CA & CMA Inter

SSA Notes on

Goods and
Services Tax

Dr CMA T K Sridhar
October, 2023

SINGAR BOOKS AND PUBLICATIONS

32-B, Vivekananda Nagar, Ramalinga Nagar, Woriur, Trichy 620 003, TN
93451 22645

www.singaracademy.blogspot.com
[email protected]
GOODS AND SERVICES TAX
No page
1 Introduction and Definition 01
2 Supply under GST 06
3 Charge of GST 23
4 Exemptions from GST 38
5 Time and Value of Supply 62
6 Input Tax Credit 78
7 Registration 95
8 Tax Invoice 107
9 Payment of Tax 122
10 Returns 129
 1: INTRODUCTION AND DEFINITION

Tax is a fee charged by a government on a product, income or activity for meeting the expenses of
government like defence, provision of education, health-care, infrastructure facilities like roads, dams
etc.
Two types of taxes – Direct taxes and indirect taxes (consumption tax).
Direct Taxes - Impact and incidence is on the same person. E.g. income tax, wealth tax, etc.
Indirect Taxes - Impact and incidence are on different persons. E.g. GST, custom duty, etc.

Difference between direct taxes and indirect taxes

Direct Taxes Indirect Taxes
1 Payer and sufferer of tax Same person Different person
2 Bases of tax Income / Asset Supply
3 Rate of taxes from Different Same
one person to another
4 Revenue shared by Central Government Central and State Government
5 PY & AY PY income taxed in AY No such concept
6 Department CBDT CBIC
7 Nature Progressive Regressive
CBDT: Central Board of Direct Taxes
CBIC: Central Board of Indirect Taxes and Customs
{CMA inter D18, 7 marks}

Goods and Services Tax (GST): [CGST / SGST / UTGST / IGST]

1. Value added tax levied on manufacture, sale and service
2. Multi point tax – continuous chain of tax credits
3. Tax burden borne by final consumer
4. No cascading effects

List of taxes subsumed in GST.

Central taxes State taxes
1 Central Excise Duty and 1 State surcharge and cesses
Additional Excise Duty 2 Entertainment Tax
2 Service Tax (except those levied by local bodies)

Goods and Services Tax 1

 3 Excise Duty under Medical and 3 Tax on lottery, betting and gambling
Toilet Preparation Act 4 Entry Tax (All Forms) & Purchase Tax
4 CVD and Special CVD 5 VAT and Sales Tax
5 Central Sales Tax 6 Luxury Tax
6 Central surcharge and cesses 7 Taxes on advertisements
{CA inter M18 & N18, 2&3 marks}

Description Power to levy

1 Alcohol for human consumption with the state
2 Crude oil, diesel, petrol, natural gas and ATF GST in future date as per GST Council
3 Entertainment tax levied by local bodies Local bodies
4 Tobacco GST and Excise duties

Goods and Services Tax Council (GST Council):

an apex constitutional body
constituted by virtue of Article 279A of the Constitution
joint forum of the centre and the States.
Members in GST Council
1. Union Finance Minister – Chairperson
2. Union Minister of State, [Revenue] – Member
3. Minister nominated by each State Government – Members.
the GST Council makes recommendations on the following matter:
1. The taxes, cesses and surcharges
2. Exemption from GST
3. The threshold limit of turnover for exemption
4. The rates including floor rates with bands of GST
5. Any special rate during any natural calamity or disaster
6. Special provision for special states and
7. The date on which GST be levied on petroleum crude, high speed diesel, motor spirit, natural
gas and aviation turbine fuel.
8. Any other matter relating to GST, as the Council may decide.
{CMA Inter D18, 10 marks}

Sahasri Singar Academy 2

 DEFINITIONS

Section 2(1): Actionable Claim: As Per Section 3 of the Transfer of Property Act, 1882
Actionable Claim is a claim to any debt, other than a debt secured by mortgage of immovable
property or by hypothecation or pledge of moveable property, or to any beneficial interest in
moveable property not in possession either actual or constructive, of the claimant, which the civil
courts recognize as affording grounds of relief whether such debt or beneficial interest be existent,
accruing or conditional or contingent”.

Section 2(5): Agent: means a person, including a factor, broker, commission agent, arhatia, del
credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries
on the business of supply or receipt of goods or services or both on behalf of another;

Section 2(6): Aggregate turnover [ATO]

Aggregate turnover:
Taxable supplies ×××
(own / as an agent / not as job worker)
+ The total turnover of all branches ×××
(PAN based all India supplies)
+ Inter-state Supplies ×××
(including inter-state supplies between distinct persons)
+ Exempt Supplies | Zero rated supplies ×××
+ Export Supplies ×××
+ Non-GST supply (e.g. petrol, alcoholic liquor etc.)
− Inward supplies under reverse charge ×××
− GST / Compensation cess ×××
Aggregate turnover ×××
Note:
1. ATO includes – turnover from 1st April of a FY
2. ATO excludes – deposits, loans or advances in so far as the consideration is represented by
way of interest or discount.
3. Partner to Firm & HUF to Coparceners / Karta – excluded

Section 2(12): Associate enterprises shall have the same meaning as assigned to it in section 92A
of the Income Tax Act, 1961

Goods and Services Tax 3

Broadly, as associated enterprise in relation to another enterprise, means an enterprise which
participates, directly or indirectly, or through one or more intermediaries, in the management or
control or capital of the other enterprise.

Section 2(14): Authorised bank shall mean a bank or a branch of a bank authorized by the
Government to collect the tax or any other amount payable under this Act

Section 2(17): Business includes

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager etc.
even if there is no monetary benefit
any activity or transaction in connection with or incidental or ancillary
irrespective of volume, frequency, continuity or regularity of such transaction
Example: Mr. S, a famous actor, paints some paintings and sells them. The consideration
is donated for a charity. – qualifies as supply even it is one time occurrence
(b) supply or acquisition of goods including capital assets and services
in connection with commencement or closure of business;
(c) Facilities or benefits by a club, association, society, or any such body
To its members for a subscription or any other consideration
Example: a resident welfare association provides the service of depositing the electricity
bills of the residents in lieu of some nominal charges is business.
(d) Admission to any premises for a consideration
[Example: Admission to circus, cinema halls, parks, etc.]
(e) services supplied by a person as the holder of an office which has been accepted by him in
the course or furtherance of his trade, profession or vocation;
(f) services by a race club: by way of totalisator or a licence to book maker or activities of a
licensed book maker
Example: Totalisator is engaged for facilitating the wagering for a commission
(g) any activity or transaction undertaken by the Central Government, a State Government or
any local authority as public authorities;

Section 2(19): Capital goods means goods, the value of which is capitalized in the books of
account of the person claiming the ITC and which are used or intended to be used in the course
or furtherance of business.

Section 2(20): Casual taxable person means

a person who occasionally undertakes transactions
involving supply of goods or services or both

Sahasri Singar Academy 4

in the course or furtherance of business
whether as principal, agent or in any other capacity,
in a State of a Union Territory where he has no fixed place of business.

Section 2(21): Central Tax means the central goods and services tax levied u/s 9

Section 2(22): Cess shall have same meaning as assigned to it in the Goods and Service Tax
(Compensation to States) Act

Section 2(26): Common portal means the common goods and services tax electronic portal

Section 2(30): Composite supply means a supply made

by a taxable person to a recipient
consisting of two or more taxable supplies of goods or service or both,
or any combination thereof, which are naturally bundled and supplied
in conjunction with each other in the ordinary course of business,
one of which is a principal supply;

Example: where goods are packed and transported with insurance, the supply of goods,
packing materials, transport and insurance is a composite supply and supply of goods is a
principal supply.

Section 2(31): Consideration

For the supply by recipient or any other person ₹
Payment in money or otherwise for the supply ×××
+ Monetary value of any act ×××
+ Monetary value of forbearance an act for the supply ×××
+ Deposit (if adjusted for consideration) ×××
+ Subsidy given by other than by Central / State Government ×××
− Subsidy given by Central / State Government ×××
− Deposit (if refundable) ×××
Consideration ×××

Goods and Services Tax 5

Section 2(32): continuous supply of goods: means
a supply of goods which is provided, or agreed to be provided,
continuously or on recurrent basis, under a contract,
whether or not by means of a wire, cable, pipeline or other conduit, and
for which the supplier invoices the recipient on a regular or periodic basis and
includes supply of such goods as the Government may,
subject to such conditions, as it may, by notification, specify;

Section 2(33): continuous supply of services: means

a supply of services which is provided, or agreed to be provided,
continuously or on recurrent basis, under a contract,
for a period exceeding three months with periodic payment obligations and
includes supply of such services as the Government may,
subject to such conditions, as it may, by notification, specify;

Section 2(34): Conveyance includes a vessel, an aircraft and a vehicle

Section 2(36): Council means the Goods and Services Tax Council established u/a 279A of
the Constitution

Section 2(37): Credit note means a document issued by a registered person u/s 34(1)

Section 2(38): Debit note a document issued by a registered person u/s 34(3)

Section 2(41): Document includes written or printed record of any sort and electronic record
as defined in u/s 2(t) of the Information Technology Act, 2000.

Section 2(43): Electronic Cash Ledger means the electronic cash ledger referred u/s 49(1)

Section 2(44): Electronic Commerce means

the supply of goods or services or both, including digital products
over digital or electronic network

Sahasri Singar Academy 6

Section 2(45): Electronic Commerce Operator means
any person who owns, operates or manages digital or electronic facility or platform
for electronic commerce

Section 2(46): Electronic Credit Ledger means the electronic credit ledger referred u/s 49(2)

Section 2(47): Exempt supply means

supply of goods or services or both
which attracts nil rate of tax or
which may be wholly exempt from tax u/s 11, or u/s 6 of the IGST Act,
and includes non-taxable supply.

Section 2(52): Goods means

Every kind of movable property
And includes
1. Actionable claim
2. 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
Excludes: money & security

Section 2(53): Government means Central Government

Section 2(55): Goods and Service Tax Practitioner means any person who has been
approved u/s 48 to act as such practitioner

Goods and Services Tax 7

Section 2(56): India means the territory of India as referred to in article 1 of the Constitution, its
territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive
economic zone or any other maritime zone as referred to in the Territorial Waters, Continental
Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its
territory and territorial waters;

Section 2(58): Integrated tax means the integrated foods and service tax levied under the
IGST Act

Section 2(59): Input means any goods other than capital goods used or intended to be used by
a supplier in the course or furtherance of business

Section 2(60): Input Service means any service used or intended to be used by a supplier in
the course or furtherance of business

Section 2(62): Input Tax in relation to a registered person, means the CGST, SGST, IGST &
UTGST charged on any supply of goods or services or both made to him and includes –
a. the IGST charged on import of goods
b. the tax payable u/s 9(3) & 9(4) of the CGST Act & SGST Act
c. the tax payable u/s 5(3) & 5(4) of the IGST Act
d. the tax payable u/s 7(3) & 7(4) of the UTGST Act
But does not include the tax paid under composition levy u/s 2(62)

Section 2(63): Input tax credit means the credit of input tax

Section 2(66): Invoice or tax invoice means the tax invoice referred to in section 31

Sahasri Singar Academy 8

Section 2(67): Inward supply in relation to a person, shall mean receipt of goods or services
or both whether by purchase, acquisition or any other means with or without consideration

Section 2(69): Local authority:

Panchayat [243(d) of Constitution],
Municipality [243P(e) of Constitution]
Municipal committee, Zilla Parishad, District Board or other authority
entrusted by the Central Government and any State Government
with the control or management of a municipal or local fund
Cantonment Board [Section 3: the Cantonments Act]
Regional Council or District Council [VI schedule to the constitution]
Development Board [371 & 371J of Constitution]
Regional Council [371A of Constitution]

Section 2(72): Manufacture means

processing of raw material or inputs in any manner
that results in emergence of a new product
having a distinct name, character and use
and the term “manufacturer” shall be construed accordingly;

Section 2(73): Market Value shall mean the full amount

which a recipient of a supply is required to pay
in order to obtain the goods or services or both of like kind and quality
at or about the same time and at the same commercial level
where the recipient and the supplier are not related

Section 2(74): Mixed Supply means

two or more individual supplies of goods or services, or any combination thereof,
made in conjunction with each other
by a taxable person for a single price
where such supply does not constitute a composite supply.
Example: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these
items can be supplied separately and is not dependent on any other. It shall not be a mixed supply
if these items are supplied separately;

Goods and Services Tax 9

Section 2(75): Money:
Indian legal tender or promissory note, draft, money order,
any foreign currency, bill of exchange, pay order, postal or electronic remittance
cheque, letter of credit, traveler cheque, or any such similar instrument
when used as consideration to settle an obligation or
exchange with Indian legal tender of another denomination
but shall not include any currency that is held for its numismatic value;

Section 2(76): Motor vehicle shall have the same meaning as assigned u/s 2(28) of the Motor
Vehicles Act, 1988
Motor Vehicle or Vehicle under the Motor Vehicles Act, 1988 means any mechanically
propelled vehicle adapted for use upon roads whether the power or propulsion is transmitted
thereto from an external or internal source and includes a chassis to which a body has not been
attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a
special type adapted for use only in a factory or in any other enclosed premised or a vehicle
having less than four wheels fitted with engine capacity of not exceeding twenty five cubic
centimetres

Section 2(77): Non-resident taxable person means

any person who occasionally undertakes transactions
involving supply of goods or services or both,
whether as principal or agent or in any other capacity,
but who has no fixed place of business or residence in India

Section 2(78): Non-taxable supply means

a supply of goods or services or both
which is not leviable to tax under this Act or
under the Integrated Goods and Services Tax Act;

Section 2(80): Notification means a notification published in the Official Gazette and the
expression ‘notify’ and ‘notified’ shall be construed accordingly

Section 2(82): Output tax in relation to a taxable person; means the tax chargeable under this
Act on taxable supply of goods or services or both made by him or by his agent but excludes
tax payable by him or reverse charge basis.

Sahasri Singar Academy 10

Section 2(83): Outward supply in relation to a taxable person,
means supply of goods or services or both,
whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode,
made or agreed to be made by such person
in the course or furtherance of business

Section 2(84): Person includes—

(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals,
whether incorporated or not, in India or outside India;
(g) any corporation established by or
under any Central Act, State Act or Provincial Act or a Government company
as defined u/s 2(45) of the Companies Act, 2013;
(h) anybody corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860;
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;

Section 2(87): Prescribed means prescribed by rules made under this Ac on the
recommendations of the council

Section 2(88): Principal means a person on whose behalf an agent carries on the business of
supply or receipt of goods or services or both

Section 2(90): Principal supply means

the supply of goods or services
which constitutes the predominant element of a composite supply and
to which any other supply forming part of that composite supply is ancillary;

Goods and Services Tax 11

Section 2(91): Proper Officer in relation to any function to be performed under this Act,
means the commissioner or the officer of the central tax who is assigned that function by the
commissioner in the Board.

Section 2(92): Quarter shall mean a period comprising three consecutive calendar months,
ending on the last day of March, June, September and December of a calendar year.

Section 2(93): Recipient of supply of goods or services or both, means –

Supply of Consideration Recipient
Goods +
Yes Person liable to Pay the consideration
Services
Person to whom:
Goods No goods are delivered or made available
possession or use of the goods is given / made available
Services No Person to whom the service is rendered

Includes: an agent
acting on behalf of the recipient in relation to the goods and / or services supplied

Section 2(94): Registered person means

a person who is registered u/s 25 of CGST Act
but does not include a person having a Unique Identity Number

Section 2(97): Return means any return prescribed or otherwise required to be furnished by
or under this Act or the rules made thereunder

Section 2(98): Reverse Charge means the liability to pay tax

be the recipient of supply of goods or services or both
instead of the supplier of such goods or services or both
u/s 9(3) & (4) or u/s 5(3) & (4) of IGST.

Sahasri Singar Academy 12

Section 2(102): Service means
Includes: activities relating to
Use of money or its conversion by cash or by any other mode,
From one form / currency / denomination,
To another form / currency / denomination
For which a separate consideration is charged
Excludes: goods, money & securities
Also includes arranging transactions in securities

Section 2(104): State Tax means the tax levied under any State Goods and Services Tax Act

Section 2(105): Supplier in relation to any goods or services or both, shall mean
The person supplying the said goods or services or both and
Shall Include: an agent
acting as such on behalf of such supplier in relation to the goods or services or both supplied.

Section 2(106): Tax Period means the period for which the return is required to be furnished

Section 2(107): Taxable Person means a person who is registered or liable to be registered
u/s 22 or 24

Section 2(108): Taxable supply means a supply of goods or services or both which is leviable
to tax under CGST Act

Section 2(109): taxable territory means the territory to which the provisions of this Act apply

Section 2(117): Valid return means a return furnished u/s 39(1) on which self-assessed tax
has been paid in full

Section 2(118): Voucher means an instrument where there is an obligation to accept it as

consideration or part consideration for a supply of goods or services or both and where the
goods or services or both to be supplied or the identities of their potential suppliers are either
indicated on the instrument itself or in related documentation, including the terms and
conditions of use of such instrument.

Goods and Services Tax 13

Section 2(119): Works contract means a contract for building, construction, fabrication,
completion, erection, installation, fitting out, improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any immovable property wherein transfer of
property in goods (whether as goods or in some other form) is involved in execution of such
contract.

Section 16(1) of the IGST Act: Zero-rated supply means any of the following supplied of
goods or services or both, namely: -
a. Export of goods or services or both; or
b. Supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit

Sahasri Singar Academy 14

 2. SUPPLY UNDER GST

Taxable event = Supply [by a taxable person & should be taxable supply]
2(107): Taxable person – a person who is registered or liable to be registered u/s 22 or 24
2(108): Taxable Supply – supply of goods or services or both which is leviable to tax

Section 7: Scope of Supply

(1)(a) Supply What When For what Purpose
Includes (such as) Goods / Made / Consideration In the course /
sale, transfer, Services / Agreed Furtherance of business
barter, exchange, Both to be
licence, rental, made
lease or disposal
(1)(b) Import Services YES NO
(c) Schedule I deemed supply: No consideration yet supply
4 Schedule II Treated as supply of goods or supply of services
5 Negative list Schedule III
Not supply Activities by CG, SG, UT & LA as public authority
6 Notify Supply of goods not supply of services or vice a versa
Nt Notification by Government on the recommendations of the council

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

Sale: the transfer of ownership of and title to property from one person to another for a price
Transfer: transfer from factory to depot for sale | transfer of right to use
Barter: doctor provides medical consultancy to barber in return barber cut’s doctor’s hair
Exchange: (a new car is purchased in exchange of an old car)
Licence: permission by competent authority [lawful] to engage in a business or occupation
e.g., - mines licence [to extract minerals, etc..] | Software licence
Lease: Legal agreement for use of land, building, vehicle… [Financial lease by bank]
Disposal: disposal means sale, discard etc.

Goods and Services Tax 15

Illegal activity vs Prohibited Activity: both activities are punishable yet
Illegal activity: steeling and selling taxable goods [car] – supply
Prohibited activity: supplying prohibited goods / services [narcotic drugs] – not supply

Supply
Made: supplied now
Agreed to be made: supplied later – e.g., hire purchase | sale on approval basis

Consideration by third party:

1. Mr A, dealer of furniture delivers to branch office (Chennai) of XYZ (Delhi) and payment
made by XYZ. Payment by XYZ (third party is also consideration hence Mr A is liable to
pay GST.)
2. Maruti Suzuki pays service charges to its authorized agent ABT Maruti for the services
rendered for the customer’s car during the warranty period.

Consideration other than money:

1. Free car for doctor for his treatment: consideration = car’s value
2. Act – compulsory donation: note-book sold for ₹100 + ₹10 for compulsory charity
Consideration = ₹110 including money value of an act (donation)
3. Forbearance: agreed not to carry on business for 10 years for a consideration

No Consideration hence Not supply

a. Fine: paid for violation of traffic rule
b. Grant of pocket money | alimony for divorce
c. Donations received by charitable institutions from individual donors, without quid pro
quo
Conditions:
1. Gift or donation is made to a charitable organization
2. Payment has the character of gift or donation
3. Purpose is philanthropic and not advertised
d. Art works sent by artist to galleries for exhibition is not a supply as no consideration flows
from the gallery to the artists
e. No Claim Bonus offered by an insurance company to the insured – Not supply
f. CBIC Clarification
1. Equipment sent manufacturer factory for repair – Not supply
2. Supply of spare parts freely to replace during warranty period – Not supply

Sahasri Singar Academy 16

 3. Penalty levied on late payment of loans / advances – Not supply
4. Services provided by members of Joint Venture to the Joint Venture [unincorporated]
i. Cash calls are merely a transaction in money (capital) – Not supply.
ii. Cash calls are for services (consideration) – Supply.

Furtherance of Business means: helping forward business, or progress of business.

In the course of business: Doctor gives treatment to a patient for fee

Furtherance of business: Hyundai cars wants to establish its manufacturing unit in Trichy;
hence Hyundai cars appoints Mr. X as a consultant for study of the market. The activities
carried out by Mr. X is in furtherance of business of Hyundai cars.
NOT supply as NOT in the course or furtherance of business [GST FAQ by CBIC]
X purchases jewel for personal use and sells after use in three years. It is not supply as it is not
in the course or furtherance of business

Exception: Supply even IF NOT in the course or furtherance of business [import of services]
1. R, a proprietor, has received the architect service for his house from an architect located in
USA at an agreed consideration of $5,000. The import of services by R is supply though it
is not in the course or furtherance of business. R is liable to pay tax under reverse charge
only if he is a registered person.
2. Import (downloading) of a song for a consideration for personal purpose – Supply
3. Accessing data using google without consideration (OIDAR service) – Not Supply
OIDAR Service: Online Information Database Access and Retrieval Service

Schedule I: Supply even if made without consideration

1 Permanent transfer or disposal of business assets (if input tax credit availed)
Not supply: if ITC not availed or Blocked credit
Examples
Supply – Donation / Gift of old laptops to schools where ITC has been availed.
Not Supply – Transfer of motor vehicle at free of cost where ITC is blocked
Not supply – Transfer of personal asset after use
2 Supply between related persons [expl u/s 15] or distinct persons [u/s 25]
(in course or furtherance of business)
Not Supply:
1. Gift up to ₹50,000 [Employer to Employee] [Diwali, Birthday, etc.,]

Goods and Services Tax 17

 2. Salary and perquisites for terms of employment
3. Payment for premature termination
4. Salary to partners by partnership firm
Supply:
1. Payment for services not in the terms of employment [reverse charge]
2. Gift above ₹50,000 [Employer to Employee] – fully taxable
3. Fringe benefit to employee – supply unless exempted [reverse charge]

Employee: Whole time director | executive director [No GST]

Not employee: MD | non-executive director | independent director | nominee director
Hence, GST is applicable under reverse charge
3 Supply of GOODS: Principal to Agent or vice versa
(agent supplies / procures on behalf of principal and issues invoice in his own name)
Procurement agent | Auctioneer agent | Sales agent
4 Import of services: from a related person or other establishments outside India
[in the course or furtherance of business]
E.g., Import of services by an Indian branch from their parent company, in the course
or furtherance of business without consideration – Supply

Explanation u/s 15: Related persons [a person who is under influence of another person]
(a) persons shall be deemed to be “related persons” if––
(i) such persons are officers or directors of one another’s businesses;
(ii) such persons are legally recognised partners in business;
(iii) such persons are employer and employee;
(iv) any person directly or indirectly owns, controls or holds 25% or more of the
outstanding voting stock or shares of both of them;
(v) one of them directly or indirectly controls the other;
(vi) both of them are directly or indirectly controlled by a third person;
(vii) together they directly or indirectly control a third person; or
(viii) they are members of the same family;
(b) the term “person” also includes legal persons;
(c) sole agent or sole distributor or sole concessionaire

Section 2(49): “family” means,

i. the spouse and children of the person, and

Sahasri Singar Academy 18

 ii. the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly
dependent on the said person

Related persons
1. Mr.I holds 35% shares in A Ltd. and 40% shares of X Ltd. – A Ltd and X Ltd are related.
2. 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

Section 25: Distinct persons: the establishment of a person with separate registrations [atleast
one registered establishment] whether within the same state / UT or in different states / UT
are considered as distinct persons.
Examples for Supply even there is no consideration:
1. Distinct persons - Mohan, a CA, has a registered head office in Delhi. He has also obtained
registration (or no registration) in the state of West Bengal in respect of his newly opened
branch office. Mohan shall be treated as distinct persons in respect of registrations in
West Bengal and Delhi. Supply between Delhi office and West Bengal office, in course or
furtherance of business even without consideration will qualify as supply.
2. Establishments of Distinct persons [XYZ Ltd in MP ➔ XYZ Ltd in TN]
3. Stock transfers or branch transfers
Supply – Factory of XYZ Ltd in MP ➔ Showroom of XYZ Ltd in TN
Not Supply – Factory of XYZ Ltd in TN ➔ Showroom of XYZ Ltd in TN [Single
registration]

Principal ➔Agent and vice versa [invoice in the name of agent]

Examples for not agent
1. Mr. A appoints Mr. B for procuring material and Mr. B procures from various suppliers
and invoice is also raised in the name of Mr. A – Mr. B is NOT an agent
2. Ms XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain goods. The
auctioneer arranges for the auction and identified the potential buyers. The invoice is issued
by Ms. XYZ. – Mr. B is an NOT agent.

Del credere agent [DCA]: [Services of buying / selling / financing / default protection]
1. Not agent (if invoice is in the name of principal):
Interest charged by DCA to the recipient – not form part of value of supply
2. Agent [agency service] (if invoice is in his own name):
Interest charged by DCA to the recipient – form part of value of supply

Goods and Services Tax 19

 Schedule II
Activities to be treated as
supply of goods (SOG) or supply of service (SOS)
(1) Transfer
(a) title in goods SOG
Example: Mr. A sells book to customer
(b) right in goods or of undivided share in goods SOS
without the transfer of title thereof
Example: Mr. A gives car in rent
(c) title in goods (future date) SOG
Example: Mr. A sells car in hire purchase
Example: Mr. A sells bed on sale or return basis
(2) Land Building
(a) any lease, tenancy, easement, licence to occupy land SOS
Example: Mr. A lets out land for car parking
(b) any lease or letting out of the building (commercial, industrial or SOS
residential complex for business or commerce, either wholly or partly),
Example: Mr. A lets out a shop for business
Note: Pagadi system (transfer of tenancy right against consideration)
(3) Treatment or process [job work for liquor – covered] SOS
Example: Mr. A dyes the clothes on job work basis.
Note: Alcoholic liquor for human consumption is not falling under GST
yet job work related to liquor production is covered.
(4) Transfer of business assets
(a) business assets (goods) transferred or disposed of, SOG
whether or not for a consideration,
Example: Mr. A gifts laptop used for business to his friend
(b) business assets (goods) put to any private use, SOS
whether or not for a consideration,
Example: Mr. A allows laptop of his business
for his son’s private use
(c) Assets (goods) of a person who ceases to be a taxable person deemed to be SOG
supplied by him in the course or furtherance of his business,
Example: Mr. A, a trader, winds up his business.

Sahasri Singar Academy 20

 Any stock left unsold shall be deemed to be supplied
Exceptions:
(i) the business is transferred as a going concern to another person; or
(ii) the business is carried on by a personal representative who is deemed
to be a taxable person.
(5) SOS
(a) renting of immovable property;
(b) construction of a complex, building, civil structure (except where the
entire consideration received after issuance of completion certificate, by
the competent authority or after its first occupation), whichever is earlier.
Example: Mr. A (builders) received ₹60 lacs as part payment for
constructing residential units before the issuance of completion certificate
by competent authority
(c) temporary transfer or permitting the use of IPR
(d) development, design, programming, customisation, adaptation,
upgradation, enhancement, implementation of information technology
software;
(e) refrain, or tolerate
Example: Non-compete fee for not doing a particular business or not to
practice a particular profession or cancellation of appointment
Example: Penalty on early termination of agreement, Late delivery
charges – liquidated damages etc.,
(f) transfer of the right to use for consideration.
Example: Car given in hire
(6) Composite supply:
(a) works contract; and SOS
(b) Catering SOS
(7) Unincorporated association or body of persons to a member for SOG
consideration
Example: XYZ, a flats association, supplies water purifier at a
concessional price

Goods and Services Tax 21

 Schedule III
Activities neither as a supply of goods nor a supply of services
(1) Services by an employee to the employer in the course of or in relation to his
employment.
Examples for in the course of employment (GST not leviable)
(i) Amount received by employee on premature termination
(ii) Casual workers getting salary daily or weekly basis etc.
(iii) Casual workers employed by contractor or security service agency
Examples NOT for in the course of employment (GST leviable)
(i) provision of service by employee on contract basis to associate company of
employer
(ii) services provided on contact basis (principal to principal basis)
(iii) amount paid for not joining a competing business
(2) Services by any court or Tribunal established under any law for the time being in
force.
(a) the functions performed by the Members of Parliament, Members of State
Legislature, Members of Panchayats, 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 in that capacity; or
Example: Duties by the President of India, Vice President of India, Prime Minister
of India, Chief Justice of India, Speaker of Lok Sabha, Chief Election Commissioner,
Comptroller and Auditor General of India, Chairman of UPSC, Attorney General of
India.
(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 the commencement of this
clause.
(4) Services of funeral, burial, crematorium or mortuary including transportation of the
deceased.
(5) Sale of land and sale of building except sale before the issuance of completion
certificate
(6) Actionable claims, other than lottery, betting and gambling.
(7) Non-taxable territory → Another non-taxable territory [without entering into India]
(8) Supply of warehoused goods to any person before clearance for home consumption

Sahasri Singar Academy 22

 Supply of goods by the consignee to any other person, by endorsement of
documents of title to the goods, after the goods have been dispatched from the port
of origin located outside India but before clearance for home consumption.
Explanation 1: Court includes District Court, High Court and Supreme Court.
Explanation 2: warehoused goods as per the Customs Act, 1962.

Note
Notification by Government
Transactions undertaken by the Central Government / a State Government / Any Local
Authority / in which they are engaged as public authority. – Not Supply
Example: Services entrusted to Panchayat u/a 243G & Municipality u/a 243W

Clarification by GST council

1. Ambulance services by private service providers to Government under the National
Health Mission (NHM) against consideration – Exempt if it is provided
a. as a pure service
b. as a composite supply the goods value ≤ 25% value of composite supply
2. Industrial Training Institute (ITI)
a. Services other than designated trades by private ITI – Not exempt
Designated trade – notified under Apprenticeship Act, 1961
b. Services of conduct of examination by private ITI for entrance fee – Not exempt
c. If the above services provided by Government ITI – Exempt [as provided by Govt.]
3. Priority Sector Lending Certificate through e-Kuber portal of RBI
01.07.17 – 27.05.18: IGST is chargeable under forward charge
On or after 28.05.18: IGST is leviable under reverse charge [if CGST / SGST not paid]
4. Residential programs or camps meant for advancement of religion, spirituality or yoga by
religious and charitable trust for fee / donation – exempt
Fee includes for cost of lodging and boarding for the above – exempt
But for fitness camps or classes for aerobics, dance, music, etc., – taxable
5. Grant of alcoholic liquor licence – exempt
6. Inter-state movement of various modes of conveyance between distinct persons – Not
supply.
Conveyance Mode: trains, buses, trucks, tankers, trailers, vessels, containers, aircrafts
i. Carrying goods or passengers or both or
ii. For repairs and maintenance

Goods and Services Tax 23

 Except in cases where such movement is for further supply of the same conveyance
But GST is leviable on repairs and maintenance done for such conveyance
7. Inter-state movement of rigs, tools and spares, and all goods on wheels (like cranes)
But GST is leviable on repairs and maintenance done
8. GST will be payable by the refinery only on the net quantity of superior kerosene oil
(SKO) retained for the manufacture of Linear Alkyl Benzene (LAB).
9. GST will be payable on the petroleum gases retained for the manufacture of petrochemical
and chemical products.
10. Goods sent by artist for exhibition in gallery or sale on approval basis
a. Goods sent for exhibition in gallery within state or outside state – not supply
Supply is on sale only in the exhibition and GST is leviable
b. Goods sent for sale on approval basis
Required: delivery challan + e-way bill | invoice on actual supply
c. Goods exported for exhibition – not supply
Re-import within 6 months from the date of delivery challan – import duty exempted.

