UNIT 1
INTRODUCTION TO INDIRECT TAX & GST
What is a tax? A tax may be defined as a "pecuniary burden laid upon individuals or property owners to support the Government, a payment exacted by legislative authority. A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority".
In simple words, tax is nothing but money that people have to pay to the Government, which is used to provide public services.
Taxes are broadly classified into direct and indirect taxes.
Direct Taxes: A direct tax is a kind of charge, which is imposed directly on the taxpayer and paid directly to the Government by the persons (juristic or natural) who are liable. A direct tax is one that cannot be shifted by the taxpayer to someone else. A significant direct tax imposed in India is income tax. In simple words it is a tax directly paid by the Person to the Government.
Indirect Taxes: If the taxpayer is just a channel or medium and at every stage the tax- incidence is passed on till it finally reaches the consumer, who really bears the burden, such tax is indirect tax. An indirect tax is one that can be shifted by the taxpayer to someone else.
Its incidence is borne by the consumers who ultimately consume the product or the service, while the immediate liability to pay the tax may fall upon another person such as a manufacturer or provider of service or seller of goods.
Also called consumption taxes, they are regressive in nature because they are not based on the principle of ability to pay. All the consumers, including the economically challenged bear the brunt of the indirect taxes equally.
Indirect taxes are levied on consumption, expenditure, privilege, or right but not on income or property. Earlier, a number of indirect taxes were levied in India, namely, excise duty, customs duty, service tax, central sales tax (CST), value added tax (VAT), entry tax, purchase tax, entertainment tax, tax on lottery, betting and gambling, luxury tax, tax on advertisements, etc.
However, indirect taxation in India witnessed major shift on July 01, 2017 with into a unified indirect tax regime wherein a large number of Central and State indirect taxes were combined into a single tax – Goods and Services Tax (GST). The introduction of GST has been a very significant step in the field of indirect tax reforms in India. Customs duty continues in post-GST regime.
- 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.
- 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.
- 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.
- 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.
- Inflationary: Tax imposed on commodities and services causes an increase in overall price of such commodity or service. In other words, indirect taxation directly affects the prices of commodities and services and leads to inflation.
- 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.
- Promotes social welfare: High taxes are imposed on the consumption of harmful products such as alcoholic products, tobacco products etc. This not only checks their consumption but also enables the State to collect substantial revenue.
- 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.
- In the year 2000, the then Prime Minister mooted the concept of GST and set up a committee to design a Goods and Services Tax (GST) model for the country. In 2003, the Central Government formed a task force under Vijay Kelkar, which in 2004 strongly recommended fully integrated ‘GST’ on national basis.
- Subsequently, the then Union Finance Minister, Shri P. Chidambaram, while presenting the Union Budget (2006-2007), announced that GST would be introduced from April 1, 2010. Since then, GST missed several deadlines and continued to be uncertain.
- However, GST regime gained momentum in the year 2014 when the NDA Government tabled the Constitution (122nd Amendment) Bill, 2014 on GST in the Parliament on 19th December, 2014. The Lok Sabha passed the Bill on 6th May, 2015 and Rajya Sabha on 3rd August, 2016. Subsequent to ratification of the Bill by more than 50% of the States, Constitution (122nd Amendment) Bill, 2014 received the assent of the President on 8th September, 2016 and became Constitution (101st Amendment) Act, 2016, which paved the way for introduction of GST in India.
- In the following year, on 27th March, 2017, the Central GST legislations - Central Goods and Services Tax Bill, 2017, Integrated Goods and Services Tax Bill, 2017, Union Territory Goods and Services Tax Bill, 2017 and Goods and Services Tax (Compensation to States) Bill, 2017 were introduced in Lok Sabha. Lok Sabha passed these bills 29th March, 2017 and with the receipt of the President’s assent on 12th April, 2017, the Bills were enacted. The enactment of the Central Acts was followed by the enactment of the State GST laws by various State Legislatures. Telangana, Rajasthan, Chhattisgarh, Punjab, Goa and Bihar were among the first ones to pass their respective State GST laws. By 30th June, 2017, all States and Union Territories had passed their respective SGST and UTGST Acts except Jammu and Kashmir. With effect from 1st July, 2017, the historic indirect tax reform - GST was introduced. GST law was extended to Jammu and Kashmir on 8th July,2017.
