1

SECTION A : GOODS AND SERVICES

TAX (GST)
CHAPTER

GST in India : An Introduction

1.1 Introduction
In earlier indirect tax regime, the credit mechanism for indirect taxes levied by the Union Government was governed by
the CENVAT Credit Rules, 2004; and the credit mechanism for state-level VAT on sale of goods was governed by the
States under their respective VAT Acts and Rules. The VAT legislations allowed ITC of VAT on inputs and capital
goods in transactions within the state, but not on inputs and capital goods coming in the State from outside the state, on
which central sales tax was paid. CENVAT Credit Rules, 2004 allowed availing and utilization of credit of duty/tax paid
on both goods (capital goods and inputs) and services by the manufacturers and the service providers across the
country.
The credit across goods and services was integrated vide the CENVAT Credit Rules, 2004 in the year 2004 to mitigate
the cascading effects of central levies namely, central excise and service tax. However, the credit chain remained
fragmented on account of State-Level VAT as the credit of central taxes could not be set off against a State levy and vice
versa. The chain further got distorted as ITC was not available on inter-State purchases. This resulted in cascading of
taxes leading to increase in costs of goods and services.
The GST regime promises seamless credit on goods and services across the entire supply chain with some exceptions
like supplies charged to tax under composition scheme and supply of exempted goods and/or services. ITC is
considered to be the backbone 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.

1.2 Genesis of GST in India

 It is now been more than a decade since the idea of national Goods and Services Tax (GST) was mooted by Kelkar
Task Force in 2004. The Task Force strongly recommended fully integrated ‘GST’ on national basis.

 Subsequently, the then Union Finance Minister, Shri. P. Chidambaram, while presenting the Central Budget (2007-
2008), announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and
continued to be shrouded by the clouds of uncertainty.

 The talks of ushering in GST, however, gained momentum in the year 2014 when the NDA Government tabled the
Constitution (122nd Amendment) Bill, 2014 on GST in the Parliament on 19th December, 2014. The Lok Sabha
passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016. Subsequent to ratification of the Bill by
more than 50% of the States, Constitution (122nd Amendment) Bill, 2014 received the assent of the President on 8th
September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of
GST in India.
 In the following year, on 27th March, 2017, the Central GST legislations - Central Goods and Services Tax Bill, 2017,
Integrated Goods and Services Tax Bill, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services
Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills on 29th March,
 2 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

2017 and with the receipt of the President’s assent on 12th April, 2017, the Bills were enacted. The enactment of the
Central Acts is being followed by the enactment of the State GST laws by various State Legislatures. Telangana,
Rajasthan, Chhattisgarh, Punjab, Goa and Bihar are among the first ones to pass their respective State GST laws.
 Government has introduced GST in India w.e.f. 1st July, 2017 by achieving consensus on all the issues relating
thereto.
 GST is a path breaking indirect tax reform which will create a common national market by dismantling interstate
trade barriers. GST has subsumed multiple indirect taxes like excise duty, service tax, VAT, CST, luxury tax,
entertainment tax, entry tax, etc.
 France was the first country to implement GST in the year 1954. Within 62 years of its advent, about 160 countries
across the world have adopted GST because this tax has the capacity to raise revenue in the most transparent and
neutral manner.

1.3 Concept of GST

 Valued Added Tax: GST is a value added tax levied on manufacture, sale and consumption of goods and services.
 Continuous Chain of Tax Credits: GST offers comprehensive and continuous chain of tax credits from the
producer’s point/service provider’s point upto the retailer’s level/consumer’s level thereby taxing only the value
added at each stage of supply chain.
 Burden Borne by Final Consumer: The supplier at each stage is permitted to avail credit of GST paid on the
purchase of goods and/or services and can set off this credit against the GST payable on the supply of goods and
services to be made by him. Thus, only the final consumer bears the GST charged by the last supplier in the supply
chain, with set-off benefits at all the previous stages.
 No Cascading of Taxes: Since, only the value added at each stage is taxed under GST, there is no tax on tax or
cascading of taxes under GST system. GST does not differentiate between goods and services and thus, the two are
taxed at a single rate.