PRACTICE QUESTIONS
Question: Examine whether the following activities would amount to supply:
1. Sulekha Manufacturers have a factory in Delhi and a depot in Mumbai. Both these
establishments are registered in respective States. Finished goods are sent from factory in
Delhi to the Mumbai depot without consideration so that the same can be sold.1
2. Raman is an Electronic Commerce Operator in Chennai. His brother who is settled in
London is a well-known lawyer. Raman has taken legal advice from him free of cost with
regard to his family dispute.2
3. Would your answer be different if in the above case, Raman has taken advice in respect of
his business unit in Chennai?3

Comparison between 7(1)(b) & Schedule I with respect to import of service

In the course or Consideration Related Person
furtherance of service
S. 7(1)(b) No Yes No
Schedule I Yes No Yes

1
Supply between related persons or between distinct persons even without consideration is supply
2
import of services from a related person not in the course or furtherance of business – not supply
3
In that case it is supply

Sahasri Singar Academy 24

Question: Examine whether the activity of import of service in the following independent
cases would amount to supply u/s 7
1. Miss Shriniti Kaushik received interior decoration services for her residence located at
Bandra, Mumbai from Mr, Racheal of Sydney (Australia). The amount paid for the said
service is A$ 5,000.1
2. Miss Shiriniti Kaushik received interior decoration services for her residence located at
Bandra, Mumbai from her brother, Mr. Varun residing in Sydney (Australia) [Wholly
dependent on Miss Shriniti]. Further, Miss Shriniti did not pay any consideration for the
said service.2
3. Will your answer change if in the above case, if Miss Shriniti has taken interior decoration
services with regard to her business premises and not her residence?3

Question: State whether the following supplies would be treated as supply of goods or supply
of Services as per Schedule II of the CGST Act:
(a) Renting of immovable property4
(b) Goods forming part of business assets are transferred or disposed of by / under directions
of person carrying on the business, whether or not for consideration.5
(c) Transfer of right in goods without transfer of title in goods.6
(d) Transfer of title in goods under an agreement which stipulates that property shall pass at a
future date.7
(e) Goods supplied on hire purchase basis will be treated as supply of goods or supply of
services8
(f) Temporary transfer or permitting use or enjoyment of any intellectual property right.9
(g) Supply of goods by an unincorporated association or body of persons to a member thereof
for cash, deferred payment or other valuable consideration.10
(h) Any treatment or process which is applied to another person’s goods11
(i) Transfer of title in goods12

1
Supply [u/s 7] [Not required – in the course or furtherance of supply]
2
Not Supply [Schedule I] [Related party hence – in the course or furtherance of supply is required]
3
Supply [Schedule I]
4
Supply of Services
5
Supply of Goods
6
Supply of Services
7
Supply of Goods
8
Supply of goods (as transfer of title at future date)
9
Supply of service
10
Supply of goods
11
Supply of service
12
Supply of service

Goods and Services Tax 25

(j) The goods supplied on hire purchase basis1

Question: Ravi & Co (a CMA firm) employer who is representing his employee before the IT
authority but does not charge any professional fee in respect of the same. Is it supply?2

Question: Mr. Raju, an employee provides his service on contract basis to an associate
company of Vikram Enterprises, the employer. The above activity is being carried out in liew
of specific monetary consideration. Is it supply? If so who is taxable?3

Question: M/s SSA (employer) gives Diwali gift worth ₹75,000. Is it supply?4

Question: Gagan Engineering Pvt Ltd., registered in Haryana, is engaged in providing

maintenance and repair services for heavy steel machinery. For carrying out the repair work,
Gagan Engineering Pvt. Ltd. sends its container trucks equipped with items like repair
equipment, consumables, tools, parts etc. from Haryana workshop to its own repairing centres
(registered under GST law) located in other States across India where the clients’ machinery
are being brought and are being repaired.
Discuss the leviability of GST on the inter-state movement of trucks from the workshop of
Gagan Engineering Pvt. Ltd in Haryana to its own repairing centres located in other states
across India.5

Question: Saravanna & Sons wishes to start supplying liquor in the state of Tamil Nadu.
Therefore, it applied for license for selling liquor to the TN Government for it has charged
specified fee from it. Examine whether the grant of alcoholic liquor license by the TN
Government to Saravanna & Sons qualifies as supply.6

1
Supply of goods [title passes on future date]
2
Yes
3
Yes, Associate company is taxable under RCM
4
Yes, as the gift worth > ₹50,000 & fully taxable
5
Not supply. [Discuss – distinct person + Schedule I + CBIC clarification]
6
Alcoholic liquor – not supply as per notification

Sahasri Singar Academy 26

 COMPOSITE AND MIXED SUPPLY

Section 8: Composite supply (S.2(30)) and mixed supply

Supply Goods Classification Rate of tax
1 Composite supply Two or more Principal Tax rate of principal supply
2 Mixed supply Two or more No classification Highest rate of tax

Features of composite supply

1. Supply is made by a taxable person
2. Such supply consists of 2 or more taxable supplies
3. Such composite supply is naturally bundled and supplied in the ordinary course of business.
4. Out of composite supply, one is principal supply and another is ancillary.
5. Applicable rate of tax – tax rate of principal supply
Example: S entered in to a contract with XYZ Ltd for supply of readymade shirts by parcel
after insurance. Supply of goods, packing material, transport and insurance is a composite
wherein supply of goods is principal supply.
Example: When a consumer buys a television set and he 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.
{CMA inter D18, 7 marks}

Mixed supply (Combo packs) [Tax rate – the supply which has the highest rate of tax]
Example: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry
fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply.
Example: A shopkeeper selling storage water bottles along with refrigerator, bottles and the
refrigerator can easily be priced and sold independently hence it is mixed supply

More than one supply made together and taxed at the individual rates
Example: in case of servicing of cars involving supply of both goods (spare parts) and services
(labour) where the value of goods and services are shown separately, the goods and services
would be liable to tax at the rate as applicable to such goods and services separately.

Case Law: Switching Avo Electro Power Ltd Vs AAAR – West Bengal
Supply of external storage battery with UPS – mixed supply

Goods and Services Tax 27

CBIC Clarifications
1. Printing contract including paper used: Supply of
Printed book, pamphlets, brochures, annual reports, etc., – service
Where the recipient supplies content that owned by him
Printed envelops, letter cards, printed boxes, tissues, napkins, wall papers, etc., – goods
Where the recipient supplies design, logo that owned by him
2. Unstitched salwar suits – 5% GST is applicable
Cutting & packing of fabrics into different sizes is also fabric and GST is leviable as fabric
3. Repairs of Car: spare parts – goods | repair charges – service
4. Retreading of tyres
Process of retreading – supply of service
Supply of retreaded tyres – supply of goods
5. Free samples & Gifts: covered under schedule I – supply, else not supply
6. Buy one get one free: one price for two [composite or mixed supply]
7. Bus body building: Builds on own chassis and supplies as a bus – goods, else service

PRACTICE QUESTIONS
Question: Determine if the following supplies is composite supplies:
(a) A hotel provides 4 days and 3 nights package wherein the facility of breakfast and dinner
is provided along with the room accommodation.1
(b) A toothpaste company has offered the scheme of free toothbrush along with the
Toothpaste.2

Question: Dumdum Electronics has sold the following electronic items to Akbar Retails Store.
1. Refrigerator taxable @ 18%
2. Stabilizer for refrigerator taxable @ 12%
3. LED TV taxable @ 12%
4. Split air conditioner taxable @ 28%
5. Stabilizer for air conditioner taxable @ 12%
Dumdum Electronics has issued a single invoice, indicating price of each of the above items
separately in the same. Akbar Retail has given a single cheque of ₹ 100,000 for all the items as
a composite discounted price. State the type of supply and the tax rate applicable in this cash.3

1
Answer (a): composite supply.
2
Answer (b): mixed supply
3
Neither composite supply nor mixed supply

Sahasri Singar Academy 28

Question: Manikarn, a registered supplier of Delhi, has supplied 20,000 packages at ₹30 each
to Mukhija Gift Shop in Punjab. Each package consists of 2 chocolates, 2 fruit juice bottles and
a packet of toy balloons. Determine the rate(s) of GST applicable in the given case assuming
the rates of GST to be as under:1
Goods / services supplied GST Rate
1. Chocolates 18%
2. Fruit juice bottles 12%
3. Toy balloons 5%

1
Mixed supply & tax rate 18%

Goods and Services Tax 29

 03. CHARGE OF GST

Sec Description
9 Levy and collection
(1) CGST shall be levied on all intra-State supplies of goods or services or both,
except on the supply of alcoholic liquor for human consumption,
on the value determined u/s 15
and at notified rates, not exceeding 20%,
(for Goods: 0.125%, 1.5%, 2.5%, 6%, 9% and 14%)
(for Services: 2.5%, 6%, 9% and 14%)
collected in prescribed manner and
shall be paid by the taxable person.
(2) The central tax on the supply of
petroleum crude,
high speed diesel,
motor spirit (commonly known as petrol),
natural gas and
aviation turbine fuel
shall be levied with effect from further notified date
the tax on supply of goods or services or both shall be paid on
reverse charge basis by the recipient in the following cases
(3) notified supply
(4) supply by an unregistered supplier to a registered person [if value > ₹5,000 in a day]
(5) 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:
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 purpose of paying tax and such person shall be liable to pay tax.

Sahasri Singar Academy 30

 PRACTICE QUESTIONS
Goods and services notified under reverse charge mechanism u/s 9(3)
Supplies of goods taxable under reverse charge [not relevant for examination]
Cashew-nuts (not shelled / peeled), bidi wrapper leaves, tobacco leaves
Raw cotton [when supplied by agriculturalist to manufacturer]
Supply of lottery
[lottery run by SG / UT / LA – 12% tax]
[lottery authorized by SG – 28% tax]
Silk yarn [when supplied by manufacturer to any registered person]
Used vehicles, Seized and confiscated goods, Old and used goods, Waste and scrap
[When supplied by CG / SG / UT / LA to any registered person]
Priority sector lending certificate [PSLC]

Supply of services taxable under reverse charge

Services / Service Provider Service Receiver
1 Supply of Services by (a) any registered factory
a goods transport agency (GTA) (b) any registered society
in respect of transportation (c) any registered co-operative society
of goods by road (d) any registered person under GST
(e) any body-corporate or
(f) Partnership firm + AOP
[registered or not]
(g) Casual taxable person
RCM is applicable – if supplier pays CGST @ 2.5% and ITC not availed
Forward charge – if supplier pays CGST @ 6%
RCM not applicable: If recipient being
(a) Department / establishment of the CG / SG / UT
(b) LA
(c) Government agencies
Which has taken registration under the CGST Act only for the purpose of deducting
tax u/s 51 and not for making a taxable supply
2 Services supplied by Any business entity
an individual advocate located in the taxable territory.
including senior advocate or

Goods and Services Tax 31

 firm of advocates
by way of legal services,
directly or indirectly
Legal services mean:
Any service provided in relation to
Advice, Consultancy or Assistance
in any branch of law and
includes representational
services before any
court, tribunal or authority
3 Services supplied Any business entity
by an arbitral tribunal located in taxable territory
4 Sponsorship services Anybody corporate
by any person or partnership firm
located in the taxable territory
5 Services supplied Any business entity
by CG / SG / UT / LA located in the taxable territory
excluding,
(1) renting of immovable property,
(2) services specified below
(a) services by the Department of Posts
by way of speed post, express parcel
post, life insurance, and agency services
provided to a person other than
Government;
(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.
5A Services supplied by way of Any person registered under CGST Act
Renting of immovable property
By CG / SG / UT / LA
5B Services by any person by way of Promoter
transfer of development rights (TDR)
or floor space index (FSI) for

Sahasri Singar Academy 32

 construction of a project by a promoter.
5C Long term lease of land (30 years or Promoter
more) by any person against
consideration in 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.
Note: Supply of TDR, FSI, long term lease (premium) of land by a landowner to
a developer are exempt subject to the condition that the constructed flats are sold
before issuance of completion certificate and tax is paid on them.
Exemption of TDR, FSI, long term lease (premium) is withdrawn in case of flats
sold after issue of completion certificate, but such withdrawal shall be limited to
1% of value in case of affordable houses and 5% of value in case of other than
affordable houses. In such cases, the liability to pay tax on TDR, FSI, long term
lease (premium) has been shifted from land owner to builder under the reverse
change mechanism (RCM)
6 Services supplied by The said company or a body corporate
a director of a company or located in taxable territory
a body corporate
Applicable for director not being employee including independent director.
And if the director receives fee [TDS applicable u/s 194J of IT Act].
7 Services supplied by Any person carrying
an insurance agent on insurance business,
located in taxable territory
8 Services supplied by A banking company or
a recovery agent a financial institution or
a non-banking financial company,
located in taxable territory
9 Supply of services by Music company,
a music composer, Producer or the like
photographer, located in the taxable territory.
artist or the like
by way of transfer or
permitting the use or

Goods and Services Tax 33

 enjoyment of a copyright relating to
original dramatic,
musical or artistic works
9A Supply of services by an author Publisher
by way of transfer or
permitting the use or
enjoyment of a copyright relating to
original literary works to a publisher
Option to pay under forward charge is available [with declaration]
Once the option is exercised cannot be withdrawn within a period of 1 year.
10 Any service supplied by any person Registered person
who is located in a non-taxable Used: business purpose
territory to any person other than non-
taxable online recipient. [OIDAR]
Non-taxable online recipient are:
Any Government
Local authority
An individual or
Any other person not registered
11 Services supplied by a person located Importer
in non-taxable territory by way of
transportation of goods by a vessel
from a place outside India up to the
customs station of clearance in India
12 Supply of services by the members of Reserve Bank of India
Overseeing committee
13 Services supplied by A banking company or
Individual direct selling agents A NBFC
Other than Located in the taxable territory
a body corporate,
partnership or LLP
14 Services provided by A banking company,
Business facilitator to Located in taxable territory
a banking company
15 Services provided by A business correspondent,

Sahasri Singar Academy 34

 An agent of business correspondent to Located in taxable territory
Business correspondent
16 Security services provided A registered person,
not a body corporate Located in the taxable territory.
to a registered person
Not apply:
i. a department or establishment of the CG / SG / UT / LA / Government
agencies [and registered only for TDS u/s 51]
ii. a registered person paying tax under composition scheme.
17 Services provided by way of renting of Any body-corporate
any motor vehicle designed to carry located in the taxable territory.
passengers where the cost of fuel is
included in the consideration charged
from the service recipient
Note: Service supplier: Any person, other than a body corporate who supplies
service to a body corporate & doesn’t issue an invoice charging CGST @ 6%
If supplier pays CGST @ 2.5% and LIMITED ITC availed
1. RCM – Supplier [other than body corporate] & Recipient [body corporate]
2. Forward charge
a) Supplier [body corporate]
b) Supplier [other than body corporate] & Recipient [other than body corporate]
c) If supplier pays CGST @ 6%
18 Services of lending of securities Borrower
Under securities lending scheme of
SEBI

Classification of Goods:
Schedule I of the Customs Tariff Act, 1975
Customs Tariff Act: Section | Chapter | Heading | Sub Heading | Tariff item
Rules for interpretation, rate as per the tariff item

Classification of services under GST

Modified version of the United Nations Central Product Classification.
Chapter 99 is assigned for services
Section 5: Construction services

Goods and Services Tax 35

Section 6: Distributive Trade Services; Accommodation, Food and Beverage Service,
Transport Service, Gas and Electricity Distribution Services
Section 7: Financial and related services, real estate services, and rental and leasing services
Section 8: Business and production services
Section 9: Community, social and personal services and other miscellaneous services

GST rate for services: (2.5%, 6%, 9% and 14%):

For certain specified services, nil rate of tax has been notified.
Supply taxed at the highest tax rate [14%] – Gambling, admission to entertainment events
/ amusement facility including casinos, race club and sporting events such as IPL,
totalizator or license to bookmaker
Supply taxed at the lowest rate [2.5%] – GTA and restaurants service [No ITC]
General tax rate 9% - Services not covered under any specific head

GST rates in real estate sector:

1. 1% without ITC on construction of affordable houses
Area 60 sqm in metro and 90 sqm in non-metro [value up to 45 lakhs]
2. 5% without ITC is applicable on construction of
a. All houses other than affordable houses and
b. Commercial apartments such as shops, offices etc. in a residential real estate project
(RREL) in which the carpet area of commercial apartments is not more than 15%
of total carpet area of all apartments.
Condition: 80% of inputs and input services used in supplying the service shall be purchased
from registered persons.
In case of shortfall RCM [ u/s 9(4)] will be applicable
Input [cement] – 28%
Other input and input services – 18%
Input capital goods – at the applicable rate
80% inputs and input services don’t include
Services by way of grant of development rights, long term lease of land
(against upfront payment in the form of premium, salami, development charges etc.) or
FSI (including additional FSI), electricity, high speed diesel, motor spirit, natural gas,

Sahasri Singar Academy 36

 PRACTICE QUESTION
Question: State person liable to pay GST in the following independent cases (recipient is located
in the taxable territory):
(a) Services provided by an arbitral tribunal to any business entity.1
(b) Sponsorship services provided by a company to an individual2
(c) Renting of immovable property services provided by the Central Government to a company to
a registered business entity.3

Question: Vivek Goyal, director of A2Z Pvt. Ltd has received sitting fee amounting to ₹1 lakh
from A2Z Pvt. Ltd for attending the board meetings. Who is the person liable to pay tax in this
case?4

Question: Raghu Associates provided sponsorship services to WE-WIN Cricket Academy, an

LLP. Determine the person liable to pay tax in this case.5

Question: ‘Safe Trans’, a Goods Transport Agency, transported goods of Kapil & Co., a
partnership firm, which is not registered under GST. Determine the person liable to pay tax in this
case.6

Question: Legal Fees is received by Sushrut, an advocate, from M/s. Tatva Trading Company
having turnover of ₹50 lakhs in preceding FY. Who is the person liable to pay tax in this case?7

Question: State the person liable to pay GST in the following independent cases provided recipient
is located in the taxable territory.
1. Services supplied by an insurance agent to an Insurance Company8
2. Services supplied by a recovery agent to a car dealer9
3. Security services (services provided by way of supply of security personnel) provided to a
registered person.10

1
Business entity [RCM]
2
Company [forward charge]
3
Registered business entity [RCM]
4
A2Z Pvt. Ltd [RCM]
5
WE-WIN Cricket Academy [RCM]
6
Kapil & Co, partnership firm [RCM]
7
M/s. Tatva Trading Company [RCM]
8
Insurance Company [RCM]
9
Recovery agent [forward charges]
10
Registered recipient person [RCM]

Goods and Services Tax 37

 COMPOSITION LEVY

Sec Description
10 Composition Levy
(1) A registered person,
Aggregate turnover in the preceding financial year < ₹1.5 crore
may opt to pay instead of regular tax an amount as following
(a) Manufacturer: 0.5% of the turnover in State or UT
(Except notified goods i.e. ice cream, pan masala, tobacco and aerated waters)
(b) Caterer: 2.5% of the turnover in State or UT
(c) Others (traders): 0.5% of the turnover in State or UT
Provided that a person, who opts to pay composition levy for goods, may supply
services (other than restaurant service) of value not exceeding 10% of turnover in a
state or UT or ₹5 lakhs, WEH
(2) Eligibility to opt
(a) Caterer, in case of supply of service
(b) Engaged in taxable supply
(c) Not engaged in inter-State outward supplies of goods;
(d) Not engaged in supply of goods through an electronic commerce
(e) Not a manufacturer of ice cream, pan masala, tobacco and aerated waters
(f) Neither a casual taxable person [CTP] nor a non-resident taxable person [NRTP]
Provided that where more than one registered persons are having the same
Permanent Account Number be eligible to opt for composition scheme only if all
registered persons opt for composition scheme
2A Registered person,
not eligible to opt composition levy as per above provision,
may opt to pay an amount @ 3% on turnover
[provided the aggregate turnover in the preceding FY does not exceed 50 lakhs]
Eligibility to opt
(a) Engaged in taxable supply of goods or services
(b) Not engaged in making any inter-state outward supplies of goods or services
(c) Not engaged in making any supply of goods or services through an electronic
commerce operator
(d) Not a manufacturer of ice cream, pan masala, tobacco and aerated waters
(e) Neither a casual taxable person or a non-resident taxable person

Sahasri Singar Academy 38

 Provided that where more than one registered persons are having the same
Permanent Account Number be eligible to opt for composition scheme only if all
registered persons opt for composition scheme
(3) The option lapses
When the aggregate turnover > ₹1.5 crore or ₹0.5 crore [as the case may be]
(4) The taxable person [paying tax under composition levy]
shall not collect tax and
not entitled to any credit of input tax
(5) The proper officer may levy penalty
If ineligible taxable person has paid tax under composition scheme

Overview:
1. Scheme – Composition levy
2. Availability – [ALL the registered person having same PAN – should avail or not to avail]
a. Composition scheme for goods
- Manufacturer & Caterer if ATO ≤ ₹1.5 crore in preceding year
- Only ₹0.75 crore for Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Sikkim, Tripura & Uttarakhand [special category states other than
Assam, Himachal Pradesh and Jammu and Kashmir]
b. Composition scheme for services
- Service provider [other than caterer] if ATO ≤ ₹0.5 crore in preceding year
3. Issue – Bill of supply [tax invoice not required] & tax cannot be collected
4. ITC – not available
5. Tax payment – Quarterly
6. Filing of Return – annually
7. Intimation of opting for composition levy
a. Intimation by person applying for registration
- in Part B of the registration form GST REG – 01
- Effective date: from the date of registration
b. Intimation by a registered person
- Electronically file an intimation prior to commencement of the FY
- Furnish the statement in prescribed form within 60 days from the
commencement for the relevant FY
- Any intimation in respect of any place of business in a state / UT shall be
deemed to be an intimation in respect of all other places of business registered
on the same PAN.

Goods and Services Tax 39

 - Effective date: from the beginning of said FY
8. Withdrawal from the composition levy scheme
a. On cessation to satisfy the conditions [intimate in 7 days] [from Current FY]
b. By the intention of taxpayer [From Current FY]
c. On denial by tax authorities [SCN][Retrospectively]
9. Composition scheme

Explain the validity: A person availing composition scheme during a financial year crosses the
turnover of ₹1.5 crore on 9th of December.1

Practice Questions
Composition levy for goods
Question: SSA & Co, being a trader of cell phones registered under GST in the state of Tamil
Nadu and furnished the following details relating to the preceeding financial year:
Particulars ₹ in lakhs
Intra-state supply of taxable goods 120
Intra-state supply of exempted goods 10
Intra-state supply of taxable services 5
Intra-state supply of exempted services 3
Interest earned on deposits / loans / advances 15.50
Whether SSA & Co is eligible for composition scheme in the current financial year?2

Question: M/s. X Ltd. being a manufacturer of laptops has five factories in Chennai, Salem,
Coimbatore and Madurai.
Place P.Y. Turnover ₹ in lakhs
(Including Taxes @ 18%)
Chennai I 57.91
Salem 12.00
Coimbatore 8.00
Madurai 30.00
Chennai II 43.60
Total 151.51
Is M/s. X Ltd eligible for composition levy in the current year?3

1
Option lapses on 9th December
2
Yes, as ATO in the previous FY [₹138 lakhs excluding interest] ≤ ₹150 lakhs
& the value of supply of service [₹8 lakhs] ≤ WEH (₹5 lakhs or 10% of ATO)
3
Yes, ATO excluding GST [₹151.51×18/118 = ₹128.40] ≤ ₹150 lakhs

Sahasri Singar Academy 40

Question: Taxpayer ‘A’ is a manufacturer, who has opted for composition levy for goods, having
one unit – A1 in UP and another unit – A2 in MP, Total turnover of two units in last FY was ₹115
lakh (₹85 lakh + ₹30 lakh). Turnover of unit A1 and A2 in the second quarter of this financial year
was ₹5 lakh and ₹10 lakh respectively. Compute the amount payable under composition levy by
Taxpayer ‘A’.
Answer:
Unit Location Turnover in Turnover in Total tax
previous FY 1st quarter (@ 1%)
of this FY
A1 U.P. ₹85 lakh ₹5 lakh ₹5,000
A2 M.P. ₹30 lakh ₹10 lakh ₹10,000
Aggregate turnover ₹115 lakh ₹15 lakh ₹15,000

Composition levy for services

Question: X & Co. being a supplier of taxable and exempted services registered under GST law in
the State of Maharashtra and furnished the following information:
Particulars Preceeding 1st quarter of
year Current year
₹ in lakhs ₹ in lakhs
Intra-State supply of taxable output services 22 2
Intra-State supply of exempted supplies 28 8
Interest earned on deposits / loans / advances 5 5
Find the following:
a) Is X & Co. eligible to opt composition scheme in the current financial year?1
b) If so, find the CGST & SGST liability of X & Co. for the 1st quarter of the current financial
year?2

Question: M/s Y Ltd. being a trader of laptops has two units in Chennai and in Mumbai.
Place P.Y. Turnover ₹ in lakhs
(Excluding taxes)
Chennai 52.00
Mumbai 12.00

You are required to answer the following:

a. Is M/s. Y Ltd eligible for composition levy in the current year?3

1
Yes. As the ATO (22+28 excluding interest) ≤ ₹50 lakhs
2
3% on ₹10 lakhs excluding interest for CGST ₹30,000 and SGST ₹30,000
3
(a) Yes | (b) No, take all location | (c) No need. Intimation in one place is deemed to be intimated to others

Goods and Services Tax 41

b. If so, M/s Y Ltd can opt composition scheme for Chennai location and normal scheme for
Mumbai.
c. Need to give separate intimations for opting composition scheme in each State.

Question: Hotel King Pvt. Ltd is a registered person under GST. PY turnover was ₹100 lakhs.
Applicable GST is 18%. Inputs cost ₹7,80,000 (exclusive of GST 18%). Profit margin is 40% on
cost. Find the invoice price and advice the best option to pay tax if any. There is no opening balance
and closing balance for the tax period.
Answer:
Composition Levy Normal Provision
Particulars ₹ Particulars ₹
Cost of inputs 7,80,000 Cost of inputs 7,80,000
+ GST on inputs @ 18% 1,40,400 + GST on inputs @ 18% 1,40,400
− ITC availed 0 − ITC availed 1,40,400
Cost of input net of GST 9,20,400 Cost of input net of GST 7,80,000
+ Value added @ 40% 3,68,160 + Value added @ 40% 3,12,000
Invoice Price 12,88,560 10,92,000
GST @ 18% 1,96,560
Invoice Price 12,88,560
GST payable (2.5%+2.5%) 64,428 GST payable net of ITC 56,160
Normal provision is better

Question: M. Sitaram is running a consulting firm and also a readymade garment show room,
registered in same PAN. Turnover of the showroom is ₹60 lakh and receipt of the consultancy firm
is ₹12 lakh in the preceding financial year.
You are required to answer the following:
a) Is Mr. Sitaram eligible for Composition Scheme?1
b) Whether it is possible for Mr. Sitaram to opt for composition only for Showroom?2
c) Rework, if Mr. Sitaram is running a restaurant as well as readymade garment show room,
whether he is eligible for composition?3
d) If the turnover of garment showroom is ₹75 lakh in the preceding financial year and there is no
consulting firm whether he is eligible for Composition?4

Question: Mr. Rahim is dealer who is selling taxable goods, exempted goods and non-taxable
goods (i.e. Liquor). His turnover in the preceding financial year is ₹35 lakh, ₹10 lakh, ₹15 lakh

1
No. As the receipt from service being ₹12 lakhs > WEH [₹5 lakhs or 10% of ATO of ₹72 lakhs]
2
No. Taking composition levy for a business is applicable all businesses with same PAN.
3
Yes. As his ATO ≤ ₹150 lakhs
4
Yes.

Sahasri Singar Academy 42

goods which are leviable to GST, exempted and non-taxable respectively. Whether Mr. Rahim is
eligible for Composition Scheme?1

Question: Mr. CMA Ram is a practicing cost accountant in Patna (Bihar). He commenced
profession on 1st April 20XX and his annual turnover (intra-state) of ₹70 lakh in the financial year.
Find the tax liability under composition scheme if any? Normal rate of CGST 9% & SGST 9%.2

Question: Sultan & Sons, a partnership firm, in Nagpur, Maharahtra is wholesaler of a taxable
product ‘P’ and product ‘Q’ exempt by way of a notification, in the state of Maharashtra. Its
aggregate turnover in the preceding financial year is ₹130 lakh. The firm wishes to opt for
composition scheme. However, its accountant is of the view that a person engaged in making supply
of exempt goods is not eligible for the said scheme. Discuss.
Note: Assume that Sultan & Sons is not engaged in manufacture of goods as notified u/s 10(2)(e).3

Question: Determine whether the supplier in the following cases are eligible for composition levy
provided their turnover in preceding year does not exceed ₹1.5 crore:
1. Mohan Enterprises is engaged in trading of pan masala in Rajasthan and is registered in the
same State.4
2. Sugam manufacturers has registered offices in Punjab and Haryana and supplies goods in
neighboring States.5

Question: Mr. Ajay has a registered repair centre where electronic goods are repaired / services.
His repair centre is located in State of Rajasthan and he is not engaged in making any inter-state
supply of services. His aggregate turnover in the preceding FY is ₹45 lakh.
With reference to the provisions of the CGST Act, examine Mr. Ajay can opt for the composition
scheme u/s 10(1) & 10(2) of the CGST Act, in the current FY? Or whether he is eligible to avail
benefit of composition scheme u/s 10(2A)? considering the option of payment of tax available to
Mr. Ajay, compute the amount of tax payable by him assuming that his aggregate turnover in the
current FY is ₹35 lakhs.
Will your answer be different if Mr. Ajay procures few items required for providing repair services
from neighboring state of Madhya Pradesh? 6

Question: M/s Sai trading Company, an eligible registered dealer goods making intra-state supplies
within the state of Andhra Pradesh, has reported an aggregate turnover of ₹118 lakhs in the
preceding financial year.
1. Determine whether Sai Trading Company will be eligible for composition levy.7

1
No. as engaging non-taxable business disqualifies for composition levy
2
Up to 20 lakhs – no tax | (20 lakhs – 50 lakhs) – 3% CGST & 3% SGST | above 50 lakhs – normal tax rate.
3
Eligible for composition levy scheme [as supply of Q is exempt by notification but leviable to tax]
4
Yes [on conditions], Mohan Enterprises is just trader not manufacturer.
5
No, as inter-state transaction exists
6
Yes u/s 10(2A). GST is leviable @ 6% on 45 lakhs. Interstate procurement will not disqualify.
7
Eligible for composition levy

Goods and Services Tax 43

2. Will your answer be different, if in the above scenario? M/s Sai Trading Company is making
intra state supply within the state of Jammu and Kashmir?1
{CA inter M18, 3 marks}

1
Eligible for composition levy (higher limit will be applicable for Jammu and Kashmir and Uttarakhand among
the special states)

Sahasri Singar Academy 44

 4: EXEMPTIONS FROM GST [S.11]

Exempt supply includes supply which attracts

1. nil rate of tax (Export & Supply to SEZ) or
2. wholly exempt from tax or
3. non-taxable supply [alcoholic liquor for human consumption and petrol etc.]

