INDEX

01
GST IN INDIA – 1
to
AN INTRODUCTION 9

02
10
TAXABLE EVENT SUPPLY to
28

03
29
CHARGES TO GST to
52

04
53
PLACE OF SUPPLY to
66

05
67
EXEMPTIONS to
108

06
109
TIME OF SUPPLY to
116

07
117
VALUE OF SUPPLY to
124

08
125
INPUT TAX CREDIT to
144

09
145
REGISTRATION to
173
 INDEX
10
TAX INVOICE, DEBIT NOTE AND 174
to
CREDIT NOTE 181

11
182
ACCOUNTS AND RECORDS to
184

12
185
E - WAY BILL to
190

13
191
PAYMENT OF TAX to
197

14
198
TDS AND TCS to
201

15
202
RETURN to
217
 CA INTER – INDIRECT TAX

1 GST IN INDIA –
AN INTRODUCTION

 Chapter Overview
1. What is TAX
2. Difference Between Direct & Indirect Tax
3. Features of Indirect tax
4. What is GST
5. GST in India
6. Concept of GST
7. Taxes To be Subsumed
8. Framework of GST in India
9. Constitutional Provision
10. Point to ponder
11. Homework

1. What is TAX?
In simple words, tax is nothing but money that people have to pay to the Government,
which is used to provide public services.

GST IN INDIA – AN INTRODUCTION

1
 CA INTER – INDIRECT TAX

2. DIFFERENCE BETWEEN DIRECT AND INDIRECT TAX

TAX

DIRECT TAX INDIRECT TAX

 The person paying the tax to  The person paying the tax to the
the Government directly bears Government collects the same
the incidence of the tax from the ultimate consumer. Thus,
 Progressive in nature – high incidence of the tax is shifted to the
rate of taxes for people having other person.
higher ability to pay  Regressive in nature – All the
consumers equally bear the burden,
irrespective of their ability to pay

Burden of tax borne by the Burden of tax shifted to

person himself another person

Goods &
Services Tax
Indirect Taxes
Major Direct and
Customs Duty
Indirect Taxes

Direct Taxes Income Tax

GST IN INDIA – AN INTRODUCTION

2
 CA INTER – INDIRECT TAX

3. FEATURES OF INDIRECT TAXES

(1) An important source of revenue: Indirect taxes are a major source of tax revenues
for Governments worldwide and continue to grow as more countries move to
consumption-oriented tax regimes. In India, indirect taxes contribute more than
50% of the total tax revenues of Central and State Governments.

(2) Tax on commodities and services: It is levied on commodities at the time of manufacture
or purchase or sale or import/export thereof. Hence, it is also known as commodity
taxation. It is also levied on provision of services.

(3) Shifting of burden: There is a clear shifting of tax burden in respect of indirect taxes.
For example, GST paid by the supplier of the goods is recovered from the buyer by
including the tax in the cost of the commodity.

(4) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in the
price of the commodity, most of the time the tax payer pays the same without
actually knowing that he is paying tax to the Government. Thus, tax payer does not
perceive a direct pinch while paying indirect taxes.

(5) Inflationary: Tax imposed on commodities and services causes an all-round price
spiral. In other words, indirect taxation directly affects the prices of commodities
and services and leads to inflationary trend.

(6) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base. Majority
of the products or services are subject to indirect taxes with low thresholds.

(7) Promotes social welfare: High taxes are imposed on the consumption of harmful
products (also known as ‘sin goods’) such as alcoholic products, tobacco products
etc. This not only checks their consumption but also enables the State to collect
substantial revenue.

(8) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich
and the poor have to pay the same rate of indirect taxes on certain commodities of
mass consumption. This may further increase the income disparities between the
rich and the poor.

GST IN INDIA – AN INTRODUCTION

3
 CA INTER – INDIRECT TAX

4. WHAT IS GST?
Simply put, Goods and Service Tax is a tax levied on goods and services imposed at each
point of sale or rendering of service. Such GST could be on entire goods and services or
there could be some exempted class of goods or services or a negative list of goods and
services on which GST is not levied. GST is an indirect tax in lieu of tax on goods (excise)
and tax on service (service tax). The GST is just like State level VAT which is levied as tax
on sale of goods.

5. GST IN INDIA
GST is a comprehensive Indirect Tax on manufacture, sale and consumption of goods and
services throughout India to replace taxes levied by the Central and State Governments.
It is introduced as Constitution (101st Amendment) Act, 2016. The GST is governed by GST
Council and its Chairman is Union Finance Minister of India.
France was the first country to implement GST in the year 1954. Presently about 160
countries across the world have adopted GST with Canada has a dual GST model just
like India.

6. CONCEPT OF GST
1. GST is a value added tax
GST is a tax levied at multiple stages of production & distribution of goods & services
in which tax paid on inputs are allowed as set-off against tax payable on output. In
short, we can say that GST is charged on “Value Addition.”

2. Chain of tax credits

GST offers comprehensive and continuous chain of tax credits from the producer’s
point/service up to the retailer’s level/consumer’s level.

3. Burden on final consumer

The final burden of GST is borne by the consumer as it is charged by the last supplier
with set off benefits at all previous stages.

4. No cascading effect of taxes

The past tax structure of India has number of indirect taxed collected both by Central
and State Government. Due to such multiple taxes, there had been cascading effect
of taxes (tax on tax) and double taxation.

GST IN INDIA – AN INTRODUCTION

4
 CA INTER – INDIRECT TAX

GST will subsume all these indirect taxes and will thus, facilitate seamless flow of
credit resolving the problem of double taxation and cascading effect of taxes.

Example :
Manufacturer purchased raw material and GST paid Rs.80
Rate of GST = 12%

MANUFACTURES WHOLESALER RETAILER CONSUMER

INVOICE -> M INVOICE -> W INVOICE -> R

Supply Price Rs.1000 Cost Rs. 1000 Cost Rs.1500

GST @12 Rs.120 PROFIT Rs. 500 PROFIT Rs. 500
Total Rs.1120 SP Rs. 1500 SP Rs.2,000
GST Rs. 180 GST Rs. 240
Total Rs. 1680 Total Rs.2,240

Tax Payable -> M Tax Payable -> W Tax Payable -> R INVOICE -> C

Payable Rs.120 Payable Rs.180 Payable Rs.240 Cost Rs. 2,000

-ITC Rs.80 -ITC Rs.120 -ITC Rs.180 GST RS. 240
Net Tax Rs.40 Net Tax Rs.60 Net Tax Rs.60 Total Rs. 2,240

GST IN INDIA – AN INTRODUCTION

5
 CA INTER – INDIRECT TAX

7. TAXES TO BE SUBSUMED

TAXES TO BE SUBSUMED IN GST

AT CENTRAL LEVEL:
SINGLE UNIFORM TAX
1. Excise Duty
2. Service tax

GST
3. Countervailing duty
4. Special Additional custom duty
5. Central Sales Tax
6. CESSES AND SURCHAREGES
Exclude
AT STATE LEVEL: • Electricity Duty
1. VAT / SALES TAX • Property tax & Stamp Duty
2. ENTERTAINMENT TAX (except • Basic Custom Duty
levied by local body) • Excise duty/VAT/CST on
3. LUXURY TAX • Alcoholic liquor for human
4. TAX ON LOTTERY, BETTING & consumption
GAMLING • Petroleum Crude
5. ENTRY TAX • High Speed Diesel
6. CESSES AND SURGCHARGES • Motor Sprit (Commonly
known as Petrol)
• Natural Gas
• Aviation Turbine Fuel

8. FRAMEWORK OF GST IN INDIA

DUAL GST MODEL

A dual GST will be in keeping with the constitutional requirement of fiscal federalism.
GST in India will be dual model based i.e., state and central government will both levy
GST termed as SGST/UTGST and CGST respectively. However, chargeability, definition of
taxable event and taxable person, measure of levy including valuation provisions, basis
of classification etc. would be uniform under both CGST and SGST laws.

GST IN INDIA – AN INTRODUCTION

6
 CA INTER – INDIRECT TAX

9. CONSTITUTIONAL PROVISION

Article 246 : Subject - matter of laws made by parliament and by the Legislatures of
States
Article 246A : was added to the constitution to provide for concurrent powers to Central
Government and State Government to levy GST on intra state supplies of
goods and services.
Article 269A : provides that Central Government has exclusive powers to make a law for
Inter State supplies and it will be apportioned as provided by Parliament.
Article 279A : provides for GST Council which is empowered to make recommendations
to the Central Government and State Government with regard to GST. It is
headed by the Union Finance Minister.

10. Points to Ponder

1. GST Common Portal: 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.

GST IN INDIA – AN INTRODUCTION

7
 CA INTER – INDIRECT TAX

2. GSP: GSTN has selected certain Information Technology, Information Technology

enabled Services and financial technology companies, to be called GST Suvidha
Providers (GSPs). GSPs have access to GST System and have the capability to develop
applications to be used by taxpayers for interacting with the GSTN.

3. Within GST or out of GST:

4. Compensation Cess: Initially, GST compensation cess was levied for a period of 5
years upto 30th June, 2022. However, its levy and collection has been extended till
31st March, 2026.

GST IN INDIA – AN INTRODUCTION

8
 CA INTER – INDIRECT TAX

20. Who are the members of the GST Council? Enumerate any two recommendations
that can be made by the GST Council.
Ans: The GST Council shall consist of the following members, namely: —
(a) the Union Finance Minister is the Chairperson;
(b) the Union Minister of State in charge of Revenue or Finance is the Member;
(c) the Minister in charge of Finance or Taxation or any other Minister nominated
by each State Government are the Members.

The recommendations that can be made by GST Council are as under: -

(i) the taxes, cesses and surcharges levied by the Union, the States and the local
bodies which may be subsumed in GST;
(ii) the goods and services that may be subjected to, or exempted from GST;
(iii) model GST Laws, principles of levy, apportionment of GST levied on supplies in
the course of inter-State trade or commerce and the principles governing the
place of supply;
(iv) the threshold limit of turnover below which goods and services may be exempted
from GST;
(v) the rates including floor rates with bands of GST;
(vi) any special rate(s) for a specified period, to raise additional resources during
any natural calamity/disaster;
(vii) special provision with respect to Special Category States;
(viii) the date on which the GST be levied on petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural gas and aviation turbine
fuel;
(ix) any other matter relating to the GST, as the Council may decide.

GST IN INDIA – AN INTRODUCTION

9
 CA INTER – INDIRECT TAX

2 TAXABLE EVENT SUPPLY

1. Section 7 ‘Meaning & Scope of Supply

GST-> TAX

LEVY ASSESSMENT PAYMENT OF TAX TO

(Computation of Tax) GOVT

GST is a TAX applicable to whole of INDIA including the state of Jammu & Kashmir

 Is a Tax
 Charged on the
 SUPPLY of Goods or
 Services or both made or
agreed to be made

 GOODS: Sec 2(52) of CGST Act, 2017 states that 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.
 SERVICES: Sec 2(102) of CGST Act,2017 states that service 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 separate
consideration is charged.

NOTE -> “Services” includes facilitating or arranging transactions in securities.

TAXABLE EVENT SUPPLY 10

 CA INTER – INDIRECT TAX

[Section 7(1)(a)] SUPPLY FOR CONSIDERATION IN COURSE OR FURTHERANCE

OF BUSINESS
SUPPLY INCLUDES

SALES TRANSFER BARTER EXCHANGE

Sales of New Washing

Goods for E.g., Mh Machine in Exchange
GJ
Readymade of Old with
E.g. Transfer b/w
Dresses additional charges
Branches

LEASE RENTAL LICSENCE DISPOSAL

E.g. Sale of
Machinery as a
scrap sale

>12 m <12 m

CONSIDERATION

IN THE COURSE OR FURTHERANCE OF BUSINESS

1. CONSIDERATION:

Consideration

Payment in money or Monetary value of any act or

otherwise for the supply forbearance for the supply

By Recipient or any other person

Deposit to be considered as payment Excluding Subsidy given by

ONLY WHEN Central / State Governments
The supplier applies such deposit as
consideration for the said supply

TAXABLE EVENT SUPPLY 11

 CA INTER – INDIRECT TAX

Note :
(I) Donations received by charitable institutions from individual donors, without quid
pro quo (something for something) :
No supply as there is no quid pro quo. Donations received by the charitable
organisations are treated as consideration only if there exists, quid pro quo, i.e.,
there is an obligation on part of recipient of the donation or gift to do anything
(Supply of Service)

Example 1 :
Bhushan donated a blackboard to Yoganisht Sansthan - a charitable yoga institution.
Yoganisht Sansthan printed underneath the blackboard so donated - “Good wishes from
Mr. Bhushan”.

Example 2 :
Smt. Durga Devi donated some money to a temple in the memory of her late father. The
Temple Trust constructed a room in the temple complex from such donation and wrote
“Donated by Smt. Durga Devi in the memory of her father” on the door floor of the room

(II) Art works sent by artists to galleries for exhibition is not a supply as no consideration
flows from the gallery to the Artists (Except Schedule1)

Section 7(1) (aa) The Activities or transactions, by a person, other than an individual, to
its members or constituents or vice-versa, for cash, deferred payment or other valuable
consideration.

[Section 7(1) (b)] IMPORTATION OF SERVICES

 Import of services for a consideration whether or not in the course or furtherance of

business.

[(Sec 7(1)(c)] r.w SCHEDULE I – SUPPLY WITHOUT CONSIDERATION

1. PERMANENT TRANSFER/DISPOSAL OF BUSINESS ASSETS WHERE ITC WAS TAKE

• Any kind of disposal or transfer of business assets made by an entity on
permanent basis even though without consideration.

TAXABLE EVENT SUPPLY 12

 CA INTER – INDIRECT TAX

• This clause is wide enough to cover transfer of business assets from holding to
subsidiary company for nil consideration. However, it is important to note that
this provision would apply if input tax credit has been availed on such assets.

Example : Dealer of laptops or dealers of cloth gives laptops or clothes free of cost to
their friend.

2. SUPPLY BETWEEN RELATED PERSON OR DISTINCT PERSONS

• Related person is defined as per explanation to Section 15 of CGST Act which means
the following:
a. Such persons are officers or directors of one another’s businesses;
b. Such persons are legally recognised partners in business;
c. Such persons are employer and employee;
d. Any person directly or indirectly owns, controls or holds twenty-five per
cent or more of the outstanding voting stock or shares of both of them;
e. One of them directly or indirectly controls the other;
f. Both of them are directly or indirectly controlled by a third person;
g. Person who are associated as sole agent or sole distributor or sole
concessionaire.
h. Together they directly or indirectly control a third person; or they are
members of the same family;

FAMILY MEANS
i. the spouse and children of the person, and
ii. the parents, grand-parents, brother and sisters of the person if they are wholly or
mainly dependent on the said person. [sec 2(49) of CGST Act]

EXAMPLES :
1. Mr. A and Mr. B are partners in the partnership firm A&B Co. Mr. A & Mr. B are
related persons. Thus, a transaction of supply between Mr. A & Mr. B in the course
or furtherance of business is treated as supply even if made without consideration.
2. Ms. Priya holds 30% shares of ABC Ltd. and 35% shares of XYZ Ltd. ABC Ltd. and XYZ
Ltd. are related.
3. Q Ltd. has a deciding role in corporate policy, operations management and quality
control of R Ltd. It can be said that Q Ltd. controls R Ltd. Thus, Q Ltd. and R Ltd. are
related.

TAXABLE EVENT SUPPLY 13

 CA INTER – INDIRECT TAX

4. Alpha Ltd. controls the composition of Board of directors of Beta Ltd. and Gama
Ltd. It is said to control both Beta Ltd. and Gama Ltd. Beta Ltd. and Gama Ltd. are
related persons.
5. Brita Ltd. and Grita Ltd. together control Margarita Ltd. Brita Ltd. and Grita Ltd. are
related.

• Supply of goods or services or both between an employer and employee: By virtue of

aforesaid definition of related person, employer and employee are related persons.
However, services provided by an employee to the employer in the course of or in
relation to his employment shall not be treated as supply of services [Schedule III
(Negative List)]

Further, Schedule I provides that gifts not exceeding ` 50,000 in value in a financial
year by an employer to an employee shall not be treated as supply of goods or
services or both.

EXAMPLE :

Value exceeding 50,000

SHAH Pvt Ltd GIFTS TOP EXECUTIVE

Tax Payable Under GST

• Distinct persons: As per section 25 of CGST Act, A person who has obtained/is required
to obtain more than one registration, whether in one State/Union territory or more
than one State/Union territory shall, in respect of each such registration, be treated
as distinct persons.

Stock transfers or branch transfers : In view of the aforesaid discussion, transactions

between different locations (with separate GST registrations) of same legal entity
(eg., stock transfers or branch transfers) will qualify as ‘supply’ under GST.

TAXABLE EVENT SUPPLY 14

 CA INTER – INDIRECT TAX

3. IMPORTATION OF SERVICE
Import of services by a person from a related person or from his establishments
located outside India, in the course or furtherance of business shall be treated as
“supply”

EXAMPLE:
1. Unilever PLC, London is supplying business consultancy service to its subsidiary
company UL Ltd. without consideration.
Ans: It is deemed supply as per section 7(1)(c) as it is import of service without consideration
from a related person in the course of furtherance of business.

2. Mr. Hritik, Sydney is supplying interior decoration service to Miss Kangana, Mumbai
his wife without any consideration in relation to Kangana’s house.
Ans: It is neither deemed supply as per section 7(1)(c) as it is not in the course or furtherance
of business, nor a supply as per section 7(1)(b) as it is without consideration.

4. PRINCIPAL - AGENT
• Supply of goods by a principal to his agent, without consideration, where the
agent undertakes to supply such goods on behalf of the principal is considered as
supply. Similarly, supply of goods by an agent to his principal, without
consideration, where the agent undertakes to receive such goods on behalf of the
principal is considered as supply.

Scope of Principal Agent relationship - Circular 57/31/2018 dated 4th September 2018 The key
ingredient for determining relationship under GST would be whether the invoice for the
further supply of goods on behalf of the principal is being issued by the agent or not.
Where the invoice for further supply is being issued by the agent in his name then, any
provision of goods from the principal to the agent would fall within the fold of the said
entry. However, it may be noted that in cases where the invoice is issued by the agent
to the customer in the name of the principal, such agent shall not fall within the ambit of
para 3 of Schedule I of the CGST Act.

Scenario 1
Mr. A appoints Mr. B to procure certain goods from the market. Mr. B identifies various
suppliers who can provide the goods as desired by Mr. A, and asks the supplier (Mr. C)
to send the goods and issue the invoice directly to Mr. A. In this scenario, Mr. B is only

TAXABLE EVENT SUPPLY 15

 CA INTER – INDIRECT TAX

acting as the procurement agent, and has in no way involved himself in the supply or receipt of
the goods. Hence, Mr.B is not an agent of Mr. A for supply of goods in terms of para 3 of
Schedule I.

 CLARIFICATION ON VARIOUS DOUBTS RELATED TO TREATMENT OF SALES

PROMOTION SCHEMES UNDER GST
It has been noticed that there are several promotional schemes which are offered
by taxable persons to increase sales volume and to attract new customers for their
products. Taxability of two such schemes has been clarified as under.

A. FREE SAMPLES AND GIFTS:

• It is a common practice among certain sections of trade and industry,
such as, pharmaceutical companies which often provide drug samples to
their stockists, dealers, medical practitioners, etc. without charging any
consideration.
• Therefore, the goods or services or both which are supplied free of cost
(without any consideration) shall not be treated as “supply” under GST
(except in case of activities mentioned in Schedule I of the CGST Act).

B. BUY ONE GET ONE FREE OFFER:

• Sometimes, companies announce offers like ‘Buy One, Get One free’.
EXAMPLE : “Buy one soap and get one soap free” or “Get one tooth brush
free along with the purchase of tooth paste”.
• Taxability of such supply will be dependent upon as to whether the supply
is a composite supply or a mixed supply and the rate of tax shall be
determined as per the provisions of section 8 of the CGST Act

TAXABLE EVENT SUPPLY 16

 CA INTER – INDIRECT TAX

SCHEDULE II - ACTIVITIES TO BE TREATED AS SUPPLY OF

GOODS OR SUPPLY OF SERVICE [Sec 7(1A)]

1. TRANSFER

TRANSFER

Immediate Transfer Deferred Transfer

i.e.; Hire Purchase

Transfer of Title Transfer of right

in goods without Supply of Goods
transfer of title
Supply of Goods i.e.; Lease, Rental
etc. Example:
1) Vipul Capital supplied
Example: goods on hire purchase
MJ Readymade Supply of Service basis to customers
Garment sells
ready-made 2) Radha manufactures
Garments to its supplies toys to
customers retailers on ‘sale or
return basis’.

TAXABLE EVENT SUPPLY 17

 CA INTER – INDIRECT TAX

2. Land and Building

Land & Building

Land Building

Any lease, Any lease or letting out of the building

tenancy, including a commercial, industrial, or
easement, license residential complex for business or
to occupy land commerce, either wholly or partly

Supply of Service

E.g., A shop let out in a market area

3. Treatment or Process (e.g.; Job Work)

 Any treatment or process which is applied to another person’s goods : Supply of

Service

E.g., Bombay Dying House dyes the clothes

given by Jigar Textiles Ltd. on job work basis.

TAXABLE EVENT SUPPLY 18

 CA INTER – INDIRECT TAX

4. TRANSFER OF BUSINESS ASSETS

TRANSFER OF BUSINESS ASSETS

TRANSFER OR PRIVATE USE PERSON WHO CEASE

DISPOSED OFF. OF BUSINESS TO BE TAXABLE
BUSINESS ASSETS ASSETS PERSON i.e.
Cancellation of
registration or shut
Supply of Goods Supply of Services down of the business

Deemed Supply of Goods

EXAMPLE: EXCEPTION:
1. Raju, a trader, is winding up his business. No GST will be leviable in the
Any goods left in stock shall deemed following cases.
to be supplied by him and GST shall be 1. Transferred as a going
payable. concern.
2. Mr. Shyam, a sole proprietor, owns a laptop 2. Business is carried on by a
used for making office presentation. He personal representative who
transfers said laptop to his son for making is deemed to be a taxable
school project. person.

5. Supply of Services

(a) Renting of immovable property i) Renting of a commercial complex.

ii) Renting of precincts of religious place.
iii) Renting of property to an education
institution.
vi) Permitting use of immovable property
for placing vending/dispensing
machines.

TAXABLE EVENT SUPPLY 19

 CA INTER – INDIRECT TAX

(b) Construction of complex civil i) Adani Builders has constructed

structure, building etc. individual residential units
NOTE: - For agreed consideration of Rs.2.4
Where the entire consideration has crore per unit. Rs.1.8 crore per
been received after issuance of unit were received before issuance
completion of completion certificate by the
Certificate, or after its first competent authority and balance
occupation, after completion.
whichever is earlier Covered under
Negative List No Supply
(c) Temporary transfer or permitting the Temporary transfer of patent.
use of intellectual property right.
(d) Agree to obligation to refrain from an i) Non-compete fee
Act, or to tolerate an act or situation, ii) Compensation for early termination
or to do an act. of contract
Note: - iii) Mr. A has entered into an agreement
If early termination is paid to with Mr. B, that A will not sale in
employee the specified areas where B is having
Negative list business. Non-compete agreements
constitute supply of service.
(e) Development, design, programming, i) XYZ Solutions develops an accounting
Customization, adaption,upgradation, software for a business.
enhancement of IT software.
(f) Transfer of right to use any goods for Machinery given on hire.
any purpose.

6. Composite Supply
Composite Supply

Works Contract Restaurant

Building, Construction, i.e. Catering contract, Supply of

Installation, Fitting out, Food & other Articles
Fabrication, Improvement, (Other than alcoholic, liquor for
Completion, Modification,
human consumption)
Erection, Renovation, Alteration,
Commissioning

Of any immovable Supply of Services

Supply of Services

TAXABLE EVENT SUPPLY 20

 CA INTER – INDIRECT TAX

 IMPORTANT CLARIFICATIONS ISSUED BY CBIC

1. Tenancy Rights/ Pagadi

ISSUE: CLARIFICATION:
-> Whether transfer of tenancy rights to -> Supply of Service and liable to GST
an incoming tenant or outgoing tenant, (subject to exemption notification)
consideration for which is in form of
tenancy premium, shall attract GST, even
if stamp duty and registration charges are
levied on the said premium?

2. Supply of printed book, pamphlets, brochures, envelopes etc.

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

In case of supply of printed envelopes, letter

cards, printed boxes, tissues, napkins, wall
paper etc. by the printer using its physical
inputs including paper to print the design,
logo etc. supplied by the recipient of goods,
predominant supply is supply of goods and the
supply of printing of the content [supplied by
the recipient of supply] is ancillary to the
principal supply of goods and therefore
such supplies would constitute SUPPLY OF
GOODS.

TAXABLE EVENT SUPPLY 21

 CA INTER – INDIRECT TAX

3. Retreading of tyres

ISSUE: CLARIFICATION:
-> Retreading of tyres -> Pre-dominant element is process of
retreading which is a SUPPLY OF SERVICE.
-> If old tyre belongs to supplier = SUPPLIY
OF GOODS.
-> If old tyre belongs to customer = SUPPLY
OF SERVICE.

4. Agreeing to an obligation or tolerating an act (Circular number 178/10/2022)

Examples which are liable to GST – Non Compete agreements, Builder refraining from
constructing more than a certain number of floors even though he has permission
against a compensation paid by neighbouring housing project which wants to
protect its sunlight, shopkeeper allowing a hawker to operate from the common
pavement in front of his shop, compensation for not collecting toll charges, late
payment charges agreed by the bank and customer or cancellation charges which
is a common industry practice [In all these cases there is positive agreement for
performance of such activities – There is sufficient nexus between supply and
consideration and one of the parties is under a contractual obligation to tolerate
an act or to do any act].

Examples which are not liable to GST – Liquidated damages for breach of contract,
Compensation given to previous allottees coal blocks for cancellation of their
licenses pursuant to Supreme Court Order, compensation for piracy, cheque
dishonour penalty, penalty imposed for violation of any law, forfeiture of salary
in the event of employee not serving notice period, forfeiture of earnest money by
a seller in case of breach of an agreement to sell an immovable property. [In such
contracts, performance is the essence of the contract. These are payments for not
tolerating an act. These are not desired outcome of the contract]

TAXABLE EVENT SUPPLY 22

 CA INTER – INDIRECT TAX

NEGATIVE LIST UNDER GST – SCHEDULE III of CGST ACT

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

EXAMPLE
a. Services provided otherwise than in course of employment  Supply
b. Services provided on contract basis – Principal – to Principal  Supply
c. Amounts received by an employee from employer on premature termination of
contract of Employment  No supply, as it arises in course of employment
d. Any amount paid for not joining a competing business would be liable to be taxed
being paid for providing the service of forbearance to act  Supply
e. Services provided by casual worker to employer who gives wages on daily basis to the
worker are services provided by the worker in the course of employment  No Supply

2. Services by any court or Tribunal established under any law for the time being in force.

3. a. The functions performed by the Member of Parliament, Member of State

Legislature, Members of Panchayat, Members of Municipalities and Members
of other local authorities.
b. The duties performed by any person who holds any post in pursuance of the
provisions of the Constitution. E.g., Governors of State, C&AG etc.
c. The duties performed by any person as a Chairperson or a Member or a Director
in a body established by the Central Government or a State Government or
local authority and who is not deemed as an employee before commencement
of this clause. E.g., Chairperson of IRDA, MIDC etc.

DO YOU KNOW
Amounts/fees charged by Consumer Disputes Redressal Commission: Consumer Disputes
Redressal Commissions (National/ State/ District) may not be tribunals literally as they
may not have been set up directly under Article 323B of the Constitution. However, they
are clothed with the characteristics of a Tribunal. Consequently, fee paid by litigants
while registering complaints to said Commissions are not leviable to GST. Any penalty in
cash imposed by or amount paid to these Commissions will not attract GST

4. Services of Funeral, Burial, Crematorium or Mortuary including transportation of the deceased.

5. Sale of Land and, subject to clause (b) of Paragraph 5 of Schedule II, sale of Building.

TAXABLE EVENT SUPPLY 23

 CA INTER – INDIRECT TAX

6. Actionable Claims, other than lottery, betting and gambling.

7. Services by way of any activity in relation to a function entrusted to a Panchayat under

article 243G of the Constitution by CG, SG or local authority

8. Alcoholic Liquor License fee charged by State Government

SOME CLARIFICATION

1. INTER-STATE MOVEMENT VARIOUS MODES OF CONVEYANCE

Sr. ISSUE: CLARIFICATION:
No.
1.  Inter-State Movement Of Various  neither supply of goods nor
Modes Of Conveyance And Rigs, Tools supply of service
And Spares, And All Goods On Wheels
[Like Cranes]
2.  For repairs and Maintance  Supply of Service, liable to IGST
3.  GST implications on Perquisites:  Schedule III to the CGST Act
Whether various perquisites provided provides that “services by
by the employer to its employees employee to the employer in
in terms of contractual agreement the course of or in relation to
entered into between the employer his employment” will not be
and the employee are liable for GST. considered as supply of goods or
services and hence GST is not
applicable on services rendered
by employee to employer
provided, they are in the course
of or in relation to employment.
Any perquisites provided by the
employer to its employees in
terms of contractual agreement
entered into between the
employer and the employee
are in lieu of the services provided
by employee to the employer in
relation to his employment.
Therefore, such perquisites will
not be subjected to GST. (Circular No.
172/04/2022 GST dated 06.07.2022)

TAXABLE EVENT SUPPLY 24

 CA INTER – INDIRECT TAX

4.  Whether sale of land after levelling,  It has been clarified that sale
laying down of drainage lines etc., is of a land after some development
taxable under GST? such as levelling, laying down
of drainage lines, water lines,
electricity lines, etc., is also a sale
of land and is covered by Schedule
III [Negative List] and thus, does
not attract GST. However, it
may be noted that any service
provided for development of land,
like levelling, laying of drainage
lines (as may be received by
developers) shall attract GST at
applicable rate for such services.
(Circular No. 177/09/2022 GST dated 03.08.2022)

5.  Applicability of GST on payment of  It has been clarified that

honorarium to the Guest Anchor services provided by the guest
anchors invited by the TV channels
for participating in their shows
in lieu of honorarium, attracts
GST liability. However, guest
anchors whose aggregate
turnover in a financial year does
not exceed Rs 20 lakhs (Rs 10
lakhs in case of special category
states) shall not be liable to
take registration and pay GST.

RELEVANT DEFINATIONS
1. PERSON: An individual, HUF, Company, Firm, LLP, AOP or BOI, whether incorporated
or not, in India or outside India; a co-operative society, local authority, CG, SG,
society, trust, artificial juridical person and 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.

TAXABLE EVENT SUPPLY 25

 CA INTER – INDIRECT TAX

SECTION 8 COMPOSITE AND MIXED SUPPLY

1) COMPOSITE SUPPLY [Sec 2(30) of CGST Act, 2017]
• comprises two or more taxable supplies of goods or services or both, or any
combination thereof.
• are naturally bundled and supplied in conjunction with each other, in the
ordinary course of business
• one of which is a principal supply [Section 2(30) of the CGST Act]

Principal Supply [Sec 2(90)] 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. [Section 2(90) of CGST Act]

EXAMPLE
1. Hotel Accommodation with Breakfast, Laundry, etc.
2. Laptop with Warranty
3. Mobile with Charger
TAX Rate  Rate of Principal Supply

EXAMPLE 1 :
Taxable person supplies goods to recipient for Rs.6 Lakhs (including transportation
charges, packing material and Insurance.

Supply of Good
Packing Material
Transportation
Insurance
Taxable Person Principal Recipient
Supply

TAXABLE EVENT SUPPLY 26

 CA INTER – INDIRECT TAX

TAX Rate  Rate of Principal Supply will be applicable on Rs. 6 lakhs.

EXAMPLE 2 :
When a consumer buys a television set and he also gets warranty and a maintenance
contract with the TV, this supply is a composite supply. In this example, supply of TV is
the principal supply, warranty and maintenance services are ancillary.
MIXED SUPPLY, [Sec 2(74) of CGST Act, 2017]
 two or more individual supplies of goods or services, or any combination thereof,
made in conjunction with each other by a taxable person
 for a single price where such supply does not constitute a composite supply [Section
2(74) of the CGST Act].
The individual supplies are independent of each other and are not naturally bundled.
TAX Rate  Supply that attracts Highest Rate of Tax.

EXAMPLE 1 :
Taxable person supplies packet consisting of Sweets, Chocolates, Cakes & Dry Fruits to recipient
for Rs.500 (All items can be supplied separately & is not dependent to any other).

Sweets
Chocolates
Cakes
Dry Fruit
Taxable Person Price Rs.500/-
Packet RECIPIENT

All items can be supplied separately & is not dependent to any other

TAX RATE  Highest rate of tax will be applied on Rs. 500

EXAMPLE 2 :
A taxable person selling water bottles along with refrigerator. Bottles and the refrigerator
can easily be priced and sold independently and are not naturally bundled. So, such
supplies are mixed supplies.

TAXABLE EVENT SUPPLY 27

 CA INTER – INDIRECT TAX

EXAMPLE 3 :
Hotel in Goa provides 3 days 2 Nights package with breakfast & one-day Goa Darshan.
(Because Goa Darshan in this package is not a natural requisite to accommodation in the
hotel).

TAXABLE EVENT SUPPLY 28

 CA INTER – INDIRECT TAX

3 CHARGES TO GST

 Chapter Overview
1. Inter & Intra State Supply
2. Levy & Collection of GST
3. List of services covered under RCM
4. Composition Scheme
5. Classwork / Homework
6. MCQs

CHARGES TO GST 29
 CA INTER – INDIRECT TAX

CHARGING SECTION [SECTION 9 OF THE CGST ACT]

[SECTION 5 OF THE IGST ACT]

Section 9(1):
• A tax called the Central Goods and Services Tax (CGST) shall be levied on all intra-
State supplies of goods or services or both.
• Except for alcoholic liquor for human consumption
• Where a rate not exceeding 20% shall be levied
• On the value determined u/s 15
Shall be payable by a taxable person.

Section 5 (1)
• A tax called Integrated Gods and Service Tax (IGST) is levied on all Inter state
supplied of goods or services or both.
• Except for alcoholic liquor for human consumption
• Where a rate not exceeding 40% shall be levied
• On the value determined u/s 15
Shall be payable by taxable person.

Section 9(2) of CGST Act/Section 5(2) of IGST Act

CGST/IGST on supply of the following items has not been levied immediately. It shall
be levied with effect from such date as may be notified by the Government on the
recommendations of the Council:
• petroleum crude
• high speed diesel
• motor spirit (commonly known as petrol)
• natural gas and
• aviation turbine fuel

CHARGES TO GST 30
 CA INTER – INDIRECT TAX

Section 9(3) LIST OF SERVICES TAXABLE UNDER REVERSE CHARGE, I.E THE SERVICES WHERE
TAX (CGST) IS PAYABLE BY THE RECIPIENT;
Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE
No SERVICE
1. Supply of services by a Goods Goods Transport (a) Any factory registered
Transport Agency (GTA) in Agency (GTA), under or governed by
respect of transportation of the Factories Act, 1948;
goods by road to- or
(a) any factory registered (b) any society registered
under or governed by the under the Societies
Factories Act, 1948; or Registration Act, 1860
(b) any society registered or under any other
under the Societies law for the time being
Registration Act, 1860 or in force in any part of
under any other law India; or
for the time being in
(c) any co-operative society
force in any part of India;
or established by or under
(c) any co-operative society any law; or
established by or (d) any person registered
under any law; or
under the CGST Act or
(d) any person registered
under the CGST Act or the IGST Act or the SGST
the IGST Act or the SGST Act or the UTGST Act; or
Act or the UTGST Act; or (e) any body corporate
(e) any body corporate
established, by or under
established, by or under
any law; or any law; or
(f) any partnership firm (f) any partnership firm
whether registered or not whether registered or not
under any law including under any law including
association of persons; association of persons;
or or
(g) any casual taxable (g) any casual taxable
person. person; located in
the taxable territory.
[Hereinafter referred as
Specified recipients]

CHARGES TO GST 31
 CA INTER – INDIRECT TAX

NOTE:
Reverse charge mechanism (RCM) shall not apply to services provided by a GTA, by way
of transport of goods in a goods carriage by road to-
(a) a Department / establishment of the Central Government / State Government /
Union territory; or
(b) local authority; or
(c) Governmental agencies,
which has taken registration under the CGST Act only for the purpose of deducting tax
under section 51 and not for making a taxable supply of goods or services.
Above service is exempt under GST
Further, nothing contained in this entry shall apply where, -
i. the supplier has taken registration under the CGST Act, 2017 and exercised the
option to pay tax on the services of GTA in relation to transport of goods supplied
by him under forward charge; and
ii. the supplier has issued a tax invoice to the recipient charging CGST at the applicable
rates and has made the prescribed declaration on such invoice issued by him.*

PROVIDES SERVICE
BY WAY OF
TRANSPORTATION OF
GOODS BY ROAD

GOODS TRANSPORT REGISTERED FACTORY/

AGENCY (GTA) SOCIETY/BODY CORPORATE
/ PARTNERSHIP/ PERSON

CHARGES TO GST 32
 CA INTER – INDIRECT TAX

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
2. Services provided by an An individual Any business entity located
individual advocate including advocate including in the taxable territory.
a senior advocate or firm of a senior advocate
advocates by way of legal or firm of advocates
services, directly or indirectly.
“Legal service” means any service
provided in relation to advice,
consultancy or assistance in any
branch of law, in any manner
and includes representational
services before any court,
tribunal or authority.