1.4 Need for GST in India

I. DEFICIENCIES IN THE EXISTING VALUE ADDED TAXATION
(1) In the present regime, a manufacturer of excisable goods charges excise duty and value added tax (VAT) on intra-
state sale of goods. However, the VAT dealer on his subsequent intra-state sale of goods charges VAT (as per
prevalent VAT rate as applicable in the respective state) on value comprising of (basic value + excise duty charged
by manufacturer + profit by dealer).
(2) Further, in respect of tax on services, service tax is payable on taxable services provided w.e.f. 1 July, 2012, service
tax is levied on all ‘services’ other than the Negative list of services as provided under Section 66D of the Finance
Act, 1994 or else otherwise exempted vide the Mega Exemption Notification No. 25/2012 - ST dated 20 June, 2012
(“the Mega Exemption Notification”).
(3) Presently, from 1st June, 2016, service tax is levied @ 15% [Service tax @ 14%, Swachh Bharat Cess (SBC) @ 0.5%
(w.e.f. November 15, 2015) and Krishi Kalyan Cess (KKC) @ 0.5% (w.e.f. June 1, 2016)] on specified services
provided by service providers in India.
(4) The existing indirect tax framework in India suffer from various shortcomings. Under the existing indirect tax
structure, the various indirect taxes being levied are not necessarily mutually exclusive. To illustrate, when the
goods are manufactured and sold both central excise duty (CENVAT) and State-Level VAT are levied. Though
CENVAT and State-Level VAT are essentially value added taxes, set off of one against the credit of another is not
possible as CENVAT is a central levy and State-Level VAT is a State levy. Moreover, CENVAT is applicable only at
manufacturing level and not at distribution levels. The existing sales tax regime in India is a combination of origin
based (Central Sales Tax) and destination based multipoint system of taxation (State Level VAT). Service tax is also
a value added tax and credit across the service tax and the central excise duty is integrated at the central level.
 GST in India : An Introduction 3

(5) Despite the introduction of the principle of taxation of value added in India - at the Central level in the form of
CENVAT and at the State level in the form of State VAT - its application has remained piecemeal and fragmented
on account of the following reasons :
(a) No-inclusion of several local levies in State VAT such as luxury tax, entertainment tax, etc.
(b) Cascading of taxes on account of (i) levy of Non-VAT Table CST and (ii) inclusion of CENVAT in the value for
imposing VAT.
(c) No CENVAT after manufacturing stage.
(d) Non-integration of VAT and service tax.
(e) Double taxation of a transaction as both goods and services.
II. GST - A CURE FOR ILLS OF EXISTING INDIRECT TAX REGIME

(1) A comprehensive tax structure covering both goods and services viz. Goods and Service Tax (GST) would address
these problems. Simultaneous introduction of GST at both Centre and State levels would integrate taxes on goods
and services for the purpose of set-off relief and will ensure that both the cascading effects of CENVAT and service
tax are removed and a continuous chain of set-off from the original producer’s point/ service provider’s point upto
the retailer’s level/consumer’s level is established.
(2) In the GST Regime, the major indirect taxes have been subsumed in the ambit of GST. The present concepts of
manufacture or sale of goods or rendering of services are not longer applicable since the tax is now levied on
“Supply of Goods and/or services”.

1.5 Taxes Subsumed in GST

CENTRAL LEVIES SUBSUMED IN GST CENTRAL LEVIES NOT SUBSUMED IN GST
(1) Central Excise Duty and Additional Excise Duties (1) Customs Duty
(2) Excise Duty under Medicinal and Toilet Preparation (2) Central Excise Duty on 5 Petroleum Products and
Act Tobacco & Tobacco Products.
(3) Service Tax
(4) CVD and Special CVD
(5) Central Sales Tax
(6) Surcharges and Cesses in so far as they relate to supply
of goods and services.
STATE LEVIES SUBSUMED IN GST STATE LEVIES NOT SUBSUMED IN GST
(1) State surcharges and cesses in so far as they relate to (1) State Excise Duty on Alcohol Liquor for Human
supply of goods and services Consumption and Opium, Indian Hemp and other
Narcotic Drugs and Narcotics
(2) Entertainment Tax (except those levied by local bodies) (2) Sales Tax on 5 Petroleum Products and Alcohol
Liquor for Human Consumption
(3) Tax on lottery, betting and gambling (3) Profession Tax
(4) Entry Tax (All Forms) and Purchase Tax (4) Electricity Duty
(5) VAT/Sales Tax (5) Stamp Duty
(6) Luxury Tax (6) Toll Tax
(7) Taxes on advertisements. (7) Road and Passenger Tax.

