INDEX

CS PROFESSIONAL

CENTRAL GOODS & SERVICE TAX

VOLUME-1

BY

SALEEM QURAISHEE

8th EDITION

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1

 INDEX

CS PROFESSIONAL (INDIRECT TAX) MARKS 70

VOLUME-I
CENTRAL GOODS & SERVICE TAX

S.NO CHAPTER PAGE-NO

1. BASICS OF GOODS & SERVICE TAX 1.1 to 1.40
2. CENTRAL GOODS AND SERVICES TAX ACT, 2017 2.1 to 2.26
3. SUPPLY 3.1 to 3.44
4. LEVY AND COLLECTION OF TAX 4.1 to 4.54
5. TIME AND VALUE OF SUPPLY 5.1 to 5.86
6. INPUT TAX CREDIT/ISD/JOB WORKER VOLUME - II
7. JOB WORK VOLUME - II
8. REGISTRATION 8.1 to 8.60
9. TAX INVOICE, CREDIT AND DEBIT NOTES, 9..1 to 9.30
10. ACCOUNTS AND RECORDS 10.1 to 10.10
11. RETURNS VOLUME - II
12. PAYMENT OF TAX 12.1 to 12.42
13. REFUND VOLUME - II
14. AUDIT 14.1 to 14.8
15. ASSESSMENT VOLUME - II
16. INSPECTION, SEARCH, SEIZURE AND ARREST 16.1 to 16.16
17. DEMANDS AND RECOVERY 17.1 to 17.28
18. LIABILITY TO PAY IN CERTAIN CASES 18.1 to 18.8
19. ADVANCE RULING 19.1 to 19.16
20. APPEALS AND REVISIONS 20.1 to 20.14
21. PENALTY VOLUME - II

2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INDEX

CS PROFESSIONAL (INDIRECT TAX) MARKS 70

VOLUME-II
UNIT-I
THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017

UNIT1 CHAPTER PARTICULAR PAGE

I 1 Preliminary
I 2 Administration
I 3 Levy and Collection of Tax
I 4 Determination of Nature of Supply
I 5 Place of Supply of Goods or Services or Both
I 6 Refund of Integrated Tax to International Tourist
I 7 Zero Rated Supply
I 8 Apportionment of Tax and Settlement of Funds
I 9 Miscellaneous

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3

 INDEX

UNIT-II
UNION GOODS AND SERVICES TAX ACT, 2017

UNIT-II CHAPTER PARTICULAR PAGE

II 1 Preliminary
II 2 Administration
II 3 Levy and Collection of Tax
II 4 Payment of Tax
II 5 Inspection, Search, Seizure and Arrest
II 6 Demands and Recovery
II 7 Advance Ruling
II 8 Transitional Provisions
II 9 Miscellaneous

UNIT-III
THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) ACT, 2017

UNIT-III CHAPTER PARTICULAR PAGE

III 1 THE GST CC

4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INDEX

UNIT-IV -MISCELLANEOUS

UNIT-IV CHAPTER PARTICULAR PAGE

IV 1. IMPORT & EXPORT UNDER GST
IV 2. E-COMMERCE
IV 3. INDUSTRY/SECTOR SPECIFIC ANALYSIS
IV 4. COMPLIANCE RATING
IV 5. ANTI-PROFITEERING.
IV 6. GST PRACTITIONERS.
IV 7. PROFESSIONAL OPPORTUNITIES.
IV 8. OFFENCES & PENALTIES
IV 9. E-WAY BILL
IV 10. EXEMPTIONS UNDER GST

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5

 INDEX

CS PROFESSIONAL (INDIRECT TAX) MARKS 70

VOLUME-III- CUSTOMS LAW

S.NO CHAPTER PAGE-NO

1. BASIC CONCEPTS
2. TYPES OF DUTIES
3. VALUATION- IMPORT & EXPORT
4. IMPORT –EXPORT PROCEDURE
5. WAREHOUSING
6. BAGGAGE
7. GOODS IMPORT OR EXPORT BY POST
8. STORES
9. COASTAL GOODS
10. REFUND AND RECOVERY
11. DUTY DRAWBACK
12. SEARCH, SEIZURE AND ARREST
13. CONFISCATION OF GOODS
14. OFFENCE, AND PROSECUTION
15. APPELLATE PROCEDURES
16. ADVANCE RUILING
17. SETTLEMENT COMMISION
18. FTP

6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INDEX

CS PROFESSIONAL (DIRECT TAX) MARKS -30

VOLUME-IV

S.NO PARTICULAR PAGE-NO

1. TAX PLANNING &MANAGEMENT
2. TAX RATES & AMT
3. TAXATION OF FIRMS
4. ASSESSMENT OF COMPANIES
5. TAXATION OF NON-RESIDENT ENTITIES
6. GAAR
7. BASICS OF INTERNATIONAL TAXATION
8. TAX TREATIES & DTAA
9. TAX IMPLICATIONS ON SPECIFIED TRANSACTIONS

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 7

 INDEX

8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 1 | BASICS OF GOODS &
SERVICE TAX

1. INTRODUCTION –
A. WHAT IS TAX -
 A tax may be defined as a “pecuniary burden laid upon individuals or property owners
to support the Government; a payment exacted by legislative authority.
 A tax “is not a voluntary payment or donation, but an enforced contribution, exacted
pursuant to legislative authority”.
 In simple words, tax is nothing but money that people have to pay to the Government,
which is used to provide public services.

B. TYPES OF TAXES
1) Direct Taxes -A direct tax is a kind of charge, which is imposed directly on the
taxpayer and paid directly to the Government by the persons (juristic or natural) on
whom it is imposed. A direct tax is one that cannot be shifted by the taxpayer to
someone else. A significant direct tax imposed in India is income tax.
2) Indirect Taxes: - If tax is levied on the price of a good or service, then, it is an
indirect tax e.g. Goods and Services Tax (GST) or Custom Duty. In the case of
indirect taxes, the person paying the tax passes on the incidence to another person

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.1

 BASICS OF GOODS & SERVICE TAX

C. DIRECT TAX AND INDIRECT TAX-

BASIS DIRECT TAX INDIRECT TAX

1) Nature Direct Taxes are the taxes Indirect Taxes are paid by one
directly incurred and paid by person (Assessee / Dealer), but
the person concerned. the same is recovered from
another person (Consumer).
2) Levied on Levied on the income / wealth Levied on Purchase / Sale /
of the Assessee. Manufacture of goods and
Provision of Services.
3) Shifting There is no shifting of tax Tax burden is shifted to the
of Burden burden. Hence, it is directly subsequent user.
borne by the taxpayer.
4) Time of Direct Taxes are collected after It is collected at the time of sale
Collection the income for a year is earned. or purchase or rendering of services.
5) TYPES Income Tax. [Wealth Tax Goods and Services Tax &
Abolished from Financial Year Customs Duty
2016-2017]
6)
7)

1.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

D. FEATURES OF INDIRECT TAXES-

1) An important source of revenue: Indirect taxes are a major source of tax revenues
for Governments worldwide and continue to grow as more countries move to
consumption-oriented tax regimes. In India, indirect taxes contribute more than
50% of the total tax revenues of Central and State Governments.
2) Tax on commodities and services: It is levied on commodities at the time of
manufacture or purchase or sale or import/export thereof. Hence, it is also known
as commodity taxation. It is also levied on provision of services.
3) Shifting of burden: There is a clear shifting of tax burden in respect of indirect
taxes. For example, GST paid by the supplier of the goods is recovered from the
buyer by including the tax in the cost of the commodity.
4) No perception of direct pinch: Since, value of indirect taxes is generally inbuilt in
the price of the commodity, most of the time the taxpayer pays the same without
knowing that he is paying tax to the Government. Thus, taxpayer does not perceive
a direct pinch while paying indirect taxes.
5) Inflationary: Tax imposed on commodities and services causes an all-round price
spiral. In other words, indirect taxation directly affects the prices of commodities
and services and leads to inflationary trend.
6) Wider tax base: Unlike direct taxes, the indirect taxes have a wide tax base.
Majority of the products or services are subject to indirect taxes with low thresholds.
7) Promotes social welfare: High taxes are imposed on the consumption of harmful
products (also known as ‘sin goods’) such as alcoholic products, tobacco products
etc. This not only checks their consumption but also enables the State to collect
substantial revenue.
8) Regressive in nature: Generally, the indirect taxes are regressive in nature. The rich
and the poor have to pay the same rate of indirect taxes on certain commodities
of mass consumption. This may further increase the income disparities between the
rich and the poor.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.3

 BASICS OF GOODS & SERVICE TAX

E. CHART

1.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

2. EVOLUTION OF INDIRECT TAXATION IN INDIA-

A. OLD-

TAXABLE TAX ENTRY

TAX TAX LAWS
EVENT COLLECTION NO
Custom duty Customs act 1962 Import/Export CG 83
Central excise duty CEA 1944 M/P CG 84
Central sales tax CST 1956 Interstate sale SG 92A
Service tax Finance act 1994 Taxable service CG 97
Vat State Vat Sale within SG 54 State
state list

B. GST is an Indirect tax. It is a destination-based tax on consumption of goods and

services. It is levied at all stages right from manufacture up to final consumption
with credit of taxes paid at previous stages available as setoff. In a nutshell,
only value addition will be taxed, and burden of tax is to be borne by the final
consumer.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.5

 BASICS OF GOODS & SERVICE TAX

Following are features of GST.

1. Value added tax
2. Destination based tax
3. Consumption based tax
4. Tax on both goods and services
5. Tax on supply
6. Comprehensive and continuous chain of Input Tax Credit
7. Final burden on ultimate Consumer

C. TREATMENT UNDER EARLIER LAW & GST-

Treatment under earlier law Treatment under GST

1. Business has to pay: Business has to pay only GST:
I. Excise duty on manufacture I. CGST and SGST (If sale is
I. VAT (in a state where sale has been Intrastate)
affected) II. IGST (if sale is Interstate) (no
II. Service tax on Services. multiple taxes)
2. Business was able to take ITC of Under GST Manufacturer, Trader
I. Excise Duty and Service Provider,
II. Service Tax all are eligible to take the benefit
III. VAT of GST paid on inputs,
Here a manufacturer can use ITC of Excise capital goods and input services
and Service tax to pay off the liability of Traders can take the benefit of
Excise as well as Service tax. But this ITC GST Paid on Input
cannot be used to pay off VAT liability. Services to pay off the GST Liability
Similarly, credit of VAT can be used to pay on supply of goods.
off VAT liability and not Excise duty and (This is one of the biggest
Service Tax. advantages)

1.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

3. REASONS FOR IMPLEMENTATION OF A NEW INDIRECT TAX REGIME:

a. Plethora of taxes: There were various indirect taxes in India in existence prior to
introduction of GST. There was a three-tier system of tax collection in India:
I. Taxes levied by Central Government i.e. Customs Duties, Central Excise Duties,
Service tax, additional duties of Excise etc.
II. State Excise, VAT, CST, Entry tax, entertainment tax, luxury tax etc. are levied by
the State Governments
III. Local Bodies levy taxes like entertainment tax Octroi, property tax, local body tax,
etc.

b. Plenty of Taxable Events: Taxes were levied at various stages on various taxable
events by different authorities on the same subject matter or transaction.
I. Excise duty was levied at central level on manufacture.
II. Service tax was levied on transport and other incidental services again by Central
Government.
III. Sales tax (VAT/CST) was collected by the State Government on sale.
IV. Entry tax was collected by State Government on the entry of goods in the state.
V. Octroi was collected by municipal authorities when the goods enter the municipal
area.
The same goods were being subjected to varieties of taxes on variety of taxable
events like entry, transport, manufacture, sale and so on. Most of the taxes were
having cascading in effect as there was no benefit of input tax credit.

c. Double taxation: On a single transaction, multiple taxes were being imposed, often
by different authorities. For e.g. for a stay in a hotel in Delhi, you had to pay luxury
tax as well as service tax. Service tax was collected by Central Government and
applicable local taxes by State Government

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.7

 BASICS OF GOODS & SERVICE TAX

d. Multiplicity of compliances: Payment of tax to various authorities, different due

dates, assessment, refund process at various levels made the taxation system
more complex and led to an increase in compliance cost.

e. Lack of Cross-utilization facility between goods and services: Taxes paid on

procurement of input purchases were not allowed to be set off against output tax
payable on services and vice versa.

f. Non-availability of set off arrangement against other State or Central

Government levies: CST paid in one state was not available as set off against
sales tax payable in another state. Similarly, central taxes were not available as
credit to set off against the taxes payable at the state level and vice versa. E.g.,
Excise duty and service tax paid on goods could not be used to pay VAT or CST. In
the same way, VAT Credit (ITC) could not be used to pay excise duty or service
tax.

1.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

4. CONSTITUTIONAL PROVISIONS
1. India has a three-tier federal structure, comprising the Union Government, the
State Governments and the Local Government.
2. The power to levy taxes and duties is distributed among the three tiers of Governments,
in accordance with the provisions of the Indian Constitution.
3. The Constitution of India is the supreme law of India. It consists of a Preamble, 25
parts containing 448 Articles and 12 Schedules.
4. Power to levy and collect taxes whether, direct or indirect emerges from the Constitution
of India. In case any tax law, be it an act, rule, notification or order is not in conformity
with the Constitution, it is called ultra vires the Constitution and is illegal and void.

Study of the basic provisions of the Constitution is essential for understanding

the genesis of the various taxes being imposed in India. The significant provisions
of the Constitution relating to taxation are:

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

II. Article 245: Part XI of the Constitution deals with relationship between the Union
and States. The power for enacting the laws is conferred on the Parliament and
on the Legislature of a State by Article 245 of the Constitution. The said Article
provides as under:

 Subject to the provisions of this Constitution, Parliament may make laws for the
whole or any part of the territory of India, and the legislature of a State may make
laws for the whole or any part of the State.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.9

 BASICS OF GOODS & SERVICE TAX

 No law made by the Parliament shall be deemed to be invalid on the ground that
it would have extra-territorial operation.

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

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

Entries 82 to 91 of List I enumerate the subjects where the Central Government

has power to levy taxes. Entries 45 to 63 of List II enumerate the subjects
where the State Governments have the power to levy taxes. Parliament has a
further power to make any law for any part of India not comprised in a State
even if such matter is included in the State List.

1.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

NEED FOR CONSTITUTIONAL AMENDMENT

 The Constitutional provisions hitherto had delineated separate powers for the Centre
and the States to impose various taxes. Whereas the Centre levied excise duty on
all goods produced or manufactured in India, the States levied Value Added Tax once
the goods entered the stream of trade upon completion of manufacture.

 In the case of inter -State sales, the Centre had the power to levy a tax (the Central
Sales Tax), but the tax was collected and retained entirely by the States. Services
were exclusively taxed by the Centre together with applicable cesses, if any. Besides,
there were State specific levies like entry tax, Octroi, luxury tax, entertainment tax,
lottery and betting tax, local taxes levied by Panchayats etc.

 With respect to goods imported from outside the country into India, Centre levied
basic customs duty and additional duties of customs together with applicable cesses,
if any.

 Introduction of the GST required amendment in the Constitution so as to enable

integration of the central excise duty including additional duties of customs, State
VAT and certain State specific taxes and service tax levied by the Centre into a
comprehensive Goods and Services Tax and to empower both Centre and the States
to levy and collect it.

 Consequently, Constitution (101 st Amendment Act), 2016 (hereinafter referred

to as Constitution Amendment Act) was passed. It has 20 sections. Newly
inserted Article 279A empowering President to constitute GST Council was
notified on 12.09.2016. Remaining provisions were notified with effect from
16.09.2016.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.11

 BASICS OF GOODS & SERVICE TAX

Significant provisions of Constitution (101st Amendment) Act, 2016

V. Article 246A: Power to make laws with respect to Goods and Services Tax:

 This article grants power to Centre and State Governments to make laws with
respect to GST imposed by Centre or such State.
 Centre has the exclusive power to make laws with respect to GST in case of inter-
State supply of goods and/or services.
 However, in respect to the following goods, the aforesaid provisions shall apply
from the date recommended by the GST Council:
Petroleum Crude
w High Speed Diesel
w Motor Spirit (commonly known as Petrol)
w Natural Gas
w Aviation Turbine Fuel

VI. Article 269A: Levy and collection of GST on inter-State supply

 Article 269A stipulates that GST on supplies in the course of inter-State trade or
commerce shall be levied and collected by the Government of India and such tax
shall be apportioned between the Union and the States in the manner as may be
provided by Parliament by law on recommendations of the Goods and Services Tax
Council.
 In addition to above, import of goods or services or both into India will also be
deemed to be supply of goods and/ or services in the course of Inter-State trade
or Commerce.
 This will give power to Central Government to levy IGST on the import transactions
which were earlier subject to countervailing duty under the Customs Tariff Act,
1975.

1.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

 Where an amount collected as IGST has been used for payment of SGST or vice
versa, such amount shall not form part of the Consolidated Fund of India. This is
to facilitate transfer of funds between the Centre and the States.
 Parliament is empowered to formulate the principles regarding place of supply and
when supply of goods, or of services, or both occurs in inter-State trade or commerce.

VII. Definitions of ‘Goods and Services Tax’, ‘Services’ and ‘State’ incorporated
under Article 366
The terms Goods and Services Tax, services and State have been defined under
respective clauses of Article 366 as follows:
 Goods and services tax mean any tax on supply of goods, or services or both except
taxes on the supply of the alcoholic liquor for human consumption. Consequently,
GST can be levied on supply of all goods and services except alcoholic liquor for
human consumption.
 Services means anything other than goods.
 State, with reference to articles 246A, 268, 269,269A and article 279A, includes a
Union territory with Legislature.
 Definition of “Goods”: The term goods has already been defined under clause (12)
of Article 366 in an inclusive manner to provide that “goods includes all materials,
commodities, and articles”.

VIII. GST Council: Article 279A

 Article 279A of the Constitution empowers the President to constitute a joint forum
of the Centre and States namely, Goods & Services Tax Council (GST Council).
 The provisions relating to GST Council came into force on 12th September 2016.
President constituted the GST Council on 15th September 2016.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.13

 BASICS OF GOODS & SERVICE TAX

POINT TO BE NOTED- Even after introduction of GST

1. Excise duty continues to be levied on manufacture/production of tobacco, petroleum
crude, diesel, petrol, ATF and natural gas
2. State excise duty is leviable on manufacture/production of alcoholic liquor, opium,
Indian hemp and narcotics, and
3. VAT is leviable on intra-State sale of petroleum crude, diesel, petrol, ATF, natural
gas and alcoholic liquor.
4. Petroleum crude, diesel, petrol, ATF, natural gas is presently not taxable under GST
and alcoholic liquor is outside the ambit of GST.
5. The Union Government has retained the power to levy excise duties on tobacco and
tobacco products manufactured in India. Resultantly, tobacco is subject to GST as
well as central excise duty.

1.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

IX. ENTRIES IN UNION & STATE LIST – (EXCEPT GST)

TAX/DUTY SOURCE LEVY TAX IMPOSED LAW

CUSTOM ENTRY 83 CG Import and Export of goods.  Customs act
DUTY 1962
 Customs tariff
act 1975
EXCISE Entry 51 of SG M/P of -  State excise
DUTY List II a) Alcoholic liquors for human  Laws
consumption.
b) Opium, Indian hemp and
other narcotic drugs and
narcotics,
EXCISE Entry 84 CG Duties of excise on
DUTY of List I the following goods
manufactured or produced
in India, namely:

a) petroleum crude;
b) high speed diesel;
c) motor spirit (commonly
known as petrol);
d) natural gas;
e) aviation turbine fuel; and
f) tobacco and tobacco products
CST Entry 92A CG Interstate sale or purchase CST act 1956
List I of goods (excluding goods
liable to GST)

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.15

 BASICS OF GOODS & SERVICE TAX

VAT Entry 54 SG Tax on intra state (within State sales tax

of List II state) sale or purchase of or Vat Laws.
a) petroleum crude.
b) high speed diesel.
c) motor spirit (commonly
known as petrol).
d) natural gas.
e) aviation turbine fuel; and
f) Alcoholic liquor for human
consumption
Other Entry 97 of CG Any other tax not enumerated _
Taxes List I in List ii or List III

1.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

5. GOODS & SERVICE TAX-

1. GST IS A CONSUMPTION BASED TAX BASED ON VAT PRINCIPLE-
a. It is a destination-based tax on consumption of goods and services.
b. It is proposed to be levied at all stages right from manufacture up to final consumption
with credit of taxes paid at previous stages available as setoff.
c. Only value addition will be taxed, and burden of tax is to be borne by the final
consumer.
d. GST is a consumption-based tax, i.e. tax will be payable in the State in which goods
and services or both are finally consumed.
e. Exports are not taxable, because the place of consumption is outside India.
f. Imports are taxable, because the place of consumption is in India.
g. GST is based on VAT system of allowing input tax credit of tax paid on inputs, input
services and capital goods, for payment of tax on output supply.
h. States from which goods are supplied will not get any tax as goods are consumed
in another State.

2. TAXABLE EVENT-
I. GST is levied on ‘supply’ of goods or services or both in India.
II. It is a single tax on the supply of goods and services, right from the manufacturer
to the consumer.
III. Under the GST credit of taxes paid at previous stages is available as set-off. That
is, only the value addition will be taxed, and burden of tax is to be borne by the
final consumer.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.17

 BASICS OF GOODS & SERVICE TAX

IV. The term “supply” includes all forms of supply of goods and services such as
a. sale,
b. transfer,
c. barter,
d. exchange,
e. license,
f. rentals,
g. lease, or
h. disposal
made or agreed to be made for consideration by a person in the course or
furtherance of business. Supply also includes import of services, whether for
consideration and whether or not in the course of or furtherance of business. In
addition, there are certain specified transactions which would be treated as supply,
even though undertaken without consideration.

V. Under GST supply has been divided into two categories:

a. Sale within the state (known as Intrastate Supply)
b. Sale from one State to another State (known as Interstate Supply)

VI. Which type of GST will be levied, it depends on type of supply, i.e. whether
supply is an intrastate Supply or interstate supply.
a. In case of intrastate supply, there will be levied two taxes- CGST and SGST-
Section 9 of CGST ACT, 2017
b. In case of inter-state supply there will be levied only one tax- IGST Section
5 of IGST Act, 2017
Thus, there are two charging sections- Section 9 of CGST Act, 2017 and
Section 5 of IGST Act, 2017.

1.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

VII. Section 7, 8 and 9 of IGST Act 2017 specifies the criteria on the basis of which
nature of supply (interstate or intrastate) is determined.
A. INTRASTATE SUPPLY: Where the location of the supplier and the place of supply
of goods or services are in the same State/Union territory, it is treated as intra-
State supply of goods or services, respectively.
B. INTER STATE SUPPLY- Where the location of the supplier and the place of supply
of goods or services are in

 two different States or

 two different Union Territories or
 a State and a Union territory,
it is treated as inter-State supply of goods or services, respectively.
POINT TO BE NOTED-Equivalent provisions are contained in Respective SGST Act
of the State.

How to Decide IGST or CGST + SGST while raising invoices:

Location of Supplier and Place of Supply

In
In same
different
state
states

Intra State Transaction Inter State Transaction

CGST + SGST IGST

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.19

 BASICS OF GOODS & SERVICE TAX

6. FRAMEWORK OF GOODS AND SERVICE TAX-

1. Dual GST: -
 India has adopted a Dual GST model in view of the federal structure of the
country. Centre and States will simultaneously levy GST on taxable supply of
goods or services or both which, takes place within a State or Union Territory.
 Thus, tax is imposed concurrently by the Centre and States, i.e. Centre and States simultaneously
tax goods and services.
 Now, the Centre also has the power to tax intra-State sales & States are also empowered
to tax services. GST extends to whole of India including the State of Jammu and Kashmir.

2. Legislative Framework -

LAW PASSESD BY PURPOSE

The Central PARLIAMENT  To levy and collect CGST on intra state supplies and for

GST Act, 2017 other matters.

 CGST ACT has 174 Sections, 3 Schedules, and 162 Rules.

The Integrated PARLIAMENT  To levy and collect IGST on inter-state supplies and for

GST Act, 2017 other matters.

 IGST Act has 25 Sections.

The Union PARLIAMENT  To levy and collect UTGST on intra state supplies and for

Territory GST other matters.

Act,2017  UTGST Act has 26 Sections.

The GST PARLIAMENT  To compensate states for the loss of revenue if any due to

(Compensation introduction of GST

to States)  GST (compensation to States) Act has 14 Sections and

Act, 2017 1 Schedule

The SGST Act STATE  To levy and collect SGST on intra state supplies and for

2017 LEGISLATURE other matters.

1.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

Point to be noted-
 There is single legislation – CGST Act, 2017 - for levying CGST.
 Union Territories without State legislatures
1. Andaman and Nicobar Islands,
1I. Lakshadweep,
1II. Dadra Nagar Haveli & Daman and Diu
1V. Chandigarh
V. Ladakh + other Territory are governed by UTGST Act, 2017 for levying UTGST.
 States and Union territories with their own legislatures
1. Delhi
1I. Pondicherry
1II. UT of J&K have their own GST legislation for levying SGST.

CASE-1 In Ladakh, CGST and UTGST is levied on supply of goods or services or

both. In Delhi, CGST and SGST is levied on supply of goods or services or both.

3. CLASSIFICATION OF GOODS AND SERVICES-

A. CLASSIFICATION OF GOODS-
1. HSN (Harmonized System of Nomenclature) code is used for classifying the goods
under the GST.
2. It is 8-digit coding system.
3. HSN code for goods.
I. Two-digit code for the taxpayers whose turnover is above Rs 1.5 crores but below
Rs. 5 crores.
II. Four-digit code for the taxpayers whose turnover is above 5 crores and above.
III. Taxpayers having turnover less than 1.5 crores are not required to mention HSN code
in the invoices
IV. I/E- HSN of 8 digits is compulsory.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.21

 BASICS OF GOODS & SERVICE TAX

B. SAC for goods

I. SAC for services.
II. 6-digit coding system is used
III. SAC in Invoice is mandatory in all cases.

4. REGISTRATION –

5. COMPOSITION SCHEME -

6. EXEMPTIONS- Apart from providing relief to small-scale business, the law also
contains provisions for granting exemption from payment of tax on essential goods
and/or services.

7. INPUT TAX CREDIT- Input Tax Credit (ITC) of CGST and SGST/UTGST is available
throughout the supply chain, but cross utilization of credit of CGST and SGST/
UTGST is not possible, i.e. CGST credit

8. COMMON PORTAL-
 Common GST Electronic Portal – www.gst.gov.in – a website managed by Goods
and Services Network (GSTN) [a company incorporated under the provisions
of section 8 of the Companies Act, 2013] has been set by the Government to
establish a uniform interface for the tax payer and a common and shared IT
infrastructure between the Centre and States.
 The GST portal is accessible over Internet (by taxpayers and their CAs/Tax
Advocates etc.) and Intranet by Tax Officials etc.
 The portal is one single common portal for all GST related services. A common
GST system provides linkage to all State/ UT Commercial Tax Departments,
Central Tax authorities, Taxpayers, Banks and other stakeholders.

1.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

 The eco-system consists of all stakeholders starting from taxpayer to tax professional
to tax officials to GST portal to Banks to accounting authorities.
 GSTN provides three front end services to the taxpayers namely registration, payment
and return through GST Common Portal.

FUNCTIONS OF THE GSTN INCLUDE:

I. Facilitating registration.
II. Forwarding the returns to Central and State authorities.
III. Computation and settlement of IGST.
IV. Matching of tax payment details with banking network.
V. Providing various MIS reports to the Central and the State Governments based on
the taxpayer return information.
VI. Providing analysis of taxpayers’ profile; and running the matching engine for matching,
reversal and reclaim of input tax credit.

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

10. COMPENSATION CESS- A GST Compensation Cess at specified rate has

been imposed under the Goods and Services Tax (Compensation to States) Cess
Act, 2017 on the specified luxury items or demerit goods, like pan masala, tobacco,

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.23

 BASICS OF GOODS & SERVICE TAX

aerated waters motor cars etc., computed on value of taxable supply.

Compensation cess is leviable on intra-State supplies and inter-State supplies.

11. GST COUNCIL- (ARTICLE 279A)

a. GST Council is the main decision-making body that has been formed to finalize
the design of GST.
b. This governing body of GST comprises of
 Union Finance, is the Chairman of the council,
 The Minister of State (Revenue) and
 The State Finance/ Taxation Ministers.
c. The duty of the Council is to make recommendations to the Union and the States.
d. It has been provided in the Constitution (one hundred and first amendments) Act,
2016 that the GST Council, in its discharge of various functions, shall be guided
by the need for a harmonized structure of GST and for the development of a
harmonized national market for goods and services. In the GST Council, a decision
will be taken by a three-fourth majority with the Centre having a one-third vote
and the states the remaining two-third.

FUNCTIONS OF THE GST COUNCIL -

I. Taxes, cesses, and surcharges levied by the Centre, States and local bodies which
may be subsumed in the GST.
II. Goods and services which may be subjected to or exempted from GST.
III. Model GST laws, principles of levy, apportionment of IGST and principles that
govern the place of supply.
IV. Threshold limit of turnover below which goods and services may be exempted from
GST.
V. Rates including floor rates with bands of GST.
VI. Special rates to raise additional resources during any natural calamity.

1.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

12. GST – A tax on goods and services GST is levied on all goods and services,
except
a. Alcoholic liquor for human consumption- Alcoholic liquor for human consumption
is outside GST. The manufacture/production of alcoholic liquor continues to be
subjected to State excise duty and inter-State/intra-State sale of the same is
subject to VAT/CST respectively.

b. Petroleum crude, diesel, petrol, ATF and natural gas. Petroleum crude, diesel,
petrol, ATF and natural gas: As regards petroleum crude, diesel, petrol, ATF and
natural gas are concerned, they are not presently leviable to GST. GST will be levied
on these products from a date to be notified on the recommendations of the GST
Council. Till such date, central excise duty continues to be levied on manufacture/
production of petroleum crude, diesel, petrol, ATF and natural gas and inter-State/
intra-State sale of the same is subject to VAT/CST respectively.

c. Tobacco: Tobacco is within the purview of GST, i.e. GST is leviable on tobacco.
However, Union Government has also retained the power to levy excise duties on
tobacco and tobacco

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.25

 BASICS OF GOODS & SERVICE TAX

7. LEVY AND COLLECTION OF GST-

A. LEVY AND COLLECTION - (SEC-9 CHARGING SECTION OF CGST)
1. Levy: A tax called the Central Goods and Services Tax (CGST) shall be levied on
all intra-State supplies of goods or services or both.
 Collection: The tax shall be collected in such manner as may be prescribed and
shall be paid by the taxable person. However, intra-State supply of alcoholic liquor
for human consumption is outside the purview of CGST.
 Value for levy: Transaction value under section 15 of the CGST Act.
 Rates of CGST: Rates for CGST are rates as may be notified by the Government
on the recommendations of the GST Council. Maximum rate of CGST will be 20%.

2. Postponement of GST on Certain Goods: Section 9(2) of CGST Act, 2017 provides
that CGST on supply of the following items has not been levied immediately. It
shall be levied with effect from such date as may be notified by the Government
on the recommendations of the Council:

 Petroleum crude/High speed diesel

 Motor spirit (commonly known as petrol)
 Natural gas and Aviation turbine fuel

3. Reverse charge - Tax payable by recipient of supply of goods or services or

both -CGST shall be paid by the recipient of goods or services or both, on reverse
charge basis Intra State supply of goods or services or both, notified by the
Government on the recommendations of the GST Council. [Section 9 (3)]

4. CGST to be paid on RCM by notified persons on notified goods/services when

received from unregistered suppliers. Section 9(4) -(W.e.f 1-2-2019)

1.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

5. Electronic commerce operator liable to pay tax on notified services- Section

9(5) of CGST Act, 2017 empowers the Government to notify certain class of
services to be supplied (intra-state) through Electronic Commerce Operator, on
which CGST will be paid by E-Commerce Operators. Such services shall be notified
on the recommendations of the GST Council.

S.NO. SITUATIONS PERSON LIABLE TO PAY TAX

1. If ECO is located in ELECTRONIC COMMERCE OPERATOR (ECO)
taxable territory (i.e.
having physical presence
in India)
2. If ECO does not have PERSON REPRESENTING THE ECO
physical presence in
taxable territory (I.e.
India)
3. If the ECO has neither PERSON APPOINTED BY THE ECO FOR THE
the physical presence PURPOSE OF PAYING THE TAX
nor any representative
in the taxable territory

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.27

 BASICS OF GOODS & SERVICE TAX

B. LEVY AND COLLECTION - (SECTION- 5 CHARGING SECTION)-IGST

1. Levy: A tax called the Integrated Goods and Services Tax (IGST) shall be levied
on all inter-State supplies of goods or services or both.
 Collection: The tax shall be collected in such manner as may be prescribed and
shall be paid by the taxable person. However, inter-State supply of alcoholic liquor
for human consumption is outside the purview of IGST.
 Value for levy: Transaction value under section 15 of the CGST Act.
 Rates of IGST: Rates for IGST are rates as may be notified by the Government
on the recommendations of the GST Council. Maximum rate of IGST will be 40%.
 Further Proviso to Section 5 (1) of IGST Act, 2017 provides that if goods are
imported into India then on such goods in addition to Custom duty under the
Customs Act, 1962, IGST will also be levied

2. Postponement of GST on Certain Goods: Section 5 (2) of IGST Act, 2017 provides
that IGST on supply of the following items has not been levied immediately. It
shall be levied with effect from such date as may be notified by the Government
on the recommendations of the Council:
 Petroleum crude
 High speed diesel
 Motor spirit (commonly known as petrol)
 Natural gas and
 Aviation turbine fuel

3. IGST TO BE PAID ON Reverse charge BASIS by recipient ON Notified goods

or services or both- THE government may on recommendations of the council by
notification specify categories of supply of goods or services or both ,the tax on
which shall be paid on reverse charge basis by recipient. [Section 5 (3)]

1.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

4. IGST to be paid on RCM by notified persons on notified goods/services when

received from unregistered suppliers. Section 5(4)-(W.e.f 1-2-2019)

5. Tax payable by the electronic commerce operator on notified services- Section 5

(5) of IGST Act, 2017 empowers the Government to notify certain class of services
to be supplied (inter-state) through Electronic Commerce Operator, on which IGST
will be paid by E-Commerce Operators. Such services shall be notified on the
recommendations of the GST Council. (Refer Chapter Levy and Collection)

Comparison between Section 9 of CGST ACT, 2017 and Section 5 of IGST ACT, 2017

S. No. Section 9 of CGST ACT Section 5 of IGST ACT Remark

1 Section 9 (1) Section 5 (1) Section 5 contains
a provision which
is not mentioned in
section 9(1)
2 Section 9 (2) Section 5 (2) Same
3 Section 9 (3) Section 5 (3) Same
4 Section 9 (4) Section 5 (4) Same
5 Section 9 (5) Section 5 (5) Same

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.29

 BASICS OF GOODS & SERVICE TAX

8. TAXES WHICH HAVE BEEN SUBSUMED UNDER GST

 The GST would replace the following taxes currently levied and collected by
the Centre:
a. Central Excise duty
b. Duties of Excise (Medicinal and Toilet Preparations)
c. Additional Duties of Excise (Goods of Special Importance)
d. Additional Duties of Excise (Textiles and Textile Products)
e. Additional Duties of Customs (commonly known as CVD)
f. Special Additional Duty of Customs (SAD)
g. Service Tax
h. Central Surcharges and Cesses so far as they relate to supply of goods and
services.

 State taxes that would be subsumed under the GST are:

a. State VAT
b. Central Sales Tax
c. Luxury Tax
d. Entry Tax (all forms)
e. Entertainment and Amusement Tax (except when levied by the local bodies)
f. Taxes on advertisements
g. Purchase Tax
h. Taxes on lotteries, betting and gambling
i. State Surcharges and Cesses so far as they relate to supply of goods and services’
The GST Council shall make recommendations to the Union and States on the
taxes, cesses and surcharges levied by the Centre, the States and the local
bodies which may be subsumed in the GST.

1.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

9. ADVANTAGE OF GST
A. MAKE IN INDIA:
1. Will help to create a unified common national market for India, giving a boost to
Foreign investment and “Make in India” campaign;
2. Will prevent cascading of taxes as Input Tax Credit will be available across goods
and services at every stage of supply;
3. Harmonization of laws, procedures and rates of tax;
4. It will boost export and manufacturing activity, generate more employment and thus
increase GDP with gainful employment leading to substantive economic growth;
5. Ultimately it will help in poverty eradication by generating more employment and
more financial resources;
6. More efficient neutralization of taxes especially for exports thereby making our
products more competitive in the international market and give boost to Indian
Exports;
7. Improve the overall investment climate in the country which will naturally benefit
the development in the states;
8. Uniform SGST and IGST rates will reduce the incentive for evasion by eliminating
rate arbitrage between neighboring States and that between intra and inter-State
sales;
9. Average tax burden on companies is likely to come down which is expected to
reduce prices and lower prices mean more consumption, which in turn means more
production thereby helping in the growth of the industries. This will create India as
a “Manufacturing hub”.

B. EASE OF DOING BUSINESS:

1. Simpler tax regime with fewer exemptions;
2. Reductions in the multiplicity of taxes that are at present governing our indirect tax
system leading to simplification and uniformity;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.31

 BASICS OF GOODS & SERVICE TAX

3. Reduction in compliance costs - No multiple record keeping for a variety of taxes-

so lesser investment of resources and manpower in maintaining records;
4. Simplified and automated procedures for various processes such as registration,
returns, refunds, tax payments, etc;
5. All interaction to be through the common GSTN portal- so less public interface
between the taxpayer and the tax administration;
6. Will improve environment of compliance as all returns to be filed online, input
credits to be verified online, encouraging more paper trail of transactions;
7. Common procedures for registration of taxpayers, refund of taxes, uniform formats
of tax return, common tax base, common system of classification of goods and
services will lend greater certainty to taxation system;
8. Timelines to be provided for important activities like obtaining registration, refunds,
etc;
9. Electronic matching of input tax credits all-across India thus making the process
more transparent and accountable.

C. TO THE GOVERNMENT:
1. Broadening Tax base
2. Improved compliance and revenue collections
3. Efficient use of Resources
4. Investments out of savings by consumers: -

D. TO TRADE
1. Reduction in multiplicity of taxes
2. Mitigation of cascading/ double taxation
3. More efficient neutralization of taxes especially for exports
4. Development of Common National Market or Common Economic market
5. Simpler tax regime with fewer rates and exemptions

1.32 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

6. Increase in cost competitiveness’ for domestic industries with reduction in tax cost
and also reduced cost of compliance.

E. TO CONSUMER
1. Reduction in cost of goods and services due to elimination of cascading effect of taxes
2. Increase in purchasing power and real income
3. Increase in savings due to decrease in cost
4. Increase in investments due to increase in savings

DISADVANTAGES OF GST:
1. GST is not good news for all sectors, though. In the current system, many products
are exempted from taxation. The GST proposes to have minimal exemption list.
Currently, higher taxes are levied on fewer items, but with GST, lower taxes will be
levied on almost all items.
2. GST is not applicable on liquor for human consumption. So alcohol rates will not get
any advantage of GST
3. Stamp duty will not fall under the GST regime and will continue to be imposed by state

10. PRINCIPLES OF GST-

a. GST is a broad-based tax
b. GST is a destination-based tax
c. GST is technically paid by suppliers, but it is actually funded by consumers
d. GST is collected through a staged process i.e. a tax on the value added to goods or
services at every point in the supply chain
e. GST is a tax on the consumption of products from business sources, and not on
personal or hobby activities
f. Under GST, input tax credit is provided throughout the value chain for creditable acquisition

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.33

 BASICS OF GOODS & SERVICE TAX

11. GST INTERNATIONAL SCENARIO

I. Internationally, countries are moving towards simplification of tax structures.
II. The adoption of Goods and Services Tax has been the most important development
in several countries over the last half-century.
III. Today, it is one of the widely accepted indirect taxation system prevalent in
more than 160 countries across the globe. Globally, GST has been structured
as a destination based comprehensive tax levied at a specified rate on sale and
consumption of goods and services within a country. It facilitates creation of
national tax standards with consumers paying uniform rates of GST, thereby
enabling flow of seamless credit across the supply chain.
IV. GST was first levied by France in 1954.
V. Today, Malaysia is the most recent country to join the bandwagon.
VI. In countries where GST has been adopted, manufacturers, wholesalers, retailers
and service providers charge GST at the specified rate on price of the goods
and services from consumers and claim input credits for GST paid by them on
procurement of goods and services (raw materi

12. MODELS OF GST

I. Most countries have adopted similar principles of GST, there remain significant
differences in the way it is implemented.
II. These differences result not only from the continued existence of exemptions and
special arrangements to meet specific policy objectives, but also from differences
of approaches in the definition of the jurisdiction of consumption and therefore of

1.34 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

taxation. In addition, there are a number of variations in the application of GST, and
other consumption taxes, including different interpretation of the same or similar
concepts; different approaches to time of supply and its interaction with place of
supply; different definitions of services and intangibles and inconsistent treatment
of mixed supplies.
III. Different countries follow different model of GST based upon their own legislative
and administrative structure and their requirements. Some of these models are:
 Australian Model wherein, tax is collected by the Centre and distributed to the
States
 Canadian Model wherein there are three variants of taxes
 Kelkar-Shah Model based on Canada Model wherein taxes are collected by the
Centre however, two different rates of tax are to be levied by the Centre and the
States and
 Bagchi-Poddar Model which envisages a combination of Central Excise, Service Tax
and VAT to make it a common base of GST to be levied both by the Centre and
the States separately.
IV. Most countries follow a unified GST regime.
V. However, considering the Federal nature of Indian Constitution, dual model of GST
was proposed, where the power to levy taxes would be subjectively distributed
between Centre and States thus, GST will be levied by both, the Centre as well
as the States and there will be separate levies in the form of Central Goods and
Services Tax (CGST), State Goods and Services Tax (SGST) and Integrated Goods
and Services Tax (IGST) enabling the tax credit across these three variants of
taxes. Currently, Brazil and Canada also follow dual GST model.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.35

 BASICS OF GOODS & SERVICE TAX

13. ADMINISTRATIVE MECHANISM-

I. GST Council is the apex body for making recommendations on various issues
relating to policy making, formulation of principles, implementation of policies
under Goods and Services Tax regime.
II. Administration and Procedural Aspects of Goods and Services tax are
administered by the Central Board of Indirect Taxes (CBIT) which is under
the control of the Department of Revenue, Ministry of Finance

AUTHORITY HEADED BY
MINISTRY OF FINANCE Union Finance Minister
REVENUE DEPARTMENT Revenue Secretary
CBIT (Central Board of Indirect Chairman and Members
Taxes)
REGIONS Principal Chief Commissioners
ZONES Chief Commissioners
COMMISSIONERATES Commissioners/ Principal Commissioners
DIVISIONS Divisional officers/ deputy commissioner etc.

1.36 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

PRACTICAL PROBLEMS
PROBLEM:1 ABC limited has purchased raw material for `10, 00,000 plus
excise duty 10%, VAT @ 10%. The company incurred `500000 being processing
charge and sold the product at a profit of `2 00,000 and charged excise duty
@ 10% plus VAT @ 10% Discuss tax treatment.
a. Before GST
b. Modified.
c. After GST-(CGST-10%, SGST 10%)
ANSWER:1

PROBLEM:2 Mr. C of Chennai supplied goods/services for ` 20,000 to Mr. M

of Madurai. SGST and CGST rate on supply of goods and services is 9% each.
IGST rate is 18%. Find the following:
a. Total price charged by Mr. C.
b. Who is liable to pay GST?
ANSWER:2

PROBLEM:3 Mr. M of Madurai supplied goods/services for ` 24,000 to Mr. S

of Selam. Mr. M purchased goods/services for ` 23,600 (inclusive of CGST 9%
and SGST 9%) from Mr. C of Chennai. Find the following:
a. Total price charged by Mr. M for supply of goods/services and
b. Who is liable to pay GST?
c. Net liability of GST.
ANSWER:3

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.37

 BASICS OF GOODS & SERVICE TAX

PROBLEM:4 Mr. C of Chennai purchased goods at intra state as well as

at interstate level by paying SGST ` 6,000, CGST ` 6,000 and IGST `12,000.
Subsequently Mr. C sold these goods to Mr. H of Hyderabad (Trader) for `
2,00,000 (IGST applicable @18%). Thereafter Mr. H of Hyderabad sold these
goods to Mr. S of Secunderabad (Consumer) for ` 3,00,000 (CGST & SGST
@18%). Find the Net GST liability of Mr. C and Mr. H. Also find net revenue
to the State and Central Government.
ANSWER:4

PROBLEM:5 Mr. A registered person under GST located in Tamil Nadu, sold
goods worth ` 10,000 after manufacture to Mr. C of Chennai. Subsequently,
Mr. C sold these goods to Mr. H of Hyderabad for ` 17,500. Mr. H being a trader
finally sold these goods to customer Mr. S of Secunderabad for ` 30,000.
Applicable rates of CGST= 9%, SGST=9% and IGST=18%. Find the net tax
liability of each supplier of goods and revenue to the government.
ANSWER:5

PROBLEM:6 Mr. C of Tamil Nadu supplied goods/services for ` 20,000 to

Mr. M of Maharashtra. SGST and CGST rate on supply of goods and services
is 9% each. IGST rate is 18%. Find the following:
a. Total price charged by Mr. C.
b. Who is liable to pay GST?
ANSWER:6

1.38 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 BASICS OF GOODS & SERVICE TAX

PROBLEM:7 Mr. M of Maharashtra supplied goods/services for ` 35,000 to Mr.

P of Pune. Mr. M purchased goods/services for ` 23,600 (inclusive of IGST 18%)
from Mr. C of Tamil Nadu. SGST and CGST rate on supply of goods and services
is 9% each. Find the following:
Total price charged by Mr. M for supply of goods/services and
Who is liable to pay GST?
Net liability of GST.
ANSWER:7

PROBLEM:8 Mr. Tejas purchases a product for ` 6, 40,000 plus CGST & CGST
@ 10% each from Mr. Y. He adds Rs. 52,000 as his profit and sells the customer
by laying SGST & CGST @10%. Cost to customer =? Also calculate the net GST
payable by Mr. Tejas.
ANSWER:8

PROBLEM:9 Mr. Kundan, of Maharashtra, purchased Raw Material A from

Maharashtra for Rs. 36,000 (including SGST & CGST @10%) and Raw Material B
for Rs. 6,20,000 plus SGST & CGST @10%. His expenses are Rs. 8,75,000. Margin
is 20% on cost. SGST & CGST rate is 10% each on supply. How much net GST
is payable by the trader?
ANSWER:9

PROBLEM:10 Inspire Ltd. Supplies the following information to you:

Value of receipt of goods and service: ` 20, 00,000
Value of supply of goods and service: ` 22, 00,000
SGST & CGST rate is @ 10% on input as well as output.
Show calculation for net GST payable by the Inspire Ltd.
ANSWER:10

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 1.39

 BASICS OF GOODS & SERVICE TAX

PROBLEM:11 Santosh Ltd. Supplies the following information to you:

Value of receipt of goods and service : Rs. 20, 00,000
Value of supply of goods and service : Rs. 12, 00,000
SGST & CGST rate is @ 10% on input
SGST & CGST rate is @ 6% on output
Show calculation for net GST payable by the Santosh Ltd
ANSWER:11

PROBLEM:12
Value of receipt of goods and services within the state Rs. 7,00,000
Value of supply of goods and services within the state Rs. 4,20,000
Value of supply of goods and services Inter-State Supply Rs. 4,20,000
IGST rate for supply of goods and services is @20%
SGST & CGST rate on receipt and supply of goods and services is @10% each.
ANSWER:12

PROBLEM:13 Invoice price of goods received by Natraj Ltd. Is Rs. 2,40,000

(inclusive SGST & CGST each @10%). Details of supply of goods are as
follows:
Value of goods sold within the state Rs. 1,60,000
Value of goods exported Rs. 80,000
SGST & CGST rate is 10% on output
You are required to state whether Natraj Ltd. Is liable to pay GST or it can
file a refund claim:
ANSWER:13

1.40 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 2 | INTRODUCTION TO CGST ACT

1. SHORT TITLE, EXTENT AND COMMENCEMENT- SECTION 1

1) This Act may be called the Central Goods and Services Tax Act, 2017.
2) It extends to the whole of India.
3) It shall come into force on such date as the Central Government may, by notification
in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act
and any reference in any such provision to the commencement of this Act shall be
construed as a reference to the coming into force of that provision.

POINT TO BE NOTED
 It came into force on 1st July 2017. (J&K 8TH July 2017)
 The CGST Act 2017 has 21 chapters, 174 section, 162 Rules and 3 Schedules.
 INDIA=

2. IMPORTANT DEFINITIONS
Section 2 of the CGST Act, 2017 contains the definitions of various terms used
at several places in the Act. Some of the important definitions are reproduced
as follows:

1) Actionable claim shall have the meaning assigned to it in section 3 of the Transfer
of Property Act, 1882 (4 of 1882).
Actionable claim: means a claim to any debt, other than a debt secured by
mortgage of immovable property or by hypothecation or pledge of movable property,
or to any beneficial interest in movable property not in the possession, either actual

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.1

 INTRODUCTION TO CGST ACT

or constructive, of the claimant, which the civil courts recognise as affording

grounds for relief, whether such debt or beneficial interest be existent, accruing,
conditional or contingent [Section 2(1) of CGST Act read with section 3 of the
Transfer of Property Act, 1882].
Examples of actionable claims are —
a. Unsecured debts
b. Right to participate in the draw to be held in a lottery
c. Right to benefit of a contract
d. Debentures
e. Bills of Exchange
f. Promissory notes,
g. Bank Guarantee
h. Fixed Deposit Receipt,
i. Arrears of rent, etc.

2) Address of delivery means the address of the recipient of goods and/or services
indicated on the tax invoice issued by a taxable person for delivery of such goods
and/or services.

3) Address on record means the address of the recipient as available in the records
of the supplier.
(It means both 2. and 3. can be same or different)

4) Adjudicating authority means any authority, appointed or authorized to pass

any order or decision under this Act, but does not include
I. The Central Board of Excise and Customs,
II. The Revisional Authority,
III. The Authority for Advance Ruling,

2.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

IV. The Appellate Authority for Advance Ruling,

V. The Appellate Authority and the Appellate Tribunal.

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

6) Casual taxable person means a person who occasionally undertakes transactions

involving supply of goods or services or both in the course or furtherance of business,
whether as principal, agent or in any other capacity, in a State or a Union territory
where he has no fixed place of business;
A casual taxable person is a person who is not registered in a particular state.

CASE-1 A person resident and registered in Goa will be a casual taxable person for
the state of Maharashtra if such person conducts business activities in Maharashtra.

PROBLEM:1 Mr. Gold runs a retail shop for handmade jewellery and is registered
in Chennai. Mr. Gold is planning to sell the jewellery at an exhibition in Mumbai, to
be held from 1st January 2020 to 10th January 2020. Advise time with regard to
registration and payment of GST.
ANSWER:1 Mr. Gold should apply for registration as a casual taxable person within 5
days prior to the date of commencing the exhibition on 1st January 2020. Mr. Gold
should also make an advance deposit of the estimated tax liability for the period
from 1st January 2020 to 10th January 2020.

PROBLEM:2 M/s X Ltd is an advertising company located in Chennai and is

registered as a normal taxable person there. Now, they have secured an assignment

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.3

 INTRODUCTION TO CGST ACT

to manage digital marketing for the Koti Deepothsavam Festival, which will take
place in Hyderabad, Telangana. This will require M/s X Ltd. to displace some
resources in Hyderabad until the festival is over. Advise M/s X Ltd. to obtain for
separate registration in the State of Telangana.
ANSWER:2 In this case, since M/s X Ltd does not have too many assignments
coming from Hyderabad, they can register as a Casual Taxable Person in Telangana
for 90 days. This will enable the organizers of the festival to take input credit on
all GST paid to M/s X Ltd.

7) 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.
A non-resident taxable person is a person who does not have any fixed place of
business/residence in INDIA. Hence, in general language “FOREIGNERS” conducting
business activities are non-resident taxable persons.

8) Agriculturist means an individual or a Hindu Undivided Family who undertakes

cultivation of land­
I. by own labour or
II. by the labour of family, or
III. by servants on wages payable in cash or kind or by hired labour under personal
supervision or the personal supervision of any member of the family
Analysis An individual/HUF who takes cultivation of land is an agriculturist
Cultivation may be done by self or by labour

9) Aggregate turnover in a Financial Year [Sec. 2(6) of CGST] Act: Aggregate value of
all taxable supplies (excluding the value of inward supplies on which tax is payable by a

2.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

person on reverse charge basis), exempt supplies, exports of goods or services or both and
inter-state supplies of person having the same PAN, to be computed on all India basis but
excludes Central Tax, State Tax, Union Territory Tax, integrated tax and Cess.

Aggregate turnover includes Aggregate turnover excludes

The value of exported goods/services Inward supplies on which the recipient
is required to pay tax under Reverse
Charge Mechanism (RCM).
Exempted goods/services or both which Central tax (CGST)/SGST/UTGST/IGST
attracts nil rate of tax or wholly exempt
from tax and includes non- taxable supply
Inter-State supplies between distinct Compensation Cess
persons having same PAN
Supply on own account and on behalf
of principal.

Important points:
I. The turnover will be computed PAN wise.
II. The partner and partnership firm will have different PAN Nos. Thus, the turnover
of the partner and partnership firm will not be aggregated.
III. The HUF and individual coparcener of the family have different PAN Nos. Hence,
turnover of Karta of HUF in his individual capacity and turnover of Karta as a
Karta of HUF will not be aggregated.
IV. Supply of goods, after completion of job work, by a registered job worker shall
be treated as the supply of goods by the principal referred to in Sec. 143 of
the CGST Act, 2017, and the value of such goods shall not be included in the
aggregate turnover of the registered job worker. It will be included in the turnover
of turnover of principal.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.5

 INTRODUCTION TO CGST ACT

10) Turnover in State” or “turnover in Union territory means the aggregate value of all
taxable supplies (excluding the value of inward supplies on which tax is payable by a
person on reverse charge basis) and exempt supplies made within a State or Union
territory by a taxable person, exports of goods or services or both and inter-State supplies
of goods or services or both made from the State or Union territory by the said taxable
person but excludes central tax, State tax, Union territory tax, integrated tax and cess

11) Appellate Authority means an authority appointed or authorized to hear appeals

as referred to in section107.

12) Appellate Tribunal means the Goods and Services Tax Appellate Tribunal constituted
under section 109.

13) Appointed day means the date on which the provisions of this Act shall come
into force.

14) Assessment means determination of tax liability under this Act and includes
I. Self-assessment,
II. Re-assessment,
III. Provisional assessment,
IV. Summary assessment and
V. Best judgment assessment.

15) Associated enterprises shall have the same meaning as assigned to it in section
92A of the Income-tax Act, 1961.

16) Audit means the examination of records, returns and other documents maintained
or furnished by the registered person under this Act or the rules made there

2.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

under or under any other law for the time being in force to verify the correctness
of turnover declared, taxes paid, refund claimed and input tax credit availed, and to
assess his compliance with the provisions of this Act or the rules made there under;

17) Authorized bank shall mean a bank, or a branch of a bank authorized by the
Government to collect the tax or any other amount payable (INTEREST, PENALTIES,
ETC.) under this Act.

18) Board means the Central Board of Excise and Customs constituted under the
Central Boards of Revenue Act, 1963.

19) BUSINESS includes--

a. Any trade, commerce, manufacture, profession, vocation, adventure, wager or any
other similar activity, whether it is for a pecuniary benefit.
b. Any activity or transaction in connection with or incidental or ancillary to sub-clause
(a);
c. Any activity or transaction in the nature of sub-clause (a), whether or not there is
volume, frequency, continuity or regularity of such transaction.
d. Supply or acquisition of goods including capital goods and services in connection
with commencement or closure of business.
e. Provision by a club, association, society, or any such body (for a subscription or any
other consideration) of the facilities or benefits to its members;
f. Admission, for a consideration, of persons to any premises;
g. Services supplied by a person as the holder of an office which has been accepted by
him in the course or furtherance of his trade, profession or vocation;
h. ACTIVITIES OF A a race club INCLUDING BY way of totalizator or a license to
book maker in such club; and
i. Any activity or transaction undertaken by the Central Government, a State

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.7

 INTRODUCTION TO CGST ACT

Government or any local authority in which they are engaged as public authorities;
POINT TO BE NOTED-Book maker means: a person whose job is to take bets
(especially on horse races), calculate odds, and pay out winnings; the manager of
a betting shop.

20) Capital goods means goods, the value of which is capitalized in the books of
account of the person claiming the input tax credit and which are used or intended
to be used in the course or furtherance of business;

21) Central tax means the central goods and services tax levied under section 9.

22) Cess shall have the same meaning as assigned to it in the Goods and Services
Tax (Compensation to States) Act.

23) Common working days in respect of a State or Union territory shall mean such
days in succession which are not declared as gazette holidays by the Central
Government or the concerned State or Union territory Government.

24) Company secretary means a company secretary as defined in clause (c) of sub-
section (1) of section 2 of the Company Secretaries Act, 1980.

25) Competent authority means such authority as may be notified by the Government.

2.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

26) Composite and Mixed Supply

Sec. 2(30) 2(74)

Definition “Composite Supply” means a “Mixed Supply” means two or

Supply made by a taxable person more individual supplies of Goods

to a recipient consisting of or Services, or any combination

two or more taxable supplies of thereof made in conjunction with
Goods or Services or both, or any each other by a taxable person,

combination thereof, which are for a single price where such

naturally bundled and supplied supply does not constitute a

in conjunction with each other in composite supply.

the ordinary course of business, one

of which is a Principal Supply.

EXAMPLE Where Goods are packed and A supply of a package consisting of

transported with insurance, the canned foods, sweets, chocolates,

supply of Goods, packing materials, cakes, dry fruits, aerated drinks

transport and insurance is a and fruit juices when supplied for

Composite supply and supply a single price is a mixed supply.
of Goods is a Principal supply. Each of these items can be supplied
separately and is not dependent

on any other. If these items are

supplied separately, then it shall

not be considered as mixed supply.

Determination Composite Supply comprising two Mixed supply comprising two or

of Tax Liability or more supplies, one of which is more supplies shall be treated as
[Sec.8] a principal supply, shall be treated a supply of that particular supply

as a supply of such principal which attracts the highest rate

supply. of tax.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.9

 INTRODUCTION TO CGST ACT

27) 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. [Sec. 2(90)]

CASE-2 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.

28) Exempt supply means supply of any goods or services or both which attracts nil
rate of tax or which may be wholly exempt from tax under section 11, or under
section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable
supply;

29) Consideration in relation to the supply of goods or services or both includes:

a. Any payment made or to be made, whether in money or otherwise, in respect of,
in response to, or for the inducement of, the supply of goods or services or both,
whether by the recipient or by any other person but shall not include any subsidy
given by the Central Government or a State Government;
b. The monetary value of any act or forbearance, in respect of, in response to, or
for the inducement of, the supply of goods or services or both, whether by the
recipient or by any other person but shall not include any subsidy given by the
Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both
shall not be considered as payment made for such supply unless the supplier
applies such deposit as consideration for the said supply.

30) 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

2.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

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;

31) 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;

Analysis: The difference between continuous supply with respect to goods/services

is with respect to the period of supply only. In the case of services, it has to be for
a continuous period of 3 months whereas, in the case of goods, there is no such
minimum period prescribed.

32) Conveyance includes a vessel, an aircraft and a vehicle.

33) Cost accountant means a cost accountant as defined in clause (c) of sub-section
(1) of section 2 of the Cost and Works Accountants Act, 1959;

34) Council means the Goods and Services Tax Council established under article 279A
of the Constitution.

35) Electronic commerce means the supply of goods or services or both, including
digital products over digital or electronic network.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.11

 INTRODUCTION TO CGST ACT

36) Electronic commerce operator means any person who owns, operates or manages
digital or electronic facility or platform for electronic commerce;

37) Existing law means any law, notification, order, rule or regulation relating to levy
and collection of duty or tax on goods or services or both passed or made before
the commencement of this Act by Parliament or any Authority or person having
the power to make such law, notification, order, rule or regulation;

38) Family means, --

a. the spouse and children of the person, and
b. the parents, grand-parents, brothers and sisters of the person if they are wholly
or mainly dependent on the said person;

39) Fixed establishment means a place (other than the registered place of business)
which is characterized by a sufficient degree of permanence and suitable structure
in terms of human and technical resources to supply services, or to receive and
use services for its own needs;

40) Fund means the Consumer Welfare Fund established under section 57;

41) Goods means every kind of movable property other than money and securities but
includes actionable claim, growing crops, grass and things attached to or forming part
of the land which are agreed to be severed before supply or under a contract of supply;

42) Services means anything other than goods, money and securities but includes
activities relating to the use of money or its conversion by cash or by any other
mode, from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged;

2.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

EXPLANATION- For removal of doubts it is here by clarified that expression

service includes facilitating or arranging transactions in securities. (1-2-2019)

43) Government means the Central Government;

44) Goods and Services Tax (Compensation to States) Act means the Goods and
Services Tax (Compensation to States) Act, 2017

45) Goods and services tax practitioner means any person who has been approved
under section 48 to act as such practitioner;

46) 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’s 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;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.13

 INTRODUCTION TO CGST ACT

47) Integrated Goods and Services Tax Act means the Integrated Goods and Services
Tax Act, 2017;

48) “Integrated tax means the integrated goods and services tax levied under the
Integrated Goods and Services Tax Act

49) Input means any goods other than capital goods used or intended to be used by
a supplier in the course or furtherance of business;

50) Input service means any service used or intended to be used by a supplier in the
course or furtherance of business;

51) Input Service Distributor means an office of the supplier of goods or services or
both which receives tax invoices issued under section 31 towards the receipt of
input services and issues a prescribed document for the purposes of distributing
the credit of central tax, State tax, integrated tax or Union territory tax paid on
the said services to a supplier of taxable goods or services or both having the same
Permanent Account Number as that of the said office;

52) Input tax credit means the credit of input tax.

53) Input tax in relation to a registered person, means the central tax, State tax,
integrated tax or Union territory tax charged on any supply of goods or services
or both made to him and includes­
a. the integrated goods and services tax charged on import of goods;
b. the tax payable under the provisions of sub-sections (3) and (4) of section 9;
c. the tax payable under the provisions of sub-section (3) and (4) of section 5 of
the Integrated Goods and Services Tax Act;

2.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

d. the tax payable under the provisions of sub-section (3) and sub-section (4) of
section 9 of the respective State Goods and Services Tax Act; or
e. The tax payable under the provisions of sub-section (3) and sub-section (4) of
section 7 of the Union Territory Goods and Services Tax Act, but does not include
the tax paid under the composition levy

54) Intra-State supply of goods shall have the same meaning as assigned to it in
section 8 of the Integrated Goods and Services Tax Act.

55) Intra-State supply of services shall have the same meaning as assigned to it in
section 8 of the Integrated Goods and Services Tax Act.

56) Invoice” or “tax invoice means the tax invoice referred to in section 31.

57) 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.

58) Job work means any treatment or process undertaken by a person on goods belonging
to another registered person and the expression “job worker” shall be construed
accordingly.