SUPPLIER: ADVOCATE (Including

RECIPIENT: ABC LTD
senior advocate)

SUPPLIER: FIRM OF ADVOCATE RECIPIENT: ABC LTD

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
3 Services supplied by an Arbitral An arbitral tribunal. Any business entity located
tribunal to a business entity in the taxable territory

CHARGES TO GST 33
 CA INTER – INDIRECT TAX

ARBITRATOR

X LTD Y LTD

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
4 Services provided by way of Any Person Any body corporate or
Sponsorship to anybody partnership firm located in
the taxable territory.
corporate or partnership
firm.

Provides Sponsorship Service

Any Person Body Corporate/

Partnership Firm

CHARGES TO GST 34
 CA INTER – INDIRECT TAX

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
5 Services supplied by the Central Central Any business entity located
Government, State Government, Government, in the taxable territory.
State
Union territory or local authority,
Government,
Parliament, State Legislature, Union territory
Courts and Tribunals to a business or local
entity excluding, - authority,
Services specified below- Parliament,
(i) services by the Department State
of Posts Legislature,
(ii) services in relation to an Courts and
aircraft or a vessel, inside Tribunals
or outside the precincts of a
port or an airport;
(iii) transport of goods or
passengers.

Provides Immovable
Property on Rent

Business Entity in Taxable

Any Person
Territory

CHARGES TO GST 35
 CA INTER – INDIRECT TAX

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
5A Services supplied by Central Central Any person registered
Government, State Government, Government, State under the CGST Act, 2017
Union territory or local authority, Government,
Parliament, State Legislature, Union territory
Courts and Tribunals by way of or local authority,
renting of immovable property to a Parliament, State
person registered under CGST Act, Legislature, Courts
2017 and Tribunals

5AA Service by way of renting of Any person Any registered person

residential dwelling to a registered
person
5B Services supplied by any person Any person Promoter
by way of transfer of development
rights (TDR) or Floor Space Index
(FSI) (including additional FSI)
for construction of a project by a
promoter.
5C Long term lease of land (30 years Any person Promoter
or more) by any person against
consideration in the form of
upfront amount (called as
premium, salami, cost, price,
development charges or by any
other name) and/or periodic rent
for construction of a project by a
promoter

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
6 Services supplied by a Director of a A director of a The company or a body
company / body corporate to the company or a corporate located in the
said company/body corporate. body corporate taxable territory as per
Sec 2(11) of Companies
Act, 2013.

CHARGES TO GST 36
 CA INTER – INDIRECT TAX

Provides Services

Director
Body corporate/Company

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
7 Services supplied by an Insurance An insurance Any person carrying on
Agent to any person carrying on agent insurance business,
insurance business. located in the taxable
territory.

Provides Services

Insurance Agent
Person carrying on
Insurance business

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
8 Services supplied by a Recovery A recovery A banking company or a
agent to a banking company or agent financial institution or a
a financial institution or a non nonbanking financial
banking financial company. company, located in the
taxable territory.

CHARGES TO GST 37
 CA INTER – INDIRECT TAX

Provides Services

Recovery Agent
Bank/ Financial Institute

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
9 Supply of services by a Music Music composer, Music company, producer
composer, photographer, artist or photographer, or the
the like by way of transfer artist, or the like Like located in taxable
or permitting the use or territory.
enjoyment of a copyright covered
under section 13(1)(a) of the
Copyright Act, 1957 relating to
original literary, dramatic, musical
or artistic works to a publisher,
music company, producer or the
like.
9A Supply of services by an author by Author Publisher located in the
way of transfer or permitting the taxable territory.
use or enjoyment of a copyright
covered under section 13(1)(a) of
the Copyright Act, 1957 relating
to original literary works to a
publisher.

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

CHARGES TO GST 38
 CA INTER – INDIRECT TAX

Music Company

Permits use of his

copyrighted Music

Music Composer
Music Company
Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE
No SERVICE
10 Supply of services by the Members of Reserve Bank of India (RBI)
members of Overseeing Overseeing
Committee to Reserve Bank of Committee
India (RBI) constituted by the
Reserve Bank of
India (RBI)

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
11 Services supplied by individual Individual Direct A banking company or
Direct Selling Agents (DSAs) other Selling Agents a NBFC, located in the
than a body corporate,partnership (DSAs) other than taxable territory
or limited liability partnership a body corporate,
(LLP) firm to bank or non- banking partnership or LLP
financial company (NBFCs). firm
Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE
No SERVICE
12 Services provided by business Business A Banking company, located
facilitator to a banking company. facilitator in the taxable territory
Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE
No SERVICE
13 Services provided by an agent of An agent A business correspondent,
business correspondent to of business located in the taxable
business correspondent. correspondent territory.

CHARGES TO GST 39
 CA INTER – INDIRECT TAX

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
14 Security service (services provided Any person other A registered person,
by way of supply of security than a body located in the taxable
personnel) provided to a registered corporate territory.
person.
However, nothing contained in
this entry shall apply to:
(i) (a) a Department
or Establishment of the
Central Government or
State Government or
Union territory; or
(b) local authority; or
(c) Governmental agencies;
which has taken
registration under the
CGST Act, 2017 only
for the purpose of
deducting tax under
section 51 of the said
Act and not for making
a taxable supply of
goods or services; or
(ii) a registered person paying
tax under composition
scheme.
Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE
No SERVICE
15 Service provided by renting of any Any person Any body corporate
motor vehicle designed to carry other than body located in the taxable
passenger where the cost of fuel corporate, who territory.
is included in the consideration supplies the
charged from the service recipient service to a body
provided to a body corporate. corporate and
does not issue an
invoice charging
CGST @6% to the
service recipient.

CHARGES TO GST 40
 CA INTER – INDIRECT TAX

Sr. CATEGORY OF SUPPLY OF GST SUPPLIER OF RECIPIENT OF SERVICE

No SERVICE
16 Service of lending of securities Lender, i.e., a Borrower i.e., a person
under securities lending scheme, person who who borrows a security
1997 (“scheme”) of SEBI deposits securities under a scheme through
registered in an approved intermediary
his name/in the of SEBI.
name of any
other person duly
authorized on
his behalf with
an approved
intermediary for
the purpose of
lending under
scheme of SEBI

Note : All the above services have also been notified for reverse charge under IGST
Act vide Notification No. 10/2017 IT (R) dated 28.06.2017 as amended. In addition to
them, following service is also notified by said notification under reverse charge for IGST
purposes:
Any service supplied by any person who is located in a non-taxable territory to any
person located in the taxable territory other than non-taxable online recipient7 located
in taxable territory. Thus, in case of import of service, tax is payable by the person
importing such service.

[SEC 9(5)] TAX PAYABLE BY E-COMMERCE OPERATOR ON NOTIFIED SERVICES

The Government may, on the recommendations of the Council, by notification, specify
categories of services the tax on intra- State supplies of which shall be paid by the
electronic commerce operator if such services are supplied through it, and all the
provisions of this Act shall apply to such electronic commerce operator as if he is the
supplier liable for paying the tax in relation to the supply of such services.

CHARGES TO GST 41
 CA INTER – INDIRECT TAX

Provided that where an electronic commerce operator does not have a physical presence
in the taxable territory, any person representing such electronic commerce operator for
any purpose in the taxable territory shall be liable to pay tax: Provided further that
where an electronic commerce operator does not have a physical presence in the taxable
territory and also he does not have a representative in the said territory, such electronic
commerce operator shall appoint a person in the taxable territory for the purpose of
paying tax and such person shall be liable to pay tax.

Notification No. 17/2017 CT (R) dated 28.06.2017/ Notification No. 14/2017 IT (R) dated
28.06.2017 as amended has notified the following categories of services supplied through
ECO for this purpose – (a) services by way of transportation of passengers by a radio-
taxi, motorcab, maxicab, motor cycle, omnibus or any other motor vehicle; (b) services by
way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes, except where the person
supplying such service through electronic commerce operator is liable for registration
under section 22(1) of the CGST Act. (c) services by way of house-keeping, such as
plumbing, carpentering etc, except where the person supplying such service through
electronic commerce operator is liable for registration under sub-section 22(1) of the
CGST Act. (d) supply of restaurant service other than the services supplied by restaurant,
eating joints etc. located at specified premises.

Meaning of various terms

(i) Radio taxi: means a taxi including a radio cab, by whatever name called, which
is in two- way radio communication with a central control office and is enabled
for tracking using Global Positioning System (GPS) or General Packet Radio Service
(GPRS).
(ii) Maxi cab: means any motor vehicle constructed or adapted to carry more than
6 passengers, but not more than 12 passengers, excluding the driver, for hire or
reward. Motor cab: means any motor vehicle constructed or adapted to carry not
more than 6 passengers excluding the driver for hire or reward. Motor car: means
any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor,
motor cycle or invalid carriage. Omnibus means any motor vehicle constructed or
adapted to carry more than 6 persons excluding the driver.
(iii) ‘Specified premises’ would mean premises providing hotel accommodation service
having declared tariff of any unit of accommodation above ` 7,500 per unit per day
or equivalent.

CHARGES TO GST 42
 CA INTER – INDIRECT TAX

[SEC 10] Composition Scheme

Basis Composition scheme (Section 10) Composition Scheme for

Services (Section 10(2A))
1.Optional It is an optional Scheme It is an optional Scheme

Scheme
2. Eligible  Manufacturer [other than notified Goods]  Exclusively engaged
Person Notified Goods: in supplying services
(i) Ice cream and other edible ice, whether or
other than restaurant
not containing cocoa.
(ii) Pan Masala services.
(iii) Tobacco and manufactured tobacco  Any person who
substitutes
is not eligible for
(iv) Aerated Water
(v) Fly ash bricks or fly ash aggregate with 90% composition scheme.
or more fly ash content; Fly ash blocks (Except Manufacutrer of
(vi) Bricks of fossil meals or similar siliceous
Notified Goods)
earths
(vii) Building bricks
(viii) Earthen or roofing tiles
 Trader
 Service Provider [only supplier making
supplies under Schedule II -> para 6 ->
Clause (b) [Restaurant service]
3. Aggregate Applicable to registered person, whose aggregate A registered person whose
Turnover turnover in preceding year is not exceeding 1.5 crore aggregate turnover in the
(ATO) for or 75 Lacs [in special category states] preceding financial year does
Eligibility Special Category States: not exceed Rs. 50 Lakh.
Meghalaya Manipur Mizoram Arunachal Pradesh
Nagaland Sikkim Uttarakhand Tripura

4. Tax Rate Registered CGST SGST 1. CGST  3% of

person is a Turnover in a state/
Manufacturer 0.5% of Turnover 0.5% of Turnover UT
in a State/UT in a State/UT 2. SGST  3% of
Turnover in a state/
Trader 0.5% of Taxable 0.5% of Taxable
UT
Turnover in a Turnover in a
state/UT state/UT
Restaurant 2.5% of Turnover 2.5% of Turnover
in a state/UT in a state/UT

CHARGES TO GST 43
 CA INTER – INDIRECT TAX

5. Is Composition scheme taxpayers permitted to render

composition services other than restaurant services upto a
scheme holder specified limit:
eligible This specified value is value not exceeding:
for making a) 10% of the turnover (Excluding Interest on
supply of loan, advance & deposit) in a State/Union
service [other territory in the preceding financial year;
than or
restaurant b) Rs. 5 lakh, Whichever is Higher
service]
6. Aggregate Aggregate Turnover
Turnover Inclusions Exclusions
(ATO) Value of all outward supplies i.e. – • CGST
• Taxable supplies • SGST
• Exempt supplies • UTGST
• Exports • IGST
• Inter-State supplies of • Cess
persons having same PAN to • Value of inward supplies on
be computed on all India basis which tax is payable under
reverse charge.
Note:
1) Interest income on deposit, advance and
loan to be excluded while computing
aggregate turnover for determining
eligibility for composition scheme.
7. Who can- a) A service provider (except Restaurant Services and a Registered
not opt for person whose Value of Service < 10% of the Turnover in a state/UT
Composition in preceding F.Y. OR Rs. 5 Lakh, whichever is Higher [This point is only
Scheme/ applicable for composition Scheme]
Composition b) Person making non-taxable supplies.
Scheme for c) Person making inter-state supply of good/ services.
Services d) A person engaged in making supplies of goods or services through
electronic commerce operator responsible for collecting tax at
source.
e) Manufacturer of notified goods.
f) Non-resident Taxable Person or Casual Taxable Person.

CHARGES TO GST 44
 CA INTER – INDIRECT TAX

8. Something 1) The option availed by a registered person u/s 10 shall lapse with
To Know effect from the day on which aggregate T/O during Financial year
exceeds limits specified. [Same u/s 10(2A)]
2) Composition scheme to be adopted uniformly by all the registered
persons having the same PAN.
3) A taxable person who is covered u/s 10/u/s 10(2A) shall neither
collect any tax from the recipient on supplies made by him nor shall
he be entitled to any credit of input tax.
4) There is no restriction on Composition Supplier to procure goods
from Inter-State Supplier.
5) A taxable person u/s 10/u/s 10(2A) shall mention the words
“Composition Taxable Person”. On sign board displayed at prominent
place at his Principal place of Business and Additional place of
Business.
6) A taxable person shall pay Tax under RCM on inward supply of
goods or services U/S 9(3)/ 9(4).
9.  Rule 3(2): At the time of registration, any person can opt composition
Composition scheme in part B of Form GST REG-01
Rule  Rule 3(3): Filing of intimation before the beginning of financial year:
Any person who is registered under regular scheme but now opting
for composition Scheme shall electronically file an intimation. Prior
to the commencement of the financial year for which the option to
pay tax under composition Scheme is exercised.
 Rule 3(5): One intimation applicable for all place in case of same PAN
 Rule 4: EFFECTIVE DATE FOR COMPOSITION LEVY The beginning of
the financial year, where intimation is filled u/r 3(3)
 Rule 6: Provision regarding validity of composition scheme
 Rule 6(1): The option exercise shall remain valid so long as he
satisfied all the conditions.

CHARGES TO GST 45
 CA INTER – INDIRECT TAX

 Rule 6(2): Mandatory Cessation of Composition Levy On

Violation Of Conditions: The person shall be liable to pay tax
under regulation scheme from the day he cease to satisfy any
of the condition and shall issue tax invoice for every taxable
supply and he shall also file intimation for withdrawal from
the scheme in FORM GST CMP -04 within 7 days of occurrence
of such event.
 Rule 6(3): Application for withdrawal from scheme: The register
person who intends to withdraw from the composition scheme
shall file an Application in FORM GST CMP- 04.
 Rule 6(4): where the proper officer has reason to believe that
the registered person was not eligible for composition scheme
or has contravened the provision of the act. Proper officer (PO)
may issue a SCN (show cause notice) as why option to pay tax
u/s 10 shall not be denied.
 Rule 6(5): registered person as per (u/s 10) shall reply to proper
officer upon receipt of reply, The PO shall issue an order within
30 days of the receipt of the reply or denying the Option to pay
tax u/s 10 as the case may be.

EXAMPLE 1:
A Ltd. is a manufacturing concern in Pune. In Financial Year 2022-23 total value of
supplies including inward supplies taxed under reverse charge basis are ` 1,52,60,000.
The breakup of supplies are as follows:
Particulars `
(1) Intra State Supplies made under forward charge 5,000,000
(2) Intra State Supplies made which are chargeable to GST at Nil rate 4,000,000
(3) Intra State Supplies which are wholly exempt under section 11 of GST 6,000,000
Act, 2017
(4) Value of inward supplies on which tax payable under RCM 260,000

Briefly explain whether A Ltd.is eligible to opt for Composition Scheme in Financial Year
2023-24.

CHARGES TO GST 46
 CA INTER – INDIRECT TAX

Solution:
Computation of Aggregate Turnover
Particulars `
(1) Supplies made under forward charge 5,000,000
(2) Supplies made which are chargeable to GST at Nil rate (covered 4,000,000
under Exempt supply)
(3) Supplies which are wholly exempt under section 11 of CGST Act, 2017 6,000,000
(4) Value of inward supplies on which tax payable u/d RCM (specifically Nil
excluded)
Total 15,000,000
Since, aggregate turnover does not exceed ` 15,000,000 during the Financial Year 2022-
23. So, A Ltd. is entitled for Composition Scheme for Financial Year 2023-24.

EXAMPLE 2:
Z Ltd. a manufacturing unit in Rajasthan has opted for composition scheme furnishes you
with the following information for Financial Year 2022-23 It requires you to determine
its composition tax liability and total tax liability. In Financial Year 2022-23 total value
of supplies including inward supplies taxed under reverse charge basis are ` 87,40,000.
The break up of supplies are as follows:
Particulars `
(1) Intra State Supplies of Goods X chargeable @ 5% GST 3,000,000
(2) Intra State Supplies made which are chargeable to GST at Nil rate 1,800,000
(3) Intra State Supplies which are wholly exempt under Sec 11 of CGST Act, 2017 240,000
(4) Value of inward supplies on which tax payable under RCM (GST Rate 5%) 700,000
(5) Intra State Supplies of Goods Y chargeable @ 18% GST 3,000,000

Solution:
(1) The composite tax liability of A Ltd. shall be as under:
Particular `
(1) Supplies made under forward charge 3,000,000
(2) Supplies made which are chargeable to GST at Nil rate 1,800,000
(3) Supplies which are wholly exempt under section 11 of GST Act, 2017 240,000
(4) Value of inward supplies on which tax payable under RCM (GST Rate 5%) Nil
(not to be included)
(5) Intra State Supplies of Goods Y chargeable @ 18% GST 3,000,000
Aggregate turnover 8,040,000
Rate of Companies Tax (Effective Rate) 1%
Total Companies Tax 80,400

CHARGES TO GST 47
 CA INTER – INDIRECT TAX

(2) Tax payable under reverse charge basis

Particulars `
Value of inward supplies on which tax payable under RCM 700,000
Rate of GST 5%
Tax payable under RCM 35,000
Total tax liability 115,400

EXAMPLE 3:
M & P Co. a trading concern, has opted for composition scheme in FY 2022-23. It furnishes
you with the following details of supplies made for the quarter ending 30th September,
2022. You are required to determine composition tax liability.
Particulars `
(1) Intra – State Taxable Supply 300,000
(2) Intra – State Exempt Supply 200,000

Solution:
M & P Co. will be liable to pay tax @ 1% of the turnover of taxable supplies of goods in
the State. Thus, the composite tax liability will be:
CGST = 0.5% of Rs. 3L = Rs. 1,500
SGST = 0.5% of Rs. 3L = Rs. 1,500
The value of exempt supply shall not be included for computation of GST liability of a trader

CHARGES TO GST 48
 CA INTER – INDIRECT TAX

Question 1
Example on section 10 (2A) composition supplier for services
Answer:
A photographer ‘Champak’ has commenced providing photography services in Delhi from
April this year. His turnover for various quarters till December is as follows:
April-June ` 20 lakh
July-Sept ` 30 lakh
Oct-Dec ` 20 lakh
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 ` 20 lakh.
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 [` 20 lakh] shall be excluded as
the 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 are to be excluded
for this purpose.
On next ` 30 lakh [turnover of July-Sept quarter], he shall pay tax @ 6% [3% CGST and
3% SGST], i.e. CGST ` 90,000 and SGST ` 90,000.
By the end of July-Sept quarter, his aggregate turnover reaches ` 50 lakh*.
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 ` 20 lakh × 18%, i.e. `
3,60,000.
*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.

CHARGES TO GST 49
 CA INTER – INDIRECT TAX

1) “Wedding Bells”, a wedding photographer, has commenced providing pre-wedding

shoot services in Jaipur from the beginning of current financial year 2020-2021. It
has provided the following details of turnover for the various quarters till December,
2020 :-

Amount
S. No. Quarter
(` in lakh)
1 April,2020-June,2020 20
2 July,2020-September,2020 30
3 October,2020-December,2020 40

You may assume the applicable tax rate as 18%. Wedding Bells wishes to pay tax
at a lower rate and opts for the composition scheme. You are required to advise
whether it can do so and calculate the amount of tax payable for each quarter?

Ans: Section 10(2A) of the CGST Act, 2017 provides the turnover limit of ` 50 lakh in
the preceding financial year for becoming eligible for composition levy for services.
Wedding Bells has started the supply of services in the current financial year (FY),
thus, it’s aggregate turnover in the preceding FY is Nil. Consequently, in the current
FY, Wedding Bells is eligible for composition scheme for services. A registered person
opting for composition levy for services shall pay tax @ 3% [Effective rate 6% (CGST+
SGST/UTGST)] of the turnover of supplies of goods and services in the State.

Further, Wedding Bells becomes eligible for the registration when the aggregate
turnover exceeds ` 20 lakh (the threshold limit of obtaining registration). While
registering under GST, Wedding Bells can opt for composition scheme for services.
The option of a registered person to avail composition scheme for services shall
lapse with effect from the day on which his aggregate turnover during a financial
year exceeds the threshold limit of ` 50 lakh.

However, for the purposes of determining the tax payable under composition
scheme, the expression “turnover in State” shall not include the value of supplies
from the first day of April of a FY up to the date when such person becomes liable
for registration under this Act.

CHARGES TO GST 50
 CA INTER – INDIRECT TAX

Thus, for determining the turnover of the State for payment of tax under composition
scheme for services, turnover of April,2020 – June,2020 quarter [` 20 lakh] shall be
excluded. On next ` 30 lakh [turnover of July,2020 – September, 2020 quarter], it
shall pay tax @ 6% [3% CGST and 3% SGST].

For the purposes of computing aggregate turnover of a registered person for

determining his eligibility to pay tax under this section, aggregate turnover includes
value of supplies from the 1st April of a FY up to the date of his becoming liable for
registration.

Thus, while computing aggregate turnover for determining Wedding Bells’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 it becomes liable for registration under this
Act (i.e. turnover of April,2020 – June,2020 quarter), are included.

By the end of July, 2020 – September, 2020 quarter, the aggregate turnover reaches
` 50 lakh. Consequently, the option to avail composition scheme for services shall
lapse by the end of July, 2020 – September, 2020 quarter and thereafter, it is
required to pay tax at the normal rate of 18%.

Considering the above provisions, the tax payable for each quarter is as under:-

S. Quarter GST rate Turnover GST payable

No. [CGST + SGST] (` in lakh) (` in lakh)
1 April, 2020 – - 20 -
June, 2020
2 July, 2020 – 6% 30 1.8
September, 2020
3 October, 2020 – 18% 40 7.2
December, 2020

(RTP MAY ’21)

CHARGES TO GST 51
 CA INTER – INDIRECT TAX

1. Mr. A, a retailer who keeps no inventories, presents the following expected information
for the year
1. Purchases of Goods : `50 lakhs (GST @ 5%)
2. Sales (at fixed selling price inclusive of all taxes) : `60 lakhs (GST on sales @
5%)

Discuss whether he should opt for composition scheme.

Expenses of keeping detailed statutory records required under the GST Laws will be
`1,20,000 p.a., which shall get reduced to `50,000 if composition scheme is opted
for. Other expenses are `3,00,000 p.a.

Solution : The cost to the ultimate customer under two schemes is as under –

Normal GST Composition

Particulars
Scheme Scheme
Cost of goods sold (*No credit under composition 50,00,000 52,50,000
scheme, hence, cost of goods sold will be higher)
Add: Costs of maintaining records 1,20,000 50,000
Add: Normal Expenses 3,00,000 3,00,000
Total Costs 54,20,000 56,00,000
Sales (inclusive of all taxes) 60,00,000 60,00,000
Less: Tax (GST=`60 lakh * 5 / 105); (C Tax=`60 2,85,714 60,000
lakh*1%)
Sales (net of taxes) 57,14,286 59,40,000
Profit of the dealer (Sales, net of taxes – Total Costs) 2,94,286 3,40,000

Conclusion: It is apparent that while cost to ultimate consumer, in both the cases remains
same, the profit of the dealer is higher if the dealer opts for composition scheme. Hence,
composition scheme should be opted.

CHARGES TO GST 52
 CA INTER – INDIRECT TAX

4 PLACE OF SUPPLY

1. Relevant Provisions of IGST Act, 2017

Section Applicability
Section 7 Inter-state supply
Section 8 Intra-state supply
Section 9 Supplies in territorial waters
Section 10 POS for Goods – Other than Import and Export
Section 12 POS for Services – WHEN SUPPLIER & RECIPIENT ARE IN INDIA

2. Section 7, 8 and 9 of IGST Act

 Section 8
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.

Explanation 1.
For the purposes of this Act, where a person has, - (ii) an establishment in a State
or Union territory and any other establishment outside that State or Union territory;
or (iii) an establishment in a State or Union territory and any other establishment
registered within that State or Union territory, then such establishments shall be
treated as establishments of distinct persons.

Explanation 2.
A person carrying on a business through a branch or an agency or a representational
office in any territory shall be treated as having an establishment in that territory.

 Section 7
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.

PLACE OF SUPPLY 53
 CA INTER – INDIRECT TAX

The following supply of goods or services or both will be treated as inter-state supply:
(a) When the supplier is located in India and the place of supply is outside India;
(b) To or by a Special Economic Zone developer or a Special Economic Zone unit; or
(c) In the taxable territory, not being an intra-State supply

 Section 9 – Supplies in Territorial Waters

Not with standing anything contained in this Act, ––
(a) Where the location of the supplier is in the territorial be deemed to be in
waters, the location of such supplier “or” the coastal State or
(b) Where the place of supply is in the territorial waters, Union territory, where
the place of supply, shall, for the purposes of this the nearest point of the
Act appropriate baseline is
located

EXAMPLE:
If repair services are provided by a company in Delhi on a ship anchored off the coast
of Kochi for a shipping company from United Kingdom, the place of supply being
the location of the ship will create doubt about the applicability of GST. Now, by the
provisions in section 9, it is clear that the place of supply of the repair services will
not be the waters but Kochi. With this doubt having been resolved, it would be an
inter-State supply albeit to the UK Company.

5. Section 10 – POS of goods OTHER THAN Import or Export

5.1. Where the Supply Involves Movement of Goods – Section 10(1)(a)
• Where the supply involves movement of goods, whether by the supplier or the
recipient or by any other person, the place of supply of such goods shall be the
location of the goods at the time at which the movement of goods terminates for
delivery to the recipient.
Particulars Suppliers Termination of Place of Tax Payable
factory from movement Supply
where goods
are removed
Movement Orissa Assam
of goods by
Supplier Orissa Orissa

Movement Kerela Goa

of goods by
recipient Kerela Kerela

PLACE OF SUPPLY 54
 CA INTER – INDIRECT TAX

5.2. Where the Supply does not Involve Movement of Goods – Section 10(1)(c)
• Where the supply does not involve movement of goods, whether by the supplier
or the recipient, the place of supply shall be the location of such goods at the
time of the delivery to the recipient;
Section 10(1)(c): Supply does not involve movement of goods
Particulars Location Location of Location Place of Tax Payable
of supplier recipient of goods supply
Sale of Delhi Bhopal Bhopal Bhopal IGST
pre-installed DG payable at
Set Delhi
Manufacture of Tamil Kerala Tamil Tamil CGST +
moulds by job- Naau Nadu Nadu TN GST
worker (supplier), payable at
sold to the Tamil Nadu
Principal, but
retained in job
worker’s premises

5.3. Where goods are Assembled or Installed – Section 10(1)(d)

• Where the goods are assembled, or installed at site, the place of supply shall
be the place of such installation or assembly.
Section 10(1)(d): Supply of goods assembles / installed at site
Particulars Location Registered Installation Place of Tax
of supplier office of Assembly supply Payable
recipient Site
Installation of Delhi Bhopal Bhopal Bhopal IGST
weigh bridge payable at
Delhi
Service supplied Karnataka Goa Karnataka Karnataka CGST +
and installation Kar GST
at the office of a payable at
marketing firm Karnataka
Supply of work- Gujarat Gujarat Kerala Kerala IGST
stations payable at
Gujarat

5.4. Where goods are Supplied On Board of a Conveyance – Section 10(1)(e)

• Where the goods are supplied on board a conveyance, including a vessel, an
aircraft, a train or a motor vehicle, the place of supply shall be the location at
which such goods are taken on board

PLACE OF SUPPLY 55
 CA INTER – INDIRECT TAX

Location of Registered office Installation Place of Tax

Particulars
supplier of recipient Assembly Site supply Payable
Supply of canned Punjab Punjab Delhi
aerated drinks
Sale of haldiram Pune Goa Hyderabad
mixtures for
sale during the
journey
Sale of sun Bangalore Chennai Cochin
glasses on a ship

5.5. Where the goods are Delivered on the DIRECTION of Third Party – Section 10(1)(b)
• Where the goods are delivered by the supplier to a recipient or any other person
on the direction of a third person, whether acting as an agent or otherwise,
before or during movement of goods, either by way of transfer of documents
of title to the goods or otherwise, it shall be deemed that the said third person has
received the goods and the place of supply of such goods shall be the principal place
of business of such person.

6. Section 12 – POS for services – When location of supplier AND recipient is IN India
5.1. Section 12(2)- Place of Supply Generally
• The place of supply of a services except section 12(3) to 12(14) shall be -

Supplied to Place of Supply

Registered Person Location of such registered person

Unregistered Person Address on record of recipient or location of supplier is

address is not available

The default presumption for place of supply in respect of registered recipients (B2B
supply of services) is the location of such person. Since the recipient is registered,
address of recipient is always there and the same can be taken as proxy for place of
supply.
The default presumption for place of supply in respect of unregistered recipients
(B2C supply of services) is also the location of recipient. However, in many cases,
the address of recipient is not available; in such cases, location of the supplier of
services is taken as proxy for place of supply. For instance, there are various B2C
services where the address of the recipient is not recorded by the supplier of services.
For instance, a person may visit a bank branch where he is not a regular customer

PLACE OF SUPPLY 56
 CA INTER – INDIRECT TAX

and may get a demand draft against cash or request for conversion of foreign
currency into local currency. The bank branch charges commission towards its
consideration for the services supplied by it. The place of supply in such cases would
be determined based on the location of the branch of the bank as the bank branch
doesn’t have the address of the said service recipient as a normal business practice.

EXAMPLE 1:
Mr. A (a Chartered Accountant registered in New Delhi) makes a supply of service
to his client C Pvt. Ltd. of Noida, Uttar Pradesh (registered in Uttar Pradesh). In this
case, since the supply is made to a registered person, the place of supply is the
location of the registered recipient, i.e. Noida.

EXAMPLE 2:
Mr. H, a Chartered Accountant in Gurugram, Haryana, (registered in Haryana)
provides consultancy services to his client Mr. P who is a resident of New Delhi but is
not registered under GST. If the address of Mr. P is available in the records of Mr. H,
location of Mr. P, i.e. New Delhi will be the place of supply, else the location of Mr.
H, which is Gurugram, will be the place of supply

5.2. Section 12(3) – POS for Immovable Property

• The place of supply of services, –
Service Place of Supply
(a) Directly in relation to an immovable property, including
services provided by architects, interior decorators, and
other related experts or estate agents, any service provided
by way of grant of rights to use immovable property or for
carrying out or co-ordination of construction work; or
(b) By way of lodging accommodation by a hotel, inn,
guest house, home stay, club or campsite, by whatever
shall be the location at
name called, and including a house boat or any other
which the immovable
vessel; or property or boat or vessel, as
the case may be, is located
(c) By way of accommodation in any immovable property
or intended to be located
for organizing any marriage or reception or matters
related thereto, official, social, cultural, religious
or business function including services provided in
relation to such function at such property; or

(d) Any services ancillary to the services referred to in

clauses (a), (b) and (c).

PLACE OF SUPPLY 57
 CA INTER – INDIRECT TAX

“Provided that if the location of the immovable property or boat or vessel is located
or intended to be located outside India, the place of supply shall be the location of the
recipient.”

Explanation.
Where the immovable property or boat or vessel is located in more than one
State or Union territory, the supply of services shall be treated as made in each
of the respective States or Union territories, in proportion to the value for services
separately collected or determined in terms of the contract or agreement entered
into in this regard or, in the absence of such contract or agreement, on such other
basis as may be prescribed.

EXAMPLES:
Sun Builders (Mumbai) is constructing a factory building for Sky Pvt. Ltd. (Kolkata),
in New Delhi. The place of supply is the location of immovable property, i.e. New
Delhi.

J K Shah, an architectural firm at Kolkata, has been hired by Madhav Builders of

Mumbai to draw up a plan for a high rise building to be constructed by them in
Ahmedabad, Gujarat. The place of supply is the place where the immovable property
is intended to be located, i.e. Ahmedabad.

K, a Chartered Accountant, (New Delhi) travels to Mumbai for business and stays in
a hotel there. The place of supply of accommodation service is the place where the
hotel is located, i.e. Mumbai.
G, a consulting engineer based in Mumbai, Maharashtra renders professional
services in respect of an immovable property of B of Bangalore located in Australia.
Since the immovable property is located outside India, the place of supply of service
is the location of recipient, i.e. Bangalore and not the place where the immovable
property is located (Australia)

5.3. Section 12(4) – POS in case of Performance Based Service

• The place of supply of restaurant and catering services, personal grooming,
fitness, beauty treatment, health service including cosmetic and plastic surgery
shall be the location where the services are actually performed.

PLACE OF SUPPLY 58
 CA INTER – INDIRECT TAX

EXAMPLES:
Mr. D, a businessman from Hyderabad dines in a restaurant at Mumbai while on a
business trip. The place of supply of restaurant service is the location where such
service is performed, i.e. Mumbai.

T, a makeup artist at Kolkata, goes to Jaipur, Rajasthan for doing the makeup of Ms.
K, a Bollywood actress based in Mumbai. The place of supply is the location where
such service is performed, i.e. Jaipur.

5.4. Section 12(5) – POS in case of Training and Performance Appraisal

• The place of supply of services in relation to training and performance appraisal
to, –
Supplied to Place of Supply

Registered Person Location of such registered person

Unregistered Person Actually performed

EXAMPLE:
Mr. S (unregistered person based in Noida) signs up with E (New Delhi) for receiving
training on English speaking at their New Delhi Centre. Since the recipient is unregistered,
the place of supply is the location where services are provided, i.e. New Delhi.

5.5. Section 12(6) – POS in case of Admission to Events

• The place of supply of services provided by way of admission to a cultural,
artistic, sporting, scientific, educational, entertainment event or amusement
park or any other place and services ancillary thereto, shall be the place where
the event is actually held or where the park or such other place is located.

EXAMPLES:
V, a resident of Ghaziabad, Uttar Pradesh, buys a ticket for a circus organized at
Gurugram, Haryana by a circus company based in New Delhi. The place of supply is
the location where the circus is held, i.e. Gurugram.

M of New Delhi buys a ticket for an amusement park located in Noida, Uttar Pradesh.
The place of the supply is the location where the park is located, i.e. Noida.

PLACE OF SUPPLY 59
 CA INTER – INDIRECT TAX

5.6. Section 12(7) – POS in case of Organizing of Events

• The place of supply of services provided by way of, —
(a) organization of cultural, artistic, sporting, scientific, educational or
entertainment event including supply of services in relation to a conference,
fair, exhibition, celebration or similar events; or
(b) Services ancillary to organization of any of the events or services referred
to in clause (a), or assigning of sponsorship to such events, ––
Supplied to Place of Supply
Registered Person Location of such registered person
Place where the event is actually held but if the event is
Unregistered Person
outside India, then location of recipient.
Explanation.
In case of service for more than 1 state/ UT, then the value has to be proportionate
as may be prescribed.

EXAMPLES:
Mayur Events, an event management company at New Delhi, organizes an award
function for Shah Diamond Merchants of Ahmedabad (registered in Gujarat), at
Mumbai. Since the recipient is a registered person, the place of supply is the location
of the recipient, i.e. Ahmedabad.

Mayur Events, an event management company at New Delhi, organizes an award

function for Shah Diamond Merchants of Ahmedabad (registered in Gujarat),
in Mauritius. Since the recipient is a registered person, the place of supply is the
location of the recipient, i.e. Ahmedabad

5.7. Section 12(8) – POS in Transportation of Goods

• The place of supply of services by way of transportation of goods, including by
mail or courier to –
Supplied to Place of Supply

Registered Person Location of such registered person

Unregistered Person Where goods are handed over for their transportation

Provided that where the transportation of goods is to a place outside India, the place of
supply shall be the place of destination of such goods.

PLACE OF SUPPLY 60
 CA INTER – INDIRECT TAX

EXAMPLES:
M/s S Pvt. Ltd. is a registered company in New Delhi. It sends its courier to Pune
through M/s B Courier Service. The recipient being registered person, the place of
supply is the location of recipient, i.e. New Delhi.