1.6 Dual GST Model to be Introduced in India

 4 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

 India has adopted a dual model GST which is imposed concurrently by the Central and States, i.e. Centre and
States simultaneously tax goods and services. Centre has the power to tax intra-state sales and states are
empowered to tax services. GST extends to whole of India.
 GST is a destination based tax applicable on all transactions involving supply of goods and services for a
consideration subject to exceptions thereof. GST in India will comprise of Central Goods Service Tax (CGST) -
levied and collected by Central Government, State Goods and Service Tax (SGST) - levied at collected by State
Governments/Union Territories with State Legislatures and Union Territory Goods and Services Tax (UTGST) -
levied and collected by Union Territories without State Legislatures, on intra-state supplies of taxable goods
and/or services. Inter-State supplies of taxable goods and/or services will be subject to Integrated Goods and
Service Tax (IGST). IGST will approximately be a sum total a CGST and SGST/UTGST and will be levied by
Centre on all inter-state supplies.
 There is single legislation - CGST Act, 2017 - for levying CGST. Similarly, Union Territories without State
Legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli & Daman and Diu, Ladakh
and Chandigarh] will be governed by UTGST Act, 2017 for levying UTGST. States and Union Territories with their
own legislatures [Delhi, Puducherry and Jammu & Kashmir] have to enact their own GST legislation for levying
SGST. Though there would be multiple SGST legislations, the basic features of law, such as chargeability, definition
of taxable event and taxable person, classification and valuation of goods and services, procedure for collection and
levy of tax and the like would be uniform in all the SGST legislations, as far as feasible. This would be necessary to
preserve the essence of dual GST.
 In GST regime, tax (i.e. CGST and SGST/UTGST for intra-state supplies and IGST for inter-state supplies) shall be
paid by every taxable person and in this regard provisions have been prescribed in the law. However, for
providing relief to small businesses, a simpler method of paying taxes and accounting thereof is also prescribed,
known as Composition Scheme. Along with providing relief to small-scale business, the law also contains
provisions for granting exemption from payment of tax on specified goods and/or services.
 Input Tax Credit (ITC) of CGST and SGST/UTGST will be available throughout the supply chain, but cross
utilisation of credit of CGST and SGST/UTGST will not be possible, i.e. CGST credit cannot be utilised for payment
of SGST/UTGST and SGST/UTGST credit cannot be utilised for payment of CGST. However, cross utilisation will
be allowed between CGST/SGST/UTGST, i.e. credit of IGST can be utilised for the payment of
CGST/SGST/UTGST and vice versa.
 Since, GST is a destination based consumption tax, revenue of SGST will ordinarily accrue to the consuming
states. The inter-state supplier in the exporting state will be allowed to set off the available credit of IGST, CGST
and SGST/UTGST (in that order) against the IGST payable on inter-state supply made by him. The buyer in the
importing state will be allowed to avail the credit of IGST paid on inter-state purchase made by him. Thus, unlike
the existing scenario where the credit chain breaks in case of inter-state sales on account of non-VATable CST,
under GST regime there is a seamless credit flow in case of inter-State supplies too. The revenue of inter-state sale
will not accrue to the exporting state and the exporting state will be required to transfer to the centre the credit of
SGST/UTGST used in payment of IGST. The centre will transfer to the importing state the credit of IGST used in
payment of SGST/UTGST. Thus, the inter-state trade of goods and services (IGST) would need a robust settlement
mechanism amongst the States and the Centre. A Central Agency is needed which can act as a clearing house and
verify the claims and inform the respective Governments to transfer the funds. This is possible only with the help
of a strong IT infrastructure.
 Resultantly, Common GST Electronic Portal – www.gst.gov.in – a website managed by Goods and Services
Network (GSTN) [a company incorporated under the provisions of section 8 of the Companies Act, 2013] is set by
the Government to establish a uniform interface for the tax payer and a common and shared IT infrastructure
between the Centre and States. The functions of the GSTN, inter alia, include :
- facilitating registration;
- forwarding the returns to Central and State authorities;
- computation and settlement of IGST;
- matching of tax payment details with banking network;
- providing various MIS reports to the Central and the State Governments based on the tax-payer return
information;
 GST in India : An Introduction 5

- providing analysis of taxpayer’s profile; and

- running the matching engine for matching, reversal and reclaim of input tax credit.

1.7 GST – A Tax on Goods and Services

GST is levied on all goods and services, except alcoholic liquor for human consumption and petroleum crude, diesel,
petrol, ATF and natural gas.
Alcoholic liquor for human consumption: is outside the realm of GST. The manufacture/production of alcoholic liquor
continues to be subjected to State excise duty and inter-State/intra-State sale of the same is subject to CST/VAT
respectively.
Petroleum crude, diesel, petrol, ATF and natural gas: As regards petroleum crude, diesel, petrol, ATF and natural gas
are concerned, they are not presently leviable to GST. GST will be levied on these products from a date to be notified on
the recommendations of the GST Council.
Till such date, central excise duty continues to be levied on manufacture/production of petroleum crude, diesel, petrol,
ATF and natural gas and inter-State/intra-State sale of the same is subject to CST/ VAT respectively.
Tobacco: Tobacco is within the purview of GST, i.e. GST is leviable on tobacco. However, Union Government has also
retained the power to levy excise duties on tobacco and tobacco products manufactured in India. Resultantly, tobacco is
subject to GST as well as central excise duty.
Opium, Indian hemp and other narcotic drugs and narcotics: Opium, Indian hemp and other narcotic drugs and
narcotics are within the purview of GST, i.e. GST is leviable on them. However, State Governments have also retained
the power to levy excise duties on such products manufactured in India. Resultantly, Opium, Indian hemp and other
narcotic drugs and narcotics are subject to GST as well as State excise duties.
Further, real estate sector has been kept out of ambit of GST, i.e. GST will not be levied on sale/purchase of immovable
property.