59) Local authority means--

a. a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
b. a “Municipality” as defined in clause (e) of article 243P of the Constitution;
c. a Municipal Committee, a Zilla Parishad, a District Board, and any other authority
legally entitled to, or entrusted by the Central Government or any State Government
with the control or management of a municipal or local fund;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.15

 INTRODUCTION TO CGST ACT

d. a Cantonment Board as defined in section 3 of the Cantonments Act 2006;

e. a Regional Council or a District Council constituted under the Sixth Schedule to
the Constitution;
f. a Development Board constituted under article 371 of the Constitution; or
g. a Regional Council constituted under article 371A of the Constitution;

60) Location of the recipient of services means, -

a. Where a supply is received at a place of business for which the registration has
been obtained, the location of such place of business;
b. Where a supply is received at a place other than the place of business for which
registration has been obtained (a fixed establishment elsewhere), the location of
such fixed establishment;
c. Where a supply is received at more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the receipt of the supply;
d. in absence of such places, the location of the usual place of residence of the
recipient;

61) Location of the supplier of services means, -

a. where a supply is made from a place of business for which the registration has
been obtained, the location of such place of business;
b. where a supply is made from a place other than the place of business for which
registration has been obtained (a fixed establishment elsewhere), the location of
such fixed establishment;
c. where a supply is made from more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provisions of the supply; and
d. in absence of such places, the location of the usual place of residence of the supplier;

2.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

62) 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;

63) 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;

64) Money means the

I. Indian legal tender or any
II. Foreign currency,
III. Cheque, promissory note, bill of exchange,
IV. Letter of credit, draft, pay order, traveler cheque, money order, postal or electronic
remittance or any other instrument recognized by the Reserve Bank of India when
used as a consideration to settle an obligation or exchange with Indian legal tender
of another denomination but shall not include any currency that is held for its
numismatic value;

65) Motor vehicle shall have the same meaning as assigned to it in clause (28) of
section 2 of the Motor Vehicles Act, 1988;

66) 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;

67) Non-taxable territory means the territory which is outside the taxable territory;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.17

 INTRODUCTION TO CGST ACT

68) Notification means a notification published in the Official Gazette and the
expressions “notify” and “notified” shall be construed accordingly;

69) Other territory includes territories other than those comprising in a State and
those referred to in subclauses (a) to (e) of clause (114) ;

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

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

72) Person includes­

a. an individual.
b. Hindu Undivided Family; (c)
c. a company.
d. a firm
e. a Limited Liability Partnership;
f. an association of persons or a body of individuals, whether incorporated or not, in
India or outside India;
g. any corporation established by or under any Central Act, State Act or Provincial Act or a
Government company as defined in clause (45) of section 2 of the Companies Act, 2013;
h. 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;

2.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

k. Central Government or a State Government;

l. society as defined under the Societies Registration Act, 1860
m. trust;
n. every artificial juridical person, not falling within any of the above;

73) PLACE OF BUSINESS INCLUDES:

a. a place from where the business is ordinarily carried on, and includes a warehouse,
a godown or any other place where a taxable person stores his goods, supplies or
receives goods or services or both; or
b. a place where a taxable person maintains his books of account; or
c. a place where a taxable person is engaged in business through an agent, by whatever
name called;

74) Place of supply means the place of supply as referred to in Chapter V of the
Integrated Goods and Services Tax Act;

75) Prescribed means prescribed by rules made under this Act on the recommendations
of the Council;

76) Principal means a person on whose behalf an agent carries on the business of supply
or receipt of goods or services or both;

77) Principal place of business means the place of business specified as the principal
place of business in the certificate of registration;

78) 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;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.19

 INTRODUCTION TO CGST ACT

79) 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.

80) Registered person means a person who is registered under section 25 but does
not include a person having a Unique Identity Number;

91) Regulations means the regulations made by the Board under this Act on the
recommendations of the Council;

82) Recipient of supply of goods or services or both, means-

a. where a consideration is payable for the supply of goods or services or both, the
person who is liable to pay that consideration;
b. where no consideration is payable for the supply of goods, the person to whom the
goods are delivered or made available, or to whom possession or use of the goods
is given or made available; and
c. where no consideration is payable for the supply of a service, the person to whom
the service is rendered, and any reference to a person to whom a supply is made
shall be construed as a reference to the recipient of the supply and shall include
an agent acting as such on behalf of the recipient in relation to the goods or
services or both supplied;

83) Removal in relation to goods, means-

a. dispatch of the goods for delivery by the supplier thereof or by any other person
acting on behalf of such supplier; or
b. collection of the goods by the recipient thereof or by any other person acting on
behalf of such recipient;

2.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

84) Return means any return prescribed or otherwise required to be furnished by or

under this Act or the rules made thereunder;

85) Reverse charge means the liability to pay tax by the recipient of supply of goods or
services or both instead of the supplier of such goods or services or both under sub-
section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection
(4) of section 5 of the Integrated Goods and Services Tax Act;

86) Revisional Authority means an authority appointed or authorized for revision of

decision or orders as referred to in section 108;

87) Schedule means a Schedule appended to this Act;

88) Securities shall have the same meaning as assigned to it in clause (h) of section
2 of the Securities Contracts (Regulation) Act, 1956

89) State includes a Union territory with Legislature;

90) State tax means the tax levied under any State Goods and Services Tax Act;

91) 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;

92) Tax period means the period for which the return is required to be furnished;

93) Taxable person means a person who is registered or liable to be registered under
section 22 or section 24;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.21

 INTRODUCTION TO CGST ACT

94) Taxable supply means a supply of goods or services or both which is leviable to
tax under this Act

95) Taxable territory means the territory to which the provisions of this Act apply;

96) Telecommunication service means service of any description (including electronic

mail, voice mail, data services, audio text services, video text services, radio paging
and cellular mobile telephone services) which is made available to users by means
of any transmission or reception of signs, signals, writing, images and sounds or
intelligence of any nature, by wire, radio, visual or other electromagnetic means;

97) The State Goods and Services Tax Act means the respective State Goods and
Services Tax Act, 2017;

98) Usual place of residence means--

a. in case of an individual, the place where he ordinarily resides;
b. in other cases, the place where the person is incorporated or otherwise legally
constituted;

99) Valid return means a return furnished under sub-section (1) of section 39 on
which self-assessed tax has been paid in full.

100) 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;

2.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

101) Words and expressions used and not defined in this Act but defined in the Integrated
Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the
Goods and Services Tax (Compensation to States) Act shall have the same meaning
as assigned to them in those Acts;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.23

 INTRODUCTION TO CGST ACT

3. OFFICERS UNDER THIS ACT-SECTION 3

The Government shall, by notification, appoint the following classes of officers
for the purposes of this Act, namely: -
a. Principal Chief Commissioners of Central Tax or Principal Directors General of
Central Tax,
b. Chief Commissioners of Central Tax or Directors General of Central Tax,
c. Principal Commissioners of Central Tax or Principal Additional Directors General
of Central Tax,
d. Commissioners of Central Tax or Additional Directors General of Central Tax,
e. Additional Commissioners of Central Tax or Additional Directors of Central Tax,
f. Joint Commissioners of Central Tax or Joint Directors of Central Tax,
g. Deputy Commissioners of Central Tax or Deputy Directors of Central Tax,
h. Assistant Commissioners of Central Tax or Assistant Directors of Central Tax, an
i. any other class of officers as it may deem fit:
Provided that the officers appointed under the Central Excise Act, 1944 shall
be deemed to be the officers appointed under the provisions of this Act.

4. APPOINTMENT OF OFFICERS- SECTION 4

1) The Board may, in addition to the officers as may be notified by the Government
under section 3, appoint such persons as it may think fit to be the officers under
this Act.
2) Without prejudice to the provisions of sub-section (1), the Board may, by order,
authorize any officer referred to in clauses (a) to (h) of section 3 to appoint
officers of central tax below the rank of Assistant Commissioner of central tax for
the administration of this Act.

2.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INTRODUCTION TO CGST ACT

5. POWERS OF OFFICER-SECTION 5
1) Subject to such conditions and limitations as the Board may impose, an officer of
central tax may exercise the powers and discharge the duties conferred or imposed
on him under this Act.
2) An officer of central tax may exercise the powers and discharge the duties conferred
or imposed under this Act on any other officer of central tax who is subordinate to
him.
3) The Commissioner may, subject to such conditions and limitations as may be
specified in this behalf by him, delegate his powers to any other officer who is
subordinate to him.
4) Notwithstanding anything contained in this section, an Appellate Authority shall
not exercise the powers and discharge the duties conferred or imposed on any other
officer of central tax.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 2.25

 INTRODUCTION TO CGST ACT

6. AUTHORISATION OF OFFICERS OF STATE TAX OR UNION TERRITOTRY

TAX AS PROPER OFFICER IN CERTAIN CIRCUMSTANCES-SECTION 6
1. Without prejudice to the provisions of this Act, the officers appointed under the
State Goods and Services Tax Act or the Union Territory Goods and Services Tax
Act are authorized to be the proper officers for the purposes of this Act, subject to
such conditions as the Government shall, on the recommendations of the Council,
by notification, specify.

2. Subject to the conditions specified in the notification issued under sub-section (1),––
a. where any proper officer issues an order under this Act, he shall also issue an
order under the State Goods and Services Tax Act or the Union Territory Goods
and Services Tax Act, as authorized by the State Goods and Services Tax Act
or the Union Territory Goods and Services Tax Act, as the case may be, under
intimation to the jurisdictional officer of State tax or Union territory tax;

b. Where a proper officer under the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act has initiated any proceedings on a subject
matter, no proceedings shall be initiated by the proper officer under this Act on
the same subject matter.

3. Any proceedings for rectification, appeal and revision, wherever applicable, of any
order passed by an officer appointed under this Act shall not lie before an officer
appointed under the State Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act.

2.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 3 | SUPPLY

1. TAXABLE EVENT-
Taxable event means that event on happening of which the liability of tax is
fixed. Under the previous regime, taxable event for various taxes were different.
Some of these taxes and their taxable event are listed below:

Type of Tax Taxable Event

Excise Duty Manufacture
Service Tax when a service was provided or agreed to be provided
Central Sales Tax Sale of goods (levied by Central Government)
Value Added Tax Sale of Goods (levied by State Government)

2. SUPPLY-
 Characteristic of Supply
1) Supply means supply of goods or services.

2) Supply of anything other than goods or services doesn’t amount for supply under
GST. Goods as well as services have been defined in the GST Law.

3) Both securities and money is excluded from the definition of goods as well as services,
however, activities relating to the use of money or its conversion by cash or by any
other mode, from one form, currency or denomination, to another form, currency or
denomination for which a separate consideration is charged are included in services.

4) Supply should be a taxable supply

5) Supply should be made by a taxable person

6) Supply should be made within taxable territory

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.1

 SUPPLY

SUPPLY” UNDER GST CAN BE DIVIDED INTO FOLLOWING PARTS.

1) SUPPLY FOR CONSIDERATION IN COURSE OF BUSINESS- SECTION 7(1)(a)
ALL form of supply of G/S or both such as sale, transfer, barter, exchange, license,
rental, lease or disposal made for a consideration by a person in the course or
furtherance of business.

2) Import of services for a consideration – Section 7(1)(b)

3) Supply without consideration- Section 7(1) (c) read with Schedule I

4) Activities or TRANSACTIONS specified in Schedule II (to be treated as supply

of goods or supply of services)- Section 7(1A)

5) Negative List- Section 7(2)-ACTIVITIES OR TRANSACTIONS WHICH SHALL

BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES
Read with (Schedule III)

6) SECTION 7(3)-Subject to the provisions of sub-sections 7(1) 7(1A) and 7(2), the
Government may, on the recommendations of the Council, specify, by notification,
the transactions that are to be treated as
a. a supply of goods and not as a supply of services; or
b. a supply of services and not as a supply of goods.

7) Section 8 Composite and Mixed supply.

3.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

 SCHEDULES OF SUPPLY

 DEFINITION OF SUPPLY

1) SUPPLY FOR CONSIDERATION IN COURSE OF BUSINESS- SECTION 7(1)(a)

As per Section 7, a supply which is made for consideration in course/furtherance of
business is considered as a taxable supply. Some inclusions in meaning of supply are:

(a) Sale, (e) License, (i) Import

(b) Transfer, (f) Rental, (j) Schedule 1
(c) Barter, (g) Lease, (k) Schedule II
(d) Exchange, (h) Disposal

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.3

 SUPPLY

a. Supply made in the course or furtherance of business: Every person carries out
certain activities regularly for running trade or commerce.

CASE-1 CMA Ram a practicing Cost Accountant carries out the activity of
Accounting, Auditing, filing returns, Certifying documents and so on so forth.
These activities can be considered as performed in the course of business.

b. Furtherance of business: Every business person use to think how to develop his
business or carrying out new activities. Such activities called as furtherance of
business

CASE-2 Rishabh buys a car for his personal use and after a year sells it to a
car dealer. Sale of car by Rishabh to car dealer is not a supply under CGST Act
because supply is not made by Rishabh in the course or furtherance of business.

CASE-3 M/s X Ltd. manufacturing of motor cars. Company use to sell a greater
number of cars in Southern India. In view of demand in Southern India, company
intends to establish manufacturing unit in Chennai. M/s X Ltd. appointed Mr. Y
as a consultant for searching, evaluating and short-listing places for prospective
targets. Finally, company decided to establish unit at Ambattur Industrial Estate
Chennai. Hence, Mr. Y carried out various activities is in furtherance of business
of M/s X Ltd.

CASE-4 Mr. X sold laptop worth ` 1,00,000 and issued invoice in favor of Mr. Y.
Now ownership in laptop transferred to Mr. Y. Such transaction shall be covered
in sale. It is a supply of goods leviable to GST.

3.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

CASE-5 Mr. X is an official liquidator provided various services like valuation of

assets with the help of valuers, inviting and evaluating the tenders, selling assets,
making payment to borrowers/creditors and so on. Activities of Mr. X are treated as
supply of service and the commission earned by him is subject to GST.

CASE-6 Mr. A being a dealer of furniture deliver the goods to the branch office
of M/s X Ltd., upon directions of M/s X Ltd., head office. The contract to supply
furniture is between Mr. A and M/s X Ltd., head office. Mr. A is liable to pay GST
on the consideration received from M/s X Ltd. head office.

c. Transfer: The term transfer means, where the ownership may not be transferred
but the right in the goods is transferred.

CASE-7 A shopkeeper sells a pen for ` 100 to the buyer. After the sale, the pen
belongs to the buyer and shopkeeper does not have any right on the pen. This is a
transaction of sale.

CASE-8 A company transfers goods from its factory to the depot for sale purposes.
This is ‘transfer’ of goods where the sale has not taken place.

CASE-9 Goods sent for a demonstration on returnable basis. Is it supply-No. It

would not be considered as supply, as there is no transfer of title involved.

CASE-10 Mr. A is the owner of Xerox machine. He transferred the right to operate
the Xerox machine to Mr. B for a consideration of ` 10,000 per month for four
months. Hence, ownership of the machine is not transferred but the right in the
machine is transferred. It is supply of service leviable to GST.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.5

 SUPPLY

d. Barter: it means, the exchange of goods and productive services for other
goods and productive services, without the use of money.

CASE-11 Mr. C, a practicing Cost Accountant provided services to M/s A Ltd.,

dealer of laptops. In return M/s A Ltd., given to Mr. C two laptops. Here, two-way
supply takes place. Mr. C is making taxable supply of service and M/s A Ltd., is
making taxable supply of goods. Hence, tax is payable by both.

CASE-12 Mr. X a dealer in laptops. He supplied a laptop for D40,000 to Mr.

Y along with a barter of printer. The value of the printer known at the time of
supply is ` 4,000 but the open market value of the laptop is not known. The value
of the supply of laptop is `44,000. Hence, Mr. X is liable to pay GST on ` 44,000.
At the same time Mr. Y is also is liable to pay GST on ` 4,000 if he is registered
person.

e. Exchange: when two persons mutually transfer the ownership of one thing for
the ownership of another, neither thing nor both things being money only,
the transaction is called an exchange.

CASE-13 When a new car worth ` 5,00,000 is purchased in exchange of an old

car along with the monetary consideration of ` 4,00,000 paid for the said purchase

CASE-14 Mr. A is a dealer of new phones. He supplied for ` 20,000 to Mr. B

along with exchange of an old phone and if the price of the new phone without
exchange is ` 24,000, the open market value of the new phone is ` 24,000. Mr.
A is liable to pay GST on ` 24,000. Mr. B also liable to pay GST on ` 4,000 if he
is registered person.

3.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

CASE-15 Mr. X is a dealer of new cars. He sells new cars for ` 8,25,000 agrees
to reduce ` 1,25,000 on surrendering of old car. Mr. Y who intends to buy new car
worth ` 8,25,000 agreed to exchange his old car with new car. Under GST law, it
will be treated as Mr. Y has made supply of old car to dealer Mr. X and Mr. X has
made supply of new car to Mr. Y. If Mr. Y is registered person, he will be liable to
pay GST on ` 1,25,000. Mr. X will be liable to pay GST on ` 8,25,000 whether Mr.
Y is a registered person or not.
f. License: where one person grants to another, or to a definite number of other
persons, a right to do or continue to do in or upon the immovable property of
the granter, the right is called a licence.

CASE-16 Mr. X, a developer of information technology software and holder of

license thereon. License to use software was given to different clients: ` 18 lakhs;
hence, Mr. X is liable to pay GST whether he transfer such right permanently or
temporarily as the case may be.

CASE-17 A Chennai based company has been awarded mineral exploration contract
for 18 months in respect of specific sites in Mumbai by a Mumbai based corporation
(i.e. local authority). As a result, Chennai based company got license to extract
mineral exploration for a period of 18 months. Mumbai based company supplied
taxable services. GST is liable to pay by Chennai based company on license fee paid
to supplier under Reverse Charge.

g. Rentals: Periodical payment for use of another’s property. Rent is to pay on

monthly.

CASE-18 Mr. A owns a residential building in a prime commercial locality. Large

vacant land in the backyard is given on rent of `1,80,000 per month to a parking

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.7

 SUPPLY

contractor, Mr. B who has set up a parking facility on the said land. It is a taxable
supply of service and hence, Mr. A is liable to pay GST.

CASE-19 Mr. X, the owner of a residential building in a commercial locality,

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

h. Lease: A lease is an agreement whereby the lessor conveys to the lessee in

return for a payment or series of payments the right to use an asset for an
agreed period of time. A lease may be financial lease or operating lease.

CASE-20 M/s M Bank Ltd., given an asset under financial lease to M/s N Ltd.
Repayment of financial lease made by the customer to the bank ` 80 lakhs which
includes a principal amount of ` 50 lakhs. Financial leases shall be taxed as supply
of services. M/s M Bank Ltd., is liable to pay GST.

i. Disposal: Disposal normally considered as selling of assets when the organization

is about to close down and various assets are required to be disposed of. Such
transactions will also be considered as supply of liable to tax under GST Law.

j. Consideration: in relation to the supply of goods or services or both includes:

I. Any payment made or to be made, whether in money or otherwise, in respect of,
in response to, or for the inducement of, the supply of goods or services or both,
whether by the recipient or by any other person but shall not include any subsidy
given by the Central Government or a State Government,
II. The monetary value of any act or forbearance, in respect of, in response to, or
for the inducement of, the supply of goods or services or both, whether by the

3.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

recipient or by any other person but shall not include any subsidy given by the
Central Government or a State Government.
III. Deposit given in respect of the supply of goods or services or both shall not be
considered as payment made for such supply unless the supplier applies such deposit
as consideration for the said supply. [Section 2(31) of CGST Act].

CASE-21 Donations received by charitable institutions from individual donors,

without quid pro quo-
 Donations received by charitable institutions from individual donors, without quid
pro quo
 An important feature of consideration is quid pro quo [something for something].
 Donations received by the charitable organizations are treated as consideration only
if there exists, quid pro quo, i.e., there is an obligation on part of recipient of the
donation or gift to do anything (supply a service).
 Generally, institutions such as religious institutions, charitable organizations, schools,
hospitals, orphanages, old age homes etc. receive financial help or any other support
in the form of donation or gift from the individual donors.
 In order to express the gratitude towards such help/support, the recipient institutions
place a name plate or similar such acknowledgement in their premises.
 When the name of the donor is displayed in recipient institution’s premises, in such
a manner, which can be said to be an expression of gratitude and public recognition
of donor’s act of philanthropy and is not aimed at giving publicity to the donor in
such manner that it would be an advertising or promotion of his business, then it
can be said that there is no supply of service for a consideration (in the form of
donation).
 In other words, there is no obligation (quid pro quo) on part of recipient of the
donation or gift to do anything (supply a service). Therefore, there is no GST
liability on such consideration.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.9

 SUPPLY

CASE-22 Art works sent by artists to galleries for exhibition is not a supply
Artists give their work of art to galleries where it is exhibited for supply. However,
no consideration flows from the gallery to the artist when the art works are sent
to the gallery for exhibition and therefore, the same is not a supply. It is only
when a buyer selects a particular art work displayed at the gallery, that the actual
supply takes place and applicable GST would be payable at the time of such supply

2) SUPPLY-IMPORT FOR CONSIDERATION SECTION 7(1)(b)-The term supply

includes import of services for a consideration whether or not in the course of
furtherance of business.
I. Applicable only for services not for goods.
II. For a consideration.
III. Service may be in course of furtherance of business or not.
IV. Import of services even for personal consumption would qualify as supply.
CASE-23 Import of free services from Google, without any consideration, are not
considered as supply as the necessary condition “consideration” is missing for
such services.

CASE-24 Import (Downloading) of a song for consideration for personal use

would be a service, even though the same are not in the course or furtherance of
business.

CASE-25 Ramaiyaa, a proprietor, has received the architect services for his house
from an architect located in New York at an agreed consideration of $ 5,000. The
import of services by Ramaiyaa is supply under section7(1)(b) though it is not in
course or furtherance of business

3.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

3) SUPPLY WITHOUT CONSIDERATION- SECTION 7(1) (c )

 Schedule I lists activities that are to be treated as supply even if they are without
consideration. The important point to note here is that though the following activities
will be considered as supply even if there is no consideration involved, it is required
that the activity is done either in the course or furtherance of business. The forms
of Supply listed in Schedule I are as follows:

a. Permanent transfer or disposal of business assets where input tax credit (ITC)
has been availed on such assets: When ITC is availed on a particular asset and
the asset is disposed of or transferred permanently without a consideration, it will
be considered as supply and attract GST.
Analysis
It is clear that permanent sale of business assets is taxable under GST. If it is a
temporary transfer, it will be covered u/s 7(1) as rental. However, only such business
assets on which input tax credit is availed is covered. Hence, a business asset on
which input tax credit is not availed remains outside the scope of Schedule I.

CASE-26 XYZ ltd purchases 10 laptops worth Rs. 500000 + GST Rs. 25000 and
further avails ITC of Rs. 25000 on GST paid, and after few years XYZ ltd. gives
away these laptops to office staff, it will be deemed as supply without consideration.

CASE-27 XYZ & Co. donates old laptops to Charitable Schools when new laptops
are purchased by business will qualify as supply provided input tax credit has been
availed by XYZ & Co. on such laptops.

CASE-28 A cloth retailer gives clothes from his business stock to his friend free
of cost. In this case, transfer of business stock would amount to ‘supply’ if he had
claimed input tax credit on his purchase of the business asset.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.11

 SUPPLY

CASE-29 A dealer of air-conditioners permanently transfers an air conditioner

from his stock in trade, for personal use at his residence. The transaction will
constitute a supply as it is a permanent transfer/ disposal of business assets. The
only condition is that input tax credit should have been availed on such assets.

b. Supply of Goods or Service between Related Persons or Distinct Persons-

Supply of goods or services between related parties and between distinct persons
(as in section 25) will attract tax. Thus, even if goods or services are transferred
from head office to branch office, GST liability will arise. Although gifts from an
employer to an employee not exceeding Rs. 50,000 will not be considered as supply

POINT TO BE NOTED-
1) RELATED PERSON [SEC.15(5)]
I. Officers or Directors of one another’s businesses,
II. Legally recognised Partners in business,
III. 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 they are members
of the same family.

2) Distinct Person [Sec.25(4)]: A Person who has obtained or is required to obtain

more than one registration, whether in one State or Union territory or more than
one State or Union territory shall, in respect of each such registration, be treated
as distinct persons for the purposes of this Act.

3.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

3) Establishments of Distinct Person [Sec.25(5)]: Where a person who has obtained

or is required to obtain registration in a State or Union territory in respect of an
establishment, has an establishment in another State or Union territory, then
such establishments shall be treated as establishments of distinct persons for the
purposes of this Act.

CASE-30 Mohan, a Chartered Accountant, has a registered head office in Delhi.

He has also obtained 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.

CASE-31 Raghubir Fabrics transfers 1000 shirts from his factory located in Lucknow
to his retail showroom in Delhi so that the same can be sold from there. The factory
and retail showroom of Raghubir Fabrics are registered in the States where they are
located. Although no consideration is charged, supply of goods from factory to retail
showroom constitutes supply.

CASE-32 ABC Goa and ABC Mumbai are both different establishment of same
parent having same PAN. However, if ABC Mumbai completes any assignment for
ABC Goa, this would be taxable under GST as ABC Goa has received services from
ABC Mumbai.

CASE-33 An employer offers high end car to its top executives for free, provision of
such car will also be covered under GST as the value of gift exceeds ` 50,000. In this
case, let us assume the employee has joined the company in January2018. Hence, in
the month of January 2018 such supply would be taxable. In the year 2019-2020,
there is afresh limit of `50,000 available with the employer.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.13

 SUPPLY

CASE-34 Rishabh Enterprises, a registered supplier, owns an air-conditioned

restaurant in Virar, Maharashtra. It has opened a liquor shop in Raipur, Uttarakhand
for trading of alcoholic liquor for human consumption. Since supply of alcoholic
liquor for human consumption in Uttarakhand is a non-taxable supply, Rishabh
Enterprises is not required to obtain registration with respect to the same in
Uttarakhand. In this case, air -conditioned restaurant in Maharashtra and liquor
shop in Raipur [though unregistered] shall be treated as establishments of
distinct persons. Supply by Maharashtra office to Uttarakhand office, in course or
furtherance of business even without consideration will qualify as supply

CASE-35 Moulds and dies owned by Original Equipment Manufacturers (OEM)

that are sent free of cost (FOC) to a component manufacturer (the two not
being related persons or distinct persons) does not constitute a supply as
there is no consideration involved .

c) Principal – Agent Transaction: In the previous indirect tax regime, supply of

goods between principal to his agent or agent to its principle was not taxable but
under GST, such a supply will be taxable.

In order to determine whether a particular principal-agent relationship falls

within the ambit of Schedule I as discussed above or not, the deciding factor
is whether the invoice for the further supply of goods on behalf of the
principal is being issued by the agent or not?
In other words, the crucial point is whether or not the agent has the authority to
pass or receive the title of the goods on behalf of the principal.

3.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

I. Where the invoice for further supply is being issued by the agent in his name then,
any provision of goods from the principal to the agent would fall within the fold of
Para 3. above. However, it may be noted that in cases where the invoice is issued
by the agent to the customer in the name of the principal, such agent shall not fall
within the ambit of Para 3. above.

II. Where the goods being procured by the agent on behalf of the principal are invoiced
in the name of the agent then further provision of the said goods by the agent to
the principal would be covered by Para 3. above

CASE-36 ABC Manufacturers Ltd. engages Raghav & Sons as an agent to sell
goods on its behalf. For the purpose, ABC Manufacturers Ltd. has supplied the goods
to Raghav & Sons located in Haryana. Supply of goods by ABC Manufacturers Ltd.
to Raghav & Sons will qualify as supply even though Raghav & Sons has not paid
any consideration yet.

CASE-37 M/s P Ltd., registered person located in Cochin and having a godown in
Cochin transfers the goods to clearing and forwarding agent (C&F Agent) located
in Chennai. Such activity of transfer shall be considered as supply even if there is
no consideration for such transfer and hence, leviable to GST.

CASE-38 Paul & Co. engages Honda Cars Ltd. as an agent to sell cars on its
behalf. Honda Cars Ltd. has supplied 50 cars to the showroom of Paul & Co., located
in Chennai. Supply of cars by Honda Cars Ltd. to Paul & Co., will qualify as supply
and the same is leviable to GST.

CASE-39 Mr. A appoints Mr. B to procure certain goods from the market. Mr. B
identifies various suppliers who can provide the goods as desired by Mr. A, and asks

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.15

 SUPPLY

the supplier (Mr. C) to send the goods and issue the invoice directly to Mr. A. In
this scenario, Mr. B is only acting as the procurement agent, and has in no way
involved himself in the supply or receipt of the goods. Hence, in accordance with
the provisions of this Act, Mr. B is not an agent of Mr. A for supply of goods in
terms of Para 3. of Schedule I.

CASE-40 M/s XYZ, a banking company, appoints Mr. B (auctioneer) to auction certain
goods. The auctioneer arranges for the auction and identifies the potential bidders. The
highest bid is accepted and the goods are sold to the highest bidder by M/s XYZ. The
invoice for the supply of the goods is issued by M/s XYZ to the successful bidder. In
this scenario, the auctioneer is merely providing the auctioneering services with no role
played in the supply of the goods. Even in this scenario, Mr. B is not an agent of M/s
XYZ for the supply of goods in terms of Para 3. of Schedule I.

CASE-41 Mr. A, an artist, appoints M/s B (auctioneer) to auction his painting.

M/s B arranges for the auction and identifies the potential bidders. The highest
bid is accepted and the painting is sold to the highest bidder. The invoice for the
supply of the painting is issued by M/s B on the behalf of Mr. A but in his own
name and the painting is delivered to the successful bidder. In this scenario, M/s
B is not merely providing auctioneering services, but is also supplying the painting
on behalf of Mr. A to the bidder, and has the authority to transfer the title of the
painting on behalf of Mr. A. This scenario is covered under Para 3. of Schedule I.

CASE-42 A C&F agent or commission agent takes possession of the goods from
the principal and issues the invoice in his own name. In such cases, the C&F
commission agent is an agent of the principal for the supply of goods in terms of
Para 3. of Schedule The disclosure or non-disclosure of the name of the principal
is immaterial in such situations

3.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

CASE-43 Mr. A sells agricultural produce by utilizing the services of Mr. B who is a
commission agent as per the Agricultural Produce Marketing Committee Act (APMC
Act) of the State. Mr. B identifies the buyers and sells the agricultural produce on
behalf of Mr. A for which he charges a commission from Mr. A.As per the APMC
Act, the commission agent is a person who buys or sells the agricultural produce
on behalf of his principal, or facilitates buying and selling of agricultural produce
on behalf of his principal and receives, by way of remuneration, a commission or
percentage upon the amount involved in such transaction. In cases where the invoice
is issued by Mr. B to the buyer, the former is an agent covered under Para 3. of
Schedule 3. However, in cases where the invoice is issued directly by Mr. A to the
buyer, the commission agent (Mr. B) doesn’t fall under the category of agent
covered under Para 3.

d. Import of services: Schedule I of CGST Act, 2017, the import of services by

a PERSON from a related person or from a distinct person in the course or
furtherance of business shall be treated as supply even if it is made without
any consideration. The summary of the explanations is as under:

Nature of Service Consideration Business Test

a) Import of service Necessarily Required Not required
b) Import of services by a Not required Necessarily Required
person from a related person
or from a distinct person

CASE-44 Import of some services by an Indian branch from their parent company,
in the course or furtherance of business, even if without consideration, will be a
supply.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.17

 SUPPLY

CASE-45 if a head office which is located out of India provides interior designing
services to its branch office in India, the service will be a taxable service under
GST

CASE-46 ABC Associates received legal consultancy services from its head office
located in Malaysia. The head office has rendered such services free of cost to
its branch office. Since ABC Associates and the branch office are related persons,
services received by ABC Associates will qualify as supply even though the head
office has not charged anything from it.

3.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

4) SUPPLY -GOODS VS SERVICE SECTION 7(1A)-Schedule II of the CGST Act, 2017

specifies activities to be treated as supply of goods or supply of services-

I. Transfer-
a. Any transfer of the title in goods is a supply of goods.
b. Any transfer of right in goods or of undivided share in goods without the transfer
of title thereof, is a supply of services.
c. Any transfer of title in goods under an agreement which stipulates that property in
goods shall pass at a future date upon payment of full consideration as agreed, is
a supply of goods.

CASE-47 When aiPhone7 is sold, title of the property is passed to the buyer.

CASE-48 When we buy license of tally, we only Buy a right to use tally but
do not become owner of codes of tally. Hence, title remains with tally.

CASE-49 When we enter into an agreement to use car/or a, we only get a right
to use the property for a specified duration we do not become owners of property.

CASE-50 When we purchase a truck on hire-purchase basis, title of truck passes

upon payment of last installment at a future date.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.19

 SUPPLY

CASE-51 A shopping complex owned by M/s X Ltd and M/s Y Ltd. At a later date M/s X

Ltd. sold his share in shopping complex to M/s Z Ltd. and hence, ownership is not transferred

to M/s Z Ltd., but only share in property is transferred to M/s Z Ltd. It is a supply of service.

CASE-52 Mr. A provides machine to Mr. B and he permits Mr. B to use the
machine, provided Mr. B pays for the machine after two months, when the property
of goods will be transferred to Mr. B. It will be considered as a transaction in
goods and service. Therefore, it is a supply of goods.

2. LAND AND BUILDING-

a. Any lease, tenancy, easement, license to occupy land is a supply of services;
b. Any lease or letting out of the building including a commercial, industrial or residential
complex for business or commerce, either wholly or partly, is a supply of services.
Analysis - All supplies except sale in respect of land and building is supply of service.

3. TREATMENT OR PROCESS-Any treatment or process which is applied to another

person’s goods is a supply of services.
 Any activity carried out on the product whether for bringing change in the product
or not will be considered as processing of the product.
 Job-work performed by a job worker like cleaning and painting.
 Job-work performed by a job worker like converting raw material into finished goods.

PROBLEM:1 Mr. A trader of steel articles purchases steel bars of 10 meters

for ` 1,00,000. He gave these steel bars to Mr. B (job worker) for cutting the
bars. Mr. B charged ` 20,000 as his job work charges. Mr. B seeks clarification
whether he will be liable to pay GST on the cut bars and if so, find the value?
ANSWER:1 Mr. B being a job worker is liable to pay GST. Value of job work charges
is ` 20,000. It is called as supply of service.

3.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

4. TRANSFER OF BUSINESS ASSETS-

a. where goods forming part of the assets of a business are transferred or disposed of
by or under the directions of the person carrying on the business so as no longer
to form part of those assets, such transfer or disposal is a supply of goods by the
person;
b. where, by or under the direction of a person carrying on a business, goods held or
used for the purposes of the business are put to any private use or are used, or made
available to any person for use, for any purpose other than a purpose of the business,
the usage or making available of such goods is a supply of services;
c. where any person ceases to be a taxable person, any goods forming part of the
assets of any business carried on by him shall be deemed to be supplied by him
in the course or furtherance of his business immediately before he ceases to be a
taxable person, unless-
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

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.21

 SUPPLY

CASE-53 Sale of office computers or furniture is supply of goods.

CASE-54 Free samples freely supplied to others are also supply of goods.

PROBLEM:2 Mr. Raj purchased a car for Business use and after one year sold
it to a car dealer for ` 2 lac. Will the transaction be a supply in terms of GST
Act?
ANSWER:2 Transfer for a consideration shall be supply of goods, even if credit is
not claim (as per Schedule II).

CASE-55 Mr. A is engaged in the business of transportation of passengers.

He provides vehicle for the marriage of his Accounts Manager free of cost. It is
supply of service, but no GST is payable (provided business not claiming Input Tax
Credit). If Mr. A charged ` 2,500 it will be subject to GST.

CASE-56 Mr. X is engaged in the business of selling furniture. He organizes

function in his house. As a result, he used business furniture for the function.
It is supply of service. Since, there is no consideration and hence no GST will be
levied provided business not claiming ITC.

CASE-57 M/s X Ltd. provided car to one of its directors for his personal purposes
and charge fee ` 30,000 per month. It is supply of service and the same is taxable
under GST.

CASE-58 A director takes a computer home for his private use. This computer is
the company’s business asset. It is supply of service. GST is accountable on the use
of the computer based on its cost. However, if the company chose not to claim input
tax on the computer purchased, the private use of the computer will not attract GST.

3.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

CASE-59 A director uses the company’s car for his family outing. It is supply
of service. The company was not entitled to claim the input tax incurred on the
purchase of the car as it is disallowed. The company does not need to account for
GST on the private use of the car as no input tax was claimed.

CASE-60 X Ltd. and Y Ltd. are related companies. Y Ltd. uses X Ltd. business
asset namely large format printer to print high-resolution architectural plans for its
client’s is accountable on the use of the printer based on its cost. However, if X
Ltd. chose not to claim input tax on the asset purchased, the use of this asset by
another person will not attract GST.

CASE-61 M/s Ravan & Co a partnership firm decided to dissolve the partnership
firm. Goods left in stock taken over by partners. Taking over of goods by partners
will be considered as a supply of goods. Since, business is not continued further.

PROBLEM:3 Mr. Raj being an owner of shop is a registered person under GST.
He has decided to close the business. At the time of deregistration, he has closing
stock of ` 15,00,000. Mr. Raj final GST return will show his supplies made during
the last taxable period plus Stock in hand of ` 15,00,000 during the deregistration.
Find the amount of supply. Is it supply of goods or services?
ANSWER:3 Amount to supply = ` 15,00,000
It is treated as supply of goods.
Note: Mr. Raj has to pay GST on ` 15 lac.
However, Mr. Raj is not required to pay to GST on closing stock of ` 15 lac, provided
ITC not availed on such stock.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.23

 SUPPLY

5. SUPPLY OF SERVICES- The following shall be treated as supply of service, namely:

a. renting of immovable property;
b. Construction of a complex, building, civil structure or a part thereof, including a
complex or building intended for sale to a buyer, wholly or partly, except where
the entire consideration has been received after issuance of completion certificate,
where required, by the competent authority or after its first occupation, whichever
is earlier.
Explanation: For the purposes of this clause:
I. “Competent authority” means the Government or any authority authorized to
issue completion certificate under any law for the time being in force and in case
of non - requirement of such certificate from such authority, from any of the
following, namely: -
II. An architect registered with the Council of Architecture constituted under the
Architects Act,1972; or
III. A chartered engineer registered with the Institution of Engineers (India); or
IV. A licensed surveyor of the respective local body of the city or town or village or
development or planning authority;
V. “Construction” includes additions, alterations, replacements or remodeling of any
existing civil structure;

PROBLEM:4 Renting of vacant land to a stud farm for ` 1,50,000. Is it a

supply of service. Will GST be leviable?
ANSWER:4 It is supply of service. GST is liable to pay.

PROBLEM:5 Leasing of vacant land to a poultry farm for ` 76,000. Is it

supply of service?
ANSWER:5 It is a supply of service.

3.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

PROBLEM:6 A builder has entered into agreement to sale a flat (carpet area 1900
sq ft) to customer. The additional information is as follows: Price of flat (including
apportioned value of cost of land): ` 42,00,000 (includes Prime Location Charges
namely charges for getting sea view ` 2,00,000).Charges for providing space for
covered parking: ` 1,25,000.The builder received part payment before construction was
completed and balance amount was received after obtaining completion certificate
from the Corporation. Find the GST liability (CGST 6% and SGST 6%)?
ANSWER:6
It is supply of service. Builder is liable to pay GST.

CGST (` 42,00,000 + 1,25,000) x 6% = ` 2,59,500

SGST (` 42,00,000 + 1,25,000) x 6% = ` 2,59,500
Total liability = ` 5,19,000

c) Temporary transfer or permitting the use or enjoyment of any intellectual

property right;
d) Development, design, programming, customization, adaptation, up gradation,
enhancement, implementation of information technology software;

CASE-62 M/s. ABC Ltd. provides the following relating to information technology
software. Compute the value of taxable service and GST liability (Rate of CGST 9%
and SGST 9%)?
Development and Design of information technology software: ` 15 lakhs;
Sale of pre-packaged software, which is put on media: ` 52 lakhs.
a. and (b) both are treated as supply of Service.
b. Value of Taxable supply of service is ` 67 Lakhs [i.e. ` 15 Lakhs + 52 Lakhs] CGST
is ` 6.03 lakhs
[i.e. ` 67 Lakhs x 9%]. SGST is ` 6.03 lakhs [i.e. ` 67 Lakhs x 9%].

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.25

 SUPPLY

e) Agreeing to the obligation to refrain from an act, or to tolerate an act or a

situation, or to do an act.

CASE-63 Mr. Ram request to Mr. Shyam not to teach a particular subject in
particular area for 5 years. Shyam agree with the terms and condition against
a consideration of Rs. 5,00,000. The same would amount to supply of service by
Shyam and would attract GST.

CASE-64 Mr. C is a Practicing Cost Accountant given appointment to a client Mr.

B representing the company for 10AM on Tuesday. Mr. B cancel the appointment at
9AM on Tuesday (i.e. one hour before appointment time). Advance paid by Mr. B
for seeking the appointment is forfeited by Mr. C for cancelling the appointment.
In the given case Mr. C, refraining from entering any other person at the given
appointment time. This is called as supply of service. Therefore, forfeited amount
is leviable to GST.

f) Transfer of the right to use any goods for any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable consideration.

CASE-65 Ram has given his tempos on hire to Gupta Brothers for transportation
of foodstuff for ` 40, 00,000. He has also transferred the right to use such
tempos to Gupta Brothers. Discuss whether Ram is liable to pay GST on the said
transaction It is treated as supply of service. Ram is liable to pay GST.

6. Composite supply deemed to be service-

The following composite supplies shall be treated as a supply of services, namely:
a. Works contract as defined in clause (119) of section 2; and
b. Restaurant & Catering services- Supply, by way of or as part of any service

3.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

or in any other manner whatsoever, of goods, being food or any other article
for human consumption or any drink (other than alcoholic liquor for human
consumption), where such supply or service is for cash, deferred payment or other
valuable consideration.

7. Supply of Goods- The following shall be treated as supply of goods, namely: Supply
of goods by any unincorporated association or body of persons to a member thereof
for cash, deferred payment or other valuable consideration.

TAXABILITY OF TENANCY RIGHTS/PAGADI UNDER GST

A. Pagadi system, the tenant acquires tenancy rights in the property against payment
of tenancy premium (pagadi). The landlord may be owner of the property, but
the possession of the same lies with the tenant. The tenant pays periodic rent
to the landlord as long as he occupies the property. The tenant also usually has
the option to sell the tenancy right of the said property and in such a case has
to share a percentage of the proceed with owner of land, as laid down in their
tenancy agreement. Alternatively, the landlord pays to tenant the prevailing tenancy
premium to get the property vacated. Such properties in Maharashtra are governed
by Maharashtra Rent Control Act, 1999.

B. The transfer of tenancy rights cannot be treated as sale of land/ building in para 5. of
Schedule III. Thus, it is not a negative list activity and consequently, a consideration
for the said activity shall attract levy of GST. To sum up, transfer of tenancy rights
to a new tenant against consideration in the form of tenancy premium is taxable.
Further, services provided by outgoing tenant by way of surrendering the tenancy
rights against consideration in the form of a portion of tenancy premium is liable
to GST.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.27

 SUPPLY

C. Grant of tenancy rights in a residential dwelling for use as residence dwelling

against tenancy premium or periodic rent or both is exempt from tax .

D. Stamp duty and registration charges have been levied on such transfer of tenancy
rights, it shall be still subject to GST since merely because a transaction/supply
involves execution of documents which may require registration and payment of
registration fee and stamp duty, would not preclude them from the ‘scope of
supply’ and from payment of GST.

5) SECTION 7(3)-Subject to the provisions of sub-sections 7(1) 7(1A) and 7(2), the
Government may, on the recommendations of the Council, specify, by notification,
the transactions that are to be treated as
a. a supply of goods and not as a supply of services; or
b. a supply of services and not as a supply of goods.

6) SUPPLY NEGATIVE LIST-SECTION 7(2)-

 Activities which are neither supply of goods nor supply of service (SCHDULE
III) SECTION 7(2)(a)
1. Services by an employee to the employer in the course of or in relation to his
employment.
2. Services by any court or Tribunal established under any law for the time being in
force.
Explanation: The term “court” includes District Court, High Court and Supreme
Court.
3. Functions-
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;

3.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

b. The duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or
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, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling.

7. Supply of goods from a place in the non-taxable territory to another place in

the non-taxable territory without such goods entering into India. It seeks to
exclude from the tax net such transactions which involve movement of goods,
caused by a registered person, from one non -taxable territory to another non-
taxable territory

8. (a) Supply of warehoused goods to any person before clearance for home
consumption. Warehoused goods mean goods deposited in a warehouse.
(b) 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.
CASE-66 Mr. A purchased goods from China and sold it to Mr. John in Canada
without bringing the goods in India. This transaction is neither supply of goods
nor supply of services.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.29

 SUPPLY

CASE-67 Mr. X imported some goods in India but kept the goods in custom
bonded warehouse without clearing it for home consumption. In the meantime,
Mr. X sold these goods to Mr. Y while they were in warehouse. This transaction
between Mr. X and Mr. Y is neither supply of goods nor supply of services.

CASE-68 Mr. P of India imported some goods from Japan. While the goods
were in high seas, Mr. P sold the goods to Mr. Q in India by way of endorsement
of documents of title of goods. This transaction between Mr. P and Mr. Q is
neither supply of goods nor supply of services.

 Activities/transactions notified by the Government –SEC 7(2)(b)

Such activities/ transactions undertaken by the Central Government, a State
Government or any local authority in which they are engaged as public authorities,
as may be notified by the Government on the recommendations of the Council
shall be treated neither as a supply of goods nor a supply of services.

3.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

SERVICE BY WAY OF GRANT OF ALCOHOLIC LIQUOR LICENCE IS NEITHER A

SUPPLY OF GOODS NOR A SUPPLY OF SERVICE
In terms of section 7(2) of the CGST Act, the Government has notified the
following activity or transaction undertaken by the State Governments in which
they are engaged as public authorities, to be treated neither as a supply of goods
nor a supply of service, namely:-
 Service by way of grant of alcoholic liquor licence, against consideration in the
form of licence fee or application fee or by whatever name it is called.
 Circular No. 121/40/2019 GST dated 11.10.2019 has clarified that the above special
dispensation applies only to supply of service by way of grant of liquor licenses by
the State Governments as an agreement between the Centre and States and has no
applicability or precedence value in relation to grant of other licenses and privileges
for a fee in other situations, where GST is payable.
 Services provided by the Government to business entities including by way of grant
of privileges, licences, mining rights, natural resources such as spectrum etc. against
payment of consideration in the form of fee, royalty etc. are taxable under GST.
 Tax is required to be paid by the business entities on such services under reverse charge.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.31

 SUPPLY

PROBLEM:7 An electronics dealer sells a desktop for Rs 50,000 to earn

a profit. Does it qualify a supply?
ANSWER:7 Yes, it qualifies as a supply. As per Section 7(1)(a) of CGST Act,
2017, supply includes all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, license, rental, lease or disposal made or agreed to be
made for consideration by a person in the course or furtherance of business.

PROBLEM:8 Mr. a (an unregistered person) plans to pursue his higher

education in Australia. He receives career consultancy services from an Australian
based consultant for Rs5,00,000. Does it qualify as a supply?
ANSWER:8 Yes, it qualifies as a supply. As per Section 7(1)(b) of CGST Act,
2017, supply includes import of services for a consideration whether or not in
the course of furtherance of business. Hence, the above case will be treated as
supply.

PROBLEM:9 ABC & Co. a manufacturer of goods donated old Laptops to

Charitable Schools on account of relocation of office. The company has taken
input tax credit on the computers so donated. Does it qualify as a supply?
ANSWER:9 Yes, it qualifies as a supply

PROBLEM:10 Sun Ltd. Provides management consultancy services without

charge to Moon Ltd in which Sun Ltd. Has controlling rights. The said consultancy
has been provided for benefit of entire group. Does it quality as a supply?
ANSWER:10 Yes, it qualifies as a supply Legal Justification: Section 7(1)(c) read
with Schedule I of CGST Act, 2017 says that supply of goods or services between
related persons is treated as supply even if it is without consideration. As per
Explanation to Section 15 of CGST Act, 2017, persons shall be deemed to be “related
persons” if “one of them directly or indirectly controls the other”. Since, sun Ltd.

3.32 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

Has controlling rights of Moon Ltd., It means it directly controls Moon Ltd. They will
be treated as related persons and the said transaction will qualify as supply.

PROBLEM:11 PQR Ltd. Gives gifts to employee worth Rs. 6,00,000. Does it quality as
a supply? Would your answer change if gifts of Rs.40,000 have been given to employee?
ANSWER:11 Yes, it qualifies as a supply.

PROBLEM:12 Duster Ltd. Owns a motor vehicle which is used to transport

its workers to customers premises. During one weekend, one car was used by its
managing director for his relatives for a family outing, Is it a supply?
ANSWER:12 Yes, it qualifies as a supply as per Section 7(1)(c) read with
Schedule I of CGST Act,2017, supply of goods or services by employer to employee
when made in the course or furtherance of business hall be treated as Supply even
if made without consideration. Thus, the said transaction wills quality as supply.

PROBLEM:13 JKL Ltd. Engages True Ltd. As an agent to sell laptops on its
behalf. For the purpose, JKL Ltd. Has supplied 200 laptops to the showroom of True
Ltd. Located in Rajasthan. Does it quality as supply.
ANSWER:13 Yes, it qualifies as a supply Section 7(1)(c) read with Schedule I
of CGST Act, 2017 says that supply of goods by a principal to his agent where the
agent undertakes to supply/receive such goods on behalf of the principal shall be
treated as supply even if made without consideration. In view of the same supply
of laptops by JKL Ltd. To True Ltd. Will qualify as supply.

PROBLEM:14 Class associates received management consultancy services form

its head office located in Malaysia. The head office has rendered such services free
of cost to its branch office. Does it qualify as supply?
ANSWER:14 : Yes, it qualifies as a supply. Legal Justification: A combined

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.33

 SUPPLY

reading of section 7(1)(c) and Schedule I of CGST Act, 2017 says that import
of services by a taxable person from a related person or from any of his other
establishments outside India, in the course or furtherance of business will be treated
as supply even if made without consideration. Thus, management consultancy
services received by Class Associates will quality as supply even though the head
office has not charged anything from it and will be liable to GST.

PROBLEM:15 ABC Construction Ltd. (a registered taxable person) receives

architectural design supplied by a foreign architect to design a residential house to
be build in Mumbai for a consideration of Rs 50,00,000. Does it quality as supply.
ANSWER:15 Yes, it qualifies as a supply. Legal Justification: As per Section
7(1)(b) of CGST Act, 2017, supply includes importation of services for a consideration
whether or not in the course or furtherance of business.

PROBLEM:16 Sun Ltd. Was amalgamated with Moon Ltd. On account of

amalgamated Mr. Star a shareholder received 10,000 shares of Sun Ltd. In exchange
of 5000 shares of Moon Ltd. Does it qualify as supply?
ANSWER:16 No, it does not qualify as a supply Legal Justification: As per
Section, goods mean every kind of movable property other than money and securities
but includes actionable claim, growing crops, grass and things attached to or forming
part of the land which are agreed to be severed before supply or under a contract of
supply; As per Section 2(102), services means anything other than goods, money
and securities but includes activities relating to the use of money or its conversion
by cash or by any other mode, form one form, currency or denomination, to another
form, currency or denomination for which a separate consideration is charged.
Transaction in securities is neither covered as supply of goods nor as a supply of
services as evident from the definition of goods as well as services. Hence, the
transaction by Mr. Star, the shareholder will not qualify as supply.

3.34 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

PROBLEM:17 Rain Ltd., an NBFC transfer bad loans(unsecured) to Mona Ltd.

Does it qualify as supply.
ANSWER:17 No, it does not qualify as a supply Legal Justification: As per
section 2(52), goods mean every kind of movable property other than money and
securities but includes actionable claim, growing crops, grass and things attached to
or forming part of the land which are agreed to be severed before supply or under
a contract of supply; Hence, actionable claims are covered in definition of goods.
However, Schedule III specifically excludes actionable claims other than lottery,
gambling and betting from the scope of supply. Therefore, transfer of unsecured
loans would not amount to supply.

PROBLEM:18 Chand Ltd. Having head office in Punji (Goa) supply of goods
worth 10,00,000 to its branch office in Jodhpur (Rajasthan). Does it qualify as
supply?
ANSWER:18 Yes, it qualifies as a supply Legal Justification: As per Section 7(1)(c) read
with Schedule I of CGST Act, 2017, supply of goods or services or both between distinct
persons as specified in section 25, when made in the course or furtherance of business
will be treated as supply even if made without consideration. As per Section 25(5) of
CGST Act,2017, where a person who has obtained or is required to obtained or is required
to obtain registration in a State or Union territory in respect of an establishments of
distinct persons for the purposes of this Act. Hence, branch transfer of goods worth Rs
10,00,000 from Goa to Rajasthan will qualify as supply.

PROBLEM:19 Mr. N is not registered in GST as his aggregate turnover of taxable

supplies do not exceed Rs 20,00,000. He has supplied goods valuing Rs 2,00,000 to Mr.
M a registered dealer. Determine the amount of GST payable if rate of GST is 18%.
ANSWER:19 As per Section 9(4) of CGST Act, 2017, the GST in respect of the
supply of taxable goods or services or both by unregistered person to a registered

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.35

 SUPPLY

person shall be paid by the registered person on reverse charge basis as the
recipient and all the provisions of this Act shall apply to such recipient as if he
is the person liable for paying the tax in relation to the supply of such goods or
services or both. Thus, in this case Mr. M will be liable to pay GST @ 18% of Rs
2,00,000 i.e. RS 2,00,000 x 18% = Rs 36,000.

PROBLEM:20 R is a supplier of goods located in Mumbai. In October 2020, he has

imported Consultancy Services for Development of IT Software from U.S.A. for a stipulated
consideration of $ 80,000.Will the import of consultancy services be treated as supply?
ANSWER:20

PROBLEM:21 R, a Chartered Accountant, purchased 3 laptops of value

Rs.2,40,000 on 1.10.2020 and paid IGST amounting to Rs 67,200 thereon. He
availed ITC of Rs 67,200 in his books on the same day. After 3 years of using the
laptops, he has donated one laptop to a college when its fair market value is Rs
30,000.Will such donation be treated as supply and liable to GST?
ANSWER:21

PROBLEM:22 R is engaged in supply of certain goods in Delhi and Haryana. He

wishes to transfer goods worth Rs 1, 40,000 from Delhi to its branch in Haryana.
Will such transfer be treated as supply and liable for GST?
ANSWER:22

PROBLEM:23 R lives in Germany. His brother G is carrying on business in

India. G imports technical services from R without any consideration in November,
2020 in the course or furtherance of business. Will this be treated of supply or
services although G did not pay any consideration to R?
ANSWER:23

3.36 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

PROBLEM:24 Under a scheme of finance, Maruti Ltd. Gives the possession of

car to the buyer in November,2020. It agrees to transfer the ownership of the car
to buyer in January 2019. Upon payment of full consideration of Rs 9,60,000 in
installments as agreed. What will be nature of this transaction?
ANSWER:24

PROBLEM:25 R, the owner of specific piece of land in Delhi, leases the same to G for one

year for an agreed consideration in November, 2020.What will be nature of this transaction?

ANSWER:25

PROBLEM:26 R deals in home appliances like washing machines, refrigerator,

etc. he uses computers in his shops for keeping track off inventory and for other
business purposes. Out of 2 computers, R takes home 1 computer to be used by his
son for his studies during the month of October,2020 and thereafter computer is
brought back to the show room of R. What will be the nature of this transaction?
ANSWER:26

PROBLEM:27 R gives generator –sets on rental basis to various customers –he gives
a generator –sets to his brother-in-law for a period of one month in September,2020. On
the occasion of some function in the home of brother-in-law and thereafter generator
is brought back to the show room of R. What will be the nature of this transaction?
ANSWER:27

PROBLEM:28 R as closed down his business but was left with certain capital
goods and inputs forming part of the assets of the business carried on by him. The
closure of the business his ill health.
What will be the nature of this transaction?
ANSWER:28

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.37

 SUPPLY

PROBLEM:29 R who is interested in taking loan from some bank but does not
have any collateral security, approaches G who agrees to mortgage his property
as collateral security to the bank for advancing loan to ‘R’. G charges some
consideration from ‘R’ for providing such collateral security. What will be the
nature of this transaction?
ANSWER:29

3.38 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

3. COMPOSITE & MIXED SUPPLY- SECTION 8

When two or more goods are sold in a combination it becomes difficult to identify
the rate of tax to be levied. For such goods or services, CGST Act, 2017 has provided
with two terms -- “Composite Supply” and “Mixed Supply”.

A. Composite supply- Section 2(30) of the CGST Act, 2017 defines “composite supply”
as a supply made by a taxable person to a recipient consisting of two or more
taxable supplies of goods or services or both, or any combination thereof, which are
naturally bundled and supplied in conjunction with each other in the ordinary course
of business, one of which is a principal supply;

Composite supply means a supply made by a taxable person to a recipient and:

v Comprises two or more taxable supplies of goods or services or both, or any combination
thereof.
v Are naturally bundled and supplied in conjunction with each other, in the ordinary
course of business.
This means that in a composite supply, goods or services or both are bundled owing
to natural necessities. The elements in a composite supply are dependent on the
‘principal supply’.
How to determine the tax liability on composite supplies?:
 A composite supply comprising of two or more supplies, one of which is a principal
supply, shall be treated as a supply of such principal supply

CASE-69 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

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.39

 SUPPLY

CASE-70 You are booking an airline ticket which includes meal. It is a bundle of
supplies. It is a composite supply where the products cannot be sold separately. You
cannot buy just the airline meal and not the airline ticket. The transportation of
passenger is, therefore, the principal supply. Rate of tax applicable to the principal
supply will be charged to the whole composite bundle. Therefore, rate of GST
applicable to transportation of passengers by air will be charged on the airline ticket.

CASE-71 On buying a LED Television, along with it, the remote control, the
wires and all the accessories that go with it along with the warranty and the
maintenance services are provided. It is evident here that the LED Television is
the principal supply and the others (remote / wires / warranty are all ancillaries).
Taxability
The composite supply will be charged at the rate which is applicable to the
principal supply.

Composite Supply
INR
LED Television supplied with remote, wires and 1 Yr Warranty with AMC 100000
GST (LED TV) @ 28% 28000
Invoice Value 128000

CASE-72 A Five-star hotel provides four days and three-night package, with
breakfast. This is a composite supply as the package of accommodation facilities
and breakfast is a natural combination in the ordinary course of business for a
hotel. In this case, the hotel accommodation is the principal supply, and breakfast
is ancillary to the hotel accommodation. The hotel accommodation attracts 18%
tax and the restaurant service attracts 28% tax. As per the example, hotel
accommodation is the principal supply, and the entire supply will be taxed at 18%.

3.40 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

PROBLEM:30 Mr. Ravi being a dealer in laptops, sold a laptop bag along with the
laptop to a customer, for ` 55,000. CGST and SGST for laptop @18% and for laptop
bag @28%. What would be the rate of tax leviable? Also find the GST liability.
ANSWER:30 If the laptop bag is supplied along with the laptop in the ordinary
course of business, the principal supply is that of the laptop and the bag is an
ancillary. Therefore, it is a composite supply and the rate of tax would that as
applicable to the laptop. Hence, applicable rate of GST 18% on ` 55,000.CGST is `
4,950 and SGST is ` 4,950

B. Mixed supply-Section 2(74) of the CGST Act, 2017 defines “mixed supply” as 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.
Mixed supply means:
v two or more individual supplies of goods or services, or any combination thereof,
made in conjunction with each other by a taxable person
v for a single price where such supply does not constitute a composite supply.
v The individual supplies are independent of each other and are not naturally bundled
How to determine the tax liability on mixed supplies?:A mixed supply comprising
of two or more supplies shall be treated as supply of that particular supply that
attracts highest rate of tax

CASE-73 One buys a consolidated package of beauty products (that is shampoo,

comb, conditioner, nail polish, lipstick and tooth powder).It is evident here that the
products can all be independently supplied and any one of them cannot be singled
out as a principal supply and these are deliberately bundled and sold together.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.41

 SUPPLY

CASE-74 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

CASE-75 Many FMCG Companies offer buckets with detergent purchased. This
is a mixed supply as it does not satisfy the 2nd condition, i.e., it can be sold
separately. You can buy either just a bucket or just detergent. The highest rate
of GST will then apply. Assuming that plastic buckets have the higher rate, this
rate will apply on the whole mixed bundle.

CASE-76 Diwali gift hamper which consist of different Items like sweets,
chocolates, cakes, dry fruits packed in one pack is Mixed supply as these items
can be sold separately and it shall be treated as a supply of that particular item
which attracts the highest rate of tax.

CASE-77 M/s X Ltd. a dealer offers combo packs of shirt, watch, wallet, book and
they are bundled as a kit and this kit is supplied for a single price and the supply
of one item does not naturally necessitate the supply of other elements. Hence the
supply is a mixed supply. Tax rate for a shirt, watch, wallet and book are 12%, 18%,
5% and Nil respectively. In this case, watch attracts the highest rate of tax in the
mixed supply i.e., 18%. Hence, the mixed supply will be taxed at 18%.

PROBLEM:31 Mr. A booked a Rajdhani train ticket, which includes meal. Is it

composite supply or mixed supply?
ANSWER:31 It is a bundle of supplies. It is a composite supply where the
products cannot be sold separately. The transportation of passenger is, therefore,
the principal supply. Rate of tax applicable to the principal supply will be charged

3.42 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 SUPPLY

to the whole composite bundle. Therefore, rate of GST applicable to transportation

of passengers by rail will be charged by IRCTC on the booking of Rajdhani ticket.

PROBLEM:32 Space Bazar offers a free bucket with detergent purchased. Is it composite
supply or mixed supply? Assume rate of GST for detergent @28% and bucket @18%.
ANSWER:32 This is a mixed supply. These items can be sold separately. Product
which has the higher rate, will apply on the whole mixed bundle.

Where “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 [Section 2(90) of CGST Act, 2017

Guiding Principles for distinction between composite and mixed supply

Whenever there is doubt whether it is composite or mixed supply; following
guiding principles may be adopted:

COMPOSITE MIXED
DESCRIPTION
SUPPLY SUPPLY
Naturally Bundled Yes No

Supplied together Yes Yes

Can be supplied separately No Yes
One is predominant supply for recipient Yes No
Other supply is not ‘aim in itself’ of recipient Yes No
Each supply priced separately No No
All supplies are goods Yes Yes
All supplies are services Yes Yes
One supply is goods and other supply is services Yes Yes

Note:-Every supply should be analyzed independently.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 3.43

 SUPPLY

4. IMPORTANT CLARIFICATIONS-

3.44 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 4 | LEVY AND COLLECTON

1. LEVY AND COLLECTION- SECTION 9 OF CGST

1) Levy: A tax called the Central Goods and Services Tax (CGST) shall be levied on all
intra-State supplies of goods or services or both.
 Collection: The tax shall be collected in such manner as may be prescribed and
shall be paid by the taxable person. However, intra-State supply of alcoholic liquor
for human consumption is outside the purview of CGST. Value for levy: Transaction
value under section 15 of the CGST Act.
 Rates of CGST: Rates for CGST are rates as may be notified by the Government
on the recommendations of the GST Council. Maximum rate of CGST will be 20%.

2) Postponement of GST on Certain Goods: Section 9(2) of CGST Act, 2017 provides
that CGST on supply of the following items has not been levied immediately. It shall
be levied with effect from such date as may be notified by the Government on the
recommendations of the Council:
 Petroleum crude/High speed diesel/Motor spirit (commonly known as petrol)
 Natural gas and Aviation turbine fuel

3) Reverse charge - Tax payable by recipient of supply of notified goods or services

or both -CGST shall be paid by the recipient of notified goods or services or both,
on reverse charge basis on Intra State supply of goods or services or both, notified
by the Government on the recommendations of the GST Council. [Section 9 (3)]

4) CGST to be paid on RCM by notified persons on notified goods/services when

received from unregistered suppliers. Section 9(4) -(W.e.f 1-2-2019)

5) Electronic commerce operator liable to pay tax on notified services- Section

9(5) of CGST Act, 2017 empowers the Government to notify certain class of

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.1

 LEVY AND COLLECTON

services to be supplied (intra-state) through Electronic Commerce Operator, on

which CGST will be paid by E-Commerce Operators. Such services shall be notified
on the recommendations of the GST Council.