Manner of exemption provided

1. Exemption to specified activities or transactions. Examples are
a. Services by way of transfer of a going concern
b. Services by way of renting of residential dwelling for residential use
2. Exemption to specified suppliers. Examples are
a. Services by government where the consideration ≤ ₹5,000
b. Services by the RBI
3. Exemption to specified recipients. Examples are
a. Services provided to government under any insurance scheme for which total premium
is paid by the government
b. Services provided to the government under any training program, for which total
expenditure is borne by the government
4. Exemption to specified suppliers and specified recipients. Examples are
a. Services by the ESI corporation to persons governed under ESI Act
b. Services by the IRDA to insurer under IRDA of India Act

Section 11: Power to grant exemption from tax

1. Government grants exemption by notification
either absolutely [not to collect tax at all] or subject to conditions
on the recommendation of the council
for the public interest
2. Exemption by special order
under circumstances of an exceptional nature
for the public interest
3. Explanation inserted within 1 year, for the purpose of clarifying the scope or applicability
of any notification / order, to have retrospective effect

Goods and Services Tax 45

Goods exempt from tax: some of them are
1. Live fish
2. Fresh milk
3. Potatoes
4. Grapes
5. Indian national flag
6. Plastic bangles

Services exempt from tax:

Services related to charitable and religious activities
1. Services by an entity
Registered u/s 12AA or 12AB of the IT Act
By way of Charitable activities
a. Public health: care or counselling of
terminally ill persons or persons with severe physical or mental disability
persons afflicted with HIV or AIDS
persons addicted to a dependence-forming substance such as narcotics drugs or alcohol
Public awareness: preventive health & family planning
b. Advancement of religion, spirituality or yoga
c. Advancement of education: orphaned, prisoners, 65 years + rural person, abused person
d. Prevention of environment including watershed, forests & wildlife
Other than the above-mentioned activities are subject to GST
Example: Giving advertisement right on the premises of the trust.
2. Service by a person by way of;
a. Conduct of any religious ceremony;
b. Renting of precincts of a religious place meant for general public, owned or managed by
an entity registered as a charitable or religious trust u/s 12AA or 12AB of the IT Act or
an institution or a body an authority
However, Exemption shall not apply to renting of
a. Rooms: charges ≥ ₹1,000 per day
b. Premises, community halls, kalyanmandapam: charges ≥ ₹10,000 per day
c. Shops or other spaces for business or commerce: charges ≥ ₹10,000 per month
3. Services by a specified Organisation in respect of a religious pilgrimage facilitated by the
Ministry of External Affairs, the Government of India, under bilateral arrangement.
Specified Organisation

Sahasri Singar Academy 46

 a. Kumaon Mandal Vikas Nigam Limited (KMVN), a Government of Uttarakhand
Undertaking (services like medical facilities, catering services, security, accommodation
services, etc. to the pilgrims undertaking Kailash-Manasarovar )
b. Haj Committee of India or State Haj Committee
4. Services by way of training or coaching in recreational activities relating to
a. Recreational activities relating to arts or culture, by an individual or
b. Sports by charitable entities registered u/s 12AA or 12AB of the IT Act.

Are the following services exempted?

Question: SSA, an educational institute run by SET Trust, a charitable trust registered u/s
12AB of the IT Act, 1961, has organised a Skill Development Programme for the old age
people over the age of 65 years residing in Trichy (an urban area).1
Question: SSA supplies numerous services, namely, medical facilities, catering services,
security, accommodation services, etc., to the pilgrims undertaking Kailash-Mansarovar
pilgrimage.2
Question: SET Foundation, a charitable trust registered u/s 12AB of the IT Act, 1961, has
organised a ‘Yoga Meditation Camp’ for the old age people.3
Question: SET, a charitable trust registered u/s 12AB of the IT Act, has organised a cricket
training camp.4

Agricultural related services

1. Services by way of loading, unloading, packing, storage or warehousing of rice.
2. Services by way of warehousing of minor forest produce
3. Services by way of storage / warehousing of cereals, pulses, fruits, nuts and vegetables,
spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo,
unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea
4. Services by way of fumigation in a warehouse of agricultural produce
5. Services relating 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 by way of-
a. Agricultural operations directly related to production of any agricultural produce
including cultivation, harvesting, threshing, plant protection or testing;
b. Supply of farm labour;
c. Processes carried out at an agricultural farm including tending, pruning, cutting,

1
Not exempt as the service provided is NOT in rural area
2
Exempt
3
Exempt, as it is by way of advancement of religion, spirituality or yoga.
4
Exempt, as the service provided by trust registered u/s 12AB of the IT Act.

Goods and Services Tax 47

 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;
d. Renting or leasing of agro machinery or vacant land with or without a structure
incidental to its use;
e. Loading, unloading, packing, storage or warehousing of agricultural produce;
Not agricultural produce: tea (Not green tea), jaggery, de-husked or split pulses
f. Agricultural extension services;
g. Services by any Agricultural Produce Marketing Committee or Board or services
provided by a commission agent for sale or purchase of agricultural produce.
6. Carrying out an intermediate production process 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.
Not intermediate production process: milling of paddy into rice
7. Services by way of artificial insemination of livestock (other than horse)

Question: Dukhiya Das is enaged in providing following services. With the help of
information given below, determine which of the services provided by Dukhiya Das are exempt
from GST:
1. Packaging of the onions purchased from village farmers into small packets of 1kg each, in
Dukhiya Das warehouse, so that same can be sold in a nearby city mall.1
2. Warehousing of jaggery and tea.2
3. Renting of warehouse for storage of agricultural produce.3

Educational Services
1. Services provided-
a. By an educational institution to its students, faculty and staff;
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 Central
Government, State Government or Union territory;
iii. Security or cleaning or house-keeping services performed in such educational
institution;

1
Not exempt [Reason – marketable for city mall not primary market & packed not in the agricultural farm]
2
Exempt [Reason: jaggery and tea are not exempt but warehousing is exempt]
3
Not exempt [Reason: Warehousing of agricultural products is exempt but renting is not]

Sahasri Singar Academy 48

 iv. Services relating to admission to, or conduct of examination by, such institution;
up to higher secondary;
v. Supply of online educational journals or periodicals
However, nothing contained in entry in sub items (i), (ii), (iii) of (b) shall apply to an
educational institution other than an institution providing services by way of pre-school
education and education up to higher secondary school or equivalent.
Further, nothing contained in sub-item (v) of item (b) shall apply to an institution providing
services by way of
a. Pre-school education and education up to higher secondary school or equivalent or
b. Education as a part of an approved vocational education course
Note: Approved by Apprentices Act, 1961, NCVT, SCVT, etc

Health care services

1. Services by a veterinary clinic in relation to health care of animals or birds.
2. services by way of-
a. Health care services by a clinical establishment, an authorised medical practitioner or
para-medics;
Not include: hair transplant or cosmetic or plastic surgery except when undertaken to
restore or to reconstruct anatomy due to injury
Not include: 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
₹5,000 per day to a person receiving health care services.
Recognized systems of medicines in India:
Allopathy Yoga Naturopathy Ayurveda
Homeopathy Siddha Unani Other recognized medicine
b. Services provided by way of transportation of a patient in an ambulance, other than those
specified in (a) above
Note:
i. Rent of rooms provided to in-patients – exempt
ii. Services provided by senior doctors – exempt
iii. Food supplied by clinical establishments to the patients as advised by doctors – exempt
iv. Other services by clinical establishments [renting / advt.] – NOT exempt
3. Services provided by the cord blood banks by way of preservation of stem cells or any other
service in relation to such preservation.

Goods and Services Tax 49

Question: Good Health Medical Centre, a clinical establishment, offers the following services;
1. Reiki healing treatments.1
2. Plastic surgeries. One such surgery was conducted to repair cleft lip of a new born baby.2
3. Air ambulance services to transport critically ill patients from distant locations to the
Medical Centre.3
4. Palliative care for terminally ill patients. On request, such care is also provided to patients
at their homes. (Palliative care is given to improve the quality of life of patients who have
a serious or life-threatening disease but the goal of such care is not to cure the disease).4
5. Alternative medical treatments by way of yoga.5
6. Good Health Medical Centre also operates a cord blood bank which provides services in
relation to preservation of stem cells.6
7. Good Health Medical Centre is of the view that since it is a clinical establishment, all the
service provided by it as well as all the services provided to it are exempt from GST.7
You are required to examine the situation in the light of relevant statutory provisions.

Services provided by Government [CG, SG, UT, LA]

1. Services by GA way of any activity in relation to any function entrusted to a municipality
under article 243W of the Constitution.
2. Services by GA way of any activity in relation to any function entrusted to a panchayat
under article 243G of the Constitution.
3. [entry 6] Services by CG, SG, UT, LA other than
a. Services by the Department of Posts by way of speed post, express parcel post, life
insurance, and agency services provided to a person other than the CG, SG, UT;
b. Services in relation to an aircraft or a vessel, inside or outside the precincts of a port of
an airport; [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]
c. Transport of goods or passengers; or
d. Any service, other than services covered under entries (a) to (c) above, provided to
business entities.
4. Services provided by the CG, SG, UT or LA to a business entity with an aggregate turnover of up
to such amount of aggregate turnover not required for registration in the preceding FY.

1
Not exempt: [Reason: reiki healing is not a recognized system]]
2
Exempt: [Reason: plastic surgery for restoring or to restructure anatomy]
3
Exempt
4
Exempt: [Reason: it is immaterial whether the service provided at clinical establishment or at home]
5
Exempt: [Reason: yoga is a recognized system of medicine]
6
Exempt: [Cord blood banks services exempt as per the entry]
7
Not correct: [Reason: services BY CE are exempt but services TO CE are not exempt]

Sahasri Singar Academy 50

 Explanation: For the purposes of this entry, it is hereby clarified that the provisions of this entry
shall not be applicable to following services;
➢ Clauses (a), (b) and (c) of Entry 6 above.
➢ Services by way of renting of immovable property.
5. Services provided by the CG, SG, UT or LA to another CG, SG, UT or LA
However, nothing contained in this entry shall apply to services referred in Clause (a), (b),
and (c) of Entry 6 above
6. Services provided by CG, SG, UT or a LA where the consideration for such services does not
exceed ₹5,000.
However, nothing contained in this entry shall apply to services referred in clause (a), (b) and
(c) of Entry 6 above
Further, in case where continuous supply of service1 is provided, the exemption shall apply only
where the consideration charged for such service does not exceed ₹5,000 in a FY.
7. Service by a Government entity to CG, SG, UT, LA or any specified person against
consideration received from CG, SG, UT, LA in the form of grants
8. Services by an old age home run by CG, SG or 12AA or 12AB entity,
to its residents (age 60+) against consideration up to ₹25,000 p.m. per member,
provided consideration includes: boarding, lodging and maintenance
9. Services by the department of posts by way of post card, inland letter, book post and
ordinary post (envelops weighing less than 10 grams)
10. Services by CG, SG or UT to their undertakings or PSUs by way of guaranteeing the
loans
11. Services provided by CG, SG, UT or LA by way of –
a. Registration required under any law for the time being in force;
b. Testing, calibration, safety check or certification relating to protection or safety of
workers, consumers or public at large, including fire license, required under any law for
the time being in force.
c. issuance of passport, visa, driving licence, birth certificate or death certificate.
d. tolerating non-performance of a contract. Consideration: fines or liquidated damages.
e. assignment of right to use natural resources to an individual farmer for 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.
f. 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.

1
as defined in section 2(33) of the CGST Act, 2017

Goods and Services Tax 51

12. Services supplied by a SG to Excess Royalty Collection Contractor (ERCC) by way of
assigning the right to collect royalty on behalf of the SG on the mineral dispatched by the
mining lease holders.
13. Services provided by rehabilitation professionals [recognized under the Rehabilitation
Council of India Act, 1992] by way of rehabilitation, therapy or counselling at medical
establishments, educational institutions, rehabilitation centers established by CG, SG or
UT or 12AA or 12AB entity.
Note: Government Authority [GA] means an authority or a board or any other body,
1. Set up by an Act of Parliament or a State Legislature or
2. Establishment by any Government
With 90%, or more participation by way of equity or control, to carry out any function
entrusted to a Municipality under article 243W or Panchayat under article 243G of the
constitution.
Note: Government Entity means an authority or a board or any other body including a society,
trust, corporation,
1. Set up by an Act of Parliament or a State Legislature or
2. Establishment by any Government
With 90%, or more participation by way of equity or control, to carry out any function
entrusted by the CG, SG, UT or a LA

Construction Services
1. Services provided by way of pure labour contracts of construction, creation,
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.
2. Services supplied by Electricity Distribution Utilities by way of construction, erection,
commissioning, or installation of infrastructure for extending electricity distribution
network up to the tube well of the farmer or agriculturalist for agricultural use.
3. 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 complex.
4. Supply of TDR, FSI, long term lease (premium) of land by a landowner to a developer are
exempted subject to the condition that the constructed flats are sold before issuance of
completion certificate and tax is paid on them.
Exemption of TDR, FSI, long term lease (premium) shall be withdrawn in case of flats
sold after issue of completion certificate, but such withdrawal shall be limited to 1% of

Sahasri Singar Academy 52

 value in case of affordable houses and 5% of value in case of other than affordable houses.

Passenger transportation services

I. Transport of passengers, with or without accompanied belongings, by-
1. Airways:
Air, embarking from or terminating in an airport located in the state of 3MN TAABS
M Manipur T Tripura
M Meghalaya A Arunachal Pradesh
M Mizoram A Assam
N Nagaland B Bagdogra in West Bengal
S Sikkim
2. Roadways:
a. Stage carriage (6+ passengers) [Local bus or inter-state transport bus]
Exempt: Non-air-conditioned
Taxable: air-conditioned stage carriage.
b. Contract carriage [Bus, Van, etc., ]
Exempt: Non-air-conditioned contract carriage
Not being supply through ECO
Taxable: Air conditioned contract carriage &
radio taxi, tourism, conducted tour, charter or hire; or
c. Metered cabs or
auto rickshaws, including e-rickshaws [3 wheeler & power ≤ 4000 watts]
Not being supply through ECO
3. Railways
a. Railways in a class other than -----
i. First class; or
ii. An air-conditioned coach;
b. Metro, monorail or tramway;
4. Waterways
a. Inland waterways;
b. Public transport, other than predominantly for tourism purpose, in a vessel between
places located in India; and
II. Services provided to the Central Government,
by way of transport of passengers with or without accompanied belongings,
by air, embarking from or terminating at an RCS (Regional Connectivity Scheme) airport,

Goods and Services Tax 53

 against consideration in the form of viability gap funding;
However, nothing contained in this entry shall apply on or after the expiry of a period of 3
year from the date of commencement of operations of the regional connectivity scheme
airport as notified by the Ministry Civil Aviation.

Example: Rituraj has booked air tickets in economy class of a flight from Delhi to Guwahati,
Assam. Transport of passengers by air terminating in an airport located in Assam is exempt
from GST

Goods transportation services

1. Services by way of transportation of goods-
a. By road except the services of (i) A GTA & (ii) A courier agency;
b. By inland waterway.
2. Services by way of transportation by rail or
a vessel (including coastal transport)
from one place in India to another of the RANDOM-R goods;
a. Relief materials meant for victims of natural or
man-made disasters, calamities, accidents or mishap; [for railways only]
b. Agricultural produce;
c. Registered Newspaper or magazines;
d. Defense or military equipment;
e. Organic manure.
f. Milk, salt and food grain including flours, pulses and rice;
g. Railway equipment or materials;
Note:
International Transport in vessels
Indian shipping company – FCM
Foreign shipping company – RCM
3. Transport in goods carriage Services provided by a GTA –
RANDOM+V
a. Relief materials meant for victims of natural or
man-made disasters, calamities, accidents or mishap;
b. Agricultural produce;
c. Registered Newspaper or magazines;
d. Defense or military equipment;

Sahasri Singar Academy 54

 e. Organic manure.
f. Milk, salt and food grain including flours, pulses and rice;
g. Consideration for transportation of goods
On a consignment in a Single carriage ≤ ₹1,500
For a Single consignee ≤ ₹750
4. Services provided by a GTA to an unregistered person, including an unregistered CTP,
Other than the following recipients,
a. Any factory registered under / governed by the Factories Act, 1948
b. Any society registered under the Societies Registration Act or any law
c. Any body-corporate established, by or under any law for the time being in force
d. Any partnership firm whether registered or not under any law
including association of persons
e. Any registered CTP
5. Services provided by a GTA,
by way of transport of goods in a goods carriage to –
a. A department or Establishment of the CG, SG or UT
b. LA
c. Governmental agencies, which has taken registration u/s 52 for TDS

Question: Discuss whether GST is payable in respect of transportation services provided by

Raghav Goods Transport Agency in each of the following independent cases;
Customer Nature of services provided ₹
A Transportation of milk1 20,000
B Transportation of books on a consignment transported in a single 3,000
goods carriage2
C Transportation of chairs for a single consignee in the goods carriage3 600

Banking and Financial Services

1. Services by the Reserve Bank of India (RBI).
2. Services by way of –
a. Interest or discount received for
Deposits, loans or advances

1
Exempt
2
Not exempt [Reason: the consignment charges in single goods carriage ≤ ₹1,500]
3
Exempt [Reason: the consignment charges in single consignee ≤ ₹750]

Goods and Services Tax 55

 Except: interest involved in credit card services
b. Inter se sale or purchase of foreign currency
amongst banks or
authorised dealers of foreign exchange or
amongst banks and such dealers.
3. Services provided by a banking company
to basic savings bank deposit account holders
under Pradhan Mantri Jan Dhan Yojana
4. Services by an acquiring bank,
to any person in relation to settlement of an amount up to ₹2,000
in a single transaction transacted
through credit card, debit card, charge card or other payment card service.
Explanation: For the purposes of this entry, “acquiring bank” means any banking company,
financial institution including non-banking financial company or any other person, who
makes the payment to any person who accepts such card.
5. 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.
Explanation: for the purpose of this entry, the intermediary of financial services in IFSC is
a person
a. Who is permitted or recognized as such by the Government of India or any Regulator
appointed for regulation of IFSC or
b. Who is treated as a person resident outside India under the Foreign Exchange
Management (International Financial Services Centre) Regulations, 2015 or
c. Who is registered under the Insurance Regulatory and Development Authority of India
(International Financial Service Centre) Guidelines, 2015 as IFSC Insurance Office or
d. Who is permitted as such by Securities and Exchange Board of India (SEBI) under the
Securities and Exchange Board of India (International Financial Services Centre)
Guidelines, 2015.

Question: M/s. Apna Bank Limited, a scheduled commercial bank, has furnished the following
details for the month of August;
Particulars ₹
Extended housing loan to its customers 100
Processing fees collected from its customers on sanction of loan 20

Sahasri Singar Academy 56

 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 25
Minimum balance charges collected from current account and saving account holder 1
Note: ₹ is given in crores (excluding GST) & Compute the value of taxable supply.1

Life insurance business services

1. Services of life insurance business provided by way of annuity under the National Pension
System regulated by the Pension Fund Regulatory and Development Authority of India
under the Pension Fund Regulatory and Development Authority of Indian under the Pension
Fund Regulatory and Development Authority Act, 2013.
2. 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 Schemes of the Central Government.
3. Services of life insurance provided or agreed to be provided by the Naval Group Insurance
Fund to the personnel of Coast Guard under the Group Insurance Schemes of the CG.
4. Services of life insurance provided / agreed to be provided by the Central Armed Police
Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under
the Group Insurance Schemes of the concerned Central Armed Police Force.
5. Services of life insurance business provided under following schemes [entry 36]-
a. Janashree Bima Yojana;
b. Aam Aadmi Bima Yojana;
c. Life micro-insurance product as approved by the IRDA, Maximum cover: ₹2,00,000
d. Varishtha Pension Bima Yojana;
e. Pradhan Mantri Jeevan Jyoti Bima Yojana;
f. Pradhan Mantri Jan Dhan Yogana;
g. Pradhan Mantri Vaya Vandan Yojana.

General insurance business services

1. Services of general insurance business provided under following schemes [entry 35]-
a. Hut Insurance Scheme;
b. Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna
c. Scheme for Insurance of Tribals;
d. Janata Personal Accident Policy and Gramin Accident Policy;

1
Taxable value = ₹91 [E + 20 + 30 + 40 + E + 1]

Goods and Services Tax 57

 e. Group Personal Accident Policy for Self-Employed Women;
f. Agricultural Pumpset and Failed Well Insurance;
g. Premia collected on export credit insurance;
h. Restructured Weather Based Crop Insurance Scheme approved by the GOI and
implemented by the Ministry of Agriculture;
i. Jan Arogya Bima Policy;
j. Pradhan Mantri Fasal Bima Yojana [Crop]
k. Pilot Scheme on Seed Crop Insurance;
l. Central Sector Scheme on Cattle Insurance;
m. Universal Health Insurance Scheme;
n. Rashtriya Swasthya Bima Yojana [Health]
o. Coconut Palm Insurance Scheme
p. Pradhan Mantri Suraksha Bima Yojna; [Security]
q. Niramaya Health Insurance Scheme implemented by the Trust constituted under the
provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy,
Mental Retardation and Multiple Disabilities Act, 1999.
r. Bangla Shasya Bima [Crop]
2. Services by way of reinsurance of the insurance schemes [entry 35 & 36]

Services provided by specified bodies like

1. the Employees’ State Insurance Corporation [ESI]
2. the Employees Provident Fund Organisation [EPF]
3. Coal Mines Provident Fund Organisation
4. Services by National Pension System (NPS) to its members for administrative fee
5. the Insurance Regulatory Development Authority of India to insurers (IRDA)
6. the Securities and Exchange Board of India (SEBI)

Pension Schemes
1. Services by way of collection of contribution under the Atal Pension Yojana.
2. Services by way of collection of contribution under any pension scheme of the SG

Services by the following persons in respective capacities-

a. Business facilitator or a business correspondent to a banking company with respect to
accounts in its rural area branch;
b. Any person as an intermediary to a business facilitator or a business correspondent with

Sahasri Singar Academy 58

 respect to services mentioned in entry (a); or
c. Business facilitator or a business correspondent to an insurance company in a rural area.

Services provided to Government

1. Pure services provided to Government
a. excluding works contract service or other composite supplies
b. Provided to the CG, SG or UT or LA.
c. By way of any activity;
i. In relation to any function entrusted to a Panchayat u/a 243G of the Constitution or
ii. In relation to any function entrusted to a Municipality u/a 243W of the Constitution
2. Composite supply of goods and services TO Government:
a. Composite supply of goods and services [Value of goods ≤ 25%]
b. Provided to the CG, SG, UT or LA
c. By way of any activity;
i. In relation to any function entrusted to a Panchayat u/a 243G of the Constitution or
ii. In relation to any function entrusted to a Municipality u/a 243W of the Constitution
3. Services provided by FAIR PRICE SHOPs to CG, SG, UT by way of good rains, kerosene,
sugar, edible oil, etc. under Public Distribution System against consideration in the form of
commission or margin.
4. Services provided to the CG, SG, UT under any insurance scheme for which total premium
is paid by the CG, SG, UT
5. Services provided to the CG, SG, UT administration under any training programme for
which 75% or more of the total expenditure is borne by the CG, SG, UT administration.
6. Services provided by the GSTN to the CG or SG or UT for implementation of GST.

Leasing services
1. Upfront amount (called as premium, salami, cost, price, development charges or by any
other name) leviable in respect of the service, by way of granting long term lease of 30
years, or more 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 the
industrial units or the developers in any industrial or financial business area.
Explanation: for the purpose of this exemption, the CG, SG or UT shall have 20% or more
ownership in the entity directly or through an entity which is wholly owned by the CG, SG
or UT.
Aforesaid exemption is admissible irrespective of whether such upfront amount is payable

Goods and Services Tax 59

 / paid in one / more instalments, provided the amount is determined upfront.
Conditions:
a. The leased plots shall be used for the purpose for which they are allotted, that is, for
industrial or financial activity in an industrial or financial business area.
b. SG concerned shall monitor and enforce the above condition as per the order
c. In case of violation, the CGST with interest is payable
d. On transfer of lease agreement, the deed should contain the conditions of exemption

Legal Services
Recipient Individual BE CG /
BE
→ Advocate Senior ATO ≤ limit SG UT
ATO > / LA
↓ or Firm of Advocates &
Limit
Supplier Advocates Others GE
Individual
Advocate
Exempt Exempt Exempt 18% RCM Exempt
or Firm of
Advocates
Senior
Advocates
Taxable Taxable Exempt 18% RCM Exempt
& Arbitral
Tribunal

Skill Development services

1. Any services provided by -
a. The National Skill Development Corporation (NSDC) set up by the Government of India;
b. A Sector Skill Council (SSC) approved by the NSDC;
c. An assessment agency approved by the SSC or the NSDC;
d. A training partner approved by the NSDC or the SSC,
In relation to-
1. The NSDC Programme implemented by the NSDC; or
2. A vocational skill development course under the National Skill certification and
Monetary Reward Scheme; or
3. Any other Scheme implemented by the NSDC.
2. Services of assessing bodies empaneled centrally by the Directorate General of Training,
Ministry of Skill Development and Entrepreneurship by way of assessments under the Skill

Sahasri Singar Academy 60

 Development Initiatives Scheme.
3. Services provided by training providers (Project implementation agencies) under Deen
Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY) implemented by the Ministry
of Rural Development, Government of India by way of offering skill or vocational training
courses certified by the National Council for Vocational Training.

Performance by an artist
Services by an artist by way of a performance in folk or classical art forms of-
1. Music, or
2. Dance, or
3. Theatre,
Not exempt:
1. If the consideration > ₹1,50,000
2. Service provided by as a brand ambassador

Question: 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;
a. Bollywood dance performance by a film actor in a film and consideration charged is
₹1,45,000.1
b. Carnatic music performance by a classical singer to promote a brand of readymade
garments and consideration charged is ₹1,30,000.2
c. Carnatic music performance by a classical singer in a music concert and consideration
charged is ₹1,55,000.3
d. Kathak dance performance by a classical dancer in a cultural program and consideration
charged is ₹1,45,000.4

Services by way of admission to

1. museum, national park, wildlife sanctuary, tiger reserve or zoo.
Taxable: theme park | film city | Cinema Hall, etc.
2. protected monument, which is declared under
the Ancient Monuments and Archaeological Sites & Remains Act 1958 or
any of the State Acts, for the time being in force
3. Exemption only if consideration ≤ ₹500 per person

1
Not exempt [exempt only if it is a performance in folk or classical forms of dance]
2
Not exempt [as service as a brand ambassador]
3
Not exempt [as consideration < ₹1,50,000]
4
Exempt

Goods and Services Tax 61

 a. Circus, dance, or theatrical performance including drama or ballet;
b. Award function, concert, pageant, musical performance or
any sporting event other than a recognised sporting event;
c. Recognised sporting event,
d. Planetarium

Sponsorship of sports events

Services by way of sponsorship of recognized sporting events organized

Recognized sporting event means

1. Organized by a recognized sports body [represent district, state, zone or country]
2. Organized by
a. National sports federation or its affiliated federations
b. Association of Indian University,
Inter-University Sports Board,
School Games Federation of India,
All India Sports Council for the Deaf, Para-Olympic Committee of India or
Special Olympics Bharat
c. Central Civil Services Cultural and Sports Board
d. As part of national games, by Indian Olympic Association
e. Panchayat Yuva Kreeda Aur Khel Abhiyaan Scheme

Recognized sport body means

a. The Indian Olympic Association
b. Sports Authority of India
c. A national sports federation recognized by
the Ministry of Sports and Youth Affairs of the CG and its affiliate federations
d. National sports promotion organization recognized by
the Ministry of Sports and Youth Affairs of the CG
e. The International Olympic Association or a federation recognized by
the International Olympic Association
f. A federation or a body which regulates a sport at international level and
its affiliated federations or bodies regulating a sport in India.

Sahasri Singar Academy 62

Services by an unincorporated body or a registered non-profit entity
1. to its own members by way of reimbursement of charges or share of contribution -
a. As a trade union;
b. For the provision of carrying out any activity which is exempt from the levy of GST
c. Residential Welfare Association (RWA) & a housing society
Sourcing of goods or services from a third person for the common use of its members
If monthly consideration > ₹7,500 per flat & annual turnover of RWA > ₹20 lakhs.
2. Services provided by an unincorporated body or a registered non-profit entity engaged in
a. Activities relating to the welfare of industrial or agricultural labour or farmers
b. Promotion of trade, commerce, industry, agriculture, art, science, literature, culture,
sports, education, social welfare, charitable activities and protection of environment
To its own members against consideration in the form of membership fee ≤ ₹1,000 per
member per year.

Other exempt services

No Description of Services
2 Services by way of transfer of a going concern,
as a whole or an independent part thereof
9AA Services provided by and to ‘Federation Internationale de Football Association’
(FIFA) and its subsidiaries directly or indirectly related to any of the events
under FIFA U017 Women’s World Cup 2020 to be hosted in India.
Condition:
Director (Sports), Ministry of Youth Affairs and Sports have to certify
9B Supply of services associated with transit cargo to Nepal and Bhutan
12 Services by way of renting of residential dwelling for use as residence.
14 Services by a hotel, inn, guest, house, club or campsite, by whatever name called,
for residential or lodging purpose, having declared tariff < ₹1,000 per day.
19C Satellite launch services supplied by Indian Space Research Organization,
Antrix Corporation Limited or new Space India Limited.
22 Service by way of giving on hire –
(a) To a state transport undertaking, a motor vehicle meant to carry more than
12 passengers; or
(aa) to a local authority, an Electrically operated vehicle (EOV) meant to carry
more than 12 passengers
(b) To a goods transport agency, a means of transportation of goods.

Goods and Services Tax 63

 (c) 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 up to higher
secondary school or equivalent.
23 Service by way of access to a road or a bridge on payment of toll charges.
23A Service by way of access to a road or a bridge on payment of annuity
Includes
a. Higher toll charges for overloaded vehicles
b. Additional amount by way double toll tax for not having Fastaq
25 Transmission or distribution of electricity by an electricity transmission or
distribution utility.
However, in this regard CBIC has clarified that the other services provided by
DISCOMS (distribution companies) to consumer against charges are liable to GST
such as
1. Applicable fee for releasing connection of electricity
2. Rental charges against metering equipment
3. Testing fee for meters / transformers, capacitors etc.
4. Labour charges from customer for shifting of meters or shifting of service lines
5. Charges for duplicate bill
44 Services provided by an incubatee to the following conditions, namely;-
(a) The total turnover ≤ 50 lakh during the preceding financial year; and
(b) A period of three years has not elapsed from the date of entering into an
agreement as an incubatee.
47A Services by way of licensing, registration and analysis or testing of food sample
supplied by the Food Safety and Standards Authority of India (FSSAI) to Food
Business Operators
48 Taxable services, provided or to be provided, by a Technology Business
Incubator or a Science and Technology Entrepreneurship Park recognised by
the National Science and Technology Entrepreneurship Development Board of the
Department of Science and Technology, Government of India or bio-incubators
recognised by the Biotechnology Industry Research Assistance Council, under the
Department of Biotechnology Government of India.
49 Services by way of collecting or providing news by
an independent journalist, Press Trust of India or United News of India.
50 Services of public libraries by way of lending of books, publications or any other
knowledge-enhancing content or material.

Sahasri Singar Academy 64

 52 Service by an organiser to any person in respect of a
business exhibition held outside India.
56 Services by way of slaughtering of animals.
57 Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail
packing, labelling of fruits and vegetables which do not change or alter the
essential characteristics of the said fruits or vegetables.
58 Services provided by the National Centre for Cold Chain Development under the
Ministry of Agriculture, Cooperation and Farmer’s Welfare by way of cold chain
knowledge dissemination.
59 Services by a foreign diplomatic mission located in India.
61A Services by way of granting National Permit to a goods carriage to operate
throughout India / contiguous states
65A Services by way of providing information under RTI
68 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 organised by a recognized sports body;
(b) Another recognised sports body;
75 Services provided by operators of the common bio-medical waste treatment
facility to a clinical establishment by way of treatment or disposal of bio-medical
waste or the processes incidental thereto.
76 Services by way of public conveniences such as provision of facilities of
bathroom, washrooms lavatories, urinal or toilets.
82A Service by way of right to admission to the events organized under FIFA U-17
Women’s World Cup 2020.