- GST has subsumed multiple indirect taxes like excise duty, service tax, VAT, CST, luxury tax, entertainment tax, entry tax, etc.
Before we proceed with concepts of Indian GST, let us first understand the basic concept of GST.
GST is a value added tax levied on manufacture, sale and consumption of goods and services.
GST offers comprehensive and continuous chain of tax credits from the producer's point/service provider's point upto the retailer's level/consumer’s level thereby taxing only the value added at each stage of supply chain.
The supplier at each stage is allowed to avail credit of GST paid on the purchase of goods and/or services and can set off this credit against the GST payable on the supply of goods and services made by him. Thus, only the final consumer bears the GST charged by the last supplier in the supply chain, with set-off benefits at all the previous stages.
- Since, only the value added at each stage is taxed under GST, there is no tax on tax or cascading of taxes under GST system. GST does not differentiate between goods and services and thus, the two are taxed at a single rate.
- Under the earlier indirect tax regime, despite the introduction of the principle of taxation of value added in India – at the Central level in the form of CENVAT and at the State level in the form of State VAT - its application always had some disadvantages on account of the following reasons:
- Double taxation of a transaction as both goods and services as the distinction between goods and services was often not distinctive, e.g. Software was liable to both VAT and service tax.
- CENVAT did not include chain of value addition in the distributive trade below the stage of production. Similarly, in the State-level VAT, CENVAT load on the goods was not removed leading to the cascading of taxes. To illustrate, when the goods were manufactured and sold, both central excise duty (CENVAT) and State-Level VAT were levied.
- Though CENVAT and State-Level VAT were essentially value added taxes, set off of one against the credit of another was not possible as CENVAT was a central levy and State-Level VAT was a State levy.
- There were several taxes in the States, such as, Luxury Tax, Entertainment Tax, etc. which were not subsumed in the VAT.
- VAT on goods was not integrated with tax on services, at the State level, to remove the cascading effect of service tax. With service sector being the fastest growing sector in the economy, the exclusion of services from the tax base of the States eradicated revenue for government.
- CST was another source of distortion in terms of its cascading nature since it was non-VATABLE. Being an origin based tax, CST was also against one of the basic principles of consumption taxes that tax should accrue to the jurisdiction where consumption takes place.
(1) Dual GST:
India has adopted a Dual GST model in view of the federal structure of the country. Consequently, Centre and States simultaneously levy GST on taxable supply of goods or services or both, which takes place within a State or Union Territory. Thus, tax is imposed concurrently by the Centre and States, i.e. Centre and States simultaneously tax goods and services. Now, the Centre also has the power to tax intra-State sales & States are also empowered to tax services. GST extends to whole of India including the State of Jammu and Kashmir.
(2) CGST/SGST/UTGST/IGST
GST is a destination based tax applicable on all transactions involving supply of goods and services for a consideration subject to exceptions thereof. GST in India comprises of Central Goods and Services Tax (CGST)
levied and collected by Central Government, State Goods and Services Tax (SGST) - levied and collected by State Governments/Union Territories with Legislatures and Union Territory Goods and Services Tax (UTGST) - levied and collected by Union Territories without Legislatures, on intra-State supplies of taxable goods and/or services.
Inter-State supplies of taxable goods and/or services are subject to Integrated Goods and Services Tax (IGST). IGST is the sum total of CGST and SGST/UTGST and is levied by Centre on all inter-State supplies.
(3) Legislative Framework
There is single legislation – CGST Act, 2017 - for levying CGST. Similarly, Union Territories without Legislatures [Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh] are governed by UTGST Act, 2017 for levying UTGST. States and Union territories with their own legislatures [Delhi and Puducherry] have their own GST legislation for levying SGST.