S.NO. SITUATIONS PERSON LIABLE TO PAY TAX

1. If ECO is located in taxable ELECTRONIC COMMERCE OPERATOR (ECO)
territory (i.e. having
physical presence in India)
2. If ECO does not have PERSON REPRESENTING THE ECO
physical presence in taxable
territory (I.e. India)
3. If the ECO has neither PERSON APPOINTED BY THE ECO FOR THE
the physical presence nor PURPOSE OF PAYING THE TAX
any representative in the
taxable territory

POINT TO BE NOTED-
1) Electronic Commerce Operators –
I. (ECO) display products as well as services which are actually supplied by some
other person to the consumer, on their electronic portal.
II. The consumers buy such goods/ services through these portals.
III. On placing the order for a particular product/ service, the actual supplier supplies
the selected product/ service to the consumer.
IV. The price/ consideration for the product/ service is collected by the ECO from the
consumer and passed on to the actual supplier after the deduction of commission
by the ECO.
V. Example: OLA, UBER, TRIVAGO etc. are some of ECO working in India.

4.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

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

3) Maxi cab/ Motor cab/ Motor cycle: shall have the same meaning as assigned
to them respectively in clauses (22), (25) and (26) of section 2 of the Motor
Vehicles Act, 1988. As per Motor Vehicles Act, 1988,
a. Maxi cab: means any motor vehicle constructed or adapted to carry more than 6
passengers, but not more than 12 passengers, excluding the driver, for hire or reward.
b. Motor cab: means any motor vehicle constructed or adapted to carry not more than
6passengers excluding the driver for hire or reward.
c. Motor car: means any motor vehicle other than a transport vehicle, omnibus, road-
roller, tractor, motorcycle or invalid carriage.
All the provisions of the CGST Act shall apply to such ECO as if he is the
supplier liable for paying the tax in relation to the supply of above services

4) Categories of services the tax on intra-State supplies of which shall be paid by the
electronic commerce operator. The Central Government has notified that in case of

the following categories of services, the tax on intra-State supplies shall be paid by the

electronic commerce operator-

I. Services by way of transportation of passengers by a radio-taxi, motor cab, maxi cab and motor cycle;

Services by way of providing accommodation in hotels, inns, guest houses, clubs,

II. campsites or other commercial places meant for residential or lodging purposes,
except where the person supplying such service through electronic commerce operator
is liable for registration u/ s 22(1) of the said CGST Act.
III. Services by way of housekeeping, such as plumbing, carpentering etc., except where
the person supplying such service through electronic commerce operator is liable for
registration u/s 22(1) of the said CGST Act.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.3

 LEVY AND COLLECTON

2. COMPOSITION SCHEME- SECTION 10

1) Tax payment under this scheme is an option available to ELIGIBLE taxable person.

2) SECTION 10(1)-IF AT IS UPTO 1.5 CR /75 LAKHS in preceding FY - A REGISTERD

PERSON whose AT in the preceding FY did not exceed 1.5 crore will be eligible to
opt for payment of tax under the composition scheme
 A reduced limit of `75 lakhs rupees have been kept for special category
states (Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura,
Sikkim and UTTRAKHAND)
 In case of ASSAM, HIMACHAL PRADESH AND JAMMU & KASHMIR THE T/O
LIMIT WILL BE 1.5 CR

3) The composition levy is an alternative method of levy of tax designed for small taxpayers.

4) The objective of composition scheme is to bring simplicity and to reduce the

compliance cost for the small taxpayers. Moreover, it is optional and the eligible
person opting to pay tax under this scheme can pay tax at a prescribed percentage
of his turnover every quarter, instead of paying tax at normal rate.

5) RATES OF COMPOSITION LEVY

S.NO ELIGIBLE PERSON CGST SGST

1. Manufacturer 0.5% of T/O in S/UT 0.5% of T/O in S/UT
2. Restaurant service 2.5% of T/O in S/UT 2.5% of T/O in S/UT
3. Other Suppliers .5% of T/O of Taxable .5% of T/O of Taxable
supplies of G/S in S/UT supplies of G/S in S/UT

4.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

6) Composition scheme taxpayers permitted to render services other than restaurant

services upto a specified limit [Second proviso to section 10 of the CGST Act]
 Under the erstwhile provisions, only a supplier of restaurant service was eligible
for composition scheme. A person engaged in the supply of any service other than
restaurant service was not eligible for composition scheme.

 However, there are cases where a manufacturer/ trader is also engaged in supply
of services other than restaurant service though the percentage of such supply of
services is very small as compared to the supplies of goods. There may also be cases
where a restaurant service provider is also engaged in supplying a small percentage
of other services.

 With a view to enable such taxpayers to avail of the benefit of composition scheme,
second proviso has been added to section 10(1) which permits a registered person
opting for composition scheme to supply services [other than restaurant services]
of specified value. This specified value is value not exceeding

a) 10% of the turnover in a State/Union territory in the preceding financial year

Or
b) ` 5 lakh, whichever is higher.

Thus, it can be inferred that a registered person opting for composition scheme whose
turnover is upto ` 50 lakh in the preceding financial year can supply services [other
than restaurant services] upto a maximum value of ` 5 lakh in the current financial
year. Further, a registered person opting for composition scheme whose turnover is
more than ` 50 lakh and upto `1.5 crore in the preceding financial year can supply
services [other than restaurant services] in the current financial year upto a maximum
value of 10% of the turnover in a State/Union territory in the preceding financial year.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.5

 LEVY AND COLLECTON

CASE-1 Rams has opted for composition scheme in the financial year 2020-21.
His aggregate turnover in FY 2019-20 is ` 60 lakh. In FY 2020-21, he can supply
services [other than restaurant services] upto a value of not exceeding:

a. 10% of ` 60 lakh, i.e. ` 6 lakh or

b. ` 5 lakh,
whichever is higher. Thus, he can supply services upto a value of ` 6 lakh in FY 2020-21

7) SECTION 10(2)-CONDITION & RESTRICTIONS- The registered person shall be

eligible to opt under sub-section (1), if—
a. save as provided in sub-section (1), he is not engaged in the supply of services.
b. he is not engaged in making any supply of goods which are not leviable to tax
under this Act.
c. he is not engaged in making any inter-State outward supplies of goods.
d. he is not engaged in making any supply of goods through an electronic commerce
operator who is required to collect tax at source under section 52.
e. he is not a manufacturer of such goods as may be notified by the Government on
the recommendations of the Council; and
f. he is neither a casual taxable person nor a non-resident taxable person.
Provided that where more than one registered person are having the same Permanent
Account Number [issued under the Income-tax Act, 1961 (43 of 1961)], the
registered person shall not be eligible to opt for the scheme under sub-section (1)
unless all such registered persons opt to pay tax under that sub-section

8) SECTION 10(2A)-COMPOSTION SCHEME FOR SUPPLIER OF SERVICE -

Notwithstanding anything to the contrary contained in this Act, but subject to
the provisions of sub-sections (3) and (4) of section 9, a registered person,
not eligible to opt to pay tax under sub-section (1) and sub-section (2), whose

4.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

aggregate turnover in the preceding financial year did not exceed fifty lakh rupees,
may opt to pay, in lieu of the tax payable by him under sub-section (1) of section
9, an amount of tax calculated at such rate as may be prescribed, but not exceeding
three per cent of the turnover in State or turnover in Union territory, if he is not—
a. engaged in making any supply of goods or services which are not leviable to tax
under this Act.
b. engaged in making any inter-State outward supplies of goods or services.
c. engaged in making any supply of goods or services through an electronic
commerce operator who is required to collect tax at source under section 52.
d. a manufacturer of such goods or supplier of such services as may be notified
by the Government on the recommendations of the Council; and
e. a casual taxable person or a non-resident taxable person:
Provided that where more than one registered person are having the same
Permanent Account Number issued under the Income-tax Act, 1961 (43 of 1961),
the registered person shall not be eligible to opt for the scheme under this sub-
section unless all such registered persons opt to pay tax under this sub-section.
f. Rates of tax : The rate of tax under presumptive levy is as under —

Description of supply Rate of Tax cannot exceed (% of turnover) Total rate of tax

cannot exceed

CGST SGST

First supplies of goods 3% of the aggregate 3% of the aggregate 6% of the aggregate

or services or both up to turnover in the State turnover in the State turnover in the State

an aggregate turnover or Union territory or Union territory or Union territory

of ` 50 lakh made on

or after 1st day of April

in any financial year,

by a registered person.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.7

 LEVY AND COLLECTON

9) SECTION 10(3)-The option availed of by a registered person under sub-section (1)

or sub-section (2A), as the case may be, shall lapse with effect from the day
on which his aggregate turnover during a financial year exceeds the limit specified
under sub-section (1) or sub-section (2A), as the case may be

10) SECTION 10(4)-A taxable person to whom the provisions of sub-section (1) or,
as the case may be, sub-section (2A) apply shall not collect any tax from the
recipient on supplies made by him nor shall he be entitled to any credit of input
tax.

11) SECTION 10(5) If the proper officer has reasons to believe that a taxable person
has paid tax under sub-section (1) or sub-section (2A), as the case may be,
despite not being eligible, such person shall, in addition to any tax that may be
payable by him under any other provisions of this Act, be liable to a penalty
and the provisions of section 73 or section 74 shall, mutatis mutandis, apply for
determination of tax and penalty

12) Taxable person who opts for this scheme will not be allowed to charge GST in
their invoice. They will issue a bill of supply instead of Tax invoice. They are
also not entitled to take input tax credit.

13) A registered taxable person having same PAN and multiple registrations in
different states have to opt for the composition scheme for all states

14) It is important to note that for the tax any tax payable under RCM the
option of payment under this scheme will not be available. Rate of tax
payable on supplies taxable under RCM will be at regular rates and not under
the composition rates.

4.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

15) OTHER PROVISIONS RELATED TO COMPOSITION SCHEME

Eligible for input where any registered person ceases to pay tax under this
tax credit when scheme, he shall be entitled to take credit of input tax in
cease to pay tax respect of inputs held in stock, inputs contained in semi
under this finished or finished goods held in stock and on capital
scheme [Section 18 goods on the day immediately preceding the date from
(l)(c)] which he becomes liable to pay tax under regular scheme.
Issue bill of supply A person under this scheme shall issue bill of supply
instead of tax invoice instead of Tax invoice
[Section 31 (3)]
Quarterly Return for A registered person paying tax under the provisions of section
Composite Scheme 10 shall, for each quarter or part thereof, furnish, in such form
[Sec. 39(2)] and manner as may be prescribed, a return, electronically,
of turnover in the State or Union territory, inward supplies
of goods or services or both, tax payable and tax paid within
eighteen days after the end of such quarter.

16) POINT TO BE NOTED-

A. Aggregate turnover in a Financial Year [Sec. 2(6) of CGST] Act: Aggregate
value of all taxable supplies (excluding the value of inward supplies on which tax
is payable by a person on reverse charge basis), exempt supplies, exports of goods
or services or both and inter-state supplies of person having the same PAN, to be
computed on all India basis but excludes Central Tax, State Tax, Union Territory Tax,
integrated tax and Cess.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.9

 LEVY AND COLLECTON

Aggregate turnover includes Aggregate turnover excludes

The value of exported goods/services Inward supplies on which the recipient
is required to pay tax under Reverse
Charge Mechanism (RCM).
Exempted goods/services or both which Central tax (CGST)/SGST/UTGST/IGST
attracts nil rate of tax or wholly exempt
from tax and includes non- taxable supply
Inter-State supplies between distinct Compensation Cess
persons having same PAN
Supply on own account and on behalf
of principal.

Important points:
I. The turnover will be computed PAN Wise.
II. The partner and partnership firm will have different PAN Nos. Thus the turnover
of the partner and partnership firm will not be aggregated.
III. The HUF and individual coparcener of the family have different PAN Nos. Hence,
turnover of Karta of HUF in his individual capacity and turnover of Karta as a
Karta of HUF will not be aggregated.
IV. Supply of goods, after completion of job work, by a registered job worker shall
be treated as the supply of goods by the principal referred to in Sec. 143 of the
CGST Act, 2017, and the value of such goods shall not be included in the aggregate
turnover of the registered job worker. It will be included in the turnover of turnover
of principal.
B. Turnover in State” or “turnover in Union territory means the aggregate value of
all taxable supplies (excluding the value of inward supplies on which tax is payable
by a person on reverse charge basis) and exempt supplies made within a State or

4.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

Union territory by a taxable person, exports of goods or services or both and inter-
State supplies of goods or services or both made from the State or Union territory
by the said taxable person but excludes central tax, State tax, Union territory tax,
integrated tax and cess;
C. Explanation 1.—For the purposes of computing aggregate turnover of a person for
determining his eligibility to pay tax under this section, the expression “aggregate
turnover” shall include the value of supplies made by such person from the 1st day
of April of a financial year upto the date when he becomes liable for registration
under this Act, but shall not include the value of 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
D. Explanation 2. —For the purposes of determining the tax payable by a person under
this section, the expression “turnover in State or turnover in Union territory” shall
not include the value of following supplies, namely: —
I. supplies from the first day of April of a financial year upto the date when such
person becomes liable for registration under this Act; and
II. 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.

E. AT FOR COMPOSITION SCHEME

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.11

 LEVY AND COLLECTON

3. RULES OF COMPOSITION SCHEME

RULE-3-INTIMATION FOR COMPOSITION LEVY
1) Any person who has been granted registration on a provisional basis under clause
(b) of sub-rule (1) of rule 24 and who opts to pay tax under section 10, shall
electronically file an intimation in FORM GST CMP-01, duly signed or verified
through electronic verification code, on the common portal, either directly or
through a Facilitation Centre notified by the Commissioner, prior to the appointed
day, but not later than thirty days after the said day, or such further period as
may be extended by the Commissioner in this behalf:
Provided that where the intimation in FORM GST CMP-01is filed after the appointed
day, the registered person shall not collect any tax from the appointed day but
shall issue bill of supply for supplies made after the said day.

2) Any person who applies for registration under sub-rule (1) of rule 8 may give an
option to pay tax under section 10 in Part B of FORM GST REG-01, which shall
be considered as an intimation to pay tax under the said section.

3) Any registered person who opts to pay tax under section 10 shall electronically file
an intimation in FORM GST CMP-02, duly signed or verified through electronic
verification code, on the common portal, either directly or through a Facilitation
Centre notified by the Commissioner, prior to the commencement of the financial
year for which the option to pay tax under the aforesaid section is exercised and
shall furnish the statement in FORM GST ITC-03in accordance with the provisions
of sub-rule (4) of rule 44 within a period of sixty days from the commencement
of the relevant financial year.

[Provided that any registered person who opts to pay tax under section 10 for
the financial year 2020-21 shall electronically file an intimation in FORM GST

4.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

CMP-02, duly signed or verified through electronic verification code, on the common
portal, either directly or through a Facilitation Centre notified by the Commissioner,
on or before 30th day of June, 2020 and shall furnish the statement in FORM GST
ITC-03 in accordance with the provisions of sub-rule (4) of rule 44 upto the 31st
day of July, 2020 ]

(3A) Notwithstanding anything contained in sub-rules (1), (2) and (3), a person
who has been granted registration on a provisional basis under rule 24 or who has
been granted certificate of registration under sub-rule (1) of rule 10 may opt to
pay tax under section 10 with effect from the first day of the month immediately
succeeding the month in which he files an intimation in FORM GST CMP-02, on
the common portal either directly or through a Facilitation Centre notified by the
Commissioner, on or before the 31st day of March, 2018, and shall furnish the
statement in FORM GST ITC-03 in accordance with the provisions of sub-rule (4)
of rule 44 within a period of 2[one hundred and eighty days] from the day on which
such person commences to pay tax under section 10:

Provided that the said persons shall not be allowed to furnish the declaration in
FORM GST TRAN-1 after the statement in FORM GST ITC-03 has been furnished.

Provided that the said persons shall not be allowed to furnish the declaration in
FORM GST TRAN-1after the statement in FORM GST ITC-03has been furnished.

4) Any person who files an intimation under sub-rule (1) to pay tax under section
10 shall furnish the details of stock, including the inward supply of goods received
from unregistered persons, held by him on the day preceding the date from which
he opts to pay tax under the said section, electronically, in FORM GST CMP-03,
on the common portal, either directly or through a Facilitation Centre notified by

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.13

 LEVY AND COLLECTON

the Commissioner, within a period of 2[ninety days] from the date on which the
option for composition levy is exercised or within such further period as may be
extended by the Commissioner in this behalf.

5) Any intimation under sub-rule (1) or sub-rule (3) 3[or sub-rule (3A)] in respect of any
place of business in any State or Union territory shall be deemed to be an intimation in
respect of all other places of business registered on the same Permanent Account Numb

RULE-4 EFFECTIVE DATE FOR COMPOSITION LEVY

1) The option to pay tax under section 10 shall be effective from the beginning of
the financial year, where the intimation is filed under sub-rule (3) of rule 3 and
the appointed day where the intimation is filed under sub-rule (1) of the said rule.
2) The intimation under sub-rule (2) of rule 3, shall be considered only after the
grant of registration to the applicant and his option to pay tax under section 10
shall be effective from the date fixed under sub-rule (2) or (3) of rule 10.

RULE-5 CONDITIONS AND RESTRICTIONS FOR COMPOSITION LEVY

1) The person exercising the option to pay tax under section 10 shall comply with
the following conditions, namely: -
a. he is neither a casual taxable person nor a non-resident taxable person;
b. the goods held in stock by him on the appointed day have not been purchased in
the course of inter-State trade or commerce or imported from a place outside India
or received from his branch situated outside the State or from his agent or principal
outside the State, where the option is exercised under sub-rule (1) of rule 3;
c. the goods held in stock by him have not been purchased from an unregistered
supplier and where purchased, he pays the tax under sub-section (4) of section 9;
d. he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward
supply of goods or services or both.

4.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

e) he was not engaged in the manufacture of goods as notified under clause (e) of
sub-section (2) of section 10, during the preceding financial year.
f) he shall mention the words “composition taxable person, not eligible to collect tax
on supplies” at the top of the bill of supply issued by him; and
g) he shall mention the words “composition taxable person” on every notice or signboard
displayed at a prominent place at his principal place of business and at every
additional place or places of business.

2) The registered person paying tax under section 10 may not file a fresh intimation
every year and he may continue to pay tax under the said section subject to
the provisions of the Act and these rules.

RULE-6 VALIDITY OF COMPOSITION LEVY

1) The option exercised by a registered person to pay tax under section 10 shall remain
valid so long as he satisfies all the conditions mentioned in the said section and
under these rules.

2) The person referred to in sub-rule (1) shall be liable to pay tax under sub-section
(1) of section 9 from the day he ceases to satisfy any of the conditions mentioned
in section 10 or the provisions of this Chapter and shall issue tax invoice for every
taxable supply made thereafter and he shall also file an intimation for withdrawal
from the scheme in FORM GST CMP-04 within seven days of the occurrence of
such event.

3) The registered person who intends to withdraw from the composition scheme shall,
before the date of such withdrawal, file an application in FORM GST CMP-04, duly
signed or verified through electronic verification code, electronically on the common
portal.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.15

 LEVY AND COLLECTON

4) Where the proper officer has reasons to believe that the registered person was
not eligible to pay tax under section 10 or has contravened the provisions of the
Act or provisions of this Chapter, he may issue a notice to such person in FORM
GST CMP-05 to show cause within fifteen days of the receipt of such notice as
to why the option to pay tax under section 10 shall not be denied.

5) Upon receipt of the reply to the show cause notice issued under sub-rule (4)
from the registered person in FORM GST CMP-06, the proper officer shall issue an
order in FORM GST CMP-07 within a period of thirty days of the receipt of such
reply, either accepting the reply, or denying the option to pay tax under section
10 from the date of the option or from the date of the event concerning such
contravention, as the case may be.

6) Every person who has furnished an intimation under sub-rule (2) or filed an application
for withdrawal under sub-rule (3) or a person in respect of whom an order of
withdrawal of option has been passed in FORM GST CMP-07 under sub-rule (5), may
electronically furnish at the common portal, either directly or through a Facilitation
Centre notified by the Commissioner, a statement in FORM GST ITC-01 containing
details of the stock of inputs and inputs contained in semi-finished or finished goods
held in stock by him on the date on which the option is withdrawn or denied, within
a period of thirty days from the date from which the option is withdrawn or from the
date of the order passed in FORM GST CMP-07, as the case may be.

7) Any intimation or application for withdrawal under sub-rule (2) or (3) or denial
of the option to pay tax under section 10 in accordance with sub-rule (5) in
respect of any place of business in any State or Union territory, shall be deemed
to be an intimation in respect of all other places of business registered on the
same Permanent Account Number.

4.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

4. COMPOSITION SCHEME-COMPARISION

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.17

 LEVY AND COLLECTON

CASE-2 P, a trader who has a revenue of INR 50,00,000 inclusive of GST

@ 5% has purchases amounting to INR 40,00,000 (GST @ 5% extra). Book-
keeping and GST compliance costs are INR 250,000 and other administrative
costs are INR 50,000. He now wants to switch to Composition Levy. You are
requested to advise in your capacity as a GST consultant.

Normal Levy Composition Levy

Revenue 50, 00,000 Revenue 50,00,000
Less: GST 2, 38,095 Less: GST NIL
Net Revenue 47, 61,905 Net Revenue 50,00,000
Less: Purchases 40, 00,000 Less : Purchases 42,00,000
Book Keeping 2, 50,000 Book Keeping 1,00,000
Other Costs 50,000 Other Costs 50,000
GST Liability 50,000
Profit 4,61,905 Profit 6,00,000
Payable 2,38,095 GST Liability 50,000
ITC 2,00,000 (1% of Turnover)
GST Liability 38,095
Cash Flow 4,23,810 Cash Flow 6,00,000
Notes:
1. GST liability wouldn’t exist if he opts for composition levy and the trader can now
charge the full amount which he was charging inclusive of GST earlier
2. For normal levy, the GST included in sales is 50,00,000 * 5 / 105
3. The ITC is available in case of normal levy and not composition levy
4. Hence, the taxes (input) are a part of purchase costs and the output is @ 1%
of the turnover in case of Composition Levy Since the book keeping costs are
substantially lower in case of composition levy, the profits and cash flows are
higher and hence the trader should be advised to switch to Composition Levy.

4.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

PROBLEM:1 Taxpayer ‘Tolaram’ 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 units A1 and A2 in the first quarter of current financial year is ` 5 lakh and ` 10
lakh respectively. Compute the amount payable under composition levy under section
10(1) & 10(2) of the CGST Act, 2017 by ‘Tolaram’
ANSWER:1

PROBLEM:2 Taxpayer ‘Bholaram’ is a trader, who has opted for composition

levy for goods, of both taxable and exempted goods. It has one retail showroom – A1
in Punjab and another retail showroom – A2 in Rajasthan, both selling taxable as
well as exempted goods. Total turnover (including taxable and exempted goods) of
the two showrooms in last FY was ` 115 lakh (` 85 lakh + ` 30 lakh). Turnover of
showrooms A1 and A2 in the first quarter of current financial year is ` 35 lakh [A1
- ` 15 lakh (` 5 lakh from sale of taxable goods and ` 10 lakh from sale of exempted
goods) and A2 - ` 20 lakh (` 10 lakh from sale of taxable goods and ` 10 lakh
from sale of exempted goods)]. Compute the amount payable under composition
levy under section 10(1) & 10(2) of the CGST Act, 2017 by ‘Bholaram’.
ANSWER:2

PROBLEM:3 Taxpayer ‘Padmavati’ is a salon stylist, who has opted for

composition levy for services, having one branch – B1 in Vasant Kunj, Delhi and
another branch – B2 in Gurgaon, Haryana. Total turnover of two branches in last
FY was ` 45 lakh (` 25 lakh + ` 20 lakh). Turnover of branches B1 and B2 in the
first quarter of current financial year is ` 5 lakh and ` 10 lakh respectively. Compute
the amount payable under composition levy under section 10(2A) of the CGST Act,
2017 by ‘Padmavati’.
ANSWER:3

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.19

 LEVY AND COLLECTON

PROBLEM:4 M/s Wadhwani has affected the sales of Rs. 115 lakhs during
the preceding Financial Year. Turnover includes the following:
Turnover of export of goods Rs. 55, 00,000
Inward supplies subject to RCM Rs. 6, 00,000
CGST 5,50,000
SGST 5,50,000
IGST 1, 25,000 Rs. 12, 25,000
Whether M/s Wadhwani is eligible for composition scheme?
ANSWER:4

PROBLEM:5 Ram & Co. being a trader of cell phones registered under GST
in the State of Tamil Nadu and furnished the following information relating
to preceding financial year:

Particulars Value (` 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 Ram & Co. is eligible for composition scheme in the current financial
year?
ANSWER:5

4.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

PROBLEM:6 M/s CELL Private Limited being a manufacturer of Mobile

Phones has four factories in Noida, Kanpur, Delhi, and Moradabad.
Place P.Y. Turnover in lakhs (Including Taxes @ 18%)
Noida 12.00
Delhi 47.91
Kanpur 18.00
Moradabad 38.91
Total 116.82
Is M/s CELL Private Limited eligible for composition levy in the current year?
ANSWER:6

PROBLEM:7 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. M/s Y Ltd is eligible for composition levy in the current year.
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.
ANSWER:7

PROBLEM:8 M/s X & Co. sells electrical cables, motors, and wires. Company
also undertake repair of switches, motor sets. Turnover during preceding financial
from sale of goods is `59 lakhs, whereas repairing unit is `1 lakh. M/s X & Co. is
eligible for composition scheme. Advice.
ANSWER:8

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.21

 LEVY AND COLLECTON

PROBLEM:9 Mr. A is a paper merchant own 5,000 sq. ft., shop at Chennai. Mr. A
offered extra space available in their shop to supplier to put up their advertisement.
His turnover in the previous year from sale of goods `20 lakhs and advertising
services `2 lakhs. Mr. A is eligible for composition scheme in the current year
ANSWER:9

PROBLEM:10 Hotel King Pvt., Ltd. provider of restaurant services in New

Delhi. They also serve beer, whisky and so on. Turnover in the preceding
previous year is `67 lakhs. Hotel King Pvt. Ltd. is eligible for composition
scheme in the current year.
ANSWER:10

PROBLEM:11 Mr. C of Chennai is a retailer dealing with cell phones. He

supplies goods to the person located in Chennai and Pondicherry. Aggregate
turnover in the preceding financial year is `45 lakhs. Mr. C wants to opt for
composition scheme in the current financial year
ANSWER:11

PROBLEM:12 Peter England is a trader who sells his ready-made clothes

online on Amazon India (an Electronic Commerce Operator). He received an
order for `12,00,000 in the previous year. Peter England also supplied goods
from there out lets. Aggregate turnover of the company in the previous year
was `21,00,000. Peter England is eligible for composition scheme
ANSWER:12

PROBLEM:13 Hot Breads Pvt. Ltd is the supplier of bakery products

registered in the current financial year (2019-20) w.e.f. 1st Oct. 2019. In the
month of Oct. 2019 total taxable supplies `88 lakhs. Answer the following:

4.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

a. Company is eligible for Composition Scheme?

b. If so, company wants to pay tax @1% being a trader. However, the Deputy
Commissioner of Central Tax contended that the assessee is liable to pay tax @5%
under the Food and Restaurant Services category? Advise.
ANSWER:13

PROBLEM:14 Prem is running a consulting firm and also a fancy store,

registered under the same PAN number. Turnover of the fancy store is `65,00,000
and receipt of consultancy firm is `10,00,000 in the preceding financial year.
You are required to provide answers with supporting explanatory note for each
answer to the following questions:
a. Is Prem eligible for composition scheme under CGST Act?
b. Whether it is possible for Prem to opt composition scheme only for fancy store?
c. If prem is running a restaurant with turnover of `65,00,000 instead of consultancy
firm as well as a fancy store, would he be eligible for composition scheme?
ANSWER:14

PROBLEM:15 Mr. Ram 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. Mr. Ram is eligible for Composition Scheme?
b. Whether it is possible for Mr. Ram to opt for composition only for Showroom?
c. Rework, if Mr. Ram is running a restaurant as well as readymade garment show
room, whether he is eligible for composition?
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?
ANSWER:15

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.23

 LEVY AND COLLECTON

a. Mr. Ram is providing services in consulting firm where value of service exceeds 10%
of turnover. Hence, he is not eligible for composition scheme.
b. If one unit of a business is ineligible to opt for composition then all other
business units registered under the same PAN shall automatically ineligible for
the composition scheme. So Mr. Ram is not eligible for composition scheme only
for showroom.
c. Restaurant services and readymade garments show room are eligible for the
composition scheme. Hence Mr. Ram is eligible for Composition Scheme. Since, his
aggregate turnover is `72 lakhs (i.e. less than `1.5 crore).
d. Yes, Mr. Ram is eligible for composition scheme as turnover of his firm does not
exceed `1.50 crore in the preceding F.Y.

PROBLEM:16 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 goods which are leviable to GST, exempted and non-
taxable respectively. Whether MR. Rahim is eligible for Composition Scheme?
ANSWER:16 Under the revised system, tax of 1% will be charged only on
taxable turnover and not on exempt turnover. However, to decide the turnover limit
for eligibility under composition scheme, total turnover will be considered.
 Turnover in the preceding financial year is `60 lakhs.
 In this case aggregate turnover does not exceed ` One crore. Hence, Mr. Rahim is
not eligible for composition Scheme since, he is dealing with non-taxable goods
(i.e. liquor).

PROBLEM:17 Mr. H registered in Hyderabad, who is selling goods from Telangana

to Tamil Nadu. Turnover of Mr. H is `73 Lakh in the preceding financial year.
Whether Mr. H is eligible for Composition? Whether your answer will change if Mr.
H is making purchase from Tamil Nadu and selling goods in Telangana?

4.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

ANSWER:17 Mr. H is not eligible for composition as he is making interstate

outward supply. If Mr. H is making purchase form TamilNadu, then he is eligible
for composition as there is restriction on outward interstate supply not on inward
interstate supply.

PROBLEM:18 X & Co. being a supplier of taxable and exempted services

registered under GST law in the State of Maharashtra and furnished the following
information pertaining to the preceding financial year:

Particulars Value (` in lakh)

Intra-State supply of taxable output services 22
Intra-State supply of exempted supplies 28
Interest earned on deposits/loans/advances 5

Turnover during 1st quarter of the current financial year of X & Co. is as follows:

Particulars Value (` in lakh)

Intra-State supply of taxable output services 2
Intra-State supply of exempted supplies 8
Interest earned on deposits/loans/advances 5

Find the following:

a. X & Co. is eligible to opt composition scheme in the current financial year?
b. If so, find the CGST & SGST liability of X & Co. for the 1st quarter of the
current financial year?
ANSWER:18

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.25

 LEVY AND COLLECTON

PROBLEM:19 Mr. Zafar of Assam, provides the following information for the
preceding financial year 2019-20. You are required to find out the aggregate
turnover for the purpose of eligibility of composition levy scheme and determine
whether he is eligible for composition levy scheme or not, for the F.Y. 2020-21.

Particulars Amount (₹ in lakhs)

Value of taxable outward supplies (out of this ₹10 lakhs 50.00
was in course of inter-state transactions).
Value of exempt supplies (which include ₹ 30 lakhs was 70.00
received as a interest on loans & advances).
Value of inward supplies on which he is liable to pay tax 5.00
under reverse charge
Value of exports 5.00
All the amounts are exclusive of GST.

ANSWER:19

PROBLEM:20 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 goods which are leviable to GST, exempted and
non-taxable respectively. Whether Mr. Rahim is eligible for Composition Scheme?
ANSWER:20

PROBLEM:21 Mr. H registered in Hyderabad, who is selling goods from Telangana

to Tamil Nadu. Turnover of Mr. H is ` 73 Lakh in the preceding financial year.
Whether Mr. H is eligible for Composition? Whether your answer will change if Mr.
H is making purchase from Tamil Nadu and selling goods in Telangana?
ANSWER:21

4.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

PROBLEM:22 Turnover of Mr. Roy in the preceding financial year is ` 49 Lakh.

Mr. Roy has opted for Composition Scheme. During the year on 18th February 20XX,
turnover of Mr. Roy exceeds ` 1.50 crore. What compliances are required to carry by
Mr. Roy?
ANSWER:22

PROBLEM:23 M/s X Pvt. Ltd. is a manufacturer having two units namely Unit
–A in Andhra Pradesh and another Unit – B in Tamil Nadu. Total turnover of two
units in last Financial Year was ` 95 lakh (` 10 lakh of Unit – A + ` 85 lakh of
Unit – B).Total turnover of two units in the second quarter of this financial year
was ` 15 lakh (` 5 lakh of Unit – A + ` 10 lakh of Unit – B). Applicable rate of
CGST 9% and SGST 9%. Find the Net liability of X Pvt. Ltd.
ANSWER:23

PROBLEM:24 A person availing composition scheme during a financial year

crosses the turnover of Rs. 100 Lakhs (Rs. 75 lakhs in specified States) during
the course of the year i.e. say he crosses the turnover in December? Will he be
allowed to pay tax under composition scheme for the remainder of the year i.e.
till 31st March?
ANSWER:24 No. The option availed shall lapse from the day on which his
aggregate turnover during the financial year exceeds Rs. 100 Lakhs (Rs. 75 lakhs in
specified States).

PROBLEM:25 M/s United Electronics, a registered dealer, is supplying all types

of Electronic Appliances in the state of Karnataka. Their aggregate Turnover in the
Financial Year 2019-20 by way of supply of appliances was ₹ 120 Lakhs.
The firm also expects to provide repair and maintenance service of such Appliances
from the financial year 2020-21.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.27

 LEVY AND COLLECTON

With reference to the latest amendments made in CGST Act, 2017, examine:
1. Whether the firm can opt for the composition scheme for the financial year 2020-
21, as the turnover may include supply of both goods and services?
ii. If yes, up to what amount, the supply of service can be provided?
ANSWER:25
As per section 10(1) & (2), a registered dealer whose aggregate turnover in the
preceding year is upto `1.5 crore may opt for composition scheme provided he
is not engaged in providing taxable supply of services except restaurant services.
However person opting for composition scheme may supply services other than
restaurant services of value not exceeding 10% of turnover in the state in the
preceding year or `5,00,000 whichever is higher may opt for composition scheme.
i. Yes, Firm can opt for the composition scheme for the financial year 2020-21 as
the turnover is not exceeding `1.5 crores even if the firm is supplying services along
with goods.
ii. Supply of services can be provided up to higher of the followings:
a. 10% of `1.2 crore = `12,00,000
b. `5,00,000
Higher = `12,00,000

PROBLEM:26 M/s Sai Trading Company, an eligible registered dealer in goods

making intra-state supplies within the state of Andhra Pradesh, has reported an
aggregate turnover of `78 Lakhs in the preceding financial year.
I. Determine whether Sai Trading Company will be eligible for composition levy, as
on 31-10-2020.
ANSWER:26 A registered person, whose aggregate turnover in the preceding
financial year did not exceed `1.5 crore is eligible to opt for composition scheme
and in the given case turnover is less than `1.5 crore so M/s Sai Trading Company
is eligible for composition scheme.

4.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

II. 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?
 No answer will remain same as limit for Jammu & Kashmir is also `1.5 crore.

PROBLEM:27 Mr. X is running a consulting firm and also a readymade garment

showroom in Kolkata registered in same PAN. Turnover of the showroom is `70
lakhs and receipt of consultancy firm is `15 lakhs in the preceding financial year.
You are required to answer the following:
1. Is Mr. X eligible for composition scheme?
2. Is it possible for Mr. X to opt for composition scheme only for showroom?

ANSWER:27 As per section 10, In the given case, total turnover is `70 lakhs
+ `15 lakhs = `85 lakhs and 10% is `8.5 lakhs, hence he is not eligible for
composition scheme
No it is not possible for firm to opt for composition scheme only for showroom if
firm is providing services also.

PROBLEM:28 Examine in relation to composition levy scheme under the CGST

Act, 2017 and the rules made thereunder in the following individual cases:
1. Ketu is a manufacturer of Ice-cream and pan masala in State of Maharashtra.
His turnover for the year does not exceed `1.5 Crore. He wants to register for
composition levy scheme. Is he eligible for it?
2. Jadhu of Gujarat opts for composition scheme during a financial year 2020-21. But
on 10-02-2021 his turnover crosses ` 1.5 Crore, can he continue under composition
levy scheme.
3. X Ltd. has 2 branches K & L in Delhi, having same PAN. Branch K opts for normal
scheme. X Ltd. want to continue composition levy in case of its branch L. Can X
Ltd. continue Composition levy only for Branch L?

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.29

 LEVY AND COLLECTON

ANSWER:28
1. A s per section 10, if a manufacturer is manufacturing Pan Masala and Ice-
cream then he is not eligible for composition scheme. In the given case, Ketu is
manufacturer of Ice-cream and pan masala hence he is not eligible for composition
scheme
2. As per rule 6, if a person crosses the threshold limit then he will be shifted
to normal scheme with immediate effect. Hence Jadhu cannot continue under
composition scheme.
3. If any person has opted for composition scheme for any place of business in any
state or union territory, shall be automatically covered in composition scheme
for all other places of business in any other State / UT i.e. same scheme will
be applicable for all registration with same PAN. Hence X Ltd. cannot opt for
composition scheme for its one branch.

PROBLEM:29 M/s. Ginny and John Company is a partnership firm of interior

decorators and also running a readymade garment showroom. Turnover of the
showroom was `80 lakh and Receipts of the interior decorators service was `22
Lakh in the preceding financial year. With reference to the provisions of the CGST
Act, 2017, examine whether the firm can opt for the composition scheme?
Will your answer change, if the turnover of the showroom was `70 lakh and
Receipts of the interior decorators service was `22 Lakh in the preceding financial
year?
Also discuss whether it is possible for M/s. Ginny and John Company to opt for
composition scheme only for Showroom?
ANSWER:29 As per section 10, a registered dealer whose aggregate turnover
in the preceding year is upto `1.5 crore may opt for composition scheme provided
he is not engaged in providing taxable supply of services except restaurant services.
In the given case Partnership firm is engaged in running a readymade garment

4.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

showroom and providing Interior decorators services along with the showroom. Since
firm is engaged in providing supply of services which is not a restaurant service
hence not eligible to opt for composition scheme.
No, Answer will remain same if a person providing services then not eligible for
composition scheme irrespective of the turnover.
No it is not possible for firm to opt for composition scheme only for showroom if
firm is providing services also.
Further it can opt for composition scheme for services under section 10(2A) if its
turnover is upto `50,00,000 but in the given case turnover is exceeding `50,00,000
hence it cannot opt for composition scheme of services.

PROBLEM:30 Zee Ltd. Is a manufacturing concern in PUNE. In financial Year

2020-21 total value of supplies including inward supplies taxed under reverse
charge basis is ` 1,53,60,000 The breakup of supplies are as follows-

Particulars `

1) Intra State Supplies made under forward charge 75,00,000

2) Intra State Supplies made which are chargeable to GST at Nil Rate 43,00,000
3) Intra State Supplies which are wholly exempt under section 11 of 32,00,000
CGST Act, 2017
4) Value of inward supplies on which tax payable under RCM 2,60,000
5) Value of exempt supply of services being interest earned on FD 1,00,000
with banks

Briefly explain whether Zee Ltd. Is eligible to opt for Composition scheme in
Financial Year 2021-22.
ANSWER:30

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.31

 LEVY AND COLLECTON

PROBLEM:31 True Ltd. A manufacturing concern in Mumbai having AT of

`120 Lakhs has opted for composition scheme furnishes you with the following
information for financial year 2021-22.

Particulars Rs.
1. Intra state supplies of goods X chargeable @5%GST 30,00,000
2. Intra state supplies made which are chargeable to GST at Nil rate 18,00,000
3. Intra state supply of services chargeable with 5% GST 6,00,000
4. Intra state supply which are wholly exempt under section 11 of 2,40,000
CGST Act 2017
5. Value of Inward supply on tax is paid on RCM 5,00,000
6. Interest earned on Fixed deposit 8,00,000
7. Intra state supply of Goods Y chargeable 18% GST 30,00,000
ALSO DETERMINE COMPOSITION TAX LIABILITY IF TRUE LIMITED
IS TRADER INSTEAD OF MANUFACTURERE.

ANSWER:31

PROBLEM:32 Mr. A, a retailer who keeps no inventories, presents the

following expected information for the year-
1. Purchase of goods: Rs.50 lakhs (GST@5%)
2. Sales (at fixed selling price inclusive of all taxes): Rs.60 lakhs (GST on sales @ 5%)
Discuss whether he should opt for composition scheme if composite tax is 1 % of
turnover.
Expenses of keeping detailed statutory records required under the GST Laws will
be Rs.120,000 p.a., the cost of maintaining fewer records shall cost Rs.50,000
under composition scheme. Other expenses are Rs.300,000 p.a. irrespective of the
method of paying tax.
ANSWER:32

4.32 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

PROBLEM:33 XYZ Ltd Is having two factories. One factory is located in Goa
is manufacturing readymade garments and another factory located in Kerala is
engaged in manufacture of auto components. The turnover details of financial
year 2020-21 are as under:

Particulars Rs.
1. Inter-state supply of readymade garments in Goa 28,00,000
2. Intra-state supply of auto-components in Kerala 18,00,000
Total value of taxable supplies 46,00,000

The company wants to opt for composition scheme for factory in Goa and tax
at normal rates in Kerala. Advice.
ANSWER:33

PROBLEM:34 Madhur traders, a trading concern, has opted for composition

scheme in FY 2020-21. It furnishes you the following details of supplies made for
the quarter ending 30th June 2020. You are required to determine composite tax
liability.

Particulars Rs.
(1) Intra-State taxable supply 28,00,000
(2) Intra-State exempt supply 18,00,000
Aggregate Turnover 46,00,000

ANSWER:34

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.33

 LEVY AND COLLECTON

PROBLEM:35 Chanchal started providing beauty and grooming services and

inaugurated “Care & Care Beauty Centre” in Janak Puri, Delhi on 01st April,
2021 She opted to pay tax under section 10(2A) in the said financial year. The
aggregate turnover of Care & Care Beauty Centre for the quarter ending 30th June,
2021 was ₹ 20 lakh. Further, for the half year ending 30th September, 2021, the
turnover reached ₹ 50 lakh. Care & Care Beauty Centre recorded a rapid growth
and the turnover reached ₹ 70 lakh by the end of October, 2021. Determine the
total tax liability of Care & Care Beauty Centre by the end of October, 2021.Note:
Rate of GST applicable on such services is 18%.
ANSWER:35

PROBLEM:36 Mr. CMA Ram is a practicing Cost Accountant in Patna (Bihar).

He commenced profession on 1st April 2019 and his annual turnover (intra-State)
of `70 lakh in the financial year 2019-20. Find the tax liability under composition
scheme ?
ANSWER:36

4.34 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

5. POWER TO GRANT EXEMPTION- SECTION 11

Meaning of Exempt Supply: Section 2(47) of CGST Act, 2017 provides that
“exempt supply” means supply of any goods or services or both which attracts nil
rate of tax or which may be wholly exempt from tax under section 11 of Central
Goods and Services Tax Act, or under section 6 of the Integrated Goods and Services
Tax Act, and includes non-taxable supply; Exempt supply includes the supply of
following type of goods and services:
I. Supply attracting nil rate of tax;
II. Supplies wholly exempt from tax;
III. Non-taxable supply;

 Governments offer exemptions which are based on goods and services consumed by
low income people, people living in disadvantaged regions and so on.
 Central Government has the power to grant exemption on goods and / or services
in the public interest generally or by special order.
 General exemption is granted by notification and is available to all persons. It
may be absolute or conditional. Such exemption may be total or partial.
 Specific, also known as ad hoc exemption is granted to persons under
circumstances of an exceptional nature by a special order communicated to
the party seeking exemption. Eg. charitable, educational, scientific, research,
defense purpose etc.
 Central Government also has the power to interpret by an explanation the provisions
of the notification or order at a later date but within one year which has retrospective
effect.

A, General Exemption [Section 11(1)] Where the Government is satisfied that it

is necessary in the public interest so to do, it may, on the recommendations of
the Council, by notification, exempt generally, either absolutely or subject to such

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.35

 LEVY AND COLLECTON

conditions as may be specified therein, goods or services or both of any specified

description from the whole or any part of the tax leviable thereon with effect from
such date as may be specified in such notification.

B. Exemption under circumstances of exceptional nature [Section 11(2)] Where

the Government is satisfied that it is necessary in the public interest so to do, it
may, on the recommendations of the Council, by special order in each case, under
circumstances of an exceptional nature to be stated in such order, exempt from
payment of tax any goods or services or both on which tax is leviable.

C. Power to clarify the scope or applicability of notification [Section 11(3)] The

Government may, if it considers necessary or expedient so to do for the purpose of
clarifying the scope or applicability of any notification issued under Section 11(1)
or order issued under Section 11(2), insert an explanation in such notification or
order, as the case may be, by notification at any time within one year of issue of
the notification under Section 11(1) or order under Section 11(2), and every such
explanation shall have effect as if it had always been the part of the first such
notification or order, as the case may be.

Explanation––For the purposes of this section, where an exemption in respect of

any goods or services or both from the whole or part of the tax leviable thereon
has been granted absolutely, the registered person supplying such goods or services
or both shall not collect the tax, in excess of the effective rate, on such supply
of goods or services or both.
An exemption may be conditional or absolute. When exemption has been granted
absolutely, i.e. it is not subjected to any condition or the happening of any event,
it is mandatory
Both the exemptions are granted in the public interest and both can be explained

4.36 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

within one year of issue by the government. All the exemptions are based on the
recommendations of the GST Council.
Section 6 of the IGST Act, 2017 also contains similar provisions and exemption
of IGST is granted on interstate supply.

D. DIFFERENCE BETWEEN GENERAL AND SPECIFICEXEMPTION-

E. COMPARISION

CGST Act, 2017 IGST Act, 2017 Provision

Section 11(1) Section 6(1) Power to grant exemption with the
Central Government by Notification.
• General exemption
• Absolute exemption
• Conditional exemption
Upon recommendation of the GST Council
Section 11(2) Section 6(2) Exemption by special order
Section 11(3) Section 6(3) Explanation in such notification issued
u/s 11(1) or 6(1) of CGST or IGST or
order issued u/s 11(2) or 6(2) of CGST
or IGST as the case may be.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.37

 LEVY AND COLLECTON

6. REVERSE CHARGE
1) “Reverse Charge” means the liability to pay tax by the recipient of supply of
goods or services or both instead of the supplier of such goods or services or
both u/s 9(3)/(4), or u/s 5(3)/(4) of the Integrated Goods and Services Tax Act.

2) Tax on Reverse Charge Basis – Specific categories of Persons [Sec.9(3)j: The

Government may, on the recommendations of the Council, by notification, specify
categories of supply of goods or services or both, the tax on which shall be paid
on reverse charge basis by the recipient of such goods or services or both.

3) SUPPLY OF CERTAIN GOODS AND SERVICES SPECIFIED BY CBIC [SECTION 9 (3)]

S.NO CATEGORY OF SUPPLY OF GOODS SUPPLIER RECEIPENT OF GOODS

1. Cashew nuts, not shelled or peeled AGRICULTURIST Any registered person

2. Bidi wrapper leaves AGRICULTURIST Any registered person

3. Silk yarn Any person who Any registered person

manufactures silk yarn from

raw silk or silk worm cocoons

for supply of silk yarn.

4. Tobacco leaves AGRICULTURIST Any registered person

5. Raw Cotton AGRICULTURIST Any registered person

6. Supply of Lottery SG/CG/LA Lottery distributor or

selling agent

7. Used vehicles, seized & confiscated CG/SG/UT/LA Any registered person

old and used goods, waste and scrap

8. Priority sector lending certificates ANY REGISTERED PERSON Any registered person

9.

10.

4.38 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

4) LIST OF SERVICES TAXABLE ON REVERSE CHARGE BASIS

SL. No. Category of Supply of Services Supplier of service Recipient of Service

1. Supply of Services by a Goods Goods Transport a) Any factory registered under

Transport Agency (GTA) in Agency (GTA) who or governed by the Factories

respect of transportation of has not paid CGST Act, 1948; or

goods by road to — @ 6% b) any society registered under

a) any factory registered under the Societies Registration Act,

or governed by the Factories 1860 or under any other law for

Act, 1948; or the time being in force in any

b) any society registered under part of India; or

the Societies Registration Act, c) any co-operative society

1860 or under any other law for established by or under any law;

the time being in force in any or

part of India; or d) any person registered under

c) any co-operative society the CGST Act or the IGST Act

established by or under any or the SGST Act or the UTGST

law; or Act; or

d) any person registered under e) anybody corporate established,

the CGST Act or the IGST Act by or under any law; or

or the SGST Act or the UTGST f) any partnership firm whether

Act; or registered or not under any law

e) anybody corporate established, including association of persons;

by or under any law; or or

f) any partnership firm whether g) any casual taxable person;

registered or not under any located in the taxable territory.

law including association of

persons; or

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.39

 LEVY AND COLLECTON

g) any casual taxable person.

RCM not applicable if

recipient registered only

for TDS: However, nothing

contained in this entry shall

apply to services provided by

a goods transport agency, by

way of transport of goods in a

goods carriage by road, to, —

a) a Department or Establishment

of the Central Government or

State Government or Union

territory; or

b) local authority; or

c) Governmental agencies,

which has taken registration

under the CGST Act, 2017 only

for the purpose of deducting

tax u/s 51 and not for making

a taxable supply of goods or

services.

2. Services provided by an An individual advocate Any business entity located in

individual advocate including including a senior the taxable territory.

a senior advocate or firm advocate or firm of Business entity being

of advocates by way of legal advocates. Litigant, applicant or

services, directly or indirectly. petitioner located in Taxable

territory - Deemed Recipient:

4.40 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

“Legal service” means any The business entity located in

service provided in relation the taxable territory who is

to advice, consultancy or litigant, applicant or petitioner,

assistance in any branch of as the case may be, shall be

law, in any manner and includes treated as the person who

representational services before receives the legal services for

any court, tribunal or authority. the purpose of this notification.

3. Services supplied by an arbitral An arbitral tribunal. Any business entity located in

tribunal to a business entity the taxable territory.

4. Services provided by way Any person Anybody corporate or

of sponsorship to anybody partnership firm located in the

corporate or partnership firm. taxable territory

5. Services supplied by the Central Government, Any business entity located in

Central Government, State State Government, the taxable territory.

Government, Union territory or Union territory or

local authority to a business local authority

entity excluding, —

1) renting of immovable

property, and

2) services specified below—

I. 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 Central

Government, State Government or

Union territory or local authority;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.41

 LEVY AND COLLECTON

II. services in relation to an

aircraft or a vessel, inside or

outside the precincts of a port

or an airport;

III. transport of goods or

passengers.

Renting of immovable

property” means allowing,

permitting or granting access,

entry, occupation, use or any

such facility, wholly or partly,

in an immovable property,

with or without the transfer

of possession or control of

the said immovable property

and includes letting, leasing,

licensing or other similar

arrangements in respect of IP.

5A. Services supplied by the CG/SG/UT/LA Any person registered under

Central Government, State the CGST Act, 2017.

Government, Union territory

or local authority by way of

renting of immovable property

to a person registered under

the CGST Act, 2017.

4.42 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

5B. Services supplied by any Any person Promoter

person by way of transfer of

development rights or Floor

Space Index (FSI) (including

additional FSI) for construction

of a project by a promoter.

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

years or more) by any person

against consideration in the

form of upfront amount (called

as premium, salami, cost, price,

development charges or by any

other name) and/or periodic

rent for construction of a

project by a promoter.

6. Services supplied by a director A director of a The company or a body

of a company or a body company or a body corporate located in the taxable

corporate to the said company corporate territory.

or the body corporate.

7. Services supplied by an An insurance agent Any person carrying on

insurance agent to any person insurance business, located in

carrying on insurance business. the taxable territory.

“Insurance agent” means an

insurance agent licensed u/s

42 of the Insurance Act, 1938

who receives agrees to receive

payment by way of commission

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.43

 LEVY AND COLLECTON

or other remuneration in

consideration of his soliciting

or procuring insurance business

including business relating to

the continuance, renewal or

revival of policies of insurance

[Section 2(10) of the Insurance

Act, 1938],

8. Services supplied by a recovery A recovery agent A banking company or a

agent to a banking company or financial institution or a non-

a financial institution or a non- banking financial company,

banking financial company. located in the taxable territory.

9. Supply of services by a music Music composer, Music company, producer

composer, photographer, p h o t o g r a p h e r , or the like, located in the

artist or the like by way of artist, or the like taxable territory.

transfer or permitting the use

or enjoyment of a copyright

covered u/s 13(1)(a) of the

Copyright Act, 1957 relating

to original dramatic, musical

or artistic works to a music

company, producer or the like

4.44 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

9A. Supply of services by an Author Publisher located in the taxable

author by way of transfer territory: However, nothing

or permitting the use or contained in this entry shall

enjoyment of a copyright apply where, -

covered under Section 13(1) I. the author has taken

(a) of the Copyright Act, 1957 registration under the CGST Act,

relating to original literary 2017, and filed a declaration, in

works to a publisher. the specified form before the

commencement of financial

year with the jurisdictional

CGST or SGST commissioner,

as the case may be, that he

exercises the option to pay

central tax on such services in

accordance with Section 9(1)

of the CGST Act, 2017 under

forward charge, and to comply

with all the provisions of CGST

Act, 2017 as they apply to a

person liable for paying the tax

in relation to the supply of any

goods or services or both and

that he shall not withdraw

the said option within a period

of 1 year from the date of

exercising such option;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.45

 LEVY AND COLLECTON

II. the author makes a

declaration regarding payment

of tax on forward charge on the

invoice issued by him in Form

GST Inv-I to the publisher.

10. Supply of services by the Members of Overseeing RBI

members of Overseeing Committee constituted

Committee to RBI by the RBI

11. Services supplied by individual Individual Direct A banking company or a non-

Direct Selling Agents (DSAs) other Selling Agents (DSAs) banking financial company,

than a body corporate, partnership other than a body located in the taxable territory.

or limited liability partnership firm corporate, partnership

to bank or non-banking financial or limited liability

company (NBFCs) partnership firm

12. Services provided by business Business facilitator A banking company, located in

facilitator (BF) to a banking (BF) the taxable territory.

company

13. Services provided by an agent of An agent of business A business correspondent,

business correspondent (BC) to correspondent located in the taxable territory

business correspondent (BC)

14. Security services (services Any person other A registered person, located in

provided by way of supply of than a body corporate the taxable territory.

security personnel) provided to

a registered person.

RCM not applicable if recipient

registered only for TDS and in

case composition suppliers:

4.46 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

However, nothing contained in

this entry shall apply to, —

(i) (a) a Department

or Establishment of the

Central Government or State

Government or UT; or

(b) local authority; or

(c) Governmental agencies,

which has taken registration

under the CGST Act, 2017 only

for the purpose of deducting

tax u/s 51 of the said Act and

not for making a taxable supply

of goods or services; or

(ii) a registered person paying tax

under section 10 of the said Act

15. Services provided by way of Any person other Anybody corporate located

renting of any motor vehicle than a body in the taxable territory

designed to carry passengers corporate, who

where cost of fuel is included supplies the service

in the consideration charged to body corporate

from recipient provided to a and does not issue

body corporate an invoice charging

CGST @ 6% ( 12%

= CGST + SGST) to

the service recipient.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.47

 LEVY AND COLLECTON

16. Services of lending of Lender i.e. a person Borrower i.e. a person who

securities under Securities who deposits the borrows the securities under

Lending Scheme, 1997 securities registered the Scheme through an

(“Scheme”) of SEBI as in his name or approved intermediary of

amended. in the name of SEBI.

any other person

duly authorised

on his behalf

with an approved

intermediary for the

purpose of lending

under the Scheme

of SEBI

4.48 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

5) FOLLOWING TWO SERVICES ARE ADDITIONALLY INCLUDED FOR IGST-

SL. No. Category of supply of service Supplier of service Recipient of Service

1. Any service supplied by any Any person located Any person located in the

person who is located in a in a non- taxable taxable territory other than

non-taxable territory to any territory non-taxable online recipient.

person other than non-taxable

online recipient.

2. Services supplied by a A person located in Importer, as defined in Section

person located in non- non-taxable territory 2(26) of the Customs Act, 1962,

taxable territory by way of located in the taxable territory.

transportation of goods by Importer, in relation to any

a vessel from a place outside goods at any time between

India up to the customs station their importation and the time

of clearance in India. when they are cleared for home

consumption, includes any

owner, beneficial owner or any

person holding himself out to

be the importer [Section 2(26)

of the Customs Act, 1962].

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.49

 LEVY AND COLLECTON

POINT TO BE NOTED-
1) RCM IN CASE OF RENTING OF MOTOR VEHICLE-

S.NO SUPPLIER OF RECEIPENT GST RATE RCM PERSON NOTE

SERVICE LIABLE TO

PAY GST

1) BC ANY 12% NO SUPPLIER ITC

RECIPENT AVAILABLE

2) BC ANY 5% NO SUPPLIER RESTRICTED

RECIPENT ITC

3) OTHER THAN BC BC 12% NO SUPPLIER ITC

AVAILABLE

4) OTHER THAN BC BC 5% YES RECEIPENT NA

5) OTHER THAN BC OTHER 12% NO SUPPLIER ITC

THAN BC AVAILABLE

6) OTHER THAN BC OTHER 5% NO SUPPLIER RESTRICTED

THAN BC ITC

4.50 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

7. REAL ESTATE SECTOR

 Earlier, the effective rate of GST on real estate sector was 8%/12% with ITC. With
effect from 01-04-2019, the effective rates of GST for the new projects have been
brought down to a large extent.
 However, the promoters/builders have been given a one-time option to continue
to pay tax at the old rates on ongoing projects (buildings where construction
and actual booking both have started before 01-04-2019) which have not been
completed by 31-03-2019.
New effective rates of GST for the new projects by promoters are as follows:
I. New rate of 1% without ITC on construction of affordable houses (area 60 sqm
in metros/ 90 sqm in non-metros and value up to ` 45 lakh).
II. New rate of 5% without ITC shall be 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
(RREP) in which the carpet area of commercial apartments is not more than 15%
of total carpet area of all apartments.
Conditions:
Above tax rates shall be available subject to following conditions :
a. Input tax credit shall not be available.
b. 80% of inputs and input services [other than 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], used in supplying the service shall be
purchased from registered persons.
However, if value of inputs and input services purchased from registered supplier is
less than 80%, promoter has to pay GST on reverse charge basis, under section
9(4) of the CGST Act, at the rate of 18% on all such inward supplies (to the
extent short of 80% of the inward supplies from registered supplier).

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.51

 LEVY AND COLLECTON

Further, where cement is received from an unregistered person, the promoter shall
pay tax on supply of such cement on reverse charge basis, under section 9(4) of
the CGST Act, at the applicable rate which is 28% (CGST 14% + SGST14%) at
present.
Moreover, GST on capital goods shall be paid by the promoter on reverse charge
basis, under section 9(4) of the CGST Act at the applicable rates. * 1

4.52 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LEVY AND COLLECTON

8. IMPORTANT POINTS

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 4.53

 LEVY AND COLLECTON

4.54 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 5 | TIME & VALUE OF SUPPLY

1. INTRODUCTION-
1) GST is payable on supply of goods or services.
2) A supply consists of elements that can be separated in time, like purchase order /
agreement, dispatch (of goods), delivery (of goods) or provision or performance of
service, entry in the records, payment, and entry of the payment in the records or
deposit in the bank. So, at which of these points of time does GST become payable?
3) Does it become payable when an agreement to supply goods or services is made,
or when the goods are shipped or the services are provided, or when the invoice is
issued or when payment is made?
4) What if the goods are shipped over a period of time?
5) What if the service is provided over a period of time?

Provisions relating to ‘time of supply’ provide answer to all such and other questions
that arise on the timing of the liability to pay CGST and SGST/UTGST (intra-State
supply) and IGST (inter-State supply) as time of supply fixes the point in time
when the liability to pay tax arises.

2. TIME OF SUPPLY
 The time of supply fixes the point when the liability to charge GST arises.
 It also indicates when a supply is deemed to have been made.
 The CGST/SGST Act provides separate time of supply for goods and services.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.1

 TIME & VALUE OF SUPPLY

3. TAX INVOICE- SECTION 31

1) A registered person supplying taxable goods shall, before or at the time of,—
a. Removal of goods for supply to the recipient, where the supply involves movement
of goods; or
b. Delivery of goods or making available thereof to the recipient, in any other case,
 Issue a tax invoice showing the description, quantity and value of goods, the tax
charged thereon and such other particulars as may be prescribed:
 Provided that the Government may, on the recommendations of the Council, by
notification, specify the categories of goods or supplies in respect of which a tax
invoice shall be issued, within such time and in such manner as may be prescribed.

CASE-1 XYZ traders, Rajasthan supplies goods to PQR Agencies, Delhi. The
goods were removed from its godown in Rajasthan on 25th October. XYZ traders
needs to issue a tax invoice on or before 25th October.

PROBLEM:1 S Industries Ltd., Delhi, entered a contract with G Entrepreneurs,

Delhi, for supply of parts of a machine on 10th September 2020. The spare parts
were to be delivered on 30th September 2020. S Industries Ltd. removed the
finished spare parts from its factory on 29th September 2020. Determine the date
by which invoice must be issued by S Industries Ltd. under GST law.
ANSWER:1 As per the provisions of Section 31, invoice shall be issued before or at
the time of removal of goods for supply to the recipient, where the supply involves
movement of goods. Accordingly, in the given case, the invoice must be issued on
or before 29th September 2020.

5.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

2) IN CASE OF CONTINUOUS SUPPLY of goods, where successive statements of accounts

or successive payments are involved, the invoice shall be issued before or at the time
each such statement is issued or, as the case may be, each such payment is received.

 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;

3) GOODS SENT ON APPROVAL- where the goods being sent or taken on approval for
sale or return are removed before the supply takes place, the invoice shall be issued
I. before or at the time of supply or
II. six months from the date of removal, whichever is earlier.
Explanation. ––For the purposes of this section, the expression “tax invoice” shall
include any revised invoice issued by the supplier in respect of a supply made earlier

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.3

 TIME & VALUE OF SUPPLY

4. TIME OF SUPPLY OF GOODS- SECTION 12

 TIME OF SUPPLY OF GOODS- SECTION 12
1) The liability to pay tax on goods shall arise at the time of supply as determined
in accordance with the provisions of this section.
2) TIME OF SUPPLY OF GOODS – FORWARD CHARGE I.E. NORMAL SUPPLY OF
GOODS- Earliest of three
a. date of issue of invoice
b. last date when invoice is required to be issued (sec 31)
c. receipt of payment

POINT TO BE NOTED-
I. Excess amount received is up to Rs. 1000 in excess to the amount indicated
in tax invoice
 (at the option of supplier)-date of issue of invoice (with respect to such excess
amount)

II. Exemption to all taxpayers from payment of tax on advances received in case
of supply of goods - Tax on ’supply of goods’ is to be paid on ‘invoice basis
and receipt basis is not applicable. Notification No. 66/2017-CT dated 15-11-
2017

III. In simple words, all taxpayers (except composition suppliers) are exempted from
paying GST at the time of receipt of advance in relation to supply of goods. The
entire GST shall be payable only when the invoice for the supply of such goods is
issued or ought to have been issued.

IV. A composition supplier has to pay, in lieu of tax payable by him, an amount
calculated at the prescribed rate applied on his turnover in the State/Union

5.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

Territory for a quarter. Therefore, the composition supplier is not required to pay any
tax on advance received as the same does not form part of taxable supplies and, in
turn, also does not form part of the turnover in a State/Union Territory at the end
of the quarter (tax period).

3) REVERSE CHARGE BASIS (SUB SECTION 3)- (EARLIEST OF THE THREE)

a. the date of the receipt of goods
b. the date of payment as entered in the books of account or payment is debited in
his bank account, whichever is earlier
c. the date immediately following thirty days from the date of issue of invoice or any
other document
Note- If time of supply cannot be determined as above- TOS shall be date of
entry in books of account of the recipient of supply.

4) Time of supply in case of supply of vouchers in respect of goods. -

a. the date of issue of voucher, if the supply is identifiable at that point or
b. the date of redemption of voucher, in all other cases

5) TOS in residuary case- Due date of return or date of payment of tax.

6) Special charges like interest, late fee etc. -TOS is date of receipt of additional
amount.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.5

 TIME & VALUE OF SUPPLY

PROBLEM:1 Determine the Time of supply in each of the following

independent cases in accordance with provisions of Section 12 of the CGST
Act, 2017 in case supply involves movement of goods.