Test Your Knowledge

1. Exempt supply includes supply of any goods or services or both which attracts nil rate of
tax and which may be wholly exempt from tax, but excludes non-taxable supply. Discuss
the validity of the statement.1
2. Examine which of the following independent services are exempt from GST;
a. Food supplied by the canteen run by a hospital to the in-patients as advised by the
doctors.2
b. An RWA, registered under GST, collects the maintenance charges of ₹6,500 per month
per member.3

1
False, non-taxable supply also comes under exempt
2
Exempt
3
Exempt as the charges ≤ ₹7,500

Goods and Services Tax 65

3. An individual acts as a referee in a football match organized by Sports Authority of India.
He has also acted as a referee in another charity football match organized by a local sports
club, in lieu of a lump sum payment. Discuss whether any GST is payable on the activities
undertaken by him?1
4. RXL Pvt. manufactures a beauty soap with the brand name ‘Forever Young’. RXL Pvt.
Ltd. has organized a concert to promote its brand. Ms. Ahana Kapoor, its brand ambassador,
who is a leading film actress, has given a classical dance performance in the said concert.
The proceeds of the concert worth ₹1,20,000 will be donated to a charitable organization.
Examine whether Ms.Ahana Kapoor will be required to pay any GST?2
5. Determine the taxable value of supply under GST law with respect to each of the following
independent services provided by the registered person;
Particulars (₹)
Fees charged for yoga camp conducted by a charitable trust registered under 50,000
section 12AA of the Income – tax Act, 19613
Amount charged by business correspondent from banking company for the 1,00,000
services provided to the rural branch of a bank with respect to Savings Bank
Accounts4
Amount charged by cord blood bank for preservation of stem cells5 5,00,000
Amount charged for service provided by selectors to a recognized sports 5,20,000
body6
6. Examine whether GST is exempted on the following independent supplies of services;
a. Service provided by a private transport operator to Scholar Boys Higher Secondary
School in relation to transportation of students to and from the school.7
b. Services provided by way of vehicle parking to general public in a shopping mall.8
7. A State Transport Undertaking has hired motor vehicles meant to carry 8-10 passengers
from Fast Cab Renting, a motor vehicle renting company. Give your comments as to
whether any GST is payable in this case.9
8. Indiana Engineering College, a recognised educational institution, has conducted an
entrance test examination for various courses run by it and charged entrance fees from the
applicants. Determine whether Indiana Engineering College is liable to pay GST on the
same.10

1
First case – Exempt & Second case – Taxable
2
Taxable even donated to charitable purpose
3
Exempt
4
Exempt
5
Exempt
6
Exempt – Selectors
7
Yes
8
No
9
Taxable [exempted only if passengers > 12]
10
Exempt

Sahasri Singar Academy 66

9. Babloo Transporters, a GTA, transported relief materials in a goods carriage meant for
victims of Kerala floods, a natural disaster, by road from Delhi to Ernakulam, for a
company. Babloo Transporters is of the view that its is not liable to pay GST on the said
services provided as said services are exempt. you are required to advice it on the said
issue.1
10. Keyan Enterprises, an event orgainiser, provided services to Breathing Wall Ltd. by way
of organizing business exhibition in New Delhi as part of Make in India initiative. Keyan
Enterprises claims that it is not required to pay GST as the services provided by way of
organizing business exhibition are exempt from GST. Examine the technical veracity of the
claim of Keyan Enterprises, in the given case.2
11. Ram, an agriculturist, has stored sugarcane in a warehouse. He has taken fumigation
services in the said warehouse from Gupta Pest Control Co. for which he paid the
consideration of ₹6,000. He seeks your advice on the taxability or otherwise of the service
so availed by him.3
12. Poorva acts as a team manager for Indian Sports Authority, a recognized sports body, for a
tennis tournament organized by a multinational company and received a remuneration of
₹2,00,000. Determine whether GST is payable on the remuneration received by Poorva.4
13. Ekta Charitable trust, registered us 10(23C)(v) of the Income-tax Act, 1961, manages a
temple in Rohini, Delhi. It has given on rent a community hall, located within temple
premises, to public for celebration of Teej Mela. Rent charged is ₹9,500. You are required
to determine whether the services provided by Ekta Charitable trust are liable to GST.5
14. ST Ltd. has given on hire 5 trucks to Titu Transporters of Delhi (a goods transport agency)
for transporting goods in Central and West Delhi. The hiring charges for the trucks are
₹7,500 per truck per day. Examine whether GST is payable in the given case.6
15. Discuss whether the following services are chargeable to GST
1. Service by way of transmission / distribution of electricity by BSES.7
2. A Ltd. charges ₹3 lakhs for storage and warehousing of turmeric.8
3. B Ltd. charges ₹1.5 lakhs for storage of potato chips.9
4. Service provided by Post Office by way of express parcel post.10
{CMA inter D18, 6 marks}

Question: Examine whether GST is exempted on the following independent supply of

1
Exempt
2
Not exempt, as the exemption is conducted in India
3
Exempt
4
Taxable [as sporting event is not organized by the recognized sporting body]
5
Exempt [As the rent < ₹10,000 per day]
6
Exempt [hire of trucks to GTA ]
7
Exempt
8
Exempt
9
Not exempt as potato chips is not agricultural product
10
Not Exempt

Goods and Services Tax 67

services:
1. Teja & Co, a tour operator, provides services to a foreign tourist for tour conducted to
Jammu Kashmir and receives a sum of ₹3,00,0001
2. Ms. Poorva acts as a Team Manager for Indian Sports League (ISL), a recognised sports
body, for a Tennis tournament organized by Multi brand Retail Company and received a
remuneration of ₹2,00,000.2
{CA inter M18, 3+3 = 6 Marks}

Question: Determine taxable value of supply under GST law with respect to each of the
following independent services provided by the registered person.

Particulars ₹
Amount charged for loading, unloading, packing and warehousing of potato 25,000
chips3
Fees charged for yoga camp conducted by a charitable trust registered under 50,000
section 12AB of the Income-tax Act, 19614
Amount charged by business correspondent for the services provided to the rural 1,00,000
branch of a bank with respect to Savings Bank Accounts5
Amount charged by cord blood bank for preservation of stem cells6 5,00,000
Amount charged for service provided by commentator to a recognized sports 6,00,000
body7
Amount charged for service provided by way of right to an admission to circus 12,000
where consideration for the same is ₹750 per person8
{CA inter M19, 6 marks}

Question: Bright Ltd. [A registered taxable person) provides the following information
relating to the services for the month of September, 2018.
Gross receipts from ₹
Running a boarding school (including receipts for providing residential 30,00,000
dwelling services of ₹14,00,000)9

1
Taxable (only services provided to foreign tourist outside India is exempt)
2
Taxable (only service rendered to recognised sports body is exempt)
3
Not exempt
4
Exempt
5
Exempt
6
Exempt
7
Not Exempt
8
Not exempt (exempt up to ₹500 per person)
9
Exempt

Sahasri Singar Academy 68

 Conducting private tuitions1 15,50,000
Education services for obtaining a qualification recognised by law of a foreign 7,00,000
country2
Conducting modular employable skill course, approved by National Council of 10,40,000
vocational training3
Fees from prospective employers for campus interview4 7,00,000
Renting of furnished flat for temporary stay to different persons5 6,40,000
Compute the value of taxable supply and the amount of GST payable. The above receipts are
exclusive of GST. The rate of GST is 18%.
{CMA inter D18, 8 marks}

1
Not exempt
2
Not exempt (as it is law recognised by foreign country)
3
Exempt
4
Not exempt
5
Not exempt

Goods and Services Tax 69

 5. TIME AND VALUE OF SUPPLY
TIME OF SUPPLY

Section 12: Time of Supply of GOODS

1. TOS is for liability to pay tax
2. TOS for forward charge
3. TOS for reverse charge
4. TOS for voucher
5. TOS, if TOS can’t be determinable in above methods
6. TOS for interest, late fee or penalty for delayed payment

Section 12: Time of supply of GOODS

1. The liability to pay tax on goods shall arise at the time of supply.
2. TOS for forward charge
Time of supply of goods (whichever is earlier)
i. the date of issue of invoice or the last date as per Sec 31(1) to issue the invoice; or
ii. the date on which the supplier receives the payment. whichever is earlier of
a. Date on which the payment is recorded in the books of account.
b. Date on which the payment is credited to the supplier’s bank a/c.
Note: If the supplier receives up to ₹1,000 more than the invoice, the time of supply is at
the option of supplier be the date of issue of invoice.
Note: Any advance collected for supply of goods [not by composition supplier] is taxable
on invoice date
Explanation: Supply shall be to the extent covered by the invoice or the payment.

Time of Supply – Forward Charge & Receipt of Advance

Question: Sphinx Pvt., Ltd., enters a contract for supply of 100 office chairs @ ₹15,000 with
Joy Sales on 21st August. Chairs are removed from the warehouse of Sphinx Pvt., Ltd., on 5th
September along with the invoice issued on same date. Joy Sales has paid 30% of the total
contract value on 21st August; balance 70% is paid after delivery of chairs on 10th September.
TOS?1

1
TOS: 05.09.XX for entire value | not taxable on receipt of advance

Sahasri Singar Academy 70

Time of Supply – Forward Charge
Question: A machine has to be supplied at site. It is done by sourcing various components
from vendors and assembling the machine at site. The details of the various events are
17th September Purchase order with advance of ₹50,000 is received for machine worth ₹12 lakh
and entry made in the seller’s books of account
20th October The machine is assembled, tested at site, and accepted by buyer
23rd October Invoice raised
th
4 November Balance payment of ₹11,50,000 received
Determine the time of supply in the above scenario for the purpose of payment of tax.1

Time of Supply – Forward Charge

Question: Gas is supplied by a pipeline to the recipient. The supply is to be made for a period
of one year. Monthly payments are made by the recipient as per contract. The details of the
payments made are
July 5, August 5, September 5 & Payments of ₹2 lakh made in each month
Determine the time of supply for the purpose of payment of tax.2

3. TOS for reverse charge

Time of supply on reverse charge basis, whichever is earlier.
a. the date of the receipt of goods; or
b. whichever is earlier of
i. the date of payment as entered in the books of account or
ii. the date on which the payment is debited in his bank a/c,
c. the date immediately following thirty days from the date of issue of invoice or any
other document by the supplier:
Otherwise, the TOS: the date of entry in the books of a/c of the recipient of supply.
Note: Any advance collected for supply of goods is taxable on date of receipt of advance

Time of Supply – Reverse Charge

Question: Determine the time of supply from the given information
May 4 Supplier invoices goods taxable on reverse charge basis to Bridge & Co
(30 days from the date of issuance of invoice lapse on June 3)
May 12 Bridge & Co receives the goods

1
TOS (including advance): 20th October.
2
TOS: July 5, August 5, September 5

Goods and Services Tax 71

 May 30 Bridge & Co makes the payment1

Time of Supply – Reverse Charge

Question: Determine the time of supply from the given information.
May 4 Supplier invoices goods taxable on reverse charge basis to Pillar & Co.
(30 days from the date of issuance of invoice elapse on June 3)
June 12 Pillar & Co receives the goods, which were held up in transit
July 13 Payment made for the goods2

4. Time of supply for supply of vouchers

a. If supply is identified on issue: the date of issue of voucher.
b. Otherwise: the date of redemption of voucher

Time of Supply – Voucher

Question: Time of supply in case voucher exchangeable for goods.
1. Acme Sales Limited sells food coupons to a company, which gives these to its employees
as part of the agreed perquisites. The coupons can be redeemed for purchase of any item of
food / provisions in the outlets that are part of the program. What is the time of supply?3
2. A company has tied up with a restaurant for having food for its employee. Company
purchases the vouchers from the restaurant and gives it to the employee. The voucher can
be encashed at this restaurant for purchase of food only.4

5. Other cases: the time of supply shall be–

a. If periodical return has to be filed – the date on which such return is to be filed; or
b. in any other case, be the date on which the tax is paid.
6. TOS for interest, late fee or penalty for delayed payment
The time of supply for addition in the value
(By way of interest, late fee or penalty for delayed payment etc.)
The date of receipt of addition in the value

1
TOS: May 12
2
TOS: 4th June
3
TOS: the date of redemption (as product is unknown)
4
TOS: the date of issue of voucher (as product is known)

Sahasri Singar Academy 72

Time of Supply – Interest / Late Fee for Delayed Payment
Question: Radha Traders sold goods to Shyam Sales on 6th June with a condition that interest
@ 2% per month will be charged if Shyam Sales failed to make payment within 15 days of the
delivery of the goods. Goods were delivered as also the invoice was issued on 6th June. Shyam
Sales paid the consideration for the goods on 6th July along with applicable interest.1

Section 13: Time of Supply of SERVICES

1. TOS is for liability to pay tax
2. TOS for forward charge
3. TOS for reverse charge
4. TOS for voucher
5. TOS, if TOS can’t be determinable in above methods
6. TOS for interest, late fee or penalty for delayed payment

Section 13: Time of supply of services

1. The liability to pay tax on services shall arise at the time of supply.
2. TOS for forward charge
Time of supply of services (whichever is earlier)
II. If invoice is issued as per the date prescribed u/s 31
i. the date of issue of invoice
ii. the date on which the supplier receives the payment. whichever is earlier of
a. Date on which the payment is recorded in the books of account.
b. Date on which the payment is credited to the supplier’s bank a/c.
III. If invoice is NOT issued as per the date prescribed u/s 31
i. the date of provision of service
ii. the date on which the supplier receives the payment. whichever is earlier of
a. Date on which the payment is recorded in the books of account.
b. Date on which the payment is credited to the supplier’s bank a/c.
IV. Otherwise: the date on which the recipient shows the receipt of services in the books
of account
Note: If the supplier receives up to ₹1,000 more than the invoice, the time of supply is at
the option of supplier be the date of issue of invoice.
Note: Any advance collected for supply of goods [not by composition supplier] is taxable
on invoice date

1
TOS: for goods – 6th June and for additional value – 6th July

Goods and Services Tax 73

 Explanation: Supply shall be to the extent covered by the invoice or the payment.

Time of Supply – Forward Charge

Question: Mohit Khanna & Sons is a firm of management consultants. The firm enters a
contract with Spark Pvt., Ltd., on 1st September for providing consultancy services. Provision
of service gets completed on 15th September. Invoice for the service is issued on 20th September
and payment is received on 10th October. When is the TOS?1
If the invoice is issued on 25th October, then TOS is___2

Time of Supply – Forward Charge

Question: Determine the time of supply from the following particulars
6th May Booking of convention hall, sum agreed ₹15,000,
advance of ₹3,000 received
15th September Function held in convention hall
27th October invoice issued for ₹15000,
indicating balance of ₹12000 payable
3rd November Balance payment of ₹12000 received3

Time of Supply – Forward Charge

Question: Investigation shows that ABC & Co carried out service of cleaning and repairs of
tanks in an apartment complex, for which the Apartment Owners’ Association showed a
payment in cash on 4th April to them against work of this description. The dates of the work
are not clear from the records of ABC & Co. ABC & Co have not issued invoice or entered the
payment in their books of account.4

Time of Supply – Forward Charge

Question: A telephone company receives ₹5,000 against an invoice of ₹4800. The excess
amount of ₹200 can be adjusted against next invoice.5

3. TOS for reverse charge

Time of supply on reverse charge basis, whichever is earlier.

1
TOS: 20th September
2
TOS: 15th September
3
TOS: 6th May for ₹3,000 & 15th September for ₹12,000
4
TOS: 4th April as no information available in the books of supplier
5
TOS: At the company’s option, the date of next invoice for ₹200

Sahasri Singar Academy 74

 a. whichever is earlier of
i. the date of payment as entered in the books of account or
ii. the date on which the payment is debited in his bank a/c,
b. the date immediately following sixty days from the date of issue of invoice or any
other document by the supplier:
Otherwise, the TOS: the date of entry in the books of a/c of the recipient of supply.
SOS by associated enterprises: supplier is located outside India, the TOS is WEE of
a. the date of entry in the books of account of the recipient
b. the date of payment

Time of Supply – Reverse Charge

Question: Determine the time of supply from the given information, (Assuming that service
being supplied is taxable under reverse charge).
May 4 The supplier of service issues invoice for service provided.
There is a dispute about amount payable, and payment is delayed.
August 21 Payment made to the supplier of service.1

Time of Supply – Reverse Charge

Question: Determine the time of supply from the given information.
May 4 A German company issues email informing to its associated company
ABC Ltd. of the cost of technical services provided to it.
July 2 ABC Ltd transfers the amount to the account of the German company.2

4. Time of supply for supply of vouchers

a. If supply is identified on issue: the date of issue of voucher.
b. Otherwise: the date of redemption of voucher

Question: Best Hospitality Services enters into agreement with Drive marketing Ltd by which
Drive Marketing Ltd., markets Best Hospitality services hotel rooms and sells coupons /
Vouchers redeemable for a discount against stay in the hotel.3

5. Other cases: the time of supply shall be–

a. If periodical return has to be filed – the date on which such return is to be filed; or

1
TOS: 4th July (WEE: payment or date of invoice + 61 days)
2
TOS: 2nd July (WEE: date of record in books or payment)
3
TOS: the date of issue of voucher (as SOS is identifiable on issue of voucher)

Goods and Services Tax 75

 b. in any other case, be the date on which the tax is paid.
6. Time of Supply – Interest / Late Fee for Delayed Payment
The time of supply for addition in the value
(By way of interest, late fee or penalty for delayed payment etc.)
The date of receipt of addition in the value

Additional Practice Questions

Question: Determine the time of supply in the following cases assuming that GST is payable
under reverse charge
Date of Date of payment by Date of issue of
receipt the recipient of goods invoice by
of supplier
goods of goods
1 July 1 August 10 June 29
2 July 1 June 25 June 29
3 July 1 Part payment made on June 30 and June 29
balance amount paid on July 20
4 July 5 Payment is entered in the books of account on June June 1
28 and debited in recipient’s bank account on June 30
5 July 1 Payment is entered in the books of account on June June 29
30 and debited in recipient’s bank account on June 26
6 August 1 August 10 June 29
Answer:
(1) (2) (3) June 30 for (4) (5) (6)
July 1 June 25 part payment and June 28 June 26 July 30
July 1 for balance

Question: Determine the time of supply in the following cases assuming that GST is payable
under reverse charge.
No Date of payment by recipient Date of issue of invoice by
for supply of services supplier of services

(1) (2)
1 August 10 June 29
2 August 10 June 1

Sahasri Singar Academy 76

 3 Part payment made on June 30 and June 29
balance amount paid on September 1
4 Payment is entered in the books of account on June 28 June 1
and debited in recipient’s bank account on June 30
5 Payment is entered in the books of account on June 30 June 29
and debited in recipient’s bank account on June 26
Answer:
(1) (2) (3) June 30 for (4) (5)
August 10 August 1 part payment and June 28 June 26
August 1 for balance

Question: Kabira Industries Ltd engaged the services of a transporter for road transport of a
consignment on 17th June and made advance payment for the transport on the same date. i.e.
17th June. However, the consignment could not be sent immediately on account of a strike in
the factory, and instead was sent on 20th July. Invoice was received from the transporter on
22nd July. What is the time of supply of the transporter’s service?
Note: Transporter’s service is taxed on reverse charge basis.1

Question: Raju Pvt Ltd. receives the order and advance payment on 5th January for carrying
out an architectural design job. It delivers the designs on 23rd April. By oversight, no invoice
is issued at that time, and it is issued much later, after the expiry of prescribed period for issue
of invoice. When is the time of supply of service?2

Question: Investigation shows that 150 cartons of ceramic capacitors were despatched on 2nd
August but no invoice was made and the cartons were not entered in the accounts. There was
no evidence of receipt of payment. What is the time of supply of 150 cartons for the purpose
of payment of tax?3

Question: An order is placed on Ram & Co. on 18th August for supply of a consignment of
customised shoes. Ram co gets the consignment ready and informs the customer and issues the
invoice on 2nd December. The customer collects the consignment from the premises of Ram &
co on 7th December and electronically transfer the payment on the same date, which is entered
in the accounts on the next day, 8th December.
What is the time of supply of the shoes for the purpose of payment of tax?4

1
TOS: 17th June
2
TOS: 5th January
3
TOS: 2nd August [date on which invoice could have issued]
4
TOS: 2nd December

Goods and Services Tax 77

Question: Meal coupons are sold to a company on 9th August for being distributed to the
employees of the said company. The coupons are valid for six months and can be used against
purchase of food items. The employees use them in various stores for purchase of various edible
items on different dates throughout the six months.
What is the date of supply of the coupons?1

Question: A firm of advocates issues invoice for services to ABC Ltd. on 17th Feb. The
payment is contested by ABC Ltd. on the ground that on account of negligence of the firm, the
company’s case was dismissed by the Court for non-appearance, which necessitated further
appearance for which the firm is billing the company. The dispute drags on and finally payment
is made on 3rd November. Identify the time of supply of the legal services.
Note: Legal services are taxable on reverse charge basis.2

Question: Modern Security Co. provides service of testing of electronic devices. In one case,
it tested a batch of devices on 4th and 5th September but could not raise invoice till 19th
November because of some dispute about the condition of the devices on return. The payment
was made in December.
What is the method to fix the time of supply of the service?3

Question: M/s XYZ & Co., a firm of Chartered Accountants, issued invoice for services
rendered to Mr. A on 7th September. Determine the time of supply in the following independent
cases;
a. The provision of service was completed on 1st August and payment was received on 28th
September.4
b. The provision of service was completed on 14th August and payment was received on 28th
September.5
c. Mr. A made the payment on 3rd August. However, provision of service was remaining to be
completed at that time.6
d. Mr. A made the payment on 15th September. However, provision of service was remaining
to be completed at that time.7

Question: M/s Pranav Associates, a partnership firm, provided recovery agent services to

1
TOS: At the time of redemption (unknown food at the time of issue)
2
TOS: 19th April (61 days + date of invoice)
3
TOS: 5th September
4
TOS: 1st August [since invoice is not issued within 30 days of SOS]
5
TOS: 7th September
6 rd
3 August
7
TOS: 7th September

Sahasri Singar Academy 78

Newton Credits Ltd., a non-banking financial company and a registered supplier, on 15th
January. Invoice for the same was issued on 7th February and the payment was made on 18th
April by Newton Credits Ltd. Bank account of the company was debited on 20th April.
Determine the following;
a. Person liable to pay GST
b. Time of supply of service1

Question: Mr. X supplied goods for ₹50,000 to its customer Miss Diyana on 1st January on the
condition that payment for the same will be made within a week. However, Miss Diyana made
payment for the said goods on 2nd February and thus, paid interest amounting to ₹2,000.
What is the time of supply with regard to addition in the value by way of interest in lieu of
delayed of consideration?2

1
RCM: GST is payable by Newton Credits Ltd. | TOS: 9th April [Invoice date + 61 days]
2
TOS for additional value: 2nd February [date of payment]

Goods and Services Tax 79

 VALUE OF SUPPLY [S.15]

Value of a supply of goods or services or both

Transaction value paid or payable ×××
(i) supplier and recipient are unrelated
(ii) sole consideration
+ Taxes, duties, cesses, fees and charges under law except GST ×××
+ Any amount payable by supplier but paid by recipient ×××
+ Incidental expenses before delivery: ×××
commission, packing
inspection or certification charges
installation and testing charges
weighment charges, loading & designing charges
+ Interest, late fee or penalty for delayed payment ×××
+ Subsidies provided other than by Central and State Government ×××
− Staggered discounts [buy more, save more] – excluded ×××
− Agreed term of discount before the time of supply ×××
Periodic / year end / volume discounts – excluded but ITC is reversed
Secondary discounts – not excluded
− Subsidies provided by Central and State Government ×××
×××
Note: value can be determined under prescribed method if value cannot be determined under
the above method.

Question: What is the value of supply in the following situation?

1. Wholesale price for 1 MT of cement sold by X Ltd. In the ordinary course of business is
₹7,000. Price charged by X Ltd to Y is ₹6,700.1
2. Levy of entertainment tax by local authority is not subsumed2
3. As per rent contract, tenant required to pay local taxes for the premise.3
4. Mr.A goes to Damro Furniture outlet and buys furniture for ₹2,00,000. Mr. A ask for the
special packing for which ₹5,000 is charged for packing.4

1
VOS: ₹6,700 [price paid by unrelated buyer]
2
Included (taxes except GST includible)
3
included
4
Packing charges ₹5,000 includable

Sahasri Singar Academy 80

5. A supply priced at ₹2,000 is made, with a credit period of 1 month for payment is received
after the lapse of two months from the date of supply. The amount of 12% p.a. on ₹2,000
for one month after the free credit period is ₹20.1
6. The selling price of a notebook is ₹50. For notebooks sold to students in Government
schools, a company uses its CSR funds to pay the seller ₹30, so that the students pay only
₹20 per notebook.2
7. Royal Biscuit Co. gives a discount of 30% on the list price to its distributors. Thus, for a
carton of Spicebisk, in the invoice the list price is mentioned as ₹200, on which a discount
of 30% is given to arrive at the final price of ₹140.3
8. The agreement of Raju Electrical Appliance with its dealers is that sale of rice cookers over
100 pieces in the Diwali month will entitle them to discount of 5% per cooker sold to them
in the next month.4
9. A Company announces turnover discounts after reviewing dealer performance during the
year. The discounts are based on performance slabs and are given as cash-back.5

Question: Grand Biz contracts with ABC Co. to conduct a dealers’ meet. In furtherance of
this, Grand Biz contracts with vendors to deliver goods / services, like water, soft drinks, audio
system, projector, catering, flowers etc. at the venue on the stipulated dates at the stipulated
prices. Grand Biz is liable to make these payments as contracted.
The soft drinks supplier wants payment upon delivery; ABC Co. agrees to pay the bill raised
by the soft-drinks’ vendor on Grand Biz, on receiving the crates of soft drinks. This amount is
not billed by Grand Biz to ABC Co. Is the amount includible in the VOS?6

Question: Black and White Pvt. Ltd, has provided the following particulars relating to goods
sold by it to Colourful Pvt. Ltd.
Particulars ₹
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

1
Value of supply is ₹2,020 (Interest is included)
2
Value of supply is ₹50 (non-Governmental subsidy is included)
3
Value of supply is ₹140 (excluded as discount is shown in invoice)
4
discount excluded but proportionate ITC should be reversed
5
discount not excluded as it is not mentioned in invoice
6
Yes

Goods and Services Tax 81

Black and White Pvt. Ltd. received ₹2,000 as a subsidy from an NGO on sale of such goods.
The price of ₹50,000 of the goods is after considering such subsidy. Black and White 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 Black and White Pvt. Ltd.
Answer: Computation of value of taxable supply
Particulars ₹
List price of the goods (exclusive of taxes and discounts) 50,000
+ Tax levied by Municipal Authority (includible) 5,000
CGST and SGST (Not includible)
+ Packing charges (includible] 1,000
+ Subsidy received from a non-Government body (includible) 2,000
Total 58,000
− Discount @ 2% (deductible since known at the time of supply) 1,000
Value of taxable supply 57,000

Question: Samriddhi Advertisers conceptualised and designed the advertising campaign for
new product launched by New Moon Pvt. Ltd. for a consideration of ₹5,00,000. Samriddhi
Advertisers owed ₹20,000 to one of its vendors in relation to the advertising service provided
by it to New Moon Pvt. Ltd. Such liability of Samriddhi Advertisers was discharged by New
Moon Pvt Ltd. New Moon Pvt Ltd. delayed the payment of consideration and thus, paid
₹15,000 as interest. Assume the rate of GST to be 18%.
Determine the value of taxable supply made by Samriddhi Advertisers.
Answer Computation of value of taxable supply
Particulars ₹
Service charges 5,00,000
+ Payment made by New Moon to vendor of Samriddhi Advertisers (includible) 20,000
+ Interest for delayed payment (includible and) 12,712
It is assumed, interest received is inclusive of GST hence
100 100
(𝑖𝑛𝑡 × ) = (15,000 × )
100 + 𝐺𝑆𝑇 𝑅𝑎𝑡𝑒 100 + 18
Value of taxable supply 5,32,712

Practical Questions
Question: Sharp Minds Institute provides coaching for engineering entrance examinations.
Monthly fee charged by the Institute from a student is ₹10,000. The Institute is known for its

Sahasri Singar Academy 82

commitment to provide education to underprivileged children. It trains 10 students every year
for entrance examinations free of cost.
The Institute has received ₹3,00,000 as coaching fees during a month. Nav Jeevan, an NGO
working in the area of education for underprivileged children, has given a subsidy of ₹10,000
(in lumpsum) during the month to the Institute as it is serving the cause of underprivileged
children.
Determine the value of supply of educations services made by Sharp Minds Institute during the
month.1

Question: Furniture Wala is a chain of retail showrooms selling both modern and classic
furniture. In order to build strong customer association, the showroom provides free delivery
of the furniture at the premises of the customers if the distance between the showroom and the
customer’s premises is up to 20 kms. Where the distance is more than 20 kms, the showroom
charges a concessional freight of ₹10 for every additional km.
Ms. Leena Kapoor purchases a double bed, a dressing table and a centre table for ₹2,00,000
from Furniture Wala. Ms. Leena gets free delivery of the furniture as her residence is located
at a distance of 18 km from the showroom. The showroom incurs an expenditure of ₹1000 for
delivering the furniture at Ms. Leena’s residence.
Determine the value of taxable supply made by Furniture Wala. Will your answer change if
residence of Ms. Leena is 50 km away from the showroom?2

Question: AKJ Food Pvt. Ltd. gets an order for supply of processed food from a customer.
The customer wants the consignment tested for gluten and specified chemical residues. AKJ
Foods Pvt. Ltd. does the testing before the supply and charges a testing fee for the same from
the customer. AKJ Foods Pvt. Ltd. argues that such testing fess should not form part of the
consideration for the sale as it is a separate activity. Is the company’s argument correct in the
light of section 15?3

Question: A philanthropic association makes a substantial donation each year to a reputed

private management institution to subsidise the education of low-income group students who
have gained admission there. The fee for these individuals is reduced thereby, coming to ₹3
lakh a year compared to ₹5lakh a year for other students.
What would be the value of the service of coaching and instruction provided by the institution
to the low-income group students4

1
VOS: ₹3,00,000
2
VOS: case 1: ₹2,00,000 | case 2: ₹2,00,300 [₹2,00,000 + ₹10 (50 km – 20 km)]
3
Testing fee is added
4
Subsidy is includible as it is from non-Governmental

Goods and Services Tax 83

Question: Mezda Banners, an advertising firm, gives an interest-free credit period of 30 days
for payment by the customer. Its customer ABC paid for the supply 32 days after supply of
services. Mezda Banners waived the interest payable for delay of two day. The department
wants to add interest for two days as per contract. Should notional interest be added to the
value?1

Question: Crunch Bakery products Ltd sells biscuits and cakes through its dealers, to whom it
charges the list price minus standard discount and pays GST accordingly. When goods remain
unsold with the dealers. It offered additional discounts on the stock as an incentive to push the
sales. Can this additional discount be reduced from the price at which the goods were sold, and
concomitant tax adjustments made?2

Question: Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It
provides the following details of taxable inter-State supply made by it during the month of
March.
Particulars ₹
1 List price of taxable goods supplied inter-state (exclusive of taxes) 15,00,000
2 Subsidy received from the Central Government for supply of taxable goods 2,10,000
to Government School (exclusively related to supply of goods included at S.
No. 1)
3 Subsidy received from an NGO for supply of taxable goods to an old age 50,000
home (exclusively related to supply of goods included at S. No. 1)
4 Tax levied by Municipal Authority 20,000
5 Packing charges 15,000
6 Late fee paid by the recipient of supply for delayed payment of consideration 6,000
(Recipient has agreed to pay ₹6,000 in lump sum and no additional amount
is payable by him)
The list price of the goods is net of the two subsidies received. However, the other charges /
taxes / fees are charged to the customers over and above the list price.
Calculate the total value of taxable supplies made by Red Pepper Ltd. during the month of
March. Rate of IGST is 18%.3

Question: M/s. Flow Pro, a registered supplier, sold a machine to BP Ltd. It provides the
following information in this regard:

1
Interest on delayed payment includible only on receipt – hence excludible
2
Additional discount is not deductible as it is not known at the time of supply
3
VOS: 15,90,085 [1500 + 50 + 20 + 15 + (6*100/118)]

Sahasri Singar Academy 84

 Particulars ₹
1 Price of the machine (excluding taxes and other charges mentioned at S. Nos. 25,000
(2) and (3)
2 Third party inspection charges (Such charges were payable by M/s Flow Pro but 5,000
the same have been directly paid by BP Ltd. to the inspection agency. These
charges were not recorded in the invoice issued by M/s. Flo Pro.)
3 Freight charges for delivery of the machine 2,000 (M/s Flow Pro has agreed to 2,000
deliver the goods at BP Ltd.’s premises)
4 Subsidy received from the State Government on sale of machine under Skill 5,000
Development Programmed (Subsidy is directly linked to the price)
5 Discount of 2% is offered to BP Ltd. on the price mentioned at S. No. (1) above
and recorded in the invoice
Note: Price of the machine is net of the subsidy received.
Determine the value of taxable supply made by M/s Flow Pro to BP Ltd.1

Question: Shri Krishna Pvt. Ltd., a registered supplier, furnishes the following information
relating to goods sold by it to Shri Balram Pvt. Ltd.
Particulars ₹
1 Price of the goods 1,00,000
(excluding taxes and other charges mentioned at S.Nos (3), (4) and (5)
2 Municipal tax 2,000
3 Inspection charges 15,000
4 Subsidy received from Shri Ram Trust 50,000
(Subsidy is directly linked to the goods supplied)
5 Late fees for delayed payment inclusive of GST (Shri Balram Pvt. Ltd. paid 1,000
the late fees. However, these charges were ultimately waived by Shri Krishna
Pvt. Ltd. and the amount was refunded to Shri Balram Pvt. Ltd. during the
same month)
6 Weighment charges (Such charges were paid by Shri Balram Pvt. Ltd. To 2,000
Radhe Pvt. on behalf of Shri Krishna Pvt. Ltd)
Note: Price of the goods is net of the subsidy received.
Determine the value of taxable supply made by Shri Krishna Pvt. Ltd. to Shri Balram Pvt. Ltd.2