Though there are multiple SGST legislations, the basic features of law, such as chargeability, definition of taxable event and taxable person, classification and valuation of goods and services, procedure for collection and levy of tax and the like are uniform in all the SGST legislations, as far as feasible. This is necessary to preserve the essence of dual GST.
(4) Classification of goods and services
HSN (Harmonised System of Nomenclature) is used for classifying the goods under the GST. Chapters referred in the Rate Schedules for goods are the Chapters of the First Schedule to the Customs Tariff Act, 1975.
A new Scheme of Classification of Services has been devised wherein the services of various descriptions have been classified under various sections, headings and groups. Each group consists of various Service Codes (Tariff).
(5) Composition Scheme
In GST regime, tax (i.e. CGST and SGST/UTGST for intra-State supplies and IGST for inter-State supplies) is payable by every taxable person and in this regard provisions have been prescribed in the law.
However, for providing relief to small businesses, primarily manufacturers, suppliers of food articles, traders, etc., making intra-State supplies, a simpler method of paying taxes is prescribed, known as Composition Levy. Further, for small service providers also, a scheme prescribing concessional rate of tax has been formulated.
(6) Registration
Every supplier of goods and/ or services is required to obtain registration in the State/UT from where he makes the taxable supply if his aggregate turnover exceeds the threshold limit during a FY.
(7) Exemptions
Apart from providing relief to small-scale business, the law also contains provisions for granting exemption from payment of tax on essential goods and/or services.
(8) Seamless flow of credit
Since GST is a destination based consumption tax, revenue of SGST ordinarily accrues to the consuming States. The inter-State supplier in the exporting State is allowed to set off the available credit of IGST, CGST and SGST/UTGST (in that order) against the IGST payable on inter-State supply made by him.
The buyer in the importing State is allowed to avail the credit of IGST paid on inter-State purchases made by him. Thus, unlike the earlier scenario where the credit chain used to break in case of inter-State sales on account of non-VAT able CST, under GST regime there is a seamless credit flow in case of inter-State supplies too.
The revenue of inter-State sale does not accrue to the exporting State and the exporting State transfers to the Centre the credit of SGST/UTGST used in payment of IGST.
The Centre transfers to the importing State the credit of IGST used in payment of SGST/UTGST.
The seamless flow of credit under GST, in case of intra-State and inter-State supplies, can be better understood with the help of the illustrations in Chapter: Input Tax Credit.
(9) GST – A tax on goods and services
GST is levied on all goods and services, except alcoholic liquor for human consumption and petroleum crude, diesel, petrol, ATF and natural gas.
Alcoholic liquor for human consumption: is outside the realm of GST. The manufacture/production of alcoholic liquor continues to be subjected to State excise duty and inter-State/intra-State sale of the same is subject to CST/VAT respectively.
Petroleum crude, diesel, petrol, ATF and natural gas: As regards petroleum crude, diesel, petrol, ATF and natural gas are concerned, they are not presently leviable to GST. GST will be levied on these products from a date to be notified on the recommendations of the GST Council. Till such date, central excise duty continues to be levied on manufacture/production of petroleum crude, diesel, petrol, ATF and natural gas and inter-State/intra-State sale of the same is subject to CST/ VAT respectively.
Tobacco: Tobacco is within the purview of GST, i.e. GST is leviable on tobacco. However, Union Government has also retained the power to levy excise duties on tobacco and tobacco products manufactured in India. Resultantly, tobacco is subject to GST as well as central excise duty.
Further, real estate sector has been kept out of ambit of GST, i.e. GST will not be levied on sale/purchase of immovable property.
(10) GST Common Portal
The GST portal is accessible over Internet (by taxpayers and their CAs/Tax Advocates etc.) and Intranet by Tax Officials etc. The portal is one single common portal for all GST related services.
A common GST system provides linkage to all State/ UT Commercial Tax Departments, Central Tax authorities, Taxpayers, Banks and other stakeholders. The eco-system consists of all stakeholders starting from taxpayer to tax professional to tax officials to GST portal to Banks to accounting authorities.