S.No. Date of Date of Date when goods made Date of receipt

Removal invoice available to recipient of payment
1. 01-10-2020 02-10-2020 03-10-2020 15-11-2020
2. 03-10-2020 01-10-2020 04-10-2020 25-11-2020
3. 04-11-2020 04-11-2020 06-11-2020 01-10-2020

ANSWER:1

PROBLEM:2 From the following information determine the time of supply

of goods where supply involves movement of goods:

S.No. Invoice Removal of Delivery of Receipt of Other information

document goods goods payment

date

1. 16-11-2020 10-11-2020 16-11-2020 16-11-2020

2. 01-11-2020 10-11-2020 16-11-2020 - Supply is on account of Inter-

State stock transfer.

3. 01-12-2020 01-12-2020 04-12-2020 20-11-2020 ` 5,00,000 is received as advance

10-12-2020 and invoice for the whole amount

is issued on the same day. Balance

payment ` 6,20,000 is received on

10-12-2020.

ANSWER:2

5.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:3 Determine the Time of supply in each of following independent

cases in accordance with provisions of Section 12 of the CGST Act, 2017 in case
supply does not involve movement of goods.

SI. No. Date of invoice Date when goods made available Date of receipt of
to recipient payment
1. 02-10-2020 03-10-2020 15-11-2020
2. 04-10-2020 01-10-2020 25-11-2020
3. 04-11-2020 06-11-2020 01-10-2020

ANSWER:3

PROBLEM:4 From the following information determine the time of supply if

there is continuous supply of goods:

S.No. Invoice date Removal of goods Statement of Receipt of

accounts payment
1. 01-12-2020 15-11-2020 05-12-2020 02-12-2020
25-11-2020
2. 21-01-2021 18-01-2021 05-01-2021 10-02-2021
31-01-2021

ANSWER:4

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.7

 TIME & VALUE OF SUPPLY

PROBLEM:5 A supplier delivers consignments of bricks on a continuous

supply basis to various contractors. With respect to one of the supplies, the
following details are available:

Invoice Date Statement of Receipt of Time of Supply

Account (Due Date) Payment Date
1st November 5th November 1st November
11th December 5th December 11th December
1st January 5th January 1st January

ANSWER:5

PROBLEM:6 From the following information determine the time of supply

if goods are supplied on approval basis:

S.No. Removal of Issue of invoice Accepted by Receipt of

goods recipient payment
1. 01-12-2020 15-12-2020 05-12-2020 25-12-2020
2. 01-12-2020 25-07-2021 25-07-2021 20-07-2021

ANSWER:6

PROBLEM:7 M/s AB Oil Corporation entered a contract with Mr. B to supply of oil
throughout the year. M/s AB Oil Corporation issues monthly statement for the oil
supplied to Mr. B. Determine the time of supply of goods in following independent cases:
I. Mr. B made payment for the month of July on 31st July 2020 and M/s AB Oil
Corporation issued statement for the month of July on 8th August 2020.
II. M/s AB Oil Corporation issued statement for the month of August on 5th September
2020, the payment of which not received till 30th September 2020
ANSWER:7

5.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

I. 31st July 2020will be the time of supply.

Earliest of the following:
 Date of Invoice: 8th August 2020
 Last date on which invoice has to be issued:
Date of payment (31.07.2020) or statement (08.08.2020), whichever is earlier i.e.
31st July 2020.

II. 5th September 2020 will be the time of supply. Earliest of the following:
 Date of Invoice: 5th September 2020.
 Last date on which invoice has to be issued:
Date of payment (not known) or statement (05.09.2020),
whichever is earlier i.e. 5th September 2020.

PROBLEM:8 Determine the Time of supply in each of following independent

cases in accordance with provisions of Section 12 of the CGST Act, 2017 in case
recipient of goods is liable to pay tax under reverse charge mechanism.

SI. No. Date of Date of Date of Date when payment

invoice receipt of payment in debited in bank
goods books account
1. 01-10-2020 05-10-2020 10-10-2020 12-10-2020
2. 01-10-2020 15-10-2020 10-10-2020 12-10-2020
3. 01-10-2020 15-10-2020 12-10-2020 10-10-2020
4. 01-10-2020 15-11-2020 18-11-2020 20-11-2020

ANSWER:8

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.9

 TIME & VALUE OF SUPPLY

PROBLEM:9 Determine the time of supply from the given information.

04-05-2020 Supplier invoices goods taxable on reverse charge basis to Bridge &
Co. (30 days from the date of issuance of invoice elapse on June 3)
12-05-2020 Bridge & Co receives the goods
30-05-2020 Bridge & Co makes the payment

ANSWER:9 Here, 12-05-2020 will be the time of supply, being the earliest of
the three stipulated dates namely, receipt of goods, date of payment and date
immediately following 30 days of issuance of invoice [Section 12(3)]. (Here, date
of invoice is relevant only for calculating 30 days from that date.)

PROBLEM:10 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 3 Payment made for the goods
ANSWER:10 June 4, 31st day from the date of supplier’s invoice, will be the
time of supply, being the earliest of the three stipulated dates namely, receipt of
goods, date of payment and date immediately following 30 days of issuance of
invoice [Section 12(3)].

PROBLEM:11 Seema is an unregistered trader and supplies the goods to a

registered recipient on 1st Feb 2020. The goods were received by Vir at his factory
on 28th February, 2020. The invoice was issued on 15th February, 2020 and the
payment was made on 5th March, 2020. Advise on the time of supply.

5.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

ANSWER:11 As the transaction stated above exhibits “reverse charge mechanism”,

supplier i.e. Seema being unregistered, the time of supply would be the earliest of:
a) Date of receipt of goods: in this case, 28th February, 2020
b) 30 days from date of invoice: in this case, 16th March, 2020
c) Date of payment: in this case 5th March, 2020
Hence the time of supply would be 28th February, 2020.

PROBLEM:12 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 goods
worth` 12 lakh and entry duly 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
4th November Balance payment of ` 11,50,000 received
Determine the time of supply(ies) in the above scenario.
ANSWER:12 As per Notification No. 66/2017 CT dated 15.11.2017, a registered
person (excluding composition supplier) has to pay GST on the outward supply of
goods at the time of supply as specified in section 12(2)(a) i.e., date of issue
of invoice or the last date on which invoice ought to have been issued in terms
of section 31.Therefore, the time of supply of goods for the entire amount of `
12,00,000 is 20th October which is the date on which the goods were made available
to the recipient as per section 31(1)(b), and the invoice should have been issued on
this date [Section 12(2)(a)].

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.11

 TIME & VALUE OF SUPPLY

PROBLEM:13 Company X receives an advance of ` 50,000 on 30th April, against

which it dispatches goods worth ` 49,200 under invoice dated 5th May.
ANSWER:13 Company X has received ` 800 in excess, which cannot be
considered as payment for the present invoice, in terms of Explanation 1 to section
12(2). Company X will adjust this excess amount against the next supply. The
time of supply for ` 800 can be taken as the date of the next invoice if the
supplier so chooses, though the payment was received earlier.

PROBLEM:14 ABC Ltd. enters in to an arrangement with “Hush Puppies”,

buys the vouchers, these vouchers were issued on 14th December, 2020. The
Company then distributes these vouchers with denomination INR 4,000/- to all
its employees on 24th December, 2020 valid until 31st January, 2021, so that they
can use these vouchers for buying shoes of their choice. The employees make the
most of it and redeem these vouchers on the New Year’s, i.e., on 1st January, 2021.
ANSWER:14 In this case, the supply is identifiable at the point of issue of
the voucher and hence the time of supply would be construed as 14th December,
2020.

PROBLEM:15 Nisha buys a voucher from Shoppers Stop for INR 10,000 and
gifts it to Tarun on 14th February. The voucher was valid until 29th February. Tarun
redeems the vouchers at the nearby Shoppers Stop store on 29th February.
ANSWER:15 In this case, the supply was not identifiable at the point of issue
of the voucher as Tarun was open to purchase anything from Shoppers’ Stop,
therefore the time of supply would be construed as the date of redemption of the
voucher, that is 29th February.

5.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:16 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.
ANSWER:16 As the supply against which the coupon will be redeemed is not
known on the date of the sale of the coupon, the time of supply of the coupon will
be the date on which the employee redeems it against food / provision items of his
choice.

PROBLEM:17 With each purchase of a large pizza during the Christmas week
from Perfect Pizza, one can buy a voucher for ` 20 which will be redeemable till 5
Jan for a small pizza.
ANSWER:17 As the supply against which the voucher will be redeemed is known
on the date of the sale, the time of supply is the date of issue of the voucher.

PROBLEM:18 MNO Ltd. Has purchased for its directors 10 vouchers dated
14/01/2020 worth Rs.5,000 each from PQR Ltd., a footwear manufacturing company.
The vouchers were issued by PQR Ltd. On 25/02/2020. The vouchers can be
encashed at retail outlets of PQR Ltd. The directors of MNO Ltd. Encashed the
same on 05-01-2021. Determine time of supply of vouchers.
ANSWER:18 In case of vouchers by a supplier, the time of supply shall be the
date of issue of voucher, if the supply is identifiable at that point. In this case the
supply of goods i.e. footwear is identifiable with the voucher, hence time of supply
shall be the date of issue of such vouchers by PQR Ltd. i.e. 25/02/2020.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.13

 TIME & VALUE OF SUPPLY

PROBLEM:19 Ms. Shobha purchased a gift voucher from central (a departmental

store) RS.500 on 30/11/2020 and gifted it to her friend occasion of her birthday
on 05/06/2021. Her friend encashed the same on 06/06/2021 for purchase of a
handbag. Determine the time of supply.
ANSWER:19 In case of supply of vouchers by a supplier, the time of supply
shall be the date of redemption of voucher, if the supply is not identifiable at the
time of issue of voucher. In this case, since the supply is not identified at the time
of issue of voucher. The holder of voucher can purchase anything from central.
Hence, time of supply is date of redemption of voucher i.e., the date of purchase
of goods by holder of voucher i.e. 06/06/2021.

PROBLEM:20 XYZ Ltd. has purchased for its customers 100 vouchers dated
24- 12-2020 worth ` 1,000 each from ABC Ltd., a footwear manufacturing
company. The vouchers were issued by ABC Ltd. on 25-12-2020. The vouchers can
be encashed at retail outlets of ABC Ltd. The employees of XYZ Ltd. encashed
the same on 01-01-2021. Determine time of supply of vouchers.
ANSWER:20 In case of supply of vouchers by a supplier, the time of supply
shall be the date of issue of voucher, if the supply is identifiable at that point. In
this case the supply of goods i.e. footwear is identifiable with the voucher, hence
time of supply shall be the date of issue of such vouchers by ABC Ltd. i.e. 25-
12-2020.

PROBLEM:21 Tasty food meal coupons are sold to a company on 25- 08-2020
for being distributed to the employees of the said company. The coupons are valid
for 6 months and can be used against purchase of food items. The employees use
them in various stores for purchases of various edible items on different dates
throughout the 6 months. What is the date of supply of the coupons?
ANSWER:21 As the coupons can be used for a variety of food items, which

5.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

are taxed at different rates, the supply cannot be identified at the time of purchase
of the coupons. Therefore, the time of supply of the coupons is the date of the
redemption in terms of Section 12(4).

PROBLEM:22 Mr. X, a registered supplier supplied certain goods to Mr. Y on 6

months credit with a penalty clause in the agreement levying a penalty of 5% of
the invoice value in case of delayed payment. The invoice was dated 01-11-2020.
Mr. Y could not make the payment on the due date due to unavoidable reasons.
He however made the payment of the invoice value on 05-05-2021. Mr. X raised a
debit note for the penalty amount. There being dispute on this, the matter was in
arbitration which was finally resolved with Mr. Y agreeing to pay half of the penalty
amount. The amount was paid by Mr. Y on 12-12-2021. Determine the Time of
Supply in light of the GST law.
ANSWER:22 With respect to the goods supplied, the Time of Supply shall be the
invoice date (assuming the delivery of goods on the date of invoice) i.e., 01-11-2020.
With respect to the penalty amount the TOS shall be the date of payment by Mr.
Y towards the penalty charge i.e., 12-12-2021 [as per Section 12(6)].

PROBLEM:23 Mr. X purchased certain goods from M/s. ABC a registered supplier
on 15-11-2020 worth ` 15,750. He made a payment of ` 16,000 with an instruction
to adjust the excess payment against future purchases, and hence the same was
adjusted by the supplier against his future purchase made on 01-01-2021 (invoice
issued on same date). Determine the tax implications with regard to such excess
payment in light of the GST law.
ANSWER:23
I. As per the proviso to Section 12(2) of the CGST Act, 2017, where the supplier of
taxable goods receives an amount up to ` 1,000 in excess of the amount indicated
in the tax invoice, the time of supply to the extent of such excess amount shall, at

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.15

 TIME & VALUE OF SUPPLY

the option of the said supplier, be the date of issue of invoice in respect of such
excess amount.
II. Hence, in the given case, the time of supply with respect to the excess amount of
` 250, shall be 01-01-2021 when invoice relating to next supply is raised.

5.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

5. TIME OF SUPPLY OF SERVICES –SECTION 13

1) The liability to pay tax on services shall arise at the time of supply, as determined
in accordance with the provisions of this section.
2) The time of supply of services shall be the earliest of the following dates,
namely: —
a. If Invoice issued within 30/45 days-The date of issue of invoice by the supplier, if
the invoice is issued within the period prescribed under sub-section (2) of section
31 or the date of receipt of payment, whichever is earlier.
b. If Invoice not Issued within 30/45 days -The date of provision of service, if the
invoice is not issued within the period prescribed under sub-section (2) of section
31 or the date of receipt of payment, whichever is earlier; or
c. The date on which the recipient shows the receipt of services in his books of
account, in a case where the provisions of clause (a) or clause (b) do not apply:
Provided that where the supplier of taxable service receives an amount up to
one thousand rupees in excess of the amount indicated in the tax invoice, the
time of supply to the extent of such excess amount shall, at the option of the
said supplier, be the date of issue of invoice relating to such excess amount.
Explanation. ––For the purposes of clauses (a) and (b)––
I. The supply shall be deemed to have been made to the extent it is covered by the
invoice or, as the case may be, the payment.
II. “The date of receipt of payment” shall be the date on which the payment is
entered in the books of account of the supplier or the date on which the payment
is credited to his bank account, whichever is earlier.
3) In case of supplies in respect of which tax is paid or liable to be paid on reverse
charge basis, the time of supply shall be the earlier of the following dates,
namely: ––
a. the date of payment as entered in the books of account of the recipient or the date
on which the payment is debited in his bank account, whichever is earlier; or

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.17

 TIME & VALUE OF SUPPLY

b. the date immediately following sixty days from the date of issue of invoice or any
other document, by whatever name called, in lieu thereof by the supplier:

Provided that where it is not possible to determine the time of supply under
clause (a) or clause (b), the time of supply shall be the date of entry in the
books of account of the recipient of supply:

Provided further that in case of supply by associated enterprises, where the

supplier of service is located outside India, the time of supply shall be the
date of entry in the books of account of the recipient of supply or the date
of payment, whichever is earlier.

4) In case of supply of vouchers by a supplier, the time of supply shall be––

a. the date of issue of voucher, if the supply is identifiable at that point; or
b. The date of redemption of voucher, in all other cases.

5) Where it is not possible to determine the time of supply under the provisions of
sub- section (2) or sub-section (3) or sub-section (4), the time of supply shall––
a. in a case where a periodical return has to be filed, be 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) The time of supply to the extent it relates to an addition in the value of

supply by way of interest, late fee or penalty for delayed payment of any
consideration shall be the date on which the supplier receives such addition
in value.

5.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

POINT TO BE NOTED- SPECIAL PROVISION- TOS in case of TDR, FSI and long
term lease for construction of residential commercial apartments - TOS shall
arise on shall arise on the date of issuance of completion certificate or on its
first occupation, whichever is earlier.
The Central Government, on the recommendations of the Council, hereby notifies
the following classes of registered persons, namely: -
I. A promoter who receives development rights or Floor Space Index (FSI) (including
additional FSI) on or after 1st April, 2019 for construction of a project against consideration
payable or paid by him, wholly or partly, in the form of construction service of commercial
or residential apartments in the project or in any other form including in cash;
II. A promoter, who receives long term lease of land on or after 01-04-2019 for
construction of residential apartments in a project against consideration payable or
paid by him, in the form of upfront amount (called as premium, salami, cost, price,
development charges or by any other name), as the registered persons in whose
case the liability to pay central tax on, —
a. The consideration paid by him in the form of construction service of commercial
or residential apartments in the project, for supply of development rights or FSI
(including additional FSI);
b. The monetary consideration paid by him, for supply of development rights or FSI
(including additional FSI) relatable to construction of residential apartments in
project.
c. The upfront amount (called as premium, salami, cost, price, development charges or
by any other name) paid by him for long term lease of land relatable to construction
of residential apartments in the project; and
d. The supply of construction service by him against consideration in the form of
development rights or FSI (including additional FSI), shall arise on the date of
issuance of completion certificate for the project, where required, by the competent
authority or on its first occupation, whichever is earlier.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.19

 TIME & VALUE OF SUPPLY

PROBLEM:24 Determine the time of supply in each of the following

independent cases in accordance with provisions of CGST Act, 2017:

Case Date of actual Time (date) of invoice, bill or Date on receipt of

provision of service challan as the case may be payment
1. 10/11/2020 30/11/2020 15/12/2020
2. 10/11/2020 30/11/2020 15/01/2020
3. 10/11/2020 30/11/2020 15/11/2020 (PART) and
10/12/2020 (Remaining)
4. 10/11/2020 30/11/2020 06/11/2020 (part) and
09/11/2020 (remaining)
5. 10/11/2020 30/11/2020 06/11/2020 (Part) and
16/11/2020 (remaining)
6. 10/11/2020 12/12/2020 30/04/2020
7. 10/11/2020 12/12/2020 05/11/2020 (part) and
25/12/2019 (remaining)
8. 10/11/2020 22/12/2020 12/12/2020

ANSWER:24

PROBLEM:25 From the following information determine the time of supply

of services. The supply is a continuous supply of service where contract
provides for monthly payment upto 15th of the succeeding month.

Date of provision Invoice date Due date of payment Receipt of

of services as per contract payment
30/11/2020 07/12/2020 15/12/2020 20/12/2020
31/12/2020 22/01/2021 15/01/2021 20/01/2021
31/01/2021 15/02/2021 15/02/2021 11/02/2021
ANSWER:25

5.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:26 Determine the time of supply from the following particulars:

6th May Booking of convention hall, sum agreed ` 15000, advance of ` 3000 received
15th September Function held in convention hall
27th October Invoice issued for ` 15000, indicating balance of `12000payable
3rd November Balance payment of ` 12000 received
ANSWER:26 As per section 31 read with rule 47 of CGST Rules, the tax invoice
is to be issued within 30 days of supply of service. In the given case, the invoice
is not issued within the prescribed time limit. As per section 13(2)(b), in a case
where the invoice is not issued within the prescribed time, the time of supply of
service is the date of provision of service or receipt of payment, whichever is earlier.
Therefore, the time of supply of service to the extent of ` 3,000 is 6th May as the
date of payment of ` 3000 is earlier than the date of provision of service. The time
of supply of service to the extent of the balance ` 12,000 is 15th September which
is the date of provision of service

PROBLEM:27 Determine the time of supply from the following particulars:

15th October-The marriage hall was fixed and the advance of INR 25000 was paid
(amount agreed was INR 100,000)
30th November-The marriage ceremony took place in the hall
14th December-The invoice was issued for balance INR 75000 indicating & adjusting
the advance paid earlier
31st December The balance payment was received
In the above case, the invoice was issued within the prescribed time (that is within
30 days of the event)
ANSWER:27 The date of invoice: which is 14th December andThe date of receipt
of payment: which is 31st December Therefore, for the amount of INR 75000, the time
of supply would be 14th December. For the advance of INR 25000, the date of payment
precedes the invoice and hence the time of supply for that amount would be 15th October

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.21

 TIME & VALUE OF SUPPLY

PROBLEM:28 A telephone company receives ` 5000 against an invoice of `

4800. The excess amount of ` 200 can be adjusted against the next invoice. The
company has the option to take the date of the next invoice as the time of supply
of service in relation to the amount of ` 200 received in excess against the earlier
invoice.
ANSWER:28

PROBLEM:29 DEF Ltd., an unregistered supplier, renders professional services

to GHI Ltd. and issues the invoice on 7thAugust, 2020. There is a dispute on the
quality of services and the payment gets delayed and is finally released on 14th
November, 2020 by cheque and an entry is made in the books of account of the
recipient.
ANSWER:29 In this case, the time of supply would be the earlier of:

a. 60 days from date of invoice: 7th October, 2020

b. Date of payment: 14th November, 2020Hence the time of supply would be 7th
October, 2020.

PROBLEM:30 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
ANSWER:30 Here, July 4 will be the time of supply, being the earliest of the
two stipulated dates namely, date of payment and date immediately following 60
days since issue of invoice

5.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:31 C Ltd., a registered firm received services from a Raman & Co., an
Advocate firm., an unregistered person. The firm issued invoice to C Ltd. on 1st July
2020. Determine the time of supply of services in the following independent cases:
I. C Ltd. made the payments to the firm on 15th August 2020.
II. C Ltd. made the payments to the firm on 11th September 2020. Note: C Ltd turnover
in the preceding financial year was ` 2 crore
ANSWER:31
I. Time of supply of service = 15-08-2020
Note: as payment made earlier than the date immediately following 60 days from
date of issue of invoice.
II. Time of supply of service = 30-08-2020
Note: as payment made after the date immediately following 60 days from date of
issue of invoice.

PROBLEM:32 Determine the time of supply from the given information.

May 4 A German company issues email informing 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
ANSWER:32 As there is no prior entry of the amount in the books of account
of ABC Ltd., July 2 will be the time of supply, being the date of payment in terms
of second proviso to section 13(3).

PROBLEM:33 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.
ANSWER:33 As the supply against which the voucher will be redeemed is
identifiable, the time of supply of the voucher will be its date of issue.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.23

 TIME & VALUE OF SUPPLY

PROBLEM:34 Sanjeev of Rajasthan received some taxable services from Microsoft

of US on 1/12/2020 for which an invoice was raised on 01/12/2020. Determine the
time of supply of services if Sanjeevmake the payment for the said services on:
Case 1: 01/01/2021
Case 2: 05/03/2021
ANSWER:34

PROBLEM:35 K &K Ltd. Is located in India and holding 69 %of shares

of Prince Ltd., a Hungarian based company. Prince Ltd. Provides business
Auxiliary services to K and K Ltd From the following details, determine the
time of supply and K and K Lts.:

Agreed consideration Us $ 1,00,000

Date on which services are provided by Prince Ltd. 16/12/2020
Date on which invoice is sent by Price Ltd. 19/12/2020
Date of debit in the books of account of K and K Ltd. 30/12/2020
Date on which payment is made by K and K Ltd. 23/03/2021

ANSWER:35

PROBLEM:36 Determine the time of supply of services where supply is by

issue of voucher valid for 6 months after supply of first service.

First service Issue of voucher Redemption of Last date for

voucher acceptance of voucher
01/01/2021 01/01/2021 31/10/2021 31/12/2021

ANSWER:36

5.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:37 X Ltd. & Y Ltd. (London) is associated enterprises. X Ltd., a

registered firm received the services of Y Ltd., a unregistered firm. Determine the
time of supply in following cases:
X Ltd. recorded the liability in the books on 15th July 2020 and payment will be
made in the next month.
X Ltd. made advance payment to Y Ltd. on 10th July and recorded liability in the
books on 15th Aug 2020.
ANSWER:37 Time of supply =15-07-2020
Note: as the date of entry in the books is prior to the date of payment. (ii) Time
of supply = 10-07-2020
Note: as the payment is made earlier to the date of entry in the books.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.25

 TIME & VALUE OF SUPPLY

6. TIME OF SUPPLY IN CASE OF CHANGE IN RATE OF TAX- SECTION 14

A. Change in Rate of Tax in respect of supply of goods or services Sec. 14 of the
CGST Act, 2017:

S.No. Supply is Invoice issued Payment Time of supply Applicable

completed before the received before rate of tax

before the date of the date of

change in change in tax change in tax

rate of tax rate

1. Yes No No Earliest of the date of New Rate of

invoice or payment Tax

2. Yes Yes No Date of issue of Old Rate of

invoice tax

3. Yes No Yes Date of receipt of Old Rate of

payment tax

4. No Yes Yes Earliest of the date of Old Rate of

invoice or payment Tax

5. No Yes No Date of receipt of New Rate of

payment tax

6. No No Yes Date of issue of New Rate of

Invoice tax

B. “Date of receipt of payment” shall be —

I. The date on which the payment is entered in the books of account of the supplier; or
II. The date on which the payment is credited to his bank account, whichever is earlier.
However, the date of receipt of payment shall be the date of credit in the
bank account if such credit in the bank account is after 4 working days from
the date of change in the rate of tax

5.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:38 Supply was made on 10th May 2020. From the following particulars,
find out the rate of GST applicable.

Event Date of event Rate applicable

Change of rate 31st May, 2020 Rate changed from 18% to 12%
Issue of Invoice 5th June, 2020 12%
Payment received 6th July, 2020 12%

ANSWER:38 Applicable rate is 12%. i.e. which is applicable on earlier of the two
events, date of invoice and date of payment which in this case would be 5th June,
2020.

PROBLEM:39 Supply was made on 10th May 2020. From the following
particulars, find out the rate of GST applicable.

Event Date of event Rate applicable

Change of rate 30th June, 2020 Rate changed from 18% to 12%
Issue of Invoice 5th June, 2020 18%
Payment received 6th July, 2020 12%

ANSWER:39 Applicable rate is 18%. i.e. date of invoice i.e. 5th June, 2020
because it is earlier than the date of payment.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.27

 TIME & VALUE OF SUPPLY

PROBLEM:40 Determine the time of supply in each of following cases. The

rate of GST has been increased to 18% from 12 % w.e.f. 01/10/2020

Cases Date of supply Date of Invoice Date of Payment Value of

of service Service (Rs)
1 25/09/2020 05/10/2020 08/10/2020 10,00,000
2 25/09/2020 25/09/2020 08/10/2020 7,00,000
3 25/09/2020 08/10/2020 30/09/2020 10,00,000
4 04/10/2020 28/09/2020 30/09/2020 10,00,000
5 04/10/2020 04/10/2020 30/09/2020 7,00,000
6 04/10/2020 30/09/2020 08/10/2020 10,00,000

ANSWER:40

PROBLEM:41 Mr. X is supplied goods to Mr. Y on 28th July 2020. The GST
rate on goods is changed from 12% to 5% w.e.f. 1st January 2021. Mr. X issued
invoice on 28th August 2020 and payment is credited in his bank account on 30th
December 2020.What is the time of supply in this case? Effective rate of GST?
ANSWER:41 Time of supply = 28th August 2020 Effective rate of GST = 12%

PROBLEM:42 A service provider supplied service on 01-12-2020 for a value of `

25,00,000. He issued invoice for the same on 30-11-2020 and received payment by
an account payee cheque on 30-11-2020 and the same was entered in the books
on the same date 30-11-2020. The cheque was deposited in bank on 04-12-2020
and the same was credited in his bank account on 09-12-2020. The said service
was taxable @ 5% prior to 01-12-2020. The rate of GST has been increased to
12% w.e.f. 01-12-2020. On 03-12-2020, there was a public holiday Discuss his
GST liability.
ANSWER:42 In case of change in rate of tax, the “date of receipt of payment”

5.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

shall be the date on which the payment is entered in the books of account of
the supplier; or the date on which the payment is credited to his bank account,
whichever is earlier. However, the date of receipt of payment shall be the date of
credit in the bank account if such credit in the bank account is after four working
days from the date of change in the rate of tax.
In this case, since the payment is credited in bank account after 4 working days
from the date of change in rate of tax hence, the date of receipt of payment shall
be 09-12-2020 and not the date when the same is entered in books of accounts.
In this case since services have been supplied after the change in rate of tax and
the payment is received after the change in rate of tax but the invoice has been
issued prior to the change in rate of tax, the time of supply shall be the date of
receipt of payment.
Hence, applicable rate of tax shall be 12%. Amount of GST payable = ` 25,00,000
* 12% = ` 300000.

PROBLEM:43 Mr. X buys a motor car from a car dealer. Mr. X has made
payment for the same and car dealer has issued an invoice in respect of the
same on 25-10-2020. The car was to be delivered on 01-11-2020 on occasion
of his birthday. On 26-10-2020, the rate of tax applicable to motor car was
revised upward, and the car dealer is demanding differential amount of tax. Is
this correct on dealers’ part?
ANSWER:43 No the car dealer is not correct in demanding differential
amount of tax. The revised rate of tax is not applicable to the transaction,
as the issuance of invoice as well as receipt of payment occurred before the
supply. Therefore, in terms of Section 14(b) (ii), the time of supply is earlier
of the two events namely, issuance of invoice or receipt of payment, both
of which are before the change in rate of tax, and thus, the old rate of tax
remains applicable.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.29

 TIME & VALUE OF SUPPLY

PROBLEM:44 An online portal, Online Info, raises invoice for database access
on 20th March 2021 on XYZ Ltd. The payment is made by XYZ Ltd. by a demand
draft sent on 24th March 2021, which is received and entered in the accounts
of Online Info on 28th March 2021. Online Info encashes the demand draft
and thereafter, gives access to the database to XYZ Ltd from 4th April. In the
meanwhile, the rate of tax is changed from 1st April 2021. What is the time of
supply of the service of database access by Online Info?
ANSWER:44 As issuance of invoice and receipt of payment (entry of the
payment in Online Info’s accounts) occurred before the change in rate of tax, the
time of supply of service by the online portal is earlier of the date of issuance
of invoice (20th March 2021) or date of receipt of payment (24th March) i.e.,
20th March 2021. This would be so even though the service commences after the
change in rate of tax [Section 14(b) (ii)].

PROBLEM:45
X Pvt. Ltd. engaged in providing taxable services by way of training and coaching
activities in relation of information Accounting and Auditing since, 1st July 2020
has the following details in respect of that activity for the month of September
2020:

Date of issuance of invoice Date on which payment received Amount in `

16.09.2020 03.10.2020 2,50,000
20.10.2020 06.10.2020 25,000
02.10.2020 30.09.2020 1,25,000

The date of change in effective rate of tax in this case is 01-10-2020 from 12%
to 18%. These services are rendered in August 2020. Find the Time of Supply of
service, effective rate of tax and due date of payment of tax.
ANSWER:45

5.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

7. VALUE OF TAXABLE SUPPLY- SECTION 15

 Value of Supply in common terms is nothing but the amount paid by the recipient of
supply to the supplier as consideration for supply (also known as transaction value).
 It means Value of supply is the figure upon which tax is levied and collected.
 It is important to know to ascertain correct value of supply for correct levy of GST.
 Valuation rules determine value of goods or services or both on which tax under GST
has to be charged. Valuation rules have been prescribed under CGST Rules, 2017
for the purpose of determination of fair market value of goods or services or both
supplied by the registered person.

1) TRANSACTION VALUE TO BE TAKEN AS ASSESSABLE VALUE [SECTION 15(1)]-

I. The value of a supply of goods or services or both shall be the transaction value,
Which is the price actually paid or payable for the said supply of goods or services or both
II. Where the supplier and the recipient of the supply are not related and
III. The price is the sole consideration for the supply.

2) AMOUNTS TO BE ADDED IN TRANSACTION VALUE [SECTION 15(2)]-The value of

supply shall include
a. Any taxes-
I. duties,
II. cesses,
III. fees and charges levied under any law for the time being in force
other than
I. this Act,
II. the State Goods and Services Tax Act,
III. the Union Territory Goods and Services Tax Act and
IV. the Goods and Services Tax (Compensation to States) Act, if charged separately by
the supplier.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.31

 TIME & VALUE OF SUPPLY

TCS under Income-Tax Act, 1961 not includible in the taxable value for the
purpose of GST:
b. Any amount that the supplier is liable to pay in relation to such supply but which
has been incurred by the recipient of the supply and not included in the price
actually paid or payable for the goods or services or both;
c. Incidental expenses, including commission and packing, charged by the supplier
to the recipient of a supply and any amount charged for anything done by the
supplier in respect of the supply of goods or services or both at the time of, or
before delivery of goods or supply of services;
d. Interest or late fee or penalty for delayed payment of any consideration for any
supply; and
e. Subsidies directly linked to the price excluding subsidies provided by the Central
Government and State Governments.
Explanation––For the purposes of this sub-section, the amount of subsidy shall
be included in the value of supply of the supplier who receives the subsidy.

PROBLEM:46 Admission to True Theater is ` 90 per ticket for a Tamil Movie

as well as for a Hindi Movie plus entertainment tax ` 10% on Tamil Movie
and 20% on other languages. In the month of November, True Theater sold
2000 tickets of Tamil Movie and 1500 tickets of Hindi Movie. Find the value of
taxable supply of service. Applicable rate of GST 18% & 28%. Find the GST
liability if any?
ANSWER:46
PROBLEM:47 Motor vehicle worth ` 20 lakh is sold by M/s Sundar Pvt. Ltd.
to a customer in retail market and for which ` 5 lakh has been paid in cash
and balance amount by way of cheque. Find the following:
a. TCS under section 206C of the Income Tax Act, 1961 is applicable in the given
case?

5.32 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

b. who is required to collect TCS?

c. value TCS if any?
d. value of taxable supply under section 15 of CGST Act, 2017?
e. Invoice Price of M/s Sunder Pvt. Ltd.?
Note: Assume applicable TCS is @1% and GST 28%.
ANSWER:47

PROBLEM:48 Mr. Ram sold goods to Mr. Lakshman for ` 2,50,000. As per
the contract of sale, Mr. Ram is required to deliver the goods in the premises of
Mr. Lakshman. Mr. Ram hires transporter for transportation for delivery of goods.
However, the freight paid by Mr. Lakshman to transporter. Freight paid ` 2,500.
Find the transaction value of supply of goods.
ANSWER:48 Particulars Value in `
Value of supply of goods 2,50,000
Add: Freight paid by recipient of supply 2,500
(which the supplier is so liable to pay)
Taxable value of supply of goods 2,52,500

PROBLEM:49 Mr. A is a seller of furniture. He supplied the furniture for ` 5,75,000
to Mr. B with the condition that to remove old furniture from the premises of Mr. B
by charging ` 5,000. Find the value of taxable supply of goods in the hands of Mr. A.
ANSWER:49 The value of taxable supply of goods is ` 5,80,000.

PROBLEM:50 Bharat Gas sells cooking gas cylinders. Subsidy directly transferred
to the account of the customer. Selling price per cylinder is ` 800. Customer
received subsidy ` 200 directly from Government to his bank account. Net outflow
of the buyer is ` 600. Find the value of supply of goods (per cylinder) in the hands
of Bharat Gas.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.33

 TIME & VALUE OF SUPPLY

ANSWER:50 Since, the amount of subsidy is directly credited to the account

holder and not received by the Bharat Gas making the supply. Therefore, such
subsidy will not be considered as part of transaction value as it is not received by
the Bharat Gas making the supply. Hence, transaction value is ` 800 per cylinder.

PROBLEM:51 The Government provides subsidy, for the benefit of farmers but
it is given to the manufacturer of fertilizers. Such subsidy will form part of value
of supply?
ANSWER:51 The buyer of goods does not provide subsidy, but the Government
as per the scheme provides it. Therefore, this will not form part of value of supply
as it is specifically specified that such subsidy provided by the Government will
not form part of the value of supply.

3) EXCLUSIONS FROM VALUE OF SUPPLY [SECTION 15(3)]-The value of the supply

shall not include any discount which is given––
a. Before or at the time of the supply if such discount has been duly recorded in
the invoice issued in respect of such supply; and
b. After the supply has been effected, if—
I. Such discount is established in terms of an agreement entered into at or before
the time of such supply and specifically linked to relevant invoices; and
II. Input tax credit as is attributable to the discount on the basis of document issued
by the supplier has been reversed by the recipient of the supply.

5.34 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

S. No. Nature of Discount Treatment in GST

1. If the discount is given before or at Value of goods XXX
the time of supply, and is recorded in Less: Discount (XX)
the invoice Transaction value XXX
2. If the discount is given after supply, Can be claimed as deduction
but agreed upon before or at the time from transaction value
of supply, and can be specifically
linked to relevant invoices.
3. If the discount is given after supply, Cannot be claimed as deduction
and not known at the time of supply from transaction value

CASE-1 A purchases an Air conditioner from B for ` 20,000. B gives cash discount
of ` 2,000 to A on the sale invoice itself. Transaction value will be ` 18,000, being
price of the goods after reducing the discount offered at the time of sale.

CASE-2 A purchases an Air conditioner from B for `20,000 on July 1, 2019. On August
1, 2019, A gives discount of `5,000 to B and B makes a payment of ``15,000 to A.

 If discount is not known before or at time of supply, transaction value will be `

20,000 being net price of the goods plus discount allowed after the supply has
been affected.
 If discount is known before or at the time of supply, transaction value will be `
15,000 being net price of the goods.

4) VALUE TO BE DETERMINED AS PER VALUATION RULES [SECTION 15(4)]-Where

the value of the supply of goods or services or both cannot be determined as per
Section 15(1), the same shall be determined in such manner as may be prescribed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.35

 TIME & VALUE OF SUPPLY

5) VALUE OF NOTIFIED SUPPLIES TO BE DETERMINED IN PRESCRIBED MANNER

[SECTION 15(5)]-Notwithstanding anything contained in Section 15(1) or Section
15(4), the value of such supplies as may be notified by the Government on the
recommendations of the Council shall be determined in such manner as may be
prescribed

CASE-3 Contracted price for 1 MT of cement from X Ltd to Y: ` 7000. Advance

payment before dispatch: ` 700. Payable after credit period of 30 days: ` 6300.
Base taxable value: ` 7000. (Additions as further discussed below may also have
to be made.) This would be so even though only ` 700 has been received at the
time of payment of GST on the supply.

CASE-4 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. However, it would be added to the value of service provided by Grand Biz to
ABC Co. for payment of GST.

CASE-5 A supply priced at ` 2,000 is made, with a credit period of 1 month for
payment. Thereafter interest of 12% is charged. The payment is received after the
lapse of two months from the date of supply. The amount of 12% p.a. (i.e. 1%
per month) on ` 2,000 for one month after the free credit period is ` 20. Such
interest will be added to the value and thus, the value of taxable supply will work
out to be ` 2,020.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

CASE-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. The taxable value of the notebook will be `
50, as this is a non-government subsidy. If the same subsidy is paid by the Central
Government or State Government, the taxable value of the notebook would be ` 30.

CASE-7 Royal Biscuit Co. gives a discount of 30% on the list price to its
distributors. Thus, for a carton of Spice Bisk, 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. The taxable value is ` 140, as the discount is allowed at the time of supply
and shown in the invoice.

CASE-8 The agreement of Raju Electrical Appliances 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 in the next month. The next month’s stock has already been
dispatched when the sales figures for the Diwali month are worked out. However,
as the agreement was in existence at the time of supply, and the discount can be
worked out for each invoice, the taxable value will be billed price minus 5%. The
dealer must reverse the proportionate input tax credit on the relevant stock to bring
it in line with the reduced tax.

CASE-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. As these discounts were not known at the time of supply of
the goods, they will not be deducted from taxable value of those

CASE-10 Bharat Gas sells cooking gas cylinders. Subsidy directly transferred to
the account of the customer. Selling price per cylinder is ` 800. Customer received

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

subsidy ` 200 directly from Government to his bank account. Net outflow of the
buyer is ` 600. Find the value of supply of goods (per cylinder) in the hands of
Bharat Gas. -Since, the amount of subsidy is directly credited to the account
holder and not received by the Bharat Gas making the supply. Therefore, such
subsidy will not be considered as part of transaction value as it is not received by
the Bharat Gas making the supply. Hence, transaction value is ` 800 per cylinder.

CASE-11 The Government provides subsidy, for the benefit of farmers but it is
given to the manufacturer of fertilizers. Such subsidy will form part of value of
supply? The buyer of goods does not provide subsidy, but the Government as per
the scheme provides it. Therefore, this will not form part of value of supply as
it is specifically specified that such subsidy provided by the Government will not
form part of the value of supply.

PROBLEM:52 M/s Ashok Enterprise sells mineral water bottles, with MRP ` 20
per bottle. However, customers availing discount of ` 4 per bottle. In the month
of Oct 2019, M/s Ashok Enterprise sold 2,000 bottles. Applicable rate of GST 18%.
Find the tax liability
ANSWER:52

PROBLEM:53 Best Cars Ltd. sells a car worth ` 5,00,000 to Sundar Automobiles.
Best Cars Ltd. incurred packing charges of `6,000 on the car. Best Cars Ltd
provided a discount of 1% on the car price, as part of Diwali scheme. Best Cars
Ltd agreed to provide a further discount of 0.5% if Sundar Automobiles makes
payment by 31st of the month via net banking. Sundar Automobiles makes the
payment by 31st of the month using net banking. Find the Net GST liability in
the hands of Best Cars Ltd. Applicable rate of GST 18%.

5.38 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

ANSWER:53
Particulars Value in `
Value of the product 5,00,000
Add: packing charges 6,000
Sub-total 5,06,000
Less: Discount 1% on Rs 5 lakh (5,000)
Transaction value 5,01,000
Add: CGST 9% 45,090
Add: SGST 9% 45,090
Invoice price 5,91,180

Note: Since, the discount was known at the time of supply, and can be linked to
this specific invoice, the discount amount can be reduced from the transaction value.
For this, Best Cars Ltd will issue a credit note to Sundar Automobiles for ` 2,500
(0.5% of ` 5,00,000 = ` 2,500+ GST@ 18% on ` 2,500 = ` 450), and the same
must be linked to the relevant tax invoice.
Discount given after supply but agreed upon before or at the time of supply and can
be specifically linked to relevant invoices, can be deducted from the transaction value.

PROBLEM:54 M/s Nambiar & Co., an Audit firm based in Cochin undertake an
audit assignment of his client based in Chennai. The Contract mentioned about the
audit fees of ` 5,00,000 and arrangement of taxi by the Client which may be worth
` 15,000. Find the transaction value on which M/s Nambiar and Co., is liable to pay
GST.
ANSWER:54 Transaction value in the hands of M/s Nambiar & Co., is ` 5,15,000.
Note: Not only audit fees but also the expenditure incurred in connection with the
taxi `15,000 constitutes the sole consideration.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.39

 TIME & VALUE OF SUPPLY

PROBLEM:55 M/s X Ltd. is engaged in doing job work for M/s Y Ltd. M/s Y
Ltd. supplies raw material for ` 2,00,000 and packing material for ` 22,500 to
M/s X Ltd. for completion of job work. M/s X Ltd. has agreed to supply services
for the purpose of performing the activities specified by M/s Y Ltd. for ` 1,00,000.
Job worker profit of ` 70,000 and material consumed for ` 3,500. Find transaction
value (i.e. sole consideration) to levy GST in the hands of M/s XLtd.
ANSWER:55 Particulars Value in `
Service charges 1,00,000
Add: Material consumed 3,500
Add: Job worker profit 70,000
Transaction value (i.e. taxable value of supply 1,73,500
of service in the hands of M/s X Ltd.)
Note: “Although, it includes materials worth ` 3,500, still the entire supply
including value of material would be treated as services.

PROBLEM:56 Mr. Bhanu makes supply of ` 2,00,000 to Mr. Renu. The contract
provides that Mr. Renu will pay ` 50,000 to Mr. Bhanu and ` 1,50,000 to Mr. Venu
to settle the debt of Mr. Bhanu. Find the transaction value and GST liability in
the hands of Mr. Bhanu. Applicable rate of CGST and SGST 9% each.
ANSWER:56 Statement showing transaction value and GST liability:
Particulars Value in `
Payment from Renu to Bhanu 50,000
Payment from Renu to Venue for settling the debt of Bhanu 1, 50,000
Transaction value (i.e. Sole consideration) 2,00,000
CGST 9% 18,000
SGST 9% 18,000
Transaction value not available [Sec. 15(4) read with CGST Rules, 2017 (i.e.
Determination of value of supply)]:

5.40 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:57 Mr. A goes to shop of Mr. B and purchases television. He pays

amount of ` 50,000 as consideration for 52 inches LED TV Purchased plus GST.
Where MRP of the product ` 65,000. Discount offered to all buyers ` 15,000. As per
section 15(1) of the CGST Act, 2017 the valuation will be as per transaction value
basis. Assume applicable rate of CGST 14% and SGST 14%.
ANSWER:57 Invoice will be prepared as follows:
Invoice
Particulars Value in `
Transaction value 50,000
Add; CGST 14% 7,000
Add: SGST 14% 7,000
Invoice price 64,000
Note: Invoice price should not increase the Maximum Retail Price (MRP)
If Mr. A not maintained sole consideration for such sale or they are related persons
then valuation will based on determination of value of supply rules (i.e. CGST Rules,
2017)

PROBLEM:58 R, a trader provides the following information:

Value of supply of goods if payment is made by 25.12.2020 Rs. 5,00,000

Interest for delayed payment of consideration if payment is made Rs. 20,000
after 25.12.2020 but before 25.01.2021
Determine the value of supply if payment is received by R on
5.1.2021.

ANSWER:58

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.41

 TIME & VALUE OF SUPPLY

PROBLEM:59 R, a trader provides the following information:

particulars Amount
Value of supply of goods if payment is made by 20.1. 2020 Rs. 6,00,000
Interest for delayed payment of consideration if payment is made Rs. 25,000
after 20.1.2020 but before 20.2.2020

Determine the value of supply if payment is received by R on 5.2.2020.

ANSWER:59

PROBLEM:60 R, a trader dealing in solar Cooker charged Rs. 30,000 for

supplying of cooker to G. he has received following subsidies:

Particulars Amount
(a) Subsidy directly linked to the supply and received from a Rs. 10,000
Charitable Trust engaged in promotion of solar cooker
(b) Subsidy from the Central Government as it also wants to promote Rs. 14,000
solar products in the country

Determine the value of supply of solar cooker.

ANSWER:60

PROBLEM:61 R, a trader has booked order of 200 pieces of Pants of different

colors at Rs. 2,000 per piece. He has agreed to allow discount of 20% at the time
of supply of such goods. Determine the value of supply.
ANSWER:61

5.42 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:62 R, a trader dealing in solar Cooker charged 30,000 for supplying

of cooker to G. He has received following subsidies:

Particulars Amount
(a) Subsidy directly linked to the supply and received from a 10,000
Charitable Trust engaged in promotion of solar cookers
(b) Subsidy from the Central Government as it also wants to promote 14,000
solar products in the country

Determine the value of supply of solar cooker.

ANSWER:62

PROBLEM:63 R Ltd. a manufacturer of readymade garments appointed certain

dealers for selling its goods. He entered into an agreement to allow 3% discount
by way of credit note if a dealer purchases goods for more than Rs.40,00,000 in
a period of 3 months from the date of first supply. One dealer G exceeded the
target and purchased goods for Rs.50,00,000 during the period of 3 months. GST
was charged separately @ 12% on such supplies. Determine the value of supply of
readymade garments.
ANSWER:63

PROBLEM:64 R & Sons has agreed to supply refrigerator to G at his residence.

R & Sons raises the invoice for Rs. 50,000 for the said supply. G paid Rs. 50,000 to
the supplier at his shop. Further, G paid Rs. 1,500 to concerned Tempo Agency who
delivered the refrigerator at his residence, though it was payable by R & Sons at the
term of supply was free delivery at his residence. Determine the value of supply.
ANSWER:64 Rs. 51,500.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.43

 TIME & VALUE OF SUPPLY

PROBLEM:65 Rajesh Footwear, a registered supplier of Jodhpur, had a non-

moving stock worth Rs.8, 00,000 of a particular variety of shoes that are out of
the fashion. It has not been able to find market in spite of huge discounts offered.
Subsequently, it was able to sell this stock at a very low price of Rs.50,0000 to
a retailer in Udaipur with a conation that the retailer would display hoardings of
RajeshFootwear in all their retain outlets in the state. Determine the value of
supply.
ANSWER:65

PROBLEM:66 RG Pvt.Ltd. provides the following relating to goods sold by it

to GK Pvt.Ltd

Particulars Amount
List price of the good (exclusive of taxes and discounts) 5,00,000
Tax levied by Municipal Authority on the sale of such goods 50,000
CGST and SGST chargeable on the goods 1,00,000
Packing charges (not included in price above) 10,000

RG Pvt. Ltd received Rs. 20,000 as a subsidy from a NGO on sale of such goods.
The price of Rs. 5,00,000 of the goods is after considering such subsidy. RG Ltd.
Offers 2% discount on the list price of the goods which is recorded in the invoice
for the goods. Determine the taxable supply made by RG Pvt. Ltd.
ANSWER:66

5.44 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:67 Determine the value of taxable supply as per section 15 of the

CGST Act, 2017

Particulars Rs
Contracted sale price of goods (including CGST and SGST @5%) 10,56,000
The contracted sale price includes the following elements of cost:
(i) Drawings and design 5,000
(ii) Primary packing 2,000
(iii) Packing at buyer’s request 4,000
(iv) Fright and insurance from place of removal to buyers’ premises 43,000

A discount of Rs 6,000 of given by the supplier before the time of supply of goods.
CGST and SGST is levied @ 5%
ANSWER:67

PROBLEM:68 From the following information determine the value of taxable

supply as per provisions of section 15 of the CGST Act, 2017?

Particulars Rs
Contracted value of supply of goods (Including GST @ 18%) 11,00,000
The Contracted value of supply includes the following
1) Primary packing 25000
2) Protective packing at recipient’s request for safe transportation 15,000
3) Designing charges 85000

Other information:
1. Commission paid by recipient as per supplier’s request 5000
2. Freight and insurance charges borne by recipient on behalf of supplier 75,000
ANSWER:68

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.45

 TIME & VALUE OF SUPPLY

PROBLEM:69 From the following information determine the value of taxable

supply as per provisions of section 15 of CGST Act, 2017?

Particulars Rs
Value of machine (inclusive GST @12%) 15,00,000
The invoice value including the following
1) Taxes (other than GST) charged separately by the supplier 15,000
2) Loading charges 25,000
3) Consultancy Charges for installation 10000
4) Testing Charges 2,000
5) Inspection Charges 4,500

Other information:

1) Subsidy received from central government for setting up factory in 51,000

backward region
2) Subsidy received from third party to recipient 50,000
3) Trade discount actually allowed shown separately in invoice 24,000

ANSWER:69

PROBLEM:70 Black and White Pvt. Ltd. has provided the following particulars
relating to goods sold by it to Colorful 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
Black and White Pvt. Ltd. received ` 2000 as a subsidy from a NGO on sale of

5.46 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

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:70

PROBLEM:71 XYZ Pvt. Ltd. has provided the following particulars relating to
goods sold by it to ABC Pvt. Ltd.
Particulars
List price of the goods (exclusive of taxes and discounts) 1,25,000
Tax levied by Municipal Authority on the sale of such goods 15,000
CGST and SGST chargeable on the goods 19,200
Packing charges (not included in price above) 15,500
XYZ Pvt. Ltd. received ` 9,500 as a subsidy from a Non profit making organization in respect
of timely supply of such goods. The price of ` 1,25,000 of the goods is after considering
such subsidy. XYZ Ltd. offers 4% 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 XYZ Pvt. Ltd.
ANSWER:71

PROBLEM:72 Floral Advertisers conceptualized and designed the advertising

campaign for a new product launched by Jupiter Stampings Pvt. Ltd. for a
consideration of ` 25,00,000. Floral Advertisers owed ` 4,50,000 to one of its
vendors in relation to the advertising service provided by it to Jupiter Stampings Pvt.
Ltd. Such liability of Floral Advertisers was discharged by Jupiter Stampings Pvt.
Ltd. Jupiter Stampings Pvt. Ltd. delayed the payment of consideration and thus,
paid ` 50,000 as interest. Assume the rate of GST to be 18%. Determine the value
of taxable supply made by Floral Advertisers
ANSWER:72

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.47

 TIME & VALUE OF SUPPLY

PROBLEM:73 Supreme Foods Pvt. Ltd. gets an order for supply of processed
food from Hotelia Ltd.. Hotelia Ltd. wants the consignment tested for gluten or
specified chemical residues. Supreme Foods Pvt. Ltd. does the testing and charges
a testing fee of ` 15,000 from the Hotelia Ltd.. Supreme 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 its argument correct in the light of Section 15?
ANSWER:73 Section 15(2) mandates the addition of certain elements to
transaction value to arrive at taxable value. Section 15(2) (c) specifies that
amount charged for anything done by the supplier in respect of the supply at
the time of or before delivery of goods or supply of services shall be included in
taxable value. Since Supreme Foods Pvt. Ltd. does the testing before the delivery
of goods, the charges therefor will be included in the taxable value. Therefore,
Supreme Foods Pvt. Ltd.’s argument is not correct. The testing fee of ` 15,000
should be added to the price to arrive at taxable value of the consignment.

PROBLEM:74 Vikash Charitable Institution makes a substantial donation each

year to a reputed private management institution to subsidize the education of
low income group students who have gained admission there. The fee for these
individuals is reduced thereby, coming to ` 1 lakh a year compared to T 4 lakh
a year for other students. What would be the taxable value of the service of
coaching and instruction provided by the institution?
ANSWER:74 As per Section 15(2) (e), the value of a supply includes subsidies
directly linked to the price, excluding State Government and Central Government
subsidies. In this case, the subsidy is not from the Government but is from a
charitable institution. Therefore, the subsidy is to be added back to the price to
arrive at the taxable value, which comes to ` 4 lakh a year.

5.48 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:75 Floral advertising, an advertising firm, gives an interest-free credit

period of 30 days for payment by the customer. One of its customer paid for the
supply 40 days after the supply of service. Floral advertising waived the interest
payable for delay of ten days. The Department wants to add interest for ten days
as per contract. Should notional interest be added to the taxable value?
ANSWER:75 This is a supply that is valued as per transaction value under
Section 15(1) as the price is the sole consideration for the supply and the supply is
made to unrelated person. The concept of transaction value has been expanded to
include certain elements like interest which are actually payable. Once waived, the
interest is not payable and is therefore, not to be added to transaction value.

PROBLEM:76 Leather Products Ltd. sells shoes its dealers, to whom it charges
the list price minus standard discount and pays GST accordingly. When such shoes
remain unsold with the dealers, it offers additional discounts on the stock as an
incentive to push the sales. Can this additional discount be reduced from the price
at which the goods were sold and concomitant tax adjustments made?
ANSWER:76 The discounts were not known or agreed at the time of supply of
goods to the dealers. Therefore, such discounts cannot be reduced from the price on
which tax had been paid in terms of Section 15(3).

PROBLEM:77 Samriddhi Advertisers conceptualized and designed the advertising

campaign for a 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. Determine
the value of taxable supply made by Samriddhi Advertisers.
ANSWER:77

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.49

 TIME & VALUE OF SUPPLY

POINT TO BE NOTED- SALES PROMOTION SCHEMES, OFFER DISCOUNTS,

SAMPLES AND GIFT TO DISTRIBUTOR ETC.CLARIFICATION ON VARIOUS
DOUBTS CIRCULAR NO 92/11/2019-GST
A. FREE SAMPLES AND GIFTS:
I. Pharmaceutical companies which often provide drug samples to their stockists,
dealers, medical practitioners, etc. without charging any consideration.
II. Not regarded as supply : The goods or services or both which are supplied free
of cost (without any consideration) shall not be treated as ‘supply’ under GST
(except in case of activities mentioned in Schedule I of the said Act).
III. Section 17(5) (h) of the said Act provides that ITC shall not be available in respect of
goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.

B. BUY ONE GET ONE FREE OFFER:

I. Sometimes, companies announce offers like ‘Buy One, Get One free’ For example,
‘buy one soap and get one soap free’ or ‘Get one toothbrush free along with the
purchase of toothpaste’.
II. Supply of two goods for the price of one : It may appear at first glance that in
case of offers like ‘Buy One, Get One Free’, one item is being ‘supplied free of
cost’ without any consideration. In fact, it is not an individual supply of free
goods but a case of two or more individual supplies where a single price is being
charged for the entire supply. It can at best be treated as supplying two goods
for the price of one.
III. Taxability of such supply will be dependent upon as to whether the supply is a
composite supply, or a mixed supply and the rate of tax shall be determined as
per the provisions of section 8 of the said Act.
IV. It is also clarified that ITC shall be available to the supplier for the inputs, input
services and capital goods used in relation to supply of goods or services or both
as part of such offers

5.50 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

C. DISCOUNTS INCLUDING ‘BUY MORE, SAVE MORE’ OFFERS:

I. Staggered discount: Sometimes, the supplier offers staggered discount to his
customers (increase in discount rate with increase in purchase volume- Get 10%
discount for purchases above ` 5,000/-, 20% discount for purchases above ` 10,000/-
and 30% discount for purchases above ` 20,000/ Such discounts are shown on the
invoice itself.
II. Periodic/ year ending discounts ie Volume discounts: Some suppliers also offer
periodic/year ending discounts to their stockists, etc.-Get additional discount of 1%
if you purchase 10000 pieces in a year, get additional discount of 2% if you purchase
15000 pieces in a year.
 Such discounts are established in terms of an agreement entered into at or before
the time of supply though not shown on the invoice as the actual quantum of such
discounts gets determined after the supply has been effected and generally at the
year end.
 In commercial parlance, such discounts are colloquially referred to as “volume
discounts”. Such discounts are passed on by the supplier through credit notes.
III. Staggered discount Volume discounts - deductible as per Section 15(3): It is
clarified that discounts offered by the suppliers to customers (including staggered
discount under ‘Buy more, save more’ scheme and post supply/volume discounts
established before or at the time of supply) shall be excluded to determine the
value of supply provided they satisfy the parameters laid down in Section 15(3)
of the said Act, including the reversal of ITC by the recipient of the supply as is
attributable to the discount on the basis of document (s) issued by the supplier.
IV. Supplier entitled to avail ITC : It is further clarified that the supplier shall be
entitled to avail the ITC for such inputs, input services and capital goods used in
relation to the supply of goods or services or both on such discounts.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.51

 TIME & VALUE OF SUPPLY

D. SECONDARY DISCOUNTS:
I. These are the discounts which are not known at the time of supply or are offered
after the supply is already over. M/s. Anil supplies 10000 packets of biscuits to
M/s. Bharat at ` 10/- per packet. Afterwards M/s. A re-values it at ` 9/- per
packet. Subsequently, M/s. A issues credit note to M/s. B for ` 1/- per packet.
II. Secondary discounts not deductible : It is further clarified that such secondary
discounts shall not be excluded while determining the value of supply as such
discounts are not known at the time of supply and the conditions laid down in
Section 15(3) (b) of the said Act are not satisfied.
III. In other words, value of supply shall not include any discount by way of issuance
of credit note(s) as explained above or by any other means, except in cases where
the provisions contained in Section 15(3) (b) of the said Act are satisfied.

PROBLEM:78 M/s. Dental Care Ltd. has introduced a new product ‘CLOVE’
toothpaste. Determine the GST payable if rate of tax is 18% on tooth paste
and toothbrush:
I. 1,000 pieces having retail sale price (RSP) ` 70 per piece are sold in retail packages
to wholesale dealer at ` 50 per piece.
II. 2 ,500 pieces having RSP ` 70 per piece are sold in retail packages, but buyer is
charged for 2,400 pieces only at ` 50 per piece (100 pieces have been given free
as quantity discount).
III. 50 pieces were given away as free samples, without any RSP on the pack.
IV. 200 multi-packs were cleared at ` 90 per pack, each containing two toothpaste
tubes and one toothbrush free (without any RSP on it).
The amount charged from the dealers/buyers are exclusive of GST.
ANSWER:78 The GST payable is as computed below (amount in `)-

5.52 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

1. 1,000 pieces at transaction value of ` 50 per piece (Retail sale price 50,000
is not relevant as value for the purpose of calculating GST liability
is the transaction value charged from the buyers)
2. 2,400 pieces at transaction value of ` 50 per piece (Offering of 1,20,000
extra quantity of the same product is to be treated in the nature
of discount. This discount or value of free article /extra quantity
of the same product which is known at the time of recognition of
supply shall not be included in the transaction value of supply so
as to compute GST liability.)
3. Samples : 50 pieces are given free of cost [The goods or services
or both which are supplied free of cost (without any consideration)
shall not be treated as ‘supply’ under GST (except in case of
activities mentioned in Schedule I of the said Act), hence no GST
is payable] -
4. Multi-packs : 200 packs at transaction value of ` 90 per pack (It 18,000
has been clarified vide Circular No. 92/11/2019-GST, dated 07-03-
2019, it is not an individual supply of free goods but a case of two
or more individual supplies where a single price is being charged for
the entire supply. It can at best be treated as supplying two goods
for the price of one. Taxability of such supply will be dependent
upon as to whether the supply is a composite supply or a mixed
supply and the rate of tax shall be determined as per the provisions
of section 8 of the said Act. Since GST rate on tooth paste and
tooth brush is 18%, hence 18% rate will be applicable.)
Total Transaction value 1,88,000
GST payable @ 18% 33,840

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.53

 TIME & VALUE OF SUPPLY

8. VALUATION RULES-

5.54 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

RULE-27-Value of supply of goods or services where the consideration is not

wholly in money. -Where the supply of goods or services is for a consideration not
wholly in money, the value of the supply shall, -
a. be the open market value of such supply.
b. if the open market value is not available under clause (a), be the sum total of
consideration in money and any such further amount in money as is equivalent to
the consideration not in money, if such amount is known at the time of supply;
c. if the value of supply is not determinable under clause (a) or clause (b), be the
value of supply of goods or services or both of like kind and quality.
d. if the value is not determinable under clause (a) or clause (b) or clause (c), be
the sum total of consideration in money and such further amount in money that is
equivalent to consideration not in money as determined by the application of rule
30 or rule 31 in that order.

CASE-12 Where a new phone is supplied for twenty thousand rupees along with
the exchange of an old phone and if the price of the new phone without exchange
is twenty four thousand rupees, the open market value of the new phone is twenty
four thousand rupees.

CASE-13 Where a laptop is supplied for forty thousand rupees along with the
barter of a printer that is manufactured by the recipient and the value of the printer
known at the time of supply is four thousand rupees but the open market value of
the laptop is not known, the value of the supply of the laptop is forty four thousand
rupees.

CASE-14 A company procures and modifies a machine and supplies it to its

unrelated customer. Since, it is a customized machine, the open market value of the
machine is not available as also the value of any other machine of the like kind and

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.55

 TIME & VALUE OF SUPPLY

quality is also not available. Therefore, the value should be worked out by adding
the cost of modification to the cost of acquisition of the machine and adding
thereto 10% of the sum of these costs.

CASE-15 M/s X Ltd is a manufacturer of car and sells the car in the open
market at a price of ` 11,00,000. M/s X Ltd provided the car to his company
auditor is only for ` 9,00,000. In return auditor provide auditing services to M/s
X Ltd and charged ` 5,000 with the condition that company will be provided the
car at the price of ` 9,00,000.Find the value as per Rule 27(a), Determination of
value of supply. ----Open market value of the car is ` 11,00,000.

CASE-16 M/s X Ltd. is supplier of security services provided such services to

M/s Y Ltd. As per the contract M/s Y Ltd is to pay monthly ` 1,00,000. In the
month of November M/s Y Ltd. supplied uniforms to all employees of M/s X Ltd.
by spending ` 20,000. As a result M/s X Ltd. raised the bill for ` 80,000 in
the month of November. In the given case M/s X Ltd. received consideration for
security service is partially in terms of money ` 80,000 and partially in kind(i.e
uniforms). Find the taxable value of service on which GST will be levied. ---
-- GST will be levied on the value of ` 1,00,000 (` 80,000 + uniforms equal to
monetary value of ` 20,000) in the hands of M/s X Ltd.

CASE-17 Guidelines Academy normally charge ` 10,000 for teaching the commerce
students. A merit student approaches the management of Guidelines Academy
and narrates his financial position. Guidelines Academy management considered
his financial position agrees to charge only ` 5,000 from such student. Find the
value of taxable supply of service.-----Since, Guidelines Academy has not received
any consideration from the student in any other form, ` 5,000 it self is a sole
consideration. GST will be levied on ` 5,000.