Mr. B, an unregistered person, of New Delhi sends a courier to his brother in Amritsar,
Punjab. The recipient being unregistered person, the place of supply is the location
where goods are handed over for their transportation, i.e. New Delhi.

P Pvt. Ltd., a Goods Transportation Agency based in Kanpur, Uttar Pradesh, is hired
by H (registered supplier in Kanpur) to transport its consignment of goods to a buyer
in New Delhi. The recipient being registered, the place of supply is the location of
recipient, i.e. Kanpur.

S Transports Pvt. Ltd., a Goods Transportation Agency based in Noida, Uttar Pradesh,
is hired by C (registered supplier in New Delhi) to transport its consignment of goods
to a buyer in Kanpur, Uttar Pradesh. The recipient being registered, the place of
supply is the location of recipient, i.e. New Delhi.

Mr. S, a manager in a Bank, is transferred from Bareilly, Uttar Pradesh to Bhopal,

Madhya Pradesh. Mr. S’s family is stationed in Kanpur, Uttar Pradesh. He hires G of
Lucknow, Uttar Pradesh (registered in Uttar Pradesh), to transport his household goods
from Kanpur to Bhopal. The recipient being unregistered person, the place of supply is
the location where goods are handed over for their transportation, i.e. Kanpur

5.8. Section 12(9) – POS in Transportation of Passenger

• The place of supply of passenger transportation service to, —
Supplied to Place of Supply

Registered Person Location of such registered person

Unregistered Person Where the passenger embarks

Explanation.
For the purposes of this sub-section, return journey shall be treated as a separate
journey, even if the right to passage for onward and return journey is issued at the
same time.

PLACE OF SUPPLY 61
 CA INTER – INDIRECT TAX

EXAMPLES:
Mr. A (registered person in New Delhi) travels from Mumbai to Bangalore in jet
flight. Mr. A has bought the tickets for the journey from jet’s office registered in New
Delhi. The place of supply is the location of recipient, i.e. New Delhi.

Mr. S (unregistered person in Chennai) has come to Delhi on a vacation. He buys pre-
paid Delhi Metro Card from Delhi Metro (New Delhi) for hassle free commute in the
National Capital Region. Recipient being unregistered person, the place of supply is
the address of Mr. S, i.e. Chennai. If address of Mr. S is not available with the Delhi
Metro, the place of supply will be the location of the supplier of services, i.e. New
Delhi.

Mr. S, an unregistered person, based in Gurugram, Haryana books a two-way air

journey ticket from New Delhi to Mumbai on 5th December. He leaves New Delhi on
10th December in a late-night flight and lands in Mumbai the next day. He leaves
Mumbai on 14th December in a morning flight and lands in New Delhi the same day.
The return journey is treated as a separate journey, even if the tickets for onward
and return journey are issued at the same time. Thus, being an unregistered person,
the place of supply for the outward and return journeys are the locations where the
unregistered person embarks on the conveyance for the continuous journey, i.e. New
Delhi and Mumbai respectively.

Examples of issue of right to passage for future use-point of boarding not known at
the time of issue of right
An airline may issue seasonal tickets, containing say 10 vouchers which could be
used for travel between any two locations in the country.

The card issued by New Delhi metro could be used by a person located in Noida, or
New Delhi or Faridabad, without the New Delhi metro being able to distinguish the
location or journeys at the time of receipt of payment.

5.9. Section 12(10) – POS for Services Supplied On Board of a Conveyance

• The place of supply of services on board a conveyance, including a vessel, an
aircraft, a train or a motor vehicle, shall be the location of the first scheduled
point of departure of that conveyance for the journey.

PLACE OF SUPPLY 62
 CA INTER – INDIRECT TAX

EXAMPLE:
Mr. R is travelling from Delhi to Mumbai in an jet flight. He desires to watch an
English movie during the journey by making the necessary payment. The place of
supply of such service of showing ‘movie on demand’ is the first scheduled point of
departure of the conveyance for the journey, i.e. Delhi.

5.10. Section 12(11) – POS in case of Telecommunication Services

• The place of supply of telecommunication services including data transfer,
broadcasting, cable and direct to home television services to any person shall, —
Type of service Place of Supply
Fixed Line, cable or Place where the device is installed for receipt of service
dish antenna
Post Paid mobile/ Location of billing address of recipient
internet connection
Prepaid mobile/  Through selling agent - address of such selling agent
internet connection  To final subscriber - location where such prepayment is
received
In any other case Address of recipient or if it is not available then location of
supplier
Prepaid through Address of recipient or if it is not available then location of
online payment supplier

Explanation.
In case of a service for more than 1 state/ UT, then the value has to be proportionate
as may be prescribed.

EXAMPLES:
Mr. S (Kolkata) gets a landline phone installed at his home in Kolkata from telair Ltd. The
place of supply is the location where the telecommunication line is installed, i.e. Kolkata.

Mr. R (Mumbai) gets a DTH installed at his home in his village in Uttar Pradesh from
skytata Ltd. The place of supply is the location where the DTH is installed, i.e. Uttar
Pradesh.

Mr. S (Mumbai) takes a post-paid mobile connection in Mumbai from telair Ltd. and
gives his residence address at Mumbai as the address for billing with supplier. The
place of supply is the location of billing address of the recipient, i.e. Mumbai.

PLACE OF SUPPLY 63
 CA INTER – INDIRECT TAX

Mr. G (New Delhi) gets his post-paid mobile bill (billing address New Delhi) paid
online from Goa. The place of supply is the location of the billing address of the
recipient, i.e. New Delhi.

Mr. J (Pune) purchases a pre-paid card from a selling agent in Mumbai. The place of
supply is the address of the selling agent or re-seller, i.e. Mumbai.

Mr. F (Puducherry) gets a pre-paid mobile recharged from a grocery shop in Chennai.
The place of supply is the location where such pre-payment is received, i.e. Chennai.

5.11. Section 12(12) – POS in case of Banking and other services including Stock Broking
• The place of supply of banking and other financial services, including stock
broking services to any person shall be

Case Place of Supply

Address available on record Location of recipient

Address not available on record Location of supplier

EXAMPLES:
Mr. D (Chennai) buys shares from a broker in BSE (Mumbai). The place of supply is
the location of the recipient of services in the records of the supplier, i.e. Chennai.

Mr. A (New Delhi) withdraws money from Best Bank’s ATM in Amritsar. Mr. A has
crossed his limit of free ATM withdrawals. The place of supply is the location of the
recipient of services in the records of the supplier, i.e. New Delhi.

Mr. R from Varanasi, Uttar Pradesh, visits a bank registered in New Delhi to get a
demand draft made. Mr. R does not have any account with the said bank. Therefore,
since the location of recipient is not available in the records of the supplier, the
place of supply is the location of the supplier of services, i.e. New Delhi.

PLACE OF SUPPLY 64
 CA INTER – INDIRECT TAX

5.12. Section 12(13) – POS in case of Insurance Services

• The place of supply of insurance services shall, ––

Supplied to Place of Supply

Registered Person Location of such registered person

Unregistered Person Location of recipient on the records of supplier

EXAMPLES:
Mr. S, CEO of S Ltd., Mumbai (a company registered in Maharashtra) buys insurance
cover for the inventory stored in company’s factory located at Mumbai, from Lucky
Insurers, Chennai (registered in Tamil Nadu). The place of supply is the location of
the registered recipient, i.e. Mumbai.

Ms. B (unregistered resident of Kolkata) goes to her native place Patna, Bihar and
buys a medical insurance policy for her parents there from Lucky Insurers, Patna
(registered in Bihar). The place of supply is the location of the recipient of services in
the records of the supplier, i.e. Patna.

5.13. Section 12(14) – Advertising service to CG, SG or Local Authority

• The place of supply of advertisement services to the Central Government, a State
Government, a statutory body or a local authority meant for the States or
Union territories identified in the contract or agreement shall be taken as being in
each of such States or Union territories and the value of such supplies specific to each
State or Union territory shall be in proportion to the amount attributable to services
provided by way of dissemination in the respective States or Union territories as may
be determined in terms of contract or agreement entered into in this regard
or, in absence of such contract or agreement, on such other basis as may be
prescribed.

No. Mode of Allocation method to each state/UT

Advertisement
1. Newspaper Number of editions in each state/UT
2. TV Viewership of the channel in each state/UT
3. Radio Number of Radio Stations in each state/UT
4. Internet Number of internet subscribers in each state/UT
5. SMS Number of telecom subscribers in each state/UT

PLACE OF SUPPLY 65
 CA INTER – INDIRECT TAX

6. Cinema hall Number of screens in each state/UT

7. Trains Length of the railway tracks in each state/UT
8. Railway Tickets Number of stations in each state/UT
9. Utility bills Number of consumers in each state/UT
10. Hoardings Number of Hoardings in each state/UT
11. Pamphlets Number of Pamphlets in each state/UT.

PLACE OF SUPPLY 66
 CA INTER – INDIRECT TAX

5 EXEMPTIONS

 Chapter Overview
(1) Section 11 : Power to Exempt
(2) NN/12/2017 - Exemption Notification
(3) Classwork / Homework

1. Power to Exempt – Section 11 of CGST Act, 2017

• Overview
Section 11 of CGST Act, 2017/ Section 6 of IGST Act, 2017
General Exemption: If the CG is satisfied that it is necessary in the public interest,
it may on the recommendation of GST Council exempt, goods or services of any
specified description from the whole or any part of the GST leviable thereon, subject
to such conditions as may be specified in the notification.
Special Exemption: On the recommendation of GST Council, Central Government may
by special order in each case, exempt goods or services of any specified description
from the whole or any part of the GST leviable thereon, under circumstances of an
exceptional nature to be stated in such order, subject to such conditions as may be
specified in the order.
Explanation: Central Government may insert Explanations for clarifying the scope or
applicability of the notification or special order.

Such explanation can have retrospective effect from date of exemption notification.
However, the Explanation should be inserted within 1 year from issue of such
Notification or Order.
Mandatory: If an exemption is absolute – whether for whole or part of GST, then the
registered person supplying such goods or services or both shall not collect the
tax, in excess of the effective rate after giving effect to the exemption.

EXEMPTIONS 67
 CA INTER – INDIRECT TAX

2. List of Service Exemptions–Notification no.12/2017 of CGST and 9/2017 of

IGST

2.1. Renting of Immovable Property

• Renting or leasing of vacant land relating to agriculture1.

• Renting of a residential dwelling for use as residence except where residential dwelling
is rented to registered person. Hotel, Lodge used as residence for temporary or long
period will not be covered under this entry as they are not residential dwelling.

Explanation: For the purpose of exemption under this entry, this entry shall cover
services by way of renting of residential dwelling to a registered person where, –
(i) Registered person is proprietor of a proprietorship concern and rents the
residential dwelling in his personal capacity for use as his own residence; and
(ii) such renting is on his own account and not that of proprietorship concern.

2.2. Hiring, Leasing, Licensing of Goods

• Services by way of giving on hire

(a) Motor vehicle meant to carry more than 12 passengers to State transport
undertaking; or

(b) Electrically operated vehicle meant to carry more than 12 passengers to Local
authority; or

(c) Means of transportation of goods to a Goods transport agency; or

(d) Motor vehicle for transport of students, faculty and staff, to a person providing
services of transportation of students, faculty and staff to an educational
institution providing services by way of pre-school education and education
upto higher secondary school or equivalent.

1
Agriculture means the cultivation of plants and rearing of all life forms of animals except rearing of horses, for food,
fibre, fuel, raw materials or other similar products.

EXEMPTIONS 68
 CA INTER – INDIRECT TAX

2.3. Construction Services

• Services provided by way of pure labour contracts of construction, erection,

commissioning, installation, completion, fitting out, repair, maintenance, renovation,
or alteration of a civil structure or any other original works pertaining to the
beneficiary-led individual house construction or enhancement under the Housing for All
(Urban) Mission or Pradhan Mantri Awas Yojana.

• Services by way of pure labour contracts of construction, erection, commissioning, or

installation of original works pertaining to a single residential unit otherwise than as a
part of a residential complex2.

• Services supplied by electricity distribution utilities by way of construction, erection,

commissioning, or installation of infrastructure for extending electricity distribution
network upto the tube well of the farmer or agriculturalist for agricultural use.

2.4. Services provided by Government and Local Authorities

• Exemption
Services by the Central Government, State Government, Union territory or local
authority excluding the following services—
(a) services by the Department of Posts
(b) services in relation to an aircraft or a vessel, inside or outside the precincts of a
port or an airport;
(c) transport of goods or passengers; or
(d) any service, other than services covered under entries (a) to (c) above, provided
to business entities.

• Additional Points
• Service by Department of post by way of Post Card, Inland letter, Book-Post and
Ordinary Post (Envelopes Weighing less than 10gram) will be Exempt.
• Any service provided by CG, SG or LA upto ` 5,000 is also exempted. This exemption
is not applicable to first three limbs of exemption

2
Residential complex: means any complex comprising of a building or buildings, having more than one single residential
unit

EXEMPTIONS 69
 CA INTER – INDIRECT TAX

• Exemption: Any service provided by Government to a business entity whose

turnover does not exceed registration limit(`40/`20/`10 lakh) in preceding financial
year is exempt except first three limbs and renting of immovable property.

• Other Points & Exemptions related to Government

Type of service Taxability
Service provided by Government Such services have been exempted. However, it
or local authority to another does not apply to first three limbs of 1st exemption
Government or local authority provided by government.
Service provided to an individual Services by way of grant of passport, visa, driving
who may be carrying out a license, birth or death certificates have been
profession or business. exempted.

Services in the nature of Exempted. However, Such allocations/auctions

allocation of natural resources by to categories of persons other than individual
Government or a local authority farmers would be leviable to GST.
to individual farmers
Services provided in lieu of fee Registration required under the law; testing,
charged by Government or a calibration, safety check or certification relating
local authority to protection or safety of workers, consumers or
public at large, required under the law, have
been exempted.
Fines and It is clarified that fines and penalty chargeable by Government or a
penalties local authority imposed for violation of a statute, bye-laws, rules or
regulations are not leviable to GST.

Fines and liquidated damages payable to Government for non-

performance of contract entered into with Government or local
authority have been exempted.
Guarantee Services supplied by Central Government, State Government,
Commission Union territory to their undertakings or PSUs by way of
guaranteeing the loans taken by such undertakings or PSUs from
the banking companies & financial institutions is exempted..
Long term One time upfront amount (called as premium, salami, cost, price,
lease by State development charges or by any other name) leviable in respect
Government of the service, by way of granting long term (thirty years, or more)
lease of industrial plots or plots for development of infrastructure for
financial business, provided by the State Government Industrial
Development Corporations or Undertakings or by any other entity
having 20% or more ownership of CG, SG, UT to industrial units is
exempted.

EXEMPTIONS 70
 CA INTER – INDIRECT TAX

Example
Analysis

Lease ≥ 30 Years
SGIDC Industrial units
or or
Undertakings or developers in
Industrial plots
by any other entity any industrial
or
having 20% or or financial
Plots for development
more ownership business area
of infrastructure for
of CG SG , LA, UT
financial business

Consideration
1. Upfront Amount -- Exempt
2. Periodical Amount -- Taxable as FCM
Circular No. 101/20/2019-GST
It is hereby clarified that GST exemption on the upfront amount
is admissible irrespective of whether such upfront amount
is payable or paid in one or more instalments, provided the
amount is determined upfront

100% 20% or more

CG, SG, Entity Entity
Ownership ownership
UT -A -B

Entity B shall be deemed to have 20% or more ownership of

CG, SG, UT

Charges for Services provided by the Central Government, State Government,

officers Union territory by way of deputing officers after office hours or on
holidays for inspection or container stuffing or such other duties
in relation to import export cargo on payment of Merchant
Overtime charges is exempted.

Assigning right Services supplied by a State Government to Excess Royalty

to collect royalty Collection Contractor (ERCC) by way of assigning the right to collect
royalty* on behalf of the State Government on the mineral
dispatched by the mining lease holders is exempted.

EXEMPTIONS 71
 CA INTER – INDIRECT TAX

* Example of ERCC :

Mine on lease
Gujarat XYZ Ltd.
Fixed Royalty – 10 Cr. Per
[Mining Lease
State Govt. Year [RCM]
Holder]

Right to Recover Variable Royalty –

Variable Royalty 7 Cr. / 4 Cr. – [RCM]

Variable Royalty-
5 Cr. Per year
PQR Ltd.
[ERCC]

 Fixed Royalty of Rs. 10 Cr. From MLH to Gujarat State

always taxable as RCM
 Variable Royalty of Rs. 7 Cr. Or 4 Cr. From MLH to ERCC also
taxable as RCM
 Variable Royalty of Rs. 5 Cr. From ERCC to Gujarat State
Govt is –
- Fully Exempt if variable royalty Rs. 7 Cr. Paid by MLH To
ERCC
- Only 4 Cr. Exempt out of 5 Cr. If if variable royalty Rs. 4
Cr. Paid by MLH To ERCC and 1 Cr.
Taxable as RCM

National Permit Services by way of granting National Permit to a goods carriage

to operate through-out India is exempted.
Panchayat and Pure Service/ Composite supply of goods or services where value
Municipality of goods is not more than 25% of the total value provided to
Government or local authority by way of any activity in relation
to any function entrusted to Panchayat under Article 243G or to
Municipalities under Article 243W of the Constitution is exempted.

EXEMPTIONS 72
 CA INTER – INDIRECT TAX

Examples –
1. Raj entered into the labour contract [without material]
to maintain a “Shivaji Garden” with Surat Municipal
Corporation.
2. Amar Entered into a Contract to administration of Parking
lot with Indore Municipal corporation.
Example –
1. Sachin tichkule entered into Repair Contract including
material with Raipur Municipal Corporation.
Invoice are as under:

Case 1 Case 2
Material value < 25% of To- Material value > 25% of Total
tal value value
Material 10,000 Material 30,000
Labour charge 90,000 Labour charge 70,000
Total Value 1,00,000 Total value 1,00,000
Exempt under Sr. No. 3A NOT Exempt under Sr. No. 3A

Commission paid Service provided by Fair Price Shops to Central Government, State
to ration shops Government or Union territory by way of sale of food grains,
kerosene, sugar, edible oil, etc. under Public Distribution System
against consideration in the form of commission or margin is
exempted.

2.5. Education related services - Exemption

• Services provided

(a) BY an educational institution* to its students, faculty and staff.

(aa) By an education institution* by way of conduct of entrance examination against

consideration in the form of entrance fee.

(b) TO an educational institution*, by way of,-

(i) Transportation of students, faculty and staff;
(ii) Catering, including any mid-day meals scheme sponsored by the
Government;

EXEMPTIONS 73
 CA INTER – INDIRECT TAX

(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;
(v) Supply of online educational journals or periodicals;

Note 1: However nothing contained in entry (i) (ii) (iii) of item (b) shall apply to an education
institution* other than an institution providing services by way of pre-school education and
education up to higher secondary school or equivalent.

Note 2: Provided further that nothing contained in sub-item (v) of item (b) shall apply to an
institution providing services by way of,-
(i) Pre-school education and education up to higher secondary school or equivalent; or
(ii) Education as a part of an approved vocational education course
______________________________________________________________
*Education institution3 means an institution providing services by way of -
(i) Pre-school education and education up to higher secondary school or equivalent;
(ii) Education as a part of a curriculum for obtaining a qualification recognised by any
law for the time being in force;
(iii) Education as a part of an approved vocational education course**;
**Approved vocational education course means,-
(i) A course run by an industrial training institute or an industrial training centre
affiliated to the National Council for Vocational Training or State Council for Vocational
Training offering courses in designated trades notified under the Apprentices Act,
3 1961 (52
It is clarified that of
the1961.); orState Educational Boards shall be treated as Educational Institution for the limited
Central and
purpose of providing services by way of conduct of examination to the students.
An explanation is inserted in the exemption notification to clarify that any authority, board or body set up by the CG/
(ii) A Modular
SG including NationalEmployable
Testing Agency Skill Course,
for conduct approved
of entrance by the
examination for National
admission to educational
Council institutions
of Vocational
shall be treated as educational institution for the limited purpose of providing services by way of conduct of entrance
Training
examination
4
, run by a
for admission to person registered
educational with the Directorate General of Employment and
institutions.
4
Circular number 55/2018 clarified that private Industrial Training Institutes providing courses approved by NCVT/ SCVT
Training, Union Ministry of Labour and Employment.
would be exempt.
Some of the designated trades notified under the Apprentices Act, 1961 are electrician, wireman, carpenter, plumber,
mason, mechanic, tool and die maker, baker and confectioner, weaver, tailor, footwear maker, photographer, beautician,
painter, desk top publishing operator, gardener, cable television operator, library assistant, etc.

#
It is clarified that the amount or fee charged for admission or entrance, or amount charged for application fee for
entrance, or the fee charged from prospective students for issuance of eligibility certificate to them in the process
of their entrance/admission to the educational institution is exempt. Further, services supplied by an educational
institution by way of issuance of migration certificate to the leaving or ex-students are also exempt. (Circular No. 177/09/2022
GST dated 03.08.2022)

EXEMPTIONS 74
 CA INTER – INDIRECT TAX

2.6. Transportation of goods - Exemptions

• Services by way of transportation of goods by road except the services of goods

transportation agency5 or courier agency6;

• Transportation of goods by an aircraft from outside India upto the custom airport;

• By inland waterways (means national waterway);

• Services by way of transportation by rail or a vessel from one place in India to another
and transportation by Goods Transportation Agency of the following goods:
- Relief materials meant for victims of natural or man-made disasters, calamities,
accidents or mishap;
- Defence or military equipment’s;
- Newspaper or magazines registered with the Registrar of Newspapers;
- Agricultural produce;
- Milk, Salt and Food grains including flour, pulses and rice; or
- Organic manure;

• Services provided by a GTA to an unregistered person, including an unregistered causal

taxable person, other than the specified recipients7.

• Services provided by a GTA, by way of transport of goods in a goods carriage, to, -

(a) a Department or Establishment of the Central Government or State Government
or Union territory; or
(b) local authority; or
(c) Governmental agencies, which has taken registration under the Central Goods
and Services Tax Act, 2017 only for the purpose of deducting tax under section
51 and not for making a taxable supply of goods or services.

GTA means any person who provides services in relation to transportation of goods by road and issues consignment
5

note, by whatever name called.

6
Courier agency means any person engaged in the door-to-door transportation of time-sensitive documents, goods
or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents,
goods or articles.
7
Specified recipients list - Refer chapter 3 Section 9 (3)

EXEMPTIONS 75
 CA INTER – INDIRECT TAX

2.7. Transportation of passengers - Exemptions

• Railways in a class other than First class; or An air-conditioned coach;

• Metro, monorail or tramway;

• Inland waterways;

• #
Public transport, other than predominantly for tourism purpose, in a vessel,
between places located in India; and

• Metered cabs8, Auto rickshaws;

• Non-air conditioned contract carriage other than radio taxi, for transportation of
passengers, excluding tourism, conducted tour, charter or hire* ; or

8
Radio taxi means a taxi including a radio cab, by whatever name called, which is in two-way radio communication
with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio
Service (GPRS).

Metered cab means any contract carriage on which an automatic device, of the type and make approved under
the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any
moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988
(59 of 1988.) and the rules made thereunder but does not include radio taxi.

Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver
for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of
the journey.- Motor Vehicle Act, 1988. A person can get in or get down at any stage of journey.

In a contract carriage, the person will always buy a ticket for the whole journey. Generally, passengers do not get in
or step down at every point.

*Circular No. 177/09/2022 GST dated 03.08.2022 It has been clarified that ‘charter or hire’ excluded from the above
exemption entry is charter or hire of a motor vehicle for a period of time, where the renter defines how and when
the vehicles will be operated, determining schedules, routes and other operational considerations. Thus, the said
exemption would apply only to passenger transportation services by Non AC contract carriage where transportation takes
place over pre-determined route on a pre-determined schedule. The exemption shall not be applicable where contract
carriage is hired for a period of time, during which the contract carriage is at the disposal of the service recipient and
the recipient is thus free to decide the manner of usage (route and schedule) as per agreement.

#Circular No. 177/09/2022 GST dated 03.08.2022 It has been clarified that the exemption would apply to tickets
purchased for transportation from one point to another irrespective of whether the ferry is owned or operated by a
private sector enterprise or by a PSU/government. It has been further clarified that the expression ‘public transport’
used in the exemption notification only means that the transport should be open to public; it can be privately or publicly
owned. Only exclusion is on transportation which is predominantly for tourism, such as services which may combine
with transportation, sightseeing, food and beverages, music, accommodation such as in shikara, cruise etc

EXEMPTIONS 76
 CA INTER – INDIRECT TAX

• Stage carriage other than AC stage carriage.

Note: The exemption is not available for Metered Cabs, auto rickshaw, Stage and
Contract Carriage provided through an E-Commerce Operator required to pay tax u/s
9(5) of CGST Act.

• Transport of passengers by Air in economy class, embarking from or terminating in

an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya,
Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; In
short- North eastern states, to encourage development.

• Services provided to the Central Government, by way of transport of passengers

with or without accompanied belongings, by air, embarking from or terminating at
a regional connectivity scheme airport, against consideration in the form of viability
gap funding. (Upto a period of 3 years from date of commencement of connectivity
scheme)

2.8. Agriculture Related Exemptions

a) Services relating to cultivation of plants and rearing of animals except rearing of horses,
for food, fibre, fuel, raw material or similar produce or agricultural produce9 by way of —
- (i) Agricultural operations directly related to production of any agricultural
produce including cultivation, harvesting, threshing, plant protection or testing;
- (ii) Supply of farm labour;
- (iii) Processes carried out at an agricultural farm including tending, pruning,
cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing,
sorting, grading, cooling or bulk packaging and such like operations which do
not alter the essential characteristics of agricultural produce but make it only
marketable for the primary market;
- (iv) Renting or leasing of agro machinery or vacant land with or without a structure
incidental to its use;
- (v) Loading, unloading, packing, storage or warehousing of agricultural produce;
- (vi) Agricultural extension services;
- (vii) Services by any Agricultural Produce Marketing Committee or Board or services
provided by a commission agent for sale or purchase of agricultural produce15;

EXEMPTIONS 77
 CA INTER – INDIRECT TAX

b) Services by way of storage or warehousing of cereals, pulses, fruits and vegetables.

c) Pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits

and vegetables.

d) Services by way of loading, unloading, packing, storage or warehousing of rice.

e) Services by way of warehousing of minor forest produce.

f) Carrying out an intermediate production process10 as job work in relation to cultivation

of plants and rearing of all life forms of animals, except the rearing of horses, for
food, fibre, fuel, raw material or other similar products or agricultural produce.

Examples :
Desai Agro Care Limited” registered under GST furnishes the following details with
respect to the activities undertaken by them in the month of March, 2022:

Particular Rs.
1 Receipts from supply of farm labour 85,000
2 Charges for seed testing 65,000
3 Charges for soil testing of farm land 35,000
4 Charges for warehousing of potato chips 85,000
5 Commission received on sale of wheat 75,000
6 Charges of training of farmer on use of new pesticides and 10,000
fertilizers developed through scientific research
7 Renting of vacant land to a stud farm 1,85,000
8 Leasing of vacant land to a cattle farm 83,000
9 Charges for warehousing of rice 1,50,000
10 Charges for warehousing of cotton fabrics 3,50,000
11 Retail packing and labeling of fruits and vegetables 5,00,000

Compute the value of taxable supply of ‘Desai Agro Care limited’ for the month of
March, 2022 if all the above amounts are exclusive of GST.

EXEMPTIONS 78
 CA INTER – INDIRECT TAX

SOLUTION: Computation of Value of taxable supply-

Particular Rs.
1 Receipts from supply of farm labor [Exempt under Notification No. NIL
12/2017] CT (Rate)]
2 Charges for seed testing [Exempt under Notification No. 12/2017] NIL
CT (Rate)]
3 Charges for soil testing of farm land [Exempt under Notification NIL
No. 12/2017] CT (Rate)]
4 Charges for warehousing of potato chips [potato chips is not an 85,000
agricultural produce, hence warehousing of the same be taxable]
5 Commission received on sale of wheat [Exempt under Notification NIL
No. 12/2017-] CT (Rate)]
6 Charges for training of farmers on use of new pesticides and NIL
fertilizers developed through scientific research [Exempt under
Notification No. 12/2017] CT (Rate)]
7 Renting of vacant land to a stud farm [This will be liable for GST as 1,85,000
rearing of horses has been specifically excluded from Exemption]
8 Leasing of vacant to a cattle farm [Exempt under Notification No. NIL
12/2017] CT (Rate)]
9 Charges for warehousing of rise [Exempt under Notification No. NIL
12/2017-] CT (Rate)]
10 Charges for warehousing of cotton fabrics (Liable to GST) 3,50,000
11 Retail packing and labeling of fruits and vegetables [Exempt NIL
under Notification No. 12/2017] CT Rate)]
Value of Taxable supply 6,20,000

9
Agricultural produce means any produce of agriculture on which either no further processing is done or such processing
is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it
marketable for primary market.
• It is hereby clarified that processed products such as tea (i.e. black tea, white tea etc.), processed coffee beans or
powder, pulses (dehusked or split), jaggery, processed spices, processed dry fruits, processed cashew nuts etc. fall outside
the definition of agricultural produce as they are not prepared after processing on raw agriculture produce. (Circular no.
16/16/2017 GST Dated 15.11.2017)
10
Milling of paddy is not an intermediate production process in relation to cultivation of plants. It is a process carried out
after the process of cultivation is over and paddy has been harvested.
Further, processing of paddy into rice is not usually carried out by cultivators but by rice millers. Milling of paddy
into rice also changes its essential characteristics. Therefore, milling of paddy into rice cannot be considered as
an intermediate production process in relation to cultivation of plants for food, fibre or other similar products or
agricultural produce.
In view of the above, it is clarified that milling of paddy into rice is not eligible for exemption. (Circular No. 19/19/2017-
GST dated 20/11/2017)

EXEMPTIONS 79
 CA INTER – INDIRECT TAX

2.9. Health Care Services and Charity Related Exemptions

a) Health care services11 by a clinical establishment12, an authorised medical

practitioner13 or para-medics and Ambulance services provided by any person14.
“Provided that nothing in this entry shall apply to the services provided by a clinical
establishment by way of providing room [other than Intensive Care Unit (ICU)/Critical
Care Unit (CCU)/Intensive Cardiac Care Unit (ICCU)/ Neo natal Intensive Care Unit
(NICU)] having room charges exceeding Rs. 5000 per day to a person receiving health
care services.”

b) Services by a veterinary clinic in relation to health care of animals or birds;

Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality
11

or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the
patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except
when undertaken to restore or to reconstruct functions of body affected due to such injury or trauma.
• Circular No. 27/01/2018 GST dated 04.01.2018 has clarified that Renting of rooms provided to in-patients in
hospitals are exempt.

Clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever
12

name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity,
abnormality or pregnancy in any recognised system of medicines in India.

Circular no. 32/06/2018 – GST Dated 12/02/2018 has clarified that Consultancy Charge provided to visiting senior
13

doctor by hospital is exempt and also food provided to in-patients in hospitals are exempt.

Circular number 51/25/2018 has clarified that ambulance service provided by private operators to Government under
14

National Health Mission is not liable to GST.

Circular No. 177/09/2022 GST dated 03.08.2022 has been clarified that abnormality/disease/ailment of infertility is
treated using ART procedure such as IVF and accordingly services by way of IVF are also covered under the definition
of health care services for the purpose of exemption notification. (Circular No. 177/09/2022 GST dated 03.08.2022)

EXEMPTIONS 80
 CA INTER – INDIRECT TAX

c) Services by an entity registered under section 12AA/12AB of the Income tax Act,1961
(43 of 1961) by way of charitable activities*;

*Charitable activities means activities relating to -

- (i) Public health by way of -

(a) Care or counseling of (i) terminally ill persons or persons with severe physical or
mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted
to a dependence-forming substance such as narcotics drugs or alcohol; or
(b) Public awareness of preventive health, family planning or prevention of HIV
infection;

- (ii) Advancement of religion or spirituality or yoga;

- (iii) Advancement of educational programmes or skill development relating to,-

(a) Abandoned, orphaned or homeless children;

(b) Physically or mentally abused and traumatized persons or prisoners;
(c) Persons over the age of 65 years residing in a rural area;

- (iv) Preservation of environment including watershed, forests and wildlife

d) Services by an old age home run by Central Government, State Government or by an entity
registered under Section 12AA/12AB of the Income-tax Act, 1961 to its residents (aged 60
years or more) against consideration upto 25,000 per month per member.

e) Services provided by an unincorporated body or a non-profit entity registered under any

law for the time being in force, engaged in
i) Activities relating to the welfare of industrial i) To its own members
or agricultural labour or farmers; or against consideration in
ii) Promotion of trade, commerce, industry, the form of membership
agriculture, art, science, literature, culture, fee upto an amount of
sports, education, social welfare, charitable one thousand rupees
activities and protection of environment (` 1000/-) per member
per year

EXEMPTIONS 81
 CA INTER – INDIRECT TAX

f) Services by way of training or coaching in

• Recreational activity relating to Arts, Culutre by an Individual,

• Sports by charitable entities registered under section 12AA/12AB of Income Tax
Act, 1961

g) Services by a person by way of-

• Conduct of any religious ceremony;

• Renting of precincts of a religious place meant for general public by an entity
registered u/s 12AA/12AB of Income tax Act. 1961 or;
Except
• Rooms for ` 1000 or more per day;
• Community hall for ` 10,000 or more per day;
• Shops for ` 10,000 or more per month

h) Services provided by rehabilitation professionals recognised under the Rehabilitation

Council of India Act, 1992 (34 of 1992) by way of rehabilitation, therapy or counselling
and such other activity as covered by the said Act at medical establishments,
educational institutions, rehabilitation centers established by Central Government,
State Government or Union territory or an entity registered under section 12AA/12AB
of the Income-tax Act, 1961

2.10. Financial Sector Related Exemptions

a) Services by a Foreign Diplomatic Mission located in India;

b) Banking and other financial services- Services by way of—

- (i) extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount except interest on credit card;
- (ii) inter se sale or purchase of foreign currency amongst banks or authorised
dealers of foreign exchange or amongst banks and such dealers;

c) Service by an acquiring bank, to any person in relation to settlement of an amount

upto two thousand rupees in a single transaction transacted through credit card,
debit card, charge card or payment card services.

EXEMPTIONS 82
 CA INTER – INDIRECT TAX

d) Service provided by a Banking Company to Basic Saving Bank Deposit (BSBD) account
holders under Pradhan Mantri Jan Dhan Yojana (PMJDY).

e) Business facilitator or business correspondent to banking company with respect to

accounts in its rural area branch or any intermediary to the business facilitator or
business correspondent.

f) Business facilitator/ Business Correspondent to insurance company in rural area.

2.11. Other services - Exemptions

a) Toll Charges- Service by way of access to a road or a bridge on payment of toll

charges.

b) Transmission or distribution of electricity by an electricity transmission or distribution

utility;

c) Arbitral Tribunal and Advocates (Not CA,CS,ICWA) by way of legal service15 -

(a) an arbitral tribunal to
(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the
preceding FY as makes it eligible for exemption from registration under
the CGST Act, 2017;
(iii) the Central Government, State Government, Union territory, local authority,
Governmental Authority or Government Entity.
(b) a partnership firm of advocates or an individual as an advocate other than a
senior advocate, by way of legal services to-
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with an aggregate turnover up to such amount in the
preceding FY as makes it eligible for exemption from registration under
the CGST Act, 2017;
(iv) the Central Government, State Government, Union territory, local authority,
Governmental Authority or Government Entity.

Legal service means any service provided in relation to advice, consultancy or assistance in any branch of law, in any
15

manner & includes representational services before any court, tribunal or authority

EXEMPTIONS 83
 CA INTER – INDIRECT TAX

(c) a senior advocate by way of legal services to-

(i) any person other than a business entity; or
(ii) a business entity with an aggregate turnover up to such amount in the
preceding FY as makes it eligible for exemption from registration under
the CGST Act, 2017.
(iii) the Central Government, State Government, Union territory, local authority,
Governmental Authority or Government Entity.

d) Services provided by a tour operator to a foreign tourist in relation to a tour conducted

wholly outside India.

e) Services by an organiser to any person in respect of a business exhibition held outside

India;

f) Tour operator service, which is performed partly in India and party outside India,
supplied by a tour operator to a foreign tourist, to the extent of the value of the tour
operator service which is performed outside India.
Provided that value of the tour operator service performed outside India shall be
such proportion of the total consideration charged for the entire tour which is equal
to the proportion which the number of days for which the tour is performed outside
India has to the total number of days comprising the tour, or 50% of the total
consideration charged for the entire tour, whichever is less:
Provided further that in making the above calculations, any duration of time equal
to or exceeding 12 hours shall be considered as one full day and any duration of
time less that 12 hours shall be taken as half a day.

Explanation - “foreign tourist” means a person not normally resident in India, who
enters India for a stay of not more than six months for legitimate non-immigrant
purposes.