(11) Compensation Cess
A GST Compensation Cess at specified rate has been imposed under the Goods and Services Tax (Compensation to States) Cess Act, 2017 on the specified luxury items or demerit goods, like pan masala, tobacco, aerated waters, motor cars etc., computed on value of taxable supply. Compensation cess is leviable on intra-State supplies and inter-State supplies with a view to provide for compensation to the States for the loss of revenue arising on account of implementation of the GST.
(12) GST Council
The GST Council, which will be a joint forum of the Centre and the States, shall consist of the following members:
(a) Union Finance Minister – Chairperson
(b) The Union Minister of State, in-charge of Revenue of finance – Member
(c) The Minister In-charge of finance or taxation or any other Minister nominated by each State Government – Members.
The GST Council has to be constituted by the President within 60 days of the commencement of Article 279A. The notification for bringing into force Article 279A with effect from 12th September, 2016 was issued on 10th September, 2016. As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/ disasters, special provisions for certain States, etc.
The Union Cabinet under the chairmanship of Prime Minister Shri Narendra Modi approved setting up of GST Council on 12th September, 2016 and also setting up its Secretariat as per the following details:
(a) Creation of the GST Council as per Article 279A of the amended Constitution;
(b) Creation of the GST Council Secretariat, with its office at New Delhi;
(c) Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
(d) Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;
(e) Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India). The Cabinet also decided to provide for adequate funds for meeting the recurring and non-recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the Central and State Governments.
GST is a win-win situation for the entire country. It brings benefits to all the stakeholders of industry, Government and the consumer. The significant benefits of GST are discussed hereunder:
Creation of unified national market: GST aims to make India a common market with common tax rates and procedures and remove the economic barriers thus paving the way for an integrated economy at the national level.
Boost to ‘Make in India' initiative: GST gives a major boost to the ‘Make in India' initiative of the Government of India by making goods and services produced in India competitive in the national as well as international market. This will create India as a ― Manufacturing hub.
Enhanced investment and employment: The subsuming of major Central and State taxes in GST, complete and comprehensive setoff of input tax on goods and services and phasing out of Central Sales Tax (CST)reduces the cost of locally manufactured goods and services and increases the competitiveness of Indian goods and services in the international market and thus, gives boost to investments and Indian exports. With a boost in exports and manufacturing activity, more employment is generated and GDP is increased.
Ease of doing business: Simpler tax regime with fewer exemptions along with reduction in multiplicity of taxes under GST has led to simplification and uniformity. The uniformity in laws, procedures and tax rates across the country makes doing business easier.
Certainty in tax administration: Common system of classification of goods and services ensures certainty in tax administration across India.
Automated procedures with greater use of IT: There are simplified and automated procedures for various processes such as registration, returns, refunds, tax payments. All interaction is through the common GSTN portal, therefore, less public interface between the taxpayer and the tax administration.
Reduction in compliance costs: The compliance cost is lesser under GST as multiple record-keeping for a variety of taxes is not needed, therefore, there is lesser investment of resources and manpower in maintaining records. The uniformity in laws, procedures and tax rates across the country goes a long way in reducing the compliance cost.
Benefits to agriculture and Industry: GST has given more relief to industry, trade and agriculture through a more comprehensive and wider coverage of input tax set-off and service tax set-off, subsuming of several Central and State taxes in the GST and phasing out of CST. The transparent and complete chain of set-offs which results in widening of tax base and better tax compliance also leads to lowering of tax burden on an average dealer in industry, trade and agriculture.
Mitigation of ill effects of cascading: By subsuming most of the Central and State taxes into a single tax and by allowing a set-off of prior-stage taxes for the transactions across the entire value chain, it helps in mitigating the ill effects of cascading, improving competitiveness and improving liquidity of the businesses.
Benefits to small traders and entrepreneurs: GST has increased the threshold for GST registration for small businesses. Further, single registration is needed in one State. Small businesses have also been provided the additional benefit of composition scheme. With the creation of a seamless national market across the country, small enterprises have an opportunity to expand their national footprint with minimal investment.