5.56 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:79 M/s. ATUL Ltd. is a manufacturer of sharbat. It sells sharbat in

bottles to various retail shopkeepers and gives 25 bottles free along with purchase
of every 100 bottles. The MRP indicated on each bottle is `200 per bottle. The
transaction value is ` 160 per bottle. During a month, M/s. ATUL Ltd. sold 1,00,000
bottles and gave away 25,000 bottles free to the retail shop-keepers. Compute the
amount of GST payable by M/s. ATUL Ltd. GST rate is 18%.
ANSWER:79 Offering of extra quantity of the same product is to be treated
in the nature of discount. This discount or value of free article/ extra quantity of
the same product which is known at the time of recognition of supply shall not be
included in the transaction value of supply so as to compute GST liability. Thus, no
GST is required to be paid on the notional value of the extra units/quantity of the
product being offered as promotional tool as is in the nature of discount.
Accordingly, the computation of GST payable is as shown below (amounts in `):

No. of bottles on which GST payable (A) 1,00,000

Transaction value per bottle (B) 160
Total transaction value on which GST is payable (C) = (A) * (B) 1,60,00,000
GST liability @ 18% (D = C x 18%) 28,80,000

PROBLEM:80 Mr. X purchases an Apple i-phone open market value ` 80,000 from
registered mobile dealer, in exchange of his existing mobile phone. The registered
mobile dealer agreed to accept ` 72,000 instead of his quote of ` 75,000, as he
would still be in a profitable position (the old mobile phone can be sold for `
10,000). Determine GST implications of such transaction.
ANSWER:80 As per Rule 27 of CGST Rules, 2017, where the price is not the
sole consideration for the supply, the ‘open market value’ would be the value of the
supply. Therefore, ` 80,000 would be the value of the supply. As per Notification No.
10/2017-CT (Rate) dated 28-06-2017 w.e.f. 01-07-2017, the Central Government

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.57

 TIME & VALUE OF SUPPLY

has exempted intra-State supplies of second hand goods received by a registered

person, dealing in buying and selling of second hand goods and who pays the central
tax on the value of outward supply of such second hand goods as determined under
Rule 32(5) of the CGST Rules, 2017, from any supplier, who is not registered,
from the whole of the central tax leviable thereon under Section 9(4) of the CGST
Act, 2017.Hence, the registered mobile dealer would not be liable for paying GST
on receipt of the old mobile phone from Mr. X.

PROBLEM:81 Mr. S supplied goods ‘X’ to Mr. R for consideration of ` 5,00,000

(excluding taxes). Mr. R also gave some material to Mr. S as consideration for such supply
whose value was ` 20,000 (excluding taxes). Mr. S has supplied the same goods to another
person at price of ` 5,71,200 (including GST @ 12%). Determine the value of supply.
 What would your answer be if price of ` 5,71,200 is not available at the time of
supply of goods to Mr. R.
 What would your answer be in above case if open market value of supply is also
not available but at the time of supply of goods by Mr. S, identical goods have
been supplied at value of ` 5,25,000 (excluding taxes).
ANSWER:81

PROBLEM:82 ABC Ltd. manufactured school bags. During the month of

August 2019, XYZ Ltd. purchased 500 bags at the contracted price of ` 1,000
per bag (excluding GST and discount) from ABC Ltd. XYZ Ltd. supplied chains
used in the manufacturing of the bags to ABC Ltd. without consideration as per
instruction of ABC Ltd. The open market value of the chains so supplied was ` 50
per chain. Also a discount of ` 20 per bag was given by the supplier at the time
of the supply and same has been duly recorded in the invoice issued in respect of
such supply. GST rate is 18%. Give reasons with suitable assumptions.
ANSWER:82

5.58 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:83 Sandeep & Co. provides technical consultancy to a group of

companies for an annual retainership fee of ` 25 lakh. It is given a room in the
head office of the group for its exclusive use. Somesh & Co. pays GST on the
amount of `25 lakh. Is the value for the service provided by Somesh & Co., correct
under GST laws? If not, please elaborate:
ANSWER:83 The value of ` 25 lakhs for the service provided by Sandeep &
Co., is not correct under GST laws. Somesh & Co. gets an office room free of cost,
which is an additional non-monetary consideration for its services. The market value
of the rent of the room must be added to the retainer fee ( ` 25 lakh) in order
to arrive at the value of the taxable service provided by Sandeep & Co, as per Rule
27 of the CGST Rules relating to valuation.

RULE-28 VALUE OF SUPPLY OF GOODS OR SERVICES OR BOTH BETWEEN

DISTINCT OR RELATED PERSONS, OTHER THAN THROUGH AN AGENT. -
The value of the supply of goods or services or both between distinct persons
as specified in sub-section (4) and (5) of section 25 or where the supplier and
recipient are related, other than where the supply is made through an agent, shall-

a. be the open market value of such supply.

b. if the open market value is not available, be the value of supply of goods or services
of like kind and quality.
c. if the value is not determinable under clause (a) or (b), be the value as determined
by the application of rule 30 or rule 31, in that order:
Provided that where the goods are intended for further supply as such by the
recipient, the value shall, at the option of the supplier, be an amount equivalent to
ninety percent of the price charged for the supply of goods of like kind and quality
by the recipient to his customer not being a related person:
Provided further that where the recipient is eligible for full input tax credit, the

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.59

 TIME & VALUE OF SUPPLY

value declared in the invoice shall be deemed to be the open market value of the
goods or services

CASE-18 Mr. A and Mr. B are partners in the partnership firm A&B Co. Mr. A &
Mr. B are related persons. Thus, a transaction of supply between Mr. A & Mr. B
in the course or furtherance of business is treated as supply even if made without
consideration.

CASE-19 Ms. Priya holds 30% shares of ABC Ltd. and 35% shares of XYZ Ltd.
ABC Ltd. and XYZ Ltd. are related. 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.

CASE-20 Alpha Ltd. controls the composition of Board of directors of Beta Ltd.
and Gama Ltd. It is said to control both Beta Ltd. and Gama Ltd. Beta Ltd. and
Gama Ltd. are related persons.

PROBLEM:84 M/s. Snowmakers an event management Co. for creation of large-

scale events & Occasions, owned by Mr. Shipu Kingdom of Dreams in Gurugram
contracts with Snowmakers Company to arrange a celebrity concerts charging Rs.
8,00, 000.The company sub-contract the same work to Aura Mgt. Company which
were also controlled and managed by Mr. Shipu for Rs. 6,00,000. M/s. Aura Mgt
Co. charges Rs. 6,20,000 from market for the same work.
ANSWER:84 M/s Snowmakers and M/s. Aura Mgt. Company are managed and
controlled by Mr. Shipu so the both business will be considered as related persons.
The value of service will be the open Market Value being Rs. 6,20,000 rather than
sub-contract price of Rs. 6,00,000.

5.60 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:85 Mr. X located in Jaipur purchases 2,000 drawing boxes for `

2,00,000 from M/s. Stationers Ltd. (wholesalers) located in Delhi. Mr. X’s son is an
employee in M/s. Stationers Ltd. The price of each drawing box in the open market
is ` 120. The supplier additionally charges ` 5,000 for delivering the goods to the
recipient’s place of business.
ANSWER:85 Mr. X and M/s. Stationers Ltd. would not be treated as related
persons merely because the son of the recipient is an employee of the supplier,
although such son and the supplier would be treated as related persons. (As they
fall under deemed relationship of employer and employee). Therefore, the transaction
value will be accepted as the value, of the supply. The transaction value includes
incidental expenses incurred by the supplier in respect of the supply up to the time
of delivery of goods to the recipient. This means, the transaction value will be: `
2,00,000 + ` 5,000 i.e. ` 2,05,000.

PROBLEM:86 Jagatguru Textiles transfers stock of 15,000 metres of cloth (costing

` 15,00,000) requiring further processing before sale, from Bellary in Karnataka to
its Bhilwara branch in Rajasthan. The Bhilwara branch, apart from processing its
own goods, engages in processing of similar goods by other persons who supply the
same variety of goods, and thereafter sells these processed goods to wholesalers.
There are no other factories in the neighbouring area which are engaged in the
same business as that of its Rajasthan unit. Goods of the same kind and quality
are supplied in lots of 15,000 metres each time, by another manufacturer located in
Rajasthan. The price of such goods is ` 14,00,000.
ANSWER:86 As per Section 25(4) of the CGST Act, 2017, a person who has
obtained more than one registration, whether in one State or Union territory or
more than one State or Union territory shall, in respect of each such registration,
be treated as distinct person for the purposes of this Act. As per provisions of
Section 7 read with Para 2 of Schedule I, transfer of goods between two registered

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.61

 TIME & VALUE OF SUPPLY

units of the same person (having the same PAN) will be treated as supply even
if the transfer is made without consideration, as such persons will be treated as
‘distinct persons’ under the GST law. The value of the supply would be the open
market value of such supply. If this value cannot be determined, the value shall
be the value of supply of goods of like kind and quality. In this case, although
goods of like kind and quality are available, the same may not be accepted as the
Tike goods’ since they are supplied by another manufacturer located in Rajasthan
whose transportation cost are lower and thus less expensive in comparison to
goods under consideration which were supplied from Karnataka. Therefore, the
value of the supply would be taken at 110% of the cost, i.e., ` 1650000 (i.e., 110%
* 15,00,000).

PROBLEM:87 M/s. Solid Fabricators owned by Kalyan is popularly known for

assembly of large machines. M/ s. SS Fabricators (also owned by Kalyan) is engaged
in fabrication of small machines. A factory contracts M/s. Solid Fabricators for
fabrication of its machinery, for a fee of `5,00,000. M/s. Solid Fabricators sub-
contracts the work to M/ s. SS Fabricators for ` 4,00,000 and ensures supervision
of the work performed by them. Generally, M/s. SS Fabricators charges a fixed
sum of ` 1,200 per man hour to its clients; it spends 400 hours on this project.
Determine value of supply.
ANSWER:87 Since M/s. Solid Fabricators and M/s. SS Fabricators are controlled
by Mr. Kalyan, the two businesses will be treated as related persons. Therefore, `
4,00,000 being the sub-contract price will not be accepted as transaction value.
The value of the service would be the open market value being ` 480000 (i.e., `
1,200 per hour x 400 hours).

PROBLEM:88 GG Ltd. supplied printers from its establishment located in

Maharashtra to its computer manufacturing unit in Rajasthan @ ` 10,000 per

5.62 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

unit. GG Ltd. supplied such printers during the same period to independent recipient
@`14,160 in market (including CGST and SGST @ 18%). Determine the value of
supply for GG Ltd. in accordance with the CGST Act, 2017 and the rules made
thereof.
ANSWER:88 As per Section 25(4) of the CGST Act, 2017, a person who has
obtained more than one registration, whether in one State or Union territory or
more than one State or Union territory shall, in respect of each such registration,
be treated as distinct persons for the purposes of this Act. Hence, the value of the
supply would be the open market value of such supply.
In this case the open market value shall be arrived as under: (amount in `)

Price charged from independent recipient 14,160

Less: GST included in the above price [ ` 14,160 * 18 / 118] 2,160
Open market value of supply of goods under consideration 12,000

PROBLEM:89 SS Ltd. manufactures a customized product ‘A’ at its unit in

Madhya Pradesh and supplies it to its another establishment, located in Rajasthan.
The Contracted sales price is ` 9,00,000. The cost of production of Product ‘A’ is
` 10,00,000. SS Ltd. is the sole manufacturer of this product. Determine taxable
value of supply and calculate CGST and SGST payable @5%. Would your answer be
different if the establishment in Jaipur is eligible to avail Input tax credit of GST
payable by SS Ltd.
ANSWER:89 As per Section 25(4) of the CGST Act, 2017, a person who has
obtained more than one registration, whether in one State or Union territory or
more than one State or Union territory shall, in respect of each such registration,
be treated as distinct persons for the purposes of this Act. As SS Ltd. is the sole
manufacturer of this product, hence the value of supply is to be determined as
per Rule 28(c) read with Rule 30 of CGST Rules, 2017 i.e. 110% of the Cost of

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.63

 TIME & VALUE OF SUPPLY

production = ` 10,00,000 x 110% = ` 1100000. GST payable shall be 5% of `

11,00,000 = ` 11,00,000 x 5% = ` 55,000.
In second situation, if establishment in Jaipur is eligible to take Input tax credit,
then value declared in invoice shall be taken to be open market value as per
provisions of Rule 28 of CGST Rules, 2017. Hence, value of taxable supply shall
be ` 9,00,000 and GST payable shall be 5% of ` 9,00,000 = ` 9,00,000 x 5% =
45,000.

PROBLEM:90 Grasim Private Ltd. was the only Indian company making and
selling a fibre ‘A’ to companies, who used this as a raw material. However, the
international prices of ‘A’ dropped, and the companies began to import it rather
than buying from Grasim Private Ltd. The promoters then set up another company,
which had a manufacturing unit that could use ‘A’, with common directors and
senior management for better integration of functionality. Grasim Private Ltd.
began to supply ‘A’ to this related concern at low margins. The related concern
was not eligible for full ITC. GST was paid on the price charged. Was the value
adopted by Grasim Private Ltd. for supply of ‘A’ to its related concern, correct?
Elaborate
ANSWER:90 The value adopted by Grasim Private Limited is not correct. As
per provisions of Rule 28(3) of the CGST Rules, 2017, the invoice value could not
be the basis of valuation for a supply made to a related person if the recipient is
not eligible for full ITC. Under rule 28(a) of the CGST Rules relating to valuation,
the open market value of fibre ‘A’ should be the value of the taxable supply of ‘A’
to the related concern. In this particular case, the open market value is likely to
be the price of imported fibre ‘A’ plus customs duties, which should be adopted for
valuation after excluding the component of IGST on import as per the definition
of open market value in explanation (a) to the CGST Rules relating to valuation.

5.64 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

RULE-29 VALUE OF SUPPLY OF GOODS MADE OR RECEIVED THROUGH AN

AGENT. –THE VALUE OF SUPPLY OF GOODS BETWEEN THE PRINCIPAL AND HIS
AGENT SHALL-
a. Be the open market value of the goods being supplied, or at the option of the
supplier, be ninety per cent. of the price charged for the supply of goods of like kind
and quality by the recipient to his customer not being a related person, where the
goods are intended for further supply by the said recipient.

CASE-21 A principal supplies groundnut to his agent and the agent is supplying
groundnuts of like kind and quality in subsequent supplies at a price of five thousand
rupees per quintal on the day of the supply. Another independent supplier is
supplying groundnuts of like kind and quality to the said agent at the price of four
thousand five hundred and fifty rupees per quintal. The value of the supply made
by the principal shall be four thousand five hundred and fifty rupees per quintal
or where he exercises the option, the value shall be 90 per cent. of five thousand
rupees i.e., four thousand five hundred rupees per quintal.
b. Where the value of a supply is not determinable under clause (a), the same shall
be determined by the application of rule 30 or rule 31 in that order.

PROBLEM:91 Home Appliances Ltd. (Faridabad) has 15 agents located across the
State of Haryana (except Faridabad). The stock of vacuum cleaners is dispatched
on Just-In-Time basis from Home Appliances Ltd. to the locations of the agents,
based on receipt of orders from various dealers, on a fortnightly basis. Home
Appliances Ltd. is also engaged in the wholesale supply of vacuum cleaners in
Faridabad. An agent places an order for dispatch of 20 vacuum cleaners on 10-12-
2020. Home Appliances Ltd. had sold 20 vacuum cleaners to a retailer in Faridabad
on 8-12-2020 for ` 1,30,000. The agent effects the sale of the 20 units to a dealer
who would effect the sales on MRP basis (i.e., @ ` 7,000/unit).

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.65

 TIME & VALUE OF SUPPLY

ANSWER:91 The law deems these supplies between the principal and agent
to be supplies for the purpose of GST. Therefore, the transfer of goods by the
principal (Home Appliances Ltd.) to its agent for him to effect sales on behalf of
the principal would be deemed to be a supply although made without consideration.
The value would be either the open market value, or 90% of the price charged by
the recipient of the intended supply to its customers, at the option of the supplier.
Thus, the value of the supply by Home Appliances Ltd. to its agent would be either
` 1,30,000, or ` 1,26,000 (i.e., 90% * 7,000 * 20), based on the option chosen by
Home Appliances Ltd.

RULE-30 ISSUE OF SUPPLY OF GOODS OR SERVICES OR BOTH BASED ON

COST. -
Where the value of a supply of goods or services or both is not determinable by
any of the preceding rules of this Chapter, the value shall be one hundred and
ten percent of
 the cost of production or manufacture or
 the cost of acquisition of such goods or
 the cost of provision of such services.
NOTE-Service providers have an option to directly move to rule 31 by passing rule
30.

5.66 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:92 RAJ & CO. FURNISH THE FOLLOWING EXPENDITURE INCURRED

BY THEM TO FIND THE TRANSACTION VALUE FOR THE PURPOSE OF PAYING GST.
Particulars `
1. Direct material cost per unit inclusive of IGST at 18% 944
ii. Direct wages 250
iii. Other direct expenses 100
iv. Indirect materials 75
v. Factory overheads 200
vi. Administrative overhead (25% relating to production capacity) 100
vii. Selling and distribution expense 150
viii. Quality control 25
ix. Sale of scrap realized 20
x. Actual profit margin 15%
Find the value for the purpose of payment of GST as per Rule 30 of the CGST Rules, 2017.

ANSWER:92 Statement showing value of supply of goods as per Rule 30 of the CGST Rules,2017:

Particulars Value in `
Direct material cost (944 x 100/118) 800
Direct wages 250
Other direct expenses 100
Indirect materials 75
Factory overheads 200
Administrative overhead (25% of Rs 100) 25
Quality control 25
Sub-total 1475
Less: Sale of scrap (20)
Cost of production 1,455
Add: 10% profit margin as per Rule 30 of the CGST Rules, 2017 145.50
Value of taxable supply of goods 1,600.50

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.67

 TIME & VALUE OF SUPPLY

Cost Accounting Standard (CAS)-4 issued by the Institute of Cost Accountants

of India enumerates various costs to be included in determining the cost of
production of goods. CAS-4 principles are also applicable for determining the cost
of supply of service.
Thus cost of acquisition will include cost of transportation, any local taxes,
insurance, other expenditure like commission, fee and so on paid on procurement
of goods.
However, GST element will not be considered for the purpose of determining the
cost of acquisition.
RULE-31-RESIDUAL METHOD FOR DETERMINATION OF VALUE OF SUPPLY OF
GOODS OR SERVICES OR BOTH-
 Where the value of supply of goods or services or both cannot be determined under
rules 27 to 30, the same shall be determined using reasonable means consistent
with the principles and the general provisions of section 15 and the provisions of
this Chapter:
 Provided that in the case of supply of services, the supplier may opt for this rule,
ignoring rule 30.

CASE-22 A cosmetics company buys its products from a subcontractor, who

supplies “testers” of each product, to be placed in retail outlets, free of charge.
These are of different size from the product that is sold. The company and the
sub-contractor are related persons. As none of the methods in rules 27 to 30
will work for valuing these testers, the value will have to be determined by using
reasonable means consistent with the principles and general provisions of section
15 and the Rules. A possible method may be pro rata reduction of the price based
on difference in size from the product that is sold.

5.68 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

RULE-31A VALUE OF SUPPLY IN CASE OF LOTTERY, BETTING, GAMBLING AND

HORSE RACING-
1) Notwithstanding anything contained in the provisions of this Chapter, the value
in respect of supplies specified below shall be determined in the manner provided
hereinafter.
2) The value of supply of lottery shall be deemed to be 100/128 of the face value of
ticket or of the price as notified in the Official Gazette by the Organizing State,
whichever is higher.
Explanation:- For the purposes of this sub-rule, the expression “Organizing State”
has the same meaning as assigned to it in clause (f) of sub-rule (1) of rule 2 of
the Lotteries (Regulation) Rules, 2010.]
3) The value of supply of actionable claim in the form of chance to win in betting,
gambling or horse racing in a race club shall be 100% of the face value of the bet
or the amount paid into the totalizator.

RULE-32 DETERMINATION OF VALUE IN RESPECT OF CERTAIN SUPPLIES. -

1) Notwithstanding anything contained in the provisions of this Chapter, the value in
respect of supplies specified below shall, at the option of the supplier, be determined
in the manner provided hereinafter.
This rule provides the valuation methods for five specific supplies which are as
under —
a. Purchase or sale of foreign currency including money changing.
b. Booking of tickets for air travel by an air travel agent.
c. Life insurance business.
d. Supply of secondhand goods.
e. Redeemable vouchers/ stamps/ coupons/ tokens
 This rule overrides other rules of valuation. Thus, the supplies prescribed in this rule
need not be valued by sequentially following Rules 27 to 31.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.69

 TIME & VALUE OF SUPPLY

 The valuation methods prescribed under this rule are optional; the supplier can use
them if he so desires. He can also opt to value his supplies in accordance with
other valuation rules.

2) The value of supply of services in relation to the purchase or sale of foreign

currency, including money changing, shall be determined by the supplier of
services in the following manner, namely:

1. Special provision relating to determination of value of service of purchase or

sale of foreign currency including money changing [Sub-rule (2)]
The value of service in relation to purchase or sale of foreign currency, including
money changing, is determined by either of the two methods:

Method-1
a. Transaction where one of the currencies exchanged is Indian Rupees-
The value of supply is difference between buying rate or selling rate of currency
and RBI reference rate for that currency at the time of exchange multiplied by
total units of foreign currency.
However, if RBI reference rate for a currency is not available then value of
supply is 1% of the gross amount of Indian Rupees provided/ received by the
person changing the money.

CASE-23 On 10th May, Mr. Doshi converted USD $ 100 into ` 6,400 @ ` 64 per
USD through Eastern Money Changers. RBI reference rate on 10th May for US $
is ` 63 per US $. The value of supply in this case is (` 63 – `64)* $ 100 = `
100 and GST will be levied on this amount.

5.70 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

CASE-24 If the RBI reference rate is not available, then 1% of ` 6,400 i.e., ` 64
will be the value of supply of service.
b. Transaction where neither of the currencies exchanged is Indian Rupees-
The value of supply is 1% of the lesser of the two amounts the person changing the
money would have received by converting (at RBI reference rate) any of the two
currencies in Indian Rupees.

CASE-25 US $ 9,000 are converted into UK £ 4,500. RBI reference rate at that
time for US $ is ` 63 per US dollar and for UK £ is ` 82 per UK Pound. In this
case, neither of the currencies exchanged is Indian Rupee. Hence, in the given case,
value of taxable service would be 1% of the lower of the following:-
US dollar converted into Indian rupees = $ 9,000 × ` 63 = ` 5,67,00
UK pound converted into Indian rupees =£ 4,500 × ` 82 = ` 3,69,000
Value of taxable service = 1% of ` 3,69,000 = ` 3,690

PROBLEM:93 R converted US$5000 from the authorized money changer @ Rs.

66 per US$ and received Rs 3,30,000. RBI reference rate for US$ is RS. 66.50 for
that day.
a. Compute the value of service in relation to exchange of money.
b. What will be your answer if RBI reference rate is not available?
ANSWER:93

PROBLEM:94 R converted INR60000 into Great Britain Pound ( GBP ) from the
authorized money changer and the exchange rate offered was Rs. 80, and therefore
he received GBP 750. RBI reference rate for that day for GBP is Rs. 79
a. Compute the value of service in relation to exchange of money.
b. What will be your answer if RBI reference rate is not available
ANSWER:94

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.71

 TIME & VALUE OF SUPPLY

Method-2- The person supplying the service may also exercise the following
option (based on slab rates) to ascertain the value of service, however, once opted
he cannot withdraw it during the remaining part of the financial year:

At the option of the supplier of services, the value in relation to the supply of
foreign currency, including money changing, shall be deemed to be
(i) one per cent of the gross amount Up to 1,00,000:
of currency exchanged for an amount 1% of the gross amount of currency
up to one lakh rupees, subject to a exchanged or Rs. 250 whichever is
minimum amount of two hundred and higher
fifty rupees;
(ii) one thousand rupees and half Exceeding Rs. 1,00,000 and up to Rs.
of a per cent of the gross amount 10,00,000:
of currency exchanged for an amount Rs. 1,000 + 0.5 % of the gross amount
exceeding one lakh rupees and up to of currency exchanged
ten lakh rupees; And
(iii) five thousand and five hundred Above Rs. 10,00,000:
rupees and one tenth of a per cent of Rs. 5,500 + 0.1 % of the gross amount
the gross amount of currency exchanged of currency exchanged or Rs.60,000
for an amount exceeding ten lakh whichever is lower
rupees, subject to maximum amount of
sixty thousand rupees.

5.72 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:95 Compute the value of supply of services as per Alternative 2 of rule

32(2):
1. Exchanged US$ 1000 and paid Rs. 66,000
2. Exchanged US$ 3000 and paid Rs. 1,98,000
3. Exchanged British $12000 and paid Rs. 10,80,000
ANSWER:95

PROBLEM:96 Kite Ltd. exported some goods to H Corporation of USA. It received

US $10,000 as consideration for the same and sold it @ Rs. 69 per US dollar.
Compute the value of taxable supply
RBI reference rate for US dollar at that time is Rs. 70 per US dollar
RBI reference rate for US dollars is not available.
What would be the value of taxable supply if US $ 9,000 are converted into UK
£6,200. RBI reference rate at that time for US$ is Rs. 70 per US dollar and for UK
£ is Rs. 100 per UK Pound.
ANSWER:96

PROBLEM:97 Determination of value of supply of services in relation to

purchase or sale of foreign currency - Rule 32(2) (a): M/s. Money Express Ltd.,
Jaipur is an authorised money changer registered under FEMA, 1999. It enters
into the following transactions of money changing:
1. Sold 10,000 US $ @ 1 US $ = Rs. 71
2. Purchased 1,000 Euro @ 1 Euro = Rs. 70
3. Purchased 1,000 GBP @ 1 GBP = Rs. 99
4. Sold 50,000 units of currency ABC @ 1 ABC = Rs. 15
5. RBI reference rate for the various currencies at the relevant time :

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.73

 TIME & VALUE OF SUPPLY

1US$ = Rs. 70
1 Euro = Rs. 71
1 GBP = Rs. 100
6. Sold 9680 US $ for 6,800 GBP
You are required to calculate value of taxable supply of service and tax thereon
if all charges are exclusive of GST. Applicable GST rate - 18%.
ANSWER:97

PROBLEM:98 M/s. MNO Ltd., Delhi is an authorised money changer registered

under FEMA, 1999. It has entered the following transaction of supply of money
changing:
1. 600 transactions of conversion of Dollar into Indian Rupees of Rs. 20,000 per
transaction;
2. 500 transactions of conversion of Dollar into Indian Rupees of Rs. 1 lakh per
transaction;
3. 200 transactions of conversion of Indian Rupee in Dollar of Rs. 5 lakhs per
transaction;
4. 100 transactions of conversion of Euro into Indian Rupee of Rs. 500 lakhs per
transaction;
5. 300 transactions of conversion of Dollar into Euro of Rs. 100 lakhs per transaction;
Compute the value of taxable supply and GST payable where M/s. MNO Ltd.
opted for option under Rule 32(2) (b) of CGST Rules, 2017. Applicable GST
rate -18%.
ANSWER:98

3) Special provision relating to determination of value of service of booking of

tickets for air travel by an air travel agent [Sub-rule (3)]
The value of the supply of services in relation to booking of tickets for travel by

5.74 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

air provided by an air travel agent shall be deemed to be an amount calculated at

the rate of five per cent. of the basic fare in the case of domestic bookings, and
at the rate of ten per cent of the basic fare in the case of international bookings
of passage for travel by air.
Explanation. - For the purposes of this sub-rule, the expression basic fare
means that part of the air fare on which commission is normally paid to the
air travel agent by the airlines.
PROBLEM:99 Mr. Prakash is an Air Travel Agent and provides the following
information for the month of October, 20XX.

Date Particulars Basic Fare Commission Total Value

02/10/20XX Booked by Mr. Ram for 3,000 500 6,000
Delhi to Chennai
10/10/20XX Booked by Mr. Sachin for 15,000 1,500 19,000
Delhi to Bangkok
24/ 10/20XX Booked by Mr. Raj for 2,600 500 5,500
Delhi to Mumbai

Compute value under various methods applicable for air travel agent.
ANSWER:99

PROBLEM:100 M/s. Airlines Associates has sold tickets for transport of passengers
to Singapore, and other foreign countries during the month of January 2018. The
total amount charged is Rs. 30 lakhs on the flight (100 tickets) of which ` 10 lakhs
is towards passenger taxes Determine the Value of taxable supply of services of M/s.
Airlines Associates and tax thereon if applicable rate of GST is 18%. Amounts are
exclusive of tax.
ANSWER:100

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.75

 TIME & VALUE OF SUPPLY

PROBLEM:101 M/s. Kamal Associates has sold tickets for transport of passengers
from various domestic flights during the month of January 2018. The total amount
charged is Rs. 90 lakhs on the flight (500 tickets) of which Rs. 10 lakhs is towards
passenger taxes. Determine the value of taxable supply of services and GST payable
thereon if rate of GST is 18%. Amounts are exclusive of CGST and SGST.
ANSWER:101

4) THE VALUE OF SUPPLY OF SERVICES IN RELATION TO LIFE INSURANCE

BUSINESS SHALL BE-
a. The gross premium charged from a policy holder reduced by the amount allocated
for investment, or savings on behalf of the policy holder, if such an amount is
intimated to the policy holder at the time of supply of service;
b. In case of single premium annuity policies other than (a), ten per cent. of single
premium charged from the policy holder; or
c. In all other cases, twenty five per cent. of the premium charged from the policy
holder in the first year and twelve and a half per cent. of the premium charged
from the policy holder in subsequent years:

Provided that nothing contained in this sub-rule shall apply where the entire
premium paid by the policy holder is only towards the risk cover in life insurance.

PROBLEM:102 Arihant Life Insurance Company Ltd. (ALICL) has charged

gross premium of ` 180 lakh from policy holders with respect to life insurance
policies in the 2019-20; out of which ` 100 lakh have been allocated for
investment on behalf of the policy holders.
Compute the value of supply of life insurance services provided by ALICL:
I. If the amount allocated for investment has been intimated by ALICL to policy
holders at the time of supply of service.

5.76 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

II. if the amount allocated for investment has not been intimated by ALICL to policy
holders at the time of providing of service.
III. if the gross premium charged by ALICL from policy holders is only towards risk
cover.
Note: ALICL has started its operations in the year 2019-20. Thus, the entire
gross premium of ` 180 lakh is the premium for the first year of all the policies.
ALICL has not issued any single premium annuity policy.
ANSWER:102

5) WHERE A TAXABLE SUPPLY IS PROVIDED BY A PERSON DEALING IN BUYING

AND SELLING OF SECOND HAND GOODS i.e., used goods as such or after such
minor processing which does not change the nature of the goods and where no input
tax credit has been availed on the purchase of such goods, the value of supply shall
be the difference between the selling price and the purchase price and where
the value of such supply is negative, it shall be ignored:
 Intra-State supplies of second-hand goods by an unregistered supplier to
registered second hand goods dealer exempt from CGST
 IF ITC AVAILED NORMAL VALUATION AS PER OTHER APPLICABLE PROVISIONS

CASE-26 A company X Ltd, which deals in buying and selling of second hand
cars, purchases a second hand Maruti Alto Car of March, 2014 make (Original price
` 5 lakh) for ` 3 lakh from an unregistered person and sells the same after minor
furbishing for ` 3,50,000. The supply of the car to the company for ` 3 lakh shall
be exempted, and the supply of the same by the company to its customer for ` 3.5
lakhs shall be taxed. The value for GST purpose shall be ` 50000/ i.e., the difference
between the selling and the purchase price of the company. In case any other value
is added by way of repair, refurbishing, reconditioning etc., the same shall also be
added to the value of goods and be part of the margin.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.77

 TIME & VALUE OF SUPPLY

PROBLEM:103 Ram & Co., being a car dealer dealing in second hand cars. Ram
& Co., purchases used car from Mr. Raja and sell the very same car to Miss. Rani
after water wash and painting. The purchase price is ` 2,00,000 whereas the sale
price is ` 2,50,000. Find the GST liability as per rule 32(5) of the CGST Rules,
2017 by following margin scheme in the hands of Ram & Co. Assume applicable
rate of GST 28%. Ram & Co., is not availing input tax credit on purchase of
second hand cars. Whether your answer is different if the sale of second hand car
for ` 1,80,000.
Note: Ram & Co., and Miss. Rani are located within the State of Tamil Nadu.
ANSWER:103

PROBLEM:104 Mr. Rohan is engaged in buying and selling of second-hand cars

in Jaipur. During the month of December, 2017, he supplied a used car after some
processing at Rs. 6,00,000 which he purchased from customer at Rs. 5,40,000
and no input tax credit has been availed on such purchase. Compute the value of
taxable Supply. What would your answer be if purchase price of used car is Rs.
6,20,000.
ANSWER:104 As per Rule 32(5) of CGST Rules, 2017, where a taxable supply
is provided by a person dealing in buying and selling of second hand goods i.e. used
goods as such or after such minor processing which does not change the nature
of the goods and where no input tax credit has been availed on purchase of such
goods, the value of supply shall be the difference between the selling price and
purchase price.
Computation of Value of Taxable Supply of Second hand Car (amount in Rs. ):

Sale price of Car 6,00,000

Purchase price of used Car 5,40,000
Value of Taxable Supply 60,000

5.78 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

(ii) In case (ii), as per Rule 32(5) of CGST Rules, the value of supply of second
hand goods shall be the difference between the selling price and purchase price and
where the value of such supply is negative it shall be ignored. Therefore, value of
Taxable supply of Second hand Car = ? (6,00,000 - 6,20,000) i.e., Nil

 Purchase value of goods repossessed from Defaulting Borrower

If the defaulting borrower is un- If the defaulting borrower is

registered registered
Purchase value = Purchase price in the The repossessing lender agency will
hands of such borrower reduced by discharge GST at the supply value
5% for every quarter or part thereof, without any reduction from actual/
between the date of purchase and the notional purchase value
date of disposal by the person making
such repossession

PROBLEM:105 Mr. X purchased a motor car on 1st October 2020 for Rs. 20,00,000.
80% of the purchase price of car was financed by Easy Finance Ltd. The loan was
payable in 60 monthly instalments beginning with 01-11-2020. Mr. X defaulted in
repayment of loan and Easy Finance Ltd. repossessed the car on 15-05-2021. The
car was disposed on 10-12-2021 for Rs. 15,50,000. Determine the value of taxable
supply as per Rule 32(5) of CGST Rules, 2017.
ANSWER:105 As per Rule 32(5) of CGST Rules, 2017, the purchase value of
goods repossessed from a defaulting borrower, who is not registered, for the purpose
of recovery of a loan or debt shall be deemed to be the purchase price of such goods
by the defaulting borrower reduced by 5% points for every quarter or part thereof,
between the date of purchase and the date of disposal by the person making such
repossession.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.79

 TIME & VALUE OF SUPPLY

Computation of Value of Taxable Supply of Second hand Car (amount in Rs. ):

Sale price of Car 15,50,000

Purchase value of repossessed Car [WN] 15,00,000
Value of Taxable Supply 50,000

Working Note: Computation of purchase value of repossessed car (amount in Rs. ):

Purchase price of car 20,00,000

Date of purchase of car 01-10-2020
Date when repossessed car is sold 10-12-2021
No of quarters or part thereof 5
Percentage computed for the no. of quarters for which goods held prior to sale 25%

Percentage computed for determining value of supply [100%-25%] 75%

Purchase value of repossessed Car 15,00,000

Note: As per Section 2(92) of the CGST Act, 2017, “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.

PROBLEM:106 M/s X Ltd, a registered person under GST, being a dealer dealing
with second-hand goods. M/s X Ltd. supplies a used camera to a consumer in
Chennai for selling price of ` 15,000. The used camera (i.e. second hand) was
purchased for ` 10,000 from a registered dealer in Mumbai, on which CGST + SGST
of ` 1,400 each was charged (i.e. GST rate applicable to cameras is 28%).
M/s X Ltd. charged IGST 28% on inter State supply.
Find the net GST liability in the following independent cases:
a. if input tax credit availed.
b. if input tax credit not availed.
ANSWER:106

5.80 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

PROBLEM:107 Mr. C has taken a loan from the bank on 15th July 2019 worth `
2 crore and purchased a machine. Subsequently Mr. C defaulted in paying the loan
amount along with interest. At late date bank repossessed the machine from Mr.
C on 1st Jan 2020. The banker sells the said goods on 26th April 2020.
Find the value of taxable supply of goods in the hands of banker in the
following two independent cases:
Case 1: machine sold for ` 1,90,00,000.
Case 2: machine sold for ` 1,70,00,000.Note: Applicable rate of IGST 18%.
ANSWER:107

6) The value of a token, or a voucher, or a coupon, or a stamp (other than postage

stamp) which is redeemable against a supply of goods or services or both
shall be equal to the money value of the goods or services or both redeemable
against such token, voucher, coupon, or stamp.

PROBLEM:108 Mr. & Ms. Bhargava purchase 5 gift vouchers for Rs. 1,000 each
from Raymond’s and give them as return gifts to children and their parents on their
son’s birthday. Determine the value of supply.
ANSWER:108 As per the provisions of Rule 32(6) of the CGST Rules, the value of
supply would be the money value of the goods redeemable against the voucher. Thus,
in case of vouchers from Raymond’s, the value would be Rs. 5,000 (i.e., 1,000 Rs.).

PROBLEM:109 Easy Coupons Ltd. sells coupons that are redeemable against specified

cosmetic products at retail outlets. Each coupon has a face value of Rs. 1,500 but is redeemable

for supplies worth Rs. 1,750. What is the value of supply of such coupon under GST laws?

ANSWER:109 As per provisions of Rule 32(6) of the CGST Rules relating to

valuation, the value of a coupon is the money value of the goods redeemable against
it. Therefore, though the coupon is sold for 1,500, its value is Rs. 1,750.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.81

 TIME & VALUE OF SUPPLY

7) Value of supply of notified services between distinct persons [Rule 32(7)] :

The value of taxable services provided by such class of service providers as may be
notified by the Government, on the recommendations of the Council, as referred to
in Paragraph 2 of Schedule I of the said Act between distinct persons as referred
to in Section 25, where input tax credit is available, shall be deemed to be NIL.

RULE-33 VALUE OF SUPPLY OF SERVICES IN CASE OF PURE AGENT. -

Notwithstanding anything contained in the provisions of this Chapter, the
expenditure or costs incurred by a supplier as a pure agent of the recipient of
supply shall be excluded from the value of supply, if all the following conditions
are satisfied, namely,
I. the supplier acts as a pure agent of the recipient of the supply, when he makes
the payment to the third party on authorization by such recipient; the payment
made by the pure agent on behalf of the recipient of supply has been separately
indicated in the invoice issued by the pure agent to the recipient of service; and
II. the supplies procured by the pure agent from the third party as a pure agent ofthe
recipient of supply are in addition to the services he supplies on his own account.
Explanation.-For the purposes of this rule, the expression “pure agent” means a
personwho-
a. enters into a contractual agreement with the recipient of supply to act as his pure
agent to incur expenditure or costs in the course of supply of goods or services
or both;
b. neither intends to hold nor holds any title to the goods or services or both so
procured or supplied as pure agent of the recipient of supply;
c. does not use for his own interest such goods or services so procured; and
d. receives only the actual amount incurred to procure such goods or services in
addition to the amount received for supply he provides on his own account.

5.82 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

CASE-27 A is an importer and B is a custom broker. A approaches B for customs

clearance work in respect of an import consignment. The clearance of import
consignment and delivery of the consignment to A would also require taking service of
a transporter. So A, also authorizes B, to incur expenditure on his behalf for procuring
the services of a transporter and agrees to reimburse B for the transportation cost
at actual. Here, B is providing customs brokers service to A, which would be on a
principal to principal basis. The ancillary service of transportation, is procured by B
on behalf of A as a pure agent and expenses incurred by B on transportation should
not form part of value of customs broker service provided by B to A. This, in sum
and substance is the relevance of the pure agent concept in GST.

CASE-28 Corporate services firm A is engaged to handle the legal work pertaining
to the incorporation of Company B. Other than its service fees, A also recovers
from B, registration fee and approval fee for the name of the company paid to
the Registrar Companies. The fees charged by the Registrar of Companies for the
registration and approval of the name are compulsorily levied on B. A is merely
acting as a pure agent in the payment of those fees. Therefore, A’s recovery of such
expenses is a disbursement and not part of the value of supply made by A to B.

CASE-29 Mr. Ram is a registered dealer under GST Law. He sold furniture to
a customer for ` 51,000 with free delivery. In such case Mr. Ram availing the
service of the transporter for his own interest and therefore, transport charges
is included in selling price of ` 51,000 and he would be not considered as pure
agent in this case

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.83

 TIME & VALUE OF SUPPLY

PROBLEM:110 Mr. X is a Customs Broker issues an invoice for reimbursement

of a few expenses and for consideration towards agency service rendered to
an importer. The amounts charged by the Customs Broker are as below

S. No. Component charges in invoice Amount in `

1. Agency income 10,000
2. Travelling expenses 5,500
3. Hotel expenses 9,500
4. Customs duty 55,000
5. Dock dues 2,500

Find value of taxable supply of service in the hands of Customs Broker

ANSWER:110
RULE-34 RATE OF EXCHANGE OF CURRENCY, OTHER THAN INDIAN RUPEES,
FOR DETERMINATION OF VALUE. -
1) Exchange rate notified by CBIC applicable in case of goods : The rate of
exchange for determination of value of taxable goods shall be the applicable rate
of exchange as notified by the Board under Section 14 of the Customs Act, 1962
for the date of time of supply of such goods in terms of Section 12 of the Act.
2) Exchange rate determined as per GAAP applicable in case of services :
The rate of exchange for determination of value of taxable services shall be the
applicable rate of exchange determined as per the generally accepted accounting
principles for the date of time of supply of such services in terms of Section 13
of the Act.

RULE-35VALUE OF SUPPLY INCLUSIVE OF INTEGRATED TAX, CENTRAL TAX,

STATE TAX, UNION TERRITORY TAX -Where the value of supply is inclusive of
integrated tax or, as the case may be, central tax, State tax, Union territory

5.84 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 TIME & VALUE OF SUPPLY

tax, the tax amount shall be determined in the following manner, namely, —
Value inclusive of taxes * tax rate in % of IGST or as the case
may be CGST, SGST or UTGST
Tax amount =
(100 + sum of tax rates, as applicable, in %)

Explanation. - For the purposes of the provisions of this Chapter, the expressions-

OPEN MARKET VALUE of a supply of goods or services or both means the full
value in money, excluding the integrated tax, central tax, State tax, Union territory
tax and the cess payable by a person in a transaction, where the supplier and the
recipient of the supply are not related and the price is the sole consideration, to
obtain such supply at the same time when the supply being valued is made;

SUPPLY OF GOODS OR SERVICES OR BOTH OF LIKE KIND AND QUALITY means

any other supply of goods or services or both made under similar circumstances
that, in respect of the characteristics, quality, quantity, functional components,
materials, and the reputation of the goods or services or both first mentioned, is
the same as, or closely or substantially resembles, that supply of goods or services
or both.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 5.85

 TIME & VALUE OF SUPPLY

5.86 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 8 | REGISTRATION

1. INTRODUCTION-
1) Registration is the most fundamental requirement for identification of taxpayers
ensuring tax compliance in the economy.
2) Registration of any business entity under the GST Law implies obtaining a unique
number from the concerned tax authorities for the purpose of collecting tax on
behalf of the government and to avail Input Tax Credit for the taxes on his inward
supplies.
3) Without registration, a person can neither collect tax from his customers nor claim
any input Tax Credit of tax paid by him.
4) Registration NO-
 Two characters for the State code
 Ten characters for the Permanent Account Number or the Tax Deduction and
Collection Account Number
 Two characters for the entity code;
 One checksum character.

5) Under GST, registrations need to be taken State-wise. No centralized registrations

under GST. A business entity having its branches in multiple States will have to take
separate State wise registration for the branches in different States.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.1

 REGISTRATION

6) One registration per State: Further, within a State, an entity with different
branches would have single registration wherein it can declare one place as
principal place of business and other branches as additional place(s) of business.
7) Separate registration in respect of multiple places of business within a State:
However, a business entity having separate places of business in a State may
obtain separate registration for each of its place of business otherwise a given
PAN based legal entity would have one registration number - Goods and Services
Tax Identification Number (GSTIN) per State
8) Registration under GST is not tax specific, which means that there is single
registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.

2. ADVANTAGES OF REGISTRATION:
I. He is legally recognized as supplier of goods or services or both.
II. He is legally authorized to collect taxes from his customers and pass on the credit
of the taxes paid on the goods or services supplied to the purchasers/recipients.
III. He can claim Input Tax Credit of taxes paid and can utilize the same for payment
of taxes due on supply of goods or services.
IV. Seamless flow of Input Tax Credit from suppliers to recipients at the national level.
V. Registered person is eligible to apply for Government bids or contracts or assignments.
VI. Registered person under GST can easily gain trust from customers.

3. RELEVANT DEFINITIONS
A. Casual taxable person” means a person who occasionally undertakes transactions
involving supply of goods or services or both in the course or furtherance of
business, whether as principal, agent or in any other capacity, in a State or a
Union territory where he has no fixed place of business;
Analysis: A casual taxable person is a person who is not registered in a particular
state.

8.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

Example: A person resident and registered in Goa will be a casual taxable person for
the state of Maharashtra if such person conducts business activities in Maharashtra.

PROBLEM:1 Mr. Gold runs a retail shop for handmade jewellery and is registered
in Chennai. Mr. Gold is planning to sell the jewellery at an exhibition in Mumbai, to
be held from 1st January 2020 to 10th January 2020. Advise time with regard to
registration and payment of GST.
ANSWER:1 Mr. Gold should apply for registration as a casual taxable person within 5
days prior to the date of commencing the exhibition on 1st January 2020. Mr. Gold
should also make an advance deposit of the estimated tax liability for the period
from 1st January 2020 to 10th January 2020.

PROBLEM:2 M/s X Ltd is an advertising company located in Chennai and is

registered as a normal taxable person there. Now, they have secured an assignment
to manage digital marketing for the Koti Deepothsavam Festival, which will take
place in Hyderabad, Telangana. This will require M/s X Ltd. to displace some
resources in Hyderabad until the festival is over. Advise M/s X Ltd. to obtain for
separate registration in the State of Telangana.
ANSWER:2 In this case, since M/s X Ltd does not have too many assignments coming from
Hyderabad, they can register as a Casual Taxable Person in Telangana for 90 days. This will
enable the organizers of the festival to take input credit on all GST paid to M/s X Ltd.

B. 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; A non-resident taxable person is a person who does not have any fixed
place of business/residence in INDIA .Hence, in general language “FOREIGNERS”
conducting business activities are non-resident taxable persons.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.3

 REGISTRATION

C. Aggregate turnover in a Financial Year [Sec. 2(6) of CGST] Act: Aggregate value of all
taxable supplies (excluding the value of inward supplies on which tax is payable by a
person on reverse charge basis), exempt supplies, exports of goods or services or both
and inter-state supplies of person having the same PAN, to be computed on all India
basis but excludes Central Tax, State Tax, Union Territory Tax, integrated tax and Cess.

Aggregate turnover includes Aggregate turnover excludes

The value of exported goods/services Inward supplies on which the
recipient is required to pay tax under
Reverse Charge Mechanism (RCM).
Exempted goods/services or both which Central tax (CGST)/SGST/UTGST/
attracts nil rate of tax or wholly exempt IGST
from tax and includes non- taxable supply
Inter-State supplies between distinct Compensation Cess
persons having same PAN
Supply on own account and on behalf of principal.

Important points:
I. The turnover will be computed PAN wise.
II. The partner and partnership firm will have different PAN Nos. Thus the turnover
of the partner and partnership firm will not be aggregated.
III. The HUF and individual coparcener of the family have different PAN Nos. Hence,
turnover of Karta of HUF in his individual capacity and turnover of Karta as a
Karta of HUF will not be aggregated.
IV. Supply of goods, after completion of job work, by a registered job worker shall be
treated as the supply of goods by the principal referred to in Sec. 143 of the CGST
Act, 2017, and the value of such goods shall not be included in the aggregate turnover
of the registered job worker. It will be included in the turnover of turnover of principal.

8.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

4. PERSONS LIABLE FOR REGISTRATION- SECTION 22

1) Every supplier shall be liable to be registered under this Act in the State or Union
territory, other than special category States, from where he makes a taxable supply
of goods or services or both, if his aggregate turnover in a financial year exceeds
twenty lakh rupees:
Provided that where such person makes taxable supplies of goods or services or both
from any of the special category States, he shall be liable to be registered if his
aggregate turnover in a financial year exceeds ten lakh rupees:
Provided further that the Government may, at the request of a special category
State and on the recommendations of the Council, enhance the aggregate turnover
referred to in the first proviso from ten lakh rupees to such amount, not exceeding
twenty lakh rupees and subject to such conditions and limitations, as may be so
notified:
Provided also that the Government may, at the request of a State and on the
recommendations of the Council, enhance the aggregate turnover from twenty lakh
rupees to such amount not exceeding forty lakh rupees in case of supplier who is
engaged exclusively in the supply of goods, subject to such conditions and limitations,
as may be notified.
Explanation.—For the purposes of this sub-section, a person shall be considered to
be engaged exclusively in the supply of goods even if he is engaged in exempt supply
of services provided by way of extending deposits, loans or advances in so far as the
consideration is represented by way of interest or discount.
Special category state. Manipur, Mizoram, Nagaland and Tripura.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.5

 REGISTRATION

Threshold limit for Registration

STATE WITH THRESHOLD STATE WITH THRESHOLD STATE WITH THRESHOLD

LIMIT OF 10 LAKHS FOR LIMIT OF 20 LAKHS FOR LIMIT OF 20 LAKHS FOR
BOTH GOODS & SERVICE BOTH GOODS & SERVICE SERVICE AND 40 LAKHS
FOR GOODS (ie PERSONS
ENGAGED EXCLUSIVELY
IN SUPPLY OF GOODS.)
MANIPUR ARUNACHAL PRADESH J & K
MIZORAM MEGHALAYA ASSAM
NAGALAND SIKKIM/ UTTARAKHAND HIMACHAL PRADESH
TRIPURA PUDUCHERRY/ ALL OTHER STATES
TELANGANA

2) Licensee: Every person who is a registered licensee or holds a license under an

existing law, on the day immediately preceding the appointed day i.e. 1st July

3) Transferee: Where a business, which is carried by a taxable person is transferred

as a going concern shall be liable to be registered with effect from the date of
such transfer or succession

4) Transferee under a scheme: 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

8.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

CASE-1 Prithiviraj of Assam is exclusively engaged in intra-State supply of shoes. His

aggregate turnover in the current financial year is ` 22 lakh. In view of the discussion
in the above paras, the applicable threshold limit for registration for Prithiviraj in the
given case is ` 40 lakh. Thus, he is not liable to get registered under GST.
 If in above example, all other things remaining the same, Prithiviraj is exclusively
engaged in supply of pan masala instead of shoes, he will not be eligible for higher
threshold limit of ` 40 lakh and the applicable threshold limit for registration in that
given case will be ` 20 lakh. Thus, Prithviraj will be liable to get registered under GST.
 If instead of pan masala, Prithiviraj is exclusively engaged in supply of taxable
services, the applicable threshold limit for registration will still be ` 20 lakh. Thus,
Prithiviraj will be liable to get registered under GST.
 Further, if Prithiviraj is engaged in supply of both taxable goods and services, the
applicable threshold limit for registration will be ` 20 lakh. Thus, Prithiviraj will be
liable to get registered under GST.

CASE-2 Sultan of Telangana is exclusively engaged in intra-State supply of

leather products. Its aggregate turnover in the current financial year is ` 25 lakh.
Since Sultan is making taxable supplies from Telangana, he will not be eligible for
higher threshold limit available in case of exclusive supply of goods. The applicable
threshold limit for registration for Sultan in the given case is ` 20 lakh. Thus, he
is liable to get registered under GST.
 If in above example, all other things remaining the same, Sultan is exclusively
engaged in supply of taxable services instead of leather products, the applicable
threshold limit for registration will still be ` 20 lakh. Thus, Sultan will be liable to
get registered under GST.
 Further, if Sultan is engaged in supply of both taxable goods and services, the
applicable threshold limit for registration will be ` 20 lakh only. Thus, Sultan will
be liable to get registered under GST.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.7

 REGISTRATION

CASE-3 Ashoka of Manipur is exclusively engaged in intra-State supply of paper.

Its aggregate turnover in the current financial year is ` 12 lakh. Since Ashoka
is making taxable supplies from Manipur which is a Special Category State, the
applicable threshold limit for registration for Ashoka in the given case is ` 10 lakh.
Thus, he is liable to get registered under GST.
 If in above example, all other things remaining the same, Ashoka is exclusively
engaged in supply of taxable services instead of toys, the applicable threshold limit
for registration will still be ` 10 lakh. Thus, Ashoka will be liable to get registered
under GST.
 Further, if Ashoka is engaged in supply of both taxable goods and services, the
applicable threshold limit for registration in that given case will be ` 10 lakh only.
Thus, Ashoka will be liable to get registered under GST.

CASE-4 Raghav of Assam is exclusively engaged in intra-State supply of

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

CASE-5 Uday Enterprises is engaged in supply of taxable goods in Maharashtra.

It also supplies alcoholic liquor for human consumption from Nagaland. Its turnover
in the current financial year is ` 34 lakh in Maharashtra and ` 8 lakh in Nagaland.
Since Uday Enterprises is exclusively engaged in making taxable supplies of goods
from Maharashtra, the applicable threshold limit for obtaining registration is `
40 lakh. However, the threshold limit will not be reduced to ` 10 lakh in this
case, as supply of alcoholic liquor for human consumption from Nagaland (one of

8.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

the Special Category States) are non-taxable supplies. In the given case, since the
aggregate turnover of Uday Enterprises exceeds the applicable threshold limit of `
40 lakh, it is liable to obtain registration. It will obtain registration in Maharashtra
but is not required to obtain registration in Nagaland as he is not making any
taxable supplies from said State.

5. PERSONS NOT LIABLE FOR REGISTRATION – SECTION 23

1) The following persons shall not be liable to registration, namely: ––
a. Any person engaged exclusively in the business of supplying goods or services or
both that are not liable to tax or wholly exempt from tax under this Act or under
the Integrated Goods and Services Tax Act.
b. An agriculturist, to the extent of supply of produce out of cultivation of land.

CASE-6 A, a farmer produces goods through cultivation from his own land and
supplies the same to traders. The goods so supplied during the whole of the year
aggregates to Rs 21 lacs. He is not liable to get the registration in terms of Section
23(1)(b) of the CGST Act.

CASE-7 In the above case, if the said farmer A, in addition to the supply of
cultivated goods worth Rs21 lacs, also supplies goods cultivated by his friend B,
worth Rs 5 lacs(which is his trading business) to other traders, then in such cases,
his aggregate turnover exceeds the threshold limit of Rs 20 lacs, hence he will be
liable for the registration under the CGST Act.

2) The Government may, on the recommendations of the Council, by notification,

specify the category of persons who may be exempted from obtaining registration
under this Act.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.9

 REGISTRATION

I. IF all supplies are under RCM.

II. Job workers engaged in making interstate supply of services exempt from
obtaining registration if T/O upto`20 lakhs

III. Persons making inter-State supplies of taxable services up to ` 20,00,000-The

persons making inter-State supplies of taxable services and having an aggregate
turnover, to be computed on all India basis, not exceeding an amount of ` 20 lakh
in a financial year have been exempted from obtaining compulsory registration.
However, the aggregate value of such supplies, to be computed on all India basis,
should not exceed an amount of ` 10 lakh in case of Special Category States other
than Jammu and Kashmir.

IV. CTP interstate supplier of handicraft goods & craftsman products having T/O
up to` 20 lakhs.

V. Intra state supplies exclusively of GOODS upto Rs 40 lakhs. Subsequently, with

effect from 01.04.2019, Notification No. 10/2019 CT dated 07.03.2019 is issued
which exempts any person who is engaged in exclusive supply of goods and whose
aggregate turnover in the financial year does not exceed ` 40 lakh. Exceptions to
this exemption are as follows:
a) persons required to take compulsory registration under section 24 of the CGST
Act.
b) persons engaged in making supplies of ice cream and other edible ice, whether or
not containing cocoa [2105 00 00], Pan masala [2106 90 20] and all goods of
Chapter 24, i.e. Tobacco and manufactured tobacco substitutes.
c) Persons engaged in making intra-State supplies in the States of Arunachal Pradesh,
Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura,

8.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

Uttarakhand. Inter-State supplies of goods are nevertheless liable to compulsory

registration and are thus covered in exception (i) above.
d) Person who has opted for voluntary registration or such registered persons who
intend to continue with their registration under the CGST Act.

CASE-8 AUTHORITY FOR ADVANCE RULINGS, KOLKATA, Joint Plant Committee,

In re.4CASE NO.02 OF 2018, March 21, 2018, it was opined that an applicant
engaged exclusively in supplying goods and services that are wholly exempt from tax
is not required to be registered under GST Act if he is not otherwise liable to pay
tax under reverse charge under section 9(3) of GST Act or section 5(3) of IGST
Act.

CASE-9 A, a farmer produces goods through cultivation from his own land and
supplies the same to traders. The goods so supplied during the whole of the year
aggregates to Rs 21 lacs. He is not liable to get the registration in terms of Section
23(1)(b) of the CGST Act.

CASE-10 In the above case, if the said farmer A, in addition to the supply of
cultivated goods worth Rs21 lacs, also supplies goods cultivated by his friend B,
worth Rs 5 lacs(which is his trading business) to other traders, then in such cases,
his aggregate turnover exceeds the threshold limit of Rs 20 lacs, hence he will be
liable for the registration under the CGST Act.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.11

 REGISTRATION

6. COMPULSORY REGISTRATION - SECTION 24

Notwithstanding anything contained in sub section (1) of section 22, the
following categories of persons shall be required to be registered under this Act
1) Interstate supplier: An interstate supplier is compulsorily required to get registered
under GST

2) Casual Taxable person: A person who occasionally undertakes transactions involving

supply of goods or services or both in the course or furtherance of business,
whether as principal, agent or in any other capacity, in a State or a Union territory
where he has no fixed place of business is termed as a casual taxable person.
Such persons if making taxable supply of goods or services or both comes under
the ambit of taxable person

3) Payer of Reverse charge: Persons who are required to pay tax under reverse
charge shall get registered under GST

4) Person who are required to pay tax under Section 9(5) of CGST Act, 2017ie
E-Commerce operator who is required to pay tax on specified services.

5) Non-resident: A non-resident taxable person making taxable supply

6) Deductors of tax at source: Persons who are required to deduct tax under section
51, whether or not separately registered under this Act

7) Supplier on behalf of another person: Persons who make taxable supply of goods
or services or both on behalf of other taxable persons whether as an agent or
otherwise

8.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

8) Input Service Distributor: Whether or not separately registered under this Act

9) Persons who supply goods or services or both (other than supplies specified
under sub-section (5) of section 9), through such electronic commerce operator
who is required to collect tax at source under section 52. (Persons who are
suppliers of service and supplying services through e-com operator are not
required to register under GST if their AT is less than 20 lakhs pa. (`10 lakhs
in special category states.)

10) Electronic Commerce Operator: Every Electronic Commerce Operator who is required
to collect TCS.

11) Supplier of online information: Every person supplying online information and
database access or retrieval services from a place outside India to a person in India,
other than a registered person

12) Any other person: Any other person or class of persons as notified by the Government
on recommendations of the Council

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.13

 REGISTRATION

PROBLEM:3 Examine, with reason, whether registration is required, under

CGST Act, in the following independent cases:
I. Aadhav Computers of Gujarat is providing computer maintenance service. Aggregate
turnover of Aadhav Computers is ` 15 lakh which comprises both inter-State and
intra-State supply.
II. Soft Wings of West Bengal, exclusively trading in garments, supplies its taxable
goods in various States of India from its outlet in West Bengal. Aggregate turnover
of Soft Wings is ` 35 lakh.

ANSWER:3
I. Registration is compulsory for suppliers engaged in inter-State supply. However, as
per Notification No. 10/2017 IT dated 13.10.2017, threshold exemption of ` 20 lakh
[` 10 lakh in case of Special Category States of Mizoram, Tripura, Manipur and
Nagaland] is available in case of inter-State supply of taxable services. Therefore,
Aadhav Computers (aggregate turnover ` 15 lakh) is not required to obtain
registration even though it is engaged in inter-State supply of taxable services.
II. The threshold limit for registration in the State of West Bengal for the persons
engaged exclusively in supply of goods, is ` 40 lakh. However, registration is
compulsory if the supplier is engaged inter-State supply of goods irrespective of
the quantum of aggregate turnover. The threshold exemption is not available in
case of inter-State supply of taxable goods. Thus, Soft Wings is required to obtain
registration.

PROBLEM:4 Examine whether the liability to register compulsorily under

section 24 arises in each of the independent cases mentioned below:
I. 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.

8.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

II. 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.
III. 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.
ANSWER:4
I. Section 24 of the CGST Act provides that persons making any inter-State taxable
supply of goods are required to obtain registration compulsorily under GST laws
irrespective of the quantum of aggregate turnover.
However, as per section 23, an agriculturist, to the extent of supply of produce out
of cultivation of land, is not liable to registration.
Meenu is exclusively engaged in cultivation and supply of potatoes. Thus, she is not
liable to registration irrespective of the fact that she is engaged in making inter-
State supply of goods. Further, Meenu will not be liable to registration, in the given
case, even if her turnover exceeds the threshold limit.
II. Section 24 of the CGST Act specifies the categories of persons who are required to
be mandatorily registered under GST irrespective of the quantum of their aggregate
turnover.
In the given case, Jinu Oils does not fall in any of the specified categories. Therefore,
it is not required to obtain registration compulsorily under GST.
However, as per section 22 read with Notification No. 10/2019 CT dated 07.03.2019,
a supplier is liable to be registered in the State/Union territory from where he makes
a taxable supply of goods and/or services, if his aggregate turnover in a financial
year exceeds the threshold limit. The threshold limit for a person making supply of
both goods and services is ` 10 lakh for the States of Mizoram, Tripura, Manipur and
Nagaland and ` 20 lakh for the rest of India. Thus, the applicable threshold limit
for the State of Gujarat is ` 20 lakh for supply of both goods and services. Further,

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.15

 REGISTRATION

aggregate turnover includes exempted turnover of goods or services. Accordingly,

Jinu Oils is liable obtain registration since its aggregate turnover [` 21 lakh
(including turnover of exempt supply of petrol)] exceeds the threshold limit of `
20 lakh.
III. Section 24 of the CGST Act provides that persons who make taxable supply of
goods and/or services on behalf of other taxable persons whether as an agent or
otherwise are required to obtain registration compulsorily under GST laws irrespective
of the quantum of aggregate turnover. Therefore, Tilu will be mandatorily required
to obtain registration.

8.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

7. PROCEDURE FOR REGISTRATION- SECTION 25

1) Every person who is liable to be registered under section 22 or section 24 shall
apply for registration in every such State or Union territory in which he is so liable
within thirty days from the date on which he becomes liable to registration, in such
manner and subject to such conditions as may be prescribed:
 Provided that a casual taxable person or a non-resident taxable person shall apply
for registration at least five days prior to the commencement of business.
 Every person who makes a supply from the territorial waters of India shall obtain
registration in the coastal State or Union territory where the nearest point of the
appropriate baseline is located.
 Provided that a person having a unit(s) in a Special Economic Zone or being
a Special Economic Zone developer shall make a separate application for
registration as a business vertical distinct from his other units located outside
the Special Economic Zone:
 SEZ is a geographically bound zone where the economic laws relating to export and
import are more liberal as compared to other parts of the country. SEZ is considered
to be a place outside India for all tax purposes.

CASE-11 Sugam Services Ltd. is engaged in taxable supply of services in Madhya

Pradesh. The turnover of Sugam Services Ltd. exceeded ` 20 lakh on 1st November.
It is liable to get registered by 1st December in the State of Madhya Pradesh.