Example
A tour operator provides a tour operator service to a foreign tourist as follows:-
(a) 3 days in India, 2 days in Nepal Consideration Charged for the entire tour : Rs.
1,00,000/-
Exemption : Rs. 40,000/- (=Rs. 1,00,000/- x 2/5) or Rs. 50,000/- (=50% of Rs.
1,00,000/-) whichever is less i.e. Rs. 40,000/- (i.e. Taxable value Rs. 60,000/-);

EXEMPTIONS 84
 CA INTER – INDIRECT TAX

(b) 2 days in India 3 nights in Nepal Consideration Charged for the entire tour Rs.
1,00,000/-
Exemption : Rs. 60,000 (=Rs. 1,00,000/- x 3/5) or, Rs. 50,000/- (=50% of Rs.
1, 00,000/-) whichever is less i.e. Rs. 50,000/- (i.e. Taxable value Rs. 50,000/-)
(c) 2.5 days in India 3 days in Nepal Consideration charged for the entire tour
Rs. 1,00,000/-
Exemption : Rs. 54,545 (=Rs.1,00,000/- x 3/5,5) or Rs, 50,000/- (=50%) of Rs.
1,00,000/-) whichever is less. i.e. Rs, 50,000/- (i.e. Taxable value Rs. 50,000/-)

g) 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 -

• As a trade union;
Example
Service
Trade Union Members

• For the provision of carrying out any activity which is exempt from the levy of
GST; or

Example

Health Checkup “Stay-Healthy” Health Checkup

Doctor Members
Service Association Service

Exempt Exempt

• Upto an amount of ` 7,500 per month per member for sourcing of goods or
services from a third person for the common use of its members in a housing
society or a residential complex;

Example

Housing Service Residents of

(eg.–Security, common lighting, society
Society [RWA]
Game zone House-keeping, Lift etc.)

EXEMPTIONS 85
 CA INTER – INDIRECT TAX

h) Services of admission to a museum, zoo, national park, wildlife sanctuary and a tiger
reserve. Ancient monuments have been exempted recently.

i) Service by way of Right to admission to:

• Circus, dance, or theatrical performances where the consideration

including drama or ballet. for such admission is upto
• Award functions, concerts, pageants, musical ` 500 per person.
performances or any sporting events other than
recognized sporting event.
• Recognized sporting events and Planetarium.

j) Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance,
or (iii) theatre upto ` 1,50,000 per performance, excluding services provided by such
artist as a brand ambassador.

k) Services provided to a recognised sports body* by-

• (a) an individual as a player, referee, umpire, coach or team manager for

participation in a sporting event organized by a recognized sports body;
• (b) another recognised sports body;

l) Services by way of sponsorship of sporting events organised,-

• By a national sports federation, or its affiliated federations, where the participating

teams or individuals represent any district, State, Zone or Country;
• By Association of Indian Universities, Inter-University Sports Board, School Games
Federation of India, All India Sports Council for Deaf, Paralympic Committee of
India or Special Olympics Bharat;
• By Central Civil Services Cultural and Sports Board;
• As part of national games, by Indian Olympic Association; or
• Under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

*“Recognised Sports Body” means : (i) the Indian Olympic Association; (ii) Sports Authority of India; (iii) a national
sports federation recognised by the Ministry of Sports and Youth Affairs of the Central Government, and its affiliate
federations; (iv) national sports promotion organisations recognised by the Ministry of Sports and Youth Affairs
of the Central Government; (v) the International Olympic Association or a federation recognised by the International
Olympic Association; or (vi) a federation or a body which regulates a sport at international level and its affiliated
federations or bodies regulating a sport in India;

EXEMPTIONS 86
 CA INTER – INDIRECT TAX

m) Services by an intermediary of financial services located in a multi services SEZ with

International Financial Services Centre (IFSC) status to a customer located outside
India for international financial services in currencies other than Indian rupees (INR).
Example

IFSC International Financial Services Foreign

Companies In Foreign Currency Customers

Located in Multi Services SEZ  Gujarat International Finance Tec-City

(GIFT), Gandhinagar (Gujarat)

n) Services provided to the Central Government, State Government, Union territory

administration under any training program for which “75% or more of the” total
expenditure is borne by CG/SG/UT.

o) Services provided by and to Asian Football Confederation (AFC) and its subsidiaries
directly or indirectly related to any of the events under AFC Women's Asia Cup 2022
to be hosted in India.

p) Services by way of right to admission to the events organised under AFC Women's
Asia Cup 2022.

q) Entry fee and service in relation to FIFA U-17 Women World Cup has been exempted
and this exemption will be available whenever the tournament is scheduled.

2.12. Read these exemptions yourself 

a) Services by way of collecting or providing news by an independent journalist, Press

Trust of India or United News of India;

b) Services by way of public conveniences such as provision of facilities of bathroom,

washrooms, lavatories, urinal or toilets;

c) Services of public libraries by way of lending of books, publications or any other

knowledge enhancing content or material;

EXEMPTIONS 87
 CA INTER – INDIRECT TAX

d) Services by way of slaughtering of animals;

e) Services by way of transfer of a going concern, as a whole or an independent part

thereof;

f) Service provided to the Central Government, State Government or Union Territory

under any insurance scheme for which total premium is paid by CG/SG/UT.

g) Specified schemes16 of general insurance business. Services of life insurance business

provided under following schemes -
(i) Janashree Bima Yojana (JBY); or Aam Aadmi Bima Yojana (AABY);

(ii) Varista Pension Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, Pradhan
Mantri Jeevan Jyoti Bima Yojana and Jan Dhan Yojana, Atal Pension Yojana,
Pradhan Mantri Vaya Vandana Yojana;

(iii) Life micro-insurance product as approved by the Insurance Regulatory and

Development Authority, having maximum amount of cover of two lakh rupees;

h) Any service provided by

• The National Skill Development In relation to
Corporation (NSDC) set up by • The National Skill Development
Government of India programme implemented by NSDC
• A Sector Skill Council approved by • A Vocational Skill development
NSDC course under National Skill
• An assessment agency approved by Certification and Monetary
above two Reward Scheme
• A training partner approved by above • Any other scheme implemented by
two NSDC
i) Service rendered by training providers under Deen Dayal Upadhyaya Grameen
Kaushalya Yojana.

16
Hut insurance scheme, Cattle insurance, scheme for insurance of tribals, Janata Personal Accident Policy and
Gramin Accident Policy, Group Personal Accident Policy for Self Employed women, Agricultural Pumpset and Failed
Well Insurance, Jan Arogya Bima Policy, Universal Health Insurance scheme, National Agricultural Insurance Scheme,
Nirmaya health insurance scheme, Bangla Shasya Bima

EXEMPTIONS 88
 CA INTER – INDIRECT TAX

j) Services of assessing bodies empanelled centrally by the Directorate General of

Training, Ministry of Skill Development and Entrepreneurship by way of assessments
under the Skill Development Initiative Scheme.

k) Service provided by Employee Provident Fund Organisation and National Centre for Cold
chain development.

l) Services by Employees‘ State Insurance Corporation to persons governed under the

Employees‘ Insurance Act, 1948 (34 of 1948);

m) Services of life insurance business provided or agreed to be provided by the Army,

Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force
respectively, under the Group Insurance Scheme of Central Government. Services
of life insurance provided or agreed to be provided by the Naval Group Insurance
Fund to the personnel of Coast Guard & Central Armed Police Force under the Group
Insurance Schemes of the Central Government.

n) Services by Coal Mines Provident Fund Organization to persons governed by the Coal
Mines Provident Fund and Miscellaneous Provisions Act, 1948.

o) Service provided under National Pension system.

p) Services by National Pension System (NPS) Trust to its members against consideration in
the form of administrative fee.

q) Services by way of providing information under the Right to Information Act, 2005.

r) Services by way of artificial insemination of livestock (other than horses).

s) Supply of services associated with transit cargo to Nepal and Bhutan.

It has been clarified that exemption notification shall cover services associated with
transit cargo both to and from Nepal and Bhutan. It has been further clarified that
movement of empty containers from Nepal and Bhutan, after delivery of goods there,
is a service associated with the transit cargo to Nepal and Bhutan and is therefore
covered by the exemption. (Circular No. 177/09/2022 GST dated 03.08.2022)

EXEMPTIONS 89
 CA INTER – INDIRECT TAX

t) Satellite launch services supplied by Indian Space Research Organisation, Antrix

Corporation Limited or New Space India Limited.
u) Service provided by the Haj Committee and Kumaon Mandal Vikas Nigam Limited in
relation to pilgrimage to Mecca and Kailash Mansarovar.

v) Services provided by an incubatee up to a total turnover of ` 50 lakh in a financial

year subject to the following conditions, namely:-
(a) the total turnover had not exceeded ` 50 lakh during the preceding financial
year; and
(b) a period of 3 years has not elapsed from the date of entering into an agreement
as an incubatee.
Incubatee: means an entrepreneur located within the premises of a Technology
Business Incubator (TBI)/ Science and Technology Entrepreneurship Park (STEP)
recognised by the National Science and Technology Entrepreneurship Development
Board of the Department of Science and Technology, Government of India (NSTEDB)
and who has entered into an agreement with the TBI/STEP to enable himself to
develop and produce hi-tech and innovative products.

Example – Incubatee – Byju’s [Agreement with TBI / STEP – date 1.4.2020]

Case 1 –
Year Total Turnover Eligibility for Exemption
1 30 lakhs Eligible
2 40 lakhs Eligible
3 45 lakhs Eligible
4 47 lakhs Ineligible

Case 2 –
Year Total Turnover Eligibility for Exemption
1 30 lakhs Eligible
2 55 lakhs Eligible
3 35 lakhs Ineligible

w) Taxable services, provided or to be provided, by a TBI/STEP recognised by NSTEDB

or bio- incubators recognised by the Biotechnology Industry Research Assistance
Council, under the Department of Biotechnology, Government of India (BIRAC).

EXEMPTIONS 90
 CA INTER – INDIRECT TAX

Examples of Incubators in India – (Start up Incubation)

1. The Amity Innovation Incubator – (Noida)
2. Centre for Innovation Incubation and Entrepreneurship – (Ahmedabad)
3. Indian Angel Network

Clarification issued by CBIC

1. Accomodation as part of spiritual programme

 Exempt as it is provided by charitable trust and is advancement of spirituality
(Composite supply)

However if only accomodition is provided then GST would be applicable for charges
>1000/day or equivalent

2. Taxability of interest in case of EMI

CBIC has classified that interest is on delayed payment of consideration for taxable
supply and therefor such interest is taxable.

  However if interest is charged by other than Supplier of goods for granting loans -
this is exempt

Case 1:-
Goods [Value – Rs. 40,000]

Supplier Consideration Recipient

EMI – Rs. 11000 * 4 = 44000

Penal Interest for late payment = 500
Total - 44500  Taxable
Value of Goods – Rs. 40000
Normal Interest of EMI Rs. 4000
Penal Interest for late payment Rs. 500

EXEMPTIONS 91
 CA INTER – INDIRECT TAX

Case – 2:
Goods [Value – Rs. 40,000]

Supplier Consideration paid– Rs. 40000 Recipient

Loan Rs. 40,000 Repayment of loan

Principal - 40,000
Interest - 4,000
Penal Int. - 500
Finance - 44,500
Company
Interest Rs. 4000 and Penal Interest – Rs. 500 are Exempted

3. Taxability of Course provided by IIM

Long term Duration Short term Duration

Eg. MBA ≥ 1year < 1year
 Eg. Executive Development course certificate
Degree 
 Participation
Exempt 
Taxable
Note : Maritime Training Institutes are educational institutions and the courses conducted
by them are exempt subject to fulfilment of other conditions specified herein.

4. Is GST applicable on accommodation services supplied by Air Force Mess to its

personnel?
Any service provided by CG/SG/UT or local authority to any person other than
business entity is exempt. Hence, accommodation services provided by Air Force
Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and
Police forces mess to their personnel or any person other than a business entity are
covered by exemption.

5. Is GST applicable on incentives paid by Ministry of Electronics and Information

Technology (MeitY) to acquiring banks under Incentive scheme for promotion of
RuPay Debit Cards and low value BHIM-UPI transactions?

EXEMPTIONS 92
 CA INTER – INDIRECT TAX

The service supplied by the acquiring banks in the digital payment system in case of
transactions through RuPay/BHIM UPI is the same as the service that they provide
in case of transactions through any other card or mode of digital payment. The only
difference is that the consideration for such services, instead of being paid by the
merchant or the user of the card, is paid by the central government in the form of
incentive. However, it is not a consideration paid by the central government for any
service supplied by the acquiring bank to the Central Government. The incentive is
in the nature of a subsidy directly linked to the price of the service and the same
does not form part of the taxable value of the transaction as per the definition of
consideration and the provisions of value of supply. Hence, it is not liable to GST.

6. Applicability of GST on sanitation and conservancy services supplied to Army and

other Central and State Government department

Clarification: The exemption has been given on pure services & composite supplies
procured by Central Government, State Government, Union Territories or local
authorities for performing functions listed in the 11th and 12th Schedule of the
Constitution [Article 243G and 243W]. It has been clarified that if such services are
procured by Indian Army or any other Government Ministry/Department which does
not perform any functions listed in the 11th and 12th Schedule of the Constitution, in the
manner as a local authority does for the general public, the same are not eligible
for exemption. (Circular No. 177/09/2022 GST dated 03.08.2022)

7. GST applicability on transport of minerals from mining pit head to railway siding,
beneficiation plant etc., by vehicles deployed with driver for a specific duration of
time

Clarification: Usually in such cases the vehicles such as tippers, dumpers, loader,
trucks etc., are given on hire to the mining lease operator. Expenses for fuel are
generally borne by the recipient of service. Such services are nothing but “rental
services of transport vehicles with operator”. It has been clarified that renting of trucks
and other freight vehicles with driver for a period of time is a service of renting of
transport vehicles with operator and not service of transportation of goods by road.
This being so, it is not eligible for exemption. (Circular No. 177/09/2022 GST dated 03.08.2022)

EXEMPTIONS 93
 CA INTER – INDIRECT TAX

8. Whether location charges or preferential location charges (PLC) collected in addition

to the lease premium for long term lease of land constitute part of the lease
premium or of upfront amount charged for long term lease of land and are eligible
for the same tax treatment?

Clarification: It has been clarified that location charges or preferential location

charges (PLC) paid upfront in addition to the lease premium for long term lease
of land constitute part of upfront amount charged for long term lease of land and
are eligible for the same tax treatment, and thus eligible for exemption. (Circular No.

177/09/2022 GST dated 03.08.2022)

9. Whether the additional toll fees collected in the form of higher toll charges from
vehicles not having fastag is exempt?

Clarification: It has been clarified that additional fee collected in the form of higher
toll charges from vehicles not having Fastag is essentially payment of toll for allowing
access to roads or bridges to such vehicles and may be given the same treatment as
given to toll charges. (Circular No. 177/09/2022 GST dated 03.08.2022)

3. Questions for practice

Sr. Case Taxability

No.
1 Catering service provided to visitors by educational institution Taxable
2 Catering service provided to students by an education institute Exempt
3 Renting of immovable property to an education institute Taxable
4 Renting of vacant land for agriculture Exempt
5 Renting of vacant land to a stud farm Taxable
6 Renting of vacant land for poultry farming Exempt
7 Security service provided by Cobra Limited to a degree college Taxable
8 Security service provided by Cobra Limited to a school Exempt
9 A vocational training programme by Rajasthan Parishad, Bangalore Taxable
10 Vocational training programme approved by National council for Exempt
Vocational training
11 Swimming pool usage service provided by degree college to Faculties Exempt
12 Repair and Maintenance of a college building Taxable

EXEMPTIONS 94
 CA INTER – INDIRECT TAX

13 Speed post provided by Dept of Post to Karnataka State Government Taxable

14 Repair of an aircraft provided by a Government department Taxable
15 Mining license given to a business entity Taxable
16 Passport of employees of a business owned by Mr. A Exempt
17 Mining license given to a business entity whose turnover in PFY was Exempt
18 lakhs
18 Mumbai Police providing security service to person other than business Exempt
entity
19 Money order by department of post Taxable
20 Marriage certificate for ` 2,000 from the registrar Exempt
21 Pension payments by department of post Taxable
22 Service provided by Central government to State government Exempt
23 Warehousing of biscuits Taxable
24 Transportation of Flour by Rail (Non AC) Exempt
25 Transportation of mineral oil by GTA to Registered Person Taxable
26 Warehousing for vegetable Oil Taxable
27 Supply of farm labour Exempt
28 Commission agent of wheat Exempt
29 Commission agent of Rice Taxable
30 Commission agent of watches Taxable
31 Packing and loading of wheat Exempt
32 Packing and loading of rice Exempt
33 Packing and loading of paddy Exempt
34 Training to farmers Exempt
35 Testing of farm Soil Exempt
36 Scientific research on Tropicana Fruit juice Taxable
37 Waxing of apples Exempt
38 Administration charges for loan processing Taxable
39 Interest on Government Securities Exempt
40 Discount earned on bills discounted Exempt
41 Interest earned by a pawn broker for loan on jewellery Exempt
42 Exchange of foreign currency with general public No Supply
43 Entry fee to Bangalore International Circus – ` 600 Taxable
44 Entry Fee to IIFA Award function – ` 200 Exempt
45 Entry fee to India v Australia match – ` 5,000 Taxable

EXEMPTIONS 95
 CA INTER – INDIRECT TAX

46 Entry fee to IPL Match – ` 500 Exempt

47 Entry fee to hip hop dance performance by Hema Malini – ` 200. Exempt
Hema Malini Charged ` 1,00,000 for the performance Taxable
48 Entry fee to Kathak dance performance by Honey Singh – ` 700. Taxable
Honey Singh Charged ` 1,50,000 for the performance Exempt
49 Zakir Hussain charged ` 1,00,000 for Taj Mahal Tea advertisement Taxable
50 Entry fee to Amoeba bowling centre – ` 11 Taxable
51 Entry fee to a pageant – ` 499 Exempt
52 Entry fee to snow city – ` 99 Taxable
53 Entry Fee to Wonderla (Amusement Park)– ` 199 Taxable
54 Health care service provided by Fortis Hospital Exempt
55 Mr A (CA) providing health advisory for cough and cold Taxable
56 Cosmetic and plastic surgery for an accident Exempt
57 Advocate providing legal service to a person other than business Exempt
entity
58 A CA providing representation service before income tax authorities Taxable
59 Training in recreational activity in relation to arts by individual Exempt
60 CA providing service to a charitable trust registered u/s 12AA Taxable
61 Entry fee to a museum Exempt
62 Entry fee to a wild life sanctuary Exempt
63 Life micro insurance of ` 2,75,000 Taxable
64 Public library Taxable
65 Virat Kohli receiving fees for Boost advertisement Taxable
66 Virat Kohli receiving fees from BCCI Exempt
67 Virat Kohli receiving fees from IPL franchise Taxable
68 A religious ceremony conducted by a priest for ` 10,000 Exempt
69 Renting of shop in precincts of religious premise for ` 10,000 per Taxable
month
70 Renting of shop in precincts of religious premise for ` 9,000 per month Exempt
71 Renting of shop in precincts of religious premise for ` 11,000 per Taxable
month
72 Ravi Shastri receiving fees from BCCI for Commentary Taxable
73 A commercial complex charging ` 3,000 per month as maintenance Taxable
74 A commercial complex charging ` 8,000 per month as maintenance Taxable
75 A residential complex charging ` 3,000 per month as maintenance Exempt

EXEMPTIONS 96
 CA INTER – INDIRECT TAX

76 A residential complex charging ` 8,000 per month as maintenance Taxable

77 Pradhan mantri jeevan jyothi yojana Exempt
78 Public telephone booth Taxable
79 Public Conveniences Exempt
80 Passengers – Tramway Exempt
81 Passengers – Aerial Tramway Taxable
82 Preservation of stem cells Exempt
83 Ambulance service provided by a CA Exempt
84 Transportation of passengers by Sleeper class (Rail) Exempt
85 Transportation of passengers by Two tier AC (Rail) Taxable
86 Transportation of passengers by Metro Exempt
87 Transportation of passengers by AC Monorail Exempt
88 Transportation of passengers by Non AC contract carriage Exempt
89 Transportation of passengers by Non AC stage carriage Exempt
90 Transportation of goods by Muniraju Auto driver Exempt
91 Transportation of goods by GTA to Registered Person Taxable
92 Transportation of goods by Courier Agency Taxable
93 Transportation of goods by GTA – Agriculture Produce Exempt
94 Transportation of goods by aircraft from a place outside India upto Exempt
Custom Airport
95 Transportation of goods by Vessel from a place outside India upto Taxable
Custom Port
96 Transportation of goods by Inland waterways Exempt
97 Construction of a villa as part of a residential complex Taxable
98 Hiring of a truck to GTA Exempt
99 Hiring of a truck to Mr B (Individual Truck Driver) Taxable
100 Root canal by a Dentist Exempt
101 Transfer of business as going concern Exempt
102 Credit card Interest Taxable
103 Training given to trainers of farmers Taxable
104 Development of a new research drug Taxable
105 Dehusking of paddy to rice on job work basis Exempt
106 Leasing of vacant land to a poultry farm Exempt
107 Plantation of tea and coffee Exempt
108 Amount of commission received for debt collection service Taxable
109 Discount earned on bills discounted Exempt

EXEMPTIONS 97
 CA INTER – INDIRECT TAX

110 Charges received on credit card and debit card facilities extended Taxable
111 Commission received for service rendered to Government for tax Taxable
collection
112 Interest earned on reverse repo transaction Exempt
113 Service supplied by a private transport operator to a School in relation Exempt
to transportation of students to and from a School
114 Services supplied by way of vehicle parking to general public in a Taxable
shopping mall.
115 Service supplied by way of repair or maintenance of aircraft owned Taxable
by a State Government
116 Exhibiting movies on television channels Taxable
117 Transportation of petroleum and petroleum products and household Taxable
effects by railways
118 Transportation of postal mails or mail bags by a vessel Taxable
119 Printing services for printing the question papers provided to a school Exempt
120 Honorarium to paper setters and examiners provided to a degree Exempt
college
121 Rural postal life insurance service in a Post office Taxable
122 Distribution of mutual funds, bonds and passport applications by Taxable
Post Office
123 Premises let to a temple trust for ` 40,000 by PQR Properties engaged Taxable
in the business of renting immovable properties
124 Building let to a theatre for ` 80,000 by PQR Properties engaged in Taxable
the business of renting immovable properties
125 ` 85,000 charged for warehousing of potato chips by Agro Care Ltd Taxable
126 ` 65,000 charged for seed testing by Agro Care Ltd Exempt
127 ` 2,00,000 charged for warehousing of cotton fabrics by Agro Care Taxable
Ltd
128 Palliative care for terminally ill patients at patient’s home by Well- Exempt
Being Nursing Home (` 30 lakhs)
129 Hair Transplant Services by Well-Being Nursing Home (` 100 lakhs) Taxable
130 Pranic Healing Treatments by Well-Being Nursing Home (` 120 lakhs). Taxable
Such treatment is not a recognized system of medicine

EXEMPTIONS 98
 CA INTER – INDIRECT TAX

Question 1
AB Ltd., a registered company of Chennai, Tamil Nadu has provided following services for
the month of October, 2021
Particulars Amount (`)
Services of transportation of students, faculty and staff from home to 2,50,000
college and back to Commerce College, (a private college) providing
degree courses in BBA, MBA, B.Com., M.Com.
Online monthly magazine containing question bank and latest updates 1,00,000
in law to students of PQR Law College offering degree courses in LLB
and LLM
Housekeeping services to T Coaching Institute 50,000
Security services to N Higher Secondary School 3,25,000
Services of providing breakfast, lunch and dinner to students of ABC 5,80,000
Medical College offering degree courses recognized by law in medical
field

All the above amounts are exclusive of GST.

Compute the taxable supplies of AB Ltd. for the month of October 2021 with necessary
explanations.

Answer:
Computation of value of taxable supplies of AB Ltd.
Particulars Amount (`)
Services of transportation of students, faculty and staff to Commerce 2,50,000
College
[Not exempt, since transportation services provided to an educational
institution are exempt only if such institution provides pre-school
education or education up to higher secondary school or equivalent.]
Online monthly magazine to students of PQR Law College
[Services of supply of online educational journals provided to an Nil
educational institution providing qualification recognized by law are
exempt.]

EXEMPTIONS 99
 CA INTER – INDIRECT TAX

Housekeeping services to T Coaching Institute [Not exempt] 50,000

Security services4 to N Higher Secondary School Nil
[Security services provided to an educational institution providing
education up to higher secondary school are exempt.]
Services of providing breakfast, lunch and dinner to students of ABC 5,80,000
Medical College
[Not exempt, since catering services provided to an educational
institution are exempt only if such institution provides pre-school
education or education up to higher secondary school or equivalent.]
Value of taxable supplies 8,80,000

Question 2:
Green Agro Services, a registered person provides the following information relating to
its activities during the month of February, 2020:
Gross Receipts from (`)
Services relating to rearing of sheeps 6,00,000
Services by way of artificial insemination of horses 4,00,000
Processing of sugarcane into jaggery 8,00,000
Milling of paddy into rice 7,50,000
Services by way of fumigation in a warehouse of agricultural produce 1,80,000
All the above receipts are exclusive of GST.
Compute the value of taxable supplies under GST laws for the month of February, 2020.

Answer:
Computation of value of taxable supplies
Particulars Amount (`)
Services relating to rearing of sheeps Nil
[Exempt since services relating to rearing of all life forms of animals,
except horses, for food etc. are exempt.]
Services by way of artificial insemination of horses 4,00,000
[Not exempt since services of artificial insemination are exempt only of
livestock other than horses.]
Processing of sugarcane into jaggery 8,00,000
[Not exempt, since processes which alter the essential characteristics of
agricultural produce are not exempt and processing of sugarcane into
jaggery changes the essential characteristics of sugarcane.]

EXEMPTIONS 100
 CA INTER – INDIRECT TAX

Milling of paddy into rice 7,50,000

[Not exempt, since this process, being carried out after cultivation is
over, is not an intermediate production process in relation to cultivation
of plants and it also changes the essential characteristics of paddy.]
Services by way of fumigation in a warehouse of agricultural produce 1,80,000
[Not Exempt]
Value of taxable supplies 21,30,000

Question 3
XYZ Pvt. Ltd. manufactures beauty soap with the brand name 'Forever beauty'. XYZ Pvt.
Ltd. has organized a concert to promote its brand. Ms. Mahima, its brand ambassador,
who is a leading film actress, has given a classical dance performance in the said concert.
The proceeds of the concert is ` 1,25,000.
(i) Explain with relevant provisions of GST, whether Ms. Mahima will be required to pay
any GST.
(ii) What will be the answer if the proceeds of the concert is donated to a charitable
organization?

Answer:
(i) Services by an artist by way of a performance in classical art forms of, inter alia,
dance, are exempt from GST, if the consideration charged for such performance is
not more than ` 1,50,000.
However, such exemption is not available in respect of service provided by such
artist as a brand ambassador.
Since Ms. Mahima is the brand ambassador of ‘Forever Beauty’ soap manufactured
by XYZ Pvt. Ltd., the services rendered by her by way of a classical dance performance
in the concert organized by XYZ Pvt. Ltd. to promote its brand will not be eligible for
the above-mentioned exemption and thus, be liable to GST.
(ii) Even if the proceeds of the concert will be donated to a charitable organization, she
will be liable to GST.

Question 4
Dharun provides service as a business facilitator to Zio Bank Limited by facilitating
in opening of bank accounts to villagers in its rural branches in Punjab and earned a
commission of ` 22 lakh in the month of April, 2022. So far he is not registered under GST.
Dharun's tax consultant advised him that he is liable for registration under GST as his

EXEMPTIONS 101
 CA INTER – INDIRECT TAX

gross receipts exceeded ` 20 lakh. Dharun has no other receipt / business activity other
than the above.
(4 Marks)
Answer:
Services by a business facilitator to a banking company with respect to accounts in its
rural area branch is exempt from GST.
Since in the given case, Dharun is engaged exclusively in providing the exempt services, it
is not liable to obtain registration even though his aggregate turnover exceeds ` 20 lakh.
Thus, the advice given by his tax consultant is not correct.

EXEMPTIONS 102
 CA INTER – INDIRECT TAX

Question 1
Determine the GST payable, if any, in each of the following independent cases, assuming
that the rate of GST is 18% and that the service providers are registered under GST:
(i) Bollywood dance performance by a film actor in a film and consideration charged
is ` 1,45,000.
(ii) Carnatic music performance by a classical singer to promote a brand of readymade
garments and consideration charged is ` 1,30,000.
(iii) Carnatic music performance by a classical singer in a music concert and consideration
charged is ` 1,55,000.
(iv) Kathak dance performance by a classical dancer in a cultural programme and
consideration charged is ` 1,45,000.

Answer:
(i) Bollywood Dance performance by a film actor in a film is not exempt from GST
even though the consideration charged is less than threshold limit of ` 1,50,000.
The reason for the same is that the dance performance by an artist is exempt only
if it is a performance in folk or classical art forms of dance. Consequently, entire
consideration charged is subject to GST as follows:
= ` 1,45,000 × 18% = ` 26,100
(ii) Carnatic music performance by a classical singer to promote a brand of readymade
garments is not exempt from GST even though, the consideration charged is less
than threshold limit of ` 1,50,000 and it is a performance in classical art forms of
music. The reason for the same is that the said exemption is not applicable to service
provided by such artist as a brand ambassador. Consequently, entire consideration
charged is subject to GST as follows:
= ` 1,30,000 × 18% = ` 23,400
(iii) Carnatic music performance by a classical singer in a music concert is not exempt
from GST even though it is a performance in classical art forms of music. The
reason for the same is the consideration charged for the service exceeds ` 1,50,000.
Consequently, entire consideration charged is subject to GST as follows:
= ` 1,55,000 × 18% = ` 27,900

EXEMPTIONS 103
 CA INTER – INDIRECT TAX

(iv) Kathak dance performance by a classical dancer in a cultural programme is exempt

from GST as it is a performance in classical art forms of dance and consideration
charged does not exceed ` 1,50,000 [i.e. ` 1,45,000]. (4 Marks) (MTP MAR’22)

Question 2
M/s. Paisa Saver Bank Limited, a scheduled commercial bank, has furnished the following
details for the month of September:
Amount [` in
Particulars lakh] (excluding
GST)
Extended housing loan to its customers 130
Processing fees collected from its customers on sanction of loan 20
Commission collected from its customers on bank guarantee 30
Interest income on credit card issued by the bank 40

Interest received on housing loan extended by the bank 35

Minimum balance charges collected from current account and saving 03
account holder
Compute the value of taxable supply.

Answer:
Computation of value of taxable supply of M/s. Paisa Saver Bank Limited for the month of
September:
Amount in lakh
Particulars
(`)
Housing loan extended to customers Nil
[Since money does not constitute goods, extending housing loan is
not a supply.]
Processing fee collected on sanction of loan 20
[Interest does not include processing fee on sanction of the loan.
Hence, the same is taxable.]
Commission collected on bank guarantee 30
[Any commission collected over and above interest on loan, advance
or deposit are not exempt.]

EXEMPTIONS 104
 CA INTER – INDIRECT TAX

Interest income on credit card issued by the bank 40

[Services by way of extending loans in so far as the consideration
is represented by way of interest are exempt from tax. However,
interest involved in credit card services is specifically excluded from
this exemption entry.]
Interest received on housing loan Nil
[Services by way of extending loans in so far as the consideration is
represented by way of interest are exempt from tax.]
Minimum balance charges collected from current account and saving 03
account holder
[Any charges collected over and above interest on loan, advance or
deposit are not exempt.]
Value of taxable supply 93
(6 Marks) (MTP APRIL’22)

Question 3
Mutiservices Private Ltd., registered in Punjab, is engaged in supplying a variety of services.
Its turnover was ` 35 lakh in the preceding financial year. It has provided the following
information for the month of April:

Particulars Amount (`)

Fee for the coaching provided to students for competitive exams. The 6,24,000
coaching centre is run by Mutiservices Private Ltd. in Punjab (Intra-
State transaction)
Receipts for services provided in relation to conduct of examination in 19,200
Pureit University, Delhi (providing education recognized by Indian law),
being an inter-State transaction
Amount received for transportation of students and faculty from their 24,000
residence to Lotus Public School - a higher secondary
school – and back (Intra-State transaction)
Amount received for providing the security and housekeeping services 36,000
in Dhaani Public School – a pre-school (Intra-State transaction)
Note: Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively. All the amounts
given above are exclusive of taxes.
Compute the total GST liability of Multiservices Private Ltd. for the month of April .

EXEMPTIONS 105
 CA INTER – INDIRECT TAX

Answer:
Computation of net GST liability of Multiservices Private Ltd. for the month of April:

Value of CGST SGST IGST @

Particulars supply @ 9% @ 9% 18%
(`) (`) (`) (`)
Fee for the coaching provided to 6,24,000 56,160 56,160
students for competitive exams [Note-1]
Services towards conduct of examination in 19,200 -
Pureit University, Delhi [Note-2]
Services of transportation of students and 24,000 -
faculty from their residence to Lotus Public
School and back [Note-3]
Security and housekeeping services in 36,000 - -
Dhaani Public School [Note-4]
Total GST liability 56,160 56,160

Notes:-
1. Coaching centre run by Mutiservices Private Ltd. is not an educational institution
since competitive exam coaching does not lead to grant of a qualification recognized
by law. Therefore, fee received for coaching provided at such coaching centre is
taxable.
2. Since Pureit University provides qualification recognized by law, it is an educational
institution and services provided to an educational institution, in relation to conduct
of examination by such institution are exempt from GST.
3. Since Lotus Public School provides education up to higher secondary school, it is an
educational institution and services of transportation of students, faculty and staff
provided to an educational institution are exempt.
4. Since Dhaani Public School provides pre-school education, it is an educational
institution. Security and housekeeping services provided within the premises of an
educational institution are exempt. (RTP NOV’20)

EXEMPTIONS 106
 CA INTER – INDIRECT TAX

Question 4
Gita Services Limited, registered under GST, is engaged in providing various services to
Government. The company provides the following information in respect of services
provided during the month of April:
S.
Description of Services provided
No.
(i) Supply of manpower for cleanliness of roads not involving any supply of goods.
(ii) Service provided by Fair Price Shops owned by Gita Services Limited by way
of sale of sugar under Public Distribution System against consideration in the
form of commission.
(iii) Service of maintenance of street lights in a Municipal area involving
replacement of defunct lights and other spares alongwith maintenance.
Generally replacement of defunct lights and other spares constitutes 35%
of the supply of service.
(iv) Service of brochure distribution provided under a training programme for which
70% of the total expenditure is borne by the Government.

Comment on the taxability or otherwise of the above transactions under GST law. Also
state the correct legal provisions for the same.

Answer:
S.
Description of Services provided Taxability
No.
(i) Supply of manpower for cleanliness of roads not involving any Exempt
supply of goods.
[Pure services provided to Government are exempt.]
(ii) Service provided by Fair Price Shops by way of sale of sugar under Exempt
Public Distribution System
[Service provided by Fair Price Shops to Government by way of sale
of sugar under Public Distribution System against consideration
in the form of commission is exempt.]

EXEMPTIONS 107
 CA INTER – INDIRECT TAX

(iii) Service of maintenance of street lights in a Municipal area involving Taxable

replacement of defunct lights and other spares constituting 35%
of the supply of service.
[Composite supply of goods and services to Government in which
the value of supply of goods constitutes not more than 25% of
the value of the said composite supply is exempt. Since, in this
case value of supply of goods constitutes 35% of the supply of
composite service, same is taxable.]
(iv) Service of brochure distribution provided under a training Taxable
programme.
[Services provided to the Government under any training
programme for which 75% or more of the total expenditure is
borne by the Government is exempt. Since in the given case, 70%
of the total expenditure is borne by the Government, it is taxable.]
(RTP MAY’22)

EXEMPTIONS 108
 CA INTER – INDIRECT TAX

6 TIME OF SUPPLY

 Chapter Overview
(1) Section 31: Last Date of Issue of Invoice
(2) Section 12: Time of Supply for Goods
(3) Section 13: Time of Supply for Service
(4) Classwork / Homework
(5) MCQs

INTRODUCTION
 It provides the Point in time when liability to pay tax arises.
 Time is the essence of levy. Tax is imposed when the supply is made. Hence it is
important to determine the time of supply. Once time of supply is determined, levy
will be made.
 Time of Supply means the point in time when goods have been deemed to be supplied
or services have been deemed to be provided. It enables us to determine the rate of
tax, value, and due dates for payment of taxes.