1.8 Benefits of GST

GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of industry, Government and
the consumer. The significant benefits of GST are discussed hereunder:
BENEFITS TO ECONOMY
Creation of unified national market: GST aims to make India a common market with common tax rates and procedures
and remove the economic barriers thus paving the way for an integrated economy at the national level.
Boost to ‘Make in India' initiative: GST gives a major boost to the ‘Make in India' initiative of the Government of India
by making goods and services produced in India competitive in the national as well as international market. This will
create India as a ― Manufacturing hub.
Enhanced investment and employment: The subsuming of major Central and State taxes in GST, complete and
comprehensive setoff of input tax on goods and services and phasing out of Central Sales Tax (CST) reduces the cost of
locally manufactured goods and services and increases the competitiveness of Indian goods and services in the
international market and thus, gives boost to investments and Indian exports. With a boost in exports and
manufacturing activity, more employment is generated and GDP is increased.
SIMPLIFIED TAX STRUCTURE
Ease of doing business: Simpler tax regime with fewer exemptions along with reduction in multiplicity of taxes under
GST has led to simplification and uniformity in tax structure. The uniformity in laws, procedures and tax rates across
the country makes doing business easier.
Certainty in tax administration: Common system of classification of goods and services across the country ensures
certainty in tax administration across India.
EASY TAX COMPLIANCE
 6 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

Automated procedures with greater use of IT: There are simplified and automated procedures for various processes
such as registration, returns, refunds, tax payments. All interaction is through the common GSTN portal, therefore, less
public interface between the taxpayer and the tax administration.
Reduction in compliance costs: The compliance cost is lesser under GST as multiple record-keeping for a variety of
taxes is not needed, therefore, there is lesser investment of resources and manpower in maintaining records. The
uniformity in laws, procedures and tax rates across the country goes a long way in reducing the compliance cost.
ADVANTAGES FOR TRADE AND INDUSTRY
Benefits to industry: GST has given more relief to trade and industry through a more comprehensive and wider
coverage of input tax set-off and service tax set-off, subsuming of several Central and State taxes in the GST and phasing
out of CST. The transparent and complete chain of set-offs which results in widening of tax base and better tax
compliance also leads to lowering of tax burden on an average dealer in trade and industry.
Mitigation of ill effects of cascading: By subsuming most of the Central and State taxes into a single tax and by
allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it helps in mitigating the ill
effects of cascading, improving competitiveness and improving liquidity of the businesses.
Benefits to small traders and entrepreneurs: GST has increased the threshold for GST registration for small businesses.
Further, single registration is needed in one State. Small businesses have also been provided the additional benefit of
composition scheme. With the creation of a seamless national market across the country, small enterprises have an
opportunity to expand their national footprint with minimal investment.

1.9 Constitutional Provisions

Power to levy and collect taxes whether, direct or indirect emerges from the Constitution of India. In case any tax law,
be it an act, rule, notification or order is not in conformity with the Constitution, it is called ultra-vires the Constitution
and is illegal and void.

The significant provisions of the Constitution relating to taxation are:

I. Article 265: Article 265 of the Constitution of India prohibits arbitrary collection of tax. It states that “no tax shall be
levied or collected except by authority of law”. The term “authority of law” means that tax proposed to be levied must
be within the legislative competence of the Legislature imposing the tax.

II. Article 246: It gives the respective authority to Union and State Governments for levying tax. Whereas Parliament
may make laws for the whole of India or any part of the territory of India, the State Legislature may make laws for
whole or part of the State.

III. Seventh Schedule to Article 246: It contains three lists which enumerate the matters under which the Union and the
State Governments have the authority to make laws.

List – I Union List It contains the matters in respect of which the parliament (Central Government) has
the exclusive right to make laws.
List – II State List It contains the matters in respect of which the State Government has the exclusive
right to make laws.
List – III Concurrent List It contains the matters in respect of which both the Central & State Governments
have power to make laws.
Power to levy Goods and Services Tax (GST) has been conferred by Article 246A of the Constitution which was
introduced by the Constitution (101st Amendment) Act, 2016. Article 279A empowered President to constitute GST
Council.