CASE-12 A dealer ‘X’ has two offices – one in Delhi and another in Haryana. In
order to determine whether ‘X’ is liable for registration, turnover of both the offices
would be taken into account and only if the same exceeds ` 20 lakh, X is liable for
registration.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.17

 REGISTRATION

CASE-13 Rohan Oils, Punjab, is engaged in supplying machine oil as well as

petrol. Supply of petrol is not leviable to GST, but supply of machine oil is taxable.
In order to determine whether Rohan Oils is liable for registration, turnover of
both the supplies – non -taxable as well as taxable - would be taken into account
and if the same exceeds ` 20 lakh, Rohan Oils is liable for registration.

CASE-14 Mohini Enterprises has appointed M/s Best fords& Associates as its
agent. All the supplies of goods made by M/s Best fords& Associates as agent
of Mohini Enterprises will also be included in the aggregate turnover of M/s Best
fords & Associates.

2) A person seeking registration under this Act shall be granted a single

registration in a State or Union territory:
 SEPRATE REGISTRATION FOR EACH PLACE OF BUINESS- (OPTIONAL PROVISION)
-A person having multiple business places in a State or Union territory may
be granted a separate registration for each such place of business , subject
to such conditions as may be prescribed.

3) A person, though not liable to be registered under section 22 or section 24 may

get himself registered voluntarily, and all provisions of this Act, as are applicable
to a registered person, shall apply to such person.

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

5) Where a person who has obtained or is required to obtain registration in a

State or Union territory in respect of an establishment, has an establishment

8.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

in another State or Union territory, then such establishments shall be treated as

establishments of distinct persons for the purposes of this Act.

CASE-15 Mohan, a Chartered Accountant, has a registered head office in Delhi.

He has also obtained 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.

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

(6A) Every registered person shall undergo authentication, or furnish proof of possession
of Aadhaar number, in such form and manner and within such time as may be prescribed:
Provided that if an Aadhaar number is not assigned to the registered person, such
person shall be offered alternate and viable means of identification in such manner
as Government may, on the recommendations of the Council, prescribe:
Provided further that in case of failure to undergo authentication or furnish proof of
possession of Aadhaar number or furnish alternate and viable means of identification,
registration allotted to such person shall be deemed to be invalid and the other
provisions of this Act shall apply as if such person does not have a registration.

(6B) On and from the date of notification, every individual shall, in order to
be eligible for grant of registration, undergo authentication, or furnish proof of
possession of Aadhaar number, in such manner as the Government may, on the
recommendations of the Council, specify in the said notification:

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.19

 REGISTRATION

Provided that if an Aadhaar number is not assigned to an individual, such individual

shall be offered alternate and viable means of identification in such manner as the
Government may, on the recommendations of the Council, specify in the said notification.

(6C) On and from the date of notification, every person, other than an individual,
shall, in order to be eligible for grant of registration, undergo authentication, or
furnish proof of possession of Aadhaar number of the Karta, Managing Director,
whole time Director, such number of partners, Members of Managing Committee
of Association, Board of Trustees, authorised representative, authorised signatory
and such other class of persons, in such manner, as the Government may, on the
recommendation of the Council, specify in the said notification:
Provided that where such person or class of persons have not been assigned the
Aadhaar Number, such person or class of persons shall be offered alternate and
viable means of identification in such manner as the Government may, on the
recommendations of the Council, specify in the said notification.

(6D) The provisions of sub-section (6A) or sub-section (6B) or sub-section

(6C) shall not apply to such person or class of persons or any State or Union
territory or part thereof, as the Government may, on the recommendations of the
Council, specify by notification.
Explanation. —For the purposes of this section, the expression “Aadhaar number”
shall have the same meaning as assigned to it in clause (a) of section 2 of
the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and
Services) Act, 2016 (18 of 2016).]

7) Notwithstanding anything contained in sub-section (6), a non-resident taxable

person may be granted registration under sub-section (1) on the basis of such
other documents as may be prescribed.

8.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

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

9) Notwithstanding anything contained in sub-section (1), ––

a. any specialized agency of the United Nations Organization or any Multilateral
Financial Institution and Organization notified under the United Nations (Privileges
and Immunities) Act, 1947, Consulate or Embassy of foreign countries; and
b. any other person or class of persons, as may be notified by the Commissioner all be
granted a Unique Identity Number in such manner and for such purposes, including
refund of taxes on the notified supplies of goods or services or both received by
them, as may be prescribed.

10) The registration or the Unique Identity Number shall be granted or rejected after
due verification in such manner and within such period as may be prescribed.

11) A certificate of registration shall be issued in such form and with effect from
such date as may be prescribed.

12) A registration or a Unique Identity Number shall be deemed to have been granted
after the expiry of the period prescribed under sub-section (10), if no deficiency has
been communicated to the applicant within that period.

Point to be noted-
a. There are basically four types of Registration,
I. Turnover basis,
II. compulsory registration,

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.21

 REGISTRATION

III. voluntary registration and

IV. Suo moto registration.

b) For obtaining registration, PAN is mandatory. PAN based GST identification number
is issued to every registrant.

c) However, in case a person is required to deduct tax under section 51, registration
can be obtained on the basis of TAN, in that case TAN based GST identification
number is issued to the registrant.

d) Any specialized agency of the United Nations Organization or any Multilateral

Financial Institution and Organization notified under the United Nations (Privileges
and Immunities) Act, 1947, Consulate or Embassy of foreign countries shall be
granted Unique Identity Number(UIN)

RULE-8 APPLICATION FOR REGISTRATION

1) Every person, other than a
 non-resident taxable person
 a person required to deduct tax at source under section 51,
 a person required to collect tax at source under section 52 and
 a person supplying online information and database access or retrieval services
from a place outside India to a non-taxable online recipient referred to in section
14 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017
who is liable to be registered under sub-section (1) of section 25 and every
person seeking registration under sub-section (3) of section 25 (hereafter in
this Chapter referred to as the applicant ) shall, before applying for registration,
declare his Permanent Account Number, mobile number, e-mail address, State
or Union territory in Part A of FORM GST REG-01 on the common portal, either

8.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

directly or through a Facilitation Centre notified by the Commissioner:

 Provided further that every person being an Input Service Distributor shall make
a separate application for registration as such Input Service Distributor.

CASE-16 Suvarna Industries is engaged in manufacturing activities in Uttar Pradesh.

It has two manufacturing units in UP - one in SEZ and another outside SEZ. Under
GST, one registration per State is required. However, since in this case, one of the
two units of Suvarna Industries is located in SEZ, it will make a separate application
for registration as a business vertical distinct from unit located outside SEZ.

2) VALIDATION-
 The Permanent Account Number shall be validated online by the common portal
from the database maintained by the Central Board of Direct Taxes.
 The mobile number declared under sub-rule (1) shall be verified through a one-time
password sent to the said mobile number; and
 The e-mail address declared under sub-rule (1) shall be verified through a separate
one-time password sent to the said e-mail address.

3) On successful verification of the Permanent Account Number, mobile number and

e-mail address, a temporary reference number shall be generated and communicated
to the applicant on the said mobile number and e-mail address.

4) Using the reference number generated under sub-rule (3), the applicant shall
electronically submit an application in Part B of FORM GST REG-01, duly signed or
verified through electronic verification code, along with the documents specified in
the said Form at the common portal, either directly or through a Facilitation Centre
notified by the Commissioner.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.23

 REGISTRATION

(4A) provides that where an applicant opts for authentication of Aadhaar

number, he shall, while submitting an application for registration, undergo
authentication of Aadhaar number. Said authentication is required to be
eligible for grant of registration. Date of submission of the application in such
cases shall be earlier of:
a. the date of authentication of the Aadhaar number, or
b. 15 days from the submission of the application in Part B of Form GST REG-01

5) On receipt of an application under sub-rule (4), an acknowledgement shall be

issued electronically to the applicant in FORM GST REG-02.

6) A person applying for registration as a casual taxable person shall be given a

temporary reference number by the common portal for making advance deposit
of tax in accordance with the provisions of section 27 and the acknowledgement
under sub-rule (5) shall be issued electronically only after the said deposit.

RULE-9 VERIFICATION OF THE APPLICATION AND APPROVAL-

1) The application shall be forwarded to the proper officer who shall examine the
application and the accompanying documents and if the same are found to be in
order, approve the grant of registration to the applicant within a period of three
working days from the date of submission of the application.
Provided that where a person, other than those notified under sub-section (6D)
of section 25, fails to undergo authentication of Aadhaar number the registration
shall be granted only after physical verification of the principal place of business
in the presence of the said person, in the manner provided under rule 25.
The PO may for reasons to be recorded in writing and with approval of an
officer not below the Rank of JC in lieu of physical verification of the place
of business carry out the verification of such documents as he may deem fit.

8.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

2) Where the application submitted under rule 8 is found to be deficient, either in

terms of any information or any document required to be furnished under the
said rule, or where the proper officer requires any clarification with regard to any
information provided in the application or documents furnished therewith, he may
issue a notice to the applicant electronically in FORM GST REG-03 within a period
of three working days from the date of submission of the application and the
applicant shall furnish such clarification, information or documents electronically,
in FORM GST REG-04, within a period of seven working days from the date of the
receipt of such notice.
Where a person other than a person notified u/s 25(6D), fails to undergo authentication
of Adhaar no the notice in FORM NO GST REG 03 may be issued not later than 21
days from date of submission application.
Explanation.- For the purposes of this sub-rule, the expression clarification includes
modification or correction of particulars declared in the application for registration,
other than Permanent Account Number, State, mobile number and e-mail address
declared in Part A of FORM GST REG-01.

3) Where the proper officer is satisfied with the clarification, information or documents
furnished by the applicant, he may approve the grant of registration to the applicant
within a period of seven working days from the date of the receipt of such
clarification or information or documents.

4) Where no reply is furnished by the applicant in response to the notice issued under
sub-rule (2) or where the proper officer is not satisfied with the clarification,
information or documents furnished, he shall, for reasons to be recorded in writing,
reject such application and inform the applicant electronically in FORM GST REG-05.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.25

 REGISTRATION

5) IF THE PROPER OFFICER FAILS TO TAKE ANY ACTION, -

a. within a period of three working days from the date of submission of the application
in case where a person successfully undergoes authentication of Aadhaar number
or is notified under section 25(6D); or
b. Within 21 days from date of submission of application in case where a person, other
than a person notified u/s 25(6D),fails to undergo authentication of Aadhaar number.
c. Within 21 days from date of submission of application in case where a person does
not opt for authentication of Aadhaar number.
d. Within a period of seven working days from the date of the receipt of the
clarification, information or documents furnished by the applicant under sub-rule
(2), the application for grant of registration shall be deemed to have been approved

CHART-

8.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

RULE-10 ISSUE OF REGISTRATION CERTIFICATE-

1) Subject to the provisions of sub-section (12) of section 25, where the application
for grant of registration has been approved under rule 9, a certificate of registration
in FORM GST REG-06 showing the principal place of business and additional
place or places of business shall be made available to the applicant on the common
portal and a Goods and Services Tax Identification Number shall be assigned subject
to the following characters, namely:-
 Two characters for the State code
 Ten characters for the Permanent Account Number or the Tax Deduction and
Collection Account Number
 Two characters for the entity code.
 One checksum character.

Effective Date of Registration:

I. Where the application for registration has been submitted within 30 days from
the date on which the person becomes liable to registration: The effective date of
registration shall be the date on which he became liable for registration.
II. Where the application for registration has been submitted by the applicant after
30 days from the date of his becoming liable to registration: The effective date of
registration shall be the date of grant of registration.
III. Voluntarily Registration: In case of a person taking registration voluntarily while
being within the threshold exemption limit for paying tax, the effective date of
registration shall be the date of order of registration.
IV. For Casual taxable persons / Non-resident taxable person: A Casual Taxable
person and a non-resident taxable person should however apply for registration at
least 5 days prior to commencement of business.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.27

 REGISTRATION

2) Every certificate of registration shall be duly signed or verified through electronic

verification code by the proper officer under the Act.

3) Where the registration has been granted under sub-rule (5) of rule 9, the applicant
shall be communicated the registration number, and the certificate of registration
under sub-rule (1), duly signed or verified through electronic verification code, shall
be made available to him on the common portal, within a period of three days
after the expiry of the period specified in sub-rule (5) of rule 9.

CASE-17 Sugam Services Ltd. is engaged in taxable supply of services in Madhya

Pradesh. The turnover of Sugam Services Ltd. exceeded ` 20 lakh on 1st November.
It is liable to get registered by 1st December [30 days] in the State of Madhya
Pradesh. It applies for registration on 28th November and is granted registration
certificate on 5th December. The effective date of registration of Sugam Services
Ltd. is 1st November.

CASE-18 In above example, if Sugam Services Ltd. applies for registration on 3rd
December and is granted registration certificate on 10th December. The effective
date of registration of Sugam Services Ltd is 10th December.

4) FURNISHING OF BANK ACCOUNT DETAILS [RULE 10A- After a certificate of

registration in FORM GST REG-06 has been made available on the common portal
and a GSTIN has been assigned, the registered person, except those who have
been granted registration under rule 12 (i.e. registered persons required to deduct
tax at source or to collect tax at source) or, as the case may be rule 16 (i.e.
persons who take suo motu registration), shall as soon as may be, but not later
than 45 days from the date of grant of registration or the date on which the
return required under section 39 is due to be furnished, whichever is earlier, furnish

8.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

information with respect to details of bank account, or any other information, as

may be required on the common portal in order to comply with any other

8. DEEMED REGISTRATION-SECTION 26
1) The grant of registration or the Unique Identity Number under the State Goods and
Services Tax Act or the Union Territory Goods and Services Tax Act shall be deemed
to be a grant of registration or the Unique Identity Number under this Act subject
to the condition that the application for registration or the Unique Identity Number
has not been rejected under this Act within the time specified in sub-section (10)
of section 25.

2) Notwithstanding anything contained in sub-section (10) of section 25, any rejection

of application for registration or the Unique Identity Number under the State Goods
and Services Tax Act or the Union Territory Goods and Services Tax Act shall be
deemed to be a rejection of application for registration under this Act.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.29

 REGISTRATION

9. SPECIAL PROVISIONS RELATING TO CASUAL TAXABLE PERSON AND

NON-RESIDENT TAXABLE PERSON- SECTION 27
1) The certificate of registration issued to a casual taxable person or a non-resident
taxable person shall be valid for the period specified in the application for registration
or ninety days from the effective date of registration, whichever is earlier and
such person shall make taxable supplies only after the issuance of the certificate
of registration:
Provided that the proper officer may, on sufficient cause being shown by the
said taxable person, extend the said period of ninety days by a further period
not exceeding ninety days.

2) A casual taxable person or a non-resident taxable person shall, at the time of

submission of application for registration under sub-section (1) of section 25,
make an advance deposit of tax in an amount equivalent to the estimated tax
liability of such person for the period for which the registration is sought:
Provided that where any extension of time is sought under sub-section (1), such
taxable person shall deposit an additional amount of tax equivalent to the estimated
tax liability of such person for the period for which the extension is sought.

3) The amount deposited under sub-section (2) shall be credited to the electronic
cash ledger of such person and shall be utilized in the manner provided under
section 49.

4) The validity of the Registration certificate granted to the casual taxable person
and non- resident taxable person shall be for a period specified in application or
ninety days from the effective date of registration which may be extended, at
the request of the said taxable person to the proper officer, for further period not
exceeding ninety days at a time.

8.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

5) However, in case of other registered persons, Registration certificate once granted is

permanent unless surrendered, cancelled, suspended or revoke

RULE-13 GRANT OF REGISTRATION TO NON-RESIDENT TAXABLE PERSON-

1) A non-resident taxable person shall electronically submit an application, along with
a self-attested copy of his valid passport, for registration, duly signed or verified
through electronic verification code, in FORM GST REG-09, at least five days prior
to the commencement of business at the common portal either directly or through
a Facilitation Centre notified by the Commissioner:

 Provided that in the case of a business entity incorporated or established outside India,
the application for registration shall be submitted along with its tax identification
number or unique number on the basis of which the entity is identified by the
Government of that country or its Permanent Account Number, if available.

2) A person applying for registration as a non-resident taxable person shall be given a

temporary reference number by the common portal for making an advance deposit
of tax in accordance with the provisions of section 27 and the acknowledgement
under sub-rule of rule 8 shall be issued electronically only after the said deposit in
his electronic cash ledger.

3) The provisions of rule 9 and rule 10 relating to the verification and the grant of
registration shall, mutatis mutandis, apply to an application submitted under this
rule.

4) The application for registration made by a non-resident taxable person shall be duly
signed or verified through electronic verification code by his authorised signatory who
shall be a person resident in India having a valid Permanent Account Number.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.31

 REGISTRATION

RULE-15 EXTENSION IN PERIOD OF OPERATION BY CASUAL TAXABLE PERSON

AND NON-RESIDENT TAXABLE PERSON. -
1) Where a registered casual taxable person or a non-resident taxable person intends
to extend the period of registration indicated in his application of registration,
an application in FORM GST REG-11 shall be submitted electronically through
the common portal, either directly or through a Facilitation Centre notified by
the Commissioner, by such person before the end of the validity of registration
granted to him.

2) The application under sub-rule (1) shall be acknowledged only on payment of the
amount specified in sub-section (2) of section 27.

8.32 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

 DIFFERENCE BETWEEN CTP &NRTP

Casual Taxable Person u/s 2(20) Non-resident Taxable Person u/s 2(77)

Definition A person who occasionally undertakes A taxable person who occasionally

transactions involving supply of undertakes transactions involving

goods or services or both in the supply of goods and/or services whether

course or furtherance of business, as principal or agent or in any other

whether as principal, agent or in capacity but who has no fixed place of

any other capacity, in a State or business in India.

a Union territory where he has no

fixed place of business.

Meaning Occasionally undertakes transactions Occasionally undertakes transactions

involving supply of goods or services involving supply of goods or services but

in a State or UT where he has no has no fixed place of business residence

fixed place of business. in India.

PAN Has a PAN Do not have a PAN. A non-resident

person, if having PAN may take

registration as a casual taxable person.

Application for Same application form for Separate application form for registration

Registration registration as for normal taxable by non-resident taxable person – GST

persons viz GST REG-01 REG-09

Business Has to undertake transactions in the Business test absent in the definition

course or furtherance of business

Forms NORMAL RETURN GSTR-5

GSTR-1,GSTR-3B

ITC Can claim ITC of all inward supplies Can get ITC only in respect of import of

goods and /or services.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.33

 REGISTRATION

10. AMENDMENT OF REGISTRATION- SECTION 28

1) Every registered person and a person to whom a Unique Identity Number has
been assigned shall inform the proper officer of any changes in the information
furnished at the time of registration or subsequent thereto, in such form and
manner and within such period as may be prescribed.

2) The proper officer may, on the basis of information furnished under sub-section
(1) or as ascertained by him, approve or reject amendments in the registration
particulars in such manner and within such period as may be prescribed:
 Provided that approval of the proper officer shall not be required in respect of
amendment of such particulars as may be prescribed:
 Provided further that the proper officer shall not reject the application for
amendment in the registration particulars without giving the person an opportunity
of being heard.

3) Any rejection or approval of amendments under the State Goods and Services Tax
Act or the Union Territory Goods and Services Tax Act, as the case may be, shall
be deemed to be a rejection or approval under this Act.

POINT TO BE NOTED-
a. It may be noted that permission of the proper officer for making amendments
will be required for only certain core fields of information, whereas for the other
fields, the registrant can himself carry out the amendments.
b. Where the change in constitution of business results in change of PAN, fresh
registration is to be obtained.

8.34 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

RULE-19 AMENDMENT OF REGISTRATION-

1) Where there is any change in any of the particulars furnished in the application for
registration in FORM GST REG-01 or FORM GST REG-07 or FORM GST REG-09 or
FORM GST REG-10 or for Unique Identity Number in FORM GST-REG-13, either at
the time of obtaining registration or Unique Identity Number or as amended from
time to time, the registered person shall, within a period of fifteen days of such
change, submit an application, duly signed or verified through electronic verification
code, electronically in FORM GST REG-14, along with the documents relating to such
change at the common portal, either directly or through a Facilitation Centre notified
by the Commissioner:
Provided that
a. where the change relates to,-
 legal name of business;
 address of the principal place of business or any additional place(s) of business; or
 addition, deletion or retirement of partners or directors, Karta, Managing Committee,
Board of Trustees, Chief Executive Officer or equivalent, responsible for the day to
day affairs of the business, which does not warrant cancellation of registration under
section 29, the proper officer shall, after due verification, approve the amendment
within a period of fifteen working days from the date of the receipt of the application
in FORM GST REG-14 and issue an order in FORM GST REG-15 electronically and
such amendment shall take effect from the date of the occurrence of the event
warranting such amendment;

b. the change relating to sub-clause (i) and sub-clause (iii) of clause (a) in any State
or Union territory shall be applicable for all registrations of the registered person
obtained under the provisions of this Chapter on the same Permanent Account
Number;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.35

 REGISTRATION

c. where the change relates to any particulars other than those specified in clause
(a), the certificate of registration shall stand amended upon submission of the
application in FORM GST REG- 14 on the common portal;

d. where a change in the constitution of any business results in the change of the
Permanent Account Number of a registered person, the said person shall apply for
fresh registration in FORM GST REG-01:
Provided further that any change in the mobile number or e-mail address of the
authorised signatory submitted under this rule, as amended from time to time,
shall be carried out only after online verification through the common portal in
the manner provided under the sub-rule (2) of rule 8.

2) Where the proper officer is of the opinion that the amendment sought under
sub-rule (1) is either not warranted or the documents furnished therewith are
incomplete or incorrect, he may, within a period of fifteen working days from the
date of the receipt of the application in FORM GST REG-14, serve a notice in
FORM GST REG-03, requiring the registered person to show cause, within a period
of seven working days of the service of the said notice, as to why the application
submitted under sub-rule (1) shall not be rejected.

3) The registered person shall furnish a reply to the notice to show cause, issued
under sub-rule (2), in FORM GST REG-04, within a period of seven working days
from the date of the service of the said notice.

4) Where the reply furnished under sub-rule (3) is found to be not satisfactory or
where no reply is furnished in response to the notice issued under sub-rule (2)
within the period prescribed in sub-rule (3), the proper officer shall reject the
application submitted under sub-rule (1) and pass an order in FORM GST REG -05.

8.36 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

5) If the proper officer fails to take any action, -

a. within a period of fifteen working days from the date of submission of the application, or
b. Within a period of seven working days from the date of the receipt of the reply to
the notice to show cause under sub-rule (3), the certificate of registration shall
stand amended to the extent applied for and the amended certificate shall be made
available to the registered person on the common portal.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.37

 REGISTRATION

11. CANCELLATION OR SUSPENSION OF REGISTRATION- SECTION 29

1) The proper officer may, either on his own motion or on an application filed by the
registered person or by his legal heirs, in case of death of such person, cancel the
registration, in such manner and within such period as may be prescribed, having
regard to the circumstances where,––
a. the business has been discontinued, transferred fully for any reason including
death of the proprietor, amalgamated with other legal entity, demerged or
otherwise disposed of; or
b. there is any change in the constitution of the business; or
c. The taxable person, other than the person registered under sub-section (3)
of section 25, is no longer liable to be registered under section 22 or section
24.

A proviso to section 29(1) has been inserted to provide that once a registered
person has applied for cancellation of registration or the proper officer seeks
to cancel his registration, the proper officer may suspend his registration
during pendency of the proceedings relating to cancellation of registration
filed by such registered person, for such period and in such manner as may
be prescribed.

2) The proper officer may cancel the registration of a person from such date,
including any retrospective date, as he may deem fit, where, ––
a. a registered person has contravened such provisions of the Act or the rules made
thereunder as may be prescribed; or
b. a person paying tax under section 10 has not furnished returns for three consecutive
tax periods; or
c. any registered person, other than a person specified in clause (b), has not
furnished returns for a continuous period of six months; or

8.38 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

d. any person who has taken voluntary registration under sub-section (3) of section
25 has not commenced business within six months from the date of registration; or
e. registration has been obtained by means of fraud, willful misstatement, or suppression
of facts:

A proviso to section 29(1) has been inserted to provide that once a registered
person has applied for cancellation of registration or the proper officer seeks
to cancel his registration, the proper officer may suspend his registration
during pendency of the proceedings relating to cancellation of registration
filed by such registered person, for such period and in such manner as may be
prescribed.

 Provided that the proper officer shall not cancel the registration without giving the
person an opportunity of being heard.

3) The cancellation of registration under this section shall not affect the liability of
the person to pay tax and other dues under this Act or to discharge any obligation
under this Act or the rules made there under for any period prior to the date of
cancellation whether or not such tax and other dues are determined before or after
the date of cancellation.

4) The cancellation of registration under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act, as the case may be, shall be deemed
to be a cancellation of registration under this Act.

5) Every registered person whose registration is cancelled shall pay an amount, by way
of debit in the electronic credit ledger or electronic cash ledger, equivalent to the
credit of input tax in respect of inputs held in stock and inputs contained in semi-

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.39

 REGISTRATION

finished or finished goods held in stock or capital goods or plant and machinery
on the day immediately preceding the date of such cancellation or the output tax
payable on such goods, whichever is higher, calculated in such manner as may
be prescribed. Provided that in case of capital goods or plant and machinery, the
taxable person shall pay an amount equal to the input tax credit taken on the said
capital goods or plant and machinery, reduced by such percentage points as may
be prescribed or the tax on the transaction value of such capital goods or plant
and machinery under section 15, whichever is higher.

6) The amount payable under sub-section (5) shall be calculated in such manner as
may be prescribed.

RULE-22 CANCELLATION OF REGISTRATION-

1) Where the proper officer has reasons to believe that the registration of a person is
liable to be cancelled under section 29, he shall issue a notice to such person in
FORM GST REG-17, requiring him to show cause, within a period of seven working
days from the date of the service of such notice, as to why his registration shall
not be cancelled.

2) The reply to the show cause notice issued under sub-rule (1) shall be furnished
in FORM REG 18 within the period specified in the said sub-rule.

3) Where a person who has submitted an application for cancellation of his registration
is no longer liable to be registered or his registration is liable to be cancelled, the
proper officer shall issue an order in FORM GST REG-19, within a period of thirty
days from the date of application submitted under rule 20 or, as the case may
be, the date of the reply to the show cause issued under sub-rule (1), cancel
the registration, with effect from a date to be determined by him and notify the

8.40 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

taxable person, directing him to pay arrears of any tax, interest or penalty including
the amount liable to be paid under sub-section (5) of section 29.

4) Where the reply furnished under sub-rule (2) is found to be satisfactory, the proper
officer shall drop the proceedings and pass an order in FORM GST REG 20.

5) The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a
deceased proprietor, as if the application had been submitted by the proprietor himself.

RULE-20 APPLICATION FOR CANCELLATION OF REGISTRATION-

A registered person, other than a person to whom a registration has been granted
under rule 12 or a person to whom a Unique Identity Number has been granted
under rule 17, seeking cancellation of his registration under sub-section (1) of
section 29 shall electronically submit an application in FORM GST REG-16, including
therein the details of inputs held in stock or inputs contained in semi-finished or
finished goods held in stock and of capital goods held in stock on the date from
which the cancellation of registration is sought, liability thereon, the details of
the payment, if any, made against such liability and may furnish, along with the
application, relevant documents in support thereof, at the common portal within a
period of thirty days of the occurrence of the event warranting the cancellation,
either directly or through a Facilitation Centre notified by the Commissioner:
Provided that no application for the cancellation of registration shall be considered
in case of a taxable person, who has registered voluntarily, before the expiry of a
period of one year from the effective date of registration.

RULE-21 REGISTRATION TO BE CANCELLED IN CERTAIN CASES

The registration granted to a person is liable to be cancelled, if the said person, -
a. does not conduct any business from the declared place of business; or

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.41

 REGISTRATION

b. issues invoice or bill without supply of goods or services in violation of the

provisions of this Act, or the rules made thereunder.

RULE-21A -SUSPENSION OF REGISTRATION:

1) Deemed suspension on application for cancellation of registration [Rule 21A
(1)] : Where a registered person has applied for cancellation of registration under
rule 20, the registration shall be deemed to be suspended from—
 the date of submission of the application; or
 the date from which the cancellation is sought,
whichever is later, pending the completion of proceedings for cancellation of
registration under rule 22.

2) Suspension of registration by Proper Officer [Rule 21A(2)]: Where the proper

officer has reasons to believe that the registration of a person is liable to be
cancelled under section 29 or under rule 21, he may, after affording the said
person a reasonable opportunity of being heard, suspend the registration of such
person with effect from a date to be determined by him, pending the completion
of the proceedings for cancellation of registration under rule 22.

3) Taxable supplies not to be effected/ return not to be filed during suspension

[Rule 21A(3)] : A registered person, whose registration has been suspended under
rule 21A(1)/(2), shall not make any taxable supply during the period of suspension
and shall not be required to furnish any return under section 39.

Meaning of expression “shall not make any taxable supply” [Explanation]: The
expression “shall not make any taxable supply” shall mean that the registered
person shall not issue a tax invoice and, accordingly, not charge tax on supplies
made by him during the period of suspension.

8.42 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

4) Revocation of suspension [Rule 21A (4)]: The suspension of registration under

21A (1)/ (2) shall be deemed to be revoked upon completion of the proceedings
by the proper officer under rule 22 and such revocation shall be effective from the
date on which the suspension had come into effect.

5) Revised tax invoice and First return provisions applicable [Rule 21A (5)]: Where
any order having the effect of revocation of suspension of registration has
been passed, the provisions of Section 31(3)(a) i.e. Revised tax Invoice and
section 40 i.e. First Return in respect of the supplies made during the period
of suspension

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.43

 REGISTRATION

12. REVOCATION OF CANCELLATION OF REGISTRATION-SECTION 30

1) Subject to such conditions as may be prescribed, 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 may, in such manner and within such period as may be
prescribed, by order, either revoke cancellation of the registration or reject the
application:
 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.

3) The revocation of cancellation of registration under the State Goods and Services
Tax Act or the Union Territory Goods and Services Tax Act, as the case may be,
shall be deemed to be a revocation of cancellation of registration under this Act.

RULE-23 REVOCATION OF CANCELLATION OF REGISTRATION-

1) A registered person, whose registration is cancelled by the proper officer on
his own motion, may submit an application for revocation of cancellation of
registration, in FORM GST REG-21, to such proper officer, within a period of thirty
days from the date of the service of the order of cancellation of registration at
the common portal, either directly or through a Facilitation Centre notified by the
Commissioner:

2) All returns due for the period from the date of the order of cancellation
of registration till the date of the order of revocation of cancellation of
registration shall be furnished by the said person within a period of 30 days
from the date of order of revocation of cancellation of registration.

8.44 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

However, where the registration has been cancelled with retrospective effect,
the registered person shall furnish all returns relating to period from the
effective date of cancellation of registration till the date of order of revocation
of cancellation of registration within a period of 30 days from the date of order
of revocation of cancellation of registration.

3) The proper officer shall, before passing the order referred to in clause (b) of sub-
rule (2), issue a notice in FORM GST REG 23 requiring the applicant to show cause
as to why the application submitted for revocation under sub-rule (1) should not be
rejected and the applicant shall furnish the reply within a period of seven working
days from the date of the service of the notice in FORM GST REG-24.

4) Upon receipt of the information or clarification in FORM GST REG-24, the proper
officer shall proceed to dispose of the application in the manner specified in sub-rule
(2) within a period of thirty days from the date of the receipt of such information
or clarification from the applicant.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.45

 REGISTRATION

13. REGISTRATION-RULES 8-26

RULE-11 Separate registration for multiple PLACE OF business within a State
or a Union territory- New rule stipulates that any person having multiple
places of business within a State/UT, requiring a separate registration for
any such place of business shall be granted separate registration in respect
of each such place of business subject to the following conditions, namely:-
a. such person has more than one place of business as defined in section 2(85);
b. such person shall not pay tax under composition levy for any of his places of
business if he is paying tax under normal scheme for any other place of business.
Where any place of business of a registered person that has been granted a
separate registration becomes ineligible to pay tax under composition scheme, all
other registered places of business of the said person shall become ineligible to
pay tax under said scheme.
c. all separately registered places of business of such person shall pay tax under the
Act on supply of goods or services or both made to another registered place of
business of such person and issue a tax invoice or a bill of supply, as the case
may be, for such supply.
d. A registered person opting to obtain separate registration for a pl ace of business
shall submit a separate application in prescribed form in respect of such place of
business.
The provisions of rule 9 and rule 10 relating to the verification and the grant of
registration shall, mutatis mutandis, apply to an application submitted under this rule.

8.46 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

RULE-12 Grant of registration to persons required to deduct tax at source or to

collect tax at source-
1) Any person required to deduct tax in accordance with the provisions of section 51
or a person required to collect tax at source in accordance with the provisions of
section 52 shall electronically submit an application, duly signed or verified through
electronic verification code, in FORM GST REG-07 for the grant of registration
through the common portal, either directly or through a Facilitation Centre notified
by the Commissioner.
When a person is applying for registration to collect TCS in a State/UT where
he does not have a physical presence, he shall mention name of said State/UT
in Part A of prescribed application form for registration.
Further, the name of the State/UT in which his principal place of business
is located is to be mentioned in Part B of the application form. States/UTs
mentioned in Part A and Part B of the application form may be different.

2) The proper officer may grant registration after due verification and issue a certificate
of registration in FORM GST REG-06 within a period of three working days from
the date of submission of the application.

3) Where, upon an enquiry or pursuant to any other proceeding under the Act, the
proper officer is satisfied that a person to whom a certificate of registration in
FORM GST REG-06 has been issued is no longer liable to deduct tax at source under
section 51 or collect tax at source under section 52, the said officer may cancel the
registration issued under sub-rule (2) and such cancellation shall be communicated
to the said person electronically in FORM GST REG-08:

 Provided that the proper officer shall follow the procedure as provided in rule 22 for
the cancellation of registration

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.47

 REGISTRATION

RULE-14 GRANT OF REGISTRATION TO A PERSON SUPPLYING ONLINE

INFORMATION AND DATABASE ACCESS OR RETRIEVAL SERVICES FROM A
PLACE OUTSIDE INDIA TO A NON-TAXABLE ONLINE RECIPIENT. -
1) Any person supplying online information and database access or retrieval services
from a place outside India to a non-taxable online recipient shall electronically
submit an application for registration, duly signed or verified through electronic
verification code, in FORM GST REG-10, at the common portal, either directly or
through a Facilitation Centre notified by the Commissioner.

2) The applicant referred to in sub-rule (1) shall be granted registration, in FORM

GST REG-06, subject to such conditions and restrictions and by such officer
as may be notified by the Central Government on the recommendations of the
Council.

RULE-16 SUO MOTO REGISTRATION -

1) Where, pursuant to any survey, enquiry, inspection, search or any other proceedings
under the Act, the proper officer finds that a person liable to registration under
the Act has failed to apply for such registration, such officer may register the said
person on a temporary basis and issue an order in FORM GST REG-12.

2) The registration granted under sub-rule (1) shall be effective from the date of
such order granting registration.

3) Every person to whom a temporary registration has been granted under sub-
rule (1) shall, within a period of ninety days from the date of the grant of
such registration, submit an application for registration in the form and manner
provided in rule 8 or rule 12:

8.48 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

Provided that where the said person has filed an appeal against the grant of temporary
registration, in such case, the application for registration shall be submitted within
a period of thirty days from the date of the issuance of the order upholding the
liability to registration by the Appellate Authority.

4) The provisions of rule 9 and rule 10 relating to verification and the issue of the
certificate of registration shall, mutatis mutandis, apply to an application submitted
under sub-rule (3).

5) The Goods and Services Tax Identification Number assigned, pursuant

to the verification under sub-rule (4), shall be effective from the date of the
order granting registration under sub-rule (1).

RULE-17 ASSIGNMENT OF UNIQUE IDENTITY NUMBER TO CERTAIN SPECIAL

ENTITY
1) (Every person required to be granted a Unique Identity Number in accordance
with the provisions of sub-section (9) of section 25 may submit an application
electronically in FORM GST REG-13, duly signed or verified through electronic
verification code, in the manner specified in rule 8 at the common portal, either
directly or through a Facilitation Centre notified by the Commissioner.

2) The proper officer may, upon submission of an application in FORM GST REG-13 or
after filling up the said form, assign a Unique Identity Number to the said person
and issue a certificate in FORM GST REG-06 within a period of three working days
from the date of the submission of the application.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.49

 REGISTRATION

RULE-18 DISPLAY OF REGISTRATION CERTIFICATE AND GOODS AND SERVICES

TAX IDENTIFICATION NUMBER ON THE NAME BOARD-
1) Every registered person shall display his certificate of registration in a prominent
location at his principal place of business and at every additional place or places
of business.

2) Every registered person shall display his Goods and Services Tax Identification
Number on the name board exhibited at the entry of his principal place of
business and at every additional place or places of business.

RULE-25 PHYSICAL VERIFICATION OF BUSINESS PREMISES IN CERTAIN CASES-

Where the proper officer is satisfied that the physical verification of the place of
business of a person is required due to failure of Aadhaar authentication or due to
not opting for Aadhaar authentication before the grant of registration, or due to
any other reason after the grant of registration, he may get such verification of
the place of business, in the presence of the said person, done. The verification
report along with the other documents, including photographs, shall be uploaded
in form GST REG-30 on the common portal within a period of 15 working days
following the date of such verification.

RULE-26 METHOD OF AUTHENTICATION-

1) All applications, including reply, if any, to the notices, returns including the details
of outward and inward supplies, appeals or any other document required to be
submitted under the provisions of these rules shall be so submitted electronically
with digital signature certificate or through e-signature as specified under the
provisions of the Information Technology Act, 2000 (21 of 2000) or verified by
any other mode of signature or verification as notified by the Board in this behalf:
Provided that a registered person registered under the provisions of the Companies

8.50 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

Act, 2013 (18 of 2013) shall furnish the documents or application verified through
digital signature certificate.
Provided further that a registered person registered under the provisions of the
Companies Act, 2013 (18 of 2013) shall, during the period from the 21st day of April,
2020 to the 30th day of June, 2020, also be allowed to furnish the return under
section 39 in FORM GSTR-3B verified through electronic verification code (EVC).

2) Each document including the return furnished online shall be signed or verified
through electronic verification code-
a. in the case of an individual, by the individual himself or where he is absent from
India, by some other person duly authorised by him in this behalf, and where the
individual is mentally incapacitated from attending to his affairs, by his guardian or
by any other person competent to act on his behalf;
b. in the case of a Hindu Undivided Family, by a Karta and where the Karta is absent
from India or is mentally incapacitated from attending to his affairs, by any other
adult member of such family or by the authorized signatory of such Karta;
c. in the case of a company, by the chief executive officer or authorised signatory
thereof;
d. in the case of a Government or any Governmental agency or local authority, by an
officer authorised in this behalf;
e. in the case of a firm, by any partner thereof, not being a minor or authorised
signatory thereof;
f. in the case of any other association, by any member of the association or persons
or authorised signatory thereof;
g. in the case of a trust, by the trustee or any trustee or authorised signatory thereof;
or
h. in the case of any other person, by some person competent to act on his behalf, or
by a person authorised in accordance with the provisions of section 48.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.51

 REGISTRATION

3) All notices, certificates and orders under the provisions of this Chapter shall be
issued electronically by the proper officer or any other officer authorised to issue
such notices or certificates or orders, through digital signature certificate or through
e-signature as specified under the provisions of the Information Technology Act,
2000 (21 of 2000) or verified by any other mode of signature or verification as
notified by the Board in this behalf.

8.52 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

PROBLEM:5 Mr. J has been involved in supplying taxable material in J&K.

His turnover exceeded the limit of ` 40 lacs. Is Mr. J required to register under
GST law?
ANSWER:5 Taxable turnover exceeds ` 40 lacs, and then the supplier shall apply
for registration. Therefore, Mr. J is required to register under GST law.

PROBLEM:6 Mr. C of Calicut is trading on his own goods and also acting as
an agent of Mr. B of Bengaluru. Mr. C turnover in the financial year 2020-21 is
` 12 lacs in his own account and ` 9 lacs on behalf of principal. Whether Mr. C
is liable to register compulsorily under GST law.
ANSWER:6 As per explanation 1 in computing the total turnover, both the value
of supply on his own account that is ` 12 lacs and on behalf of principal ` 9
lacs will be aggregated. Hence, the aggregate turnover will be ` 21 lacs. Mr. C
is liable to register compulsorily under the GST law.

PROBLEM:7 Mr. Rajan of Tamilnadu is a farmer with an annual turnover

in relation to agriculture of ` 78,00,000 lakh. Since this income is agriculture-
related, the turnover is exempt from GST. However, Mr. Rajan also supplies
plastic bags worth of ` 2,50,000 (taxable goods) along with his crop and
charges separately for this. Mr. Rajan is required to register under GST? Advise.
ANSWER:7 Mr. Rajan is required to register under GST because his aggregate
turnover exceeds the threshold limit of ` 40 lakh.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.53

 REGISTRATION

PROBLEM:8 Mr. X a dealer dealing with Intra State supply of goods and
services has place of business in India furnished the following information in
the financial year 2020-21:
Sale of taxable goods by Head Office located in Chennai for ` 1,00,000
Supply of taxable services by Branch office at Bengaluru for ` 50,000
Supply of goods exempted from GST ` 10,000
Export of goods and services for ` 2,00,000
Sale of goods acting as agent on behalf of principal for ` 15,00,000

ANSWER:8 Statement showing aggregate turnover in a Financial Year

Particulars Value in `
Sale of taxable goods by Head Office located in Chennai 1,00,000
Supply of taxable services by Branch office at Bengaluru 50,000
Supply of goods exempted from GST 10,000
Export of goods and services 2,00,000
Sale of goods acting as agent on behalf of principal 15,00,000
Aggregate turnover 18,60,000
Since, aggregate turnover does not exceed ` 20 lakhs, Mr. X is not required to
register under GST

PROBLEM:9 R is located in Delhi. He provides the following information

Particulars Amount (Rs.)

Value of taxable supply of goods in Delhi 12,00,000
Value of supply of renting of Immovable property services in Delhi 9,00,000

Does R require any registration?

ANSWER:9 In this case, R requires registration under the CGST act/ SGST act

8.54 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

since the ‘aggregate turnover’ shall exceed the threshold limit of Rs. 20,00,000 by
including the value of taxable supply of goods and value of services.

PROBLEM:10 R is located in Delhi and Haryana. He provides the followings

information

Particulars Amount
Value of supply of goods in Delhi 7,00,000
Value exempt supply 6,00,000
Value of supply of renting of immovable property Services in Delhi 9,00,000

Does R require any registration?

ANSWER:10 In this case, R requires registration under CGST act/ SGST act
of both states since the aggregate turnover including exempt supply shall exceeds
the threshold limit of Rs.20,00,000.

PROBLEM:11 Mr. A of PUNJAB has affected following supplies within the

State of Punjab. You are required to determine whether he is required to obtain
registration under GST law.

Particulars `

1) Intra-State supply of goods agricultural produce grown out of 5,50,000

cultivation of land by himself
2) Intra-State supply of wholly exempt goods under section 11 of CGST 6,00,000
Act, 2017
3) Intra-State supply of goods chargeable with GST @ 5% 8,50,000
4) Intra state supply of services which are wholly exempt from tax 50000

ANSWER:11

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.55

 REGISTRATION

PROBLEM:12 From the following information you are required to determine

whether ABC LTD. incorporated in MP is liable to be registered under GST Law
if the company has affected following supplies within the state of MP.

Particulars `

1) Intra-State supply of goods chargeable with GST @5 % 1551000

2) Intra-State supply of goods which are exempt from GST under 500000
section 11 of CGST Act, 2017
3) Intra-State supply of goods chargeable with Nil rate 1850000
4) Interest received from FD made PNB 1,00,000
5) Intra state supply of goods chargeable to 18% GST 50000
Total Value of supplies

ANSWER:12

PROBLEM:13 ABC Ltd. of Jaipur, Rajasthan has affected intra-State supplies

of taxable goods amounting ` 38,00,000 till 31-12-2020. On 01-01-2021 it has
affected inter-State supply of taxable goods amounting ` 1,00,000. ABC Ltd.
is of the opinion that it is not required to get registered under GST law since
its aggregate turnover is not likely to exceed ` 40,00,000 during financial year
2020-21. As a consultant of the company you are required to advise the company
relating to registration requirements.
ANSWER:13

PROBLEM:14 ABC Pvt. Ltd., Pune provides house-keeping services. The

company supplies its services exclusively through an e-commerce website owned
and managed by Hi-Tech India Pvt. Ltd., Pune. The turnover of ABC Pvt. Ltd. in
the current financial year is ` 18 lakh. Advise ABC Pvt. Ltd. as to whether they
are required to obtain GST registration. Will your advice be any different if ABC

8.56 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

Pvt. Ltd. sells readymade garments exclusively through the e-commerce website
owned and managed by Hi-Tech India Pvt. Ltd.?
ANSWER:14

PROBLEM:15 M Enterprises, a sole proprietorship firm, opened a shopping

complex dealing in supply of goods at multiple locations, i.e. in Himachal Pradesh,
Uttarakhand and Tripura in the month of June. It has furnished the following details
relating to the sale made at such multiple locations for the month of June: -

Particulars Himachal Pradesh Uttarakhand Tripura

(`) (`) (`)

Intra- State sale of taxable goods 22,50,000 - 7,00,000

Intra-State sale of exempted goods - - 6,00,000
Interest received from banks on - - 60,000
the fixed deposits
Intra-State sale of non-taxable goods - 21,00,000 40,000

With the help of the above-mentioned information, answer the following questions
giving reasons: -
1) Determine whether M Enterprises is liable to be registered under GST law and what
is the threshold limit of taking registration in this case.
2) Explain with reasons whether your answer in (1) will change in the following
independent cases:
a. If M Enterprises is dealing in taxable supply of goods only from Himachal Pradesh.
b. If M Enterprises is dealing in taxable supply of goods and services only from
Himachal Pradesh;
c. If M Enterprises is dealing in taxable supply of goods only from Himachal Pradesh
and has also affected inter - State supplies of taxable goods amounting to ` 4,00,000.
ANSWER:15

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.57

 REGISTRATION

PROBLEM:16 Rajesh Dynamics having its head office in Chennai, carries

on the following activities with respective turnovers in a FY:

Particulars `

1) Supply of Petrol at Chennai 18,00,000

2) Value of inward supplies on which tax is payable on Reverse 9,00,000
Charge Basis
3) Supply of Transformer Oil at Chennai 2,00,000
4) Value of Branch Transfer from Chennai to Bengaluru without 1,50,000
payment of consideration
5) Value of Taxable supplies at Manipur Branch 11,50,000

It argues that it does not have taxable turnover crossing threshold limit of `
20,00,000 either at Chennai or Bengaluru and including turnover at Manipur Branch.
It believes that the determination of aggregate turnover is not required for the
purpose of obtaining registration but it is required for determining composition levy.
Decide based on the above facts:
i. The aggregate turnover of Rajesh Dynamics.
ii. All conditions that fulfil the requirements for registration under CGST Act,
2017 in the given circumstances.
ANSWER:16

8.58 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 REGISTRATION

PROBLEM:17 Rishabh Enterprises - a sole proprietorship firm - started an

air- conditioned restaurant in Virar, Maharashtra in the month of February
wherein the customers are served cooked food as well as cold drinks/non-alcoholic
beverages. In March, the firm opened a liquor shop in Kohima, Nagaland for
trading of alcoholic liquor for human consumption. Determine whether Rishabh
Enterprises is liable to be registered under GST law with the help of the
following information:

February March
Particulars
` `
Serving of cooked food and cold drinks/non-alcoholic 5,50,000 6,50,000
beverages in restaurant in Maharashtra
Sale of alcoholic liquor for human consumption in Nagaland 5,00,000
Supply of wholly exempt services 1,00,000 1,00,000
Export of packed food items from restaurant in Maharashtra 1,50,000 2,00,000

ANSWER:17

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 8.59

 REGISTRATION

PROBLEM:18 With the help of the following information in the case of

M/s Jayant Enterprises, Jaipur (Rajasthan) for the year 2020-21, determine
the aggregate turnover for the purpose the registration under CGST Act,
2017.

S.NO Particulars Amount (`)

1) Sale of diesel on which Sale Tax (VAT) is levied by 1,00,000
Rajasthan Government.
2) Supply of goods, after completion of Job work, from the 3,00,000
place of Jayant Enterprises directly by principal.
3) Export Supply to England (U.K). 5,00,000
4) Supply to its own additional place of business in Rajasthan. 5,00,000
5) Outward supply on which GST is to be paid by recipient 1,00,000
under reverse charge.

All the above amounts are excluding GST. You are required to provide reasons
for treatment of various items given above.
ANSWER:18

8.60 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 9 | INVOICE

1. INVOICE-
 An invoice indicates what must be paid by the buyer to the seller. On every sale/
purchase an invoice is issued by the supplier i.e., person making the sale. An invoice
provides a detailed account of the products or service along with details of supplier,
purchaser, tax charged and other particulars such as discounts, terms of sale etc.
 An invoice OR bill is a commercial document issued by a seller to a buyer, relating
to a sale transaction and indicating the products, quantities, and agreed prices for
products or services the seller had provided the buyer.
 Tax invoice acts as a document evidencing the payment of the value of the goods
or services or both as also the tax portion in the same. In certain cases, an invoice
serves as a demand for payment and becomes a document of title when paid in full.

2. TAX INVOICE- SECTION 31

1) A REGISTERED PERSON SUPPLYING TAXABLE GOODS shall, before or at the time
of,—
a. Removal of goods for supply to the recipient, where the supply involves movement
of goods; or
b. Delivery of goods or making available thereof to the recipient, in any other case,
 Issue a tax invoice showing the description, quantity and value of goods, the tax
charged thereon, and such other particulars as may be prescribed:
 Provided that the Government may, on the recommendations of the Council, by
notification, specify the categories of goods or supplies in respect of which a tax
invoice shall be issued, within such time and in such manner as may be prescribed.

CASE-1 XYZ traders, Rajasthan supplies goods to PQR Agencies, Delhi. The goods
were removed from its godown in Rajasthan on 25th October. XYZ traders needs to
issue a tax invoice on or before 25th October.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.1

 INVOICE

PROBLEM:1 S Industries Ltd., Delhi, entered a contract with G Entrepreneurs,

Delhi, for supply of parts of a machine on 10th September 2020. The spare parts
were to be delivered on 30th September 2020. S Industries Ltd. removed the
finished spare parts from its factory on 29th September 2020. Determine the date
by which invoice must be issued by S Industries Ltd. under GST law.
ANSWER:1 As per the provisions of Section 31, invoice shall be issued before or at
the time of removal of goods for supply to the recipient, where the supply involves
movement of goods. Accordingly, in the given case, the invoice must be issued on
or before 29th September 2020.

2) A REGISTERED PERSON SUPPLYING TAXABLE SERVICES shall, before or after

the provision of service but within a prescribed period, issue a tax invoice, showing
the description, value, tax charged thereon, and such other particulars as may be
prescribed:
 Provided that the Government may, on the recommendations of the Council,
by notification and subject to such conditions as may be mentioned therein,
specify the categories of services in respect of which––
a. Any other document issued in relation to the supply shall be deemed to be a tax
invoice; or
b. Tax invoice may not be issued.

3) Notwithstanding anything contained in sub-sections (1) and (2) ––

a. Registered person may, within one month from the date of issuance of certificate
of registration and in such manner as may be prescribed, issue a revised invoice
against the invoice already issued during the period beginning with the effective
date of registration till the date of issuance of certificate of registration to him;

9.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

b. A registered person may not issue a tax invoice if the value of the goods or services
or both supplied is less than two hundred rupees subject to such conditions and in
such manner as may be prescribed.

c. A registered person supplying exempted goods or services or both or paying tax under
the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply
containing such particulars and, in such manner, as may be prescribed:

 Provided that the registered person may not issue a bill of supply if the value of the
goods or services or both supplied is less than two hundred rupees subject to such
conditions and in such manner as may be prescribed.

d. A registered person shall, on receipt of advance payment with respect to any supply
of goods or services or both, issue a receipt voucher or any other document, containing
such particulars as may be prescribed, evidencing receipt of such payment.

e. Where, on receipt of advance payment with respect to any supply of goods or services
or both the registered person issues a receipt voucher, but subsequently no supply is
made and no tax invoice is issued in pursuance thereof, the said registered person
may issue to the person who had made the payment, a refund voucher against such
payment;

f. A registered person who is liable to pay tax under sub-section (3) or sub-section
(4) of section 9 shall issue an invoice in respect of goods or services or both
received by him from the supplier who is not registered on the date of receipt of
goods or services or both;

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.3

 INVOICE

g) A registered person who is liable to pay tax under sub-section (3) or sub-section
(4) of section 9 shall issue a payment voucher at the time of making payment
to the supplier.

4) IN CASE OF CONTINUOUS SUPPLY of goods, where successive statements of

accounts or successive payments are involved, the invoice shall be issued before
or at the time each such statement is issued or, as the case may be, each such
payment is received.

 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;

5) IN CASE OF CONTINUOUS SUPPLY OF SERVICES, ––

a. Where the due date of payment is ascertainable from the contract, the invoice
shall be issued on or before the due date of payment.
b. Where the due date of payment is not ascertainable from the contract, the
invoice shall be issued before or at the time when the supplier of service receives
the payment.
c. Where the payment is linked to the completion of an event, the invoice shall
be issued on or before the date of completion of that event.

 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

9.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

supply of such services as the Government may, subject to such conditions, as it

may, by notification, specify;
 Analysis: The difference between continuous supply with respect to goods/services
is with respect to the period of supply only. In the case of services, it has to be for
a continuous period of 3 months whereas, in the case of goods, there is no such
minimum period prescribed.

CASE-2 AJAY Limited entered an annual maintenance contract with INSPIRE

Ltd. for financial year 2020-21 for repairs of the machinery fitted in factory of
INSPIRE Ltd. As per the contract, payment for said services had to be made on 7th
April 2020. However, INSPIRE Ltd. made the payment on 25th April 2020. Since
services provided by AJAY Ltd. to INSPIRE Ltd. is a continuous supply of services
and due date of payment is ascertainable from the contract, AJAY Ltd. had to issue
a tax invoice on or before such due date, viz. 7th April 2020.

PROBLEM:2 Mr. Raj provides Continuous Supply of Services (CSS) to M/s.

Toy Limited. He furnishes the following further information:
I. Date of commencement of Providing CSS - 01-10-2020
II. Date of completion of Providing CSS - 31-01-2021
III. Date of receipt of payment by Mr. Raj - 30-03-2021
Determine the time of issue of invoice as per provisions of CGST Act, 2017, in
the following circumstances:
I. If no due date for payment is agreed upon by both under the contract of CSS.
II. If payment is linked to the completion of service.
III. If M/s. Toy Limited has to make payment on 25-03-2021 as per the contract
between them.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.5

 INVOICE

ANSWER:2 As per Section 31(5) of CGST Act, 2017, in case of continuous

supply of services the time limit for issuance of invoice is as under —

Particulars Time limit

a) where the due date of payment is the invoice shall be issued on or before
ascertainable from the contract the due date of payment.
b) where the due date of payment is the invoice shall be issued before or at
not ascertainable from the contract the time when the supplier of service
receives the payment.
c) where the payment is linked to the the invoice shall be issued on or before
completion of an event the date of completion of that event.

a. If no due date for payment is agreed upon by both under the contract of CSS, the
invoice shall be issued on or before 30-03-2021.
b. If payment is linked to the completion of service, the invoice is to be issued on
or before 31-01-2021
c. If M/s. Toy Limited has to make payment on 25-03-2021 as per the contract
between them, the invoice is to be issued on or before the due date of payment
as per the contract -25-03-2021.

6) ISSUANCE OF INVOICE AT THE TIME OF CESSATION OF SUPPLY OF SERVICES-

In a case where the supply of services ceases under a contract before the
completion of the supply, the invoice shall be issued at the time when the supply
ceases and such invoice shall be issued to the extent of the supply made before
such cessation.

7) GOODS SENT ON APPROVAL- where the goods being sent or taken on approval
for sale or return are removed before the supply takes place, the invoice shall be
issued

9.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

I. before or at the time of supply or

II. six months from the date of removal, whichever is earlier.
Explanation. ––For the purposes of this section, the expression “tax invoice” shall
include any revised invoice issued by the supplier in respect of a supply made earlier

POINT TO BE NOTED-
I. TAX INVOICE CAN BE RAISED ONLY BY REGISTERED PERSON
a. in case of taxable supply of goods or services or both and
b. In case he receives taxable goods or services or both from unregistered person where
he pays tax under reverse charge basis. However, no tax invoice may be raised if the
value of taxable goods or supply or both is less than two hundred rupees.

II. BILL OF SUPPLY is issued in case of supply of exempted goods or non-taxable

supply or supply by a person paying tax under composition levy. It is issued when
the supplier is not required to charge any tax

III. REVISED INVOICE can be issued by a registered person against supplies made during
the period from the date of application of registration till the grant of registration.

IV. RECEIPT VOUCHER is issued in case of receipt of advance payment for the supply
of goods or services or both

V. REFUND VOUCHER is issued in case of return of advance payment.

VI. PAYMENT VOUCHER is issued by the person making payment under reverse charge
at the time of making payment to the supplier.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.7

 INVOICE

3. FACILITY OF DIGITAL PAYMENT TO RECIPENT- SECTION 31A

The Government may, on the recommendations of the Council, prescribe a class
of registered persons who shall provide prescribed modes of electronic payment to
the recipient of supply of goods or services or both made by him and give option
to such recipient to make payment accordingly, in such manner and subject to
such conditions and restrictions, as may be prescribed

4. PROHIBITION OF UNAUTHORISED COLLECTION OF TAX-SECTION 32

1. A person who is not a registered person shall not collect in respect of any supply
of goods or services or both any amount by way of tax under this Act.
2. No registered person shall collect tax except in accordance with the provisions of
this Act or the rules made there under

5. AMOUNT OF TAX TO BE INDICATED IN TAX INVOICE AND OTHER

DOCUMENTS- SECTION 33
Notwithstanding anything contained in this Act or any other law for the time
being in force, where any supply is made for a consideration, every person who
is liable to pay tax for such supply shall prominently indicate in all documents
relating to assessment, tax invoice and other like documents, the amount of tax
which shall form part of the price at which such supply is made.

6. PROVISIONS WHERE NO TAX INVOICE IS REQUIRED TO BE ISSUED.

NO TAX INVOICE IF THE VALUE IS LESS THAN 200
A registered person, other than the supplier engaged in making supply of
services by way of admission to exhibition of cinematograph films in multiplex
screens, may not issue a tax invoice if -
I. Value of the goods or services or both supplied is less than 200,
II. The recipient is unregistered; and

9.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

III. The recipient does not require such invoice.

Instead such registered person shall issue a Consolidated Tax Invoice for such
supplies at the close of each day in respect of all such supplies.
Above provisions are also applicable to Bill of Supply

CASE-3 Ritu Manufacturers, Delhi supplies goods to Prakhar Electronics,

Haryana. The goods were removed from its factory in Delhi on 23rd September. Ritu
Manufacturers needs to issue a tax invoice on or before 23rd September.

CASE-4 KARAN Security Services Ltd. provides security services to Royal Jewellers for their
Jewellery Exhibition to be organized on 5th October. KARAN Security Services Ltd. needs to issue
a tax invoice within 30 days of supply of security services, i.e. on or before 4th November.

CASE-5 Jhanvi Cinemas entered into an annual maintenance contract with Peer
Services Ltd. for one year [April -March] for the Air conditioners fitted in their
theaters. As per the contract, payment for said services had to be made on 7th April.
However, Jhanvi Services made the payment on 15th April. Since services provided
by Peer Services Ltd. to Jhanvi Cinemas is a continuous supply of services and due
date of payment is ascertainable from the contract, Peer Services Ltd. had to issue
a tax invoice on or before such due date, viz. 7th April.

CASE-6 Sarabhai Private Ltd. commenced business of supply of goods on 1st April
in Delhi. Its turnover exceeded 20,00,000 on 3rd September. Thus it became liable
to registration on 3rd September. It applied for registration on 29th September and
granted registration certificate on 5th October. Since it applied for registration within
30 days of becoming liable to registration, it was granted registration with effect
from 3rd September. Sarabhai Private Ltd. may issue Revised Tax Invoices in respect
of taxable supplies effected between 3rd September and 5th October.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.9

 INVOICE

PROBLEM:3 Jain & Sons is a trader dealing in stationery items. It is

registered under GST and has undertaken following sales during the day:
S. No. Recipient of supply Amount ()
1. Raghav Traders - a registered retail dealer 190
2. Dhruv Enterprises – an unregistered trader 358
3. Gaurav – a Painter [unregistered] 500
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?

ANSWER:3 Jain & Sons can issue a Consolidated Tax Invoice only with respect
to supplies made to Oberoi Orphanage [worth 188] and Aaradhya [worth 158]
as the value of goods supplied to these recipients is less than 200 as also these
recipients are unregistered and don’t require a tax invoice. As regards the supply
made to Raghav Traders, although the value of goods supplied to it is less than
200, Raghav Traders is registered under GST. So, Consolidated Tax Invoice cannot
be issued. Consolidated Tax Invoice can also not be issued for supplies of goods
made to Dhruv Enterprises and Gaurav although both of them are unregistered.
The reason for the same is that the value of goods supplied is not less than 200.

7. CREDIT NOTE AND DEBIT NOTE- SECTION 34

A. DEBIT NOTE- where taxable value or tax charged in that tax invoice is found to
be less than the taxable value or tax payable in respect of such supply

9.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

B. CREDIT NOTE-
I. when taxable value or tax charged in a tax invoice is found to exceed the taxable
value or tax payable in respect of supply
II. where the goods supplied are returned by the recipient
III. where goods or services or both supplied are found to be deficient

1) Where ONE OR MORE tax invoice HAVE been issued for supply of any goods or
services or both and the taxable value or tax charged in that tax invoice is
found to exceed the taxable value or tax payable in respect of such supply,
or where the goods supplied are returned by the recipient, or where goods or
services or both supplied are found to be deficient, the registered person, who
has supplied such goods or services or both, may issue to the recipient ONE OR
MORE credit note FOR SUPPLIES MADE IN A FINANACIAL YEAR containing such
particulars as may be prescribed

 Earlier, a credit/debit note, which is issued by the registered person under section
34, was required to be issued invoice-wise. This used to cause avoidable compliance
burden for tax payers.
 The CGST (Amendment) Act, 2018 has amended sub -section (1) of section 34
to allow the registered person to issue one (consolidated) or more credit notes in
respect of multiple invoices issued in a financial year without linking the same to
individual invoices
 Similarly, sub-section (3) of section 34 has been amended to allow the registered
person to issue one (consolidated) or more debit notes in respect of multiple invoices
issued in a financial year without linking the same to individual invoices.

2) Any registered person who issues a credit note in relation to a supply of goods
or services or both shall declare the details of such credit note in the return for

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.11

 INVOICE

the month during which such credit note has been issued but not later than
September following the end of the financial year in which such supply was made,
or the date of furnishing of the relevant annual return, whichever is earlier, and
the tax liability shall be adjusted in such manner as may be prescribed:

Provided that no reduction in output tax liability of the supplier shall be permitted,
if the incidence of tax and interest on such supply has been passed on to any
other person.

3) Where a tax invoice has been issued for supply of any goods or services or both
and the taxable value or tax charged in that tax invoice is found to be less than
the taxable value or tax payable in respect of such supply, the registered person,
who has supplied such goods or services or both, shall issue to the recipient a
debit note containing such particulars as may be prescribed.

4) Any registered person who issues a debit note in relation to a supply of goods or
services or both shall declare the details of such debit note in the return for the
month during which such debit note has been issued and the tax liability shall be
adjusted in such manner as may be prescribed.