India has a three-tier federal structure, comprising the Union Government, the State Governments and the Local Government.
The power to levy taxes and duties is distributed among the three tiers of Governments, in accordance with the provisions of the Indian Constitution.
The Constitution of India is the supreme law of India. It consists of a Preamble, 25 parts containing 448 Articles and 12 Schedules.
Power to levy and collect taxes whether, direct or indirect emerges from the Constitution of India. In case any tax law, be it an act, rule, notification or order is not in conformity with the Constitution, it is called ultra vires the Constitution and is illegal and void.
Thus, a study of the basic provisions of the Constitution is essential for understanding the genesis of the various taxes being imposed in India.
The significant provisions of the Constitution relating to taxation are:
- Article 265: Article 265 of the Constitution of India prohibits arbitrary collection of tax. It states that “no tax shall be levied or collected except by authority of law”. The term “authority of law” means that tax proposed to be levied must be within the legislative competence of the Legislature imposing the tax.
- Article 245: Part XI of the Constitution deals with relationship between the Union and States. The power for enacting the laws is conferred on the Parliament and on the Legislature of a State by Article 245 of the Constitution. The said Article provides as under:
Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the legislature of a State may make laws for the whole or any part of the State.
No law made by the Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.
III. Article 246: It gives the respective authority to Union and State Governments for levying tax. Whereas Parliament may make laws for the whole of India or any part of the territory of India, the State Legislature may make laws for whole or part of the State.
IV. Seventh Schedule to Article 246: It contains three lists which enumerate the matters under which the Union and the State Governments have the authority to make laws.
V. Article 246A: Power to make laws with respect to Goods and Services Tax
This article grants power to Centre and State Governments to make laws with respect to GST imposed by Centre or such State.
Centre has the exclusive power to make laws with respect to GST in case of inter-State supply of goods and/or services.
However, in respect to the following goods, the aforesaid provisions shall apply from the date recommended by the GST Council:
The provisions of Article 246A are notwithstanding anything contained in Articles 246 and 254. Article 254 deals with the supremacy of the laws made by Parliament.
VI. Article 269A: Levy and collection of GST on inter-State supply
Article 269A stipulates that GST on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.
In addition to above, import of goods or services or both into India will also be deemed to be supply of goods and/ or services in the course of Inter-State trade or Commerce.
This will give power to Central Government to levy IGST on the import transactions which were earlier subject to Countervailing duty under the Customs Tariff Act, 1975.
Where an amount collected as IGST has been used for payment of SGST or vice versa, such amount shall not form part of the Consolidated Fund of India. This is to facilitate transfer of funds between the Centre and the States.
Parliament is empowered to formulate the principles regarding place of supply and when supply of goods, or of services, or both occurs in inter-State trade or commerce.
The Constitutional provisions hitherto had delineated separate powers for the Centre and the States to impose various taxes. Whereas the Centre levied excise duty on all goods produced or manufactured in India, the States levied Value Added Tax once the goods entered the stream of trade upon completion of manufacture.
In the case of inter-State sales, the Centre had the power to levy a tax (the Central Sales Tax), but the tax was collected and retained entirely by the States. Services were exclusively taxed by the Centre together with applicable cesses, if any. Besides, there were State specific levies like entry tax, Octroi, luxury tax, entertainment tax, lottery and betting tax, local taxes levied by Panchayats etc.
With respect to goods imported from outside the country into India, Centre levied basic customs duty and additional duties of customs together with applicable cesses, if any.
Introduction of the GST required amendment in the Constitution so as to enable integration of the central excise duty, additional duties of customs, State VAT and certain State specific taxes and service tax into a comprehensive Goods and Services Tax and to empower both Centre and the States to levy and collect it.
- Actionable claim will have the significance assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882), which refers to a claim on any unsecured debt or any beneficial interest in movable property of the claimant.
- Address of delivery refers to the address of the recipient of goods and/or services indicated on the tax invoice issued by a taxable person for delivery of such goods and/or services.