Significant Amendments made by Constitution (101st Amendment) Act, 2016 are discussed below:
IV. Article 246A: Power to make laws with respect to Goods and Services Tax

 This article grants power to Centre and State Governments to make laws with respect to GST imposed by Centre or
such State.
 GST in India : An Introduction 7

 Centre has the exclusive power to make laws with respect to GST in case of inter-State supply of goods and/or
services.
 However, in respect to the following goods, the aforesaid provisions shall apply from the date recommended by the
GST Council:
1. Petroleum Crude
2. High Speed Diesel
3. Motor Spirit (commonly known as Petrol)
4. Natural Gas
5. Aviation Turbine Fuel
V. Article 269A: Levy and collection of GST on inter-State supply

 Article 269A stipulates that GST on supplies in the course of inter-State trade or commerce shall be levied and
collected by the Government of India and such tax shall be apportioned between the Union and the States in the
manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
 In addition to above, import of goods or services or both into India will also be deemed to be supply of goods and/
or services in the course of Inter-State trade or Commerce.
VI. GST Council: Article 279A
 Article 279A of the Constitution empowers the President to constitute a joint forum of the Centre and States namely,
Goods & Services Tax Council (GST Council).
 The Union Finance Minister is the Chairman of this Council and Ministers in charge of Finance/Taxation or any
other Minister nominated by each of the States & UTs with Legislatures are its members. Besides, the Union
Minister of State in charge of Revenue or Finance is also its member.

1.10 Charge of Tax

The very basis for the charge of tax in any taxing statute is the taxable event i.e. the point on which the levy of tax gets
attracted. As discussed earlier, under GST, the taxable event is Supply. CGST Act / SGST Act / UTGST Act levies tax
on all intra-state supplies of goods and/or services while IGST Act levies tax on all inter-state supplies of goods
and/or services.

INTRA-STATE SUPPLY
Where the location of the supplier and the place of supply of goods or services are in the same State / Union Territory,
it is treated as intra-state supply of goods or services respectively.

INTER-STATE SUPPLY
Where the location of the supplier and the place of supply of goods or services are in (i) two different States or (ii)
two different Union Territories or (iii) a State and a Union Territory, it is treated as inter-state supply of goods or
services respectively.
Illustration 1 : Define ‘intra State supply’ and ‘inter-State supply’ under GST law. Is it correct to say that inter-State
supply attracts both CGST and SGST? [Nov. 2017, Q.1 (b) (ii), 3 Marks]
Solution : Where the location of the supplier and the place of supply of goods or services are in the same State/Union
territory, it is treated as intra-State supply of goods or services respectively.
Where the location of the supplier and the place of supply of goods or services are in (i) two different States or (ii) two
different Union Territories or (iii) a State and a Union territory, it is treated as inter-State supply of goods or services
respectively.
No, it is not correct to say that inter-State supply attracts both CGST and SGST as inter-State supply attracts IGST.
However, IGST is the sum total of CGST and SGST/UTGST.
 8 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

1.11 Taxable Event - Supply

 The incidence of tax is the foundation stone of any taxation system. It determines the point at which tax would be
levied, i.e., the taxable event. The existing framework of taxable event in various statutes is prone to catena of
interpretations resulting in litigation since decades.
 Broadly, the controversies relates to issues like whether a particular process amounts to manufacture or not,
whether the sale is pre-determined sale, whether a particular transaction is a sale of goods or rendering of services,
etc. The GST laws seek to resolve these issues by laying down one comprehensive taxable event i.e. “Supply”.
 GST Law, by levying tax on the ‘supply’ of goods and/or services, will depart from the historically understood
concepts of ‘taxable event’ under the State VAT Laws, Excise Laws and Service Tax Laws i.e. sale, manufacture and
service respectively.
 In the GST regime, the entire value of supply of goods and/or services will be taxed in an integrated manner,
unlike the existing indirect taxes, which are charged independently either on the manufacture or sale of goods, or
on the provisions of services.

1.12 Sec. 2 of the CGST Act, 2017 (Definitions)

In this Act, unless the context otherwise requires,
(1) “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882;
(2) “address of delivery” means the address of the recipient of goods or services or both indicated on the tax invoice
issued by a registered person for delivery of such goods or services or both;
(3) “address on record” means the address of the recipient as available in the records of the supplier;
(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this
Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the
Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the
Appellate Tribunal and the Authority referred to in sub-section (2) of section 171;
(5) “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or
any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or
services or both on behalf of another;
(6) “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 reverse charge basis), exempt supplies, exports of goods or services or
both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all
India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
(7) “agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land –
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal
supervision of any member of the family;
(8) “Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section 107;
(9) “Appellate Tribunal” means the Goods and Services Tax Appellate Tribunal constituted under section 109;
(10) “appointed day” means the date on which the provisions of this Act shall come into force;
(11) “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment,
provisional assessment, summary assessment and best judgment assessment;
(12) “associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961;
(13) “audit” means the examination of records, returns and other documents maintained or furnished by the
registered person under this Act or the rules made thereunder or under any other law for the time being in force
to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to
assess his compliance with the provisions of this Act or the rules made thereunder;
 GST in India : An Introduction 9