Explanation.––For the purposes of this Act, the expression “debit note” shall
include a supplementary invoice

8. RULES RELATING TO INVOICE-

1. RULE-46. Subject to rule 54, a tax invoice referred to in section 31 shall be issued
by the registered person containing the following particulars, namely, —
a. name, address and Goods and Services Tax Identification Number of the supplier;
b. a consecutive serial number not exceeding sixteen characters, in one or multiple

9.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

series, containing alphabets or numerals or special characters-hyphen or dash and

slash symbolized as “-” and “/” respectively, and any combination thereof, unique
for a financial year;
c. date of its issue;
d. name, address and Goods and Services Tax Identification Number or Unique Identity
Number, if registered, of the recipient;
e. name and address of the recipient and the address of delivery, along with the name
of the State and its code, if such recipient is un-registered and where the value of
the taxable supply is fifty thousand rupees or more
f. name and address of the recipient and the address of delivery, along with the name
of the State and its code, if such recipient is un-registered and where the value of
the taxable supply is less than fifty thousand rupees and the recipient requests that
such details be recorded in the tax invoice;
g. Harmonized System of Nomenclature code for goods or services;
h. description of goods or services;
i. quantity in case of goods and unit or Unique Quantity Code thereof;
j. total value of supply of goods or services or both;
k. taxable value of the supply of goods or services or both taking into account discount
or abatement, if any;
l. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
m. amount of tax charged in respect of taxable goods or services (central tax, State
tax, integrated tax, Union territory tax or cess);
n. place of supply along with the name of the State, in the case of a supply in the
course of inter-State trade or commerce;
o. address of delivery where the same is different from the place of supply;
p. whether the tax is payable on reverse charge basis; and
q. signature or digital signature of the supplier or his authorised representative:

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.13

 INVOICE

 Provided that the Board may, on the recommendations of the Council, by

notification, specify—
I. the number of digits of Harmonized System of Nomenclature code for goods or
services that a class of registered persons shall be required to mention, for such
period and
II. the class of registered persons that would not be required to mention the
Harmonised System of Nomenclature code for goods or services.
III. A CLASS of supply of Goods or services for which specified numbers of digits of
HSN code shall be required to be mentioned by all registered tax payers.

 Provided further that where an invoice is required to be issued under clause (f) of
sub-section (3) of section 31, a registered person may issue a consolidated invoice
at the end of a month for supplies covered under sub-section (4) of section 9,
the aggregate value of such supplies exceeds rupees five thousand in a day from
any or all the suppliers:

 Provided also that in the case of the export of goods or services, the invoice
shall carry an endorsement “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ
UNIT OR SEZ DEVELOPER FOR AUTHORISED OPERATIONS ON PAYMENT OF
INTEGRATED TAX” or “SUPPLY MEANT FOR EXPORT/SUPPLY TO SEZ UNIT OR
SEZ DEVELOPER FOR AUTHORISED OPERATIONS UNDER BOND OR LETTER OF
UNDERTAKING WITHOUT PAYMENT OF INTEGRATED TAX”, as the case may
be, and shall, in lieu of the details specified in clause (e), contain the following
details, namely,—
I. name and address of the recipient.
II. address of delivery; and
III. name of the country of destination:

9.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

 Provided also that a registered person, other than the supplier engaged in making
supply of services by way of admission to exhibition of cinematograph films in
multiplex screens, ] may not issue a tax invoice in accordance with the provisions
of clause (b) of sub-section (3) of section 31 subject to the following conditions,
namely,—
a. the recipient is not a registered person; and
b. the recipient does not require such invoice, and
shall issue a consolidated tax invoice for such supplies at the close of each day in
respect of all such supplies.

 Provided also that the signature or digital signature of the supplier or his authorised
representative shall not be required in the case of issuance of an electronic invoice in
accordance with the provisions of the Information Technology Act, 2000 (21 of 2000).

 Provided also that the Government may, by notification, on the recommendations of

the Council, and subject to such conditions and restrictions as mentioned therein,
specify that the tax invoice shall have Quick Response (QR) code

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.15

 INVOICE

2. RULE-46A TAX INVOICE CUM BILL OF SUPPLY -Rule 46A of the CGST Rules states
that notwithstanding anything contained in rule 46 or rule 49 or rule 54, where a
registered person is supplying taxable as well as exempted goods or services or both to an
unregistered person, a single invoice-cum-bill of supply may be issued for all such supplies.

3. RULE-47 -TIME LIMIT FOR ISSUING TAX INVOICE -

1. IN THE CASE OF THE TAXABLE SUPPLY OF SERVICES, - Invoice shall be issued
within a period of thirty days from the date of the supply of service:

2. WHERE THE SUPPLIER OF SERVICES IS AN INSURER OR A BANKING COMPANY

OR A FINANCIAL INSTITUTION, INCLUDING A NON-BANKING FINANCIAL
COMPANY, - the period within which the invoice or any document in lieu thereof
is to be issued shall be forty-five days from the date of the supply of service:

3. AN INSURER OR A BANKING COMPANY OR A FINANCIAL INSTITUTION,

INCLUDING A NON-BANKING FINANCIAL COMPANY, OR A TELECOM OPERATOR,
OR ANY OTHER CLASS OF SUPPLIER OF SERVICES as may be notified by the
Government on the recommendations of the Council, making taxable supplies of
services between distinct persons as specified in section 25, may issue the invoice
I. before or at the time such supplier records the same in his books of account or
II. before the expiry of the quarter during which the supply was made.

4. RULE-48 MANNER OF ISSUING INVOICE-

1) The invoice shall be prepared in triplicate, in the case of supply of goods, in
the following manner, namely, -
I. the original copy being marked as ORIGINAL FOR RECIPIENT.
II. the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
III. the triplicate copy being marked as TRIPLICATE FOR SUPPLIER.

9.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

2) The invoice shall be prepared in duplicate, in the case of the supply of services,
in the following manner, namely, -
I. the original copy being marked as ORIGINAL FOR RECIPIENT; and
II. the duplicate copy being marked as DUPLICATE FOR SUPPLIER.

3) The serial number of invoices issued during a tax period shall be furnished
electronically through the common portal in FORM GSTR-1.

4) E-INVOICE-The invoice shall be prepared by such class of registered persons as

may be notified by the Government, on the recommendations of the Council, by
including such particulars contained in FORM GST INV-01 after obtaining an Invoice
Reference Number by uploading information contained therein on the Common
Goods and Services Tax Electronic Portal in such manner and subject to such
conditions and restrictions as may be specified in the notification.

However, the commissioner through notification may exempt a person or a class

of registered person from issuance of e-invoice for a specified period subject
to such conditions and restrictions as may be specified in the said notification

5) Every invoice issued by a person to whom sub-rule (4) applies in any manner other
than the manner specified in the said sub-rule shall not be treated as an invoice.

6) The provisions of sub-rules (1) and (2) shall not apply to an invoice prepared in
the manner specified in sub-rule (4).

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.17

 INVOICE

POINT TO BE NOTED-
 All registered businesses with an aggregate turnover (based on PAN) in any
preceding financial year from 2017-18 onwards greater than ` 500 crore (hereinafter
referred to as ‘notified persons’) except
I. SEZ
II. BANKS /FINANCIAL INSTITUTIONS/INSURERS/GTA/PASSENGER TRANSPORT
SERVICE AND MULTIPLEX.

 WHAT IS ‘E-INVOICING’- E-invoicing is not generation of invoice by a Government

portal. Taxpayers will continue to create their GST invoices on their own Accounting/
Billing/ERP Systems as per e-invoice schema. These invoices will then be reported
to ‘Invoice Registration Portal (IRP)’. On such reporting, IRP will generate a
unique ‘Invoice Reference Number (IRN)’, digitally sign it and return the e-invoice
to the supplier. A GST e-invoice will be valid only with a valid IRN.

9.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

5. RULE 49 BILL OF SUPPLY. -A bill of supply referred to in clause (c) of sub-section

(3) of section 31 shall be issued by the supplier containing the following details,
namely,—
a. name, address and Goods and Services Tax Identification Number of the supplier;
b. a consecutive serial number not exceeding sixteen characters, in one or multiple
series, containing alphabets or numerals or special characters -hyphen or dash and
slash symbolized as “-” and “/” respectively, and any combination thereof, unique
for a financial year;
c. date of its issue;
d. name, address and Goods and Services Tax Identification Number or Unique Identity
Number, if registered, of the recipient;
e. Harmonised System of Nomenclature Code for goods or services;
f. description of goods or services or both;
g. value of supply of goods or services or both taking into account discount or abatement,
if any; and
h. signature or digital signature of the supplier or his authorised representative:
 Provided that the provisos to rule 46 shall, mutatis mutandis, apply to the bill of
supply issued under this rule:
 Provided further that any tax invoice or any other similar document issued under any
other Act for the time being in force in respect of any non-taxable supply shall be
treated as a bill of supply for the purposes of the Act.
 Provided also that the signature or digital signature of the supplier or his authorised
representative shall not be required in the case of issuance of an electronic bill of
supply in accordance with the provisions of the Information Technology Act, 2000
(21 of 2000).
 Provided also that the Government may, by notification, on the recommendations of
the Council, and subject to such conditions and restrictions as mentioned therein,
specify that the bill of supply shall have Quick Response (QR) code.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.19

 INVOICE

6. RULE -50 RECEIPT VOUCHER. A receipt voucher referred to in clause (d) of

sub-section (3) of section 31 shall contain the following particulars, namely, -
a. name, address and Goods and Services Tax Identification Number of the supplier.
b. a consecutive serial number not exceeding sixteen characters, in one or multiple
series, containing alphabets or numerals or special characters-hyphen or dash and
slash symbolized as - and / respectively, and any combination thereof, unique for
a financial year.
c. date of its issue.
d. name, address and Goods and Services Tax Identification Number or Unique Identity
Number, if registered, of the recipient.
e. description of goods or services.
f. amount of advance taken.
g. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
h. amount of tax charged in respect of taxable goods or services (central tax, State
tax, integrated tax, Union territory tax or cess);
i. place of supply along with the name of State and its code, in case of a supply in
the course of inter-State trade or commerce.
j. whether the tax is payable on reverse charge basis; and
k. signature or digital signature of the supplier or his authorized representative:
 Provided that where at the time of receipt of advance, -
I. The rate of tax is not determinable, the tax shall be paid at the rate of eighteen
per cent.;
II. The nature of supply is not determinable; the same shall be treated as inter-State
supply.

9.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

7. RULE-51 REFUND VOUCHER- A refund voucher referred to in clause (e) of sub-

section (3) of section 31 shall contain the following particulars, namely: -
a. name, address and Goods and Services Tax Identification Number of the supplier;
b. a consecutive serial number not exceeding sixteen characters, in one or multiple
series, containing alphabets or numerals or special characters-hyphen or dash and
slash symbolized as - and / respectively, and any combination thereof, unique for a
financial year;
c. date of its issue;
d. name, address and Goods and Services Tax Identification Number or Unique Identity
Number, if registered, of the recipient;
e. number and date of receipt voucher issued in accordance with the provisions of rule
50;
f. description of goods or services in respect of which refund is made
g. amount of refund made;
h. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
i. amount of tax paid in respect of such goods or services (central tax, State tax,
integrated tax, Union territory tax or cess);
j. whether the tax is payable on reverse charge basis; and
k. Signature or digital signature of the supplier or his authorized representative.

8. RULE-52 PAYMENT VOUCHER– A payment voucher referred to in clause (g) of

sub-section (3) of section 31 shall contain the following, namely: -
a. name, address and Goods and Services Tax Identification Number of the supplier if
registered.
b. a consecutive serial number not exceeding sixteen characters, in one or multiple
series, containing alphabets or numerals or special characters-hyphen or dash and
slash symbolized as - and / respectively, and any combination thereof, unique for a
financial year.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.21

 INVOICE

c. date of its issue.

d. name, address and Goods and Services Tax Identification Number of the recipient.
e. description of goods or services.
f. amount paid.
g. rate of tax (central tax, State tax, integrated tax, Union territory tax or cess);
h. amount of tax payable in respect of taxable goods or services (central tax, State
tax, integrated tax, Union territory tax or cess);
i. place of supply along with the name of State and its code, in case of a supply in
the course of inter-State trade or commerce; and
j. Signature or digital signature of the supplier or his authorized representative.

9. RULE 53 REVISED TAX INVOICE. -

1) A revised tax invoice referred to in section 31 shall contain the following particulars,
namely: -
a. the word Revised Invoice, wherever applicable, indicated prominently.
b. name, address and Goods and Services Tax Identification Number of the supplier;
c. a consecutive serial number not exceeding sixteen characters, in one or multiple
series, containing alphabets or numerals or special characters-hyphen or dash and
slash symbolized as - and / respectively, and any combination thereof, unique for
a financial year;
d. date of issue of the document;
e. name, address and Goods and Services Tax Identification Number or Unique Identity
Number, if registered, of the recipient;
f. name and address of the recipient and the address of delivery, along with the
name of State and its code, if such recipient is un-registered;
g. serial number and date of the corresponding tax invoice or, as the case may be,
bill of supply;
h. Signature or digital signature of the supplier or his authorized representative.

9.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

2) Every registered person who has been granted registration with effect from a date
earlier than the date of issuance of certificate of registration to him, may issue
revised tax invoices in respect of taxable supplies effected during the period starting
from the effective date of registration till the date of the issuance of the certificate
of registration:
Provided that the registered person may issue a consolidated revised tax invoice in
respect of all taxable supplies made to a recipient who is not registered under the
Act during such period
Provided further that in the case of inter-State supplies, where the value of a supply
does not exceed two lakh and fifty thousand rupees, a consolidated revised invoice
may be issued separately in respect of all the recipients located in a State, who are
not registered under the Act.

3) Any invoice or debit note issued in pursuance of any tax payable in accordance with
the provisions of section 74 or section 129 or section 130 shall prominently contain
the words INPUT TAX CREDIT NOT ADMISSIBLE.

10. RULE 53 1A-CONTENTS FOR CREDIT AND DEBIT NOTES.

A new sub-rule (1A) has been inserted in rule 53 to provide the contents of debit
and credit notes separately. Consequently, sub -rule (1) now provides the contents
of only the revised tax invoice.
a. name, address and GSTIN of the supplier.
b. nature of the document.
c. a consecutive serial number not exceeding 16 characters, in one or multiple series,
containing alphabets or numerals or special characters -hyphen or dash and slash
symbolized as “-” and “/” respectively, and any combination thereof, unique for a
financial year;
d. date of issue of the document.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.23

 INVOICE

e. name, address and GSTIN or UIN, if registered, of the recipient.

f. name and address of the recipient and the address of delivery, along with the
name of State and its code, if such recipient is un -registered.
g. serial number(s) and date(s) of the corresponding tax invoice(s) or, as the case
may be, bill(s) of supply.
h. value of taxable supply of goods or services, rate of tax and the amount of the
tax credited or, as the case may be, debited to the recipient; and
i. signature or digital signature of the supplier or his authorized representative.

11. RULE-54 TAX INVOICE IN SPECIAL CASES.

1) An Input Service Distributor invoice or, as the case may be, an Input Service
Distributor credit note issued by an Input Service Distributor shall contain the
following details: -
a. name, address and Goods and Services Tax Identification Number of the Input
Service Distributor.
b. a consecutive serial number not exceeding sixteen characters, in one or multiple series,
containing alphabets or numerals or special characters-hyphen or dash and slash
symbolized as respectively, and any combination thereof, unique for a financial year.
c. date of its issue.
d. name, address and Goods and Services Tax Identification Number of the recipient
to whom the credit is distributed.
e. amount of the credit distributed; and
f. signature or digital signature of the Input Service Distributor or his authorized
representative:
Provided that where the Input Service Distributor is an office of a banking company
or a financial institution, including a non-banking financial company, a tax invoice
shall include any document in lieu thereof, by whatever name called, whether or
not serially numbered but containing the information as mentioned above.

9.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

1A)
a. A registered person, having the same PAN and State code as an Input Service
Distributor, may issue an invoice or, as the case may be, a credit or debit note to
transfer the credit of common input services to the Input Service Distributor, which
shall contain the following details:—
I. name, address and Goods and Services Tax Identification Number of the registered
person having the same PAN and same State code as the Input Service Distributor;
II. a consecutive serial number not exceeding sixteen characters, in one or multiple
series, containing alphabets or numerals or special characters - hyphen or dash and
slash symbolised as “-” and “/” respectively, and any combination thereof, unique
for a financial year;
III. date of its issue;
IV. Goods and Services Tax Identification Number of supplier of common service and
original invoice number whose credit is sought to be transferred to the Input Service
Distributor;
V. name, address and Goods and Services Tax Identification Number of the Input
Service Distributor;
VI. taxable value, rate and amount of the credit to be transferred; and
VII. signature or digital signature of the registered person or his authorised representative.

b) The taxable value in the invoice issued under clause (a) shall be the same as the
value of the common services.

2) Where the supplier of taxable service is an insurer or a banking company or a

financial institution, including a non-banking financial company, the said supplier
may issue a consolidated tax invoice or any other document in lieu thereof, for the
supply of services made during a month at the end of the month, whether issued
or made available, physically or electronically whether or not serially numbered, and

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.25

 INVOICE

whether or not containing the address of the recipient of taxable service but
containing other information as mentioned under Rule 46.
The signature or digital signature of the supplier or his authorized representative
shall not be required in the case of issuance of a consolidated tax invoice or
any other document in lieu thereof in accordance with the provisions of the
Information Technology Act, 2000.

3) Where the supplier of taxable service is a goods transport agency supplying services
in relation to transportation of goods by road in a goods carriage, the said supplier
shall issue a tax invoice or any other document in lieu thereof, by whatever name
called, containing
I. the gross weight of the consignment,
II. name of the consigner and the consignee,
III. registration number of goods carriages in which the goods are transported,
IV. details of goods transported, details of place of origin and destination,
V. Goods and Services Tax Identification Number of the person liable for paying tax
whether as consigner, consignee or goods transport agency, and
VI. also containing other information as mentioned under rule 46.

4) Where the supplier of taxable service is supplying passenger transportation service,

a tax invoice shall include ticket in any form, by whatever name called, whether or
not serially numbered, and whether or not containing the address of the recipient
of service but containing other information as mentioned under rule 46.
54(4A)-Multiplex screens exhibiting films - Electronic ticket is invoice :
A registered person supplying services by way of admission to exhibition
of cinematograph films in multiplex screens shall be required to issue an
electronic ticket and the said electronic ticket shall be deemed to be a
tax invoice for all purposes of the Act, even if such ticket does not contain

9.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

the details of the recipient of service but contains the other information as
mentioned under rule 46.However, the supplier of such service in a screen other
than multiplex screens may, at his option, follow the above procedure.

5) It is important to note here that keeping in view the large number of transactions
in banking, insurance, multiplex screens exhibiting films and passenger transportation
sector, taxpayers need not mention the address of the customer and the serial
number in their invoices.
The provisions of sub-rule (2) or sub-rule (4) shall apply, mutatis mutandis, to the
documents issued under rule 49 or rule 50 or rule 51 or rule 52 or rule 53.

12. RULE-55 TRANSPORTATION OF GOODS WITHOUT ISSUE OF INVOICE.

1) For the purposes of-
a. Supply of liquid gas where the quantity at the time of removal from the place of
business of the supplier is not known,
b. Transportation of goods for job work,
c. Transportation of goods for reasons other than by way of supply, or
d. Such other supplies as may be notified by the Board,
the consigner may issue a delivery challan, serially numbered not exceeding sixteen
characters, in one or multiple series, in lieu of invoice at the time of removal of
goods for transportation, containing the following details, namely: -
I. date and number of the delivery challan.
II. name, address and Goods and Services Tax Identification Number of the consigner,
if registered.
III. name, address and Goods and Services Tax Identification Number or Unique Identity
Number of the consignee, if registered.
IV. Harmonized System of Nomenclature code and description of goods.
V. quantity (provisional, where the exact quantity being supplied is not known);

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.27

 INVOICE

VI. taxable value.

VII. tax rate and tax amount central tax, State tax, integrated tax, Union territory tax
or cess, where the transportation is for supply to the consignee
VIII. place of supply, in case of inter-State movement.
IX. signature.

2) THE DELIVERY CHALLAN SHALL BE PREPARED IN TRIPLICATE, IN CASE OF

SUPPLY OF GOODS, IN THE FOLLOWING MANNER, NAMELY:
I. the original copy being marked as ORIGINAL FOR CONSIGNEE.
II. the duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and
III. the triplicate copy being marked as TRIPLICATE FOR CONSIGNER.

3) Where goods are being transported on a delivery challan in lieu of invoice, the
same shall be declared as specified in rule 138.

4) Where the goods being transported are for the purpose of supply to the recipient
but the tax invoice could not be issued at the time of removal of goods for the
purpose of supply, the supplier shall issue a tax invoice after delivery of goods.

5) WHERE THE GOODS ARE BEING TRANSPORTED IN A SEMI KNOCKED DOWN OR

COMPLETELY KNOCKED DOWN CONDITION –
a. The supplier shall issue the complete invoice before dispatch of the first consignment.
b. The supplier shall issue a delivery challan for each of the subsequent consignments,
giving reference of the invoice.
c. Each consignment shall be accompanied by copies of the corresponding delivery
challan along with a duly certified copy of the invoice; and
d. The original copy of the invoice shall be sent along with the last consignment.

9.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INVOICE

13. RULE-55A-The person in charge of the conveyance shall carry a copy of the tax
Invoice or Bill of supply issued in accordance with the provision of rules 46/46A/49
in a case where such person is not required to carry an e-way bill under these rules.

9. POINT TO BE NOTED

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 9.29

 INVOICE

9.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 10 | ACCOUNTS & RECORDS

1. INTRODUCTION
1) Section 35 of the CGST Act, 2017 states that a registered person is required to
maintain proper accounts and records and keep it at his registered, principal place
of business.
2) If there is more than one place of business specified in the certificate of registration,
the accounts relating to each place of business is required to be kept at such places
of business.
3) To facilitate digitization, there is a facility to maintain accounts and other records
in electronic form under GST.

2. ACCOUNTS & OTHER RECORDS- SECTION 35

1) List of accounts required to be maintained are as follows: Every registered person
shall keep and maintain, at his principal place of business, as mentioned in the
certificate of registration, a true and correct account of—
a. production or manufacture of goods.
b. inward and outward supply of goods or services or both.
c. stock of goods.
d. input tax credit availed.
e. output tax payable and paid; and
f. such other particulars as may be prescribed:
 Provided that where more than one place of business is specified in the
certificate of registration, the accounts relating to each place of business shall
be kept at such places of business:
 Provided further that the registered person may keep and maintain such accounts
and other particulars in electronic form in such manner as may be prescribed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 10.1

 ACCOUNTS & RECORDS

2) Owner or operator of warehouse or godown or any other place used for storage of
goods and every transporter, irrespective of whether he is a registered person or
not, shall maintain records of the consigner, consignee and other relevant details
of the goods in such manner as may be prescribed

3) The Commissioner is empowered to notify a class of taxable persons to maintain

additional accounts or documents for specified purpose or to maintain accounts in
other prescribed manner

4) Where the Commissioner considers that any class of taxable person is not in a
position to keep and maintain accounts in accordance with the provisions of this
section, he may, for reasons to be recorded in writing, permit such class of taxable
persons to maintain accounts in such manner as may be prescribed.

5) Section 35(5): Compulsorily Audit [Section 35(5) of the CGST Act, 2017 read
with rule 80(3) of the CGST Rules, 2017]:
I. Every registered person whose turnover during a financial year exceeds the prescribed
limit shall get his accounts audited by a Chartered Accountant or a Cost Accountant.
II. As per Rule 80 (3) of the CGST Rules, 2017 every registered person whose
aggregate turnover during a financial year exceeds two crore rupees shall get
his accounts audited as specified under sub-section (5) of section 35 and he
shall furnish a copy of audited annual accounts and a reconciliation statement,
duly certified, in FORMGSTR-9C, electronically through the common portal either
directly or through a Facilitation Centre notified by the Commissioner.
III. Books of accounts of the Central/State Government or local authority would
not be subject to audit by a Chartered Accountant/Cost Accountant if the
same are subject to audit by CAG of India or any statutory auditor appointed
for auditing the accounts of local authorities.

10.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ACCOUNTS & RECORDS

6) Section 35(6):Subject to the provisions of Section 17(5)(h), where the registered

person fails to account for the goods or services or both in accordance with the
provisions of Section 35(1), the proper officer shall determine the amount of tax
payable on the goods or services or both that are not accounted for, as if such
goods or services or both had been supplied by such person and the provisions of
section 73 or section 74, as the case may be, shall, mutatis mutandis, apply for
determination of such tax.

3. PERIOD OF RETENTION OF ACCOUNTS- SECTION 36

1) The time duration for retention of accounts and records under GST is until expiry of
seventy-two months from the due date of furnishing of annual return for the year
pertaining to such accounts and records.
CASE-1

2) A registered person, who is a party to an appeal or revision or any other proceedings

before any Appellate Authority or Revisional Authority or Appellate Tribunal or
court, whether filed by him or by the Commissioner, or is under investigation for an
offence under Chapter XIX,
 shall retain the books of account and other records pertaining to the subject matter
of such appeal or revision or proceedings or investigation for
 a period of one year after final disposal of such appeal or revision or proceedings or
investigation, or
 for the period specified above, ie until the expiry of 72 months from due date of
furnishing of annual return for the year pertaining to such accounts and record
whichever is later.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 10.3

 ACCOUNTS & RECORDS

4. RECORDS PRESCRIBED BY THE RULES [RULE 56]

1) Every registered person shall keep and maintain, in addition to the particulars
mentioned in Section 35(1), a true and correct account of the goods or services
imported or exported or of supplies attracting payment of tax on reverse charge
along with the relevant documents, including invoices, bills of supply, delivery
challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund
vouchers.

2) Every registered person, other than a person paying tax under section 10, shall
maintain the accounts of stock in respect of goods received and supplied by him,
and such accounts shall contain particulars of the opening balance, receipt, supply,
goods lost, stolen, destroyed, written off or disposed of by way of gift or free
sample and the balance of stock including raw materials, finished goods, scrap
and wastage thereof.

3) Every registered person shall keep and maintain a separate account of advances
received, paid and adjustments made thereto.

4) Every registered person, other than a person paying tax under section 10, shall
keep and maintain an account, containing the details of tax payable (including tax
payable in accordance with the provisions of sub-section (3) and sub-section (4)
of section 9), tax collected and paid, input tax, input tax credit claimed, together
with a register of tax invoice, credit notes, debit notes, delivery challan issued or
received during any tax period.

5) Every registered person shall keep the particulars of –

 Names and complete addresses of suppliers from whom he has received the goods
or services chargeable to tax under the Act;

10.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ACCOUNTS & RECORDS

 Names and complete addresses of the persons to whom he has supplied goods or
services, where required under the provisions of this Chapter;
 The complete address of the premises where goods are stored by him, including
goods stored during transit along with the particulars of the stock stored therein.

6) If any taxable goods are found to be stored at any place(s) other than those
declared under sub-rule (5) without the cover of any valid documents, the proper
officer shall determine the amount of tax payable on such goods as if such goods
have been supplied by the registered person.

7) Every registered person shall keep the books of account at the principal place of
business and books of account relating to additional place of business mentioned in
his certificate of registration and such books of account shall include any electronic
form of data stored on any electronic device.

8) Any entry in registers, accounts and documents shall not be erased, effaced or
overwritten, and all incorrect entries, otherwise than those of clerical nature, shall
be scored out under attestation and thereafter, the correct entry shall be recorded
and where the registers and other documents are maintained electronically, a log of
every entry edited or deleted shall be maintained.

9) Each volume of books of account maintained manually by the registered person shall
be serially numbered.

10) Unless proved otherwise, if any documents, registers, or any books of account
belonging to a registered person are found at any premises other than those
mentioned in the certificate of registration, they shall be presumed to be maintained
by the said registered person.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 10.5

 ACCOUNTS & RECORDS

11) Every agent referred to in clause (5) of section 2 shall maintain accounts
depicting the, -
a. particulars of authorization received by him from each principal to receive or
supply goods or services on behalf of such principal separately;
b. particulars including description, value and quantity (wherever applicable) of goods
or services received on behalf of every principal;
c. particulars including description, value and quantity (wherever applicable) of goods
or services supplied on behalf of every principal;
d. details of accounts furnished to every principal; and
e. tax paid on receipts or on supply of goods or services effected on behalf of every principal.

12) Every registered person manufacturing goods shall maintain monthly production
accounts showing quantitative details of raw materials or services used in the
manufacture and quantitative details of the goods so manufactured including the
waste and by products thereof.

13) Every registered person supplying services shall maintain the accounts showing
quantitative details of goods used in the provision of services, details of input
services utilized and the services supplied.

14) Every registered person executing works contract shall keep separate accounts
for works contract showing -
a. the names and addresses of the persons on whose behalf the works contract is
executed;
b. description, value and quantity (wherever applicable) of goods or services received
for the execution of works contract;
c. description, value and quantity (wherever applicable) of goods or services utilized
in the execution of works contract;

10.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ACCOUNTS & RECORDS

d. the details of payment received in respect of each works contract; and

e. The names and addresses of suppliers from whom he received goods or services.

15) The records under the provisions of this Chapter may be maintained in electronic
form and the record so maintained shall be authenticated by means of a digital
signature.

16) Accounts maintained by the registered person together with all the invoices, bills
of supply, credit and debit notes, and delivery challans relating to stocks, deliveries,
inward supply and outward supply shall be preserved for the period as provided in
section 36 and shall, where such accounts and documents are maintained manually,
be kept at every related place of business mentioned in the certificate of registration
and shall be accessible at every related place of business where such accounts and
documents are maintained digitally.

17) Any person having custody over the goods in the capacity of a carrier or a clearing
and forwarding agent for delivery or dispatch thereof to a recipient on behalf of
any registered person shall maintain true and correct records in respect of such
goods handled by him on behalf of such registered person and shall produce the
details thereof as and when required by the proper officer.

18) Every registered person shall, on demand, produce the books of accounts which he
is required to maintain under any law for the time being in force.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 10.7

 ACCOUNTS & RECORDS

5. GENERATION AND MAINTENANCE OF ELECTRONIC RECORDS [RULE 57]

1) Proper electronic back-up of records shall be maintained and preserved in such
manner that, in the event of destruction of such records due to accidents or
natural causes, the information can be restored within a reasonable period.

2) The registered person maintaining electronic records shall produce, on demand, the
relevant records or documents, duly authenticated by him, in hard copy or in any
electronically readable format.

3) Where the accounts and records are stored electronically by any registered person,
he shall, on demand, provide the details of such files, passwords of such files and
explanation for codes used, where necessary, for access and any other information
which is required for such access along with a sample copy in print form of the
information stored in such files.

6. RECORDS TO BE MAINTAINED BY OWNER OR OPERATOR OF GODOWN OR

WAREHOUSE AND TRANSPORTERS [RULE 58]
1) Every person required to maintain records and accounts in accordance with the
provisions of sub-section (2) of section 35, if not already registered under the
Act, shall submit the details regarding his business electronically on the common
portal in FORM GST ENR-01, either directly or through a Facilitation Centre
notified by the Commissioner and, upon validation of the details furnished, a
unique enrolment number shall be generated and communicated to the said person.

2) The person enrolled under sub-rule (1) as aforesaid in any other State or Union
territory shall be deemed to be enrolled in the State or Union territory.

10.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ACCOUNTS & RECORDS

A transporter having registration in more than one State/UT would have more than
one GSTIN as well. A transporter who is registered in more than one State/UT having
the same PAN, may apply for a unique common enrolment number by submitting
the details in prescribed form using any one of his GSTIN. Upon validation of the
details furnished, a unique common enrolment number shall be generated and
communicated to the said transporter. Once a transporter has obtained a unique
common enrolment number, he shall not be eligible to use any of the GSTIN for the
purposes of E-Way Bill under Chapter XVI of these rules.

3) Every person who is enrolled under sub-rule (1) shall, where required, amend the
details furnished in FORM GST ENR-01 electronically on the common portal either
directly or through a Facilitation Centre notified by the Commissioner.

4) Subject to the provisions of rule 56,-any person engaged in the business of transporting
goods shall maintain records of goods transported, delivered and goods stored in
transit by him along with the Goods and Services Tax Identification Number of the
registered consigner and consignee for each of his branches every owner or operator
of a warehouse or godown shall maintain books of accounts with respect to the
period for which particular goods remain in the warehouse, including the particulars
relating to dispatch, movement, receipt and disposal of such goods.

5) The owner or the operator of the godown shall store the goods in such manner that
they can be identified item-wise and owner-wise and shall facilitate any physical
verification or inspection by the proper officer on demand

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 10.9

 ACCOUNTS & RECORDS

10.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 12 | PAYMENTS

1. PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS [SECTION 49]:

1) Amount deposited to be credited to the Electronic Cash Ledger [Section 49(1)]:
Every deposit made towards tax, interest, penalty, fee or any other amount by a person—
I. by internet banking, or
II. by using credit or debit cards, or
III. by National Electronic Fund Transfer (NeFT), or
IV. by Real Time Gross Settlement (RTGS), or
V. by such other mode and subject to such conditions and restrictions as may be
prescribed, shall be credited to the electronic cash ledger of such person to be
maintained in such manner as may be prescribed.
 Electronic cash ledger means the electronic cash ledger referred to in Section
49(1). The Electronic Cash Ledger contains a summary of all the deposits/
payments made by a taxpayer. Electronic Cash Ledger is maintained on the GST
Portal. [Section 2(43)]

Debit Amount (DR) Credit Amount (CR)

Credit amount of this ledger may be used  Any deposit made towards tax,
for payment of tax, interest, fees etc. interest, penalty, late fee etc. via internet
Remaining credit balance amount after banking, RTGS, fund transfer etc.
payment of above tax etc. will be  TDS/TCS claimed
refunded to taxable person.

2) ITC to be credited to Electronic Credit Ledger [Section 49(2)]: The input tax
credit as self-assessed in the return of a registered person shall be credited to his
electronic credit ledger, in accordance with Section 41, to be maintained in such
manner as may be prescribed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.1

 PAYMENTS

 Electronic credit ledger” means the electronic credit ledger referred to in

Section 49(2). [Section 2(46)

Debit Amount (DR) Credit Amount (CR)

 Credit amount of this ledger may be  Input Tax credit as self-assessed in
used for payment of output tax viz IGST, the return in the form of IGST, CGST,
CGST, SGST, UTGST in the prescribed order. SGST, UTGST

3) Utilisation of amount in Electronic Cash Ledger [Section 49(3)] : The amount

available in the electronic cash ledger may be used for making any payment
towards tax, interest, penalty, fees or any other amount payable under the
provisions of this Act or the rules made there under in such manner and subject
to such conditions and within such time as may be prescribed.
Head wise information is to be Maintained: In electronic cash ledger, information
is kept minor head- wise for each major head as under:

Major Heads Minor Heads

I. IGST  Tax
II. CGST  Interest
III. SGST/UTGST  Penalty
IV. CESS  Fee, and
 Others

 Head wise utilisation is permissible: The amount available in the Electronic Cash
Ledger can be utilised for payment of any liability for the respective major and
minor heads. For example, liability for the tax under SGST/UTGST can be settled
only from the available amount of cash under SGST/UTGST Major head.
 An amount of ` 5,000 is available under minor head ‘tax’ of major head ‘SGST/

12.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

UTGST’ and the taxpayer has a liability of ` 800 for minor head ‘interest’ under
the same major head ‘SGST/UTGST’. Since, there is no amount available under
minor head ‘interest’ under major head “SGST/UTGST”, therefore, interest payment
cannot be made from the amount available under ‘tax’ of the same major head.
 Transfer of funds between the major heads not permissible: Amount available
under one major head (SGST/UTGST, CGST, IGST or CESS) cannot be utilised for
discharging the liability under any other major head. For example, amount available
in SGST/UTGST cannot be utilised for discharging liabilities under CGST, IGST, or
CESS and vice versa.
 A taxpayer made a cash deposit of ` 5,000 to IGST - Tax, through net banking.
The tax payer can utilize this cash deposit of ` 5,000 in the cash ledger to make
payment ONLY of the IGST - Tax liability, by debiting the Cash Ledger.

4) Utilisation of amount in Electronic credit ledger - For payment of output

tax under CGST and IGST Act [Section 49(4)]: The amount available in the
electronic credit ledger may be used for making any payment towards output
tax under this Act or under the IGST Act in such manner and subject to such
conditions and within such time as may be prescribed.

5) Manner of utilisation of amount in Electronic Credit Ledger [Section 49(5)]:

The amount of input tax credit available in the electronic credit ledger of the
registered person on account of—

a. Credit of IGST - To be utilised for payment of IGST, CGST, SGST and UTGST
sequentially: Integrated tax shall first be utilised towards payment of integrated
tax and the amount remaining, if any, may be utilised towards the payment of
central tax and State tax, or as the case may be, Union territory tax, in that order
b. Credit of CGST - To be utilised for payment of CGST and IGST sequentially: The

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.3

 PAYMENTS

central tax shall first be utilised towards payment of central tax and the amount
remaining, if any, may be utilised towards the payment of integrated tax;
c. Credit of SGST - To be utilised for payment of SGST and IGST sequentially:
The State tax shall first be utilised towards payment of State tax and the amount
remaining, if any, may be utilised towards payment of integrated tax;
However, the input tax credit on account of State tax shall be utilised towards
payment of integrated tax only where the balance of the input tax credit on
account of central tax is not available for payment of integrated tax;
d. Credit of UTGST - To be utilised for payment of UTGST and IGST sequentially:
The Union territory tax shall first be utilised towards payment of Union territory tax
and the amount remaining, if any, may be utilised towards payment of integrated tax;
However, the input tax credit on account of Union territory tax shall be utilised
towards payment of integrated tax only where the balance of the input tax credit
on account of central tax is not available for payment of integrated tax;
e. Credit of CGST - Cannot be utilised for payment of SGST and UTGST : The
central tax shall not be utilised towards payment of State tax or Union territory
tax; and
f. Credit of SGST/ UTGST - Cannot be utilised for payment of CGST : The State
tax or Union territory tax shall not be utilised towards payment of central tax.

6) Refund of balance in Electronic Ledger [Section 49(6)] : The balance in the

electronic cash ledger or electronic credit ledger after payment of tax, interest,
penalty, fee or any other amount payable under this Act or the rules made
thereunder may be refunded in accordance with the provisions of Section 54.

7) Electronic liability Register [Section 49(7)] : All liabilities of a taxable person

under this Act shall be recorded and maintained in an electronic liability register
in such manner as may be prescribed.

12.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

Debit Amount (DR) Credit Amount (CR)

Amount payable towards tax, interest, Electronic cash ledger
fees etc. Tax or interest payable due to
mismatch Any other dues
Amount payable towards output tax Electronic credit ledger

8) Order of discharge of liabilities [Section 49(8)] : Every taxable person shall discharge his tax
and other dues under this Act or the rules made thereunder in the following order, namely:-
a. self-assessed tax, and other dues related to returns of previous tax periods;
b. self-assessed tax, and other dues related to the return of the current tax period;
c. any other amount payable under this Act or the rules made thereunder including
the demand determined under Section 73 or Section 74.

9) Incidence of tax - Deemed to have been passed [Section 49(9)] : Every person
who has paid the tax on goods or services or both under this Act shall, unless the
contrary is proved by him, be deemed to have passed on the full incidence of
such tax to the recipient of such goods or services or both.
Explanation: For the purposes of this Section, —
a. Date of credit in Government Account - Date of deposit the date of credit to
the account of the Government in the authorised bank shall be deemed to be the
date of deposit in the electronic cash ledger.
b. The expression, —
I. “tax dues” means the tax payable under this Act and does not include interest,
fee and penalty; and
II. “other dues” means interest, penalty, fee or any other amount payable under this
Act or the rules made thereunder.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.5

 PAYMENTS

III. Authorised bank” shall mean a bank or a branch of a bank authorised by the
Government to collect the tax or any other amount payable under this Act.
[Section 2(14)]

10) A registered person may, on the common portal, transfer any amount of tax,
interest, penalty, fee or any other amount available in the electronic cash ledger
under this Act, to the electronic cash ledger for integrated tax, central tax,
State tax, Union territory tax or cess, in such form and manner and subject to
such conditions and restrictions as may be prescribed and such transfer shall be
deemed to be a refund from the electronic cash ledger under this Act.

11) Where any amount has been transferred to the electronic cash ledger under this
Act, the same shall be deemed to be deposited in the said ledger as provided in
sub-section (1).

CASE-1 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 utilize the amount available for payment of interest.
The Registered person is allowed to transfer the amount available under any minor
head of a major head to any of the minor head of the same or other major head
as per Section 49(10) of the CGST Act vide Form PMT-09.
Therefore, in the given case, amount of ` 10,000 available under minor head ‘tax’
of major head ‘SGST’ can be utilised for payment of liability of ` 2,000 under
minor head ‘interest’ of the same major head, after making a due transfer entry
using Form GST PMT-09 from the minor head of ‘tax’ to ‘interest’.

12.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

2. INTEREST ON DELAYED PAYMENT OF TAX

1) Interest payable on delayed payment of tax not exceeding 18% [Section 50(1)]:
Every person who is liable to pay tax in accordance with the provisions of this Act
or the rules made thereunder, but fails to pay the tax or any part thereof to the
Government within the period prescribed, shall for the period for which the tax or
any part thereof remains unpaid, pay, on his own, interest @ 18% p.a.

2) Calculation of Interest [Section 50(2)]: The interest under Section 50(1) shall
be calculated, —
 in such manner as may be prescribed,
 from the day succeeding the day on which such tax was due to be paid.
Thus, the period of interest will be from the date following the due date of
payment to the actual date of payment of tax.

3) Interest on excess claim of credit excess reduction of output tax liability - Not
exceeding 24% [Section 50(3)]: A taxable person—
 who makes an undue or excess claim of input tax credit under Section 42(10), or
 Undue or excess reduction in output tax liability under section 43(10)
Shall pay interest on such undue or excess claim on such undue or excess reduction
as the case may be at such rate not exceeding 24% as may be notified by CG
POINT TO BE NOTED:
 Section 42(10) of CGST Act deals with contravention of provisions for matching
of claims for input tax credit by a recipient; and
 Section 43(10) of CGST Act deals with contravention of provisions for matching
of claims for reduction in output tax liability by a supplier.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.7

 PAYMENTS

4) Other relevant points relating to interest:

a. The payment of interest in case of belated payment of tax should be made
voluntarily i.e. even without a demand.
b. The interest payable under this Section shall be debited to the Electronic Liability
Register.
c. The liability for interest can be settled by adjustment with balance in Electronic
Cash Ledger but not with balance in electronic credit ledger.

PROBLEM:1 M/s. S & M Limited reduced the amount of ` 1,50,000 from

the output tax liability in contravention of provisions of section 42(10) of
the CGST Act, 2017 for the month of April 2020, which is ineligible credit. A
show cause notice was issued by the Tax Department to pay tax along with
interest. M/s. S & M Limited paid the tax and interest on 31st July, 2020.
Calculate Interest liability (Ignore Penalty).
ANSWER:1

3. MANNER OF UTILISATION OF ITC [COMBINED READING OF SECTION 49(5),

49A, 49B, RULE 88A AND CIRCULAR NO. 98/17/2019 GST DATED 23.04.2019]
A. SECTION -49A-Utilisation of input tax credit subject to certain conditions
-Notwithstanding anything contained in section 49, the input tax credit on account
of central tax, State tax or Union territory tax shall be utilised towards payment
of integrated tax, central tax, State tax or Union territory tax, as the case may
be, only after the input tax credit available on account of integrated tax has first
been utilised fully towards such payment.

B. SECTION 49B-Order of utilisation of input tax credit Notwithstanding anything

contained in this Chapter and subject to Section 49(5)(e)&(f), the Government
may, on the recommendations of the Council, prescribe the order and manner of

12.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

utilisation of the input tax credit on account of integrated tax, central tax, State
tax or Union territory tax, as the case may be, towards payment of any such tax

C. RULE-88A-Order of utilization of input tax credit Input tax credit on account

of integrated tax shall first be utilised towards payment of integrated tax, and the
amount remaining, if any, may be utilised towards the payment of central tax and
State tax or Union territory tax, as the case may be, in any order However, the input
tax credit on account of central tax, State tax or Union territory tax shall be utilised
towards payment of integrated tax, central tax, State tax or Union territory tax, as
the case may be, only after the input tax credit available on account of integrated
tax has first been utilised fully.

D. POINT TO BE NOTED-
1) Available IGST credit in the credit ledger should first be utilized towards
payment of IGST.
Remaining amount if any, can be utilized towards the payment of CGST and SGST/
UTGST in any order and in any proportion, i.e. ITC of IGST can be utilized either
against CGST or SGST.
 Entire ITC of IGST is to be fully utilised first before the ITC of CGST or SGST/
UTGST can be utilized.

2) Available CGST Credit in the credit ledger shall first be utilized for payment of CGST.
 Remaining amount if any, will be utilized for payment of IGST

3) Available SGST /UTGST credit in the credit ledger shall first be utilized for
payment of SGST/UTGST.
 Remaining amount if any, will be utilized for payment of IGST, only when credit
of CGST is not available for payment of IGST

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.9

 PAYMENTS

4) CGST credit cannot be utilized for payment of SGST/UTGST. Similarly, SGST/

UTGST credit cannot be utilized for payment of CGST.

5) ORDER OF UTILIZATION OF CREDIT-

IGST CREDIT CGST CREDIT SGST/UTGST CREDIT

USE FOR SEQUENTIALLY USE FOR SEQUENTIALLY USE FOR SEQUENTIALLY
a) IGST a) CGST a) SGST/UTGST
b) CGST OR SGST OR b) IGST b) IGST
UTGST ANY ORDER AS per section 49A, AS per section 9A,
credit of CGST IS TO credit of UTGST IS TO
BE UTLISED ONLY IF BE UTLISED ONLY IF
IGST CREDIT IS WHOLLY IGST CREDIT IS WHOLLY
USED i.e. IGST balance is USED i.e. IGST balance is
reduced to NIL. reduced to NIL.

4. PAYMENT BY CHALLAN
A. CPIN stands for Common portal Identification Number. It is created for every
Challan successfully generated by the taxpayer. It is a 14-digit unique number to
identify the challan. CPIN remains valid for a period of 15 days.

B. CIN or 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. IN is generated by the authorized banks/Reserve Bank of
India (RBI) when payment is actually received by such authorized banks or RBI and
credited in the relevant government account held with them. It is an indication that
the payment has been realized and credited to the appropriate government account.
CIN is communicated by the authorized bank to taxpayer as well as to GSTN.

12.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

C. BRN or Bank Reference Number is the transaction number given by the bank for
a payment against a Challan

D. E-FPB stands for Electronic Focal Point Branch. These are branches of authorized
banks which are authorized to collect payment of GST. Each authorized bank will
nominate only one branch as its E-FPB for pan India transaction. The E-FPB will
have to open accounts under each major head for all governments. Any amount
received by such E-FPB towards GST will be credited to the appropriate account
held by such E-FPB. For NEFT/RTGS Transactions, RBI will act as E-FPB.

E. There is single Challan prescribed for all taxes, fees, penalty, interest, and other
payments to be made under the GST regime.

F. Other Aspects relating to Challan.

I. E- challan validity is for 15 days. The commission for making payment through
e-challan has to be borne by the person making the payment.
II. Any unregistered person has to make payment on the basis of temporary identification
number generated through common portal.
III. The mandate form obtained after making NEFT/RTGS payment has to be submitted
in the Bank. The validity of the days.
IV. On successful credit of amount in the concerned (Central/State) Government
Account maintained in the authorized bank, a Challan Identification Number (CIN)
will be generated by the collecting bank which will be indicated in the challan.
V. The ‘deposit’ made by one of the modes and in the prescribed manner will be
credited to the Electronic Cash Ledger of the taxable person.
VI. On receipt of the CIN from the collecting bank, the said amount is credited into
the electronic cash ledger of the person on whose behalf the deposit is made and
the common portal will generate a receipt to this effect.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.11

 PAYMENTS

VII. If CIN is not generated even after making payment and submission of mandate
form or when after generation, it has not reflected in the common portal, the
person making the deposit or the person on whose behalf the deposit has been
made, can make a representation in prescribed form through the common portal
or e-gateway through which the payment has been made.
VIII. Date of credit into the treasury of the State Government/Central Government is
deemed to be the date of deposit and not the actual date of debit to the amount
of the taxable person.
IX. In case any discrepancy is noticed in electronic cash ledger, the registered person
shall communicate the same to the officer exercising jurisdiction in the matter,
through the common portal in prescribed form.

12.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PRACTICAL PROBLEMS-
PROBLEM:2 Calculate Amount of input tax credit available and output
liability under different tax heads:

Head Output liability Input tax credit

Integrated tax 1000 1300
Central tax 300 200
State tax/ Union territory tax 300 200
Total 1600 1700

ANSWER:2

PROBLEM:3 A Wholesale dealer of steel in Uttar Pradesh supplies steel bars

and rods to a construction company which is also located within the same State
for `100. Rate of CGST is 12% and that of SGST is 12%. The GST Credit available
with him is `5 and that of SGST is also` 5. The IGST Credit available with him is
8%. Determine tax implications under GST and also compute GST payable in cash.
ANSWER:3

PROBLEM:4 A service provider in Uttar Pradesh supplies services to a construction

company located within another state (supply is inter-state supply) for `100. CGST
is 12% and SGST is 12% (Rate of IGST is 24%). The GST Credit available with
him is `5 and that of SGST is also `5. The IGST Credit available with him is `8.
Determine tax implications under GST and also compute GST payable in cash.
ANSWER:4

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.13

 PAYMENTS

PROBLEM:5 CGST rate is 9% and SGST rate is also 9%. Mr. A of Rajasthan
supplies goods/services to Mr. B of Rajasthan at `10,000. B makes value-addition
of 20% and supplies to Mr. C of Rajasthan at `12,000. Determine GST implications.
Show detailed workings.
ANSWER:5

PROBLEM:6 CGST rate is 9% and SGST rate is also 9% and IGST rate is
18%. Mr. X of Rajasthan supplies goods/services to Mr. A of Rajasthan at `10,000.
A makes value-addition of 20% and supplies to Mr. B of Maharashtra at `12,000.
B makes value-addition of 20% and supplies to Mr. C of Maharashtra at`14,400.
Determine GST implications showing detailed workings.
ANSWER:6

PROBLEM:7 Mr. A has output Tax Liability of ` 1,00,000/- towards CGST

& SGST/UGST and ` 20,000 towards IGST and interest payable of ` 1800/-.
Explain the manner of discharge tax liability by Mr. A in the following two
independent cases:
Input tax credit available of CGST & SGST is ` 25,000/- each & IGST is ` 25,000/-
Input tax credit not available.
ANSWER:7

12.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PROBLEM:8 M/s X Ltd. being a registered person supplying taxable goods in

the following manner:

Particulars
Intra-State supply of goods 18,00,000
Inter-State supply of goods 13,00,000
Intra-State purchases 13,00,000
Inter-State purchases 1,50,000
ITC at the beginning of the relevant tax period:
CGST 1,30,000
SGST 1,30,000
IGST 1,70,000

I. Rate of CGST, SGST and IGST to be 9%, 9% and18% respectively.

II. Inward and outward supplies are exclusive of taxes.
III. All the conditions necessary for availing the input tax credit have been fulfilled.
Compute the net GST payable by M/s X Ltd. during the tax period. Make
suitable assumptions.
ANSWER:8

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.15

 PAYMENTS

PROBLEM:9 Y Ltd is operating in two states Andhra Pradesh and Tamil

Nadu. The tax liability for the month of August 20XX is as follows-

S. No Tax Liability Andhra Pradesh (`) Tamil Nadu (`)

1. Output CGST Payable 25,000 10,000
2. Output SGST Payable 10,000 5,000
3. Output IGST payable 3,000 2,500
4. Input CGST 8,000 13,000
5. Input SGST 15,000 1,500
6. Input IGST 12,000 16,000

Calculate the tax payable for the month of August 20XX.

ANSWER:9

PROBLEM:10 X Ltd has following tax liabilities under the provisions of Act-

S. No Particulars Amount (`)

1. Tax liability of CGST, SGST/UGST, IGST for supplies made during August 2019 1,00,000

2. Interest & Penalty on delayed payment and filing of returns belonging to 20,000

August 2020

3. Tax liability of CGST, SGST/UGST, IGST for supplies made during September 2020 1,20,000

4. Interest & Penalty on delayed payment and filing of returns belonging to 20,000

September 2020

5. Demand raised as per section 73 or section 74 under CGST Act, 2017 8,00,000

belonging to July 2020

6. Demand raised as per the old provisions of Indirect Taxes 1,00,000

X Ltd has ` 5,00,000 in Electronic cash ledger. Suggest X Ltd in discharging

the tax liability.
ANSWER:10

12.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PROBLEM:11 R has a sum of Rs.3,50,000 on account of input tax credit of

IGST in the electronic credit ledger. He has to pay the following tax liability:

Particulars Amount (Rs.)

1. IGST payable for the month of December, 2020 2,55,500
2. CGST payable for the month of December, 2020 63,000
3. SGST payable for the month of December, 2020 1,22,500

Determine, how would you utilize ITC on account of IGST available in the Electronic
Credit Ledger.
ANSWER:11

PROBLEM:12 R has a sum of Rs.3,60,000 on account of input tax credit of

CGST in the electronic credit ledger. He has to pay the following tax liability:

Particulars Amount (Rs.)

CGST payable for the month of November, 2020 1,31,400
IGST payable for the month of November, 2020 1,72„800
SGST payable for the month of November, 2020 54,000

Determine, how would you utilize ITC on account of CGST available in the Electronic
Credit Ledger.
ANSWER:12

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.17

 PAYMENTS

PROBLEM:13 R has a sum of Rs.4,40,000 on account of input tax credit of

SGST in the electronic credit ledger. He has to pay the following tax liability:

Particulars Amount (Rs.)

CGST payable for the month of December, 2020 1,60,600
IGST payable for the month of December, 2020 2,11,200
SGST payable for the month of December, 2020 66,000

Determine, how would you utilize ITC on account of SGST available in the Electronic
Credit Ledger.
ANSWER:13

PROBLEM:14 R has a sum of Rs.5,10,000 on account of input tax credit of

IGST in the electronic credit ledger. He has to pay the following tax liability:

S. No Particulars Amount (`)

1. IGST payable for the month of December, 2020 3,72,300

2. CGST payable for the month of December, 2020 91,800

3. SGST payable for the month of December, 2020 1,78,500

Determine, how would you utilize ITC on account of IGST available in the Electronic
Credit Ledger.
ANSWER:14

12.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PROBLEM:15 R has a sum of Rs.9,50,000 on account of input tax credit of

CGST in the electronic credit ledger. He has to pay the following tax liability:

Particulars Amount (Rs.)

CGST payable for the month of November, 2020 3,46,750
IGST payable for the month of November, 2020 4,56,000
SGST payable for the month of November, 2020 1,42,500

Determine, how would you utilize ITC on account of CGST available in the Electronic
Credit Ledger.
ANSWER:15

PROBLEM:16 R has a sum of Rs.4,70,000 on account of input tax credit of

SGST in the electronic credit ledger. He has to pay the following tax liability:

Particulars Amount (Rs.)

CGST payable for the month of December, 2020 98,550
IGST payable for the month of December, 2020 1,29,600
SGST payable for the month of December, 2020 2,40,500

Determine, how would you utilize ITC on account of SGST available in the Electronic
Credit Ledger.
ANSWER:16

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.19

 PAYMENTS

PROBLEM:17 R submits the following information

Rs.
(1) Amount of ITC available on account of IGST 5,12,000
(2) Amount of ITC available on account of CGST 2,24,000
(3) Amount of ITC available on account of SGST 2,24,000
(4) IGST payable 3,20,000
(5) CGST payable 1,44,000
(6) SGST payable 1,44,000

Compute how should R utilize the input credit available to him

ANSWER:17

PROBLEM:18 From the following information provided to you, determine,

how would you utilize ITC on account of IGST available in the Electronic Credit
Ledger:

S. No Particulars Amount (`)

1. Amount of ITC on account of IGST available in the Electronic 3,52,000
Credit Ledger for the month of January, 2021
2. Amount of ITC on account of CGST available in the 70,400
Electronic Credit Ledger for the month of January, 2021
3. Amount of ITC on account of SGST available in the Electronic 88,000.
Credit Ledger for the month of January, 2021
4. IGST payable for the month of January, 2021 2,56,960
5. CGST payable for the month of January, 2021 63,360
6. SGST payable for the month of January, 2021 1,23,200

ANSWER:18

12.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PROBLEM:19 From the following information provided to you, determine,

how would you utilize ITC on account of CGST available in the Electronic Credit
Ledger:

Particulars Amount (Rs.)

Amount of ITC on account of CGST available in the Electronic 3,76,000
Credit Ledger for the month of December, 2020
CGST payable for the month of December, 2020 1,37,2400
IGST payable for the month of December, 2020 1,80,480
SGST payable for the month of December, 2020 56,400

ANSWER:19

PROBLEM:20 The following are details of purchases, sales, etc. effected by
M/s. TOY & Co. a registered manufacturer under CGST Act, 2017:
1) Purchased Raw material ‘A’ from local dealer Rs. 86,100 (inclusive of GST @ 5%).
2) Purchased Raw material ‘B’ from local dealer Rs. 1,12,000 (inclusive of GST @ 12%)
3) Purchased capital goods from within the state to be used in manufacture of the
taxable goods Rs. 1,96,000 (inclusive of GST @ 12%). Depreciation @ 15% to be
charged.
4) Other Direct and Indirect expenses Rs. 55,460.
5) Earned 5% profit margin on total cost.
6) During the month of October only 70% production is sold within the state and
applicable GST rate being 12%.
7) Calculate the amount of CGST and SGST payable after utilizing input tax credit
for the month of October assuming no opening balance of input tax credit is
available.
ANSWER:20

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.21

 PAYMENTS

PROBLEM:21 M Ltd., a registered manufacturer in state of Gujarat provides

the following particulars for tax period of January.
1) Inputs purchased within state Rs. 1,05,000 (includes GST @ 5%).
2) Machinery purchased on 15-01-2020 for Rs. 1,00,000 (excluding 18% GST) from
a local dealer in Gujarat, eligible for input tax credit. Depreciation rate 15% p.a
(taken half yearly)
3) Manufacturing expenses and profits Rs. 55,000
4) Goods produced were sold outside Gujarat with IGST @18% on sales.
5) Calculate the amount of CGST and SGST payable after utilizing input tax
credit for the month of January assuming no opening balance of input tax
credit available.
ANSWER:21

PROBLEM:22 Mr. K of Kolkata purchased goods from Mr. A of Assam

amounting to Rs. 1,18,000 (including 18% IGST) . He also purchased raw
material worth Rs. 1,25,000 from local dealer who has opted for composition
scheme. He incurred Rs. 50,000 as direct and indirect expenses and added
profit margin @ 12% of cost. Mr. K sold 70% of finished goods to Mr. M of
Mumbai with IGST @ 12% payable thereon, and 30% of finished goods to Mr.
N of Kolkata with CGST and SGST @ 12% payable thereon.
ANSWER:22

12.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PROBLEM:23 Vivitha & Co., a registered dealer in Ludhiana, furnishes the

following details of purchases and sales pertaining to the month of July:
Goods ‘A’ purchased from local market (including GST @ 12%) 50,400
Goods ‘B’ purchased from Jaipur (including IGST @ 18%) 82,600
Sales made during the month to dealer of Kolkata of product:
 Goods ‘A’ 40,000
 Goods ‘B’ 25,000
 Sales made within the state of Goods ‘B’ 35,000
Above sales amount given is exclusive of tax. Compute the net CGST, SGST and
IGST liability and input tax credit, if any for the month of July.
ANSWER:23

PROBLEM:24 R, a supplier of goods, pays GST under regular scheme. He has

made the following outward taxable supplier in the month of November,2020:

Particular Amount
Intra- State supply of goods 8,00,000
Inter- State supply of goods 3,00,000

He has also furnished the following information in respect of purchase made by

him that tax period:

Particular Amount
Intra- State supply of goods 3,00,000
Inter- State supply of goods 50,000

Mr. X has following ITCs with as on 1.11.2020:

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.23

 PAYMENTS

Particular Amount
CGST 30,000
SGST 30,000
IGST 70,000

Assume:
1. Rate of CGST, SGST and IGST to be 9%,9%and 18% respectively.
2. Both inward and outward supplies are exclusive of taxes, wherever applicable
3. All the conditions necessary for availing the ITC have been fulfilled
Compute the net GST payable by R for the month of November,2020
ANSWER:24

PROBLEM:25 Mr. X, a supplier of goods, pays GST under regular scheme,

Mr. X is not eligible for any threshold exemption. He has made the following
outward taxable supplies in a tax period:
Particulars Rs.
Intra-State supply of goods 16,00,000
Inter-State supply of goods 6,00,000
He has also furnished the following information in respect of purchases made by
him in that tax period:
Particulars Rs.
Intra-State purchases of goods 10,80,000
Inter-State purchases of goods 1,50,000
Mr. X has following ITCs with him at the beginning of the tax period:
Particulars Rs.
CGST 40,500
SGST 40,500
IGST 90,000

12.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

i. Rate of CGST, SGST and IGST to be 9%, 9% and 18% respectively.

ii. Both inward and outward supplies are exclusive of taxes, wherever applicable.
iii. All the conditions necessary for availing the ITC have been fulfilled.
Compute the net GST payable by Mr. X during the tax period. Make suitable
assumptions as required.
ANSWER:25

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.25

 PAYMENTS

5. TAX DEDUCTION AT SOURCE. SECTION 51

1) The Deductors liable to make TDS under this section are, ––
a. A department or establishment of the Central Government or State Government;
or
b. Local authority; or
c. Governmental agencies; or
d. The following persons have been notified under clause (d) of sub-section (1)
of section 51 of the CGST Act by the Central Government:
I. an authority or a board or any other body, -
a. set up by an Act of Parliament or a State Legislature; or
b. established by any Government,
with 51% or more participation by way of equity or control, to carry out any
function;
II. society established by the Central Government or the State Government or a Local
Authority under the Societies Registration Act, 1860;
III. public sector undertakings
to deduct tax at the rate of Two per cent(1% CGST+1% SGST) from the
payment made or credited to the supplier (hereafter in this section referred to
as “the deductee”) of taxable goods or services or both, where the total value
of such supply, under a contract, exceeds two lakhs and fifty thousand rupees:
 Categories of persons not liable to deduct TDS--Tax is not liable to be
deducted at source in the following cases: -amendment
I. When goods and/or services are supplied from a public sector undertaking
(PSU) to another PSU, whether or not a distinct person – Effective from
01.10.2018.
II. When supply of goods and/or services takes place between one person to
another person specified in clauses (a), (b), (c) and (d) of section 51(1) of
the CGST Act.

12.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

 Provided that no deduction shall be made if the location of the supplier and
the place of supply is in a State or Union territory which is different from the
State or as the case may be, Union territory of registration of the recipient.
 Explanation. ––For the purpose of deduction of tax specified above, the value
of supply shall be taken as the amount excluding the central tax, State tax,
Union territory tax, integrated tax and cess indicated in the invoice.

2) The amount deducted as tax under this section shall be paid to the Government by
the Deductors within ten days after the end of the month in which such deduction
is made, in such manner as may be prescribed.

3) The Deductors shall furnish to the deductee a certificate mentioning therein the
contract value, rate of deduction, amount deducted, amount paid to the Government
and such other particulars in such manner as may be prescribed.

4) If any Deductors fails to furnish to the deductee the certificate, after deducting
the tax at source, within five days of crediting the amount so deducted to the
Government, the Deductors shall pay, by way of a late fee, a sum of one hundred
rupees per day from the day after the expiry of such five days period until the
failure is rectified, subject to a maximum amount of five thousand rupees.

5) The deductee shall claim credit, in his electronic cash ledger, of the tax deducted
and reflected in the return of the deductor furnished under sub-section (3) of
section 39, in such manner as may be prescribed.

6) If any deductor fails to pay to the Government the amount deducted as tax under
sub- section (1), he shall pay interest in accordance with the provisions of sub-
section (1) of section 50, in addition to the amount of tax deducted.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.27

 PAYMENTS

7) The determination of the amount in default under this section shall be made in
the manner specified in section 73 or section 74.