- Address on record means the address of the recipient as noted in the files of the supplier. This may or may not be the same as the address of delivery.
- Adjudicating authority means any authority competent to pass any order or decision relating to the GST Act, but does not include the Central Board of Excise and Customs, the Revisional authority, authority for the advance ruling, appellate authority for an advance ruling, appellate authority, or the appellate tribunal.
- Aggregate turnover means the total value of all taxable supplies, exempt supplies, exports of goods and/or services, and interstate supplies of a person having the same PAN, computed on the pan-India basis and excluding taxes. However, the value of inward supplies on which taxation is based on reverse-charge mechanism shall not be admitted.
- Appellate tribunal means the Goods and Services Tax Appellate Tribunal set up under section 109.
- Application Service Providers (ASPs) are like GST Suvidha Providers (GSPs) but are more wholesome than GSPs. The support provided by ASPs will address most taxpayer compliance difficulties as they work as a liaison between the taxpayers and the GSPs.
- Appropriate government refers to the Central Government for IGST, UTGST and CGST, and the State Government for SGST.
- Assessment means the determination of tax liability inclusive of self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.
- Business: Any trade, commerce, manufacture, profession, vocation or any other similar activity can be called as Business under GST. It can either be a core or an ancillary activity whether or not involving monetary benefits.
- Capital goods are goods that are capitalized in the books of accounts of the person claiming the credit and are intended to be used during business.
- Casual taxable person is a person occasionally undertaking transactions involving the supply of goods and/or services during business, whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business.
- CGST is the tax levied under the Central Goods and Services Tax Act, 2016.
- Common portal refers to the online GST portal approved by the Central and State Governments, on the recommendation of the council.
- Composite supply means a supply consisting of two or more goods and/or services, which are naturally bundled and provided together, one being a principal supply.
- Consideration relates to the supply of goods or services involving:
Any payment made or to be made, whether in money or kind
Monetary value of any act or forbearance, whether or not voluntary
However, the subsidy given by the Central and/or State Governments are not included.
17. Council refers to the Goods and Services Tax Council set up under Article 279A of the Constitution.
18. Credit note means a document issued by a taxable person in relation to the tax invoice exceeding the taxable value and/or tax payable in respect of supply, or where the goods supplied are returned by the recipient, or where the services supplied are found to be deficient.
19. Debit note means a document issued by a taxable person relating to the taxable value and/or tax charged as per the tax invoice when found to be less than the taxable value and/or tax payable in respect of such supply.
20. Digital signature certificate (DSC) refers to a secure digital key that certifies the identity of the holder, issued by a Certifying Authority (CA). It typically holds information about the identity of the holder. It is the digital equivalent of a handwritten signature.
21. Electronic commerce means the supply of goods and/or services including digital products over a digital or electronic network.
22. Exempt supply means supply of any goods and/or services that are not taxable and includes such supply of goods and/or services that attract zero rate of tax or that may be exempt from tax per section 11.
23. Fixed establishment is a place, other than the place of business, that has a sufficient degree of permanence and suitable structure regarding human and technical resources as to supply/receive/use services for its own
24. Forward charge means the tax liability of the supplier of goods and/or services to levy the tax on the recipient of the goods and/or services and to remit the same to the credit of the government.
25. Fund means the Consumer Welfare Fund set up under section 57 by the Central Government.
26. Goods refers to all types of movable property, including actionable claim, growing crops, grass, and things attached to the land that are agreed to be severed before supply or under a contract of supply. Excludes securities and money.
27. Goods and Services Tax Network (GSTN) is a non-profit, public-private partnership company. Its main purpose is to provide IT infrastructure and services to Central and State Governments, taxpayers, and other stakeholders to facilitate the implementation of GST.
28. GST Suvidha Provider (GSP) refers to third-party applications that assist the taxable person in accessing the GST portal in an enriched manner by being more user-friendly and customer-centered.
29. Harmonized System Nomenclature (HSN) Code is a numeral used to classify goods for taxation purposes provided by the World Customs Organization.