(14) “authorised bank” shall mean a bank or a branch of a bank authorised by the Government to collect the tax or
any other amount payable under this Act;
(15) “authorised representative” means the representative as referred to in section 116;
(16) “Board” means the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act,
1963;
(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 sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency,
continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or
closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of
the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or
furtherance of his trade, profession or vocation;
(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed
book maker in such club; and
(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;
(18) “business vertical” [Omitted by CGST (Amendment) Act, 2018, w.e.f. 01.02.2019]
(19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the
input tax credit and which are used or intended to be used in the course or furtherance of business;
(20) “casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or
services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a
State or a Union territory where he has no fixed place of business;
(21) “central tax” means the central goods and services tax levied under section 9;
(22) “cess” shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States) Act;
(23) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the
Chartered Accountants Act, 1949;
(24) “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax
appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and
Services Tax Act;
(25) “Commissioner in the Board” means the Commissioner referred to in section 168;
(26) “common portal” means the common goods and services tax electronic portal referred to in section 146;
(27) “common working days” in respect of a State or Union territory shall mean such days in succession which are not
declared as gazetted holidays by the Central Government or the concerned State or Union territory Government;
(28) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the
Company Secretaries Act, 1980;
(29) “competent authority” means such authority as may be notified by the Government;
(30) “composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable
supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in
conjunction with each other in the ordinary course of business, one of which is a principal supply;
Example : Where goods are packed and transported with insurance, the supply of goods, packing materials,
transport and insurance is a composite supply and supply of goods is a principal supply;
(31) “consideration” in relation to the supply of goods or services or both includes –
(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the
inducement of, the supply of goods or services or both, whether by the recipient or by any other person but
shall not include any subsidy given by the Central Government or a State Government;
 10 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the
supply of goods or services or both, whether by the recipient or by any other person but shall not include any
subsidy given by the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as
payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
(32) “continuous supply of goods” means a supply of goods which is provided, or agreed to be provided,
continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other
conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of
such goods as the Government may, subject to such conditions, as it may, by notification, specify;
(33) “continuous supply of services” means a supply of services which is provided, or agreed to be provided,
continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment
obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by
notification, specify;
(34) “conveyance” includes a vessel, an aircraft and a vehicle;
(35) “cost accountant” means a cost accountant as defined in sec. 2(1)(b) of the Cost and Works Accountants Act, 1959;
(36) “Council” means the Goods and Services Tax Council established under article 279A of the Constitution;
(37) “credit note” means a document issued by a registered person under sub-section (1) of section 34;
(38) “debit note” means a document issued by a registered person under sub-section (3) of section 34;
(39) “deemed exports” means such supplies of goods as may be notified under section 147;
(40) “designated authority” means such authority as may be notified by the Board;
(41) “document” includes written or printed record of any sort and electronic record as defined in clause (t) of section
2 of the Information Technology Act, 2000;
(42) “drawback” in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess
chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such
goods;
(43) “electronic cash ledger” means the electronic cash ledger referred to in subsection (1) of section 49;
(44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or
electronic network;
(45) “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or
platform for electronic commerce;
(46) “electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49;
(47) “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be
wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and
includes non-taxable supply;
(48) “existing law” means any law, notification, order, rule or regulation relating to levy and collection of duty or tax
on goods or services or both passed or made before the commencement of this Act by Parliament or any
Authority or person having the power to make such law, notification, order, rule or regulation;
(49) “family” means, –
(i) the spouse and children of the person, and
(ii) the parents, grandparents, brothers and sisters of the person if they are wholly or mainly dependent on the
said person;
(50) “fixed establishment” means a place (other than the registered place of business) which is characterised by a
sufficient degree of permanence and suitable structure in terms of human and technical resources to supply
services, or to receive and use services for its own needs;
(51) “Fund” means the Consumer Welfare Fund established under section 57;
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim,
growing crops, grass and things attached to or forming part of the land which are agreed to be severed before
supply or under a contract of supply;
(53) “Government” means the Central Government;
 GST in India : An Introduction 11