1
VOS: 31,500 = [25 + 5 + 2 – 2% of 25]
2
VOS: 1,69,000 = [100 + 2 + 15 + 50 + 2]

Goods and Services Tax 85

Question: Koli Ltd., a registered supplier, has supplied machinery to Ghisa Ltd. (a supplier
registered in the same state). It provides following particulars regarding the same.
Particulars ₹
1 Price of machinery (exclusive of taxes and discounts) 5,50,000
2 Part fitted in the machinery at the premises of Ghisa Ltd. (Amount has been 20,000
paid by Ghisa Ltd. directly to the supplier. However, it was Koli Ltd.’s
liability to pay the said amount. The said amount has not been recorded in the
invoice issued by Koli Ltd.)
3 Installation and testing charges for machinery, not included in price 25,000
4 Discount @ 2% on price of the machinery mentioned at S.No (1) above
(recorded in the invoice)
5 Koli Ltd. provides additional discount @ 1% at year end, based on additional
purchase of other machinery for which adjustment is made at the end of the
financial year without any change in individual transactions.
Determine the value of taxable supply made by Koli Ltd. to Ghisa Ltd.1

1
VOS: 5,84,000 [550 + 20 + 25 - 2% of 550]

Sahasri Singar Academy 86

 6: INPUT TAX CREDIT

Section 41: Availment of ITC

Section 49(5), 49A, 49B and Rule 88A: Sequence of utilisation of ITC
Rule 86A & 86B: Conditions of use & restriction on use of amount in ECrL

Note:
Exempted Supply – ITC is not available
Zero rated supply [Supply to Exports or SEZ] – ITC is available (refund is allowed)
ITC is available for GST paid in inputs, inputs services & capital goods
Proportionate ITC is available in case of common inputs, input services & capital goods
1. If taxable supply & exempt supply
2. If used for non-business purpose

Section 16: Eligibility and conditions for taking ITC

1. Eligible person: every registered person
ITC: GST on inward supply is credited in Electronic Credit Ledger
Inward supply: Goods / services to be used in the course or furtherance of the business
Subject to provisions u/s 49 [payment of tax, interest, penalty & other amounts]
2. Eligibility for ITC:
a. Possession of Tax Invoice / debit note / prescribed tax paying documents [Rule 36]
(aa) The details of the invoice or debit note has been furnished by the supplier in the
statement of outward supplies and such details have been communicated to the recipient
of such invoice or debit note in the manner specified u/s 37
b. Received the goods or services (by agent or transfer during movement)
Deemed to be received:
Bill to ship to
[A → B → C where A delivered to C directly yet B is recipient]
By agent
[A → B → B’s Branch where A delivered to B’s branch directly yet B is recipient]
(ba) The details of ITC in respect of the said supply communicated to such registered
person u/s 38 has not been restricted
ITC not available if inward supplies details furnished by a registered supplier
i. Who is a new registrant (Refer: registration)
ii. Who has defaulted in payment of tax for a prescribed period

Goods and Services Tax 87

 iii. Whose output tax payable as per GSTR-1 / IFF exceeds the output tax paid in GSTR-
3B for a particular tax period by prescribed limit
iv. Who has defaulted in discharging his tax liability u/s 49(12) r.w. rule 86B
v. Other specified classes of persons
c. Tax charged should be actually paid [by cash or by utilizing ITC]
i. Availment of self-assessed ITC u/s 41
ii. Reverse ITC availed if supplier failed to pay the tax
iii. Re-availment of reversed ITC if supplier paid tax later
d. Furnished the return in GSTR-3B u/s 39
Note 1: In case of receipt of supply in lot, ITC is available only on the receipt of last lot
Note 2: Rule 37: If recipient failed to pay the supplier within 180 days,
ITC availed to be added to the output tax liability with interest @ 18%
[Form GSTR 2]
Exceptions
a. Reverse charge supplier
b. Deemed supplies without consideration
c. Additions made to value of supplies on account of supplier’s liability being
incurred by the recipient of the supply
3. Depreciation is not available on ITC availed on capital goods
4. No ITC related to any FY after the date i.e., WEE
a. 30th day of November following the end of FY
b. Furnishing of the relevant annual return.
Except: re-availing ITC reversed earlier

Example: Hercules Machinery delivered a machine to XYZ in the month of January under
invoice number 49 dated 28th January for ₹4,15,000 plus GST and undertook trial runs and
calibration of the machine as per the requirements of XYZ. The amount chargeable for the
post-delivery activities was covered in a debit note raised in the month of April for ₹50,000
plus GST. XYZ filed its annual return on 15th December. What is the cut-off date for ITC
availability?1

Rule 36: Documentary requirements and conditions for claiming ITC

1. ITC available for registered person and ISD on the basis of any of the following documents
a. Tax invoice / revised invoice issued by supplier

1
30th November being WEE of [30th November or date of filing of annual return]

Sahasri Singar Academy 88

 b. Tax invoice under reverse charge subject to tax payment
c. Debit note issued by supplier
d. Bill of Entry or other documents prescribed under Customs Act
e. Invoice or Credit note issued by ISD
2. Tax invoice should contain requisite particulars. At least the particulars listed below
a. Amount of tax charged
b. Description of goods or services
c. Total value of supply
d. GSTIN of the supplier and the recipient
e. Place of supply [in case of inter-state supply]
3. No ITC, if tax paid after demand on account of fraud, material misstatement and suppression
of facts
4. ITC based on invoices / debit note uploaded by supplier
in GSTR-1 or using the invoice furnishing facility (IFF)
in case of Quarterly Return Monthly Payment (QRMP) &
details communicated in Form GSTR-2B (auto populated)
a. Uploaded – avail 100% ITC on the invoice uploaded by supplier
b. Not uploaded – avail No ITC
Note: Full ITC can be availed in respect of IGST paid on imports, documents issued under
reverse charge, credit received from ISD., which are outside the ambit of S.37(1)

Section 41: Availment of input tax credit

1. ITC credited in electronic credit ledger by self-assessed return subject to conditions
2. ITC availed shall be reversed with interest if the supplier not paid the consideration
And re-avail the ITC on payment of consideration

ITC & Uploaded in GSTR-1

Question: Vijay Sales, a registered supplier, receives 100 invoices (for inward supply of goods
/ services) involving GST of ₹10 lakh, from various suppliers during the month of October.
Out of 100 invoices. 80 invoices involving GST of ₹6 lakh have been uploaded by the suppliers
in their respective GSTR-1s filed on the prescribed due date therefor.
Compute the ITC that can be claimed by Vijay Sales in its GSTR-3B for the month of October
to be filed by 20th November assuming that GST of ₹10 lakh is otherwise eligible for ITC.1

1
ITC ₹6 lakh is available: 100% ITC for invoices uploaded in GSTR-1 & No ITC for invoices NOT uploaded

Goods and Services Tax 89

Bill to Ship to
Question: Comfortable (P) Ltd. is registered under GST in the State of Odisha. It is engaged
in the business of manufacturing of iron and steel products. It has received IT engineering
services from High-Fi Infotech (P) Ltd. for ₹11,00,000/- (excluding GST @ 18%) on 28th
October. Invoice for service rendered was issued on 5th November.
Comfortable (P) Ltd. made part payment of ₹4,20,000/- on 30th November. Being unhappy
with service provided by High-Fi Infotech (P) Ltd., it did not make the balance payment.
Deficiency in service rendered was made good by High-Fi Infotech (P) Ltd. by 15th April of
next year. Comfortable (P) Ltd. made the balance payment on 6th July of next year.
Examine the availability of ITC with Comfortable (P) Ltd. in respect of IT engineering services
received by it from High-Fi infotech (P) Ltd.
Answer:
1. ITC ₹1,98,000 [₹11 lakhs × 18%] is available in November
18
2. ITC ₹1,33,932 [(₹11 𝑙𝑎𝑘ℎ𝑠 × 1.18 – ₹4.2 𝑙𝑎𝑘ℎ𝑠) × 118] is refundable in 180 days from
the date of invoice i.e., 4th May for non-payment.
3. ITC can be re-availed in the month of July on payment of the due

Rule 37: Reversal of ITC in the case of non-payment of consideration

1. Pay ITC availed in case non-payment of consideration in 180 days u/s 16(2)
except supply as per schedule I & ITC for RCM
2. ITC refundable is added to the output tax while furnishing return in Form GSTR-3B
3. Interest @ 18% is payable [S.50(1)]
4. No time limit for re-availing the ITC reversed earlier [on payment of the dues]

Rule 37A: Reversal of ITC in the case of non-payment of tax by supplier and re-availment
thereof
1. Reversal of ITC availed in Form GSTR-3B
if the supplier not furnished the return in Form GSTR-3B till 30th September
except schedule I & ITC for RCM
2. Interest @ 18% is payable [S.50(1)]
3. No time limit for re-availing the ITC reversed earlier in Form GSTR-3B
on submission of return in Form-3B by supplier

Section 17: Apportionment of Credit and Blocked Credit

Apportionment of Credit
1. Partial ITC is availed if input is used partly for the business purpose and non-business

Sahasri Singar Academy 90

 ITC available to the extent of tax attributable for business purpose
2. Partial ITC is availed if input is used partly for the taxable supply and exempt supply
ITC available to the extent of tax attributable for taxable supplies
Note:
Taxable supply includes zero rated supply
Exempt supply (nil rated supply) includes supply under reverse charge and transactions in
securities, sale of land and building
3. Banking company or FI & NBFC has option (u/r 38)
Supply: services of accepting deposits, extending loans and advances
Either: avail partial ITC to the extent of taxable supply or avail 50%
Provided:
a. the option once exercised shall not be withdrawn during the rest of the FY
b. restriction of 50% shall not apply to the tax paid on supplies made to distinct person
4. Blocked Credit
a. Motor vehicles for transportation of persons [Max 13 seats including driver]
Except:
Further supply of such vehicles or conveyance or
Transportation of passengers or
Imparting training on driving, flying, navigating such vehicles or conveyance
b. Vessels & aircraft
Except:
1) Further supply of such vehicles or conveyance or
Transportation of passengers or
Imparting training on navigating such vessels & flying such aircraft
2) For transportation of goods
c. Services of general insurance, servicing, repair and maintenance of ineligible motor
vehicles, vessels & aircraft
Except:
1) Motor vehicles, vessels or aircraft are used for the eligible purposes
2) Where such services are received by a taxable person engaged in
In the manufacture of ineligible motor vehicles, vessels or aircraft or
In the supply of general insurance services in respect of ineligible motor vehicles,
vessels or aircraft insured by him
d. Other supplies
1) Food and beverages

Goods and Services Tax 91

 Outdoor catering
Beauty treatment
Health services
Cosmetic and plastic surgery
Leasing or renting or hiring of motor vehicles, vessels, aircraft
on which ITC is disallowed
Life insurance and
Health insurance
Except where the above services
used for rendering similar outward taxable services by the recipient
are obligatory under any law for providing to employees by employer
2) Membership of a club
Health and fitness centre
Travel benefits to employees on vacation or LTC
Except where the above services are obligatory under any law for providing to
employees by employer
e. Works contract services (WCS) for construction of an immovable property
[other than plant and Machinery]
Except
WCS availed for further supply of WCS [sub-contracting]
WCS for P&M and ITC on WCS used for construction of such P&M is allowed.
Where the value of WCS is not capitalized.
f. Goods or service or both received by a taxable person for construction of an
immovable property on his own account including when such goods or services or both
are used in the course or furtherance of business
[other than plant and Machinery]
Except
Construction of P&M
Construction of immovable property for others
Where the value of construction is not capitalized.
Construction: includes reconstruction, renovation, additions or alterations or repairs, to
the extent of capitalization.
g. Composition tax (u/s.10)
h. Goods or services or both received by a NRTP
Except on goods imported by him

Sahasri Singar Academy 92

 i. Goods or services or both used for personal consumption
j. Goods lost, stolen, destroyed, written off or disposed of by way of gift or samples
Time expired medicines [reverse supply]
ITC reversal when return of time expired medicines are treated as fresh supply or
by issuing credit notes
ITC is availed but reversed on destroying the time expired medicines.
ITC in case of sale promotional scheme
3. Samples and free gifts: not supply except supply falls under schedule I
4. Buy one get one free – ITC is available
5. Discounts including ‘buy more, save more’ – ITC is available
6. Secondary discounts – ITC is available
k. Any tax paid on demand (u/s 74, 129 and 130))
S. 74: tax short paid or not paid or erroneously refunded due to fraud etc.
S. 129: amount paid for release of goods and conveyances in transit which are detained
S. 130: Fine paid in lieu of confiscation
5. Government prescribed the manner of apportionment
Explanation:
Plant and Machinery: means apparatus, equipment and machinery fixed to earth by
foundation or structural support that are used for making outward supply and includes such
foundation and structural supports but excludes –
Land, building or any other civil structures
Telecommunication towers and
Pipeline laid outside the factory premises

1. Capital goods include plant and machinery

2. For determining the value of an exempt supply as referred to in S.17(3)
a. The value of land and building = SDV
b. The value of security = 1% of the sale value

Aggregate value of exempt supply shall exclude

1. Interest or discount for trade credit
2. Transportation of goods by a vessel from the customs station of India to a place outside
India

Zero rated supply: covers

Goods and Services Tax 93

4. Exports
5. Supplies to a SEZ unit or SEZ developers
ITC may be availed u/s 16(2) of the IGST Act
But Nil rated supply is part of exempted supply, hence no ITC is available

Rule 38: Claim of credit by a banking company or a financial institution & NBFC
Activities engaged: accepting deposits or extending loans or advances
Provision to comply: As per S.17(4) and not as per S.17(2)
ITC not available: Inputs and input services used for non-business / blocked credit
ITC available: 50% (100% is available for inputs from distinct persons)

Section 18: ITC in special circumstances & Rule 40

1. ITC for newly registered persons: Conditions and restrictions
a. If applied for registration within 30 days from the date on which he becomes liable for
registration
ITC available on inputs held in stock and inputs contained in semi-finished or finished
goods on the day immediately preceding the date from which he becomes liable to pay
tax
b. In case of voluntary registration (S.25)
ITC available on inputs held in stock and inputs contained in semi-finished or finished
goods on the day immediately preceding the date of grant of registration
c. If composition levy scheme is ceased
ITC available on inputs held in stock and inputs contained in semi-finished or finished
goods and on capital goods on the day immediately preceding the date of grant of normal
registration.
Provided that the credit on capital goods shall be reduced by 5% per quarter
d. Exempt supply becomes taxable supply [applicable for exiting registered persons]
ITC available on inputs held in stock and inputs contained in semi-finished or finished
goods and on capital goods on the day immediately preceding the date of grant of normal
registration.
Provided that the credit on capital goods shall be reduced by 5% per quarter
2. ITC is not available after the expiry of one year from the date of issue of invoice
3. Transfer of unutilised ITC by transferor to transferee
in case of sale, merger, demerger, amalgamation, lease or transfer
4. If registered person opts composition levy scheme or
Where the supply becomes wholly exempt,

Sahasri Singar Academy 94

 he shall pay an amount equal to
ITC availed on inputs held in stock and inputs contained in semi-finished or finished goods
and on capital goods on the day immediately preceding the date of exercising such option
or the date the supply becomes exemption
by Electronic Credit Ledger or Electronic Cash Ledger
Provided that the credit on capital goods shall be reduced by 5% per quarter
Provided any balance left in electronic credit balance after the payment lapses
5. ITC available for (1) or amount refundable for (4) is calculated as per prescribed method
6. Supply of capital goods, pay an amount (whichever is higher of)
a. the ITC taken – 5% per quarter or part thereof from the date of invoice or
b. the tax on the transaction value of such capital goods,
However, in case of refractory bricks, moulds and dies, jigs and fixtures when these are
supplied as scrap, the person can pay tax on the transaction value.

Rule 40: Conditions for availing ITC in special circumstances

1. Filing of electronic declaration giving details of inputs held in stock / contained in semi-
finished goods and finished goods held in stock and capital goods on the days immediately
preceding the day on which credit becomes eligible
CA / CMA certification is required if the aggregate ITC > ₹2,00,000
2. Declaration has to be filed within 30 days from becoming eligible to avail credit.

Special Circumstances leading to reversal of credit / payment of amount

1. Registered person (who has availed ITC) switching from regular scheme of payment of
tax to composition levy
Supplies of registered person getting wholly exempted from tax
Cancellation of registration
Amount to be reversed for the above cases is equivalent to ITC on
Inputs held in stock / inputs contained in semi-finished or finished goods held in stock
Capital goods
On the day immediately preceding the date of switch over / date of exemption / date of
cancellation of registration
Manner of reversal of credit on inputs and capita goods & other conditions
Inputs: proportionate reversal based on corresponding invoices. If such invoices not
available, prevailing market price on the effective date of switch over / exemption /
cancellation of registration should be used with due certification by a CA /CMA
Capital goods: reversal on pro rata basis pertaining to remaining useful life (in months),
taking useful life as 5 years.
Electronic credit / cash ledger will be debited for the amount. Balance ITC, if any, will

Goods and Services Tax 95

 lapse
2. Supply of capital goods / plant and machinery on which ITC has been taken
Amount to be paid is equivalent to higher of the following
a. ITC on CG or P&M less 5% per quarter or part thereof from the date of invoice
b. Tax on transaction value of such capital goods or plant & machinery
Note: Tax to be paid on transaction value when refractory bricks, moulds, dies, figs &
fixtures are supplier as scrap
Common Note:
1. ITC to be reversed will be calculated separately for ITC of CGST, SGST, UTGST & IGST
2. Reversal amount will be added to output tax liability of the registered person

Rule 41: Transfer of unutilised ITC on change in constitution of registered person

In case of sale, merger, amalgamation, lease or transfer of business
Unutilised ITC can be transferred to the new entity if there is a specific provision for transfer
of liabilities to the new entity. The inputs and capital goods so transferred should be duly
accounted for by the transferee in his books of accounts.
In case of demerger
ITC is apportioned in the ratio of value of entire assets (including assets on which ITC has not
been taken) of the new units as per the demerger scheme
Furnishing the change in constitution in the common portal
With request to transfer unutilised ITC
Submit certificate from CA / CMA for the same with the provision for transfer of liabilities
Upon acceptance of such details by the transferee on the common portal,
The unutilised ITC is credited to his ECrL

Rule 41A: Transfer of unutilised ITC on obtaining separate registrations for multiple
places of business within a state / UT
1. Registered person having separate registrations for multiple places of business can transfer
the unutilized ITC to any or all of the newly registered place of business in the ratio of the
value of assets held by them at the time of registration
2. Value of assets means the value of the entire assets of the business irrespective of whether
ITC has been availed thereon or not.
3. The registered person should furnish the prescribed details on the common portal within a
period of 30 days from obtaining such separate registrations.
4. Upon acceptance of such details by the newly registered person (transferee) on the common
portal, the unutilized ITC is credited to his ECrL.

Sahasri Singar Academy 96

Rule 86A: Restrictions on utilisation of ITC
Who: The commissioner / an officer (not below the rank of an AC) authorised by him
Reason: to believe that the ITC has been fraudulently availed or ineligible
Circumstances:
1. ITC has been availed on the basis of tax invoices / valid documents –
Issued by a non-existent supplier or by a person not conducting any business from the
registered place of business or
Without receipt of goods or services or both or
The tax in relation to which has not been paid to the Government
2. The registered person availing ITC has been found non-existent or not to be conducting any
business from the registered place of business or
3. The registered person availing ITC is not in possession of tax invoice / valid document.
If the ITC is so availed,
can be restricted (for a period up to 1 year) to pay any liability u/s 49 or
not allowing refund of any unutilised ITC
Withdrawal of restriction: the commissioner / an officer authorised by him

Rule 86B: Restrictions on the use of amount available in ECrL

Rule 86B overrides the other provisions
Applicable: Registered person having value of taxable supply > ₹50 lakhs in a month
Taxable supply: not include exempt supply and zero-rated supply
Restriction: ITC can be utilised to the extent of 99% of the output tax
& the balance is payable using ECL
Exceptions:
1. Payment of Income Tax more than ₹1 lakh by
Registered person,
Proprietor or a karta or MD of registered person or
Any of two partners, whole time directors
2. Receipt of refund of unutilized ITC of more than ₹1 lakh
On account of zero-rated supply without payment of tax or
On account of inverted duty structure
3. Government Department, Public Sector undertaking, local authority and a statutory body
4. Payment of total output tax liability through ECL in excess of 1% of total output tax liability
up to the said month in the current FY [hence not applicable for April month]

Practical Questions

Goods and Services Tax 97

Question: Swastik Pvt. Ltd. is a manufacturer of taxable goods. It purchased a machinery for
₹8,00,000 on which IGST of ₹14,400 is paid. The company has claimed depreciation under the
Income-tax Act, 1961 on the full value of the machine, i.e. including the IGST component as
also availed ITC of ₹14,400 paid by it as IGST. Examine if the stand taken by the company is
correct in law.1

Question: Sigma Consultants, an LLP of finance professionals, provides financial consultancy

services. It made an advance payment of ₹1,18,000 (inclusive of IGST @18%) in the month of
October to Azuro Computer Services for developing a software. The software would be used
by the LLP to enhance the precision of the financial advice given by it to various clients. The
balance payment is to be made after the successful test run of the software in the month of
December. Sigma Consultants has availed ITC of IGST of ₹18,000 in the month of October.
Do you think Sigma Consultants can avail such ITC? Examine the scenario with reference to
the relevant legal provisions.2

Question: A taxable person is in the business of information technology. He buys a car

(maximum seating capacity – 5 persons) for use of his Executive Directors.
Can he avail the ITC in respect of GST paid on purchase of such car?3

Question: A technical testing agency tests and certifies each batch of machine tools before
dispatch by BMT Ltd. Some of these are dispatched to a unit in a SEZ without payment of GST
as these supplies are not taxable.
The finance personnel of BMT Ltd. want to know whether they need to carry out reversal of
ITC on the testing agency’s services to the extent attributable to the SEZ supplies. Give your
comments.4

Question: ‘AB’, a registered person, was paying tax under composition scheme up to 30th July.
However, w.e.f. 31st July, ‘AB’ becomes liable to pay tax under regular scheme.
Is ‘AB’ eligible for any ITC?5

Question: Babla Enterprises is exclusively engaged in making exempt supply of goods and is
thus, not registered under GST. On 1st October, the exemption available on its goods gets
withdrawn. On that day, the turnover of Babla Enterprises was ₹50 lakh.
Examine the eligibility of Babla Enterprises for availing ITC, if any.6

1
No ITC is eligible as depreciation on GST is claimed
2
ITC is available in the month of receipt of services [in this case advance only paid hence ITC is not available]
3
No (blocked credit)
4
ITC is available is supply to SEZ is zero rated supply
5
ITC is available for inputs in stock and capital goods
6
ITC is available for inputs in stock only [as supplier is not registered person]

Sahasri Singar Academy 98

Question: Mamta Trade Links trades in exempt goods and provides taxable services. It is
registered under GST. On 1st October, the exemption available on its goods gets withdrawn.
Analyze the scenario and determine the eligibility of Mamta Trade Links for availing ITC, if
any, on inputs and/or capital goods used in the supply of exempt goods.1

Question: ABC Co. Ltd registered under GST, is engaged in the manufacture of heavy
machinery. It procured the following items during the month of July
Particulars GST (₹)
1 Electrical transformers to be used in the manufacturing process 5,20,000
2 Trucks used for the transport of raw material 1,00,000
3 Raw material 2,00,000
4 Confectionery items. These items were supplied free of cost to the 25,000
customers in a customer meet orgainsed by the company
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving the
necessary explanation for treatment of various items. Subject to the information given above,
all the other conditions necessary for availing ITC have been fulfilled.
Answer:
Particulars GST (₹)
1 Electrical transformers to be used in the manufacturing process [S.16(1)] 5,20,000
2 Trucks used for the transport of raw material [S.17(5)] 1,00,000
3 Raw material [S.16(1)] 2,00,000
4 Confectionery items. [Blocked credit u/s 17(5)] Nil
Total ITC available 8,20,000

Question: Harshgeet Pvt. Ltd., a registered supplier, is engaged in the manufacture of taxable
goods. The company provides the following information pertaining to purchases made /
services availed by it during the month of July;
Particulars GST (₹)
1 Raw material (to be received in the month of September) 2,50,000
2 Membership of a club availed for employees working in the factory 1,45,000
3 Inputs to be received in 5 lots, out of which 3rd lot was received during 80,000
the month
4 Trucks used for transport of raw material 40,000
5 Capital goods (out of 3 items, invoice for 2 items is missing and GST paid 1,50,000
on those items is ₹80,000)

1
ITC is available for inputs in stock and capital goods [as supplier is a registered person]

Goods and Services Tax 99

Determine the amount of ITC available with Harshgeet Pvt. Ltd. for the month of July by giving
the necessary explanation for treatment of various items. Subject to the information given
above, all the other conditions necessary for availing ITC have been fulfilled.
Answer:
Particulars GST (₹)
1 Raw material (ITC not available as goods not received) Nil
2 Membership of a club availed for employees (blocked credit) Nil
3 Inputs to be received 3/5 lots (available only on receipt of last lot) Nil
4 Trucks used for transport of raw material 40,000
5 Capital goods (ITC is available to the extent invoice is available) 70,000
1,10,000

Question: Jamku Ltd., a registered person, is engaged in the business of spices. It provides
following details in relation to GST paid on inward supplies procured by it during the month
of October.
Particulars GST (₹)
1 Raw spices purchase
• Raw spices sold to customers 50,000
• Raw spices used for personal use of directors 20,000
2 Electric machinery purchased for being used in the manufacturing process. 25,000
3 Motor vehicle used for transportation of the employee 55,000
4 Payment made to contractor for construction of staff quarter 1,25,000

Determine the amount of ITC available with Jamku Ltd. for the month October by giving the
necessary explanation for treatment of various items. Subjects to the information given above,
all the other conditions necessary for availing ITC have been fulfilled.
Answer:
Particulars GST (₹)
1 Raw spices purchase
• Raw spices sold to customers 50,000
• Raw spices used for personal use of directors [Not allowed] Nil
2 Electric machinery purchased for being used in the manufacturing process. 25,000
3 Motor vehicle used for transportation of the employee (blocked credit) Nil
4 Payment made to contractor for construction of staff quarter (blocked credit) Nil
Total ITC available 75,000

Sahasri Singar Academy 100

Question: Dina Ltd. a registered supplier from Maharashtra, is engaged in the manufacture of
passenger autos. The company provides the following details of purchases made / services
availed by it during the month of March;

Particulars GST (₹)

1 Purchase of iron which is used as a raw material (Goods were received in two 2,50,000
installments – first in March and the second in April)
2 Purchase of accessories which were delivered directly to the dealers of the 90,000
company on the direction of Dina Ltd. (Only invoice was received by Dina
Ltd.)
3 Purchase of bus (seating capacity 15) for the transportation of employees 1,97,000
from their residence to company and back
4 General insurance taken on a car used by executives of the company for 5,200
official purposes

You are required to determine the ITC available with Dina Ltd. for the month of March, by
giving brief explanations for treatment of various items. Subject to the information given
above, all the other conditions necessary for availing ITC have been fulfilled.
Answer:
Particulars GST (₹)
1 Purchase of iron – raw material (ITC available on receipt of last lot) Nil
2 Purchase of accessories which were delivered directly to the dealers of the 90,000
company on the direction of Dina Ltd. (Only invoice was received by Dina
Ltd.) [ITC is available]
3 Purchase of bus (seating capacity 15) for the transportation of employees 1,97,000
from their residence to company and back [ITC is available as seating > 13]
4 General insurance taken on a car used by executives of the company for Nil
official purposes (blocked credit)
Total ITC available 2.87,000

Question: M/s. Diwan & Sons of New Delhi, has placed an order for 250 kg of plastic granules
@ ₹50 kg (exclusive of GST) on M/s. Karim & Bros. of Noida, U.P. M/s. Karim & Bros. has
agreed to deliver the goods at the warehouse of M/s. Diwan & Sons at New Delhi.
While the order was getting packed at the factory of M/s. Karim & Bros., M/s. Diwan & Sons
got an order from Shubhkamna Sales of Hapur, U.P for 250kg of plastic granules @ ₹60 per
kg (exclusive of GST). In order to save on transportation cost, M/s. Diwan & Sons asks M/s.
Karim & Bros. to directly deliver the plastic granules to Shubhkamna Sales at its godown
located in Hapur. Accordingly,

Goods and Services Tax 101

M.s. Karim & Bros. has delivered the plastic granules at the godown of Shubhkamna Sales at
Hapur.
Examine the availability of ITC with M/s. Diwan & Sons & M/s. Karim & Bros.
Note: All the parties are registered under GST and rate of GST is 18%.
Answer: Goods are transferred on movement hence ITC is available as follows
1. Diwan & Sons: ₹2,250 [₹250 kg × ₹50 ×18%]
2. Shubhkamna Sales: ₹2,700 [₹250 kg × ₹60 ×18%]

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

Particulars ₹
Intra-State supply of goods 10,00,000
Inter-State supply of goods 8,0,0000
It has also furnished the following information in respect of purchases made by it in that tax
period:
Particulars ₹
Intra-State purchases of goods 3,00,000
Inter-State purchases of goods 2,50,000
Paritosh & Co. has following ITCs with it at the beginning of the tax period;
Particulars ₹
CGST 57,000
SGST 60,000
IGST 1,40,000
Note:
1) Rates of CGST, SGST and IGST are 9%, and 18% respectively.
2) Both inward and outward supplies are exclusive of taxes, wherever applicable.
3) All the conditions necessary for availing ITC have been fulfilled.
Compute the minimum GST, payable in cash, by Paritosh & Co. for the tax period and the ITC
to be carried forward to the next month. Make suitable assumptions as required.

Sahasri Singar Academy 102

Answer:
I GST payable on outward supplies
Particulars CGST SGST IGST Total
9% 9% 18%
₹ ₹ ₹ ₹
1 For intra-state supply [₹10,00,000] 90,000 90,000 Nil 1,80,000
2 For inter-state supply [₹8,00,000] Nil Nil 1,44,000 1,44,000
Total GST payable 90,000 90,000 1,44,000 3,24,000

II Computation of total ITC

Opening ITC 57,000 60,000 1,40,000 2,57,000
+ ITC on intra-state purchase [₹3,00,000] 27,000 27,000 Nil 54,000
+ ITC on inter-state purchase [₹2,50,000] Nil Nil 45,000 45,000
Total ITC 84,000 87,000 1,85,000 3,56,000

III Computation of minimum GST payable from electronic cash ledger

Total GST payable as per I 90,000 90,000 1,44,000 3,24,000
− 1st: ITC of IGST used for IGST [₹1,85,000] 1,44,000 1,44,000
− 2nd: ITC of CGST for CGST 84,000 84,000
− 3rd: ITC of SGST for SGST 87,000 87,000
− 4th: balance ITC of IGST for CGST & SGST 6,000 3,000 Nil 9,000
Minimum GST payable in cash Nil Nil Nil
IV ITC balance carried forward Nil Nil 32,000

Question: Mr. Thiraj, a registered supplier of service in Bangalore (Karnataka State) has
provided the following information for the month of February 2020;
Particulars ₹
1 Intra-State taxable supply of service 5,20,000
2 Legal fee paid to a Lawyer located within the state 20,000
3 Rent paid to the State Govt. for his office building 30,000
4 Received for services towards conduct of exams to Lovell University, 16,000
Pune (recognized by law), being an inter-state transaction

Goods and Services Tax 103

Compute the net GST liability (CGST, SGST or IGST) of Mr. Thiraj for the month of February
2020. Rate of CGST, SGST AND IGST are 9%, 9% and 18% respectively. All the amounts
given above are exclusive of taxes.
{CA inter N18, 6 marks}
Answer: Computation of net GST liability by Mr. Thiraj for the month of February, 2020
No Particulars Value CGST SGST
Supply 9% 9%
Output supply ₹ ₹ ₹
1 Intra-State taxable supply of services 5,20,000 46,800 46,800

4 Services towards conduct of exams in Lovell University, 16,000

Pune (exempt)
Inward supply
2 Legal fee paid to lawyer located within State 20,000 1,800 1,800
[reverse charge]
3 Rent paid to State Government for Office Building 30,000 2,700 2,700
[reverse charge]
Total tax liability 51,300 51,300
− Cash paid towards tax payable under reverse charge [A] (4,500) (4,500)

Output tax payable against which ITC can be set off 46,800 46,800

− ITC of tax paid on legal fees and rent (4,500) (4,500)

Output tax payable after set off of ITC [B] 42,300 42,300

Net GST [A+B] 46,800 46,800

Notes: The amount available in the electronic credit ledger may be used for making payment
towards output tax. However, tax payable under reverse charge is not an output tax. Therefore,
tax payable under reverse charge cannot be set off against the input tax credit and thus, will
have to be paid in cash.