30. IGST means Integrated Goods and Services Tax Act, 2017. Integrated tax means the IGST levied under IGST Act, 2017.
31. Input service distributor means an office of the supplier of goods and/or services that receives tax invoices issued under section 31 toward the receipt of input services and issues a prescribed document for distributing the credit of CGST, SGST, UTGST and/or IGST paid for the said services.
32. Input tax in relation to a regisfixedtered person, means the central tax, state tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes:
IGST charged on the import of goods.
Tax payable under subsections (3) and (4) of section 9.
Tax payable under subsections (3) and (4) of section 5 of the IGST Act.
Tax payable under subsections (3) and (4) of section 9 of the respective SGST Act; or
Tax payable under subsections (3) and (4) of section 7 of the UTGST Act.
However, it does not include the tax paid under the composition levy.
33. Input tax credit means the credit of input tax.
34. Intrastate supply of goods means the supply of goods during intrastate trade or commerce regarding subsection (1) of section 8 of IGST Act, 2017.
35. Intrastate supply of services means the supply of services during intrastate trade or commerce regarding subsection (2) of section 8 of IGST Act, 2017.
36. Invoice shall have the meaning as assigned to “Tax Invoice” as under section 31.
37. Inward supply refers to the receipt of goods and/or services, whether by purchase, acquisition, or any other means, and with or without any consideration.
38. Job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person.
39. Local authority means:
Panchayat as defined in clause (d) of Article 243 of the Constitution
Municipality as specified in clause (e) of Article 243P of the Constitution
A municipal committee, a zilla parishad, a district board, and any other authority legally entitled to or entrusted by the Central or any State Government with the control or management of a municipal or local fund
Cantonment board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006)
Regional council or a district council formed under the Sixth Schedule to the Constitution
Development board formed under Article 371 of the Constitution
Regional council formed under Article 371A of the Constitution
40. Market value refers to the full amount that a recipient of supply would pay to obtain the goods and/or services of like kind and quality at or about the same time and at the same commercial level, where the recipient and supplier are not related.
41. Mixed supply means two or more individual supplies of goods and/or services made together by a taxable person for a single price where such supply does not form a composite supply.
42. Non-resident taxable person is someone who occasionally undertakes transactions involving the supply of goods and/or services, whether as principal or agent, or in any other capacity, but with no fixed place of business in India.
43. Output tax means the CGST/SGST on taxable supply of goods and/or services made by a taxable person or by his agent. Excludes tax payable on a reverse-charge basis.
44. Outward supply refers to the supply of goods and/or services, whether by sale, transfer, barter, exchange, license, rental, lease, or disposal, or any other means made or agreed to be made during business.
45. Person includes:
An individual
A Hindu undivided family
A company
A firm
A Limited Liability Partnership
An association of persons or a body of individuals, whether incorporated or not, in India or outside India
Any corporation set up by or under any Central, State, or Provincial Act or a government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013)
A body corporate incorporated by or under the laws of a country outside India
A cooperative society registered under any law relating to cooperative societies
A local authority
Central government or a State government.
Society as defined under the Societies Registration Act, 1860 (21 of 1860)
A trust
Every artificial juridical person, not falling within any of the preceding sub-clauses
46. Place of business includes:
A place from where the business is ordinarily carried on, including a warehouse, a godown, or any other place where a taxable person stores his goods, or provides or receives goods and/or services
A place where a taxable person keeps his books of account
A place where a taxable person is engaged in business through an agent
47. Principal means a person on whose behalf an agent carries on the business of supply or receipt of goods and/or services.
48. Principal place of business means the location of business specified as the principal place of business in the certificate of registration.
49. Principal supply means the supply of goods and/or services that form the significant element of a composite supply and any other related supply being ancillary.
50. Recipient of supply of goods and/or services means:
Where the consideration is payable, the person liable to pay that consideration.
Where no consideration is payable, the person to whom the goods and/or services are delivered/rendered or made available.
Includes an agent working on behalf of the recipient in relation to the goods and/or services provided.