(54) “Goods and Services Tax (Compensation to States) Act” means the Goods and Services Tax (Compensation to
States) Act, 2017;
(55) “goods and services tax practitioner” means any person who has been approved under section 48 to act as such
practitioner;
(56) “India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters, sea-bed and
sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act,
1976, and the air space above its territory and territorial waters;
(57) “Integrated Goods and Services Tax Act” means the Integrated Goods and Services Tax Act, 2017;
(58) “integrated tax” means the integrated goods and services tax levied under the Integrated Goods and Services Tax
Act;
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the course or
furtherance of business;
(60) “input service” means any service used or intended to be used by a supplier in the course or furtherance of
business;
(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax
invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the
purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said
services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of
the said office;
(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax
charged on any supply of goods or services or both made to him and includes –
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of section 5(3) & 5(4) of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of section 9(3) & 9(4) of the respective State GST Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and
Services Tax Act, but does not include the tax paid under the composition levy;
(63) “input tax credit” means the credit of input tax;
(64) “intra-State supply of goods” shall have the same meaning as assigned to it in section 8 of the Integrated Goods
and Services Tax Act;
(65) “intra-State supply of services” shall have the same meaning as assigned to it in section 8 of the Integrated Goods
and Services Tax Act;
(66) “invoice” or “tax invoice” means the tax invoice referred to in section 31;
(67) “inward supply” in relation to a person, shall mean receipt of goods or services or both whether by purchase,
acquisition or any other means with or without consideration;
(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered
person and the expression “job worker” shall be construed accordingly;
(69) “local authority” means –
(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or
entrusted by the Central Government or any State Government with the control or management of a
municipal or local fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006;
(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
(f) a Development Board constituted under article 371 and article 371J of the Constitution; or
(g) a Regional Council constituted under article 371A of the Constitution;
(70) “location of the recipient of services” means,
 12 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

(a) where a supply is received at a place of business for which the registration has been obtained, the location of
such place of business;
(b) where a supply is received at a place other than the place of business for which registration has been
obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of business or fixed
establishment, the location of the establishment most directly concerned with the receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence of the recipient;
(71) “location of the supplier of services” means,
(a) where a supply is made from a place of business for which the registration has been obtained, the location of
such place of business;
(b) where a supply is made from a place other than the place of business for which registration has been
obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is made from more than one establishment, whether the place of business or fixed
establishment, the location of the establishment most directly concerned with the provisions of the supply;
and
(d) in absence of such places, the location of the usual place of residence of the supplier;
(72) “manufacture” means processing of raw material or inputs in any manner that results in emergence of a new
product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly;
(73) “market value” shall mean the full amount which a recipient of a supply is required to pay in order to obtain the
goods or services or both of like kind and quality at or about the same time and at the same commercial level
where the recipient and the supplier are not related;
(74) “mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in
conjunction with each other by a taxable person for a single price where such supply does not constitute a
composite supply.
Example : A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks
and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately
and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter
of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument
recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with
Indian legal tender of another denomination but shall not include any currency that is held for its numismatic
value;
(76) “motor vehicle” shall have the same meaning as assigned to it in section 2(28) of the Motor Vehicles Act, 1988;
(77) “non-resident taxable person” means any person who occasionally undertakes transactions involving supply of
goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of
business or residence in India;
(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or
under the Integrated Goods and Services Tax Act;
(79) “non-taxable territory” means the territory which is outside the taxable territory;
(80) “notification” means a notification published in the Official Gazette and the expressions “notify” and “notified”
shall be construed accordingly;
(80A) "online gaming" means offering of a game on the internet or an electronic network and includes online money
gaming; [inserted by CGST (Amendment) Act, 2023, w.e.f. 01.10.2023]
(80B) "online money gaming" means online gaming in which players pay or deposit money or money's worth, including
virtual digital assets, in the expectation of winning money or money's worth, including virtual digital assets, in
any event including game, scheme, competition or any other activity or process, whether or not its outcome or
performance is based on skill, chance or both and whether the same is permissible or otherwise under any other
law for the time being in force; [inserted by CGST (Amendment) Act, 2023, w.e.f. 01.10.2023]
 GST in India : An Introduction 13

(81) “other territory” includes territories other than those comprising in a State and those referred to in sub-clauses (a)
to (e) of clause (114) ;
(82) “output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods
or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;
(83) “outward supply” in relation to a taxable person, means supply of goods or services or both, whether by sale,
transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such
person in the course or furtherance of business;
(84) “person” includes –
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government
company as defined in clause (45) of section 2 of the Companies Act, 2013;
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
(85) “place of business” includes –
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other
place where a taxable person stores his goods, supplies or receives goods or services or both; or
(b) a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called;
(86) “place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods and Services Tax
Act;
(87) “prescribed” means prescribed by rules made under this Act on the recommendations of the Council;
(88) “principal” means a person on whose behalf an agent carries on the business of supply or receipt of goods or
services or both;
(89) “principal place of business” means the place of business specified as the principal place of business in the
certificate of registration;
(90) “principal supply” means the supply of goods or services which constitutes the predominant element of a
composite supply and to which any other supply forming part of that composite supply is ancillary;
(91) “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the
officer of the central tax who is assigned that function by the Commissioner in the Board;
(92) “quarter” shall mean a period comprising three consecutive calendar months, ending on the last day of March,
June, September and December of a calendar year;
(93) “recipient” of supply of goods or services or both, means –
(a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay
that consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or
made available, or to whom possession or use of the goods is given or made available; and
(c) where no consideration is payable for the supply of a service, the person to whom the service is rendered,
and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of
 14 Indirect Taxation - Goods and Services Tax (GST) Authored by CA. Yashvant Mangal