Sahasri Singar Academy 104

 7: REGISTRATION

Persons liable for Registration u/s 22

1. Every supplier is liable to be registered under this Act
In the State or Union territory from where he makes the taxable supply
If his aggregate turnover (AT) > exceeds ₹20 lakh | ₹10 lakh | ₹40 lakh in a financial year

Special Category States

MMNT ASUM JHA
1 Manipur 5 Arunachal Pradesh 9 Jammu and Kashmir
2 Mizoram 6 Sikkim 10 Himachal Pradesh
3 Nagaland 7 Uttarakhand 11 Assam
4 Tripura 8 Meghalaya

AT > ₹10 lakhs AT > ₹20 lakhs AT (service) > ₹20 lakhs
MMNT ASUM | PT AT (service & goods) > ₹20 lakhs
1 Manipur 1 Arunachal Pradesh AT (goods) > ₹40 lakhs*
2 Mizoram 2 Sikkim JHA
3 Nagaland 3 Uttarakhand 1 Jammu and Kashmir
4 Tripura 4 Meghalaya 2 Himachal Pradesh
5 Puducherry 3 Assam
6 Telangana 4 All other states

Note: for the purposes of this sub-section, a person shall be considered to be engaged
exclusively in the supply of goods 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.
Exception to higher AT
(a) Persons required compulsory registration u/s 24
(b) Persons engaged in making supplies of ice cream, pan masala, tobacco
[no extended threshold limit]
(c) Person who has opted for voluntary registration

2. Every person who, on the day immediately preceding the appointed day, is registered or
holds a licence under an existing law, shall be liable to be registered under this Act with

Goods and Services Tax 105

 effect from the appointed day.
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.
4. In a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation
or, as the case may be, demerger 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.

Question: is the registration required or not for the following cases?

1. SSA of Assam is engaged in intra-state supply of books. His aggregate turnover is ₹24 lakhs1
2. SSA of Assam is engaged in intra-state supply of CA / CMA Coaching. His aggregate
turnover is ₹24 lakhs.2
3. SSA of Assam is engaged in intra-state supply of ice cream. His aggregate turnover is ₹24
lakhs.3
4. SSA of TN is engaged in intra-state supply of ice cream [ATO is ₹14 lakhs] and supply of
books [ATO is ₹24 lakhs]4
5. SSA of Puducherry is engaged in intra-state supply of books. [ATO is ₹24 lakhs]5
6. SSA of Manipur is engaged in intra-state supply of Books. [ATO is ₹14 lakhs].6
7. SSA of TN is engaged in intra-state supply of books [ATO is ₹24 lakhs]. It has another
showroom in Tripura with a ATO of ₹16 lakhs.7
8. SSA of TN is engaged in intra-state supply of books [ATO is ₹34 lakhs]. It also supplied
alcoholic liquor for human consumption from Nagaland [ATO is ₹9 lakhs]8

1
Yes, as ATO ≤ 20 lakhs in case of supply of goods only [for Puducherry]
2
Yes, as ATO is NOT ≤ 20 lakhs in case of supply of service only [for Assam]
3
Yes, as ATO is NOT ≤ 20 lakhs in case of supply of goods only i.e. ice cream [for Assam]
4
Yes, as ATO is NOT ≤ 20 lakhs in case of supply of goods that includes ice cream
5
Yes, as ATO ≤ 20 lakhs in case of supply of goods or services or both from Puducherry
6
Yes, as ATO is NOT ≤ 10 lakhs in case of supply of goods or services or both [for Manipur]
7
Yes, as ATO is NOT ≤ 10 lakhs in case of supply of goods or services or both [from TN & Tirpura]
8
Yes, as ATO is NOT ≤ 40 lakhs in case of taxable supply and exempt / non-taxable supply from Nagaland will
not reduce the limit to ₹10 lakhs. Registration is required only in TN and NO registration is required in
Nagaland

Sahasri Singar Academy 106

Question: Pure Oils, Delhi has supplied machine oil and high speed diesel in the month of
April as per the details given in table below. Pure Oils is not yet registered.
Particulars ₹
1 Supply of machine oil in Delhi 15,00,000
2 Supply of High-speed diesel in Delhi 10,00,000
3 Supply of machine oil made in Punjab by Pure Oils from its branch in Panjab 10,00,000
Value is excluding GST
a. Determine whether Pure Oils liable for registration1
b. What will be your answer if Pure Oils supplied the high speed diesel in Delhi in the capacity
of an agent of Mixed Oils Ltd?2

Question: Examine whether the supplier of goods is liable to get registered in the following
independent cases:
a. Raghav of Assam is exclusively engaged in intra-state taxable supply of readymade
garments. His turnover in the current financial year from Assam showroom is ₹23 lakh. He
has another showroom in Tripura with a turnover of ₹11 lakh in the current FY3
b. Pulkit of Panjim, Goa is exclusively engaged in intra state taxable supply of shoes. His
aggregate turnover in the current financial year is ₹22 lakh.4
c. Harshit of Himachal Pradesh is exclusively engaged in intra-state supply of pan masala.
His aggregate turnover in the current FY is ₹24 lakh5

Section 23: Persons not liable for registration [Not taxable person]
1. Supplier of 100% wholly exempt or not taxable supplies
Not taxable – Petrol supply | Exempt – charitable activity by 12AA charitable trust
2. Agriculturist, to the extent of supply of produce out of cultivation of land
Agriculturist – individual or HUF cultivating in land by own labour, labour of family or
servants on wage payable in cash or kind under own supervision.
Supply other than produce out of cultivation of land – liable for registration subject to limit
Question: SET is an agriculturist engaged in cultivation of rice in his field and supplies the
wheat [ATO is ₹33 lakhs] in TN. SET also buys and supplies the wheat [ATO is ₹9 lakhs].

1
Threshold limit not reached hence not required [15+10+10 = 35]
2
Being an agent of taxable person, registration is must irrespective of the threshold limit. Anyhow in the given
case registration not required as the supply is non-taxable goods
3
Register in both the states, threshold limit is 10 lakhs as one of the states being Tripura
4
Not required, as AT < threshold limit of ₹40 lakhs
5
Liable to register, Threshold limit is ₹20 lakh as sale of pan masala

Goods and Services Tax 107

 Is SET required to register?1
3. Notified specific category of persons
a. Persons making only reverse charge supplies [S.9(3)]
b. Persons making inter-state supply of taxable services up to ₹20 lakhs
Question: SET located in TN, is engaged in supply of taxable goods in the neighbouring
states of Andhra Pradesh and Karnataka. [ATO is ₹15 lakhs]. Is SET required to
register?2
Also state if SET is engaged in supply of taxable services instead of taxable goods.3
c. Persons making inter-state taxable supplies of notified handicraft goods or notified
products made predominantly by hand up to the limit
Conditions:
i. Limit: ATO is ₹20 lakhs & [ATO is ₹10 in case of MMNT states]
ii. Have obtained a PAN & have generated an e-way bill
Handicraft goods: handicraft candles, articles made of paper mache, coir articles,
handbags, pouches and purse, jewellery box, hand embroidered articles, art ware of iron
/ aluminium, etc.
Notified products made predominantly by hand: leather articles, carved wood
products, wood turning and lacquer ware, bamboo products, textiles hand printing,
theatre costumes, musical instruments, dolls and toys, etc.
d. Casual Taxable Persons making inter-state taxable supplies of notified handicraft goods
or notified products made predominantly by hand up to ₹20 lakhs or ₹10 lakhs
Conditions:
i. Limit: ATO is ₹20 lakhs & [ATO is ₹10 in case of MMNT states]
ii. Have obtained a PAN & have generated an e-way bill
e. Agent as per APMC Act for sale / purchase of agricultural produce
APMC Act: Agricultural Produce Marketing Committee Act of the State
Agent as per APMC Act: a Commission agent, who is making supplies on behalf of
non-taxable person (i.e. agriculturist), is not liable for compulsory registration under this
provision
Provided: He is not required to register under RCM

1
Yes, as ATO is NOT ≤ 40 lakhs as SET is engaged in supply other than supply of produce out of cultivation of
land
2
Yes
3
No, as ATO is ≤ 20 lakhs

Sahasri Singar Academy 108

Compulsory Registration u/s 24
1. Person engaging inter-state supply
Except
a. taxable services up to the limit [₹20 lakhs or ₹10 lakhs]
b. supply of notified handicraft goods up to the limit [₹20 lakhs or ₹10 lakhs]
2. Casual taxable person
Except inter-state notified supply of notified handicraft goods up to ₹20 lakhs or ₹10 lakhs
3. Tax payer under reverse charge
4. Non-resident taxable person
5. Tax payer being E-Com Operator u/s 9(5)
ECO – who is required to collect tax at source
Except – supplier through E-Com operator up to the threshold limit
6. Person required to deducts tax TDS u/s 51
7. Persons make taxable supply as an agent for other taxable person
8. Input Service Distributor
9. Online Information and Database Access and Retrieval Service
Supply from outside India to India
10. Such other notified person

Question: State which of the following suppliers are liable to be registered:

a. Agent supplying goods on behalf of some other taxable person & its aggregate turnover
does not exceed the threshold limit during the financial year.1
b. An agriculturist who is only engaged in supply of produce out of cultivation of land but
aggregate turnover exceeds the threshold limit.2

Question: Examine, with reason, whether registration is required, under CGST Act, in the
following independent cases:
3. SSA Computers of TN is providing computer maintenance service. Aggregate turnover of
SSA computers is ₹15 lakhs which comprises both inter-state and intra-state supply.3
4. SBP of TN, supplying its taxable goods in various status of India from its outlet in TN.
[ATO is ₹36 lakhs]4

1
Liable for registration
2
Not liable for registration
3
Registration is not required as ATO ≤ 20 lakhs [₹40 lakhs is not applicable as there is inter-state supply]
4
Registration is required as ATO > 20 lakhs [₹40 lakhs is not applicable as there is inter-state supply]

Goods and Services Tax 109

Question: Examine, with reason, whether registration is required, under CGST Act, in the
following independent cases:
1. Meenu, a supplier in Maharashtra, is exclusively engaged in supply of potatoes produced
out of cultivation of her own land, within Maharashtra and also outside Maharashtra.1
2. Jinu Oils, Gujarat is engaged in supplying machine oil as well as petrol. Further, it provides
services of refining of oil to customers. Total turnover of supply of machine oil is ₹10 lakh,
supply of petrol is ₹5 lakh and supply of services is ₹6 lakh.2
3. Tilu is working as an agent, he is supplying taxable goods as an agent of Tiku (who is
registered taxable person) and its aggregate turnover does not exceed ₹20 lakh during the
financial year.3

Procedure for registration u/s 25

1. Where and by when to apply for registration
Every person liable for registration
Apply for registration in every State or UT in which he is liable
In 30 days from the date on which he becomes liable to registration
Provided:
In case of a casual taxable person or a non-resident taxable person
Apply for registration at least 5 days prior to the commencement of business
Further provided: SEZ or SEZ developer – a separate registration
2. State-wise registration
One registration per state
Single registration for different branches is allowed only if
All the branches located in the same state provided
Declare one place as Principal Place of Business (PPoB) and
Other branches as Additional Place of Business (APoB)
Separate registration for different business verticals – granted
Provided: All separately registered business verticals pay tax on supply made to another
registered business vertical
3. Voluntary registration – granted (same provision will be applicable)
4. A person obtained more than one registration is treated as distinct persons
5. A person who obtained registration in a state or UT in respect of an establishment, has an
establishment in another state or UT then such establishments shall be treated as

1
Registration not required and threshold limit is not applicable [as supply of agricultural produce]
2
Registration is required as ATO > 20 lakhs
3
Registration is required compulsorily u/s 24 [being agent of other taxable perons]

Sahasri Singar Academy 110

 establishment of distinct persons
6. PAN (or TDS / TCS Account number) must for obtaining registration except NRTP
7. Authentication for every registered person –
Aadhaar number or other proof else registration allotted is invalid
Individual: Authentication for grant of registration – Aadhaar number or other proof
Other than individual: Authentication for grant of registration – Aadhaar number of Karta,
MD, whole time Director, Partners, Members of managing committee of association, board
of trustees, authorized representative, authorized signatory or such other notified persons.
Other proof if Aadhaar number is not available
8. Authentication not apply: any state or UT or other notified person
Notified person:
a. a person who is not a citizen of India
b. a class of persons other than the following class of persons
individual Authorised signatory of all types
Karta of a HUF Managing and authorized partner
9. Unique Identity Number:
Any specialized agency of the United Nations Organisation
Multilateral Financial Institution & Organisation notified by UN Act
Consulate or embassy of foreign countries
Other notified person
A person, having UIN is not registered person and thus, is not a taxable person
But UIN is needed to claim refund of taxes
UIN is issued in Form GST REG 06 within 3 working days from the date of application
after receiving a recommendation from the Ministry of External Affairs.
10. Suo-motu registration by the proper officer
Proper officer (on enquiry) may issue order for temporary basis
a) Submit an application for registration in prescribed form within 90 days from the date
of grant of temporary registration or
b) File an application against temporary registration but
If the Appellate Authority upholds the liability for registration, application for
registration shall be submitted in 30 days

Goods and Services Tax 111

General Procedure for Registration
{Not applicable: NRTP | TDS | TCS | OIDAR}
{Separate registration for SEZ or SEZ Developer}
Part I
1. Apply in Part A of Form GST REG-01 on GST Common Portal
Declare: PAN | Mobile No. | E-mail Address | State or UT
2. Validation
PAN – online by Common Portal from CBDT database
Mobile No & Email Address – by onetime password
3. Generate Temporary Reference Number (TRN) and
communicated in validated mobile no & email address
4. Using TRN, submit application electronically in Part B
along with required documents
Constitution of business, jurisdiction, option for composition, date of commencement
of business, reason for registration, address, details of bank account, details of
authorized signatory, etc..
Note: details of bank account can be furnished later but within WEE of
ii. Date of registration + 45 days
iii. The date of return to be furnished u/s 39.
This relaxation is not applicable for TDS / TCS / Suo-motu registration
and Authentication of Aadhar number
in case of CTP, deposit of tax in electronic cash ledger in advance,
5. Acknowledgement issued electronically

Part II: Procedure by proper officer

6. Proper officer examines the application + documents
7. If application is in order,
grants registration certificate in Form GST REG 06
8. If application is not in order
PO issue notice electronically for clarification in 3 working days
Notice may be issued not later than 21 days from application submission date in case where
a person fails to undergo Aadhaar authentication
9. Applicant should furnish the clarification in 7 working days and
PO may issue registration certificate in 7 working days if PO is satisfied
PO may reject registration in 7 working days if clarification is not received in 7 working

Sahasri Singar Academy 112

 days or PO is not satisfied with clarification
Note: clarification includes modification / correction of particulars declared in the application
for registration, other than PAN, State, Mobile No. & E mail address.

Deemed Approval of Application

If the proper officer fails to take any action
Within 3 working days from the date of application [not related to Aadhar], or
Within 21 days from the date of application in case of Aadhar authentication
Within 7 working days from the date of receipt of clarification

Aadhar authentication:
New applicant:
Date of submission of application is WEE:
c. The date of authentication of the Aadhar number
d. 15 days form the submission of the application in Part B of Form GST REG – 01
Exiting registered person: Authenticate
Where Aadhar is not assigned:
Registration is granted only after physical verification or
The proper officer may carry out the verification of such documents as he may deem fit.
In case of an already registered persons, needs authenticate the Aadhar or other documents else
his registration becomes invalid.
Aadhar authentication is done with OTP through the link sent

Other points
1. Physical verification along with other documents including photographs of business
premises shall be uploaded in GST Common Portal within 15 working days in some cases

2. Issuance of registration certificate [Form GST REG – 06] with GSTIN (PAN based)
State Pan Number Entity Check
Code Code Sum

GSTIN should be displayed on the name board at the entry of PPoB / ADoB

Goods and Services Tax 113

3. Effective date of registration
Date of Application Date of Registration
Apply within 30 days from Date liable for registration
the date of liable for registration
Apply after 30 days from Date of grant of registration
the date of liable for registration

Section 26: Deemed Registration

The grant of registration UIN under SGST or UTGST shall be deemed to be a grant of
registration under CGST unless rejected in CGST
The rejection of registration UIN under SGST or UTGST shall be deemed to be a rejection of
registration under CGST

Section 27: Special Provision for Registration for CTP and NRTP
1. CTP and NRTP get compulsorily registered at least 5 days prior to the commencement of
business
2. CTP will apply in normal form with PAN
3. NRTP will apply with self-attested valid passport along with the application signed by his
authorised signatory who is an Indian Resident having valid PAN. Also, NRTP should
submit Tax Identification Number applicable in his country.
4. Period of validity of registration certificate: Which-ever is earlier
i. Period specified in application
ii. 90 days from effective date of registration (extendable for further 90 days)
5. Advance Deposit of Tax based on estimation before applying
{CA inter N18, 5 marks | Mr. Allan, NRTP}

Question: Determine the effective date of registration in following cases:

a. The aggregate turnover of Dhampur Industries of Delhi has exceeded ₹40 lakh on 1st September.
It submits the application for registration on 20th September. Registration certificate is granted
to it on 25th September. 1
b. Mehta Teleservices is an internet service provider in Lucknow. Its aggregate turnover
exceeds ₹20 lakh on 25th October. It submits the application for registration on 27th
November. Registration certificate is granted to it on 5th December.2

1
1st September
2 th
5 December

Sahasri Singar Academy 114

Question: In order to be eligible for grant of registration, a person must have a Permanent
Account Number issued under the Income- tax Act, 1961. State one exception to it.1

Question: What are the advantages of taking registration in GST?

{CMA inter D18, 9 marks}
Legally recognized as supplier of goods or services.
Proper accounting of taxes paid on the input goods or services which can be utilized for
payment of GST due on supply of goods or services or both by the business.
Legally authorized to collect tax from his purchasers and pass on the credit of the taxes
paid on the goods or services supplied to purchasers or recipients.
Become eligible to avail various other benefits and privileges rendered under the GST laws.

Question: Write short notes on Advantages of voluntary registration?

{CMA inter D18, 5 marks}
1. Legally recognized as supplier of goods or services; this helps in attracting more customers.
2. Provide input tax credit to customers. As they can issue taxable invoices, they can collect
GST. Their customers can take input credit on their purchases.
3. They will be more competitive than other small business as buying from them will ensure
input credit.
4. Voluntarily registered persons can take input credit on their own purchases and input
services like legal fees, consultation fees etc.
5. They can make inter-state sales without many restrictions.

Section 28: Amendment of Registration

1. Change in case of PAN or PPoB or APoB [one state to another]:
Not possible hence need to apply fresh registration
2. Core fields: Name of business | addition or deletion of stakeholders, PPoB & APoB [within
the same state]
3. Non-core fields: other than core fields such as email, mobile number etc
4. Change in case of core fields:
a. Inform the proper officer for amendment in 15 working days of change
b. PO may approve or reject within next 15 working days
5. Change in case of non-core fields: certificate stands amended on submission
6. In case of rejection, PO will give 7 working days to applicant for reply

1
NRTP

Goods and Services Tax 115

 If reply is satisfactory, amend within 7 days
7. Any rejection or modification in SGST / UTGST is deemed to be rejected or amended in
CGST
8. Amendments applicable prospectively except with the order of Commissioner

Section 29: Cancellation of Registration

1. Cancellation either by PO on his own motion or by the registered person or by his legal heirs
(in case of death of such person)
a. Business discontinued
b. Transferred fully for any reason including death of the proprietor
c. Amalgamated with other legal entity
d. Demerged
e. Disposed
f. Change in constitution of the business
g. Taxable person who is no longer liable for register u/s 22 or 24
Suspension of registration during pendency from WEL of
a. The date of submission of the application or
b. The date from which the cancellation is sought
During suspension: not to make taxable supply | No return filing is required
Suspension is revoked on completion of cancellation
2. Circumstances when the registration can be cancelled by PO on his own even with
retrospective date
a. A registered person has contravened provisions of the Act or;
b. A person paying tax under composition levy has not furnished returns for three
consecutive tax periods
c. A person paying tax [other than tax payer under composition levy] has not furnished
returns for continuous 6 months; or
d. Voluntary registered person has not commenced business within six months from the
date of registration; or
e. Registration was obtained by means of fraud, willful misstatement or suppression of facts
PO will cancel only after giving opportunity being heard
3. Procedure for cancellation
a. Apply for cancellation electronically within 30 days
b. Furnish the details of inputs held in stock or contained in semi-finished / finished goods
or capital goods and liability thereon

Sahasri Singar Academy 116

 c. PO may issue cancellation order in 30 days
d. Where the PO cancels the registration suo-motu, he shall issue SCN with 7 days for reply
e. The PO officer may direct to pay pending tax, dues, etc.
f. Deemed to be cancelled under CGST if registration is cancelled in SGST or UTGST
4. Pay an amount on cancellation: WEH
a. ITC [stock of inputs + inputs contained in WIP & FG stock + capital goods or PM]
b. Output tax
In case of capital goods or PM, amount payable is WEH
a. ITC – x% [take useful life as 5 years]
b. Tax on transaction value of capital goods or PM
Example: Capital goods have been in use for 4 years, 6 month and 15 days. The useful
remaining life in months = 5 months ignoring a part of the month.
5
ITC attributable to remaining useful life = 𝐼𝑇𝐶 𝑜𝑛 𝐶𝐺 ×
60

Other points
2. UIN can not be applied for cancellation
3. Cancellation will not reduce the tax dues

Section 30: Revocation of Cancellation

1. Any registered person, whose registration is cancelled by the proper officer on his own
motion, may apply to such officer for revocation of cancellation of the registration in the
prescribed manner within thirty days from the date of service of the cancellation order
2. The proper officer, either revoke cancellation of the registration in 30 days or reject the
application.
3. Provided that the application for revocation of cancellation of registration shall not be
rejected unless the applicant has been given an opportunity of being heard (for reply 7 days)
4. The revocation of cancellation of registration under the SGST/UTGST shall be deemed to
be a revocation of cancellation of registration under CGST.
5. On revocation, file the return during the period of cancellation within 30 days from the date
of issue of revocation

Question: Can a person without GST registration collect GST and claim ITC?1
Question: If a person is operating in different States, with the same PAN number, can he
operate with a single registration?2

1
No
2
No

Goods and Services Tax 117

Question: Can a person, having multiple business verticals in a State, obtain separate
registrations for each business vertical?1
Question: Is there a provision for a person to get himself voluntarily registered though he may
not be liable to pay GST?2
Question: Can the Department, through the proper officer, suo-moto proceed to register of a
person?3
Question: Whether the registration granted to any person is permanent?4
Question: Is it necessary for the UN bodies to get registration under GST?5
Question: What is the responsibility of the taxable person making supplies to UN bodies?6
Question: What is the validity period of the registration certificate issued to a casual taxable
person and non-resident taxable person?7
Question: What happens when the registration is obtained by means of willful mis-statement,
fraud or suppression of facts?8
Question: Is there an option to take centralized registration for services under GST Law?9
Question: What could be the liabilities (in so far as registration is concerned) on transfer of a
business?10
Question: At the time of registration, will the assessee have to declare all his places of
business?11
Question: What will be the time limit for the decision on the on-line registration application?12
Question: Does cancellation of registration impose any tax obligations on the person whose
registration is so cancelled?13

1
Yes
2
Yes
3
Yes
4
Yes, always permanent unless surrendered or cancelled
5
Yes
6
Quote UIN number in the invoice and treat as B2B
7
Period specified in application form or 90 days (extendable by further 90 dates) whichever is earlier
8
Cancellation of registration retrospectively
9
No
10
Transferee needs to apply fresh registration
11
Yes
12
PO should respond in 3 days | Applicant should respond in 7 days | PO may grant or reject the registration in
7 days
13
Yes

Sahasri Singar Academy 118

 8. TAX INVOICE, CREDIT AND DEBIT NOTES

Section 31: Tax invoice

Sec Particulars
31 Tax Invoice
(1) A registered person supplies taxable goods shall issue tax invoice,
before or at the time of;
(a) Movement of goods: Removal of goods for supply to the recipient,
(b) Other cases: Delivery of goods or making available to the recipient
(2) A registered person supplies taxable services shall issue tax invoice,
before or after the provision of service
but within a period of 30 days from the date of supply of service
(45 days in case of an insurer or banking company or FIs or NBFC)
Note: An insurer or banking company or FIs or NBFC or telecom operator, or any
other cases making taxable supplies of services between distinct persons may issue
the invoice
Before or at the time of recording the supply in the books of account or
Before the expiry of the quarter during which the supply was made
(3) Special Cases
(a) Revised invoice:
within one month from the date of registration
for the invoice already issued
during the period beginning
with effective date of registration
till the date of issuance of certificate of registration.
(b) May not issue of tax invoice.
Conditions:
1. Value of supply < ₹200,
2. The recipient is unregistered and
3. tax invoice is not required by him
4. But consolidated tax invoice (CTI) can be issued at the close of each day.
This option is not available: Admission to multiplex screens.
In case of inter-state supplier, CTI cannot be issued in respect of all unregistered
recipients if the value of a supply exceeds ₹2,50,000 during this period.

Goods and Services Tax 119

(c) Issue of bill of supply: by registered person
1. for supplying exempted supply
2. paying tax under composition levy
May not issue of bill of supply [If Value < ₹200 [conditions apply]]
(d) Issue of receipt voucher on receipt of advance payment
Where at the time of receipt of advance
i. Rate of tax is not determinable – 18%
ii. Nature of supply is not determinable – inter-state supply
(e) Issue of refund voucher if advance payment is refunded
[due to no supply and no tax invoice]
(f) Issue of invoice under reverse charge by registered recipient u/s 9(3) & (4)
On the date of receipt of goods or services or both
[if the supplier is not registered u/s 9(3)]
(g) Issue of payment voucher for the above at the time of payment
(4) Time of issue of invoice for continuous supply of goods which
Involves successive statements: before or at the time of statement
Involves successive payments: before or at the time receipt of payment
(5) Time of issue of invoice for continuous supply of services where
(a) Due date is ascertainable from contract: on or before the due date
(b) Due date is not ascertainable: on or before the receipt of payment
(c) Payment on completion of contract: on or before the date of completion
(6) Supply of services ceases before the completion of service
Time of supply: before cessation (to the extent of completion of supply)
(7) Sale on approval or return basis
Invoice shall be issued whichever is earlier [WEE]
(a) on or before the time of supply
(b) six months from the date of removal
31A Facility of digital payment to recipient:
(2) Government by notification issue other documents other than tax invoice
a. Any other documents shall be deemed to be a tax invoice
b. Tax invoice may not be issued
Suppliers are permitted to issue other documents other than tax invoice
a. Insurer / banking company / FIs / NBFC – document should contain
Optional information: serial number / address of recipient

Sahasri Singar Academy 120

 Mandatory information: a consolidated tax invoice at the end of the month,
as prescribed for tax invoice (other than optional info)
Digital signature not required
b. GTA [transportation of goods by road] – documents should contain
Gross weight of the consignment
Name of the consignor and the consignee
Registration number of goods carriage
Details of goods transported
Details of place of origin and destination
GSTIN of the person liable for paying tax [consigner or consignee or GTA]
Other information as prescribed for a tax invoice
c. Supplier of transportation of passengers
Optional information: serial number / address of recipient
Mandatory information: tax invoice [as prescribed] shall include ticket in any
form
d. Admission in multiplex screen for film
Optional information: details of recipient
Mandatory information: electronic ticket shall be deemed to be a tax invoice

Particulars of a tax invoice

1. Name, address and GSTIN of supplier
2. Consecutive serial number
Max 16 characters
Alphanumeric and special characters: hyphen or dash and slash
Unique for every FY
3. Date of issue
4. If recipient is registered – mention Name, Address and GSTIN number
5. If recipient is unregistered:
₹50,000 or more – name, address, state and its code
Less than ₹50,000 – name, address, state may be requested.
6. Harmonized System of Nomenclature (HSN) code for goods or services
Annual Turnover [AT] in the preceding FY Number of Digits of HSN Code
Less than ₹5 crores For B2B supply – 4
For B2C supply – 4 (optional)
More than ₹5 crores For B2B and B2C supply – 6

Goods and Services Tax 121

7. Description of goods or services
8. Quantity / quantity code
9. Total value of supply
10. Rate of tax
11. Amount of tax
12. Place of supply [in case of inter-state supply]
13. Address of delivery [if different from the place of supply]
14. Whether the tax is payable on reverse charge basis
15. Signature or digital signature of the supplier or his authorized representative [not required
for an electronic invoice but quick response code, having embedded invoice reference
number (IRN) in it, in case e-invoice has been issued.]

Manner of issue of the invoice

In case of taxable supply of goods [three copies]
1. Original copy – for recipient
2. Duplicate copy – for transporter
3. Triplicate copy – for supplier
In case of taxable supply of services
1. Original copy – for recipient
2. Duplicate copy – for supplier
Serial number of invoices shall be furnished electronically in form GSTR-1.

Sahasri Singar Academy 122

 TAX INVOICE [Sample]
SSA PVT LTD
GSTIN: 33SSATC9876H2B4
Off – B-32, Vivekanandar Nagar, Ramalinga Nagar,
Trichy 620003.
Customer Name: XYZ PVT LTD Invoice Date: 04.03.2021
Address: VK High Road, Chennai Invoice No. 76/2020-21
GSTIN: XXXXXXXXXXXX

No Description HSN Code Quantity Rate Amount

1 Mobile phone & adopter

Total XXXX
Add: CGST 14% XXXX
Add: SGST 14% XXXX
Grand Total XXXX
Amount in words…
For SSA PVT LTD

Authorized Signature

E-invoice
e-invoice: is must be issued by notified persons.
Notified persons: Registered Business & PAN based aggregate turnover > ₹10 crores in
PFY

E-invoice Schema:
e-invoice is created by tax payer on their own accounting / billing / ERP systems
as per e-invoice schema containing mandatory fields [Form GST INV-1].

Invoice Reference Number (IRN)

E-invoices reported to ‘invoice registration portal [IRP] (10 portals are available)’

Goods and Services Tax 123

IRP will generate a unique ‘Invoice Reference Number [IRN]’ and return the e-invoice
GST e-invoice will be valid only with a valid IRN

Work flow of e-invoice:

1. Taxpayers (Suppliers) create GST invoices on their own accounting / billing / ERP system
As per e-invoice schema [Form GST INV – 01]
2. Taxpayers unload the e-invoice schema to IRP
3. IRP generates IRN
4. IRP digitally signs the e-invoice and add QR code
5. IRP returns e-invoice to supplier
6. Supplier shares the e-invoice with receiver (along with QR code)

Cancellation of reported invoice

Allowed by seller by reporting IRN on IRP within specified time

Amendment of reported invoice

Possible only on GST portal but possible through the IRP
Presently, invoices, credit notes and debit notes, when issued by notified persons (to registered
persons (B2B) or for the purpose of exports) covered under e-invoice.

E-invoicing – applicability
Situation E-invoice
1 Supply of goods or services or both to Applicable
a registered person by notified person [B2B supplied]
2 Exports by notified persons Applicable
3 Supplies made by notified person, Applicable
tax on which is payable under reverse charge u/s 9(3)
4 B2C supplies by notified persons Not applicable
5 Invoices issued by Input Service Distributor [ISD] Not applicable
6 Where specified category of supplies are received Not applicable
by notified persons from unregistered persons
[attracting reverse charge u/s 9(4) or
through import of services]
7 Import of goods (Bill of Entry) Not applicable

Sahasri Singar Academy 124

Exemption from e-invoicing even if turnover exceeds ₹10 crore.
Special Economic Zone [SEZ] units [not for SEZ developers]
Insurer or banking company or FIs or NBFC
GTA – transportation of goods by road in a goods carriage
Supplier of passenger transportation service
Person supplying services by way of admission
to exhibition of cinematograph films in multiplex screens.

