr. Akash to pay GST on monthly basis. You are
required to examine the validity of the advice given by Mr. Mohan.
Answer: Advice given by Mr. Mohan is valid. A person registered under regular scheme (Section 9) is required
to file a monthly return in form GSTR-3B. Due date for payment of tax in respect of the persons required to file
GSTR-3B is linked with the due date for filing of such return. Therefore, a person registered under regular
scheme is required to pay GST on monthly basis by the 20th of the succeeding month, which is the due date for
filing of GSTR-3B. Quarterly payment of taxes can be made by persons registered under composition scheme.

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