TIME OF SUPPLY 109

 CA INTER – INDIRECT TAX

SECTION 31 : DUE DATE OF ISSUE OF TAX INVOICE

DUE DATE OF ISSUE OF TAX INVOICE IN CASE OF SUPPLY OF GOODS

NORMAL SUPPLY SUPPLY ON APPROVAL BASIS

Earlier of -
OTHER THAN Issued before / at the time
CONTINUOUS
CONTINUOUS of approval
OR
Successive statement Six months from the date of
Movement No movement of accounts/ removal
of goods of goods payments

Date of Delivery Before/at the time

removal of of goods/ of issue of such
goods making goods statement/receipt of
available to payment
the recipient

DUE DATE OF ISSUE OF TAX INVOICE IN CASE OF SUPPLY OF SERVICE

OTHER THAN CONTINUOUS SUPPLY

CONTINUOUS SUPPLY

Before/after the time of Due date is Due date is NOT Completion of

provision of service but ascertainable ascertainable event
within prescribed period
as per rule 47 On/before due Before/at the On/before
date of time when date of
payment supplier of completion of
service received event
the payment

TIME OF SUPPLY 110

 CA INTER – INDIRECT TAX

RULE 47: TIME LIMIT FOR ISSUING TAX INVOICE

Taxable supply of service: The tax invoices shall be issued within 30days from the
date of supply of services.
For Insurers, Banks etc. The tax invoice shall be issued within 45days from the date
of supply of services.

Section 12: Time of Supply for Goods

12(1): The liability to pay tax on goods shall arise at the time of supply as determined in
terms of the provisions of this section.

12(2): In Case of Normal Charge:

Time of Supply =
Date of Issue of Invoice
OR
Last Date to Issue Invoice under Section 31
Whichever is Earlier

EXAMPLE:
Where Supply involves Movement

Date of Removal Date of Invoice Date of Delivery Date of Receipt Time of Supply
of Payment
01-10-2021 02-10-2021 03-10-2021 15-09-2021
03-10-2021 01-10-2021 04-10-2021 25-11-2021
04-11-2021 07-11-2021 06-11-2021 01-10-2021

EXAMPLE :
Where Goods does not involve any Movement
Date of Invoice Date When Goods made Date of Receipt of Time of Supply
available to Recipient Payment
02-10-2021 03-10-2021 15-09-2021
11-11-2021 05-11-2021 20-11-2021

TIME OF SUPPLY 111

 CA INTER – INDIRECT TAX

12(3): In Case of Reverse Charge Mechanism

Time of Supply =
The date of the receipt of the goods
OR
The date of Payment entered in BOA of Recipient
OR
Date of Debit in Bank Account of Recipient
OR
31st Day from Date of Issue of Invoice
Whichever is Earlier

EXAMPLE:
Determine TOS where Recipient is liable to pay tax

Date of Invoice Date of Date of Payment Date when Payment Time of

Receipt of as debited in Bank A/c Supply
Goods per BOA
01-10-2021 05-10-2021 10-10-2021 12-10-2021
01-10-2021 15-10-2021 10-10-2021 12-10-2021

12(4): Time of Supply in case of Vouchers

(a) Where Supply is Identifiable at time of Issue of Voucher – Date of Issue of Voucher
(b) Where Supply is Not Identifiable at time of Issue of Voucher – Date of Redemption
of Voucher

EXAMPLE:
ABC Ltd. enters in to an arrangement with “Hush Puppies”, buys the vouchers, these
vouchers were issued on 14th December, 2020. The Company then distributes these
vouchers with denomination INR 4,000/- to all its employees on 24th December, 2020
valid until
31st January, 2021, so that they can use these vouchers for buying shoes of their choice.
The employees make the most of it and redeem these vouchers on the New Year’s, i.e., on
1st January, 2021.
Ans. Time of Supply is __________________________________________________.

TIME OF SUPPLY 112

 CA INTER – INDIRECT TAX

EXAMPLE:
Nisha buys a voucher from Shoppers Stop for INR 10,000 and gifts it to Tarun on
14th February. The voucher was valid until 28th February. Tarun redeems the vouchers at
the nearby Shoppers Stop store on 20th February.
Ans. Time of Supply is __________________________________________________.

12(5): Residual Cases

In case where time of supply cannot be determined u/s 12 (2), (3), (4) then Time of supply
shall be -
If person files periodical return – date of filing return.
In any other case – date when tax is paid.

12(6): Time of Supply in relation to Addition in Value by way of Interest, Late Fees &
Penalty -
TOS = Date when interest, penalty, late fee is received (receipt basis)

Section 13: Time of Supply for Services

13(1): The liability to pay tax on services shall arise at the time of supply, as determined
in terms of the provisions of this section.

13(2): In Case of Normal Charge –

(a) If Invoice is issued within prescribed Time,
TOS = Date of Issue of Invoice OR Date of Receipt of Payment, Whichever is Earlier.
(b) If Invoice is not issued within prescribed Time,
TOS = Date of Provision / Completion of Service OR Date of Receipt of Payment,
Whichever is Earlier.

Note: Date of Receipt of Payment shall be –

Date on Which Payment is entered in BOA of Supplier
OR
Date on Which Payment is credited in Bank Account
Whichever is Earlier

TIME OF SUPPLY 113

 CA INTER – INDIRECT TAX

EXAMPLE: Determine TOS in Independent Cases.

Date of Supply of Service Date of Invoice Date of Receipt of Payment Time of Supply
10-11-2021 30-11-2021 15-12-2021
10-11-2021 30-11-2021 15-11-2021
10-11-2021 12-12-2021 30-04-2021
10-11-2021 22-12-2021 12-12-2021

Small Advance Upto `1,000 – Where the Supplier of taxable service receives an amount
upto `1,000 in excess of the amount indicated in the tax invoice, the TOS to the extent
of such excess shall, at the option of Supplier, be the date of Issue of Invoice relating to
such excess amount.

13(3): In Case of Reverse Charge Mechanism –

Time of Supply = Earlier of -
Date of Payment as Entered in Books of Accounts
OR
Date of Debit in Bank Account
OR
61st Day from Date of Issue of Invoice

EXAMPLE:

Date of Invoice Date of Completion Date of Debit in Entry in Books of Time of

of Service Bank Account Accounts Supply
30-11-2021 30-11-2021 10-12-2021 12-12-2021
30-11-2021 30-11-2021 15-11-2021 30-11-2021
30-11-2021 29-11-2021 10-03-2021 30-11-2021

Proviso to Section 13(3): When supplier is Outside India & Recipient is in India & Both are
Associated Enterprise. Example: Holding & Subsidiary
TOS = Earlier of -
Date of debit entry in the books of A/c of recipient
OR
Date of payment
Note: Section 13(4),13(5) & 13(6) are Same as 12(4),12(5) & 12(6)

TIME OF SUPPLY 114

 CA INTER – INDIRECT TAX

Question 1
(i) An order is placed to T & Co;, Sholapur on 18th August, 2021 for supply of fabrics to
make garments. Company delivered the fabrics on 4th September, 2021 and after
completion of the order issued the invoice on 15th September, 2021. The payment
against the same was received on 30th September, 2021. Determine the time of
supply for the purpose of payment under CGST Act, 2017 with your explanations.

Answer:
(i) The time of supply of goods (where movement of goods involve) (fabric) for the
purpose of payment of tax is the date of issue of invoice or the last date when the
invoice ought to have been issued.
Further, a registered person is required to issue a tax invoice before or at the time of
delivery of goods or making available thereof to the recipient.
Thus, in the given case, time of supply is 4th September, 2021. (Suggested Dec 21)

Question 2:
Know & Grow Publishers, a registered dealer in India, paid an advance of ` 50,000 to
Mr. Ganatra, an author, for the copyright covered under Section 13(1)(a) of the Copyright
Act, 1957, of his original literary work on 5-9-2018. It made the balance payment of
` 1,50,000 on 12-12-2018. You are required to determine the time of supply, if Mr.
Ganatra raised the invoice on :
(i) 6-10-2018, or
(ii) 17-12-2018

Answer:
GST on supply of services by an author by way of transfer or permitting the use or
enjoyment of a copyright covered under section 13(1)(a) of the Copyright Act, 1957
relating to original literary works to a publisher is payable under reverse charge by such
publisher, i.e. Know & Grow Publishers.
The time of supply of service, on which GST is payable under reverse charge, is earlier of
the following:

TIME OF SUPPLY 115

 CA INTER – INDIRECT TAX

(a) Date of payment as entered in the books of account of the recipient or date on
which payment is debited from the bank account, whichever is earlier
or
(b) 61st day from the date of issue of invoice by the supplier
(i) If the invoice is issued on 06.10.2018, time of supply is as under:
• For the payment of ` 50,000: 05.09.2018 [earlier of date of payment and
61st day from date of issue of invoice]
• For the payment of ` 1,50,000: 06.12.2018 [earlier of date of payment
and 61st day from date of issue of invoice]
(ii) If the invoice is issued on 17.12.2018, time of supply is as under:
• For the payment of ` 50,000: 05.09.2018 [earlier of date of payment and
61st day from date of issue of invoice]
• For the payment of ` 1,50,000: 12.12.2018 [earlier of date of payment
and 61st day from date of issue of invoice] (Suggested Nov 19)

Question 3
M/s. Xing Trans of Kolkata is engaged in the trading of transmitters. On 20/05/2021,
M/s. Xing Trans has sent 500 units of transmitters for exhibition at Chennai on sale or
return basis. Out of the said 500 units, 300 units have been sold on 28/07/2021 at the
exhibition. Out of remaining 200 units, 150 units have been brought back to Kolkata on
25/11/2021 and balance 50 units have neither been sold nor brought back.
Explain the provisions under GST law relating to issue of invoices with exact dates on
which tax invoices need to be issued by M/s. Xing Trans.

Answer:
Where the goods being sent for sale or return are removed before the supply takes place,
the tax invoice shall be issued before or at the time of supply or 6 months from the date
of removal, whichever is earlier.
In the given case, 500 units of transmitters have been sent for exhibition on sale or return
basis out of which 300 units are sold before 6 months from the date of removal. Thus,
tax invoice for said 300 units needs to be issued before or at the time of supply of such
goods, i.e. upto 28/07/2021.
Remaining 200 (150+ 50) units have neither been sold nor brought back till the expiry of
6 months from the date of removal goods, i.e. 20/11/2021. Thus, tax invoice for said 200
units needs to be issued upto 20/11/2021. (Suggested May’22)

TIME OF SUPPLY 116

 CA INTER – INDIRECT TAX

7 VALUE OF SUPPLY

 Chapter Overview
(1) Section 15(1): Transaction value
(2) Section 15(2): Inclusions
(3) Section 15(3): Exclusions
(4) Classwork / Homework
(5) MCQs

15(1)-Transaction value = Assessable Value

Transaction value means Price actually paid or payable for the said supply of goods or
service or both.
The Transaction Value will be accepted as Assessable Value if:
 Buyer and Seller are not related, and
 Price is a sole consideration.

Consideration
Consideration

Payment in money or Monetary value of any act or

otherwise for the supply forbearance for the supply

By Recipient or any other person

Deposit to be considered as Excluding Subsidy given by

payment Central / State Governments
ONLY WHEN
The supplier applies such
deposit as consideration for
the said supply

Value of supply = T. V. + Inclusions – Exclusions

VALUE OF SUPPLY 117

 CA INTER – INDIRECT TAX

Section: 15(2) Inclusions -

Section 15(2)(a): In taxes, duties, cesses, fees and charges levied under any law for the
time being in force other than this Act, SGST act, UTGST act, IGST act, GST(compensation
to states) act, if charged by supplier

Section 15(2)(b): any amount that the supplier is liable to pay in relation to such supply
but which has been incurred by the recipient of the supply and not included in the price
actually paid or payable for the goods or services or both;

Section 15(2)(c): incidental expenses, including commission and packing, charged by the
supplier to the recipient of a supply and any amount charged for anything done by the
supplier in respect of the supply of goods or services or both at the time of, or before
delivery of goods or supply of services

Section 15(2)(d): Interest or late fee or penalty for delayed payment of any consideration
for any supply

 CLARIFICATION ON SCOPE OF PRINCIPAL AND AGENT RELATIONSHIP UNDER

SCHEDULE I OF CGST ACT IN THE CONTEXT OF DEL-CREDERE AGENT (DCA)
If Del order Agent issued invoice in his own name, he will fall within the ambit of
para 3 of schedule 1 & hence Interest charged by him to recipient would be included
in value of supply of Goods by him
However when Del credere agent is not para 3 agent Interest charged by him on
extending Loans to recipient would amount to Independent supply & will not be
included in value of supply of Goods.

15(2)(e): Subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments

Section 15(3): Exclusion

Discount shall not be included in the value of supply in the following situations-

(a) Before or at the time of the supply if such discount has been duly recorded in the
invoice issued in respect of such supply; and

VALUE OF SUPPLY 118

 CA INTER – INDIRECT TAX

EXAMPLE :
Lifestyle an apparel shop supplies at `2,000 wherein it allows a flat discount of
30% on list price.
Value of supply =_________________________________

(b) Post-Supply Discount: Post-discount to be excluded only when Such discount is

established in terms of agreement entered into at or before TOS & Specially linked
to Invoice & ITC attributable for such amount has been reversed.

CLARIFICATION ON DISCOUNTS

 DISCOUNTS INCLUDING ‘BUY MORE, SAVE MORE’ OFFERS

(i) Sometimes, the supplier offers staggered discount to his customers (increase in
discount rate with increase in purchase volume). For example - Get 10 % discount
for purchases above Rs.5000/-, 20% discount for purchases above Rs.10000/-
and 30% discount for purchases above Rs.20000/-. Such discounts are shown on
the invoice itself. Such discounts are excluded to determine value of supply.

(ii) Some suppliers also offer periodic / year ending discounts to their stockists,
etc. For example- 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 or before the time of supply though not shown on the invoice as the actual
quantum of such discounts gets determined after the supply has been effected
and generally at the year end. In commercial parlance, such discounts are
colloquially referred to as “volume discounts”. Such discounts are passed on by
the supplier through credit notes.
Such discounts are excluded to determine the value of supply provided they
satisfy the parameters laid down in section 15(3), including the reversal of ITC
by the recipient of the supply as is attributable to the discount on the basis of
document (s) issued by the supplier.

 SECONDARY DISCOUNTS
(i) These are the discounts which are not known at the time of supply or are
offered after the supply is already over. For example, M/s A supplies 10,000
packets of biscuits to M/s B at Rs. 10/- per packet. Afterwards M/s A re-values

VALUE OF SUPPLY 119

 CA INTER – INDIRECT TAX

it at Rs. 9/- per packet. Subsequently, M/s A issues credit note to M/s B for
Rs.1/- per packet.

(ii) such secondary discount shall not be excluded while determining the value of
supply as such discounts are not known at the time of supply and condition
laid down under section 15(3) are not satisfied.

(iii) It may be noted that financial/commercial credit note can be issued by the
supplier even if the condition mentioned in the section 15(3) are not satisfied.
Such credit note does not include GST, and do not have any impact on value of
supply for the purpose of GST

EXAMPLE:
Deepika Pvt. Ltd. has provided the following particulars relating to goods sold by it to
Ranveer Pvt. Ltd.

PARTICULARS Rs.
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods 5,000
CGST and SGST chargeable on the goods 10,440
Packing charges (not included in price above) 1,000

Deepika Pvt. Ltd. received Rs.2000 as a subsidy from a NGO on sale of such goods. The
price of Rs.50000 of the goods is after considering such subsidy. Deepika Pvt. Ltd. offers
2% discount on the list price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Deepika Pvt. Ltd

ANSWER:
PARTICULARS Rs.
List price of the goods (exclusive of taxes and discounts) 50,000
Tax levied by Municipal Authority on the sale of such goods [Includible 5,000
in the value as per section 15(2)(a)]
CGST and SGST chargeable on the goods [Not includible in the value as -
per section 15(2)(a)]
Packing charges [Includible in the value as per section 15(2)(c)] 1,000

VALUE OF SUPPLY 120

 CA INTER – INDIRECT TAX

Subsidy received from a non-Government body [Since subsidy is received 2,000

from a non-Government body, the same is included in the value in terms
of section 15(2)(e)]
TOTAL 58,000
Less: Discount @ 2% on Rs.50,000 [Since discount is known at the time 1,000
of supply, it is deductible from the value in terms of section 15(3)(a)]
Value of taxable supply 57,000

EXAMPLE:
Alia Advertisers conceptualized and designed the advertising campaign for a new product
launched by Ranbir Pvt Ltd. for a consideration of Rs.500000. Alia Advertisers owed Rs.
20,000 to one of its vendors in relation to the advertising service provided by it to Ranbir
Pvt Ltd. Such liability of Alia Advertisers was discharged by Ranbir Pvt Ltd. Ranbir Pvt Ltd.
delayed the payment of consideration and thus, paid Rs.15000 as interest. Assume the
rate of GST to be 18%. Determine the value of taxable supply made by Alia Advertisers.

ANSWER:
Computation of value of taxable supply
PARTICULARS Rs.
Service charges 5,00,000
Payment made by Ranbir Pvt. Ltd to vendor of Alia Advertisers [Liability
of the supplier being discharged by the recipient, is includible in the value
in terms of section 15(2)(b)] 20,000
Interest for delay in payment of consideration [Includible in the value in
terms of section 15(2)(d) – Refer note below] (rounded off) 12,712
Value of taxable supply 5,32,712
Note: The interest for delay in payment of consideration will be includible in the value
of supply but the time of supply of such interest will be the date when such interest is
received in terms of section 13(6). Such interest has been assumed to be inclusive of GST
and the value computed by making back calculations [Interest / 100 + tax rate) x 100].

• Circular No. 186/18/2022 GST dated 27.12.2022

- Issue: What will be the taxability of no claim bonus allowed as deduction by
insurance companies from insurance premium?

VALUE OF SUPPLY 121

 CA INTER – INDIRECT TAX

- Clarification: No claim bonus is a permissible deduction u/s 15 of CGST Act,

2017 and GST shall be leviable on actual insurance premium amount payable
by the policy holder. Further, it is clarified that there is no supply provided by
the insured to the insurance company in form of agreeing to the obligation to
refrain from the act of lodging insurance claim during previous years and No
claim bonus cannot be considered as consideration for any supply provided
by the insured to the insurance company.

VALUE OF SUPPLY 122

 CA INTER – INDIRECT TAX

Question 1
Following are the particulars, relating to one of the machine sold by SQM Ltd. to ACD Ltd.
in the month of February 2020 at list price of ` 9,50,000. (exclusive of taxes and discount)
Further, following additional amounts have been charged from ACD Ltd :
S. No. Particulars Amount (`)
(i) Municipal taxes chargeable on the machine 45,000
(ii) Outward freight charges (Contract was to deliver machine at 65,000
ACD Ltd.’s factory i.e. F.O.R. contract)
Additional information :
(i) SQM Ltd. normally gives an interest-free credit period of 30 days for payment, after
that it charges interest @ 1% p.m. or part thereof on list price.
ACD Ltd. paid for the supply after 45 days, but SQM Ltd. waived the interest payable.
(ii) SQM Ltd. received ` 50,000 as subsidy, from one non-government organization
(NGO) on sale of such machine. This subsidy was not linked to the price of machine
and also not considered in list price of ` 9,50,000.
(iii) ACD Ltd. deducted discount of ` 15,000 at the time of final payment, which was not
as per agreement.
(iv) SQM Ltd. collected ` 9,500 as TCS (tax collected at source) under the provisions of
the Income Tax Act, 1961.
Compute the value of taxable supply as per the provision of GST laws, considering
that the price is the sole consideration for the supply and both parties are unrelated
to each other.
Note: Correct legal provision should form part of your answer.

Answer:
S. No. Particulars Amount (`)
List price (exclusive of taxes and discount) 9,50,000
(i) Municipal taxes [Note-1] 45,000
(ii) Outward freight charges [Note-2] 65,000
Value of taxable supply 10,60,000

VALUE OF SUPPLY 123

 CA INTER – INDIRECT TAX

Notes:
1. Tax other than GST, if charged separately, are includible in the value in terms of
section 15.
2. Since contract is to deliver machine at buyer’s factory, it is a composite supply wherein
the freight charges will be added to the value of principal supply of machine.
3. Value of supply includes interest charged for delayed payment. However, since the
interest on delayed payment has been waived off, the same has not been added to
the value.
4. Subsidy provided by non-Government bodies is includible in the value in terms of
section 15 provided the same is directly linked to the price. Since subsidy received
from NGO is not directly linked to the price of the machine, the same has not been
added to the value.
5. Since the discount was not known or agreed to at the time of supply of goods to the
buyers, such discount cannot be reduced from the price, in terms of section 15.
6. TCS is not includible in the value of supply as it is an interim levy not having the
character of tax. (Suggested Nov 20)

VALUE OF SUPPLY 124

 CA INTER – INDIRECT TAX

8 INPUT TAX CREDIT

 Chapter Overview
(1) Section 16: Eligibility & Condition for Claiming ITC
(2) Section 17: Apportionment of credit & Blocked credit
(3) Section 18: Availability & Reversal of ITC
(4) Classwork / Homework
(5) MCQs

Input Tax Credit is available of Inputs, Capital Goods & Input Services -
 Inputs: Inputs are those goods which are not capital goods and are used in course
or furtherance of business.
 Capital goods: Capital goods are those goods which are capitalized in books of
accounts of recipient who shall avail ITC and are used in course or furtherance of
business.
 Input Service: Input services are those services which are used in course or furtherance
of business.

Section 16: Eligibility & Conditions for Claiming ITC

16(1): Every registered person shall be entitled to take credit of input tax charged on any
supply of goods or services or both to him which are used or intended to be used in
the course or furtherance of his business.
Analysis:
(a) Person must be registered
(b) Goods & Services should be used for Business Purpose

16(2): Conditions for Availing Credit:

Section 16 (2)(a): Possession of tax invoice or debit note or other documents as prescribed.
Following are documents that should be in possession of recipient to avail ITC: Rule 36
(1) Tax invoice
(2) Debit note
(3) Self – Invoice

INPUT TAX CREDIT 125

 CA INTER – INDIRECT TAX

(4) Revised tax invoice

(5) Bill of entry, to avail ITC in respect of IGST paid on imports. (Customs) as IGST is payable.
(6) ISD invoice

Section 16 (a):
Above document must content following:
 Amount of tax charge
 Description of goods or services
 Total value of supply of goods
 GSTIN of the supplier and recipient
 Place of supply

Section 16 (2) (aa): Input tax credit in respect of any supply of goods or services or both is
available to a registered person only if the details of the invoice/debit note in respect of said
supply has been furnished by the supplier in the statement of outward supplies (GSTR-1) and
such details have been communicated to the recipient of such invoice/debit note in the manner
specified under section 37.

Section 16 (2) (b): Receipt of goods or service: ITC can be availed by recipient only after goods
or services are received.

Proviso to 16 (2) (b): When goods are received in lots or instalments the registered person
shall be able to avail ITC only upon receipt of last lot or instalment.

Explanation to 16 (2) (b): For Purpose of this clause, it shall be deemed that the registered
person has received goods, Where the Goods are delivered by supplier to recipient on
direction of such registered person by way of transferring document of title to goods

Section 16(2) (ba) : The details of ITC in respect of said supply comminucated to Registered
person u/s 38 has not been restricted.

16(2) (c): The tax charged in respect of such supply by supplier to recipient has been actually
paid to Government either by utilising ITC or by Cash.

16(2)(d): Recipient has to furnished return u/s 39. Person claiming ITC must furnish the
information relating to inward supply in the return covered u/s 39 i.e. GSTR3B.

INPUT TAX CREDIT 126

 CA INTER – INDIRECT TAX

Proviso to 16(2) r.w. Rule 37: If recipient fails to pay the value of supply of goods or service
and tax amount to supplier of goods or service within a period of 180 days from date of
issue of invoice then the recipient shall add to his output tax liability an amount equal
to ITC that he had wrongly availed earlier along with interest.
Interest u/s 50 shall be payable from the date immediately following 180 days upto the
date of adding such amount to output tax.
If recipient makes the payment of the amount towards value of supply of goods or
service and tax to supplier after 180 days then the recipient can re-avail ITC of same.
Exception : 1) Suppliers on which tax is payable under RCM (Reverse charge
mechanism)
2) Supplies made without consideration
3) Any amount that supplier is liable to pay but incurred by recipient on
behalf of supplier
Rule 37: Reversal of input tax credit in the case of non-payment of tax by the supplier
and re-availment thereof
• Every registered person shall be entitled to avail the credit of eligible input tax,
as self-assessed, in his return and such amount shall be credited to his electronic
credit ledger, subject to such conditions and restrictions as may be prescribed
• If the supplier has not filed GSTR 3B for the said tax period till 30th September
following the FY in which ITC in respect of such invoice or debit note has been
availed, the recipient shall reverse such ITC in his GSTR 3B on or before 30th
November following the such FY. Interest u/s 50 of CGST Act shall be payable if the
reversal is not made by 30th November.
• Provided Tax Recipient may re-avail ITC in his GSTR 3B after supplier furnishes
GSTR 3B for the tax period.

Section 16 (3) : Depreciation Tax Component

Where registered person has claimed depreciation tax component of cost of capital
goods under provisions of Income Tax Act 1961, the ITC shall not be allowed. In relation
to input tax paid on such capital goods.

EXAMPLE:
Mr. A purchased Capital Goods of 100 Lacs & paid GST @ 18% on Same. Life of the Asset
is 10 Years.

INPUT TAX CREDIT 127

 CA INTER – INDIRECT TAX

Option 1: Claim Depreciation on Value Option 2: Claim Depreciation on Value &

including Tax Claim ITC of Tax Paid.
Depreciation on: 118 Depreciation on: 100
ITC: 0 ITC : 18

Section 16 (4): Time limit to avail ITC

30th day of November following the end of F.Y to which such invoice or debite note pertains.
OR
Actual date of filing annual returns for relevant F.Y
Whichever is earlier

EXAMPLE:
HUL Ltd. supplies soaps to Big Bazar Ltd. for amount of ` 10 lacs + GST @ 18% by raising
invoice on 1/3/22 and goods were delivered to BB on same date. What shall be time limit
by which BB Ltd. can avail ITC if it fails to avail it on 20/4/22?

Date of filing annual return:

Case 1: 26/9/22
Ans : 26, September 2022
Case 2: 27/12/22
Ans : 30, November 2022

Section-17: Apportionments of Credit and Blocked Credits

17 (1)- Goods or services partly used for business and partly for other purpose
Where the goods or services or both are used by the registered person partly for the
purpose of any business and partly for other purposes, the amount of credit shall
be restricted to so much of the input tax as is attributable to the purposes of his
business.

17(2)-Goods or services used partly for taxable and partly for exempt supplies
Where the goods or services or both are used by the registered person partly for
effecting taxable supplies including zero-rated supplies under this Act or under
the Integrated Goods and Services Tax Act and partly for effecting exempt supplies
under the said Acts, the amount of credit shall be restricted to so much of the input
tax as is attributable to the said taxable supplies including zero-rated supplies.

INPUT TAX CREDIT 128

 CA INTER – INDIRECT TAX

Zero Rated Supply:

(a) Export
(b) Supply to SEZ Units

17(3)-The value of exempt supply under sub-section (2) shall be such as may be prescribed,
and shall include supplies on which the recipient is liable to pay tax on reverse
charge basis, transactions in securities, sales of land and, subject to clause (b) of
paragraph 5 of Schedule II, sale of building.
Note:
1) Value of Land and building for the purpose of exempt supply will be stamp
duty value
2) value of securities will be 1% of Sale Value of Securities

17(4) - ITC in case of a Banking company or a financial Institution including NBFC

 A banking company or a financial institution including a non-banking financial
company, engaged in supplying services by way of accepting deposits, extending
loans or advances shall have the option to either comply with the provisions of
Section 17(2), or avail of, every month, an amount equal to fifty per cent of the
eligible input tax credit on inputs, capital goods and input services in that month
and the balance amount of ITC shall be reversed in Form GSTR-3B.
 Option once exercised shall not be withdrawn during the remaining part of the
financial year.
 The restriction of fifty percent is not applicable in case of supplies made to its own
establishment.

Section 17(5): Blocked Credit i.e., Non-Availability of ITC in Certain Cases

(a) Motor Vehicle for transportation of persons having approved seating capacity of not more
than 13 persons (including the driver) except when they are used for:
(i) Further supply of such vehicles or conveyances; or
(ii) Transportation of passengers; or
(iii) Imparting training on driving, flying, navigating such vehicles or conveyances;

INPUT TAX CREDIT 129

 CA INTER – INDIRECT TAX

EXAMPLE:

Situation ITC Allowed or

Not
(1) ITC on cars purchased by a manufacturing company for official Not Allowed
use of its employees is -
(2) ITC on cars purchased by a car dealer for sale to customers is - Allowed
(3) ITC on cars purchased by a company engaged in renting out
cars for transportation of passengers, is - Allowed
(4) ITC on cars purchased by a car driving school is - Allowed
(5) ITC on buses purchased by a company for transportation of its Allowed
employees from their residence to office and back, is -
(6) ITC on trucks purchased by a company for transportation of its Allowed
finished goods is -

(aa) Vessel and Aircraft except when they are used for –
(i) For making the following taxable supplies, namely –
(A) further supply of such vessels or aircraft, or
(B) transportation of passengers, or
(C) imparting training on navigating such vessels, or
(D) imparting training on flying such aircraft
(ii) For transportation of Goods.

(ab) Services of general insurance, repair and maintenance in respect of motor vehicles, vessels
and aircraft on which credit is available is allowed.
EXAMPLE:
ITC on general insurance taken on a car is used by MR. Ravikant who is teacher who uses
it for commuting to his coaching centers is– Blocked

EXAMPLE
ITC on maintenance & repair services availed by a company for a truck used for transporting
its finished goods is – Allowed
EXAMPLE:
ITC on repairs and maintenance services availed by a Maruti driving school is – Allowed

Clarification: CBIC has clarified that the restriction under section 17(5) i.e. blocked credit is applicable only in respect
of input services by way of “leasing of motor vehicles, vessels or aircraft” and not for ITC on input services by way of
leasing of other goods (Circular No. 172/04/2022 GST dated 06.07.2022)

INPUT TAX CREDIT 130

 CA INTER – INDIRECT TAX

(b) Food & Beverages, Outdoor Catering, Beauty treatment etc.

(i) Supply of –
 food and beverages,
 outdoor catering,
 beauty treatment,
 health services,
 cosmetic and plastic surgery,

EXAMPLE:
Suresh procures catering service from Kamlesh Caterers for his engagement. ITC will not
be allowed to Mr. Suresh.

EXAMPLE
JKSC ltd procures wafers and cold drinks i.r.t farewell party to students from Pepsi Ltd ITC
will not be allowed to JKSC ltd.

 However, ITC would be available when inward supply of goods or services or both of
a particular category is used by a registered person for making an outward taxable
supply of the same category of goods or services or both or as an element of a
taxable composite or mixed supply;

EXAMPLE:
Kamlesh caterer is procuring catering services from Vimlesh caterers for providing catering
service to RIL Ltd.
ITC will be allowed to Kamlesh ITC will not be allowed to RIL ltd.

EXAMPLE
Pizza Hut, a restaurant procures ice creams and cold drinks for the purpose of serving
them to their customers along with food.
ITC will be allowed to Pizza Hut.

EXAMPLE:
Jet airways are procuring catering service from Taj hotels ltd and supplies a composite
supply wherein it provides transportation of passenger and meal to their customers.
ITC will be allowed to Jet airways as its inward supply is an element of its outward
composite supply

INPUT TAX CREDIT 131

 CA INTER – INDIRECT TAX

 ITC would be admissible where it is obligatory for an employer to provide such

supplies to its employees under any law for the time being in force.

EXAMPLE:
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 – Allowed

(ii) Membership of a club, health and fitness centre;

 ITC would be admissible where it is obligatory for an employer to provide such
supplies to its employees under any law for the time being in force.

EXAMPLE:
JKSC has purchased membership of GOLDs GYM for ` 10 lakhs + GST @ 18% for its faculties.
ITC will not be allowed to JKSC.

EXAMPLE:
Mr. Khali a body builder purchased membership of POWERHOUSE GYM for ` 1 lacs+ GST
@ 18% for himself.
ITC will not be allowed to Mr. Khali

(iii) Travel benefits extended to employees on vacation such as leave or home travel concession;
 ITC would be admissible where it is obligatory for an employer to provide such
supplies to its employees under any law for the time being in force.
EXAMPLE:
Jet airways extend travel benefits of 2 lacs to each of its 500 employees wherein they can
fly around the world with their family as per their company policy.
Ans. ITC will not be allowed to Jet Airways.

(iv) Rent-a-Cab Life Insurance & Health Insurance

 However, ITC would be available when inward supply of goods or services or
both of a particular category is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or
as an element of a taxable composite or mixed supply;
 ITC would be admissible where it is obligatory for an employer to provide such
supplies to its employees under any law for the time being in force.

INPUT TAX CREDIT 132

 CA INTER – INDIRECT TAX

EXAMPLE:
Prof X is procuring renting of cab services from zoom cars Ltd- ITC will not be allowed to
Prof X

EXAMPLE:
ZOOM cars, a car rental service supplier is procuring car renting service from BOOM cars
for supplying car renting service, ITC will be allowed to Zoom cars

EXAMPLE:
LIC is supplying life insurance service to Mr. Modi and LIC itself procures reinsurance
service from Max Life Insurance.
ITC will be allowed to LIC
ITC will not be allowed to Mr. MODI

(c) Works contract services when supplied for construction of an immovable property
Except
1) For further supply of same category service (Sub contracting) :
Eg. Pranit Builder is taking works contract service from Pranay Builder for providing
works contract service to CA Jainam & Associates
ITC will be allowed to pranit Builder but it will be blocked to CA Jainam &
Associates.

2) For construction of plant & Machinery*

ITC is allowed to all irrespective of their line of Business

3) When ITC on works contract service is not capitalised

(i.e. if Expense charged to revenue ITC is allowed)

* Plant & Machinery includes foundation and structural support

But Exclude
- Land & Building, Civil structure
- Telecommunication Towers
- Pipeline laid outside the factory

INPUT TAX CREDIT 133

 CA INTER – INDIRECT TAX

EXAMPLE:
L&T is providing works contract service from Raheja Builders for providing works contract
service to JKSC. In this case, L&T will get ITC on the input tax paid by it from procuring
service from Raheja builders.
But in the same case JKSC will not get ITC on procuring service from L&T as it is used for
constructing own immovable property.

(d) Goods or services or both received by a taxable person for construction of an immovable
property : Except (Same as point No. c)

EXAMPLE:
Havmour, an ice cream manufacturer is purchasing cement and procuring labour service
for constructing his own factory building. In this case, he will not be eligible to avail
ITC of the cement and labour service procured by it as it is used for construction of own
immovable property.

But if the same would have been used for construction of P&M then Havmour can take
its ITC on the input tax paid on cement and labour.
ITC will be allowed in the following case: If L&T purchases cement and procure labour
service for construction of immovable property for Havmore then L&T would be eligible
to avail on input tax paid on such cement and labour service.

(e) Inward Supply of Goods or services or both on which tax has been paid under section 10 i.e.
Composition Scheme
(f) Goods or services or both received by a non-resident taxable person except on goods
imported by him;

EXAMPLE
Mr. Trump, USA is an NRTP who has come to India to carry out business and has no fixed
establishment has imported goods from USA and has paid IGST on same.
Mr. Trump shall get ITC on the IGST paid by it on such imported goods.
But if Mr. Trump purchase any goods from within India then he will not be eligible to
avail any ITC.

(g) Goods or services or both used for personal consumption;

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

INPUT TAX CREDIT 134

 CA INTER – INDIRECT TAX

(i) Any tax paid in accordance with the provisions of sections 74 (Tax not / short paid due to
fraud etc.), 129 (Detention, seizure and release of goods and conveyance in transit) and
130 (confiscation of goods or conveyance and levy of penalty)

Section 18: Availability & Reversal of ITC in Special Cases

Sec18 (1): Availability of ITC

Section 18(1)(a):
Subject to such conditions and restrictions as may be prescribed person who has applied
for registration under this Act within 30 days from date on which he becomes liable to
registration and has been granted such registration shall be entitled to take credit of
input tax in respect of inputs held in stock and inputs contained in semi – finished or
finished goods held in stock on day immediately preceding date from which he becomes
liable to pay tax under provision of Act.