- Registered importer refers to the importer registered per the provisions of Central Excise Rules, 2002.
- Related persons include:
Officers or directors of one another's business
Legally recognised partners in business
The employer and the employee
Someone who directly or indirectly owns, controls, or holds 25 percent or more of the outstanding voting stock or shares of both
One of them directly or indirectly controls the other
A third person directly or indirectly controls both
Together they directly or indirectly control a third person
They are members of the same family
3. Removal in relation to goods means:
Dispatch of the goods for delivery by the supplier or by any other person acting on behalf of such supplier
Collection of the goods by the recipient or by any other person acting on behalf of such recipient
4. Return refers to any return prescribed or required to be furnished.
5. Reverse charge means the tax liability on the recipient of the supply of goods and/or services instead of the supplier of such goods and/or services.
6. Securities shall mean as per subsection (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
7. Services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
8. SGST means the State Goods and Services Tax Act, 2017. State tax means the tax imposed under SGST Act, 2017.
9. Supplier signifies the person providing the said goods and/or services and shall include an agent acting as such on behalf of such supplier about the goods and/or services provided.
10. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course of business and also includes import of services for a consideration whether or not in the course of business.
11. Taxable person is an individual who carries on any business at any place in any state of India and who is registered or required to be registered under GST.
12. Turnover in a state or in Union Territory means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services made within a state or Union Territory by a taxable person and interstate supplies of goods and/or services made from the state or Union Territory excluding taxes. Like aggregate turnover, the value of inward supplies on which taxation is based on reverse-charge mechanism shall not be admitted.
13. Usual place of residence means:
In the case of an individual, the place where he ordinarily resides
In other cases, the place where the person is incorporated or otherwise legally constituted
14. Zero-rated supply, as per section 16 of IGST Act, 2017, means supply of any goods and/or services including:
export of goods or services or both; or
supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
An e-Way Bill, a GSTN project under the Goods and Services Tax, is required to be generated for every inter-State movement of goods beyond 10 km (6.2 m) and the threshold limit of 50,000 (US$780).
Use:
e-Way Bill is mandatory for inter-State movement of goods of consignment value exceeding Rs 50,000/- in motorised conveyance.
Registered GST taxpayers can register in the e-Way Bill Portal using GSTN.
Unregistered persons/transporters can enroll in the e-Way Bill system by providing their PAN and Aadhaar.
Supplier/Recipient/Transporter can generate the e-Way Bill.
Vehicle number can be entered/updated in PART B of Form EWB-01 by those who have generated the e-Way Bill or by the transporter.
QR code is provided in the e-Way Bill to facilitate quick verification.
Certain goods have been exempted from e-Way Bill and the list is available as Annexure to Rule 138 of CGST Rules. e-Way Bill is not required for transport through non-motorised conveyance
Modes of Generation:
Various modes of generating e-Way Bill: (a) Web (Online), (b) Android App – the IMEI of the phone and the registered mobile number has to be given, (c) SMS based (through registered Mobile Number, and (d) Excel based upload is provided for bulk generation.
If the e-Way Bill is generated with wrong information, it can be cancelled and new e-Way Bill can be generated.
Provision for cancellation of e-Way Bill within 24 hours by the person who have generated the e-Way Bill.
The recipient can reject the e-Way Bill within 72 hours of generation.
Alert messages are also issued to the users through online and SMS
Contents and Validity of e-Way Bill:
Contents of PART A of the Form EWB-01 cannot be edited or modified once generated. PART B can be updated with Vehicle details/RR/Airway Bill, etc.
Consolidated e-Way Bill can be generated for vehicle carrying multiple consignments.
The Validity of e-Way Bill is fixed as one day for every 100 km or part thereof. The validity can be extended online before the expiry.
The e-Way Bill with consignment should have the latest vehicle number which is carrying the said consignment.
The users can create their own masters like the list of customers, suppliers, products, HSN, etc.
For detailed User Manual, FAQs, CBT and legal provision on e-Way Bill.