Advantages of e-invoicing
Auto-reporting of invoices into GST return [GSTR-1 & GSTR-2A] and
Auto-generation of e-way bill (schema includes Transporter ID & Vehicle number, etc.).
Hence, Substantial reduction in transcription errors.
Early payment | Cost Reduction
Improved efficiency of business
Reduction of tax evasion
Elimination of fake invoices
No requirement: issuing invoice in duplicate / triplicate copies

Content in (quick response) QR code

GSTIN of suppler
GSTIN of recipient
Invoice number as given by supplier
Date of generation of invoice
Invoice Value (taxable value)
Number of line items
HSN code of main item (the line item having highest taxable value)
Unique Invoice Reference Number (hash)
Date of generation of IRN

Dynamic QR code on B2C invoices if ATO in PFY > ₹500 crores

To enable and encourage digital payments where buyer can scan the dynamic QR code and
make payment from mobile wallet directly.

Dynamic QR code – not applicable

1. Insurer or banking company or FI including NBFC

Goods and Services Tax 125

2. GTA supplying services in relation to transportation of goods by road in a goods carriage
3. Supplier of passenger transportation service
4. Person supplying services by way of admission to exhibition of cinematograph films in
multiplex screens
5. Supplier of online information and database access or retrieval (OIDAR) services.

No Dynamic QR code in case of exports:

Need to issue e-invoice by a registered person for exports, treating them as B2B supplies

Content in (quick response) QR code to be scanned to make digital payment.

Supplier GSTIN
Supplier UPI ID
Payee’s Bank A/c number and IFSC
Invoice number & Invoice Date
Total invoice value and
GST amount along with breakup i.e., CGST, SGST, IGST, Cess, etc.
Example: A taxpayer (say a firm of advocates) having aggregate turnover in a FY of more
than ₹20 crore is supplying services to a company (who will be discharging tax liability as
recipient under reverse charge mechanism), such invoices have to be reported by said tax payer
(since it is a notified person) to IRP.

Example: Maharaja Private Limited has an SEZ unit and a regular DTA unit (both having
same PAN). The aggregate total turnover of Maharaja Private Limited is more than ₹10 crores
(considering both GSTINs). However, the turnover of DTA unit is below ₹5 crores for FY
2022-23.
In this scenario, SEZ unit is exempt from e-invoicing. However, e-invoicing will be applicable
to DTA unit because the aggregate turnover of the legal entity in this case is > ₹10 crores. The
eligibility is based on aggregate annual turnover on the common PAN.

Question: Jain & Sons is a trader dealing in stationery items. It is registered under GST and
has undertaken following sales during the day;
No Recipient of supply ₹
1 Raghav Traders- a registered retail dealer 190
2 Dhruv Enterprises – an unregistered trader 358
3 Gaurav – a Painter (unregistered) 500

Sahasri Singar Academy 126

 4 Oberoi Orphanage – an unregistered entity 188
5 Aaradhya – a student (unregistered) 158
None of the recipients require a tax invoice (Raghav Traders being a composition dealer)
Determine in respect of which of the above supplies. Jain & Sons may issue a Consolidated
Tax Invoice instead of Tax invoice, at the end of the day?1

Delivery Challan:
Delivery challan is issued on removal and invoice may be issued after delivery.
Cases where delivery challan is issued.
1. Supply of liquid gas where the quantity at the time of removal from the place of business
of the supplier is not known.
2. Transportation of goods for job work,
3. Transportation of goods for reasons other than by way of supply
4. Such other supplies as may be notified
Delivery challan to be issued:
Serially numbered not exceeding 16 characters in one or multiple series at the time of removal

Particulars of Delivery Challan:

1. Date and number of the delivery challan
2. Name, address and GSTIN of the consigner, if registered
3. Name, address and GSTIN or UIN of the consignee, if registered
4. HSN code and description of goods
5. Quantity (provisional where exact quantity being supplied is not known)
6. Taxable value
7. Tax rate and tax amount
8. Place of supply, in case of interstate movement
9. Signature.

Manner of issue of delivery challan [three copies]

1. Original copy – for consignee
2. Duplicate copy – for transporter
3. Triplicate copy – for consignor

1
Consolidated tax invoice can be issued to Oberoi and Aaradhaya (as unregistered recipient & value < ₹200)

Goods and Services Tax 127

Declaration in E-way bill: if goods are being delivered on a delivery challan.
Tax invoice is issued after delivery of goods.
Goods transported in SKD / CKD condition or in batches or lots:
1. The supplier shall issue the complete invoice before dispatch of the first consignment,
2. The supplier shall issue a delivery challan for each of the subsequent consignments,
giving reference of the invoice,
3. Copies of the corresponding delivery challan shall accompany each consignment along
with a duly certified copy of the invoice and
4. The original copy of the invoice shall be sent along with the last consignment.

Suppliers of jewellery | artists supply art work

Goods may be moved within the state / from the state of registration to another state for supply
on approval basis and art works may be sent by artists to galleries for exhibition on delivery
challan along with e-way bill wherever applicable.
Supplier should carry invoice book with him and issue once the supply is fructified
Section 32: Prohibition of unauthorized collection of tax by unregistered person
Section 33: Amount of tax to be indicated in tax invoice and other documents.

Section 34: Credit and Debit Notes

1. Supplier issues credit note to recipient: in case of
a. Taxable value in invoice > Taxable value (actual)
b. Tax charged in invoice > Tax payable (actual)
c. Return of supply.
d. Supply is deficient.
Note: credit note cannot be issued for secondary discounts.
Provided no reduction in output tax is permitted,
if the tax incidence has been passed on to any other person.
2. Issue a credit note: within WEE
a. 30th November following the end of financial year or
b. The date of furnishing of the relevant annual return
Note:
Tax liability shall be adjusted.
However, no reduction in output tax liability shall be permitted,
if the incidence of tax and interest passed on to any other person
3. Supplier issues debit note to recipient: in case of

Sahasri Singar Academy 128

 a. Taxable value in invoice < Taxable value (actual)
b. Tax charged in invoice < Tax payable (actual)
4. Issue a debit note:
Note: declare the details of debit note in the return
for the month during which such debit note has been issued and
Tax liability shall be adjusted.

Particulars of the debit and credit note:

1. Name, address and GSTIN of the supplier
2. Nature of the document.
3. Serial number [like tax invoice]
4. Date of issue of the document
5. Name, address and GSTIN or UIN of recipient [if registered]
6. Name and address of recipient or place of delivery [if recipient is unregistered]
7. Serial number and date of the corresponding tax invoice or bill of supply
8. Value of taxable supply of goods or services, rate of tax and the amount of the tax credited
or debited to the recipient.
9. Signature / digital signature of the supplier / his authorized representative

Question: Kartik & Co., a registered supplier under GST, provides the following information
regarding various tax invoices issued by it during the month of March:
1. Value of supply charged in invoice no. 1 was ₹2,50,000 against the actual taxable value of
₹2,30,000.
2. Tax charged in invoice no. 4 was ₹32,000 against the actual tax liability of ₹68,000 due to
wrong HSN code being chosen while issuing invoice.
3. Value charged in invoice no. 8 was ₹3,20,000 as against the actual value of ₹4,20,000 due
to wrong quantity considered while billing.
Kartik & Co., asks you to answer the following:
1. Who shall issue a debit / credit note under CGST Act?1
2. Whether debit note or credit note has to be issued in each of the above circumstances?2
3. What is the maximum time limit available for declaring the credit note in the GST return?3

1
Credit note issued by Kartik & Co
2
1. Credit note | 2. Debit note | 3. Debit note
3
WEE of 30th November following the end of the FY or date of furnishing annual return.

Goods and Services Tax 129

Practice Questions
Question: Sultan Industries Ltd, Delhi, entered a contract with Prakash Entrepreneurs, Delhi,
for supply of spare parts of a machine on 7th September. The spare parts were to be delivered
on 30th September. Sultan Industries Ltd. removed the finished spare parts from its factory on
29th September. Determine the date by which invoice must be issued by Sultan Industries Ltd
under GST law.1

Question: MBM Caretakers, a registered person, provides the services of repair and
maintenance of electrical appliances. On April 1, it has entered an annual maintenance contract
with P for its Air Conditioner and Washing Machine. As per the terms of contract, maintenance
services will be provided on the first day of each quarter of the relevant financial year and
payment for the same will also be due on the date on which service is rendered. During the
year, it provided the services on April 1, July 1, October 1, and January 1 in accordance with
the terms of contract. When should MBM caretakers issue the invoice for the services
rendered?2
Question: The aggregate turnover of Sangri Service Ltd. exceeded ₹20 lakh on 12th August.
He applied for registration certificate on 6th September. You are required to advice Sangri
Services Ltd. as to what is the effective date of registration in its case. It has also sought your
advice regarding period for issuance of Revised Tax invoices.3

Question: Shyam Fabrics has opted for composition levy scheme in the current financial year.
It has approached you for advice whether it is mandatory for it to issue a tax invoice. You are
required to advise him regarding same.4

Question: Royal Fashions, a registered supplier of designer outfits in Delhi, decides to exhibit
its products in a Fashion Show being organised at Hotel Park Royal, Delhi on 4th January. For
the occasion, it gets the service by way of makeover of its models from Aura Beauty Services
Ltd., Ashok Vihar, for which a consideration is ₹5,00,000 (excluding GST) has been charged.
Aura Beauty Services Ltd., issued a duly signed tax invoice on 10th February showing the
lumpsum amount of ₹5,90,000 inclusive of CGST and SGST @ 9% each for the services
provided. Answer the following questions:
a. Examine whether the tax has been issued within the time limit prescribed under law.5
b. Tax consultant of Royal Fashions objected to the invoice raised suggesting that the amount
of tax charged in respect of the taxable supply should be shown separately in the invoice
raised by Aura Beauty Services Ltd. However, Aura Beauty Services Ltd. Contended that

1
29th September
2
on or before April 1, July 1, October 1, and January 1
3 th
6 October
4
Cannot issue tax invoice but bill of supply can be issued.
5
No, the time limit is 30 days from time of supply of service i.e. 03.02.xx

Sahasri Singar Academy 130

 there is no mandatory requirement of showing tax component separately in the invoice. You
are required to examine the validity of the objection raised by tax consultant of Royal
Fashions.1

Question: Kidzee Ltd., a wholesaler of toys registered in Chandigarh, is renowned in the local
market for the varieties of toys and their reasonable prices. Kidzee Ltd makes supply of 100
pieces of baby’s learning laptops and chat learning phones to Nancy General Store on 25th
September, 20 by issuing a tax invoice amounting to ₹1,00,000.
However, the said toys were retuned by Nancy General Store on 30th September, 20. Which
document Kidzee Ltd. is required to issue in such a case?2
(a) Debit Note (b) Refund voucher
(c) Credit note (d) Payment voucher
{CA inter}
Question: Rana Sanga Ltd., a registered supplier has made following taxable supplies to its
customer Babur in the quarter ending 30th June.

Date Bill No Particulars Invoice Value

Including GST
5th April 102 Notebooks [10 numbers] 1,200
10th May 197 Chart paper [4 in number] 600
20th May 230 Crayon Colors [2 packets] 500
2nd June 254 Poster colors [5 packets] 900
22nd June 304 Pencil box [4 sets] 700

Goods in respect of bill no. 102, 230 and 254 have been returned by Babur. You are required
to advise Rana Sanga Ltd. Whether it can issue a consolidated credit note against all the three
invoices?3

Question: Chidanand Products Pvt. Ltd is a registered supplier who has opted for composition
levy in the current financial year. He wishes to know whether the issue of a bill of supply can
be dispensed with under any circumstances. You are required to advise him.4

1
Need to show CGST & SGST separately
2
(c)
3
Can issue consolidated credit note
4
Yes, if value < ₹200 and buyer is not required the bill of supply.

Goods and Services Tax 131

Question: A registered person has to mandatorily issue separate invoices for taxable and
exempted goods when supplying both taxable as well as exempted goods to an unregistered
person. Examine the validity of the statement.1

Question: A non-banking financial company can issue a consolidated tax invoice at the end of
every month for the supply made during that month. Examine the validity of the statement.2

Question: Sakhti Enterprise, Kolkata entered a contract with Suraj Enterprises, Surat for
supply of goods and the delivery shall be made on or before 31st October. The goods were
removed from the factory at Kolkata on 11th October. As per the agreement, the goods were to
be delivered on or before 31st October. Suraj Enterprises has received the goods on 14th
October. Determine the time of issue of invoice as per the provisions of CGST Act.3

Question: Trust and Fun Ltd., an event management company, has provided its services for an
event at Kapoor Film Agencies, Mumbai on 5th June. Payment for the event was made on 19th
June. Determine the time of issue of invoice as per the provisions of CGST Act.4

Question: Udai Singh, a registered supplier, has received advance payment with respect to
services to be supplied to Sujamal. His accountant asked him to issue the receipt voucher with
respect to such services to be supplied. However, he is apprehensive as to what would happen
in case a receipt voucher is issued, but subsequently no services are supplied. You are required
to advise Udai Singh regarding the same.5

Question: Bhoj Raj, a registered person, has availed GTA services on which he is liable to pay
tax under reverse charge. He wishes to know whether he is required to issue an invoice. Please
advise him discussing the relevant provisions under CGST Act and rules thereunder.6

Question: Sitaram Textiles has to send cloth for dyeing to its job-worker. It wishes to know
whether it needs to issue a tax invoice at the time of sending the goods to job-worker. Please
advise him with reference to the provisions of the CGST Act.7

1
Invalid. Can issue invoice cum bill of supply.
2
Valid
3
11th October [at the time of removal]
4 th
5 July [supply of service + 30 days]
5
Need to issue receipt voucher on receipt of advance | issue refund voucher in case of refund.
6
Yes, Bhoj Raj has to issue an invoice.
7
Need to issue delivery challan

Sahasri Singar Academy 132

Section 68: E-WAY Bill
What: E-WAY bill is an electronic document generated on the GST portal evidencing
movement of goods.
Benefits:
1. Elimination of state boundary check-post
2. Facilitate faster movement of goods.
3. Improve turnaround time of trucks.
When: e-way bill is mandatory in case of movement of goods of consignment value > ₹50,000
Consignment Value:
1. Determined in accordance with the provisions of section 15.
2. Declared value [in tax invoice or bills of supply or delivery challan]
3. Includes GST
4. Exclude the value of exempt supply [where supply includes exempt and taxable]
Movement should be:
a. In relation to a supply or
b. For reasons other than supply or
c. Due to inward supply from an unregistered person
Registered person causing movement of goods shall furnish the information relating to the said
goods in Part A of Form GST EWB-01 before commencement of such movement.
Exceptions [e-way bill is needed even consignment value < ₹50,000]:
a. Inter-state transfer of goods by principal to job worker
b. Inter-state transfer of handicraft goods by a person exempted from obtaining registration.
Person causes movement of goods:
a. Supplier – if registered supplier undertakes to transport the goods.
b. Recipient – if recipient arranges the transport.
c. Registered recipient – if unregistered supplier supplies to registered recipient.

E-way bill in case of ‘Bill to Ship to’ Model: only one e-way bill is required.

Goods and Services Tax 133

State whether e-way bill is required in the following cases
1. Bhanupratap Shoe manufacturers, registered in Punjab, sold shoes to a retail seller in
Gujarat, at a value of ₹48,000 (excluding GST leviable @ 18%).1
2. Sindhi Textiles of Ludhiana, registered in Punjab, sends cloth to a job worker in Jalandhar,
Punjab on a delivery challan of ₹48,000.2

Information to be furnished in e-way bill: Form GST EWB 01

Part A: to be furnished by the registered person who is causing movement of goods.
by the transporter or by e-com operator / courier – if so authorised
Note: if the transporter is not registered then get enrolled on e-waybill portal to get 15
digit unique transporter id called TRANSIN
Particulars: as per the details in tax invoice + reason for movement of goods
Part B: Transport details – to be furnished by the person who is transporting the goods.
Particulars: Goods Receipt Number or Railway Receipt Number of Airway Bill
number or Bill of Lading and vehicle number in case of transport by road

Details of conveyance may not be furnished in Part – B.

In case of intra-state movement of goods up to 50 km distance
From place of business of consignor to place of business of transporter for further
transportation
From place of business of transporter finally to place of business of the consignee.

Who can generate the e-way bill?

a. Consignor or consignee (own / hired conveyance or by railways or by air or by vessel) or
b. The transporter (goods handed over to transporter for transportation by road).
Note: transporter is responsible if neither consignor nor consignee generates the e-way bill
[in case the consignment value > ₹50,000]
Note: goods transported by railways shall be delivered only on production of e-way bill. &
E-way bill can be generated even if consignment value is less than ₹50,000
Unique e-way bill number [EBN]: is available to the supplier, the recipient, and the
transporter on the common portal upon generation of the e-way bill on the common portal.

Transfer of goods to another conveyance:

Update the new vehicle number in Part B of the EWB
By the transporter or generator of the e-way bill

1
Yes, the value exceeds ₹50,000 with GST.
2
No, the value does not exceed ₹50,000 as no GST is applicable for delivery challan.

Sahasri Singar Academy 134

Question: Mr.Bala, a consignor, is required to move goods from Trichy (TN) to Chennai (TN).
He appoints ABT Transporter for movement of goods. ABT Transporter moves the goods from
Trichy (TN) to Villupuram (TN). For completing the movement of goods from Villupuram
(TN) to Chennai (TN), ABT Transporter now hands over the goods to KPN Transporter.
Explain the procedure regarding e-way bill to be followed by consignor and transporter as per
provisions of GST law and rules made thereunder.
Answer:
1. Part A can be filled by Mr. Bala or recipient of goods or ABT Transporter with authorization
2. On reaching Villupuram, the person who filled Part A update on conveyance in Part B of
the e-way bill before the transfer.
3. Then assign the said e-way bill to KPN Transporter who will thereafter update the details of
conveyance in Part-B.
4. After updating by KPN, assigning to other transporter shall not be allowed

Consolidated E-Way bill in case of road transport:

In Form GST EWB-02 by transporter.
Where consigner / consignee has not generated the EWB in Form EWB-01 and
the aggregate value of goods carried in the conveyance is more than ₹50,000,
the transporter shall generate individual form GST EWB-01
on the basis of invoice or bill of supply or delivery challan.

Information submitted for e-way bill can be used for filling GST Returns [GSTR-1].

Cancellation of e-way bill: within 24 hours from the time of generation, if goods not
transported.

Validity period of e-way bill / consolidated e-way bill:

Distance within Validity period from relevant date
country
1 Up to 200 km One day in cases other than over dimensional cargo or
multimodal shipment in which at least one leg involves
transport by ship
2 For every 200 km or - Do -
part thereof thereafter One additional day
3 Up to 20 km One day in case of over dimensional cargo or multimodal
shipment in which at least one leg involves transport by ship
4 For every 20 km or - Do -
part thereof thereafter One additional day

Note: validity period shall be counted from the time of generation of e-way bill [Part B]

Goods and Services Tax 135

Note: Day is expiring at mid-night of the immediately following the date of generation of e-
way bill.
Note: Extension of validity period:
By commissioner for certain categories of goods.
By transporter in exceptional circumstances like natural calamity, etc.
[state the reason | extended within 8 hours from the time of its expiry]

Acceptance / rejection of e-way bill – by the recipient / supplier

as the case may be
within 72 hours from the time of generation of e-way bill or
the time of delivery of goods WEE,
else it will be deemed to be accepted.
Note: E-way will be generated in one state is valid in another state / UT.

Situations where e-way bill is not required to be generated.

1. Transporting goods:
a. liquefied petroleum gas for supply to household and non-domestic exempted category
customers
b. Kerosene oil sold under PDS.
c. Postal baggage transported by Department of Posts
d. Pearls, precious stones, precious metals, and metals clad
e. Jewellery, goldsmiths’ and silversmiths’ wares and others [chapter 77]
f. Currency
g. Used personal and household effects.
h. Coral
2. Goods are transported by a non-motorized conveyance.
3. Goods are transported from the customs port, airport, air cargo complex, ICD & CFS for
clearance from customs.
4. Movement of goods within notified areas
5. Transportation of exempted goods [except de-oiled cake]
6. Transportation of alcoholic liquor for human consumption, petroleum crude, high speed
diesel, petrol, natural gas, or aviation turbine fuel
7. Goods transported being no supply under schedule III
8. Goods transported are being under customs bond or customs supervision.
9. Goods transported are being transit cargo from or to Nepal or Bhutan.
10. Any movement of goods caused by defence formation.
11. Where the consignor of goods being CG / ST or LA.
12. Where empty cargo containers are being transported
13. Where the goods are being transported up to 20 km for weighment with delivery
challan.

Sahasri Singar Academy 136

Documents / devices to be carried by a person-in-charge of a conveyance:
a. Invoice or bill of supply or delivery challan
b. 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] RFID embedded on the conveyance.
Verification of documents and conveyances
a. Commissioner or an officer empowered by him can intercept any conveyance to verify the
e-way bill for all inter-state and intra-state movements of goods.
b. Physical verification of a specific conveyance can be carried out on receipt of information
on tax evasion after obtaining necessary approval of the commissioner or an officer
authorized by him.

Inspection and Verification of goods

A summary report of inspection shall be recorded online within 24 hours of inspection and the
final report shall be recorded within 3 days of such inspection.
After physical inspection, the same conveyance cannot be intercepted for physical verification
unless on receipt of information on tax evasion. If the intercepted vehicle detained for more
than 30 minutes, the transporter may upload the said information in on the common portal.

Restriction on furnishing of information in Part A of Form GST EWB-01.

No person shall not be allowed to furnish the information in Part A of Form WEB-01
a. a composition supplier has not furnished the statement for payment of self-assessed tax for
2 consecutive quarters, or
b. a person paying tax under regular scheme has not furnished the returns for 2 consecutive
months, 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
d. a person whose registration has been suspended.
However, commissioner may, on sufficient cause being shown and for reasons to be recorded
in writing, allow furnishing of the said information.

Goods and Services Tax 137

 9: PAYMENT OF TAX

Section 49: Payment of tax, interest, penalty and other amounts

Section 49A: Utilisation of input tax credit subject to conditions
Section 49B: Order of utililsation of input tax credit
Section 50: Interest on delayed payment of tax
Section 51: Tax deduction at source
Section 52: Collection of tax at source
Section 53: Transfer of input tax credit
Section 53A: Transfer of certain amounts

Section 49: Payment of Tax, Interest, Penalty and Other Amounts

1. Every deposit by a person
By internet banking or credit card or
National Electronic Fund Transfer (NEFT) or
Real Time Gross Settlement (RTGS) or
Unified Payment Interface (UPI) from any bank or
Immediate Payment Services (IMPS) from any bank or
Over the counter (OTC) by cash, cheque or demand draft [includes TDS & TCS]
Limit for OTC: ₹10,000 per challan, per tax period except
a. Govt departments or
b. Notified persons
c. On authorization of proper officer
1) To recover outstanding dues (including sale or attachment of property)
2) During investigation / enforcement activity / any ad hoc deposit
Shall be credited to Electronic Cash Ledger
Used for payment of tax, interest, penalty, fee or any other amount
If any balance after the above payment, may be refunded (but to the same account)

2. The ITC as self-assessed as per return

Shall be credited to his electronic credit ledger
Used for payment of output tax only as per the order given below

Sahasri Singar Academy 138

 ITC ITC Used
Available IGST CGST S/UTGST
IGST 1st 2nd 2nd
CGST [After IGST] 2nd 1st Nil
S/UTGST [After CGST] 2nd Nil 1st
ITC cannot be used for paying tax on RCM

Order of discharge of tax and other dues

1. Tax & other dues for the previous tax period
2. Tax & other dues for the current tax period
3. After the above payment, any other dues including demand u/s 73 & 74

Rule 86A: Restrictions of use of amount available in electronic credit ledger

Commissioner or not below the rank of an Assistant Commissioner,
Prohibit in writing after recording reasons
to use of ITC for discharge of any liability or
to claim refund of any unutilized ITC
where he has the reasons to believe
that ITC available in the ECrL has been fraudulently availed or is ineligible
Circumstances for restrictions
1. ITC availed on the basis of tax invoices / debit notes /
Issued by a non-existent registered person or
conducting no business from place declared in registration
Without actual receipt of goods or services or both or
In respect of any supply, the tax in respect of which has not been paid
2. The registered person availing ITC has been found non-existent or
not conducting any business from the registered place of business or
3. The registered person availing ITC is not in possession of tax invoice / debit note or
any other prescribed valid document for it
Restriction is imposed for 1 year but
Can withdraw such restriction if he is satisfied

Rule 86B: Restrictions on use of amount available in ECrL

Amount in ECrL can be used to discharge 99% output tax liability

Goods and Services Tax 139

 In case, where the value of taxable supply
other than exempt supply and zero-rated supply
In a month exceeds ₹50 lakh
Exceptions
1. Payment of income tax of more than ₹1 lakh [for each of 2 FYs] by
Registered person / karta / proprietor / MD / any of its two partners
Whole time directors
Members of Managing Committee of Associations
Board of Trustees
2. Receipt of refund of ITC of more than ₹1 lakh [in preceding FY] under
Zero-rated supplies made without payment of tax
Inverted duty structure
3. Payment of output tax liability through electronic cash ledger
in excess of 1% of total output tax liability (cumulatively) in current FY
4. Specified registered persons
Government Department or
A Public Sector Undertaking or
A Local Authority or
A Statutory Body

Note: output tax should not include GST paid under RCM

Question: the total value of inter-state supply of Raman & Sons for the month of February
is of ₹100 lakh. Said supply is taxable @ 18% IGST. How much of output tax payable using
ITC?1

Question: FY up to August, the total output tax liability of a registered person is ₹30 lakhs
and such registered person has deposited ₹1 lakh through ECL. How much of must the
output tax be payable using ECL if output tax liability in the month of September is (a) ₹50
lakhs & (b) ₹100 lakhs?2

3. All liabilities of a taxable person

Shall be recorded in Electronic Liability Register and

1
99% of (18% of ₹100 lakhs) = ₹17.82 lakkhs
2
(a) nil & (b) ₹30,000

Sahasri Singar Academy 140

 Discharge in the following order
a. Self-assessed tax related to the previous tax period
b. Self-assessed tax related to the current tax period
c. Any other amount like tax short paid or not paid etc.
4. Tax paid deemed to have passed on to the recipient of supply

Explanation:
1. 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;
2. The expression,
a. “tax dues” means the tax payable under this Act and does not include interest, fee and
penalty; and
b. “other dues” means interest, penalty, fee or any other amount payable under this Act or
the rules made thereunder.

E-Ledger / Register
Electronic Liability
Register
tax, interest, penalty, Electronic Credit ITC
late fee, other amount Ledger
Debited
Tax Electronic Deposit by Internet banking
Debited Cash Debit / Credit Card
Ledger NEFT / RTGS / TDS / TCS

Major heads: IGST, CGST, SGST/UTGST / CESS

Minor heads: Tax, interest, penalty, fee, others
If there is no unpaid liability in his ELR
Cross utilization of funds across major or minor heads – allowed
Transfer of amount in ECL between distinct person – allowed
Date of deposit: is the date on credit in the Government account

Section 53A: Transfer of amount from ECL of CGST to ECL of SGST or UTGST.
Shall be transferred to the SGST or UTGST as per the prescribed manner

Goods and Services Tax 141

Payment by Challan:
a. CPIN: Common Portal Identification Number. It is a 14-digit unique number to identify the
challan generated by the tax payer. CPIN remains valid for a period of 15 days.
NO physical challan
Only one challan is prescribed for all type of payments
b. CIN: Challan Identification Number is generated by the banks, once payment in lieu of a
generated Challan is successful. It is a 17-digit number that is 14-digit CPIN plus 3-digit
Bank Code.
CIN is communicated by the authorized bank to taxpayer as well as to GSTN
c. BRN: (Bank Reference Number) – is the transaction number given by the bank for a
payment against a challan.
d. E-FPB: (Electronic Focal Point Branch). These are branches of authorized banks which are
authorized to collect payment of GST.
One branch for a bank for PAN India
Open a/c for all major heads for all government

Form GST PMT-09: used for

1. transfer of erroneous deposits under any minor head of a major head to any other minor head
of same or other major heads or
2. transfer of any of the amounts already lying unutilized under any of the minor heads in
electronic cash ledger or
3. transfer of any amount lying in the electronic cash ledger to the electronic cash ledger for
CGST / IGST of a distinct person.

Question: M/s. Daksha Enterprises has made a cash deposit of ₹10,000 under minor head ‘tax’
of major head ‘SGST’. It has a liability of ₹2,000 for minor head “Interest” under the major
head “SGST”.
State whether M/s. Daksha Enterprises can utilise the amount available for payment of interest.1

Section 50: Interest on delayed payment of tax (Rule 88B)

1. Maximum interest @ 18% is leviable for the delayed payment of tax
Interest is calculated only on the net tax paid using ECL i.e., [Output tax - ECrL]
If return is filed after the DD as per S.39 but before any proceeding u/s 73 & 74
2. Calculate interest for the period

1
Yes, can be used

Sahasri Singar Academy 142

 from the day succeeding the day on which tax was due to be paid to the date of payment
3. Maximum interest @ 24% (notified 18%) is payable on gross liability
for an excess claim of ITC u/s 42(10) or under payment of output tax u/s 43(10)

Interest Calculation
Question: Mr. Alok, a registered supplier of taxable goods, filed GSTR 3B for the month of
January, 2020 on 15th April, 2020. The prescribed due date to file the said GSTR3B was 20th
February, 2020. The amount of net GST payable, in Cash i.e., Electronic Cash Ledger on
supplies made by him for the said month worked out to be ₹36,500 which was paid on 15th
April, 2020. Briefly explain the related provisions and compute the amount of interest payable
under the CGST Act, 2017 by Mr. Alok. Ignore the effect of leap year, if applicable in this
case.1

Interest Calculation
Question: M/s ABC Ltd., have filed their GSTR3B for the month of July, 2020 within the due
date prescribed under Section 39 i.e., 20.08.2020. Post filing of the return, the registered person
has noticed during September 2020 that tax dues for the month of July, 2020 have been short
paid for ₹40,000. M/s. ABC Ltd. has paid the above shortfall of ₹40,000, through GSTR3B of
September 2020, filed on 20.10.2020 (payment through Cash ledger – ₹30,000 and Credit
ledger ₹10,000). Examine the Interest payable under the CGST Act, 2017.
What would be your answer if, GSTR3B for the month of July 2020 has been filed belatedly
on 20.10.2020 and the self-assessed tax of ₹40,000/- has been paid on 20.10.2020 [payment
through electronic cash ledger – ₹30,000 and electronic credit ledger ₹10,000]
Notes:
• There exists adequate balance in Electronic Cash & Credit ledger as on 31.07.2020 for the
above short fall
• No other supply has been made nor tax payable for the month of July, 2020 other than
₹40,000/- missed out to be paid on forward charge basis
• Ignore the effect of leap year, if applicable in this case.2

Features of GST payment process

Electronically generated challan from GSTN common portal
in all modes of payment and no use of manually prepared challan;
Facilitation for the tax payer by
providing hassle free, anytime, anywhere mode of payment of tax;

1
Interest payable = ₹972 [36,500 × 18% × 54 / 365] [21st February, 2020 to 15th April, 2020 = 54 days]
2
Interest in Case 1: ₹1,203 (₹40,000×18% × 61/365) & case 2: ₹902 (₹30,000×18% × 61/365)

Goods and Services Tax 143

 Convenience of making payment online;
Logical tax collection data in electronic format;
Faster remittance of tax revenue to the Government Account;
Paperless transactions; Speedy Accounting and reporting;
Electronic reconciliation of all receipts;
Simplified procedure for banks;
Warehousing of Digital Challan.