the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or
services or both supplied;
(94) “registered person” means a person who is registered under section 25 but does not include a person having a
Unique Identity Number;
(95) “regulations” means the regulations made by the Board under this Act on the recommendations of the Council;
(96) “removal’’ in relation to goods, means –
(a) despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such
supplier; or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient;
(97) “return” means any return prescribed or otherwise required to be furnished by or under this Act or the rules
made there under;
(98) “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of
the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-
section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;
(99) “Revisional Authority” means an authority appointed or authorised for revision of decision or orders as referred
to in section 108;
(100) “Schedule” means a Schedule appended to this Act;
(101) “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956;
(102) “services” means anything other than goods, money and securities but includes activities relating to the use of
money or its conversion by cash or by any other mode, from one form, currency or denomination, to another
form, currency or denomination for which a separate consideration is charged;
Explanation.–– For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating
or arranging transactions in securities;
(102A) "specified actionable claim" means the actionable claim involved in or by way of betting, casinos, gambling,
horse racing, lottery or online money gaming; [inserted by CGST (Amendment) Act, 2023, w.e.f. 01.10.2023]
(103) “State” includes a Union territory with Legislature;
(104) “State tax” means the tax levied under any State Goods and Services Tax Act;
(105) “supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or services
or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or
both supplied;
Provided that a person who organises or arranges, directly or indirectly, supply of specified actionable claims,
including a person who owns, operates or manages digital or electronic platform for such supply, shall be deemed
to be a supplier of such actionable claims, whether such actionable claims are supplied by him or through him
and whether consideration in money or money's worth, including virtual digital assets, for supply of such
actionable claims is paid or conveyed to him or through him or placed at his disposal in any manner, and all the
provisions of this Act shall apply to such supplier of specified actionable claims, as if he is the supplier liable to
pay the tax in relation to the supply of such actionable claims; [inserted by CGST (Amendment) Act, 2023, w.e.f.
01.10.2023]
(106) “tax period” means the period for which the return is required to be furnished;
(107) “taxable person” means a person who is registered or liable to be registered under section 22 or section 24;
(108) “taxable supply” means a supply of goods or services or both which is leviable to tax under this Act;
(109) “taxable territory” means the territory to which the provisions of this Act apply;
(110) “telecommunication service” means service of any description (including electronic mail, voice mail, data
services, audio text services, video text services, radio paging and cellular mobile telephone services) which is
 GST in India : An Introduction 15

made available to users by means of any transmission or reception of signs, signals, writing, images and sounds
or intelligence of any nature, by wire, radio, visual or other electromagnetic means;
(111) “the State Goods and Services Tax Act” means the respective State Goods and Services Tax Act, 2017;
(112) “turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies (excluding
the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies
made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State
supplies of goods or services or both made from the State or Union territory by the said taxable person but
excludes central tax, State tax, Union territory tax, integrated tax and cess;
(113) “usual place of residence” means –
(a) in case of an individual, the place where he ordinarily resides;
(b) in other cases, the place where the person is incorporated or otherwise legally constituted;
(114) “Union territory” means the territory of –
(a) The Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and Diu;
(d) Ladakh;
(e) Chandigarh; and
(f) Other territory.
Explanation : For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f) shall be
considered to be a separate Union territory;
(115) “Union territory tax” means the Union territory goods and services tax levied under the Union Territory Goods
and Services Tax Act;
(116) “Union Territory Goods and Services Tax Act” means the Union Territory Goods and Services Tax Act, 2017;
(117) “valid return” means a return furnished under sub-section (1) of section 39 on which self-assessed tax has been
paid in full;
(117A) "virtual digital asset" shall have the same meaning as assigned to it in clause (47A) of section 2 of the Income-
tax Act, 1961; [inserted by CGST (Amendment) Act, 2023, w.e.f. 01.10.2023]

(118) “voucher” means an instrument where there is an obligation to accept it as consideration or part consideration for
a supply of goods or services or both and where the goods or services or both to be supplied or the identities of
their potential suppliers are either indicated on the instrument itself or in related documentation, including the
terms and conditions of use of such instrument;
(119) “works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting
out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable
property wherein transfer of property in goods (whether as goods or in some other form) is involved in the
execution of such contract;
(120) words and expressions used and not defined in this Act but defined in the Integrated Goods and Services Tax Act,
the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act
shall have the same meaning as assigned to them in those Acts;
(121) any reference in this Act to a law which is not in force in the State of Jammu and Kashmir, shall, in relation to that
State be construed as a reference to the corresponding law, if any, in force in that State.

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