Analysis:

1/4 30/9 1/10 10/10

Date when Date of grant

Start Inputs contained person becomes of registration
Business in RM, WIP, FG liable to register certificate
U/s 22/24
ITC =

Capital goods

ITC=

INPUT TAX CREDIT 135

 CA INTER – INDIRECT TAX

Section 18(1)(b):
A person who takes registration u/s 25 (3) (i.e., Voluntary registration) shall be entitled
to take credit of input tax in respect of inputs held in stock and inputs contained in WIP /
FG held in stock on day immediately preceding the dare of grant of registration.
Analysis:

1/4 1/5 9/5 10/5

Inputs contained Grant of

Start Applied for
in Registration
Business Voluntary
RM /WIP/FG Certificate
Registration
ITC =

Capital goods
ITC=

Section 18 (1) (c):

Where any registered person ceases to pay tax u/s 10 he shall be entitled to take credit
of ITC in respect of inputs contained in stock, inputs contained in WIP / FG held in stock
and on capital goods on the day immediately preceding the date from which he becomes
liable to pay tax u/s 9.
ITC on capital goods = ITC – 5% per quarter or part thereof

Analysis:

1/4 30/9 1/10

Person paying tax as per Input contained in Started paying tax as

composition scheme RM/WIP/ FG per normal scheme
(Agg T/O > 150lacs)
ITC =

Capital goods
ITC = ITC -5% per quarter or part thereof

INPUT TAX CREDIT 136

 CA INTER – INDIRECT TAX

Section 18(1)(d):
Where an exempt supply of goods or services or both by a registered person becomes
taxable supply, such person shall be entitled to take ITC of inputs held in stock, WIP / FG
and on capital exclusively used for such exempt supply on the day immediately preceding
the date from which such supply becomes taxable.
ITC on capital goods = ITC – 5% per quarter or part thereof.
Analysis:

1/4 30/9 1/10

Person is supplying Input contained in Govt. withdrawn

exempted goods or RM/WIP/ FG exemption notification
services
on such supply
ITC =

Capital goods
ITC = ITC -5% per quarter or part thereof

Section 18(2):
A registered person cannot avail ITC w.r.t goods after expiry of one year from date of
issue of invoice that registered person is entitled to take u/s 18 (1).

EXAMPLE:
HUL Ltd. becomes liable to register w.e.f 1/4/21 as it exceeds `20 lacs and it applies for
registration within 30 days. Following are details as on 31/3/21:
(1) DOI 1/1/21 inputs contained in stock = 12 lacs (GST @ 20% inclusive)
(2) DOI 1/2/20 inputs contained in WIP = 11.80 lacs (GST @ 18% inclusive)
(3) DOI 1/10/20 inputs contained in FG = 15 lacs (GST @ 10% exclusive)
(4) CG purchase for 100 lacs + GST @ 20%, exclusive on 26/06/20, invoice date 26/06/20.

Ans : Computation of ITC to be availed by HUL Ltd.:

12L
1. Inputs contained in Stock = 2L x 20
120

2. Inputs contained in FG = 1.5L [15l x 10%]

3. Total = 3.5L

INPUT TAX CREDIT 137

 CA INTER – INDIRECT TAX

NOTE:
ITC shall not be allowed on capital goods u/s 18 (1) (a) when a person is becoming liable
to register.
According to Section 18 (2) ITC shall be allowed only on those inputs whose credit is
availed within 1 year of DOI. Hence ITC shall not be allowed w.r.t. inputs contained in
WIP.
Will your answer be different if on 1/4/21 if government has withdrawn exemption
notification on goods supplied by HUL?

Ans.: Yes,it can avail ITC on capital goods also.

Date of issue of invoice = 26/6/20

Date when exemption notification is withdrawn = 1/4/21
No of Quarters = 4 Quarters
= ITC available (-) 5% per quarter
= 20 Lacs (-) (5% x 4 quarters) (26/06/20 - 31/03/21)
= 20 Lacs (-) 20%
= 20 Lacs (-) 4 lacs
= 16 lacs
Total ITC available 3.5l + 16l = 19.50 l

Section 18 (4): Reversal of ITC

ITC had already been taken; due to change he would not have output liability so reversal
of ITC claimed on inputs.
In Section 18 (4) ITC shall be reserved in following two situations:
(1) When a supplier who pays tax as per normal scheme options to pay tax under
composition scheme u/s 10.

(2) When a supplier of taxable goods or service is supplying exempted goods or service
after exemption notification is issued by government.
Reversal of Inputs held in Stock / WIP / FG on the day immediately preceding the
date of Switchover / date of Exemption.

Reversal of Capital Goods:

INPUT TAX CREDIT 138

 CA INTER – INDIRECT TAX

Analysis:
Eg:

1/4 30/9 1/10

Supplying taxable goods or Input contained in Govt. has notified

service RM/WIP/ FG goods
or service to be
Reversal of ITC= exempted

Capital goods:
Reversal of ITC= ITC availed x Remaining useful life
60 Months

Eg:

1/4 31/3/19 1/4/19

Opted to pay tax as per Input contained in
normal scheme RM/WIP/ FG
Opted to pay tax
Reversal of ITC= as per composition
scheme

Capital goods:
Reversal of ITC= ITC availed x Remaining useful life
60 Months

Section 18 (6)
In case of supply of goods or plant or machinery where ITC has already been taken in full:
Reverse ITC to extent of =
ITC availed – 5% per quarter or part thereof
OR
Transaction value x rate of tax
Whichever is Higher
But in case moulds, dies, jigs and fixtures, Reversal of ITC = Transaction value * rate of tax

INPUT TAX CREDIT 139

 CA INTER – INDIRECT TAX

Section 18 (3): ITC in case of transfer of business.

When there is a change in constitution of registered person account of sale, merger,
demerger, amalgamation, lease or transfer of business with specific provision of transfer
of liabilities, the said registered person shall be allowed to transfer. ITC which remains
unutilised in his
E–credit ledger to such sold, merged, demerged, amalgamated, leased or transferred
business in such manner as may be prescribed.

 Rule 86A – Conditions of use of amount available in E-Credit Ledger

• Commissioner or an officer authorised not below the rank of an Assistant
Commissioner may, for reasons to be recorded in writing, not allow debit of an amount in
E-Credit Ledger, if he has reasons to believe that ITC has been fraudulently availed or
is ineligible in as much as:

- a) ITC has been availed on the strength of tax invoices or debit notes or any
other document prescribed under rule 36 issued by a registered person
who has been found non-existent or not to be conducting any business
from any place for which registration has been obtained; or without
receipt of goods or services or both; or

- b) The credit of input tax has been availed on the strength of tax invoices or
debit notes or any other document prescribed under rule 36 in respect of
any supply, the tax charged in respect of which has not been paid to the
Government; or

- c) The registered person availing the credit of input tax has been found non-
existent or not to be conducting any business from any place for which
registration has been obtained; or

- d) The registered person availing any credit of input tax is not in possession of
a tax invoice or debit note or any other document prescribed under rule 36,

• The Commissioner, or the officer authorised by him may, upon being satisfied that
conditions for disallowing debit of electronic credit ledger as above, no longer exist,
allow such debit. Such restriction shall cease to have effect after the expiry of a
period of 1 year from the date of imposing such restriction.

INPUT TAX CREDIT 140

 CA INTER – INDIRECT TAX

 Rule 86B - Restrictions on use of amount available in electronic credit ledger

• The registered person shall not use amount available in electronic credit ledger to
discharge his liability towards output tax in excess of 99% of such tax liability, in cases
where value of taxable supply other than exempt supply and zero-rated supply, in a
month exceeds ` 50 Lakh:

• The above restriction is not applicable in the following cases

- (a) The said person or the proprietor or karta or the managing director or any of
its two partners, whole-time Directors, Members of Managing Committee of
Associations or Board of Trustees, have paid more than one lakh rupees as
income tax in each of last two financial years for which the time limit to file
return of income u/s 139(1) has expired; or

- (b) The registered person has received a refund amount of more than one lakh
rupees in the preceding financial year on account of unutilised input tax credit
under zero rated supply or inverted tax structure or

- (c) The registered person has discharged his liability towards output tax through
the electronic cash ledger for an amount which is in excess of 1% of the total
output tax liability, applied cumulatively, upto the said month in the current
financial year; or

- (d) The registered person is –(i) Government Department; or (ii) a Public Sector
Undertaking; or (iii) a local authority; or (iv) a statutory body

• Provided further that the Commissioner or an officer authorised by him in this behalf
may remove the said restriction after such verifications and such safeguards as he
may deem fit.

INPUT TAX CREDIT 141

 CA INTER – INDIRECT TAX

Question 1
Riddhi & Co., a supplier of goods, pays GST under regular scheme. It has made the
following outward taxable supplies in a tax period:

Particulars Amount (`)

Intra-State supply of goods 10,00,000
Inter-State supply of goods 8,00,000

It has also furnished the following information in respect of purchases made by it in that
tax period:

Particulars Amount (`)

Intra-State purchases of goods 3,00,000
Inter-State purchases of goods 2,50,000

Riddhi & Co. has following ITCs with it at the beginning of the tax period:

Particulars Amount (`)

CGST 57,000
SGST 60,000
IGST 1,40,000

Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing ITC have been fulfilled.
Compute the minimum GST, payable in cash, by Riddhi & Co. for the tax period and the
ITC to be carried forward to the next month. Make suitable assumptions as required.
(8 Marks) (MTP MAR’22)

INPUT TAX CREDIT 142

 CA INTER – INDIRECT TAX

Answer:
Computation of GST payable on outward supplies

CGST SGST IGST @ Total

S.No. Particulars
@ 9% (`) @ 9% (`) 18% (`) (`)
(i) Intra-State supply of goods for 90,000 90,000 1,80,000
` 10,00,000
(ii) Inter-State supply of goods for 1,44,000 1,44,000
` 8,00,000
Total GST payable 3,24,000
Computation of total ITC
CGST SGST IGST @
Particulars
@ 9% (`) @ 9% (`) 18% (`)
Opening ITC 57,000 60,000 1,40,000
Add: ITC on Intra-State purchases of goods valuing 27,000 27,000 Nil
` 3,00,000
Add: ITC on Inter-State purchases of goods valuing Nil Nil 45,000
` 2,50,000
Total ITC 84,000 87,000 1,85,000

Computation of minimum GST payable from electronic cash ledger

CGST SGST IGST @ Total (`)

Particulars
@ 9% (`) @ 9% (`) 18% (`)
GST payable 90,000 90,000 1,44,000 3,24,000
Less: ITC [First ITC of IGST should be (38,000) (3,000) (1,44,000) 1,85,000
utilized in full - first against IGST liability IGST IGST IGST
and then against CGST and SGST liabilities
in a manner to minimize cash outflow]
(52,000) (87,000) 1,39,000
CGST SGST
Minimum GST payable in cash Nil Nil Nil Nil
ITC balance to be carried forward next 32,000 Nil Nil 32,000
month

Note : The above computation is one of the many ways to set off the ITC of IGST
(` 41,000-after set off against IGST liability) against CGST and SGST liability to compute
minimum GST payable in cash. To illustrate, IGST of ` 10,000 can be set off against SGST

INPUT TAX CREDIT 143

 CA INTER – INDIRECT TAX

payable and IGST of ` 31,000 can be set off against CGST payable. In this situation also,
the net GST payable will be nil but the ITC of CGST and SGST to be carried forward will
be ` 25,000 and ` 7,000 (totaling to ` 32,000) respectively. However, if the entire ITC of
` 41,000 is set off against CGST payable, then SGST of ` 3,000 will be payable in cash
thus, increasing the cash outflow. Therefore, such a set off would not be advisable for
computing the minimum GST payable. (8 Marks) (MTP MAR’22)

INPUT TAX CREDIT 144

 CA INTER – INDIRECT TAX

9 REGISTRATION

 Chapter Overview
(1) Section 22: Person liable for Registration
(2) Section 23: Person not liable for Registration
(3) Section 24: Compulsory Registration
(4) Section 25: Procedure Registration
(5) Section 26: Deemed Registration
(6) Section 27: Special provision for CTP & NRTP
(7) Section 28: Amendments in Registration
(8) Section 29: Cancellation of Registration
(9) Section 30: Revocation of Cancellation of Registration
(10) Classwork / Homework
(11) MCQs

Registration is the most fundamental requirement for identification of Tax Payer. Under
GST Regime - Without Registration, a person can neither collect tax from Customers nor
can he claim ITC of the Tax paid by him on purchase.
Registration under GST is not Tax Specific, which means single registration for all taxes
i.e. CGST, SGST, IGST, UTGST & Cesses. However registration is to be taken State-wise,
there is no Centralized Registration.
This Chapter covers provision from Sec 22 to Sec 30.

SECTION 22: PERSON LIABLE FOR REGISTRATION

Sec 22 (1): Threshold Limit

If the aggregate turnover of the Supplier in the Financial year Exceeds ` 20 Lakhs than
every supplier shall be liable to get registered under this Act, in relevant State or Union
Territory from where he is making taxable supply of Goods or Services or Both.
Provided that: In case of Special Category States i.e. Manipur, Mizoram, Tripura & Nagaland,
the threshold limit is 10 Lakhs instead of 20 Lakhs.

REGISTRATION 145
 CA INTER – INDIRECT TAX

Aggregate Turnover:
Inclusions Exclusions
Value of all outward Supplies i.e.  CGST
 Taxable Supplies  SGST
 Exempt Supplies  UTGST
 Exports  IGST
 Inter-State Supplies  CESS
Of persons having Same PAN to be computed  Value of Inward Supplies on which
on all India basis. Tax is payable under Reverse Charge.

Note 1: In above outward supplies even supplies where tax is payable as per RCM is
included.
Note 2: Exempt supply means supply of goods or service which attract NIL rate of tax.
Exempt supply u/s 11, u/s 6 of IGST Act and includes non-taxable supplies like
petrol diesel, etc.
Note 3: Include interest earned loan, deposits, advances in the computation of
aggregate turnover.
Note 4 : Taxable supply means supply of goods &/or services which is chargeable to tax
under CGST Act.
Note 5 : Taxable person means a person who is registered or liable to be registered u/s
22 or section 24.

Example:
X Ltd registered in Mumbai having following supplies, is it required to get registration in
FY 22-23 from which date?

Date Particulars Amount

01/04 Taxable Intrastate supply of goods 2,00,000
01/05 Exempt supplies of goods 9,00,000
01/06 Taxable inter-state supply of service 4,00,000
01/07 Supplies procured from Y Ltd which are taxable under FCM 8,00,000
10/07 Interest on extending loans 6,00,000
01/08 Supply of liquor 12,00,000

Answer:
It is liable to register from 10th July as his Aggregate Turnover exceeds Rs.20 Lakhs.
Will Your Answer be different if Mr. X is of Manipur?
Answer: Yes, it would be liable to register from 01st May.

REGISTRATION 146
 CA INTER – INDIRECT TAX

Imp Note: Aggregate turnover to include all turnover of all branches under same PAN.
Example:
D-Mart Ltd. has 2 branches one at Mumbai and other at Ahmedabad.

Mumbai Ahmedabad
Date Particulars
(Amt) (Amt)
01/04 Taxable Intrastate supply of goods 100000 300000
05/04 Exempt supplies of goods 150000 150000
01/05 Taxable inter-state supply of service 200000 250000
10/05 Inward Taxable supply of Goods 600000 100000
12/05 Taxable Inter-state supply of Service 100000 800000

Answer:

Date Particulars (Amt)

01/04 Taxable Intrastate supply of goods 4,00,000
05/04 Exempt supplies of goods 3,00,000
01/05 Taxable inter-state supply of service 4,50,000
12/05 Taxable Inter-state supply of Service 9,00,000
Total 20.5 Lakhs

Since aggregate turnover of D-mart which is computed on All India Basis where they
have same PAN exceeds 20 lakhs, hence D - mart is liable to get registered on 12/5 (Both
Branches Mumbai & Ahmedabad with their respective GST Act).

Higher Limit for Supplier of Goods:

Any person, who is engaged in Exclusive Supply of Goods & whose aggregate turnover
in the financial year does not exceeds ` 40 Lakhs is Exempt from Obtaining Registration.
However, the Exemption is not applicable to following Persons:
a) Person required compulsory registration under section 24.
b) Person Engaged in making supplies of the Goods being:
 Ice-Cream & Other Edible Ice, whether or not containing Cocoa.

 Pan-Masala, &

 Tobacco & Manufactured Tobacco Substitutes.

REGISTRATION 147
 CA INTER – INDIRECT TAX

 Fly ash bricks or fly ash aggregate with 90% or more fly ash content; Fly ash blocks
 Bricks of fossil meals or similar siliceous earths

 Building bricks

 Earthen or roofing tiles

c) Person making Intra-State Supply in the States of Arunachal Pradesh, Manipur, Meghalaya,
Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; &
d) Person exercising option of Voluntary Registration under this Act.

Explanation: A person shall be considered to be engaged exclusively in the supply of Goods

even if he is engaged in exempt supply of services provided by way of extending deposits,
loans or advances in so far as the consideration is represented by way of interest or
discount.

Example:

Supplier Supplier is engaged in Aggregate Applicable Whether

Turnover Threshold Liable to
Limit for Obtain
Registration Registration?
Exclusively in supply of shoes 32 Lakhs
Exclusively in supply of pan masala 22 Lakhs
Prithiviraj Exclusively in supply of taxable 22 Lakhs
of Assam services
In supply of both taxable goods and 18 Lakhs
services
Exclusively in supply of toys 22 Lakhs
Exclusively in Supply of ice cream. 22 Lakhs
Shivaji of Exclusively in supply of taxable 32 Lakhs
Telangana services
In supply of both taxable goods and 32 Lakhs
services
Exclusively in Supply of Paper 12 Lakhs
Exclusively in Supply of Tobacco 22 Lakhs
Ashoka of Exclusively in Supply of Taxable 8 Lakhs
Manipur Services
In supply of both taxable goods and 12 Lakhs
services

REGISTRATION 148
 CA INTER – INDIRECT TAX

Sec 22 (2): Every Person who were registered under Existing Law such as Service Provided
under Finance Act, 1994 (Service Tax), Trader under VAT Law, Manufacturer under Central
Excise Act shall get registered Compulsorily under GST Law from 1st July, 2017.

Sec 22 (3): Where a business carried on by a taxable person registered under this Act
is transferred, whether on account of succession or otherwise, to another person as a
going concern, the transferee or the successor, as the case may be, shall be liable to be
registered with effect from the date of such transfer or succession.

Example:
Mr. Tom a registered person transferred his running business as a Going Concern to Mr.
Jerry on 01st April 2019. In this Case, Mr. Jerry is compulsory liable to be registered
under GST Act from date of Transfer of Business i.e. from 01st April. 2019.

Sec 22 (4): In case of transfer pursuant to sanction of a scheme or an arrangement for

amalgamation or, as the case may be, de-merger of two or more companies pursuant
to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to
be registered, with effect from the date on which the Registrar of Companies issues a
certificate of incorporation giving effect to such order of the High Court or Tribunal.

Example:
A Ltd and B Ltd is considering amalgamation into AB Ltd with its entity. The HC has dated
effective transfer of business from A Ltd and B Ltd into AB Ltd w.e.f 1/6/2020, to which
ROC has issued COI for the merged entity w.e.f 1/12/2020
Answer:
In that case that transferee company i.e., AB Ltd shall be liable to register w.e.f 1st
December 2020.

SECTION 23: PERSON NOT LIABLE FOR REGISTRATION

1. Person exclusively making supply of Non- Taxable or Wholly Exempted Goods or
Services or Both.
2. Agriculturist to the Extent of Supply of Produce out of cultivation Land.
3. Notified Category of Person: Person only engaged in making taxable supplies, total
tax on which is liable to be paid on Reverse Charge Basis.

REGISTRATION 149
 CA INTER – INDIRECT TAX

SECTION 24: COMPULSORY REGISTRATION IN CERTAIN CASES

Notwithstanding anything contained in sub-section (1) of section 22, the following
categories of persons shall be required to be registered under this Act,–

1. Person Making Inter-State Supply of Goods except Where Person making Inter-State
Supply of Handicraft Items.
Thus, Person making Inter-State Supply of Service shall be liable to register only
when they Exceeds Aggregate Turnover of Rs. 10 Lakhs / 20 Lakhs.

2. Casual Taxable Person

Casual taxable person means a person who occasionally undertakes transaction
involving of business in a state or union territory where he has no fixed place of
business.
Example:
Mr. Kalu a supplier of pencils has its place of business in Patna, he is participating
in exhibition conducted in Mumbai which will last for 10 days. Mr. Kalu has no fixed
place of business in Maharashtra.

Answer:
In above case, Mr. Kalu shall compulsorily get registered under Mah SGST Act. u/s 24.
COMMON NOTE FOR 1) & 2) ABOVE

REGISTRATION 150
 CA INTER – INDIRECT TAX

Meaning of Handicraft Goods:

Handicraft goods means goods predominantly made by hand even though some
tools or machinery may also have been used in the process; such goods are graced
with visual appeal in the nature of ornamentation or in-lay work or some similar
work of a substantial nature; possess distinctive features, which can be aesthetic,
artistic, ethnic or culturally attached and are amply different from mechanically
produced goods of similar utility.

3. Persons who are required to pay tax under reverse charge i.e. Recipient of Supply is
Liable to pay Tax.[ Cases Notified under Section 9(3) of CGST Act]

4. Ecommerce Operator
(i) Every ECO (Electronic Commerce Operator) who are required to collect tax u/s
52,
(ii) persons who supply goods and/or services [other than supplies specified under
section 9(5)], through such ECO who is required to collect tax at source under
section 52, but threshold limit of Rs. 20 lakh (Rs. 10 lakh in case of Special
Category States Tripura, Nagaland, Mizoram, Manipur) is available in case of
suppliers supplying services through ECO

Person supplying SUDPLY OF Yes COMPULSORY

through ECO GOODS REGISTRATION
No
SUPPLY
SERVICES

Services covered Other

U/S 9(5) Services

Exempt from If ATO > 20L 10L

Registration → Compulsory Registration

5. Non Resident Taxable Person (NRTP)

NRTP means any person who occasionally undertakes transaction involving supply
of goods or services but has no fixed place of business or residence in India.

REGISTRATION 151
 CA INTER – INDIRECT TAX

Example:
Mr. John from USA a supplier of diamonds is participating in exhibition conducted
in Mumbai which will last for 60 days. Mr. John has no fixed place of business in
Maharashtra.
Answer:
In an above case, Mr. John shall compulsorily get registered under Mah SGST Act. u/s 24.

6. Persons who make taxable supply of goods or services or both on behalf of other
taxable persons whether as an agent or otherwise.

8. Persons who are required to pay tax u/s 9(5).

9. Such other person or class of persons as may be notified by the Government on the
recommendations of the Council.

Section 25: PROCEDURE FOR REGISTRATION

Sec 25(1) Time limit for application:

Every person who is liable to be registered under section 22 or section 24 shall apply for
registration in every such State or Union territory in which he is so liable within thirty
days from the date on which he becomes liable to registration, in such manner and
subject to such conditions as may be prescribed.

Effective Date of Registration (Rule 10)

Condition Effective Date

Where Application is made within 30 Days Effective date shall be the date when
from the date he becomes liable for person becomes liable for Registration.
Registration
Where Application is made after 30 Days Effective date shall be date of grant of
from the date he becomes liable for Registration Certificate.
Registration

However, a casual taxable person or a non-resident taxable person shall apply for
registration at least five days prior to the commencement of business.

REGISTRATION 152
 CA INTER – INDIRECT TAX

EXAMPLE:
Sameer Services Ltd. Is engaged in taxable supply of services in Maharashtra. The
turnover of Sameer Services Ltd. exceeded Rs. 20 Lakh on 1st November. It is liable to get
registered by 1st December in the state of Maharashtra

Sec 25(2) MAY Take multiple registrations within the state:

Taxpayers may opt for multiple registrations within a State/U.T in respect of multiple
places of business located within the same State/U.T on the same PAN.

Sec 25(3) Voluntary Registration:

A person, though not liable to be registered under section 22 or section 24 may get himself
registered voluntarily, and all provisions of this Act, as are applicable to a registered
person, shall apply to such person.

Sec 25(4) & (5) Distinct Person:

A person who has obtained or is required to obtain more than one registration, whether
in one State or Union territory or more than one State or Union territory shall, in respect
of each such registration, be treated as distinct persons for the purposes of this Act.
Where a person who has obtained or is required to obtain registration in a State or
Union territory in respect of an establishment, has an establishment in another State or
Union territory, then such establishments shall be treated as establishments of distinct
persons for the purposes of this Act.

Sec 25(6) PAN is necessary for getting GST Registration:

Every person shall have a Permanent Account Number issued under the Income-tax Act,
1961 in order to be eligible for grant of registration:
However, a person required to deduct tax under section 51 may have, in lieu of a Permanent
Account. Number, a Tax Deduction and Collection Account Number issued under the said
Act in order to be eligible for grant of registration.

Section 25 (6A), (6B), (6C) & (6D) – Aadhaar Authentication:

A. As per section 25(6A), (6B) and (6C), following persons are required to undergo aadhaar
authentication:
(i) New applicant: Every (i) individual applicant or (ii) an applicant, other than an
individual, shall undergo authentication/furnish proof of possession of Aadhaar
number.

REGISTRATION 153
 CA INTER – INDIRECT TAX

In order to be eligible for registration following persons should get Aadhaar

authentication
a) Individual;
b) Authorized signatory of all types;
c) Managing and Authorized Partner; and
d) Karta of an HUF

Risk-based biometric-based aadhaar authentication of registration applicants –

Pilot project in Gujarat
In order to improve the registration process, biometric based aadhaar
authentication of the high-risk applicants who opt for authentication of
Aadhaar number has been introduced on a pilot basis in the State of Gujarat.
An applicant who has opted for authentication of Aadhaar number and is identified
on the common portal, based on data analysis and risk parameters, shall be
followed by biometricbased Aadhaar authentication and taking photograph:
(i) of the applicant where the applicant is an individual or
(ii) of such individuals where the applicant is not an individual,along with the
verification of the original copy of the documents uploaded with the application
in Form GST REG01 at one of the notified Facilitation Centres.
The application shall be deemed to be complete only after completion of the
process laid down hereunder.
An acknowledgement shall be issued to the applicant only after completion
of biometric-based authentication.
(ii) Persons already registered (new rule 10B)
The registered person, who has been issued a certificate of registration under GST,
shall undergo authentication of the Aadhaar number of:-
 Proprietor, in the case of proprietorship firm,
 Any partner, in the case of a partnership firm,
 Karta, in the case of a Hindu undivided family,
 Managing director or any whole-time director, in the case of a company,
 Any of the Members of the Managing Committee of an Association of persons
or body of individuals or a Society, or of the
 Trustee in the Board of Trustees, in the case of a Trust;

REGISTRATION 154
 CA INTER – INDIRECT TAX

B. Where Aadhaar number is not assigned

1. In case of new applicant
If an aadhaar number is not assigned to a new applicant – either
(i) an 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.
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, or
• a person, who has undergone authentication of Aadhaar number, is identified on the
common portal, based on data analysis and risk parameters (presently in case pilot
project in Gujarat), for carrying out physical verification of places of business
• the proper officer, with the approval of an officer authorised by the Commissioner
not below the rank of Assistant Commissioner, deems it fit to carry out physical
verification of places of business
the registration shall be granted within 30 days of submission of application only after
physical verification of the principal place of business in the presence of the said person, in
the prescribed manner and verification of such documents as the proper officer may deem fit.

2. In case of an already registered persons

If Aadhaar number has not been assigned to the person required to undergo
authentication of the Aadhaar number, such person shall furnish the following
identification documents, namely: –
(a) her/his Aadhaar Enrolment ID slip; and
(b) (i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority
Such person shall undergo the authentication of Aadhaar number within a period
of 30 days of the allotment of the Aadhaar number.

3. 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.

REGISTRATION 155
 CA INTER – INDIRECT TAX

Following persons have been notified in this regard:

• 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 under section 25(9)

Sec 25(7) Documents required for NRTP:

Notwithstanding anything contained in Section 25(6), a non-resident taxable person may
be granted registration under Section 25(1) on the basis of such other documents as may
be prescribed.

Sec 25(8) Registration by proper officer in case of failure of person to get registered:
Where a person who is liable to be registered under this Act fails to obtain registration,
the proper officer may, without prejudice to any action which may be taken under this
Act or under any other law for the time being in force, proceed to register such person in
such manner as may be prescribed.

Sec 25(9) Grant of Unique Identification Number:

Not with standing anything contained in Section 25(1),–
• any specialized agency of the United Nations Organization or Consulate or Embassy
of foreign countries;
• and any other person or class of persons, as may be notified by the Commissioner,
shall be granted a Unique Identity Number in such manner and for such purposes,
including refund of taxes on the notified supplies of goods or services or both received
by them, as may be prescribed.

Application for registration by Special Economic Zone (SEZ)

[Second proviso to section 25(1)]

A person having a unit in SEZ/and SEZ developer will have to make a separate application
for registration as distinct from his place of business located outside SEZ in the same
State/UT. Thus, there may be a case where two units of a taxpayer are located in same
State/UT - one in SEZ and another outside SEZ. In that case, separate registrations have
to be obtained for each of the two units as separate places of business.

REGISTRATION 156
 CA INTER – INDIRECT TAX

SEZ is a geographically bound zone where the

economic laws relating to export and import
are more liberal as compared to other parts
of the country. SEZ is considered to be a place
outside India for all tax purposes.

Example:
Sandeep Industries is engaged in manufacturing activities in Uttar Pradesh. It has
two manufacturing units in UP - one in SEZ and another outside SEZ. Under GST, one
registration per State is required. However, since in this case, one of the two units of
Sandeep Industries is located in SEZ, SEZ unit will have to compulsorily make a separate
application for registration as a place of business distinct from unit located outside SEZ
in the same State.

REGISTRATION 157
 CA INTER – INDIRECT TAX

Procedure for registration

Part I

Every person liable to get registered and person seeking voluntary registration shall, before
applying for registration, declare his Permanent Account Number (PAN) and State/UT in Part A of
FORM GST REG-01 on GST Common Portal.

PAN is validated online by Common Portal from CBDT database and is also be
verified through separate OTPs sent to the PAN linked mobile number and email address.

Temporary Reference Number (TRN) is generated and communicated to the applicant

on the validated mobile number and e-mail address.

Using TRN, applicant shall electronically submit application in Part B of application

form, along with specified documents at the Common Portal.
Part B of application contains the details, such as, constitution of business, jurisdiction,
option for composition, date of commencement of business, reason to obtain
registration, address of PPoB and nature of activity carried out therein, details of APoB,
details of bank account(s), details of authorized signatory, aadhaar authentication, etc.

On receipt of such application, an acknowledgement in the prescribed form shall

be issued to the applicant electronically. A Casual Taxable Person (CTP) applying
for registration gets a TRN for making an advance deposit of tax in his electronic
cash ledger and an acknowledgement is issued only after said deposit.*

Application shall be forwarded to the Proper Officer.

The procedure after receipt of application by the Proper Officer is depicted in Part II.

* Discussed in detail in subsequent paras.

REGISTRATION 158
 CA INTER – INDIRECT TAX

REGISTRATION 159
 CA INTER – INDIRECT TAX

Deemed Approval of Application

If the proper officer fails to take any action in the following cases within the stipulated
time, the application for grant of registration shall be deemed to have been approved

Section 26: DEEMED REGISTRATION

1. The grant of registration or the Unique Identity Number under the State Goods and
Services Tax Act or the Union Territory Goods and Services Tax Act shall be deemed
to be a grant of registration or the Unique Identity Number under this Act subject to
the condition that the application for registration or the Unique Identity Number has
not been rejected under this Act within the time specified.

2. In case any application for Registration or UIN is rejected in specified time under SGST
Act or UTGST Act, shall be deemed to be a rejection of application for registration
under this Act.

Section 27: SPECIAL PROVISIONS FOR CASUAL TAXABLE PERSON OR NON

RESIDENT TAXABLE PERSON

1. CTP / NRTP registration is valid up to Period Specified in application for Registration

or 90 Days from Effective date of Registration, Whichever is Earlier.
2. Taxable Supply to be made only after issuance of Registration Certificate.
3. Advance deposit to be made by CTP or NRT equivalent to Estimated Tax Liability.
4. The Amount Deposited will be credited to Electronic Cash Ledger.

REGISTRATION 160
 CA INTER – INDIRECT TAX

DO YOU KNOW?
1) As per Rule 13, Application for registration made by a Non Resident taxable person
shall be duly signed or verified through electronic verification code by his authorized
signatory who shall be a person resident in India having a valid PAN.

2) At the time of submitting the registration application, CTP/NRTP are required to

make an advance deposit of tax** in an amount equivalent to the estimated tax
liability of such person for the period for which the registration is sought.

Such person will get a TRN for making an advance deposit of tax which shall be credited to
his electronic cash ledger. An acknowledgement of receipt of application for registration
is issued only after said deposit.

Such advance tax deposit amount should be calculated after considering the due eligible ITC
which might be available to such casual taxable person [Circular No. 71/45/2018-GST dated
26.10.2018].

3) REGISTRATION OF PARTICIPANTS OF LONG RUNNING EXHIBITIONS

In case of long running exhibitions (for a period more than 180 days), the taxable
person cannot be treated as a CTP and thus such person would be required to
obtain registration as a normal taxable person.
In such cases, he would not be required to pay advance tax [Refer Point D.] for the
purpose of registration. He can surrender such registration once the exhibition is
over [Circular No. 71/45/2018-GST dated 26.10.2018].

REGISTRATION 161
 CA INTER – INDIRECT TAX

Section 28: AMENDMENT OF REGISTRATION

Except for the changes in some core information in the registration application, a
taxable person shall be able to make amendments without requiring any specific
approval from the tax authority.

In case the change is for legal name of the business, or the State of Place of
Business or additional place of business. The taxable person will apply for
amendments within 15 days of the event necessitating the change.

The Proper Officer, then will approve the amendment within the next 15 days.

For other changes like the name of day to day functionaries, e-mail ID’s, mobile
numbers etc. no approval of the Proper Officer is required and the amendments
can be affected by the taxable person in his own on the common portal.

DO YOU KNOW?
1) Any change in the mobile number or e-mail address of the authorized signatory
submitted under rule 19, as amended from time to time, shall be carried out only
after online verification through the common portal in the manner provided under
[sub-rule (2) of rule 8.]

2) Any particular of the application for registration shall not stand amended with
effect from a date earlier than the date of the submission of the application in FORM
GST REG-14 on the commission portal except with the order of the Commissioner for
reasons to be recorded in writing and subject to such conditions in the Commissioner
may, in the said order, specify.
Example:
Karan Enterprises, a sole proprietorship firm, is engaged in supply of electrical goods in
Delhi. The firm is registered under GST. Karan is the proprietor of the firm. He wishes to
expand his business and his friend Vijay - approaches him to provide additional capital
for his business if he is made a partner in Karan’s business.
Karan agrees and changes the constitution of his business and form a partnership firm
- Karan Vijay & Co. Since the change in constitution of business from sole proprietorship
firm to partnership firm results in change in PAN of the registered person, the partnership

REGISTRATION 162
 CA INTER – INDIRECT TAX

firm has to apply for fresh registration. The reason for the same is that GSTIN is PAN
based. Any change in PAN would warrant a new registration.

Section 29: CANCELLATION OF REGISTRATION

Cancellation of Registration

Voluntary Suo-Moto
cancellation cancellation

Where the registered Where the Proper Officer considers the registration
person no more requires it liable for cancellation in view of certain defaults

SEC 29 (1): CIRCUMSTANCES FOR CANCELLATION OR SUSPENSION OF REGISTRATION

The Proper Officer may either on his own motion or on an application filed by
the registered person or by his legal heirs, in case of death of such person,
cancel the registration, in such manner and within such period as may be
prescribed, having regard to the circumstances where:

The Business has been There is any The Taxable person is

discontinued, transferred change in the no longer liable to be
fully for any reason constitution of registered u/s
including death of the the business 22 or 24 or he intends
proprietor, amalgamated to opt out of the
with other legal entity, voluntary registration.
demerged or otherwise
disposed of:

A provision to section 29(1) has been inserted to provide that once a registered person
has applied for cancellation of registration or the proper officer seeks to cancel his
registration, the proper officer may suspend his registration during pendency of the
proceedings relating to cancellation of registration filed by such registered person, for
such period** and in such manner as may be prescribed.

REGISTRATION 163
 CA INTER – INDIRECT TAX

**PERIOD AND MANNER OF SUSPENSION OF REGISTRATION RULE 21A

Further, with effect from 01.02.2019, new rule 21A of the CGST Rules has been inserted vide
Notification No. 03/2019 CT dated 29.01.2019 which lays down the period and manner of
suspension of registration as follows:

1. Where registered person has applied for cancellation of registration:

Where a registered person has applied for cancellation of registration, the registration
shall be deemed to be suspended from:
(a) the date of submission of the application or
(b) the date from which the cancellation is sought,

Whichever is later, pending the completion of proceedings for cancellation of

registration.

2. Where cancellation of the registration has been initiated by the Department on their own
motion:
Where the proper officer has reasons to believe that the registration of a person
is liable to be cancelled, he may, after affording the said person a reasonable
opportunity of being heard, suspend the registration of such person with effect from
a date to be determined by him, pending the completion of the proceedings for
cancellation of registration.

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

• shall not make any taxable supply during the period of suspension (It means
the registered person shall not issue a tax invoice and, accordingly not charge tax on
supplies made by him) and
• shall not be required to furnish any return under section 39.

4. The suspension of registration shall be deemed to be revoked upon completion of the

cancellation proceedings by the proper officer. Such revocation shall be effective from the
date on which the suspension had come into effect.

5. Where the registration has been suspended for not filing of returns and the registration
has not already been cancelled by the proper officer, the suspension of registration shall
be deemed to be revoked upon furnishing of all the pending returns.