Benefits of tax payment system

No more queues and waiting for making payments as payments can be made online 24X7
Instant online receipts for payments made online
Tax consultants can make payments on behalf of the clients
Single Challan form to be created online, replacing the three or four copy challan
Revenue will come earlier into the Government Treasury as compared to the old system
Greater transparency
Online payments made after 8 pm will be credited to the taxpayer’s account on the same
day

Practice Questions:
Question: Are principles of unjust enrichment applicable for payment made under GST?1

Question: Mr. A has deposited a sum of ₹30,000 under minor head of “Interest” column for
the major head “IGST”. At the time of filing GSTR-3B for a particular tax period, he noticed
that there is no sufficient amount under the minor head ‘Tax’ towards payment of ₹30,000.
When approached with the Jurisdictional Tax officer, Mr. A was guided to deposit the tax
amount under proper head of account and claim a refund for the remittance of amount deposited
under head “interest”. Examine the relevant provisions of CGST Act, 2017 towards payment
of tax and compliance with the law.2

Question: M/s ABC & Co., have defaulted in filing the return under Section 39 of CGST Act,
2017 i.e. GSTR – 3B for the month of March, 2020 within the specified due date. Reason for
such delay is attributable to delay in closure of Books for March 2020, which have been
finalised during May 2020. The GST Common portal prompted for payment of late fees
payable under Section 47 of CGST Act, 2017 for a sum of ₹2,000 under CGST and SGST each.
Accountant, of M/s ABC & Co., sought your confirmation for payment of such late fees

1
Yes
2
Can be transferred using Form GST PMT-09

Sahasri Singar Academy 144

through the balance available in Electronic Credit Ledger for the late fees.Give your guidance
in this regard.1

Question: Sahil is a supplier of taxable goods in Karnataka. He got registered under GST in
the month of September, 2023 and wishes to pay his IGST liability for the month. Since he’s
making the GST Payment for the first time, he is of the view that he needs to mandatorily have
the online banking facility to make payment of GST, offline payment is not permitted under
GST. You are required to apprise Sahil regarding the various modes of deposit in the electronic
cash ledger. Further, advise him with regard to following issues.
a) Are manual challans allowed under GST?
b) What is the validity period of the challan?
c) Is cross utilization among Major and Minor heads of the electronic cash ledger permitted?
Answer: Section 49(1) of CGST Act, 2017 read with rule 87 of CGST Rules, 2017 provides
that the deposit in electronic cash ledger can be made through any of the following modes,
namely,
1) Internet Banking through authorized banks.
2) Credit card or Debit card through the authorized bank;
3) National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
4) Over the Counter payment through authorized banks.
Thus, offline mode is also permitted under GST.
a. Manual or physical Challans are not allowed under the GST regime. It is mandatory to
generate Challans online on the GST Portal.
b. E-challan is valid for a period of 15 days.
c. Amount entered any Minor head (Tax, interest, Penalty, etc) and Major Head (CGST, IGST,
SGST/UTGST of the Electronic Cash Ledger can be utilized only for that liability. Cross-
utilization among Major and Minor heads is not possible.

Question: Suhasini is a registered software consultant. On account of her ill health, she could
not provide any services during the month of October. However, she had to incur all the
expenses relating to her office. She paid ₹75,000 to various vendors. The total input tax
involved on the goods and services procured by her is ₹13,500. Out of the total bills paid by
her, one bill for ₹15,000 relates to security services availed for security of her office, tax on
which is payable under reverse charge. Input tax involved in such bill is ₹2,700.
Suhasini is of the opinion that for the month of October, no GST is payable from electronic
cash ledger as she has sufficient balance of ITC for payment of GST under reverse charge on
security services.
Do you think Suhasini is right? Explain with reasons.2

1
Can be paid only by electronic cash ledger
2
ITC cannot be used for tax payment under reverse charge

Goods and Services Tax 145

 10: RETURNS

S Description
37 Furnishing details of outward supplies
38 Furnishing details of inward supplies
39 Furnishing of returns: GSTR-3B | GSTR-4 | GSTR-5
40 First return
41 Claim of input tax credit and provisional acceptance thereof
42 Matching, reversal and reclaim of reduction in output tax liability
43 Matching, reversal and reclaim of reduction in output tax liability
43A Procedure for furnishing return and availing input tax credit
44 Annual return: GSTR-9
45 Final return: GSTR-10
46 Notice to return defaulters
47 Levy of late fee
48 Goods and services tax practitioners

Modes of filing returns

1. GSTN portal (www.gst.gov.in)
2. Offline utilities provided by GSTN
3. GST Suvidha Provider (GSP)

Section 37: Furnishing details of outward supplies

1. Persons required to furnish details of outward supplies (GSTR-1)
Every registered person including CTP except
ISD
NRTP
Person paying tax under composition scheme
Person deducting tax at source
Person collecting tax at source (ECO not being agent)
Supplier of online information and database access or retrieval services (OIDAR)

Sahasri Singar Academy 146

2. Furnish in form GSTR-1 for the month or quarter
electronically in the common portal, either directly or from a facilitation centre
a Nil GSTR-1 can be filed through SMS using the registered mobile number

3. Due date of submission of GSTR-1

Can file between 1st and 10th for the succeeding month / quarter
Cannot file between 11th and 15th in the succeeding month / quarter
Cannot file GSTR-1 before the end of the current tax period except
Casual taxable person after closure of their business
Cancellation of GSTIN of a normal tax payer

The time limit is extended by the commissioner as follows

Class of Time limit for furnishing the details of outward supplies
registered person in Form GSTR-1 for each quarter / month
1 Registered persons 13th day of the month succeeding such quarter
opting for QRMP
2 Others 11th day of the month succeeding such month

4. Invoice Furnishing Facility (IFF) for taxpayers opting for QRMP Scheme
[Rule 59(2) & Rule 59(3)]
QRMP: Quarterly Return Monthly Payment
IFF is an optional facility provided to QRMP scheme,
to file their details of outward supplies in first two months of the quarter,
up to a cumulative value of ₹50 lakh in each of the first 2 months of the quarter
however, invoices for the last month of the quarter are to be uploaded in GSTR-1 only
to pass on the credit to their recipients
reflected in the recipients’ inward supplies Form
GSRT-2A: for normal registered person
GSTR-2B: for IFF
GSTR-4A: for Composition levy registered person
GSTR-6A: for ISD for distributing ITC

Goods and Services Tax 147

 Debarred from furnishing details of outward supplies in GSTR-1 / IFF [Rule 59(6)]
If the details of supplies for any of the previous tax periods has not been furnished by him
Rule 59(6): debar from furnishing details of outward supplies
1. A registered person shall not be allowed to furnish the details of outward supplies in
Form GTSR-1, If he has not furnished the return in Form GSTR-3B for preceding month
2. A registered person, opting QRMP scheme, shall not be allowed to furnish the details of
outward supplies in Form GTSR-1 or using IFF, If he has not furnished the return in
Form GSTR-3B for preceding tax period
3. A registered person, to whom an intimation has been issued on the common portal u/s
88C(1) in respect of a tax period, shall not be allowed to furnish the details of outward
supplied in Form GSTR-1 or using IFF 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, as required u/r 88C(2).

5. Contents of GSTR-1: Place of Supply and the following

Basic and Other Details Details of Outward Supplies
GSTIN B2B [including UIN holders]
Legal name and Trade name B2C inter-state supplies
Aggregate turnover in PFY where invoice value > ₹2.5 lakhs
Tax Period [year & month] else consolidated details
HSN-wise summary of outward supplies Zero rated and deemed exports
Details of documents issued Debit / Credit notes issued
Nil rated / exempted / Non-GST
Amendments for prior period
Advance received / adjusted

6. Kind of details of outward supplies to be furnished in GSTR-1 and IFF

a. B2B supplies: Invoice-wise details of all supplies (Inter & intra-state)
b. B2C Supplies
i. Inter-state supplies
Invoice-wise details [if invoice > ₹2,50,000]
State-wise (rate-wise) consolidated details [if invoice ≤ ₹2,50,000]
ii. Intra-state supplies: Consolidated details of all supplies

Sahasri Singar Academy 148

 Question: Mr. XY makes intra-state taxable supplies for ₹10,000 and ₹50,000 to Mr.
AB, a registered person and ₹1,00,000 to Mr. DE, an unregistered person. He also makes
inter-state taxable supplies for ₹2,60,000 and ₹45,000 to Mr. RS, a registered person and
₹1,50,000 to Mr. OP, an unregistered person. State the issue of invoice needed.
Answer: Supply by Mr. XY
To Recipient Category ₹ Invoice
1 AB Registered Intra-state 10,000 Need
2 AB Registered Intra-state 50,000 Need
3 DE Unregistered Intra-state 1,00,000 No need
4 RS Registered Inter-state 2,60,000 Need
5 RS Registered Inter-state 45,000 Need
6 OP unregistered Inter-state 1,50,000 No need

c. Indication of HSN details

Annual TO in the Preceding FY No. of digits in HSN
Upto ₹5 crore For B2B supply – 4
For B2C supply – 4 optional
More than ₹5 crore 6

Question: The turnovers of Yellow Lemon Pvt. Ltd., Red Pepper Pvt. Ltd. and Blue Berry
Pvt. Ltd. in the previous FY are ₹1.5 crore, ₹4.8 crore and ₹6 crore respectively. How many
digits of HSN should be quoted for above situations?
Answer:
Supplier ATO in Previous FY Sale Type No. of Digits of HSN
1 Yellow Lemon ₹1.5 crore B2B 4 digits
B2C 4 digits (optional)
2 Red Pepper ₹4.8 crore B2B 4 digits
B2C 4 digits (optional)
3 Blue Berry ₹6 crore B2B 6 digits
B2C 6 digits

Goods and Services Tax 149

7. Amendments for outward supplies furnished in prior periods
a. Scope of amendment / correction entry [debit & credit note & refund voucher]
Particulars furnished in GSTR-1 of prior periods can be amended
by way of amendment tables given in GSTR-1
of subsequent periods (data entry error)
b. Rectification of errors for prior period
c. Time limit for rectification, WEE
1. Date of filing of annual return or
2. 30th day of November following the end of the financial year

Question: An entity has furnished the annual return for the previous FY on 15th August in
the current FY. An error is discovered in respect of a transaction pertaining to the month of
November of the previous FY. What is the time limit for rectification?1

8. Other Points
a. Nil return (by SMS): GSTR-1 needs to be filed even if there is no business.
Time: can be filed from 1st day of the month subsequent of the tax period
Nil return cannot be filed if the taxpayer
1. has made any outward supply including exempt, nil rated or non-GST supplies
2. has received supplies on which tax is payable under RCM
3. needs an amendment for earlier return or any credit or debit
b. Taxpayer applying for GSTIN cancellation
is required to file GSTR-1 up to the active period
c. Taxpayer converting from normal taxpayer to composition taxpayer
should furnish GSTR-1 up to the period of being normal taxpayer

Section 38: Furnishing details of inward supplies [rule 60]

A system generated read only statement, updated on a real time basis.
Details of outward supplied furnished in Form GSTR-1 or IFF is auto populated in
[system generated inward supply & updated on a real time basis in]
GSRT-2A: for normal registered person
GSTR-2B: for IFF from GSTR-1, 5 & 6
GSTR-4A: for Composition levy registered person
GSTR-6A: for ISD for distributing ITC

1
15.8.XX [WEE of 30.11 or 15.8]

Sahasri Singar Academy 150

Rule 88C: where the tax liability
as per Form GSTR-1 exceeds tax liability as per Form GSTR-3B more than a specified extent,
the registered person would be intimated on the portal of such difference and
be directed to either
1. Pay the differential tax liability along with interest, or
2. Explain the difference
Within 7 days’ period
Unless the taxpayer either deposits the amount specified in the said intimation or
Furnishes a reply explaining the reasons for any amount remaining unpaid,
Such a person should not be allowed to file Form GSTR-1 / IFF for the subsequent tax period
In case of default, the amount shall be recoverable as per the provision of section 79.

Form GSTR-1
Details of invoice furnished by a NRTP in Form GSTR-5 & by an ISD in Form GSTR-6
Details of TDS by deductor furnished in Form GSTR-7 &
Details of TCS by and e-commerce operator furnished in Form GSTR-8
Details of IGST on imports of goods or goods brought in DTA from SEZ unit
/ SEZ developer on bill of entry
Are made available to the recipient, deductee or concerned person in Form GSTR-2A

Form GSTR-2B
An auto drafted read only statement containing the details of eligible ITC
Is made available to the registered person for every month
It is a static statement and is available only once a month
It consists of
1. Outward supplies (other than by QRMP) in Form GSTR-1 by supplier
Between the day immediately after the due date of furnishing of Form GSTR-1 for the
previous month to the due date of furnishing of Form GSTR-1 for the month
2. Outward supplies by QRMP in Form GSTR-1 or using IFF by supplier
a. For the 1st month of the quarter:
Between the day immediately after the due date of furnishing of Form GSTR-1 for the
previous quarter to the due date of furnishing details using the IFF for the 1st month of
the quarter;
b. For the 2nd month of the quarter:
Between the day immediately after the due date of furnishing of Form GSTR-1 for the
previous quarter to the due date of furnishing details using the IFF for the 1st month of
the quarter;

Goods and Services Tax 151

 c. For the 3rd month of the quarter:
Between the day immediately after the due date of furnishing of details using the IFF
for the 2nd month of the quarter to the due date of furnishing of Form GSTR-1 for the
quarter;
3. The details of the IGST paid on the import of goods or
goods brought in the DTA from SEZ unit / developers on a bill of entry in the month.

Form GSTR-2B
Documents filed by suppliers / ISD in GSTR-1, 5 & 6 → Form GSTR-2B
Import data for the period which are received within 13th of the succeeding month

Monthly Form GSTR-1, the cut-off date is

00:00 hours on 12th of the relevant month to 23.59 hours, on 11th of the succeeding month
Quarterly Form GSTR-1 / IFF / GSTR-5 & GSTR-6, the cut-off date is
00:00 hours on 14th of the relevant month to 23.59 hours, on 13th of the succeeding month

Question: if a supplier opting for QRMP files an invoice dated 15th July on 13th August, it will
get reflected in GSTR-2B of July (generated on 14th August)

Section 39: Furnishing of returns

1. Monthly return is furnished in GSTR-3B
Containing summary of outward supplies
by every registered person except
ISD
NRTP
Composition tax payer
A person deducting tax at source &
A person collecting tax at source [ECO & OIDAR supplier]
In case of QRMP, registered person shall furnish a return for every quarter

2. Due date of filing: 20th day of succeeding month (Other than QRMP)
For QRMP: 22nd or 24th of the month succeeding the quarter for which return is furnished

QRMP Scheme
1. Conditions for availing
Small taxpayers [ATO ≤ ₹5 crores in the Previous FY]

Sahasri Singar Academy 152

 Should have furnished the last return on the date of exercising such option
2. QRMP benefit
Tax is paid monthly through a simple challan
Return is furnished quarterly [Form GSTR-1 & GSTR-3B]
3. Manner of exercising option of QRMP scheme
Indicate his preference from 1st day of the 2nd month of the preceding quarter
till the last day of the 1st month of the quarter for which the option is being exercised
no need to exercise option every quarter
Once QRMP scheme is exercised, then QRMP shall continue for future, unless he
a. becomes ineligible for this scheme
as per the conditions and restrictions notified in this regard; or
b. opts for furnishing of return on a monthly basis,
electronically, on the common portal.
4. Option of QRMP scheme to lapse
On crossing the limit [ATO = ₹5 crores],
From the succeeding quarter, he shall opt for furnishing of return on a monthly basis

3. GSTR-3B can be submitted electronically by RP or CTP

Nil GSTR-3B can be filed through an SMS and has no entry in any tables
Note: Nil GSTR-3B cannot be filed,
if taxpayer has made any outward supply or
received supplies which are taxable under reverse charge.

4. Contents of GSTR-3B
Basic Details Other details relating to supplies
GSTIN Summarised details of outward supplies and inward
Legal name of the supplies liable to reverse charge
registered person Summarised details of inter-state supplies made to
Tax period (year and unregistered persons, composition taxable persons and
month) UIN holders
Eligible and ineligible ITC
Values of exempt, nil-rated and non-GST inward supplies
Payment of tax
TDS / TCS credit

Goods and Services Tax 153

5. Return for composition supplier under GSTR-4
a. Person required to file return – composition supplier
b. Due date:
i. GSTR-4 for a FY: 30th April from the end of the FY [annual return]
ii. GST CMP-08: 18th day of the month of succeeding quarter [quarterly payment]
c. Auto population of inward supplies in GSTR-4A
d. Contents
Basic Details Other details relating to supplies
GSTIN Invoice-wise details of all inward supplies (i.e., intra and
Legal name of the inter-state supplies and from registered and unregistered
registered person persons) including reverse charge supplies and import of
services [Table 4]
TDS / TCS credit
received [Table Summary of self-assessed liability as per GST CMP-08 [net
7] of advances, credit & debit notes and any other adjustments
due to amendments etc.] [Table 5]
Tax, interest, late
fee payable and Tax rate wise details of outward supplies / inward supplied
paid [Table 8] attracting reverse charge (net of advances, credit & debit
notes and any other adjustments due to other adjustments due
Refund claimed
to amendments etc.) – consolidated details of outward
from ECL [Table
supplies [Table 6]
9]

e. Regular taxpayer to composition taxpayer [opting for composition scheme]

Due date for return relating to period prior to opting for composition scheme
Whichever is earlier of
a. Due date of furnishing the return for the month of September of the succeeding FY
b. Furnishing of annual return of the preceding FY

f. Composition taxpayer to regular taxpayer [exit from composition scheme]

Due date for period prior to exit from composition scheme
a. GSTR-4: 30th April from the end of the FY [annual return]
GSTR-4A: auto populated from GSTR-1
b. GST CMP-08: 18th day of the month of succeeding quarter [quarterly payment]

6. GSTR-5: Return for Non-Resident Taxable Persons

a) Monthly return in Form GSTR-5

Sahasri Singar Academy 154

 b) Last date of filing return: WEE
within 13 days after the end of the calendar month or
within 7 days after the last day of validity period (requires no annual return)
c) Payment of interest, penalty, fees or any other amount payable
d) Due date for payment of tax: usually in advance but before the due date of filling of return

7. Rectification of errors / omissions can be done

Revision of return – not allowed
Rectification on account of scrutiny, audit, inspection or enforcement activities – not
allowed
Rectification in subsequent return – allowed. Within whichever earlier of
a. 30th day of November following the end of the FY or
b. Actual date of filing annual return
Note:
A return furnished u/s 39 on which self-assessed tax has been paid in full is considered as a
valid return
Filing of returns for current month is possible only when returns of the previous month have
been filed
A taxpayer needs to electronically sign the submitted returns otherwise it will be considered
not-filed
Taxpayers can electronically sign their returns using a DSC (mandatory for all types of
companies and LLPs), E-sign (Aadhaar-based OTP verification), or EVC (Electronic
Verification Code sent to the registered mobile number of the authorized signatory)

Question: Mr. Akash obtains registration under regular scheme. He askes Mr. Mohan, his tax
manager, to pay GST on quarterly basis. However, Mr. Mohan advises Mr. Akash to pay GST
on monthly basis.
You are required to examine the validity of the advice given by Mr. Mohan1

Question: Ms. Pragya, a taxpayer registered under regular scheme, files GSTR-3B for the
month of October on 20th November. After filing the return, she discovers that the value of a
taxable supply has been under reported therein.
Ms. Pragya now wants to file a revised GSTR-3B. Examine the scenario and give your
comments.2

1
Need to file the return monthly and payment of tax is linked with the due date to file the return
2
Return once filed cannot be amended, but can amend the details in GSTR-1 in the next month

Goods and Services Tax 155

Quarterly Return Monthly Payment Scheme [QRMP Scheme]
Eligibility / Criteria: Threshold limit: [ATO ≤ ₹5 crore in preceeding FY]
Non-eligibility: If ATO exceeds ₹5 crore in any quarter in the current FY
Exercising option: taxpayer can opt for any quarter
from 1st day of 2nd month of preceding quarter to
the last day of the first month of the quarter for which the option is being exercised.
Validity of option once exercised
Can continue QRMP once exercised, unless they revise the said option
QRMP scheme is GSTIN wise
Monthly payment of tax
Tax due in each of the first 2 months of the quarter
To be paid by depositing in pre filled Form GST PMT-06
Payment to be made by 25th of the succeeding month
Option for making monthly payment of tax [first 2 months of the quarter]
1. Fixed sum method
35% of the tax paid in cash in the return for the preceding quarter
[in case of quarterly return]
The tax paid in cash in the return for the preceding month [in case of monthly return]
Interest u/s 50
d. If auto calculated fixed sum paid for the first 2 months of the quarter within due date
No interest is applicable even if the liability for the said month was found higher
If GSTR-3B of the quarter is filed by the due date by discharging the entire liability
e. Where tax payer makes monthly payment beyond due date
Interest is payable
f. Where Form GSTR-3B is furnished beyond due date
Interest is payable
2. Self-assessment method
Taxpayer can pay tax by considering tax liability on inward and outward supplies and ITC
available
In form GST PMT-06
Interest u/s 50
Interest payable as per provisions of section 50
For tax (net of ITC) which remains unpaid / paid beyond the due date
For the first 2 months of the quarter

Sahasri Singar Academy 156

Note: monthly tax payment through this method would not be available to those registered
persons who have not furnished the return for a complete tax period preceding such month.

Furnishing details of outward supply details under QRMP

Filing of GSTR-1: Quarterly basis
Time limit:
Registered persons opting for QRMP scheme
– 13th day of the month succeeding such tax period
Others
– 11th day of the month succeeding such tax period

Uploading invoices
1st & 2nd month of the quarter: upload invoice details in IFF (optional)
Reflect in Form GSTR-2A and GSTR-2B of recipient
Not required to be furnished again in GSTR-1
Last month of the quarter: upload invoice in GSTR-1 only

Applicability of late fees

1. Delay in furnishing of quarterly return / details of outward supply
Late fee is appliable
2. Delay in payment of tax in first two months of quarter
No late fee is applicable

Invoice Furnish Facility (IFF):

For: Taxpayers filing quarterly return
Furnishing: invoices from 1st day to 13th day of the succeeding month
Details reflect in: Form GSTR-2A, GSTR-2B, GSTR-4A or GSTR-6A of the recipient.
To facilitate him to avail ITC
Period: for 1st month & 2nd month of the quarter
Limit: up to a cumulative value of ₹50 lakhs in each of the months

Quarterly filing of Form GSTR-3B

Due date: on or before 22nd or 24th of the month succeeding the quarter
Offsetting of liability:
amount deposited in the first 2 months can be debited only for offsetting the liability.

Goods and Services Tax 157

Cancellation of registration:
GSTR-3B to be filed even if cancellation of registration was done
during any of the first two months of the quarter

Benefits of QRMP Scheme:

1. Significant reduction of compliance burden of tax payer
2. Only 4 GSTR-3B returns to be filed instead of 12 in a year
3. Only 4 GSTR-1 returns required to be filed
4. Payment of taxes on monthly basis
5. Furnishing of invoice details in IFF

Opting out of the QRMP:

Once the ATO exceeds ₹5 crore in the FY
Period: from the 1st day of 2nd month of preceding quarter to the last day of the 1st month of the
quarter

Applicability of late fees

Delay in furnishing of quarterly return / details of outward supply – late fee is applicable
Delay in payment of tax in first two months of quarter – no late fee is applicable

Tax payment
For taxpayer not being QRMP (who is required to file monthly GSTR-3B and GSTR-5)
Tax is payable on the due date of filing of such return (linked with return)
QRMP taxpayer – tax payment delinked from the return filing
For each of the first 2 months of a quarter –
tax is payable in 25th of succeeding month in Form GST PMT-06
Composition Levy Taxpayer
GSTR-4 is required to be filed by 30the April of the following year
Tax for a quarter is to be payable by 18th of the month succeeding such quarter
NRTP or CTP – make advance deposit for estimated tax liability

Other Returns
1. Section 40: First Return
The registered person can issue revised return hence the first return contains
a. Details of outward supplies, after becoming liable to registration

Sahasri Singar Academy 158

 but before grant of the certificate of registration
b. Details of outward supplied made in first tax period
after grant of the certificate of registration

2. Section 44: Annual Return

a. Persons required to furnish Annual Return: All registered persons except
1. Casual Taxable Persons.
2. Non-resident taxable person
3. Input Service Distributor and
4. Persons authorized to deduct / collect tax at source u/s 51/52
5. Person supplying OIDAR services from outside India to unregistered persons in India
b. The due date: before 31st December of the next financial year
c. To Furnish details of expenditure and income for the entire FY
d. Prescribed form for Annual Return
GSTR-9 is to be filed electronically
GSTR-9A is for composition scheme supplier
e. Revision of returns
1. There is no mechanism of filing revised returns for any correction of errors / omissions
2. The rectification of errors / omissions is allowed in the subsequent returns
3. Rectification is not allowed after WEE
a. Due date of furnishing the return for the month of September following the end of
the FY
b. Furnishing of the relevant annual return

3. Section 45: Final Return in GSTR-10

a) Filed by every registered person whose registration has been surrendered or cancelled
b) Time limit for furnishing Final Return
Final Return has to be filed within 3 months of the
i. Date of cancellation or
ii. Date of order of cancellation whichever is later

4. Details of inward supplies of persons having UIN in Form GSTR-11

a) UIN issued for claiming refund of taxes paid on his inward supplies
Furnish the details of inward supplies on which refund of taxes has been claimed in Form
GSTR-11, along with application for such refund claim.
b) UIN issued for purposes other than refund of taxes paid
Furnish the details of inward supplies as may be required by the proper officer in Form
GSTR-11.

Goods and Services Tax 159

Section 46: Notice to return defaulters: notice issued to furnish return in15 days
Section 47: Late fees levied for delay in filing return
If a registered person fails to furnish the following by the due date;
a) Statement of Outward Supplies (Section 37)
b) Returns (Section 39)
c) Final Return (Section 45)
Late fee: WEL of [₹100 for every day during which such failure continues or ₹5,000]

Section 44: Late fees levied for delay in filing annual return
Late fee: Whichever is lower of
a. ₹100 for every day during which such failure continues
b. 0.25% of the turnover of the registered person in the state or UT

Section 48: Goods and Services Tax Practitioners

An eligible person as per eligibility condition is authorised to act as an approved GSTP
A registered person may authorise an approved GSTP to furnish information, on his behalf.
GSTN will provide separate user ID and Password to GSTP
They can do all the work on behalf of taxpayers under this id
A taxpayer may choose a different GSTP on the GST portal.
Prescribed and Standardised formats [GST PCT-1 to GST PCT-5]
for disqualification,
order of rejection of application of enrolment,
list of approved GSTPs
authorisation letter and
withdrawal of authorisation.
A GSTP enrolled in any State or UT shall be treated as enrolled in the other States / UT.

1. The eligibility criteria for GSTP

Indian citizen
Person of sound mind
Not adjudicated as insolvent
Not being convicted by a competent court
+
Satisfying any of the conditions
a. Retired officer of commercial tax department (Group B officer + & for 2 year +)

Sahasri Singar Academy 160

 b. Enrolled as a sales tax practitioner or tax return preparer (for 5 years)
c. Acquired any prescribed qualification listed below
1. UG or PG in Commerce, Law and Banking, BBA
2. Degree in foreign university recognised in India
3. Notified examination
4. Final passed CA / CMA / CS
2. the activities which can be undertaken by a GSTP.
a. Furnish details of outward and inward supplies
b. Furnish monthly, quarterly, annual or final return
c. Make deposit for credit into ECL
d. Furnish information for generation of e-way bill
e. Furnish details of challan in the prescribed form
f. File an application for amendment or cancellation of enrolment u/r 58 [GTA]
g. File an intimation to pay tax under the composition scheme or withdraw
h. Also allowed to appear as authorized representative before officer of department,
appellate authority or Tribunal
i. On confirmation of registered person [hence GSTP not responsibility]
File a claim for refund
File an application for registration / amendment / cancellation
3. Other points
Any registered person gives consent and authorises a GSTP in the prescribed form by
listing the authorised activities in which he intends to authorise the GST practitioner.
The GSTP accepts the authorization in Part B of the same form.
The GSTP can undertake only such tasks as indicated in the prescribed form. The
registered person may, at any time, withdraw such authorisation in the prescribed form.
Any statement furnished by the GSTP is made available to the registered person on the GST
Common Portal. For every statement furnished by the GSTP, a confirmation is sought
from the registered person over email or SMS.
The GSTP should prepare all statements with due diligence and affix his digital
signature on the statements prepared by him or electronically verify using his credentials,
If the GSTP is found guilty of misconduct, his enrolment will be liable to be cancelled and
a SCN would be issued to him.
4. The procedure for enrolment as GSTP
1. An application in prescribed form may be made electronically through the common portal
for enrolment as GSTP
2. The Application shall be scrutinised and GSTP certificate shall be granted in the prescribed
form.
3. In case, the application is rejected, proper reasons shall have to be given.
4. The enrolment once done remains valid till it is cancelled.

Goods and Services Tax 161

5. Any person who has been enrolled as GSTP by virtue of him being enrolled as a Sales Tax
Practioner or Tax Return Preparer under the earlier indirect Tax law shall remain enrolled
only for a period of 30 months from the appointed date unless he passes the said examination
within the said period of 30 months.
6. No person enrolled as a GSTP shall be eligible to remain enrolled unless he passes such
examination conducted at such periods by National Academy of Customs, Indirect Taxes &
Narcotics (NACIN).

List of statements / returns under GST

Return Description Who Files? Date of filing
GSTR-1 Monthly Statement RP under regular 10th of the next month
of Outward supplies scheme & CTP Presently 11th of the next
month
Quarterly Statement RP opting QRMP 13th of the next quarter
of Outward supplies Scheme & CTP

GSTR-3B Monthly Return RP under regular 20th of the next month

scheme & CTP
Quarterly Return RP opting QRMP 22nd or 24th of the month as
Scheme & CTP per the state or UT
GSTR-4 Return for a FY RP paying tax under 30th April of the Next FY
CTP
GST Quarterly Return RP paying tax under 18th of the month
CMP-08 for payment of self- Composition levy succeeding the quarter
assessed tax
GSTR-5 Monthly Return NRTP whichever is earlier:
20th of next month or
Expiry of reg + 7 days
GSTR-9 Annual Return RP other than 31st December of next FY
an ISD, TDS / TCS,
CTP & NRTP
GSTR-10 Final Return By RP on surrender whichever is later:
date of cancellation + 3 m or
date of order for cancellation
GSTR-11 Details of inward Persons who have
supplies been issued a UIN

Sahasri Singar Academy 162

Practical Questions
Question: Mr. X, a registered taxpayer, did not make any taxable supply during the month of
July. Is he required to file a GSTR-3B?1
Question: If a return has been filed, how can it be revised if some changes are required to be
made?2
Question: M/s Cavenon Enterprises, a registered supplier of designer wedding dresses under
regular scheme, has aggregate annual turnover of ₹30 lakh in the preceding FY. It is of the
view that in the current FY, it is permitted to file its statement of outward supplies (GSTR-1)
on a quarterly basis while its accountant advises it to file the same on a monthly basis.
You are required to advise M/s Cavenon Enterprises on the same.3
Question: Mr. Kohli is a registered supplier in the State of Gujarat. He is filing GSTR-1 every
month. During the month of February, he went out of India and thus, could not do any business
transaction during that month. He believes that as there is no transaction, there is no need to
file GSTR-1 for the month of February. Is he correct? Explain.4
Question: Mr. Kalpesh is a registered dealer in Kerala paying tax under composition levy from
1st April. However, he opts to pay tax under regular scheme from 1st December. Is he liable to
file GSTR-4 for the month of November? Discuss.5
Question: Mrs. Zarina, a registered dealer in Rajasthan, did not file GSTR-3B for the month
of June but she wants to file GSTR-3B for the month of July.
Is it possible? Answer with reference to section 39 of the CGST Act6
Question: X has not made any outward supply during the month of September. However, X
has procured certain input services during the month. X is of the opinion that he can file Nil
GSTR-3B for the month of September through SMS. Whether the understanding of X is
correct? Explain.7
Question: A is a chartered accountant in practice and is registered under GST. On a query
regarding return filing process by a potential client, A has represented him as a GSTP. A is of
the view that since he is a qualified CA with a GST registration in the name of his proprietorship
firm, he also qualifies as GSTP. Is the understanding of A correct? Discuss.8
Question: Quicktax, a GST return filing service provider, has asked its clients to provide the
scanned copies of the tax invoices issued to B2B customers for uploading on the GST portal
and filing the return. Whether the process followed by Quicktax is correct?9

1
Yes, at least nil GSTR-3B
2
Cannot revise the return but can amend in the amendment tables contained in GSTR-1 on the date of notice
3
Can file quarterly as AT ≤1.5 crores
4
No, Nil return is to be filed
5
Yes, need to file GSTR-4 up to the date of withdrawal from the composition scheme,
6
Cannot file GSTR-3B for month July unless return for June is filed
7
Nil return cannot be filed. Nil return means no entry in all its tables
8
No, CA also should follow enrolment process
9
No, scanned copy not required but only required field data is enough

Goods and Services Tax 163

Question: X Ltd. is winding up its business in Rajasthan. The Tax Consultant of X Ltd. Has
suggested that X Ltd. Will have to file either the annual return or the final return at the time of
voluntary cancellation of registration in the state of Rajasthan. Do you agree with the stand
taken by Tax Consultant of X Ltd.? Offer your comments.1

1
No, RP has to file annual return as well as final return with in 3 months of cancellation of registration

Sahasri Singar Academy 164