REGISTRATION 164
 CA INTER – INDIRECT TAX

6. Where any order having the effect of revocation of suspension of registration has been
passed, the provisions of section 31(3)(a) [revised tax invoices] and section 40 [first
return] in respect of the supplies made during the period of suspension and the procedure
specified therein shall apply.

SEC 29(2): CANCELLATION OF REGISTRATION BY PROPER OFFICER

Reasons thereof [Sections 29(2) and Rule 21 of CGST Rules, 2017]. The proper officer may
cancel the registration of a person from such date, including any retrospective date, as
he may deem fit, where –
(a) a registered person has contravened such provisions of the Act or the rules made
thereunder as may be prescribed.
(b) A person paying tax under Section 10 i.e. composition scheme has not furnished
returns for a financial year beyond 3 months from the due date of furnishing the
said return.
(c) Being a registered person required to file return under subsection (1) of section 39
for each month or part thereof, has not furnished returns for a continuous period of
six months.
(d) Being a registered person required to file return under proviso to subsection (1)
of section 39 for each quarter or part thereof, has not furnished for a continuous
period of two tax period.
(e) Any person who has taken voluntary registration under Section 25(3) has not
commenced business within 6 months from the date of registration; or
(f) registration has been obtained by means of fraud, willful misstatement or suppression
of facts.
(g) does not conduct any business from the declared place of business, or
(h) issues invoice/bill without supply of goods/services in violation of the provisions of
this Act, or the rules made thereunder
(i) avails input tax credit in violation of the provisions of section 16(2) of the CGST Act
or the rules made thereunder; or
(j) furnishes the details of outward supplies in Form GSTR-1 under section 37 for one
or more tax periods which is in excess of the outward supplies declared by him in his
valid return under section 39 for the said tax periods; or
(k) violates the provision of rule 86B
Opportunity of being heard. The proper officer shall not cancel the registration without
giving the person an opportunity of being heard.

REGISTRATION 165
 CA INTER – INDIRECT TAX

SEC 29(3): CANCELLATION OF REGISTRATION

Not to affect tax liability: The cancellation of registration under this section shall not affect
the liability of the person to pay tax and the other dues under this Act or to discharge
any obligation under this Act or the rules made thereunder for any period prior to the
date of cancellation whether or not such tax and other dues are determined before or
after the date of cancellation.

SEC 29(4): CANCELLATION UNDER SGST/UTGST ACT

Deemed cancellation under CGST Act The cancellation of registration under this act.

SEC 29(5): PAYMENT OF ITC ON CANCELLATION

Pay ITC availed on goods in stock or output tax whichever is higher. As per Section 29(5), every
registered person whose registration is cancelled shall pay an amount calculated in such
manner as may be prescribed, by way of debit in the electronic credit ledger or electronic
cash ledger, -
 equivalent to the credit of input tax in respect of –
- inputs held in stock, or
- inputs contained in semi-finished goods, or
- inputs contained in finished goods held in stock, or
- capital goods or plant and machinery
On the day immediately proceedings the date of such cancellation, or
 the output tax payable on such goods,
Whichever is higher.
Payment in case of capital goods – ITC in respect of capital goods or plant and machinery
calculated in accordance with rule 44
 ITC involved in the remaining useful life in months of the capital goods computed on
pro-rata basis, taking the useful life as 5 years.
 The tax on the transaction value of such capital goods or plant and machinery
under Section 15, whichever is higher.

EXAMPLE:
Capital goods have been in use for 4 years and 4 months.
The useful remaining life in months = 8 months. And sold for 50,000 @18%.
ITC taken on such capital goods = 60,000

REGISTRATION 166
 CA INTER – INDIRECT TAX

Answer:
1. ITC attributable to remaining useful life = 60,000 x 8/60 = 8,000
2. Tax on transaction value = 50,000 x 18% = 9000
Higher of the two above = 9000

Section 30: REVOCATION OF CANCELLATION OF REGISTRATION

1. Application for Restoration of Registration to be made within 30 Days from Service
of Cancellation Order. This can be further extended by not exceeding 30 days by
Additional commissioner / Joint commissioner and further period by not exceeding 30 days
by Commissioner.
2. The P.O by order either revoke cancellation of the registration or reject application.
However before cancellation, Applicant must be given opportunity of being heard.
3. Restoration of RC under SGST / UTGST Act deemed to be restoration under CGST Act.
4. Where registration was cancelled for failure of registered person to furnish returns

4A - Where the registration has been cancelled with effect from the date of order of cancellation
of registration.

Example:
The registration of Vinit 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 June itself. It applied for revocation of
cancellation of registration and the order for revocation of cancellation of Vinit Associates
is passed on 31st July.
In this case, Vinit 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.
4B - Where the registration has been cancelled with retrospective effect.

Example:
The registration of Vinit 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 Vinit
Associates is passed on 31st July.
In this case, Vinit 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.

REGISTRATION 167
 CA INTER – INDIRECT TAX

Question 1
BBD Pvt. Ltd. of Gujarat exclusively manufactures and sells product ‘Z’ which is exempt
from GST vide notifications issued under relevant GST legislations. The company sells ‘Z’
only within Gujarat and is not registered under GST laws. The turnover of the company
in the previous year 2018-19 was ` 50 lakh. The company expects the sales to grow by
10% in the current year 2019-20.
However, effective 01.01.2020, exemption available on ‘Z’ was withdrawn by the Central
Government and GST@ 5% was imposed thereon. The turnover of the company for the
nine months ended on 31.12.2019 was ` 42 lakh.
BBD Pvt. Ltd. is of the opinion that it is not required to get registered under GST for
current financial year 2019-20.

Answer:
For a supplier exclusively engaged in intra-State supply of goods, the threshold limit of
turnover to obtain registration in the State of Gujarat is ` 40 lakh. However, a person
exclusively engaged in the business of supplying goods and/or services that are not liable
to tax or are wholly exempt from tax is not liable to registration.
Therefore, since BBD Pvt. Ltd. was engaged exclusively in supplying exempted goods
till 31.12.2019, it was not required to be registered till that day; though voluntary
registration was allowed.
The position, however, will change from 01.01.2020 as the supply of goods become
taxable from that day and the turnover of BBD Pvt. Ltd. is more than ` 40 lakh. Since the
aggregate turnover limit of ` 40 lakh includes exempt turnover also, turnover of ‘Z’ till
31.12.2019 will be considered for determining the threshold limit even though the same
was exempt from GST. Therefore, BBD Pvt. Ltd. needs to register within 30 days from
01.01.2020. (Suggested Nov’20)

Question 2:
Mr. Q, a casual taxable person of Gujarat state is a trader of taxable notified handicraft
goods. It makes supplies to the states of Maharashtra, Rajasthan and Andhra Pradesh.
Turnover for October, 2021 is ` 18 Lakh.

REGISTRATION 168
 CA INTER – INDIRECT TAX

(i) Explain the provisions of registration for casual taxable person under GST. Examine
whether Mr. Q is liable for registration or not?
(ii) What will be the answer if Mr. Q makes trading in taxable notified products instead
of taxable notified handicraft goods which involves 75% making on machine and
25% by hand?

Answer:
(i) A casual taxable person is required to obtain compulsory registration under GST
irrespective of the quantum of its aggregate turnover.
However, a threshold limit of ` 20 lakh (` 10 lakh in case of specified Special Category
States) is available for registration to a casual taxable person who:
(i) is making inter-State taxable supplies of notified handicraft goods and notified
hand-made goods,
(ii) is availing the benefit of exemption from registration available to inter-State
supply of above-mentioned goods upto the aggregate turnover of ` 20 lakh
(` 10 lakh in case of specified Special Category States), and
(iii) has obtained a PAN and
(iv) has generated an e-way bill.
In the given case, since Mr. Q is engaged in supplying notified handicraft goods
and its aggregate turnover6 does not exceed ` 20 lakh, he will not be liable to
registration provided he fulfills other conditions specified herein.
(ii) In case Mr. Q is engaged in trading of notified products which are predominantly
made by machine, he will not be eligible for the exemption from registration under
aforesaid provisions and needs to take compulsory (mandatory) registration.
(Suggested Dec’21)

Question 3
Under the provision of section 29(1) of CGST Act, 2017 read with rule 21A of CGST Rules, 2017
related to suspension of registration if the registered person has applied for cancellation of
registration, what is the period and manner of suspension of registration ?
Answer:
(b) Where a registered person has applied for cancellation of registration, the registration
shall be deemed to be suspended from:
(a) the date of submission of the application or
(b) the date from which the cancellation is sought, whichever is later, pending the
completion of proceedings for cancellation of registration.

REGISTRATION 169
 CA INTER – INDIRECT TAX

Such person shall not make any taxable supply during the period of suspension and
shall not be required to furnish any return.
The expression “shall not make and taxable supply” mean that the registered person
shall not issue a tax invoice and accordingly, not charge tax on supplies made by
him during the suspension period. (Suggested Jan’21)

Question 4
Explain the registration requirements under GST law in the following independent cases:
(i) Mr. Ahmad of Jammu engaged in the business of supplying tobacco based Pan
Masala with an aggregate turnover of ` 24 lacs.
(ii) Mr. Lepcha of Mizoram is engaged in the supply of papers with an aggregate turnover
of ` 13 lacs.
Will your answer be different if Mr. Lepcha is located in Meghalaya ?

Answer:
(i) A person is eligible for enhanced threshold limit of ` 40 lakh in the State of Jammu
and Kashmir if he is engaged exclusively in intra-State supply of goods.
However, the enhanced threshold limit is not applicable if the person is engaged,
inter alia, in the supply of pan masala and all goods of chapter 24 i.e. Tobacco and
manufactured tobacco substitutes. In that case, the normal threshold limit of ` 20
lakh will be applicable.
In view of said provisions, in the given case, Mr. Ahmad is liable to register since his
aggregate turnover (` 24 lakh) exceeds the applicable threshold limit for registration
of ` 20 lakh.
(ii) The enhanced threshold limit of ` 40 lakh as applicable to a person engaged
exclusively in intra-State supply of goods, is not applicable to Mizoram [a specified
Special Category State]. Instead, a lower threshold limit of ` 10 lakh for registration
is applicable for Mizoram.
Thus, in the given case, Mr. Lepcha of Mizoram is liable to register since his aggregate
turnover (` 13 lakh) exceeds the applicable threshold limit for registration of ` 10 lakh.
The enhanced threshold limit of ` 40 lakh is also specifically not applicable in the
State of Meghalaya. Instead, the normal threshold limit of ` 20 lakh for registration
is applicable to it.
Therefore, if Mr. Lepcha is located in Meghalaya, he is not liable to register since his
aggregate turnover (` 13 lakh) does not exceed the applicable threshold limit for
registration of ` 20 lakh. (Suggested Nov’19)

REGISTRATION 170
 CA INTER – INDIRECT TAX

Question 5
Examine the following cases and explain with reasons whether the supplier of goods is
liable to get registered in GST:
(i) Krishna of Himachal Pradesh is exclusively engaged in intra-State taxable supply of
readymade suits. His turnover in the current financial year from Himachal Pradesh
showroom is ` 25 lakh. He has two more showrooms one in Manipur & another in Sikkim
with a turnover of ` 15 lakh and ` 18 lakh respectively in the current financial year.
(ii) Ankit of Telangana is exclusively engaged in intra-State taxable supply of footwears.
His aggregate turnover in the current financial year is ` 25 lakh:
(iii) Aakash of Uttar Pradesh is exclusively engaged in intra-State supply of pan masala.
His aggregate turnover in the current financial year is ` 30 lakh.

Answer:
Every person engaged in making a taxable supply is required to obtain registration if his
aggregate turnover exceeds ` 20 lakh in a financial year. An enhanced threshold limit for
registration of ` 40 lakh is available to persons engaged exclusively in intra-State supply
of goods in specified States.
(i) The applicable threshold limit for registration gets reduced to ` 10 lakh in case a
person is engaged in making taxable supply from a Special Category State.
Since Krishna is making taxable supply from Manipur – a Special Category State,
the applicable threshold limit will get reduced to ` 10 lakh. Thus, it is liable to be
registered under GST as its aggregate turnover exceeds the said threshold limit.
(ii) Since Ankit is exclusively engaged in intra-State supply of goods in Telangana, which
is not a specified State for enhanced threshold limit, the applicable threshold limit
for registration is ` 20 lakh.
Thus, Ankit is liable to be registered under GST as its aggregate turnover exceeds
the said threshold limit.
(iii) Though the enhanced threshold limit for registration of ` 40 lakh is available to
Uttar Pradesh, the same will not be applicable if the person is engaged in supply of
pan masala.
In view of the same, the applicable threshold limit for Aakash is ` 20 lakh. Thus,
it is liable to be registered under GST as its aggregate turnover exceeds the said
threshold limit. (Suggested July’21)

REGISTRATION 171
 CA INTER – INDIRECT TAX

Question 6:
Q Ltd. is engaged exclusively in supply of taxable goods from the following states. The
particulars of intra-state supplies for the month of May 2021 are as follows:
State Turnover (`)
Madhya Pradesh 5,00,000
Gujarat 14,00,000
Tripura 12,00,000

(i) Q Ltd. seeks to know whether it is liable for registration under GST. Give your
explanation.
(ii) Will your answer be different if Q Ltd. supplies only petrol & diesel from Tripura
instead of any other taxable goods?

Answer:
Every person engaged in making a taxable supply is required to obtain registration if his
aggregate turnover exceeds ` 20 lakh in a financial year. An enhanced threshold limit for
registration of ` 40 lakh is available to persons engaged exclusively in intra-State supply
of goods in specified States. However, the applicable threshold limit for registration gets
reduced to ` 10 lakh in case a person is engaged in making supply from a specified
Special Category State provided such supply is a taxable supply.
(i) Since Q Ltd. is making supply of taxable goods5from Tripura – a specified Special
Category State, the applicable threshold limit will get reduced to ` 10 lakh.
Thus, it is liable to be registered under GST as its aggregate turnover [` 31 lakh]
exceeds the said threshold limit.
(ii) In case Q Ltd. is making supply of non-taxable goods [petrol and diesel] from
Tripura, the applicable threshold limit will not be reduced to ` 10 lakh; enhanced
threshold limit of ` 40 lakh will be applicable.
Thus, it is not liable to be registered under GST as its aggregate turnover [` 31 lakh]
does not exceed the said threshold limit. (Suggested Dec’21)

Question 7:
Nesamani started his business activities in the month of February 2022 in the State of
Orissa. He provided the following details:
State Amount in `
(i) Outward supply of petrol (Intra State) 4,00,000
(ii) Transfer of exempt goods to his branch in Rajasthan (Inter- State) 2,00,000

REGISTRATION 172
 CA INTER – INDIRECT TAX

(iii) Outward supply of taxable goods by his branch in Uttar Pradesh 5,00,000
(Intra State)
(iv) Outward supply of services on which tax is payable under RCM by the 6,00,000
recipient of services (Intra-State)

(v) Inward supply of services on which tax is payable under RCM (Intra- State) 2,00,000

From the information given above, compute the aggregate turnover of Nesamani and also
decide whether he is required to get registration under GST. Assume that the amounts
given above are exclusive of taxes.
(5 Marks)
Answer:
Particulars Amount (`)
Computation of aggregate turnover of Nesamani
Outward supply of petrol 4,00,000
[Supply of petrol being a non-taxable supply is an exempt supply. Value
of exempt supply is includible in aggregate turnover.]
Inter-State stock transfer of exempt goods 2,00,000
[Supply of taxable/exempt goods between distinct persons is includible.]
Outward supply of taxable goods from Uttar Pradesh branch [Value of 5,00,000
outward supplies under same PAN are includible.]
Outward supply of services taxable under reverse charge [Includible in 6,00,000
aggregate turnover.]
Inward supply of services taxable under reverse charge [Excludible from --
the aggregate turnover.]
Aggregate turnover 17,00,000

For a supplier engaged in supply of goods and services from the States of Orissa and Uttar
Pradesh, the threshold limit of aggregate turnover to obtain registration is ` 20 lakh.
However, a person required to pay tax under reverse charge has to obtain registration
compulsorily irrespective of the quantum of turnover.
Since in the given case, Nesamani is required to pay tax under reverse charge, it is liable
to obtain registration compulsorily irrespective of his quantum of turnover.

REGISTRATION 173
 CA INTER – INDIRECT TAX

10 Tax Invoice, Debit Note and

Credit Note

 Chapter Overview
(1) Section 31: Tax Invoice
(2) Section 34: Credit Note Debit Note
(3) Manner of Issue of E-Invoice & Dynamic QR Code
(4) Section 68 (Rule 138): E-way Bill
(5) Classwork / Homework
(6) MCQs

1. Time limit for issue of invoice - Section 31

Same as Chapter 5A Time of Supply

2. Manner of issuing an invoice – Rule 48

Case Number of Copies

Goods 3 Copies – Original for recipient, Duplicate for Transporter and Triplicate
for supplier
Services 2 Copies – Original for recipient, Duplicate for supplier

3. Particulars to be mentioned on the invoice – Rule 46

1) Name, add & GSTIN of Supplier
2) Date of Issue
3) Name, add, GSTIN/UIN of recipient ( if he is registered)
4) Description of goods or Service
5) Qty in case of goods/Unique Qty Code
6) Total value, Taxable value & Rate of Tax
7) Amount of Tax, Place of supply, Add of delivery ( if different than Place of supply)
8) whether it is under RCM.
9) Signature, digital signature (not required incase of E-invoicing)
10) Quick Response Code (IRN Embeded in it - in case of E-invoicing)
11) HSN Code - Harmonised System of Nomenclature
SAC Code- Service Accounting Code.

Tax Invoice, Debit Note and Credit Note 174

 CA INTER – INDIRECT TAX

T/O PFY No of Digits of HSN Code

ATO Upto 5cr For B2B Supplies = 4 digit
For B2C Supplies = 4 digit (Optional)
ATO > 5cr For B2B & B2C = 6 digit

4. Revised Tax Invoice – Rule 53

• 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.

• There would be a time lag between date of grant of certificate of registration and the
effective date of registration. For supplies made by such person during this intervening
period, the law enables the issuance of a revised invoice can be issued within 1 month,
so that ITC can be availed by the recipient on such supplies except for cases where
revised invoice is due to Section 74,129 & 130.

Example:

1/4/21 1/10/21 5/10/21 10/10/21

   
Starts his Liable to register (i.e, Applies for registration Grant of registration
business aggregate turnover certificate within 30 certificate (i.e, GSTIN)
exceeds Rs. 20 lakhs) days

For the supplies between effective date of Registration

till date of grant of Registration Certificate

Issue Revised Tax Invoice

• A registered person may issue a Consolidated Revised Tax Invoice in respect of 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 in respect
of all unregistered recipients if the value of a supply exceeds 2,50,000.

Tax Invoice, Debit Note and Credit Note 175

 CA INTER – INDIRECT TAX

5. Consolidated tax invoice – Rule 46

• A registered person may not issue a Tax Invoice if: (i) Value of the goods/services/
both supplied is less than 200, (ii) the recipient is unregistered; and (iii) the recipient
does not require such 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.

• All the above provisions are also applicable to Bill of Supply.

Example :
Kiran & Co. a Printing & stationery dealer has given details for the day. You are
required to determine for which all case he can issued consolidated Tax Invoice.

Sr. No. Recipient of supply Amount ()

1 CA Pravesh & Associates – registered dealer 199
2 Tisha – painter (Unregistered) 500
3 Bhavna orphanage – unregistered entity 389
4 Sneha & Co. an unregistered dealer 156
5 Pranay – student 188

Answer
Kiran & Co. is required to issue consolidated Tax Invoice for the supplies to Sneha
& Co. & Pranay a student. As the amount of supply is less than 200, recipient is
unregistered & recipient doesn’t require the same (assumed).
However in supplies to CA Pravesh & Associates, Tisha & Bhavna Orphanage he will
have to issue Tax Invoice separately as the all the conditions are not fulfilled.

6. Bill of Supply – Rule 49

• A registered person supplying exempted goods or services or both or paying tax
under composition levy shall issue a bill of supply instead of a tax invoice.

7. Invoice cum Bill of Supply – Rule 49

• A registered person supplying exempted and taxable goods or services may issue an
invoice cum bill of supply instead of a tax invoice and bill of supply separately.

Tax Invoice, Debit Note and Credit Note 176

 CA INTER – INDIRECT TAX

8. Receipt Voucher – Rule 50

• A registered person shall, on receipt of advance payment with respect to any supply
of goods or services or both, issue a Receipt Voucher evidencing receipt of such
payment.

• Where at the time of receipt of advance, rate of tax/ nature of supply is not determinable:
- Rate of tax would be – 18%
- Nature of supply would be– inter-state supply (IGST)

9. Refund Voucher – Rule 51

• Where, on receipt of advance payment with respect to any supply of goods or services
or both the registered person issues a Receipt Voucher, but subsequently no supply
is made and no tax invoice is issued in pursuance thereof, the said registered person
may issue to the person who had made the payment, a Refund Voucher against such
payment.

10. Payment Voucher – Rule 52

• A registered person who is liable to pay tax under reverse charge [under section
9(3)/9(4) of the CGST Act] shall issue a Payment Voucher at the time of making
payment to the supplier.

• Invoice and Payment Voucher for RCM - Summary

When Recipient Is Receives the supplies
Registered taxable under RCM

Section 9(3) Section 9(4)

Supplier is
Supplier is Supplier is
Unregistered
Registered Unregistered

Supplier will Recipient will issue Recipient will issue

Issue Invoice SELF TAX INVOICE SELF TAX INVOICE

Recipient shall issue payment voucher at the time of making

Payment to the supplier.

Tax Invoice, Debit Note and Credit Note 177

 CA INTER – INDIRECT TAX

11. Suppliers permitted to issue any other document – Rule 54

Supplier Optional Mandatory Information

information
Insurer/ Serial Number Other information’s to be mentioned – Optional
Banking and Address of for these entities to issue invoice for every
Company recipient transaction. They can issue consolidated invoice
including NBFC for a month per customer.
Goods Gross weight, Name of consignor and consignee,
Transport Registration number of carriage, Details of
Agency goods, place of origin and destination, GSTIN
of the person liable to pay tax.
Supplier of Serial Number Tax invoice shall include ticket in any form, by
passenger and Address of whatever name called.
transportation recipient
A registered person supplying Issue an electronic ticket and the said electronic
services by way of admission to ticket shall be deemed to be a tax invoice for all
exhibition of cinematograph films purposes of the Act, even if such ticket does not
in multiplex screens. contain the details of the recipient of service
but contains the other information.

Note: An insurer or banking company or other financial institution or telecom

operator or any other class of notified supplier of service can raise a single invoice
per quarter for transactions between distinct persons.

12. Delivery Challan – Rule 55

• Rule 55 specifies the cases where at the time of removal of goods, goods may be
removed on delivery challan and invoice may be issued after delivery.

- Supply of liquid gas where the quantity at the time of removal from the place of
business of the supplier is not known;
- Transportation of goods for job work;
- Transportation of goods for reasons other than by way of supply;
- Transportation of goods in semi knocked down or completely knocked down condition
and invoice was issued before dispatch of first consignment;
- Such other supplies as may be notified by Board;

Tax Invoice, Debit Note and Credit Note 178

 CA INTER – INDIRECT TAX

13. Section 31A – Facility for digital payment to recipient

• The Government may, on the recommendations of the Council, prescribe a class of
registered persons who shall provide prescribed modes of electronic payment to
the recipient of supply of goods or services or both made by him and give option
to such recipient to make payment accordingly, in such manner and subject to such
conditions and restrictions, as may be prescribed.

14. Credit Note and Debit Note – Section 34

• Credit Note: Where one or more tax invoices have has been issued for supply of any
goods or services or both and the taxable value or tax charged in that tax invoice
is found to exceed the taxable value or tax payable in respect of such supply, or
where the goods supplied are returned by the recipient, or where goods or services
or both supplied are found to be deficient, the registered person, who has supplied
such goods or services or both, may issue to the recipient one or more credit notes for
supplies made in a financial year containing such particulars as may be prescribed.

• Reasons for Credit Note issued by Supplier

- Taxable value in invoice is more than Taxable value in respect of such supply;
- Tax charged in invoice is more than Tax payable in respect of such supply;
- Where the goods supplied are returned by the recipient;
- Where goods or services or both are found to be deficient.
• Debit Note is Where one or more tax invoices have has been issued for supply of any
goods or services or both and the taxable value or tax charged in that tax invoice is
less than taxable value or tax payable in respect of such supply.
Note: Last date to issue Credit note is
30th day of November following the financial year in which such invoice debit note
pertains. OR
Actual date of filing annual returns for relevant F.Y
Whichever is earlier

15. Manner of issuing E-invoice - Rule 48(4)

• The e-invoice shall be prepared by notified class of registered persons, on the
recommendation of GST Council, by including such particulars contained in Form GST
INV-01 after obtaining an IRN (Invoice Reference Number) by uploading information
contained therein on the prescribed electronic portal (Invoice Registration Portal –
Eg: einvoice1.gst.gov.in).

Tax Invoice, Debit Note and Credit Note 179

 CA INTER – INDIRECT TAX

• Every Invoice issued in any other manner shall not be treated as on invoice.
• The requirement of preparing the invoice in duplicate and triplicate in case of supply
of services and goods does not apply to such e-invoice. Signature or digital signature
is also not required for e-invoice. An e-invoice will have a Quick Response Code (QR
Code) having embedded IRN in it.

• Notified Persons: E-invoicing is mandatory for the registered person whose aggregate
turnover in any of the preceding financial year from 2017-18 exceeds 5 Crores in
case of B2B supplies and exports.

• E-invoice can be cancelled within 24 hours but any amendment is not permitted.

• Exceptions: However, irrespective of the turnover, e-invoicing shall not be applicable

to the following categories of registered person:
- SEZ Unit;
- Insurer or a banking company or a financial institution, including a NBFC;
- A Goods Transport Agency;
- A registered person supplying passenger transportation service; and
- A registered person supplying services by way of admission to the exhibition of
cinematograph films in multiplex screens.
- Government Department and Local Authority

Note: Any person whose aggregate turnover exceeds 5 crore in any of the preceding
financial year from 2017-18 but is not required to issue e-invoice should mention
the below declaration on every invoice issued by such person (Eg: Banks, Government
Department, SEZ unit, etc.)

“I/We hereby declare that though our aggregate turnover in any preceding financial
year from 2017-18 onwards is more than the aggregate turnover notified under
rule 48(4), we are not required to prepare an invoice in terms of the provisions of
the said sub-rule”

• Circular No. 186/18/2022 GST dated 27.12.2022

- Issue: Whether the exemption from mandatory generation of e-invoices is
available for the entity as whole, or whether the same is available only in
respect of certain supplies made by the said entity?

Tax Invoice, Debit Note and Credit Note 180

 CA INTER – INDIRECT TAX

- Clarification: It is hereby clarified that the said exemption from generation of

e-invoices is for the entity as a whole and is not restricted by the nature of
supply being made by the said entity.

- Illustration: A Banking Company providing banking services, may also be

involved in making supply of some goods, including bullion. The said banking
company is exempted from mandatory issuance of e-invoice for all supplies
of goods and services and thus, will not be required to issue e-invoice with
respect to any supply made by it.

16. Dynamic QR Code

• Any registered person whose aggregate turnover in any of the preceding financial year
from 2017-18 exceeds 500 Crore is required to display a dynamic QR code on every
B2C invoice. This Dynamic QR code should be such that a person can scan and pay
electronically.

• The Dynamic QR code should capture details of invoice such as GSTIN, invoice value,
GST, Bank details, UPI ID, etc. In this regard, CBIC has issued a detailed circular
regarding various issues which was faced by the trade. This circular is given below

Tax Invoice, Debit Note and Credit Note 181

 CA INTER – INDIRECT TAX

11 ACCOUNTS & RECORDS

1. Introduction
• Chapter VIII – This chapter [Sections 35 and 36] enumerates accounts and
records required to be maintained by a taxpayer and period for which they are
required to be preserved.

2. Section 35 read with CGST Rules, 2017

• Every registered person shall keep and maintain his books of accounts at his
principal place of business and books of account relating to additional place of
business.
• Where more than one place of business is specified in the certificate of registration,
the accounts relating to each place of business shall be kept at such places of business.
• Unless proved otherwise, if any documents, registers, or any books of account
belonging to a registered person are found at any premises other than those
mentioned in the certificate of registration, they shall be presumed to be
maintained by the said registered person.
• Accounts and records required to be maintained – A true and correct account of
the following: Production or manufacture of goods, inward and outward supply
of goods or services or both, stock of goods, ITC, output tax payable and paid
and other particulars as may be prescribed.2
• Records not required by composition dealer – Stock of goods, Details of tax.
• Records to be maintained by agent – particulars of authorization received by him
from each principal, particulars for goods received or supplied on behalf of
principal, details of accounts furnished to every principal & tax paid on receipts
or on supply effected on behalf of each principal.
• Separate accounts for executing works contract - The names and addresses of the
persons on whose behalf the works contract is executed; Description, value and
quantity (wherever applicable) of goods or services received for the execution
of works contract; Description, value and quantity (wherever applicable) of
goods or services utilized in the execution of works contract;
2
prescribed means The goods/ services imported/exported, supplies attracting payment of tax under RCM along with
all required documents and separate account for advances received, paid and adjustments. Names and complete
addresses of suppliers from whom he has received goods or services chargeable to tax and details to whom he has
supplied goods or services.

ACCOUNTS & RECORDS 182

 CA INTER – INDIRECT TAX

The details of payment received in respect of each works contract; and the
names and addresses of suppliers from whom he received goods or services.
(a) Failure to maintain the accounts
• Where the registered person fails to account for the goods or services
or both, PO shall determine the amount of tax payable on the goods or services
or both that are not accounted for, as if such goods or services or both had been
supplied by such person and the provisions of section 73 or section 74(Notice and
Order), as the case may be, shall apply for determination of such tax.

(b) Records to be maintained by owner or operator of godown or warehouse and

transporters
• Irrespective of whether he is a registered person or not, shall maintain
records of the consignor, consignee and other relevant details of the
goods in such manner as may be prescribed.
• Records to be maintained by an owner/operator of a warehouse/
godown - Books of accounts with respect to the period for which
particular goods remain in the warehouse, including the particulars
relating to dispatch, movement, receipt, and disposal of such goods.
• The owner or the operator of godown shall store goods in such manner
that they can be identified item-wise & owner-wise to facilitate any
physical verification or inspection by officer on demand.
• Registration: If such persons are not already registered, they shall
obtain a unique enrolment number by applying electronically at the
GST Common Portal.
• A transporter who is registered in more than one State or Union
Territory having the same Permanent Account Number, he may apply
for a unique common enrolment number by submitting the details
in FORM GST ENR-02 using any one of his Goods and Services Tax
Identification Numbers, and upon validation of the details furnished,
a unique common enrolment number shall be generated and
communicated to the said transporter.
• Records by a transporter - Records of goods transported, delivered
& goods stored in transit by him along with GSTIN of the registered
consignor and consignee for each of his branches.

ACCOUNTS & RECORDS 183

 CA INTER – INDIRECT TAX

(c) Records may be in electronic form

• The registered person may keep and maintain such accounts and
other particulars in electronic form stored on any electronic device
and record so maintained shall be authenticated by means of a
digital signature.
• Proper electronic back-up of records shall be maintained and
preserved in such manner that, in the event of destruction of such
records due to accidents or natural causes, the information can be
restored within a reasonable period of time.
• Registered person maintaining electronic records shall produce, on
demand, the relevant records or documents, duly authenticated by
him, in hard copy or in any electronically readable format.

3. Section 36 – Period of retention of accounts

• Every registered person required to keep and maintain books of account or other
records as per section 35(1), shall retain them until the expiry of 72 months from
the due date of furnishing of annual return for the year pertaining to such accounts
and records.
• In case of Appeal or other proceedings: A registered person, who is a party to an
appeal or revision or any other proceedings before any Appellate Authority
or Revisional Authority or Appellate Tribunal or Court, whether filed by him
or by the Commissioner, or is under investigation for an offence, shall retain
the books of account and other records pertaining to the subject matter of
such proceedings for a period of one year after final disposal of such appeal
or revision or proceedings or investigation, or for the period specified above,
whichever is later.

ACCOUNTS & RECORDS 184

 CA INTER – INDIRECT TAX

12 E - Way Bill

1. Electronic way bill – Section 68 read with Rule 138, 138A, 138B, 138C, 138D & 138E

• The Government may require the person in charge of a conveyance carrying any
consignment of goods of value exceeding such amount as may be specified to carry
with him such documents and such devices as may be prescribed.

• Consequently, E-way Bills have been prescribed for such purpose.

1.1. Rule 138 – Information to be furnished prior to Commencement of movement of goods and
generation of E-way bill

• Every registered person who causes movement of goods of value21 exceeding ` 50,000
shall before commencement furnish Part A of GST EWB-01. It is required in the
following cases:
a. In relation to a supply;
b. For reasons other than supply;
c. Due to inward supply from an unregistered person (In this case, movement is
deemed to be caused by the registered recipient);
Note 1: The Unique number generated after submitting Part A would be valid for 15
days for updating Part B.

Note 2: A transporter or E-commerce operator or a courier agency can also furnish

the above details if they have the authorisation from the registered person.

Note 3: Mandatory E-way bill - The limit of ` 50,000 is not applicable in case of
movement of goods from the principal in one state to the job worker in another state
and handicraft goods from one state to another by a person who is exempted from
registration u/s 24 of CGST Act.

• Goods transported by road: Where the goods are transported by the registered person
as a consignor or consignee, whether in his own conveyance or a hired one or a public

E-Way Bill 185

 CA INTER – INDIRECT TAX

conveyance, by road, the said person shall generate the e-way bill in FORM GST
EWB-01 electronically on the common portal after furnishing information in Part B
of FORM GST EWB-01.

• Goods transported by road: If the registered person has not generated the E-way bill
and the goods are handed over to the transporter for transportation by road, the
registered person shall furnish the information relating to the transporter on the
common portal and the e-way bill shall be generated by the transporter on the said
portal on the basis of the information furnished by the registered person in Part A
of FORM GST EWB-01. Some key points are:
a. Consignment below ` 50,000 – E-way bill is optional. However, if the
consignments in a conveyance exceed ` 50,000 where the consignor or consignee
have not generated E-way bill and it is an interstate supply, then transporter
has to generate E-way bill.
b. Movement by URP – E-way bill is optional for such URP
c. Part B is optional if the distance between the place of business of consignor
and the place of business of transporter is upto 50 kms within the state.

• Goods transported by railway, air or vessel: E-way bill can be generated by the
registered person by furnishing Part B of form GST EWB-01 before or after the
commencement of movement. However, railways shall not deliver the goods unless
E-way bill is produced at the time of delivery.
Value shall be as per section 15 of CGST Act, 2017 including GST but excludes exempt supply.
21

• Consolidated E-way bill: The transporter may indicate serial number of e-way bills
generated in respect of each such consignment electronically on common portal
and a consolidated e-way bill in FORM GST EWB-02 maybe generated by him on
said portal prior to the movement of goods.

• E-way Bill Number: Upon generation of the e-way bill on the common portal, a
unique e-way bill number (EBN) shall be made available to the supplier, the recipient
and the transporter on the common portal. Any acceptance or rejection should be made
within 72 hours or delivery of goods, whichever is earlier. Otherwise, it is deemed to be
accepted.

E-Way Bill 186

 CA INTER – INDIRECT TAX

• Cancellation of EBN: Where an e-way bill has been generated under this rule, but
goods are either not transported or are not transported as per the details furnished
in the e-way bill, the e-way bill may be cancelled electronically on the common
portal within twenty four hours of generation of the e-way bill. However, an e-way
bill cannot be cancelled if it has been verified in transit in accordance with the provisions
of rule 138B.

• One conveyance to another: If the goods are transferred from one conveyance to
another, then the consignor or recipient or transporter shall before such transfer,
update Part B of GST EWB-01. It is not required if the distance is upto 50 kms within
the state.

• One transporter to another: The consignor or recipient or the transporter shall assign the
EBN to another registered or enrolled transporter for updating Part B of GST EWB-01.

• Validity of EWB Number

Distance Validity period
Upto 200 Kms One day in cases other than over dimensional Cargo
For every 200 km. One additional day in cases other than over dimensional
or part thereof Cargo
thereafter

Note 1: In case of Over Dimensional Cargo and Multi Modal transportation (at least
one leg involves transport by ship) 200 Kms is replaced by 20 Kms.

Note 2: The count would start from midnight of the day on which the goods were
transported. However, under circumstances of an exceptional nature, including
trans-shipment, where the goods cannot be transported within the validity period of
the e-way bill, the transporter may extend the validity period within 8 hours from the
expiry of EWB after updating the details in Part B of FORM GST EWB-01, if required.

• Exemptions from generation of E-way bill

a. Where the goods being transported are specified in Annexure22;
b. Where the goods are being transported by a non-motorised conveyance;

LPG, Kerosene (PDS), Postal baggage, precious stones, jewellery (except Imitation Jewellery), currency, used personal
22

or household effect, Coral.

E-Way Bill 187

 CA INTER – INDIRECT TAX

c. In respect of movement of goods within such areas as are notified;

d. Where the goods being transported are alcoholic liquor for human consumption,
petroleum crude, high speed diesel, motor spirit (petrol), natural gas or aviation
turbine fuel;

e. Where supply of goods being transported is treated as no supply under Schedule

III of Act;

f. Where the goods being transported are transit cargo from or to Nepal or Bhutan;

g. Where the goods being transported are exempt from tax;

h. Any movement of goods caused by defence formation under Ministry of defence

as a consignor or consignee;

i. Where the consignor of goods is the Central Government, Government of any

State or a local authority for transport of goods by rail;

j. Where empty cargo containers are being transported; and

k. Where the goods are being transported upto a distance of twenty kilometers
from the place of the business of the consignor to a weighbridge for weighment
or from the weighbridge back to the place of the business of the said consignor
accompanied by a delivery challan.

l. Empty cylinders for packing of LPG are being moved for reasons other than supply;

1.2. Rule 138A – Documents and devices to be carried by person in charge of a conveyance
• The person in charge of a conveyance shall carry—
(a) The invoice or bill of supply or delivery challan, as the case may be; and

(b) A copy of the e-way bill in physical form or the e-way bill number in electronic
form or mapped to a Radio Frequency Identification Device embedded on to the
conveyance in such manner as may be notified by the Commissioner. [(b) Not
applicable for rail, air or vessel]

E-Way Bill 188

 CA INTER – INDIRECT TAX

1.3. Rule 138B – Verification of documents and conveyances

• The Commissioner or an officer empowered by him in this behalf may authorize the
proper officer to intercept any conveyance to verify the e-way bill in physical or
electronic form for all inter-State and intra-State movement of goods.

• The Commissioner shall get Radio Frequency Identification Device readers installed
at places where the verification of movement of goods is required to be carried out
and verification of movement of vehicles shall be done through such device readers
where the eway bill has been mapped with the said device.

• The physical verification of conveyances shall be carried out by the proper officer
as authorised by the Commissioner or an officer empowered by him in this behalf:
Provided that 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 the Commissioner or an officer authorised by him in this behalf.

1.4. Rule 138C – Inspection and verification of goods

• A summary report of every inspection of goods in transit shall be recorded online

by the proper officer in Part A of FORM GST EWB-03 within twenty four hours of
inspection and the final report in Part B of FORM GST EWB-03 shall be recorded
within three days of such inspection.

• Provided that where the circumstances so warrant, the Commissioner, or any other
officer authorised by him, may, on sufficient cause being shown, extend the time
for recording of the final report in Part B of FORM EWB-03, for a further period not
exceeding three days.

• Where the physical verification of goods being transported on any conveyance has
been done during transit at one place within the State or Union territory or in any
other State or Union territory, no further physical verification of the said conveyance
shall be carried out again in the State or Union territory, unless a specific information
relating to evasion of tax is made available subsequently.

E-Way Bill 189

 CA INTER – INDIRECT TAX

1.5. Rule 138D – Facility for uploading information regarding detention of vehicle
• Where a vehicle has been intercepted and detained for a period exceeding thirty
minutes, the transporter may upload the said information in FORM GST EWB-04 on
the common portal.

1.6. Rule 138E – Restriction on furnishing information in Part A of GST EWB-01

• The following persons shall not be allowed to furnish information in Part A of Form
GST EWB-01 in respect of their outward supply:
a. A person paying tax under composition scheme who has not furnished the
statement of payment of self-assessed tax for 2 consecutive quarters or

b. A person paying tax under regular scheme has not furnished the return for
2 consecutive tax period or

c. A person paying tax under regular scheme has not furnished GSTR 1 for any
2 months or quarters, as the case may be or

d. A person whose registration is suspended

• However, Commissioner may, on receipt of application from such person may allow
him to furnish information upon sufficient cause being shown and make an order in
writing. He shall not reject the application without giving an opportunity of being
heard.

2. Press release on E-way bill – Bill to ship to transaction

• Bill-to-Ship-to model of supply which involves two transactions, only one e-way
bill is to be generated –either by the person ordering goods to be sent to another or
by the person actually sending the goods. (Press Release dated 23-4-2018)

E-Way Bill 190

 CA INTER – INDIRECT TAX

13 Payment of Tax

 Chapter Overview
(1) Rule 86A: Conditions on use of amount available in E-credit ledger
(2) Rule 86B: Restrictions on use of amount available in electronic credit ledger
(3) Section 49: Payment of Tax
(4) Section 50: Interest
(5) Classwork & Homework

1. Definitions
• 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.

• Valid return means a return furnished under sub-section (1) of section 39 on which
self-assessed tax has been paid in full.

• Common portal Identification Number (CPIN) is created for every Challan successfully
generated by taxpayer. It is a 14-digit unique number to identify the challan &
remains valid for a period of 15 days.

• CIN or Challan Identification Number is generated by banks, once payment in lieu of

a generated Challan is successful. It is a 17-digit number that is 14-digit CPIN plus
3-digit Bank Code.

• Bank Reference Number (BRN) is a transaction number given by bank for payment
against Challan.
• Where the bank fails to communicate details of Challan Identification Number to
the common portal, the Electronic Cash Ledger may be updated on the basis of
e-Scroll of the RBI in cases where the details of the said e-Scroll are in conformity
with the details in challan generated in Form GST PMT-06 on the common portal.

Payment of Tax 191

 CA INTER – INDIRECT TAX

2. Major and Minor Heads for payment

Major Heads Minor Heads

IGST Tax
CGST Interest
SGST/ UTGST Penalty
Compensation Cess Fee
----------- Others

Note 1: Cross Utilization of Major Head and Minor Head is strictly prohibited.
Note 2: Cross Utilization within Minor head is also not allowed.

Example for Adjustment: An amount of ` 1,000 is available under S(Tax) and the
taxpayer has a liability of ` 200 for S(Interest). Since, there is no amount available
under S(Int), therefore, interest payment cannot be made from the amount available
S(Tax). However, ` 200 can be transferred from S(tax) to S(Int) by filing form GST PMT-09
and then it can be utilised to pay the liability.

3. Payment of tax, interest, penalty and other amounts – Section 49 with the Rules

• Credit to E Cash Ledger: Every deposit made towards tax, interest, penalty, fee or
any other amount by a person by internet banking or by using credit or debit cards or
National Electronic Fund Transfer or Real Time Gross Settlement or by such other mode
shall be credited to the electronic cash ledger.

• Credit to E Credit Ledger: The input tax credit as self-assessed in the return of a
registered person shall be credited to his electronic credit ledger as provisional
credit u/s 41.

• What happens if the taxable person files the return but does not make payment of tax?

Solution: In such cases, the return is not considered as a valid return. Section 2(117)
defines a valid return to mean a return furnished under sub-section (1) of section 39
on which self-assessed tax has been paid in full. It is only the valid return that
would be used for allowing input tax credit (ITC) to the recipient. In other words,

Payment of Tax 192

 CA INTER – INDIRECT TAX

unless the supplier has paid the entire self-assessed tax and filed his return and the
recipient has filed his return, the ITC of the recipient would not be confirmed.

• Sequence to discharge tax and other dues: Every taxable person shall discharge his tax
and other dues under this Act or the rules made thereunder in the following order:

- Self-assessed tax, and other dues20 related to returns of previous tax periods;
- Self-assessed tax, and other dues related to the return of the current tax period;
- Any other amount payable under this Act or the rules made thereunder including
the demand determined under section 73 or section 74.
• Date of Deposit: The date of credit to the account of the Government in the authorised
bank shall be deemed to be the date of deposit in the electronic cash ledger.

• ONLY CASH PAYMENT - TDS under section 51, or TCS under section 52, or the amount
payable on reverse charge basis, or the amount payable under Composition Scheme,
any amount payable towards interest, penalty, fee or any other amount under the
Act shall be paid by debiting the electronic cash ledger.
• Payment challan to be generated online and will be valid for 15 days – Form GST
PMT – 06.

• Limit for Over the Counter Payment: The limit for Over the Counter payment through
authorised banks for deposits is up to ` 10,000 per challan per tax period, by
cash, cheque or demand draft. However, the limit of ` 10,000 is not applicable to
Government Departments or any other deposit to be made by persons as may be
notified by the Commissioner in this behalf or deposit by proper officer in case of
recovery by department.

• The credit in E Credit ledger can be used to make payment of TAX ONLY and not for other
amounts such as interest, penalty, fees etc.

• Clarifications regarding utilization of the amounts available in the electronic credit ledger
and the electronic cash ledger for payment of tax and other liabilities (Circular No. 172/04/2022
GST dated 06.07.2022)

Issue 1: Whether the amount available in the electronic credit ledger can be used for
making payment of any tax under the GST Laws?

Payment of Tax 193

 CA INTER – INDIRECT TAX

Clarification: It is clarified that any payment towards output tax, whether self-
assessed in the return or payable as a consequence of any proceeding instituted under
the provisions of GST laws, can be made by utilization of the amount available in
the electronic credit ledger of a registered person except tax payable under RCM.

Issue 2: Whether the amount available in the electronic credit ledger can be used for
making payment of any liability other than tax under the GST laws?

Clarification: As per section 49(4), the electronic credit ledger can be used for making
payment of output tax only under the CGST Act or the IGST Act. It cannot be used
for making payment of any interest, penalty, fees or any other amount payable
under the said Acts. Similarly, electronic credit ledger cannot be used for payment
of erroneous refund sanctioned to the taxpayer, where such refund was sanctioned in
cash.

Issue 3: Whether the amount available in the electronic cash ledger can be used for
making payment of any liability under the GST laws?

Clarification: As per section 49(3), the amount available in the electronic cash ledger
may be used for making any payment towards tax, interest, penalty, fees or any
other amount payable under the provisions of the GST laws.

4. Interest on delayed payment of tax – Section 50

Case Interest
Delay in payment of tax, in full or in part 18% per annum from the date
within the prescribed period. following the due date to the date
of payment.
Where the ITC has been wrongly availed and Interest not exceeding 24% p.a. as
utilised. notified by Govt. The notified rate
is 18% p.a.*

*Note - The interest shall be calculated on the amount of ITC wrongly availed and
utilised, for the period starting from the date of the utilisation of such wrongly availed
ITC till the date of reversal of such credit or payment of tax in respect of such amount.
Further, an Explanation has been added to the said new Rule 88B to provide that

Other dues means interest, penalty, fee or any other amount payable under this Act or the rules under GST.
20

Payment of Tax 194

 CA INTER – INDIRECT TAX

ITC availed shall be said to have been utilised, when the balance in the E-Credit
Ledger falls below the amount of the ITC wrongly availed, and the extent of such
utilisation of ITC shall be the amount by which the balance in the electronic credit
ledger falls below the amount of the ITC wrongly availed. Further, the date of the
utilisation of such ITC shall be taken to be the due date for filing return or the actual
date of filing of the said return, whichever is earlier. In all other cases, the date of
debit in the E-Credit ledger.

Note 1: Provided that the interest on tax payable in respect of supplies made during
a tax period and declared in the return for the said period furnished after the due
date in accordance with the provisions of section 39 shall be payable on that portion
of the tax that is paid by debiting the electronic cash ledger.
However, this benefit will not be available where such return is furnished after
commencement of any proceedings under section 73 or 74 in respect of the said
period.

Note 2: Payment of tax wrongly collected and paid due to wrong place of supply

Section 19 of IGST Act - In case a person has paid IGST instead of CGST+SGST, then
he has to claim refund of IGST after payment of CGST+SGST. However, interest is not
applicable on such payment due to wrong place of supply.

Same principle is applicable if C+S is paid instead of IGST in terms of section 77 of

CGST Act, 2017.

Payment of Tax 195

 CA INTER – INDIRECT TAX

Question 1
PQR Ltd., have filed their GSTR-3B return for the month of August, 2020 within the
due date i.e. 20.09.2020. It was noticed in October, 2020 that tax dues for the month
of August, 2020 have been short paid by ` 10,000. The shortfall of ` 10,000 was paid
through cash ledger and credit ledger amounting to ` 7,500 and ` 2,500 respectively
while filing GSTR-3B of October, 2020 which was filed on 20.11.2020.
(i) Examine and compute the interest payable if any under the CGST Act, 2017.
(ii) What would be your answer if, GSTR-3B for the month of August 2020 had been
filed belatedly on 20.11.2020 as above.
Note: Ignore the effect of the leap year. Electronic cash ledger and credit ledger carried
sufficient balance for the above shortfall.

Answer:
In case of delayed payment of tax,interest is payable @ 18% per annum from the date
following the due date of payment to the actual date of payment of tax.
However, interest is payable only on the short-paid tax which is paid through electronic
cash ledger if return under section 39 is furnished after the due date.
(i) In the given case, PQR Ltd. has furnished the return for August 2020 by the due
date. Hence, interest is payable on the entire amount of short payment of ` 10,000,
as under:
= ` 10,000×18%×61/365 = ` 300.82 or 301(rounded off)
(ii) If PQR Ltd. has furnished the return for August 2020 after the due date, interest is
payable only on the short payment which is paid through electronic cash ledger, i.e.
` 7,500, as under:
= ` 7,500×18%×61/365 = ` 225.62 or 226 (rounded off)
(Suggested Dec’21)

Question 2
Pranesh has deposited a sum of ` 5,000 under the head of ‘Fee’ column of Cess and
`4,000 was lying unutilized under the head of ‘Penalty’ column of IGST. Both the deposits
were made wrongly instead of depositing under the head of Fee column under SGST.

Payment of Tax 196

 CA INTER – INDIRECT TAX

In the light of the provisions of section 49(10) & 49(11) of the CGST Act, 2017, briefly
explain the relevant provisions as how can Pranesh rectify these errors?
(3 Marks)
Answer:
A (registered person is allowed to make intra-head or inter-head transfer of amount, as
available in electronic cash ledger, using specified form.
It can transfer any amount of tax, interest, penalty, fee or others, under one (major or
minor) head to another (major or minor) head, as available in the electronic cash ledger.
Therefore, in the given case, amount of ` 5,000 available under minor head ‘fee’ of major
head ‘cess’ and ` 4,000 available under minor head ‘penalty’ of major head ‘IGST’ can be
transferred to minor head ‘fee’ of major head ‘SGST’ using specified form.

Question 3
Rule 86B restricts the use of Input Tax Credit (ITC) available in the Electronic Credit Ledger
for discharging output tax liability. List down the exceptions to the rule 86B.
(5 Marks)
Answer:
(a) Rule 86B of the CGST Rules, 2017 restricts the use of ITC available in the Electronic
Credit Ledger for discharging output tax liability by a registered person. Exceptions
to rule 86B are as follows:
(1) Where the said person / proprietor / karta / managing director / any of its
two partners, whole-time directors, members of Managing Committee of
Associations or Board of Trustees, as the case may be, have paid more than `
1 lakh as income tax in each of the last 2 financial years.
(2) Where the registered person has received a refund of more than ` 1 lakh in the
preceding FY on account of unutilised ITC in case of
(i) zero rated supplies made without payment of tax or
(ii) inverted duty structure.
(3) Where the registered person has discharged his liability towards output tax
through the electronic cash ledger for an amount which is in excess of 1% of
the total output tax liability, applied cumulatively, upto the said month in the
current FY.
(4) Where the registered person is Government Department, Public Sector
Undertaking, Local authority or Statutory body. Said restriction may be
removed by Commissioner/ authorised officer after required verifications and
safeguards.

Payment of Tax 197

 CA INTER – INDIRECT TAX

14 TDS AND TCS

1. Tax deducted at Source (TDS): Section 51: Notified rate – CGST 1%, SGST 1%
& IGST 2%
• Difference between TDS & TCS: TDS refers to the tax which is deducted when
the recipient of goods or services makes some payments under a contract
etc., while TCS refers to the tax which is collected by the electronic commerce
operator when a supplier supplies some goods or services through its portal and
the payment for that supply is collected by the electronic commerce operator.
• Compulsory Registration: Any person liable to deduct tax u/s 51 has to take
registration u/s 24 and file TDS return (GSTR 7) on monthly basis by 10th of the
following month. Interest for delayed payment is at 18% p.a.
• Credited in E Cash Ledger: The amount of tax deducted/collected is reflected in
the Electronic Cash Ledger of the deductee/supplier respectively after validation
by deductee/supplier.
• Rate and Monetary Limit: Where the total value of taxable goods or services,
under a contract, exceeds two lakh and fifty thousand rupees (Excluding GST),
then TDS is at the rate of 1%.
• Example: Suppose a supplier makes a supply worth ` 1000/- to a recipient and
the GST at the rate of 18% is required to be paid. The recipient, while making
the payment of Rs1000/- to the supplier, shall deduct 1% viz ` 10/- as TDS.
The value for TDS purpose shall not include 18% GST. The TDS, so deducted,
shall be deposited in the account of Government by 10th of the succeeding
month. The TDS so deposited in the Government account shall be reflected in
the electronic cash ledger of the supplier (i.e. deductee) who would be able to
use the same for payment of tax or any other amount.

• Persons required to deduct tax are given below:

- A department or establishment of the Central Government or State Government;
or
- local authority; or
- Governmental agencies; or

TDS AND TCS 198

 CA INTER – INDIRECT TAX

- Such persons or category of persons as may be notified by the Government on

the recommendations of the Council. The persons notified are:
 Any authority or board set up by parliament.
 Society set up by Central Government or State Government.
 Public Sector Undertaking (PSU)

• Exemptions from TDS – Following persons are not required to deduct tax:
- Ministry of Defence.
- Transaction between two PSU.
- Transaction amongst the persons required to deduct tax as specified above.

• No deduction: Deduction shall not be made if the location of the supplier and the place
of supply is in a State or Union territory which is different from the State/ Union territory
of registration of the recipient.
Example: Supplier as well as the place of supply are in State A and the recipient is located
in State B. The supply would be intra-State supply and Central tax and State tax
would be levied. In such case, transfer of TDS (Central tax + State tax of State B) to
the cash ledger of the supplier (Central tax + State tax of State A) would be difficult.
So, TDS would not be deducted.

• Certificate of deduction: A certificate of deduction shall be issued is the manner

prescribed.
Example: Supplier makes a supply worth ` 20 lakh to a recipient and the GST at
the rate of 18% is required to be paid. The recipient, while making the payment of
`20 lakh to the supplier, shall deduct 2% [CGST 1% + SGST 1%] viz ` 4 lakh as TDS.
The value for TDS purpose shall not include 18% GST. The TDS, so deducted, shall
be deposited in the account of Government by 10th of the succeeding month. The
TDS so deposited in the Government account shall be reflected in the electronic
cash ledger of the supplier (i.e. deductee) who would be able to use the same for
payment of tax or any other amount.

TDS AND TCS 199

 CA INTER – INDIRECT TAX

2. Collection of tax at source: Section 52: Notified rate – CGST 0.5%, SGST 0.5%
& IGST 1%
• Electronic Commerce means the supply of goods or services or both, including
digital products over digital or electronic network.
• Electronic Commerce Operator means any person who owns, operates or manages
digital or electronic facility or platform for electronic commerce.
• Collection: Every electronic commerce operator, not being an agent, shall collect
an amount calculated at such rate not exceeding one per cent of the net value of
taxable supplies made through it by other suppliers where the consideration with
respect to such supplies is to be collected by the operator.
• Net value of taxable supplies will be aggregate value of taxable supplies of
goods or services less taxable supplies returned to suppliers and other than
notified services under section 9(5) by all registered persons supplied through
the E-Commerce Operator
Note: As per section 20 of IGST Act, the operator shall collect tax at such rate
not exceeding two per cent, as may be notified on the recommendations of the
Council
• Compulsory Registration: The e-commerce operator as well as the supplier
supplying goods or services through an operator needs to compulsorily register
under GST. If a person is applying for GST registration in a state for collecting
TCS and he does not have any physical place of business in that state, even
then he can apply for GST registration in that state.
• Due Date: TCS has to be paid by 10th of the next month. Otherwise interest at
18% p.a.
• Monthly Statement: Every operator who collects the TCS shall furnish a
statement, electronically, containing the details of outward supplies of goods or
services or both effected through it including the supplies of goods or services or
both returned through it, and the amount collected, within 10 days after end of
such month. (Extension can be notified by Commissioner)
• Annual statement: Every operator has to also furnish an annual statement for a
financial year by 31st December after the end of the financial year. (Extension can
be notified by Commissioner)
• Discovery of errors – Any error can be rectified subject to payment of interest on
TCS. However, it cannot be changed after the 30th November following the end
of the financial year or the actual date of furnishing of the relevant annual
statement, whichever is earlier.

TDS AND TCS 200

 CA INTER – INDIRECT TAX

• Credit of TCS: The supplier who has supplied the goods or services or both
through the operator shall claim credit, in his electronic cash ledger, of the
amount collected after validation.

• Notice to ECO: Any authority not below the rank of Deputy Commissioner may
serve a notice, either before or during the course of any proceedings under this
Act, requiring the operator to furnish such details relating to:
- Supplies of goods or services or both effected through such operator during
any period
- Stock of goods held by the suppliers making supplies through such operator
in the godowns or warehouses, managed by such operator and declared
as additional places of business by such suppliers.
Time to Submit: Every operator on whom a notice has been served shall
furnish the required information within 15 working days of the date of
service of such notice.
Penalty: Any person who fails to furnish the information required by the
notice served shall, without prejudice to any action that may be taken
under section 1221 , be liable to a penalty which may extend to ` 25,000.

TDS AND TCS 201

 CA INTER – INDIRECT TAX

15 RETURN

 Chapter Overview
(1) Section 37: Details of Outward Supply
(2) Section 38: Details of Inward Supply
(3) Section 39: Summary Return
(4) Section 40: First Return
(5) Section 44: Annual Return
(6) Section 45: Final Return
(7) Section 46: Notice to Defaulter
(8) Section 47: Late Fees
(9) Section 48: GSTP
(10) Classwork & Homework
(11) MCQs

Section 37 : Detain of outward supplies (From GSTR – 1)

1) Every Registered Person including CTP has to furnish details of outward supplies in
Form GSTR – 1/ IFF & the due date as follows
a) Monthly Return Scheme – 11th of Next Month
b) QRMP Scheme – GSTR-1 = 13th of Next Month after the Quarter
– IFF = For 1st & 2nd Month = 13th of Next Month following
the Quarter

2) Following person are not required to file GSTR 1/ IFF

i. input service distributor (ISD)
ii. non-resident taxable person
iii. person paying tax under composition scheme
iv. person deducting tax at source
v. person collecting tax at source i.e., e-commerce operator (ECO), not being an
agent
vi. supplier of online information and database access or retrieval services (OIDAR)
located in non-taxable territory and providing such services to non-taxable
online recipient

RETURN 202
 CA INTER – INDIRECT TAX

3) Extention: Due date of GSTR 1 / IFF May be extended by Commissioner.

4) Modification: Modification can be done any no. of times before submitting the return

5) Rectification: Any error or omission in the returns be rectified in the month’s Return
in which the error is found.

The last date of rectification is

• 30th day of November following the end of the financial year to which such details
pertain or
• Date of filing of the relevant annual return
Which is earlier

Exception
Section 39(9) of the CGST Act does not permit rectification of error/omission discovered
on account of scrutiny, audit, inspection or enforcement activities by tax authorities.

Note:
Can a Return be Revised?
No, Revision of return filed in not permitted.

6) NIL Return: If there is no outward supply in a tax period, then Nil Return has to be
filed.

7) GSTR – 1 cannot be filed before the end of a current tax period

However in following circumstances one can do
a) CTP after last day of registration
b) Cancellation of Registration

RETURN 203
 CA INTER – INDIRECT TAX

8) Outward Taxable supplies to be furnished in GSTR -1

Outward Taxable Supplies to be furnished in GSTR-1

B2B supplies B2C supplies

Inter-state Intra-state Inter-state Intra-state

supplies supplies supplies supplies

Consolidated
Invoice > Invoice ≤ details of all
Invoice-wise details ` 2,50,000
` 2,50,000 supplies to be
of all supplies to be
uploaded
uploaded

Invoice-wise details to State-wise consolidated

be uploaded details to be uploaded

9) Indication of HSN details

Annual turnover in the Number of Digits of HSN Code
preceding financial year
Upto ` 5 core For B2B supply - 4
For B2C supply – 4 (optional)
More than ` 5 crore 6

10) GSTR – 1/ IFF not permitted to be furnished: If

i. Registered Person has not furnished GSTR- 3B for preceding month.
ii. Registered Person opting for QRMP scheme has not furnished return in form
GSTR - 3B for preceding tax period
iii. Registered Person has not furnished GSTR – 1/ IFF for preceding tax period.

RETURN 204
 CA INTER – INDIRECT TAX

Rule 88C – Manner of dealing with difference in liability reported in statement of outward supply
and in return
• If the tax payable by registered person as per GSTR 1/Invoice Furnishing Facility (IFF)
in respect of a tax period, exceeds the amount of tax payable as per GSTR 3B for the
said tax period, by such percentage and amount, as may be recommended by GST
Council, the said registered person shall be intimated in form DRC-1B electronically
on common portal and a copy will be sent to his registered email ID.
• The intimation will direct to either pay the liability along with interest u/s 50,
through form DRC-03 or explain the difference within 7 days.
• The registered person shall either pay the liability or furnish a reply electronically
on the common portal, giving reasons for the difference.
• Where the amount is not paid or the reply is not found to be acceptable by the
proper officer, the said amount shall be recoverable in accordance with section 79.

Note - (Rule 59) - A registered person, to whom an intimation has been issued on
the common portal under rule 88C in respect of a tax period, shall not be
allowed to furnish the details of outward supplies of goods or services or both
under section 37 in Form GSTR-1 or using the invoice furnishing facility for a
subsequent tax period, unless he has either deposited the amount specified
in the said intimation or has furnished a reply explaining the reasons for any
amount remaining unpaid.

Section 38: Furnishing details of Inward supplies

(1) The details of outward supplies furnished by the registered persons under sub-
section (1) of section 37 and of such other supplies as may be prescribed, and
an auto-generated statement containing the details of input tax credit shall be
made available electronically to the recipients of such supplies in such form and
manner, within such time, and subject to such conditions and restrictions as may be
prescribed.

(2) The auto-generated statement under sub- section (1) shall consist of
(a) details of inward supplies in respect of which credit of input tax may be available
to the recipient; and
(b) details of supplies in respect of which such credit cannot be availed, whether
wholly or partly, by the recipient, on account of the details of the said supplies
being furnished under sub-section (1) of section 37,

RETURN 205
 CA INTER – INDIRECT TAX

(i) by any registered person within such period of taking registration as may
be prescribed; or
(ii) by any registered person, who has defaulted in payment of tax and where
such default has continued for such period as may be prescribed; or
(iii) by any registered person, the output tax payable by whom in accordance
with the statement of outward supplies furnished by him under the said
sub-section during such period, as may be prescribed, exceeds the output
tax paid by him during the said period by such limit as may be prescribed;
or
(iv) by any registered person who, during such period as may be prescribed,
has availed credit of input tax of an amount that exceeds the credit that
can be availed by him in accordance with clause (a), by such limit as may
be prescribed; or
(v) by any registered person, who has defaulted in discharging his tax liability
in accordance with the provisions of sub-section (12) of section 49 subject
to such conditions and restrictions as may be prescribed; or
(vi) by such other class of persons as may be prescribed.

Form GSTR – 2B : An Auto-generated statement containing the details of eligible ITC is

made available to recipient for every month. It is a static statement and is available only
once a month on 14th day of relevant months.

Section 39: Furnishing of Returns

1) GSTR 3B : Regular scheme
i. Monthly Filling scheme
Every Registered person who is required to file GSTR – 1 has to file GSTR – 3B
giving details of output tax, input tax, RCM Liabilities etc.
The due date is 20th of Next Month

 Monthly Return = 20th of next month

ii QRMP Scheme: Quarterly Returns Monthly Scheme

1) Applicability: Any person whose Aggregate Turnover of Preceding Financial
year is upto 5 crore

RETURN 206
 CA INTER – INDIRECT TAX

2) Due dates:
i) GSTR 1: 13th of Next Month following the quarter
ii) GSTR-3B: 22nd/24th of the next Month following the quarter

3) Payment of Tax
 QRMP Scheme:
• For 1st & 2nd month of the Quarter = 25th day of next month
• For 3rd month of the Quarter = 22nd /24th of next month following the
quarter.

4) IFF Facility: (Invoice Furnishing Facility)

i. Applicability Optional = (Upto 50 Lakh each month)
ii. Due date for 1st and 2nd month of quarter
= 13th of next month

5) Method of Payment under QRMP scheme

Option 1 Option 2

Self Assessed
(output – ITC) 1st month of the 2nd month of the
quarter (*) quarter (*)
 
35% of tax paid in 35% of tax paid in
previous Quarter/ previous Quarter/
100% of tax paid in 100% of tax paid in
previous month previous month
• How to pay for 1st & 2nd month
 Deposit in Electronic cash ledger
 & adjust in the returns i.e. GSTR – 3B for the Quarter

*No Interest for short payment compared to actual tax of 1st & 2nd month
of the Quarter

Note: Any short payment will be liable to interest u/s 50 @ 18% P.A.

RETURN 207
 CA INTER – INDIRECT TAX

6) When to opt for QRMP scheme?

One can of for QRMP Scheme between 1st day of 2nd Month of previous
Quarter till last day of 1st month of relevant Quarter
E.g.: CA Sahil & Co. wants to opt for QRMP scheme for the Quarter of
April – June when can he opt?
Ans: He can select it between 1st Feb to 30th April.

7) Can we shift between QRMP scheme to monthly scheme?

Ans: Yes, it can be changed between the 1st day of 2nd month of previous
Quarter till last day of 1st month of relevant Quarter
QRMP is available only upto 5cr in current year, then shift to monthly
scheme from next Quarter

8) Can QRMP scheme taken in one branch having same PAN & monthly in
other?
Ans: Yes

9) Can we use money deposited in E – cash ledger in first 2 months for any
other purpose.
Ans: It is to be used only for Paying Quarterly Liability. But once GSTR – 3B is
filed it can be used for any other payment

ii GSTR 3B not permitted to the furnished :

If registered person has not furnished GSTR 3B FOR preceding tax period.

2) GSTR – 4: For Composition dealer u/s 10

a) Due date for filing GSTR-4 and Statement for payment of selfassessed tax
GSTR-4 for a financial year should be furnished by 30th April of the succeeding
financial year.

GST CMP-08 (quarterly statement for payment of self-assessed tax) should

RETURN 208
 CA INTER – INDIRECT TAX

be furnished by 18th day of the month succeeding such quarter.

b) Details to be Reported
Purchases Composition Sales
Dealer

Cannot Collect Tax
Purchase Purchase under

under FCM RCM
Pay tax @ Lower
 
Rate
No ITC Pay tax @ Full
Rate

No ITC

Report in GST CMP

- 08 & GSTR – 4

c) Composition Scheme Regular scheme

Shifted on 15/10/22

2022 – 23 Oct’ 22onwards
 
GSTR – 4 (30th April’ 23) GSTR – 1 & 3B
(Information till 14/10/22)
GST CMP – 08 (18th Jan 23)
(Information till 14/10/22)

RETURN 209
 CA INTER – INDIRECT TAX

d) Regular scheme Composition scheme

Shifted on 1/4/22

Till 31/3/22 FY 2022 – 23

 
File GSTR 1 & 3B File GSTR - 4

If required it can be uploaded till

Due date of filing returns for the month
Of September after the FY (20th Oct)
Or
Actual date of filing Annual Return
whichever is earlier

3) GSTR – 5: Non Resident Taxable Person (NRTP)

Tax period : Monthly
Due Date: 13th of next month or
7 days after expiry of Registration certificate
whichever is earlier

4) GSTR – 7: Return for Tax deducted at source

Tax period : Monthly
Due Date: 10th of next month succeeding the calender month
Note: The details of TDS will be available to supplier in his Electric cash ledger and
he can utilise for payment of tax or any other liability

5) GSTR – 8: Statement for Tax Collected at Source

Tax period : Monthly
Due Date: 10th of next month succeeding the calender month
Note: The details of TCS will be available to supplier in his Electric cash ledger and
he can utilise for payment of tax or any other liability

RETURN 210
 CA INTER – INDIRECT TAX

Section 40: First Return

1/4/22 1/10/22 5/10/22 10/10/22

   
Started Liable for Applied for Date of grant of
Business Registration Registration Registration certificate

For the supplies between effective date of Registration till Date of grant
of Registration certificate – Issue Revised Tax Invoice.

Furnish these invoice along with details of outward supply maid during
said period in first Return.

Section 44: Annual Return

1) Applicability: Every Registered Person who required to File GSTR – 1 expect CTP.
2) Form: Form GSTR – 9/GSTR – 9A (For composition dealer)
3) Due Date: 31st December of Next financial Year.
4) Annual return not return by CG, SG, LA whose book are audited by C & AG.
5) A person whose Aggregate T/O exceeds 5 crore is required to submit re–
conciliation statement along with Annual Return
This statement is self-certified comparing Annual Return & Audited Financial
statement
Form for Reconciliation  GSTR – 9C
6) Extension: by commissioner

Section 45: Final Return (GSTR – 10)

Applicability: Every person whose Registration has been cancelled or who has
surrendered the Registration

Form: Form GSTR – 10

Due Date: 3 months from Date of cancellation
Or
3 months form Date of order of cancellation
whichever is LATER

RETURN 211
 CA INTER – INDIRECT TAX

Section 46: Notice to defaulter

Proper officer has the power to issue a notice to a person who has not filed his
Return giving 15 days time to file Return (Notice to person u/s 39, 44,45)

Section 47: Late fees for delay in filing return

(A) Statement of Outward Supplies [Section 37]
(B) Returns (including returns under QRMP Scheme) [Section 39]
(C) Final Return [Section 45]
(D) TCS Statement [Section 52]

` 100 for every day during

Quantum of which such failure continues. whichever is
late fee lower
` 5,000

Note: It may be noted that the late fee payable by a registered person for delayed filing
of a return and/or annual return under section 47 is with reference to only the CGST Act.
An equal amount of late fee is payable by such person under the respective SGST/UTGST
Act as well. Hence, the late fee amount mentioned herein pertains to both CGST as well
as SGST/UTGST.

Rationalisation of late fees for delayed filing of Forms GSTR-1, GSTR-3B, GSTR-4, GSTR-7
and GSTR-9
The late fee can be waived off partially or fully by the Central Government [Section
12821]. In view of this, late fees for delayed filing of Forms GSTR-1, GSTR-3B,
GSTR-4, GSTR-7 and GSTR-9 have been rationalized22 as follows:
(i) For delayed filing of GSTR-1 and/or GSTR-3B:
Amount of late fee payable under section 47 by the registered person who fail
to furnish Form GSTR-1 and/or Form GSTR-3B by the due date, shall be as
follows:

RETURN 212
 CA INTER – INDIRECT TAX

RETURN 213
RETURN
(ii) For delayed filing of GSTR-4:-
Amount of late fee payable under section 47 by a composition supplier who fails to furnish Form GSTR-4
by the due date, shall be as follows:

214
CA INTER – INDIRECT TAX
RETURN
(Iii) For delayed filing of GSTR-9:-

215
CA INTER – INDIRECT TAX
 CA INTER – INDIRECT TAX

(iv) For delayed filing of GSTR-7:-

Total amount of late fee payable under section 47 by any registered person,
required to deduct tax at source under the provisions of section 51 for delayed
filing of GSTR-7, shall be as follows:

` 50 (`25 each under

CGST & SGST/UTGST) for
every day during which
Quantum of whichever is
such failure continues.
late fee lower
` 1,000

Section 48: Goods & Service Tax Practitioner (GSTP)

1) GST Practitioner is given a separate user name & password on the common portal.
He can access his client records allowed by the clients & carry out functions such as
GST Return, Payment of Tax, reply to notice etc.
2) GSTP has to pass an exam conducted by National Academy for customer, Indirect
Tax & Narcotics (NACIN).

3) The primary responsibility of any error or mistake is always on the client.

4) Who is eligible?

Indian citizen

Person of sound mind

A
person
who is Not adjudicated as
insolvent

Not been convicted by a

competent court

RETURN 216
 CA INTER – INDIRECT TAX

Retired officer of Commercial Tax Department of any State Govt./CBIC

satisfies any of the

who, during service under Government had worked in a post not lower
than the rank of a Group-B gazetted officer for a period ≥ 2 years
conditions

Enrolled as a Sales Tax Practitioner or Tax Return Preparer under the

earlier indirect tax laws for a period of not less than 5 years

Has acquired any of the prescribed qualifications (mentioned below)

(i) Graduate or postgraduate degree or its equivalent examination

having a degree in Commerce, Law, Banking including Higher
Auditing, or Business Administration or Business Management
from any Indian University established by any law for the time
Prescribed Qualifications

being in force

(ii) Degree examination of any Foreign University recognised by

any Indian University as equivalent to the degree examination
mentioned in sub-clause (i)

(iii) Any other examination notified by the Government, on the

recommendation of the Council, for this purpose

(iv) Has passed final examination of ICAI/ ICSI/ Institute of Cost

Accountants of India.

RETURN 217