8) The refund to the deductor or the deductee arising on account of excess or

erroneous deduction shall be dealt with in accordance with the provisions of
section 54:

TDS Deductor will account for such TDS in the following ways:
1) Such Deductors needs to get compulsorily registered under section 24 of the
CGST/SGST Act.
2) They need to remit such TDS collected by the 10th day of the month succeeding
the month in which TDS was collected and reported in the prescribed return. Delay
or failure to remit such TDS will attract interest at the rate as the government
may notify but not exceeding 18%.
3) The amount deposited as TDS will be reflected in the electronic cash ledger of
the supplier.
4) They need to issue certificate of such TDS to the deductee within 5 days of
deducting TDS failing which fees of Rs. 100 per day subject to maximum of Rs.
5000/- will be payable by such Deductors.
CASE-

PROBLEM:26 ABC Ltd has supplied goods to local authority for 11,80,000(inclusive
of GST 18%). Determine the amount of tax to be deducted. Also determine the
interest liability if TDS on 25-12-2020 is deposited on 28-03-2021.
ANSWER:26

12.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

6. COLLECTION OF TAX AT SOURCE. SECTION 52

1) Notwithstanding anything to the contrary contained in this Act,
 every electronic commerce operator not being an agent,
 shall collect an amount calculated at such rate not exceeding one per cent., as may
be notified by the Government on the recommendations of the Council,
 of the net value of taxable supplies made through it by other suppliers
 where the consideration with respect to such supplies is to be collected by the
operator.
Explanation.––For the purposes of this sub-section, the expression “net value of
taxable supplies” shall mean the aggregate value of taxable supplies of goods or
services or both, other than services notified under sub-section (5) of section
9, made during any month by all registered persons through the operator
reduced by the aggregate value of taxable supplies returned to the suppliers
during the said month.

2) The power to collect the amount specified in sub-section (1) shall be without
prejudice to any other mode of recovery from the operator.

3) The amount collected under sub-section (1) shall be paid to the Government by
the operator within ten days after the end of the month in which such collection
is made, in such manner as may be prescribed.

4) Every operator who collects the amount specified in sub-section (1) shall furnish
a statement, electronically, containing the details of outward supplies of goods or
services or both effected through it, including the supplies of goods or services or
both returned through it, and the amount collected under sub-section (1) during a
month, in such form and manner as may be prescribed, within ten days after the
end of such month.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.29

 PAYMENTS

Provided that the Commissioner may, for reasons to be recorded in writing, by

notification, extend the time limit for furnishing the statement for such class of
registered persons as may be specified therein:
Provided further that any extension of time limit notified by the Commissioner
of State tax or the Commissioner of Union territory tax shall be deemed to be
notified by the Commissioner.

5) Every operator who collects the amount specified in sub-section (1) shall furnish
an annual statement, electronically, containing the details of outward supplies of
goods or services or both effected through it, including the supplies of goods or
services or both returned through it, and the amount collected under the said sub-
section during the financial year, in such form and manner as may be prescribed,
before the thirty first day of December following the end of such financial year.
Provided that the Commissioner may, on the recommendations of the Council
and for reasons to be recorded in writing, by notification, extend the time limit
for furnishing the annual statement for such class of registered persons as may
be specified therein:
Provided further that any extension of time limit notified by the Commissioner
of State tax or the Commissioner of Union territory tax shall be deemed to be
notified by the Commissioner.

6) If any operator after furnishing a statement under sub-section (4) discovers

any omission or incorrect particulars therein, other than as a result of scrutiny,
audit, inspection or enforcement activity by the tax authorities, he shall rectify
such omission or incorrect particulars in the statement to be furnished for the
month during which such omission or incorrect particulars are noticed, subject to
payment of interest, as specified in sub-section (1) of section 50:

12.30 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

 Provided that no such rectification of any omission or incorrect particulars shall be

allowed after the due date for furnishing of statement for the month of September
following the end of the financial year or the actual date of furnishing of the
relevant annual statement, whichever is earlier.

7) The supplier who has supplied the goods or services or both through the operator
shall claim credit, in his electronic cash ledger, of the amount collected and reflected
in the statement of the operator furnished under sub-section (4), in such manner
as may be prescribed.

8) The details of supplies furnished by every operator under sub-section (4) shall
be matched with the corresponding details of outward supplies furnished by the
concerned supplier registered under this Act in such manner and within such time
as may be prescribed.

9) Where the details of outward supplies furnished by the operator under sub-section
(4) do not match with the corresponding details furnished by the supplier under
section 37, the discrepancy shall be communicated to both persons in such manner
and within such time as may be prescribed.

10) The amount in respect of which any discrepancy is communicated under sub-section
(9) and which is not rectified by the supplier in his valid return or the operator in
his statement for the month in which discrepancy is communicated, shall be added
to the output tax liability of the said supplier, where the value of outward supplies
furnished by the operator is more than the value of outward supplies furnished
by the supplier, in his return for the month succeeding the month in which the
discrepancy is communicated in such manner as may be prescribed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.31

 PAYMENTS

11) The concerned supplier, in whose output tax liability any amount has been added
under sub-section (10), shall pay the tax payable in respect of such supply along
with interest, at the rate specified under sub-section (1) of section 50 on the
amount so added from the date such tax was due till the date of its payment.

12) Any authority not below the rank of Deputy Commissioner may serve a notice,
either before or during the course of any proceedings under this Act, requiring the
operator to furnish such details relating to—
a. Supplies of goods or services or both effected through such operator during any period; or
b. Stock of goods held by the suppliers making supplies through such operator in the
godown or warehouses, by whatever name called, managed by such operator and declared
as additional places of business by such suppliers, as may be specified in the notice.

13) Every operator on whom a notice has been served under sub-section (12) shall
furnish the required information within fifteen working days of the date of service
of such notice.

14) Any person who fails to furnish the information required by the notice served under
sub-section (12) shall, without prejudice to any action that may be taken under
section 122, be liable to a penalty which may extend to twenty-five thousand rupees.
Explanation. —For the purposes of this section, the expression “concerned supplier” shall
mean the supplier of goods or services or both making supplies through the operator.
Point to be noted-

12.32 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

PROBLEM:27 XYZ Ltd. a registered supplier of goods is effecting supplies through

E-Comm Ltd (an Electronic Commerce operator). It has made taxable supplies of goods
amounting ` 25,00,000 in month of December 2020 through E-Comm Ltd. E-Comm Ltd.
has returned goods amounting ` 2,50,000 to XYZ Ltd during the month of December
2020. Determine the amount of tax to be collected at source by E-Comm Ltd.
ANSWER:27

7. TRANSFER OF INPUT TAX CREDIT. SECTION 53

On utilization of input tax credit availed under this Act for payment of tax dues
under the Integrated Goods and Services Tax Act in accordance with the provisions of
sub-section (5) of section 49, as reflected in the valid return furnished under sub-
section (1) of section 39, the amount collected as central tax shall stand reduced
by an amount equal to such credit so utilized and the Central Government shall
transfer an amount equal to the amount so reduced from the central tax account to
the integrated tax account in such manner and within such time as may be prescribe

8. TRANSFER OF CERTAIN AMOUNTS-53A

Where any amount has been transferred from the electronic cash ledger under this
Act to the electronic cash ledger under the State Goods and Services Tax Act or
the Union Territory Goods and Services Tax Act, the Government shall, transfer to
the State tax account or the Union territory tax account, an amount equal to the
amount transferred from the electronic cash ledger, in such manner and within
such time as may be prescribed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.33

 PAYMENTS

9. RULES
RULE-85 ELECTRONIC LIABILITY REGISTER.
1) The electronic liability register specified under sub-section (7) of section 49 shall
be maintained in FORM GST PMT-01 for each person liable to pay tax, interest,
penalty, late fee or any other amount on the common portal and all amounts
payable by him shall be debited to the said register.

2) The electronic liability register of the person shall be debited by-

a. the amount payable towards tax, interest, late fee or any other amount payable
as per the return furnished by the said person;
b. the amount of tax, interest, penalty or any other amount payable as determined
by a proper officer in pursuance of any proceedings under the Act or as ascertained
by the said person;
c. the amount of tax and interest payable as a result of mismatch under section 42
or section 43 or section 50; or
d. any amount of interest that may accrue from time to time.

3) Subject to the provisions of section 49, payment of every liability by a registered

person as per his return shall be made by debiting the electronic credit ledger
maintained as per rule 86 or the electronic cash ledger maintained as per rule 87
and the electronic liability register shall be credited accordingly.

4) The amount deducted under section 51, or the amount collected under section
52, or the amount payable on reverse charge basis, or the amount payable under
section 10, any amount payable towards interest, penalty, fee or any other amount
under the Act shall be paid by debiting the electronic cash ledger maintained as
per rule 87 and the electronic liability register shall be credited accordingly.

12.34 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

5) Any amount of demand debited in the electronic liability register shall stand
reduced to the extent of relief given by the appellate authority or Appellate Tribunal
or court and the electronic tax liability register shall be credited accordingly.

6) The amount of penalty imposed or liable to be imposed shall stand reduced partly or
fully, as the case may be, if the taxable person makes the payment of tax, interest
and penalty specified in the show cause notice or demand order and the electronic
liability register shall be credited accordingly.

7) A registered person shall, upon noticing any discrepancy in his electronic liability
ledger, communicate the same to the officer exercising jurisdiction in the matter,
through the common portal in FORM GST PMT-04.

RULE-86 ELECTRONIC CREDIT LEDGER.

1) The electronic credit ledger shall be maintained in FORM GST PMT-02 for each
registered person eligible for input tax credit under the Act on the common portal
and every claim of input tax credit under the Act shall be credited to the said ledger.

2) The electronic credit ledger shall be debited to the extent of discharge of any
liability in accordance with the provisions of section 49.

3) Where a registered person has claimed refund of any unutilized amount from the
electronic credit ledger in accordance with the provisions of section 54, the amount
to the extent of the claim shall be debited in the said ledger.

4) If the refund so filed is rejected, either fully or partly, the amount debited under
sub-rule (3), to the extent of rejection, shall be re-credited to the electronic credit
ledger by the proper officer by an order made in FORM GST PMT-03.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.35

 PAYMENTS

4A) Where a registered person has claimed refund of any amount paid as
tax wrongly paid or paid in excess for which debit has been made from the
electronic credit ledger, the said amount, if found admissible, shall be re-
credited to the electronic credit ledger by the proper officer by an order
made in FORM GST PMT-03.]

5) Save as provided in the provisions of this Chapter, no entry shall be made directly
in the electronic credit ledger under any circumstance.

6) A registered person shall, upon noticing any discrepancy in his electronic credit
ledger, communicate the same to the officer exercising jurisdiction in the matter,
through the common portal in FORM GST PMT-04.
Explanation. For the purposes of this rule, it is hereby clarified that a refund shall
be deemed to be rejected, if the appeal is finally rejected or if the claimant gives
an undertaking to the proper officer that he shall not file an appeal.

RULE-87 ELECTRONIC CASH LEDGER.

1) The electronic cash ledger under sub-section (1) of section 49 shall be maintained
in FORM GST PMT-05 for each person, liable to pay tax, interest, penalty, late fee
or any other amount, on the common portal for crediting the amount deposited
and debiting the payment therefrom towards tax, interest, penalty, fee or any
other amount.

2) Any person, or a person on his behalf, shall generate a challan in FORM GST PMT-
06 on the common portal and enter the details of the amount to be deposited by
him towards tax, interest, penalty, fees or any other amount:
Provided that the challan in FORM GST PMT-06 generated at the common portal
shall be valid for a period of fifteen days

12.36 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

3) The deposit under sub-rule (2) shall be made through any of the following modes,
namely:—
i. Internet Banking through authorised banks;
ii. Credit card or Debit card through the authorised bank;
iii. National Electronic Fund Transfer or Real Time Gross Settlement from any bank; or
iv. Over the Counter payment through authorised banks for deposits up to ten thousand
rupees per challan per tax period, by cash, cheque or demand draft:
Provided that the restriction for deposit up to ten thousand rupees per challan in
case of an Over the Counter payment shall not apply to deposit to be made by -
a. Government Departments or any other deposit to be made by persons as may be
notified by the Commissioner in this behalf;
b. Proper officer or any other officer authorised to recover outstanding dues from any
person, whether registered or not, including recovery made through attachment or
sale of movable or immovable properties;
c. Proper officer or any other officer authorised for the amounts collected by way of
cash, cheque or demand draft during any investigation or enforcement activity or
any ad hoc deposit:

Provided further that a person supplying online information and database access
or retrieval services from a place outside India to a non-taxable online recipient
referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 (13 of
2017) may also make the deposit under sub-rule (2) through international money
transfer through Society for Worldwide Interbank Financial Telecommunication
payment network, from the date to be notified by the Board.
Explanation.—For the purposes of this sub-rule, it is hereby clarified that for making
payment of any amount indicated in the challan, the commission, if any, payable in
respect of such payment shall be borne by the person making such payment.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.37

 PAYMENTS

4) Any payment required to be made by a person who is not registered under the
Act, shall be made on the basis of a temporary identification number generated
through the common portal.

5) Where the payment is made by way of National Electronic Fund Transfer or Real
Time Gross Settlement mode from any bank, the mandate form shall be generated
along with the challan on the common portal and the same shall be submitted to
the bank from where the payment is to be made:
Provided that the mandate form shall be valid for a period of fifteen days from
the date of generation of challan.

6) On successful credit of the amount to the concerned government account maintained

in the authorised bank, a Challan Identification Number shall be generated by the
collecting bank and the same shall be indicated in the challan

7) On receipt of the Challan Identification Number from the collecting bank, the said amount
shall be credited to the electronic cash ledger of the person on whose behalf the deposit
has been made and the common portal shall make available a receipt to this effect.

8) Where the bank account of the person concerned, or the person making the
deposit on his behalf, is debited but no Challan Identification Number is generated
or generated but not communicated to the common portal, the said person may
represent electronically in FORM GST PMT-07 through the common portal to the
bank or electronic gateway through which the deposit was initiated.

9) Any amount deducted under section 51 or collected under section 52 and claimed
by the registered taxable person from whom the said amount was deducted or, as
the case may be, collected shall be credited to his electronic cash ledger

12.38 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

10) Where a person has claimed refund of any amount from the electronic cash ledger,
the said amount shall be debited to the electronic cash ledger.

11) If the refund so claimed is rejected, either fully or partly, the amount debited under
sub-rule (10), to the extent of rejection, shall be credited to the electronic cash
ledger by the proper officer by an order made in FORM GST PMT-03.

12) A registered person shall, upon noticing any discrepancy in his electronic cash ledger,
communicate the same to the officer exercising jurisdiction in the matter, through
the common portal in FORM GST PMT-04

13) A registered person may, on the common portal, transfer any amount of tax, interest,
penalty, fee or any other amount available in the electronic cash ledger under the
Act to the electronic cash ledger for integrated tax, central tax, State tax or Union
territory tax or cess in FORM GST PMT-09.].
Explanation 1.—The refund shall be deemed to be rejected if the appeal is finally
rejected.
Explanation 2.—For the purposes of this rule, it is hereby clarified that a refund
shall be deemed to be rejected, if the appeal is finally rejected or if the claimant
gives an undertaking to the proper officer that he shall not file an appeal.

RULE-88 IDENTIFICATION NUMBER FOR EACH TRANSACTION.

1) A unique identification number shall be generated at the common portal for each
debit or credit to the electronic cash or credit ledger, as the case may be.
2) The unique identification number relating to discharge of any liability shall be
indicated in the corresponding entry in the electronic liability register.
3) A unique identification number shall be generated at the common portal for each credit
in the electronic liability register for reasons other than those covered under sub-rule (2).

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.39

 PAYMENTS

PROBLEM:28 MANOJ Enterprises, registered in Delhi, is engaged in supply of

various goods and services exclusively to Government departments, agencies etc.
and persons notified under section 51 of the CGST Act, 2017. It has provided
the information relating to the supplies made, their contract values and the
payment due against each of them in the month of October 2020 as under:

S.No. Particulars Total contract Payment due

value (inclusive in October,
of GST) (`) 2019 (`)
I. Supply of stationery to Fisheries Department, 2,60,000 15,000
Kolkata
II. Supply of car rental services to Municipal 2,95,000 20,000
Corporation of Delhi
III. Supply of a heavy machinery to Public 5,90,000 25,000
Sector Undertaking located in Uttarakhand
IV. Supply of taxable goods to Delhi office of 6,49,000 50,000
National Housing Bank, a society established
by Government of India under the Societies
Registration Act, 1860
V. Interior decoration of Andhra Bhawan located 12,39,000 12,39,000
in Delhi. Service contract is entered into
with the Government of Andhra Pradesh.
VI. Supply of printed books and printed post 9,72,000 50,000 for
cards to a West Delhi Post office. [Out of Books &
total contract value of ` 9,72,000, contract 20000 for
value for supply of books (exempt from printed post
GST) is `700,000 and supply of printed cards.
post cards taxable under GST is `272000

12.40 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 PAYMENTS

VIII. Maintenance of streetlights in Municipal area 3,50,000 3,50,000

of East Delhi* [The maintenance contract
entered into with the Municipal Corporation
of Delhi also involves replacement of defunct
lights and other spares. However, the value
of supply of goods is not more than 25% of
the value of composite supply.] an activity
in relation to any function entrusted to
a Municipality under article 243W of the
Constitution

You are required to determine amount of tax, if any, to be deducted from each
of the receivable given above assuming the rate of CGST, SGST and IGST as 9%,
9% and 18% respectively. Will your answer be different, if Manoj Enterprises
is registered under composition scheme?
ANSWER:28

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 12.41

 PAYMENTS

12.42 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 14 | AUDIT

1. AUDIT
1) The term Audit as defined in Section 2(13) of the CGST Act, 2017 means the
examination of records, returns and other documents maintained or furnished by the
registered person under this Act or rules made there under or under any other law
for the time being in force to verify the correctness of turnover declared, taxes paid,
refund claimed and input tax credit availed, and to assess his compliance with the
provisions of this Act or rules made there under.

2) Audit under GST can be of three types: -

I. AUDIT BY CHARTERED ACCOUNTANT OR COST ACCOUNTANTS UNDER SECTION
35(5) WHOSE TURNOVER EXCEEDS THE PRESCRIBED LIMIT.
II. AUDIT BY TAX AUTHORITIES
III. SPECIAL AUDIT.
This chapter deals with the last two types of audits.

2. AUDIT BY TAX AUTHORITIES [SECTION 65]

A. Who may conduct the audit?
I. The Commissioner; or
II. Any officer authorized by him, by way of a general or a specific order,
may undertake audit of any registered person at the place of business of the
registered person or in their office for a financial year or multiples thereof.
Where it is decided to undertake the audit of a registered person, the proper officer
shall issue a notice not less than 15 working days prior to the conduct of audit.

B. What is meant by commencement of audit?

The term ‘commencement of audit’ is important because audit has to be completed
within a given time frame in reference to this date of commencement. Commencement

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 14.1

 AUDIT

of audit means the later of the following:

I. the date on which the records/accounts called for by the audit authorities are
made available to them, or
II. the actual institution of audit at the place of business of the taxpayer.

C. Time limit for completion of audit-The audit is required to be completed within

3 months from the date of commencement of audit. The period is extendable for
a further period of a maximum of 6 months by the Commissioner.

D. How to conduct audit-The proper officer authorized to conduct audit of the

records and books of account of the registered person shall, with the assistance of
the team of officers and officials accompanying him, verify the documents on the
basis of which the books of account are maintained and the returns and statements
furnished under the Act and the rules made thereunder, the correctness of the
turnover, exemptions and deductions claimed, the rate of tax applied in respect of
supply of goods or services or both, the input tax credit availed andutilized, refund
claimed, and other relevant issues and record the observations in his audit notes.

During the course of audit, the authorised officer may require the registered person,—
a. to facilitate the verification of accounts/records available or requisitioned by the
authorities,
b. to provide such information as the authorities may require for the conduct of the
audit, and
c. to render assistance for timely completion of the audit.
The proper officer may inform the registered person of the discrepancies noticed,
if any, as observations of the audit and the said person may file his reply and
the proper officer shall finalize the findings of the audit after due consideration
of the reply furnished.

14.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 AUDIT

E. Finalization of Audit
I. The proper officer shall finalize the findings of the audit after due consideration of
the reply furnished by registered person to audit observation brought to his notice
during the course of audit.
II. On conclusion of audit, the proper officer shall within 30 days inform the registered
person whose records are audited, about the findings, his rights and obligations and
the reasons for such findings.
III. Where the audit results in detection of tax not paid or short paid or erroneously
refunded, or input tax credit wrongly availed or utilized, the proper officer may
initiate action under section 73 or section 74.

3. SPECIAL AUDIT [SECTION 66]

A. When Special Audit may be directed and from whom?If at any stage of scrutiny,
inquiry, investigation or any other proceedings before him, any officer not below the
rank of Assistant Commissioner, having regard to the nature and complexity of the
case and the interest of revenue, is of the opinion that –
I. the value has not been correctly declared; or
II. the credit availed is not within the normal limits,
he may, with the prior approval of the Commissioner, issue a direction to the
registered person to get his records including books of account examined and
audited by a chartered accountant or a cost accountant as may be nominated by
the Commissioner and specified in the said direction.
The provisions of special audit shall have effect even if the accounts of the
registered person have been audited under any other provisions of the GST Act or
any other law for the time being in force.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 14.3

 AUDIT

B. Time limit within which audit to be completed-The Chartered Accountant or

cost accountant as nominated by Commissioner shall submit a report of such audit
duly signed and certified by him within the period of 90 days to the said Assistant
Commissioner mentioning therein such other particulars as may be specified:
The Assistant Commissioner may extend the said period 90 days by a further
period of 90 days −
I. on an application made to him in this behalf by the registered person or the
chartered accountant or cost accountant; or
II. for any material and sufficient reason.

C. Who will bear the expenses of audit?

The expenses of the examination and audit of records including the remuneration
of such Chartered Accountant or Cost Accountant, shall be determined and paid
by the Commissioner and such determination shall be final.

D. How Special Audit Report to be dealt with?

The registered person shall be given an opportunity of being heard in respect of
any material gathered on the basis of special audit which is proposed to be used
in any proceedings against him under this Act or the rules made thereunder.
On conclusion of special audit, the registered person shall be informed of the
findings of special audit.
Where the special audit results in detection of tax not paid or short paid or
erroneously refunded, or input tax credit wrongly availed or utilized, the process of
demand and recovery will be initiated against the registered person under section
73 or section 74.

14.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 AUDIT

4. DIFFERENCE BETWEEN SECTION 65 AND SECTION 66: -

Components Section 65 Section 66

Nature of Audit In this section, we have a In this section, we have a
departmental audit special audit
Conducted by It is conducted by officers It is conducted by
of the department authorised Chartered accountant/cost
commissioner accountant nominated by the
commissioner
Prior Notice Prior notice of 15 days is o such notice/intimation is
required required
Time for conclusion The conclusion of the audit The conclusion of the audit
of the audit is given in 3 months, further is given in 90 days, further
extension of 6 months is extension of 90 days is
allowed allowed
Audit Findings/ Audit reports should be Audit reports should be
Report intimated soon upon shown to deputy/ assistant
completion of the audit commissioner
The opportunity of No specific provision Yes, where material
being heard gathered during the audit is
to be used in any proceedings
against the auditee
Action based on a Yes, under section 73 by Yes, under section 73 by
report the issuance of SCN (Show the issuance of SCN (Show
Cause Notice) Cause Notice)

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 14.5

 AUDIT

5. RULES
RULE-101 Audit.
1) The period of audit to be conducted under sub-section (1) of section 65 shall be
a financial year or multiples thereof.

2) Where it is decided to undertake the audit of a registered person in accordance

with the provisions of section 65, the proper officer shall issue a notice in FORM
GST ADT-01 in accordance with the provisions of sub-section (3) of the said
section.

3) The proper officer authorised to conduct audit of the records and the books of
account of the registered person shall, with the assistance of the team of officers
and officials accompanying him, verify the documents on the basis of which the
books of account are maintained and the returns and statements furnished under
the provisions of the Act and the rules made thereunder, the correctness of the
turnover, exemptions and deductions claimed, the rate of tax applied in respect of
the supply of goods or services or both, the input tax credit availed and utilised,
refund claimed, and other relevant issues and record the observations in his audit
notes.

4) The proper officer may inform the registered person of the discrepancies noticed,
if any, as observed in the audit and the said person may file his reply and the
proper officer shall finalize the findings of the audit after due consideration of the
reply furnished.

5) On conclusion of the audit, the proper officer shall inform the findings of audit
to the registered person in accordance with the provisions of sub-section (6) of
section 65 in FORM GST ADT-02.

14.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 AUDIT

RULE-102 SPECIAL AUDIT.

1) Where special audit is required to be conducted in accordance with the provisions of
section 66, the officer referred to in the said section shall issue a direction in FORM
GST ADT-03 to the registered person to get his records audited by a chartered
accountant or a cost accountant specified in the said direction.

2) On conclusion of the special audit, the registered person shall be informed of the
findings of the special audit in FORM GST ADT-04.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 14.7

 AUDIT

14.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 16 | INSPECTION,SEARCH,
SEIZURE & ARREST

1. INSPECTION, SEARCH & SEIZURE-

A. WHAT IS INSPECTION:
I. Inspection is a new provision under the CGST/SGST Act.
II. The word inspection has not been defined in the Act.
III. Inspection is a softer provision of ‘search’ which enables officers to access to
business premises.
IV. Inspection enables officers to access any place of business of a taxable person and
also any place of business of a person engaged in transporting goods or who is an
owner or an operator of a warehouse or godown.

B. WHAT IS SEARCH:
I. As per Black’s Law Dictionary, search is ‘an examination of a man’s house or other
buildings or premises, or of his person, with a view to the discovery of contraband
or illicit or stolen property, or some evidence of guilt to be used in the prosecution
of a criminal action for some crime or offence with which he is charged.’
II. The term ‘search’, in simple language, denotes an action of a government machinery
to go, look through or examine carefully a place, area, person, object etc. in order
to find something concealed or for the purpose of discovering evidence of a crime.
III. The search of a person or vehicle or premises etc. can only be done under proper
and valid authority of law.
IV. There have to be compelling reasons to order for a search i.e., transgression into
one’s privacy. In case of search, due process of law has to be followed.
V. In case of taxes, a suspicion of undisclosed or concealed income or assets is sufficient
for issuance of a search warrant.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.1

 INSPECTION,SEARCH, SEIZURE & ARREST

C. What is SEIZURE-
I. Seizure has not been defined in the GST law.
II. In Law Lexicon Dictionary, seizure is defined as the act of taking possession of
property by an officer under legal process. It generally implies taking possession
forcibly contrary to the wishes of the owner of the property or who has the
possession and who was unwilling to part with the possession.
III. Seizure is the outcome of search. If any documents are found during the search
which need to be seized, the officials conducting the search can seize such
documents etc.
IV. When power to seize exists, the power to release seized items is also implied
V. Once the investigation is completed, the department may retain or release the
seized documents or papers or things.
VI. The investigation officer, if establishes that there has been an evasion of tax,
notice under section 74 of the Act may be issued.

D. SEIZURE AND DETENTION

 DETENTION-
I. Denial of access to the owner of the property or the person who possesses the
property at a particular point of time by a legal order/notice is called detention.
II. Detention order is issued when it is suspected that the goods are liable to
confiscation.
 SEIZURE-
I. Seizure is taking over of actual possession of the goods by the department.
II. Seizure can be made only on the reasonable belief which is arrived at after
inquiry/investigation that the goods are liable to confiscation

16.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

2. SEARCH WARRANT-
A. SEARCH WARRANT-The written authority to conduct search is generally called
search warrant. The competent authority to issue search warrant is an officer of the
rank of Joint Commissioner or above. A search warrant must indicate the existence
of a reasonable belief leading to the search.

B. SEARCH Warrant should contain the following details:

I. The violation under the Act,
II. The premise to be searched,
III. The name and designation of the person authorized for search,
IV. The name of the issuing officer with full designation along with his round seal,
V. Date and place of issue,
VI. Serial number of the search warrant,
VII. Period of validity i.e. a day or two days etc.

C. Basic requirements to be observed during Search operations:

I. No search of premises should be carried out without a valid search warrant issued
by the proper officer.
II. There should invariably be a lady officer accompanying the search team to residence.
III. The officers before starting the search should disclose their identity by showing
their identity cards to the person in-charge of the premises.
IV. The search warrant should be executed before the start of the search by showing
the same to the person in-charge of the premises and his signature should be taken
on the body of the search warrant in token of having seen the same. The signatures
of at least two witnesses should also be taken on the body of the search warrant.
V. The search should be made in the presence of at least two independent witnesses
of the locality. If no such inhabitants are available Willing, the inhabitants of any
other locality should be asked to be witness to the search. The witnesses should be

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.3

 INSPECTION,SEARCH, SEIZURE & ARREST

briefed about the purpose of the search.

VI. Before the start of the search proceedings, the team of officers conducting the
search and the accompanying witnesses should offer themselves for their personal
search to the person in-charge of the premises being searched. Similarly, after
the completion of search all the officers and the witnesses should again offer
themselves for their personal search.
VII. A Panchnama / Mahazar of the proceedings of the search should necessarily be
prepared on the spot. A list of all goods, documents recovered and seized/detained
should be prepared and annexed to the Panchnama/Mahazar.
VIII. The Panchnama / Mahazar and the list of goods/ documents seized/detained
should invariably be signed by the witnesses, the in-charge/ owner of the premises
before whom the search is conducted and also by the officer(s) duly authorized
for conducting the search.
IX. After the search is over, the search warrant duly executed should be returned in
original to the issuing officer with a report regarding the outcome of the search.
The names of the officers who participated in the search may also be written on
the reverse of the search warrant.
X. The issuing authority of search warrant should maintain register of records of
search warrant issued and returned and used search warrants should be kept in
records.
XI. A copy of the Panchnama / Mahazar along with its annexure should be given to the
person in- charge/ owner of the premises being searched under acknowledgement.

16.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

3. SUMMONS-
A. MEANING OF SUMMON-

B. WHY SUMMONS ARE ISSUED-

I. Summons are issued to enquire about evasion of tax or duty and contravention of
statutory provisions.
II. It does not specifically state that who is evader and against whom proceedings have
to be initiated. It also does not mean that the noticee is an evader.
III. It cannot be assumed or presumed that summon means action against the person
to whom it is issued.
IV. If one reads the language employed, then one can have a presumption without any
doubt that authorities have only issued summons intending to enquire into alleged
evasion of tax or duty.
V. The power to issue summon and examine a person has a vital bearing in an
enquiry under the CGST Act, 2017. The evidence so gathered will have a bearing on
the quality of adjudication proceedings. Status of the person summoned is of no
consequence. However, sufficient care should be taken to summon only such persons
who would have first-hand knowledge of material relevant to the investigation being
conducted. It must be ensured that the procedural safeguards are not violated.
VI. Summons can be used in an inquiry for recording statements or for collecting
evidence/documents. While the evidentiary value of securing documentary and oral
evidence under the said legal provision can hardly be over emphasized, nevertheless,
it is desirable that summons need not always be issued when a simple letter, politely
worded, can also serve the purpose of securing documents relevant to investigation.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.5

 INSPECTION,SEARCH, SEIZURE & ARREST

C. POWERS TO SUMMON TO PRODUCE DOCUMENTS/THINGS- According to section

70 of CGST Act, 2017, where any officer has reasons to believe that any person is
required in attendance to give evidence and produce documents, he may authorize
any officer to issue summons. Any proper officer, duly authorized by the competent
authority shall have the power to summon any person whose attendance he
considers necessary, either to give evidence or to produce a document or any other
thing in any inquiry, which such officer is making.

 Under section 63(1), a summon may be issued for –

I. Production of specified documents or other things (say, a contract or audit report)
II. Production of all documents or things of a particular description (say, financial
statements)
The condition is that such documents or things must be in the possession or
control of the person to whom summon is being served.

 SUMMON TO BE ISSUED IN WRITING ONLY-A summon issued to give evidence or

produce documents shall be issued by the CGST/SGST officer in writing only, duly
authorized by the competent authority.
 VALIDITIY OF ON SPOT SUMMONS-In Anghinghu Nice Tobacco (Firm) v CCE
(2013) 298 ELT 570 (Cestat, Chennai), it was held that summons issued on spot
are valid when issued with prior approval of competent authority. Generally, this
is resorted to during the search proceedings.

D. Obligations of a person who has been issued and served with a summon
I. Attend to the summons.
II. Attend in person or through an authorized representative, as the officer issuing
summon may direct (he may direct to attend in person).
III. State the truth upon any subject in respect of which they are examined.

16.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

IV. Make statements (recording of statement by officers).

V. Produce documents or things as required.
VI. Seek exemption under section 132 and 133 of Code of Civil Procedure regarding
attendance.

E. Nature of summon proceedings-As per section 70(2) of the CGST Act, 2017, every
act of summoning a person by issuance of summons to give evidence and produce
documents in enquiries, shall be deemed to be judicial proceedings as provided for in
section 193 and 228 of Indian Penal Code, 1860. Section 193 deals with punishment
for false evidence. Section 228 provides action in case of intentional insult or
interruption to public servant sitting in a judicial proceeding.

F. Consequences of non-appearance or not responding to summons

I. Since the summon proceedings are deemed to be judicial proceedings, if a person
does not appear on the date when summoned without any reasonable justification,
he can be prosecuted under section 174 of the Indian Penal Code (IPC).
II. If he absconds to avoid service of summons, he can be prosecuted under section
172 of the IPC and in case he does not produce the documents or electronic records
required to be produced, he can be prosecuted under section 175 of the IPC.
III. In terms of penal provisions, if a person does not appear before a any officer who
has issued the summon, he shall be liable to a monetary penalty up to INR 25,000.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.7

 INSPECTION,SEARCH, SEIZURE & ARREST

4. POWER OF INSPECTION, SEARCH AND SEIZURE- SECTION 67

1) Where the proper officer, not below the rank of Joint Commissioner, has
reasons to believe that–
a. A taxable person
 has suppressed any transaction relating to supply of goods or services or both or
the stock of goods in hand, or
 has claimed input tax credit in excess of his entitlement under this Act or
 has indulged in contravention of any of the provisions of this Act or the rules
made there under to evade tax under this Act; or
b. any person engaged in the business of transporting goods or an owner or operator
of a warehouse or a godown or any other place is keeping goods which have
escaped payment of tax or has kept his accounts or goods in such a manner as is
likely to cause evasion of tax payable under this Act, He may authorize in writing
any other officer of central tax to inspect any places of business of the taxable
person or the persons engaged in the business of transporting goods or the owner
or the operator of warehouse or godown or any other place.

2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant
to an inspection carried out under sub-section (1) or otherwise, has reasons to believe
that any goods liable to confiscation or any documents or books or things, which in his
opinion shall be useful for or relevant to any proceedings under this Act, are secreted
in any place, he may authorize in writing any other officer of central tax to search and
seize or may himself search and seize such goods, documents or books or things:

 Provided that where it is not practicable to seize any such goods, the proper
officer, or any officer authorized by him, may serve on the owner or the custodian
of the goods an order that he shall not remove, part with, or otherwise deal with
the goods except with the previous permission of such officer:

16.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

 Provided further that the documents or books or things so seized shall be retained
by such officer only for so long as may be necessary for their examination and for
any inquiry or proceedings under this Act.

3) The documents, books or things referred to in sub-section (2) or any other

documents, books or things produced by a taxable person or any other person, which
have not been relied upon for the issue of notice under this Act or the rules made
thereunder, shall be returned to such person within a period not exceeding thirty
days of the issue of the said notice.

4) The officer authorized under sub-section (2) shall have the power to seal or break
open the door of any premises or to break open any almirah, electronic devices,
box, receptacle in which any goods, accounts, registers or documents of the person
are suspected to be concealed, where access to such premises, almirah, electronic
devices, box or receptacle is denied.

5) The person from whose custody any documents are seized under sub-section (2)
shall be entitled to make copies thereof or take extracts therefrom in the presence
of an authorized officer at such place and time as such officer may indicate in this
behalf except where making such copies or taking such extracts may, in the opinion
of the proper officer, prejudicially affect the investigation.

6) The goods so seized under sub-section (2) shall be released, on a provisional basis,
upon execution of a bond and furnishing of a security, in such manner and of
such quantum, respectively, as may be prescribed or on payment of applicable tax,
interest and penalty payable, as the case may be.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.9

 INSPECTION,SEARCH, SEIZURE & ARREST

7) Where any goods are seized under sub-section (2) and no notice in respect
thereof is given within six months of the seizure of the goods, the goods shall be
returned to the person from whose possession they were seized:

 Provided that the period of six months may, on sufficient cause being shown, be
extended by the proper officer for a further period not exceeding six months.

8) The Government may, having regard to the perishable or hazardous nature of any goods,
depreciation in the value of the goods with the passage of time, constraints of storage
space for the goods or any other relevant considerations, by notification, specify the
goods or class of goods which shall, as soon as may be after its seizure under sub-
section (2), be disposed of by the proper officer in such manner as may be prescribed.

9) Where any goods, being goods specified under sub-section (8), have been seized
by a proper officer, or any officer authorized by him under sub-section (2), he
shall prepare an inventory of such goods in such manner as may be prescribed.

10) The provisions of the Code of Criminal Procedure, 1973, relating to search and seizure, shall,
so far as may be, apply to search and seizure under this section subject to the modification
that sub-section (5) of section 165 of the said Code shall have effect as if for the word
“Magistrate”, wherever it occurs, the word “Commissioner” were substituted.

11) Where the proper officer has reasons to believe that any person has evaded or is
attempting to evade the payment of any tax, he may, for reasons to be recorded
in writing, seize the accounts, registers or documents of such person produced
before him and shall grant a receipt for the same, and shall retain the same for
so long as may be necessary in connection with any proceedings under this Act
or the rules made there under for prosecution.

16.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

12) The Commissioner or an officer authorized by him may cause purchase of any goods
or services or both by any person authorized by him from the business premises
of any taxable person, to check the issue of tax invoices or bills of supply by such
taxable person, and on return of goods so purchased by such officer, such taxable
person or any person in charge of the business premises shall refund the amount so
paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.

5. INSPECTION OF GOODS IN MOVEMENT. SEC 68

1) The Government may require the person in charge of a conveyance carrying any
consignment of goods of value exceeding such amount as may be specified to carry
with him such documents and such devices as may be prescribed.
2) The details of documents required to be carried under sub-section (1) shall be
validated in such manner as may be prescribed.
3) Where any conveyance referred to in sub-section (1) is intercepted by the proper
officer at any place, he may require the person in charge of the said conveyance
to produce the documents prescribed under the said sub-section and devices for
verification, and the said person shall be liable to produce the documents and
devices and also allow the inspection of goods.

6. COGNIZABLE AND NON-COGNIZABLE OFFENCE.

A. Cognizable Offence: Generally, cognizable offence means serious category of offences
in respect of which a police officer has the authority to make an arrest without a
warrant and to start an investigation with or without the permission of a court.
B. Non-Cognizable Offence: Non-cognizable offence means relatively less serious offences
in respect of which a police officer does not have the authority to make an arrest without
a warrant and an investigation cannot be initiated without a court order.
C. Cognizable and non-cognizable offences under CGST Act : In Section 132 of
CGST Act, it is provided that the offences relating to taxable goods and/ or services

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.11

 INSPECTION,SEARCH, SEIZURE & ARREST

where the amount of tax evaded or the amount of input tax credit wrongly availed
or the amount of refund wrongly taken exceeds ` 5 crore, it shall be cognizable and
non-bailable and in such cases the bail can be considered by a Judicial Magistrate
only. Other offences under the Act are non-cognizable and bailable aid all arrested
persons shall be released on bail by Deputy/ Assistant Commissioner.

7. POWER TO ARREST.SECTION 69
1) Where the Commissioner has reasons to believe that a person has committed any
offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-
section (1) of section 132 which is punishable under clause (i) or (ii) of sub-
section (1), or sub- section (2) of the said section, he may, by order, authorize
any officer of central tax to arrest such person.

2) Where a person is arrested under sub-section (1) for an offence specified under
sub- section (5) of section 132, the officer authorized to arrest the person shall
inform such person of the grounds of arrest and produce him before a Magistrate
within twenty-four hours.

3) Subject to the provisions of the Code of Criminal Procedure, 1973, ––

a) Where a person is arrested under sub-section (1) for any offence specified
under sub-section (4) of section 132, he shall be admitted to bail or in default
of bail, forwarded to the custody of the Magistrate.
b) in the case of a non-cognizable and Bailable offence, the Deputy Commissioner
or the Assistant Commissioner shall, for the purpose of releasing an arrested
person on bail or otherwise, have the same powers and be subject to the same
provisions as an officer-in-charge of a police station

16.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

8. POWER TO SUMMON PERSONS TO GIVE EVIDENCE AND PRODUCE

DOCUMENTS.SECTION 70
1) The proper officer under this Act shall have power to summon any person whose
attendance he considers necessary either to give evidence or to produce a document
or any other thing in any inquiry in the same manner, as provided in the case of a
civil court under the provisions of the Code of Civil Procedure, 1908.
2) Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial
proceedings” within the meaning of section 193 and section 228 of the Indian Penal
Code

9. ACCESS TO BUSINESS PREMISES.SECTION 71

1) Any officer under this Act, authorized by the proper officer not below the rank of
Joint Commissioner, shall have access to any place of business of a registered person
to inspect books of account, documents, computers, computer programs, computer
software whether installed in a computer or otherwise and such other things as he
may require and which may be available at such place, for the purposes of carrying
out any audit, scrutiny, verification and checks as may be necessary to safeguard
the interest of revenue.

2) Every person in charge of place referred to in sub-section (1) shall, on demand, make
available to the officer authorized under sub-section (1) or the audit party deputed
by the proper officer or a cost accountant or chartered accountant nominated under
section 66—
I. Such records as prepared or maintained by the registered person and declared to the
proper officer in such manner as may be prescribed.
II. Trial balance or its equivalent.
III. Statements of annual financial accounts, duly audited, wherever required.
IV. Cost audit report, if any, under section 148 of the Companies Act, 2013.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.13

 INSPECTION,SEARCH, SEIZURE & ARREST

V. The income-tax audit report, if any, under section 44AB of the Income-tax Act,
1961; and
VI. Any other relevant record,
For the scrutiny by the officer or audit party or the chartered accountant or cost
accountant within a period not exceeding fifteen working days from the day when
such demand is made, or such further period as may be allowed by the said officer
or the audit party or the chartered accountant or cost accountant.

10. OFFICERS TO ASSIST PROPER OFFICERS.SECTION 72

1) All officers of Police, Railways, Customs, and those officers engaged in the collection
of land revenue, including village officers, officers of State tax and officers of Union
territory tax shall assist the proper officers in the implementation of this Act.

2) The Government may, by notification, empower and require any other class of
officers to assist the proper officers in the implementation of this Act when called
upon to do so by the Commissioner

11. INSPECTION, SEARCH AND SEIZURE- RULES 139-141

RULE-139 INSPECTION, SEARCH AND SEIZURE. -
1) Where the proper officer not below the rank of a Joint Commissioner has reasons
to believe that a place of business or any other place is to be visited for the
purposes of inspection or search or, as the case may be, seizure in accordance
with the provisions of section 67, he shall issue an authorization in FORM GST
INS-01 authorizing any other officer subordinate to him to conduct the inspection
or search or, as the case may be, seizure of goods, documents, books or things
liable to confiscation.

16.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 INSPECTION,SEARCH, SEIZURE & ARREST

2) Where any goods, documents, books, or things are liable for seizure under sub-
section (2) of section 67, the proper officer or an authorized officer shall make an
order of seizure in FORM GST INS-02.

3) The proper officer or an authorized officer may entrust upon the owner or the
custodian of goods, from whose custody such goods or things are seized, the custody
of such goods or things for safe upkeep and the said person shall not remove, part
with, or otherwise deal with the goods or things except with the previous permission
of such officer.

4) Where it is not practicable to seize any such goods, the proper officer or the
authorized officer may serve on the owner or the custodian of the goods, an order of
prohibition in FORM GST INS-03 that he shall not remove, part with, or otherwise
deal with the goods except with the previous permission of such officer.

5) The officer seizing the goods, documents, books or things shall prepare an inventory
of such goods or documents or books or things containing, inter alia, description,
quantity or unit, make, mark or model, where applicable, and get it signed by the
person from whom such goods or documents or books or things are seized.

RULE 140 BOND AND SECURITY FOR RELEASE OF SEIZED GOODS. -

1) The seized goods may be released on a provisional basis upon execution of a bond for the
value of the goods in FORM GST INS-04 and furnishing of a security in the form of a
bank guarantee equivalent to the amount of applicable tax, interest and penalty payable.
Explanation.- For the purposes of the rules under the provisions of this Chapter, the
applicable tax shall include central tax and State tax or central tax and the Union
territory tax, as the case may be and the cess, if any, payable under the Goods and
Services Tax (Compensation to States) Act.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 16.15

 INSPECTION,SEARCH, SEIZURE & ARREST

2) In case the person to whom the goods were released provisionally fails to produce
the goods at the appointed date and place indicated by the proper officer, the
security shall be encashed and adjusted against the tax, interest and penalty and
fine, if any, payable in respect of such goods.

RULE-141 PROCEDURE IN RESPECT OF SEIZED GOODS. -

1) Where the goods or things seized are of perishable or hazardous nature, and if the
taxable person pays an amount equivalent to the market price of such goods or
things or the amount of tax, interest and penalty that is or may become payable
by the taxable person, whichever is lower, such goods or, as the case may be,
things shall be released forthwith, by an order in FORM GST INS-05, on proof of
payment.

2) Where the taxable person fails to pay the amount referred to in sub-rule (1) in
respect of the said goods or things, the Commissioner may dispose of such goods
or things and the amount realized thereby shall be adjusted against the tax,
interest, penalty, or any other amount payable in respect of such goods or things.

16.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 17 | DEMANDS AND RECOVERY

1. DETERMINATION OF TAX NOT PAID OR SHORT PAID OR ERRONEOUSLY

REFUNDED OR INPUT TAX CREDIT WRONGLY AVAILED OR UTILISED FOR
ANY REASON OTHER THAN FRAUD OR ANY WILFUL-MISSTATEMENT OR
SUPPRESSION OF FACTS –SECTION 73
1) WHERE IT APPEARS TO THE PROPER OFFICER THAT ANY TAX HAS
I. not been paid or short paid or
II. erroneously refunded, or
III. where input tax credit has been wrongly availed or utilized for any reason,
other than the reason of fraud or any willful-misstatement or suppression of facts
to evade tax,
he shall serve notice on the person chargeable with tax which has not been so paid
or which has been so short paid or to whom the refund has erroneously been made,
or who has wrongly availed or utilized input tax credit, requiring him to show cause
as to why he should not pay the amount specified in the notice along with interest
payable thereon under section 50 and a penalty leviable under the provisions of this
Act or the rules made thereunder.

2) TIME LIMIT FOR ISSUE OF NOTICE-The proper officer shall issue the notice under
sub-section (1) at least three months prior to the time limit specified in sub-
section (10) for issuance of order.

3) SERVICE OF STATEMENT-Where a notice has been issued for any period under sub-
section (1), the proper officer may serve a statement, containing the details of tax
not paid or short paid or erroneously refunded or input tax credit wrongly availed
or utilized for such periods other than those covered under sub-section (1), on the
person chargeable with tax.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.1

 DEMANDS AND RECOVERY

4) SERVICE OF STATEMENT TO BE DEEMED TO BE SERVICE OF SCN-The service

of such statement shall be deemed to be service of notice on such person under
sub-section (1), subject to the condition that the grounds relied upon for such
tax periods other than those covered under sub-section (1) are the same as are
mentioned in the earlier notice.

5) The person chargeable with tax may, before service of notice under sub-section
(1) or, as the case may be, the statement under sub-section (3), pay the amount
of tax along with interest payable thereon under section 50 on the basis of his
own ascertainment of such tax or the tax as ascertained by the proper officer and
inform the proper officer in writing of such payment.

6) The proper officer, on receipt of such information, shall not serve any notice under
sub- section (1) or, as the case may be, the statement under sub-section (3), in
respect of the tax so paid or any penalty payable under the provisions of this Act
or the rules made thereunder.

7) Where the proper officer is of the opinion that the amount paid under sub-section
(5) falls short of the amount actually payable, he shall proceed to issue the notice
as provided for in sub-section (1) in respect of such amount which falls short of
the amount actually payable.

8) Where any person chargeable with tax under sub-section (1) or sub-section (3)
pays the said tax along with interest payable under section 50 within thirty days
of issue of show cause notice, no penalty shall be payable and all proceedings in
respect of the said notice shall be deemed to be concluded.

17.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

9) The proper officer shall, after considering the representation, if any, made by person chargeable
with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent of
tax or ten thousand rupees, whichever is higher, due from such person and issue an order.

10) TIME LIMIT FOR ADJUDICATION ORDER-The proper officer shall issue the order under
sub-section (9) within three years from the due date for furnishing of annual return
for the financial year to which the tax not paid or short paid or input tax credit wrongly
availed or utilized relates to or within three years from the date of erroneous refund.

11) Notwithstanding anything contained in sub-section (6) or sub-section (8), penalty

under sub-section (9) shall be payable where any amount of self-assessed tax or
any amount collected as tax has not been paid within a period of thirty days from
the due date of payment of such tax.

POINT TO BE NOTED-

Payment of Penalty Amount of Penalty

Dues paid before issuance of show cause notice. No penalty
Dues paid within 30 days of issuance of show No penalty
cause notice.
Dues paid after 30 days of issuance of Order. 10% of tax dues or INR 10,000
Whichever is higher.
Any other case 10% of tax dues or INR 10,000
Whichever is higher.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.3

 DEMANDS AND RECOVERY

2. DETERMINATION OF TAX NOT PAID OR SHORT PAID OR ERRONEOUSLY

REFUNDED OR INPUT TAX CREDIT WRONGLY AVAILED OR UTILISED BY
REASON OF FRAUD OR ANY WILFUL-MISSTATEMENT OR SUPPRESSION
OFFACTS.SECTION 74
1) WHERE IT APPEARS TO THE PROPER OFFICER THAT ANY TAX HAS
I. not been paid or short paid or
II. erroneously refunded or
III. where input tax credit has been wrongly availed or utilized
by reason of fraud, or any willful-misstatement or suppression of facts to evade
tax,
he shall serve notice on the person chargeable with tax which has not been so
paid or which has been so short paid or to whom the refund has erroneously been
made, or who has wrongly availed or utilized input tax credit, requiring him to
show cause as to why he should not pay the amount specified in the notice along
with interest payable thereon under section 50 and a penalty equivalent to the
tax specified in the notice.

2) TIME LIMIT FOR ISSUE OF NOTICE -The proper officer shall issue the notice
under sub-section (1) at least six months prior to the time limit specified in sub-
section (10) for issuance of order.

3) SERVICE OF STATEMENT -Where a notice has been issued for any period under
sub-section (1), the proper officer may serve a statement, containing the details
of tax not paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilized for such periods other than those covered under sub-section (1),
on the person chargeable with tax.

17.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

4) SERVICE OF STATEMENT TO BE DEEMED TO BE SERVICE OF SCN-The service

of statement under sub-section (3) shall be deemed to be service of notice under
sub-section (1) of section 73, subject to the condition that the grounds relied upon
in the said statement, except the ground of fraud, or any willful-misstatement or
suppression of facts to evade tax, for periods other than those covered under sub-
section (1) are the same as are mentioned in the earlier notice.

5) The person chargeable with tax may, before service of notice under sub-section (1),
pay the amount of tax along with interest payable under section 50 and a penalty
equivalent to fifteen per cent. of such tax on the basis of his own ascertainment
of such tax or the tax as ascertained by the proper officer and inform the proper
officer in writing of such payment.

6) The proper officer, on receipt of such information, shall not serve any notice under
sub- section (1), in respect of the tax so paid or any penalty payable under the
provisions of this Act or the rules made thereunder.

7) Where the proper officer is of the opinion that the amount paid under sub-section
(5) falls short of the amount actually payable, he shall proceed to issue the notice
as provided for in sub-section (1) in respect of such amount which falls short of
the amount actually payable.

8) Where any person chargeable with tax under sub-section (1) pays the said tax along
with interest payable under section 50 and a penalty equivalent to twenty-five per
cent. of such tax within thirty days of issue of the notice, all proceedings in respect
of the said notice shall be deemed to be concluded.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.5

 DEMANDS AND RECOVERY

9) The proper officer shall, after considering the representation, if any, made by the
person chargeable with tax, determine the amount of tax, interest and penalty due
from such person and issue an order.

10) The proper officer shall issue the order under sub-section (9) within a period of
five years from the due date for furnishing of annual return for the financial year
to which the tax not paid or short paid or input tax credit wrongly availed or
utilized relates to or within five years from the date of erroneous refund.

11) Where any person served with an order issued under sub-section (9) pays the tax
along with interest payable thereon under section 50 and a penalty equivalent to
fifty per cent. of such tax within thirty days of communication of the order, all
proceedings in respect of the said notice shall be deemed to be concluded.

POINT TO BE NOTED-

Payment of Penalty Amount of Penalty

Dues paid before issuance of show cause notice. 15% of tax amount due
Dues paid within 30 days of issuance of show 25% of tax amount due
cause notice.
Dues paid after 30 days of issuance of Order. 50% of tax amount due
Any other case. 100% of tax amount due

17.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

3. COMPARATIVE ANALYSIS OF SECTION 73 & 74

Basis of comparison Sec.73 Sec.74

Applicability Non-payment or Non-payment or short
short payment of payment of tax with fraud
tax without fraud or or wilful-misstatement or
wilful misstatement or suppression of facts
suppression of facts
Time limit for proper At least 3 months prior At least 6 months prior
officer to issue notice to issuance of order to issuance of order
Time limit for proper Within 3 years from the Within 5 years from the
officer to issue order due date for furnishing of due date for furnishing of
annual return annual return
Penalty – before issuance No penalty 15% of the tax amount
of show cause notice
Penalty – within 30 No penalty 25% of the tax amount
days after the issuance
of show cause notice
Penalty – after 30 days 10% of tax or Rs.10,000, 50% of the tax amount
of issuance of show whichever is higher
cause notice or after the
issuance of order
In any other case 10% of tax or Rs.10,000, 100% of the tax amount
whichever is higher (equivalent to tax)

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.7

 DEMANDS AND RECOVERY

4. GENERAL PROVISIONS RELATING TO DETERMINATION OF TAX-SECTION 75

1) Period of stay order to be excluded in computing the limitation period [Section
75(1)]-Where the service of notice or issuance of order is stayed by an order of a
court or Appellate Tribunal, the period of such stay shall be excluded in computing
the period specified in sub-sections (2) and (10) of section 73 or sub-sections
(2) and (10) of section 74, as the case may be.

2) In case charges of fraud/any willful misstatement/suppression of facts are

not established for a notice issued in a fraud case, tax to be determined
deeming the demand notice to be issued in normal case [Section 75(2)]
Where any Appellate Authority or Appellate Tribunal or court concludes that the
notice issued under section 74(1) is not sustainable for the reason that the
charges of fraud or any willful misstatement or suppression of facts to evade tax
has not been established against the person to whom the notice was issued, the
proper officer shall determine the tax payable by such person, deeming as if the
notice were issued under section 73(1).

3) Adjudication order issued in pursuance of Appellate Authority/ Appellate

Tribunal/ Court’s direction be issued with 2 years [Section 75(3)]
Where any order is required to be issued in pursuance of the direction of the
Appellate Authority or Appellate Tribunal or a court, such order shall be issued
within 2 years from the date of communication of the said direction.

4) Opportunity of being heard [Section 75(4)]- An opportunity of hearing shall

be granted where a request is received in writing from the person chargeable with
tax or penalty, or where any adverse decision is contemplated against such person.

17.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

5) Adjournment of hearing to grant time to person chargeable with tax [Section

75(5)]-The proper officer shall, if sufficient cause is shown by the person chargeable
with tax, grant time to the said person and adjourn the hearing for reasons to be
recorded in writing.
However, such adjournment shall be granted for a maximum of 3 times to a person
during the proceedings.

6) Adjudication order should be a speaking order [Section 75(6)]-The proper officer,

in his order, shall set out the relevant facts and the basis of his decision.

7) Tax, interest, and penalty demanded in order not to exceed amount specified in
notice [Section 75(7)]- The amount of tax, interest and penalty demanded in the
order shall not be in excess of the amount specified in the notice and no demand
shall be confirmed on the grounds other than the grounds specified in the notice.

8) In case of modification of tax by the Appellate Authority/Tribunal/Court, penalty

and interest to be modified accordingly [Section 75(8)]- Where the Appellate
Authority or Appellate Tribunal or court modifies the amount of tax determined
by the proper officer, the amount of interest and penalty shall stand modified
accordingly, taking into account the amount of tax so modified.

9) PAYMENT OF INTEREST MANDATORY EVEN IF NOT SPECIFIED IN THE

ADJUDICATION ORDER [SECTION 75(9)] -The interest on the tax short paid or
not paid shall be payable whether or not specified in the order determining the tax
liability.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.9

 DEMANDS AND RECOVERY

10) ADJUDICATION ORDER TO BE PASSED MANDATORILY WITHIN STIPULATED

TIME [SECTION 75(10)]- The GST law ensures timely disposal of cases by
providing that if the adjudication order is not issued within the stipulated time
limit of 3 years in normal cases or 5 years in fraud cases, as the case may be,
the adjudication proceedings shall be deemed to be concluded.

11) IN CASE OF APPEAL FILED BY DEPARTMENT AGAINST PREJUDICIAL DECISION

OF THE APPELLATE AUTHORITY/APPELLATE TRIBUNAL/HIGH COURT, PERIOD
BETWEEN THE DATE OF DECISION OF THE HIGHER AUTHORITY AND THAT OF
THE LOWER AUTHORITY TO BE EXCLUDED [SECTION 75(11)]-An issue on which
the Appellate Authority or the Appellate Tribunal or the High Court has given its
decision which is prejudicial to the interest of revenue in some other proceedings
and an appeal to the Appellate Tribunal or the High Court or the Supreme Court
against such decision of the Appellate Authority or the Appellate Tribunal or the
High Court is pending, the period spent between the date of the decision of the
Appellate Authority and that of the Appellate Tribunal or the date of decision of
the Appellate Tribunal and that of the High Court or the date of the decision of
the High Court and that of the Supreme Court shall be excluded in computing the
time limit for passing adjudication order, where proceedings are initiated by way
of issue of a SCN under the sections 73 and 74.

12) AMOUNT OF SELF-ASSESSED TAX OR INTEREST REMAINING UNPAID TO BE

RECOVERED UNDER SECTION 79 [SECTION 75(12)]-Notwithstanding anything
contained in section 73 or section 74, where any amount of self-assessed tax
in accordance with a return furnished under section 39 remains unpaid, either
wholly or partly, or any amount of interest payable on such tax remains unpaid,
the same shall be directly recovered under the provisions of section 79 [discussed
subsequently in this chapter].

17.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

13) IN CASE OF PENALTY BEING IMPOSED UNDER SECTION 73/74, NO OTHER PENALTY
TO BE IMPOSED FOR THE SAME ACT/OMISSION [SECTION 75(13)]-Where any
penalty is imposed under section 73 or section 74, no penalty for the same act or
omission shall be imposed on the same person under any other provision of this Act.

5. TAX COLLECTED BUT NOT PAID TO GOVERNMENT. SECTION 76

1) Amount representing tax collected from any person to be paid to the Central
Government [Section 76(1)]-Notwithstanding anything to the contrary contained
in any order or direction of any Appellate Authority or Appellate Tribunal or Court
or in any other provisions of this Act or the rules made thereunder or any other law
for the time being in force, every person who has collected from any other person
any amount as representing the tax under this Act, and has not paid the said
amount to the Government, shall forthwith pay the said amount to the Government,
irrespective of whether the supplies in respect of which such amount was collected
are taxable or not.

2) Issue of SCN [Section 76(2)]- Where any amount is required to be paid to the
Government under sub- section (1), and which has not been so paid, the proper
officer may serve on the person liable to pay such amount a notice requiring him to
show cause as to why the said amount as specified in the notice, should not be paid
by him to the Government and why a penalty equivalent to the amount specified in
the notice should not be imposed on him under the provisions of this Act.

3) Determination of amount due [Section 76(3)]- The proper officer shall, after
considering the representation, if any, made by the person on whom SCN is served,
determine the amount due from such person and thereupon such person shall pay
the amount so determined.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.11

 DEMANDS AND RECOVERY

4) Interest payable on the amount [Section 76(4)]-The person who has collected
any amount as representing the tax, but not deposited the same with the
Government shall in addition to paying the said amount determined by the proper
officer shall also be liable to pay interest thereon.
 Interest is payable at the rate specified under section 50.
 Interest is payable from the date such amount was collected by him to the date
such amount is paid by him to the Government.

5) Opportunity of being heard [Section 76(5)]-An opportunity of hearing shall be

granted where a request is received in writing from the person to whom SCN was
issued.

6) The proper officer shall issue an order within one year from the date of issue of
the notice.

7) Where the issuance of order is stayed by an order of the court or Appellate

Tribunal, the period of such stay shall be excluded in computing the period of one
year.

8) Order must be a speaking order [Section 76(8)]-The proper officer, in his order,
shall set out the relevant facts and the basis of his decision.

9) Adjustment of amount to be adjusted against tax payable [Section 76(9)] :

The amount paid to the Government under Section 76(1) or Section 76(3) shall
be adjusted against the tax payable, if any, by the person in relation to the
supplies referred to in Section 76(1).

17.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

10) Refund of Surplus Amount [Section 76(10)] : Where any surplus is left after
the adjustment under Section 76(9), the amount of such surplus shall either be
credited to the Consumer Welfare Fund or refunded to the person who has borne
the incidence of such amount.

11) Application for refund by person who has borne incidence of such amount
[Section 76(11)] : The person who has borne the incidence of the amount, may
apply for the refund of the same in accordance with the provisions of Section 54.

6. NOTICE & ORDER FOR DEMAND OF AMOUNTS PAYABLE UNDER THE ACT
(RULE 142)
1) RULE-142 (1)-SUMMARY OF NOTICE AND STATEMENT TO BE FURNISHED
ELECTRONICALLY -The proper officer shall serve, along with the —
a. notice issued under section 52 or section 73 or section 74 or section 76 or section
122 or section 123 or section 124 or section 125 or section 127 or section 129 or
section 130, a summary thereof electronically in FORM GST DRC-01,

b. statement under section 73(3) or section 74(3), a summary thereof electronically

in FORM GST DRC-02, specifying therein the details of the amount payable.

RULE-142(1A)-COMMUNICATION OF DETAILS OF DEMAND PAYABLE BEFORE

SERVICE OF NOTICE - The proper officer shall, before service of notice to the
person chargeable with tax, interest and penalty, under Section 73(1) or Section
74(1), as the case may be, shall communicate the details of any tax, interest and
penalty as ascertained by the said officer, in Part A of FORM GST DRC-01A.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.13

 DEMANDS AND RECOVERY

2) RULE-142(2)-INFORMATION TO THE PROPER OFFICER OF TAX AND INTEREST

PAYMENT AND ISSUANCE OF ACKNOWLEDGMENT - Where, before the service
of notice or statement, the person chargeable with tax makes payment of the tax
and interest in accordance with the provisions of section 73(5) or, as the case
may be, tax, interest and penalty in accordance with the provisions of section
74(5), or where any person makes payment of tax, interest, penalty or any other
amount due in accordance with the provisions of the Act whether on his own
ascertainment or, as communicated by the proper officer under 142(1A), he shall
inform the proper officer of such payment in FORM GST DRC-03 and the proper
officer shall issue an acknowledgement, accepting the payment made by the said
person in FORM GST DRC-04.

RULE-142(2A)-INFORMATION OF PARTIAL PAYMENT AND FILING OF

SUBMISSIONS AGAINST PROPOSED LIABILITY Where the person referred to in
sub-rule (1A) has made partial payment of the amount communicated to him or
desires to file any submissions against the proposed liability, he may make such
submission in Part B of FORM GST DRC-01A.

3) RULE-142(3)- INTIMATION TO PROPER OFFICER OF PAYMENT OF DEMAND

AND ISSUANCE OF ORDER OF CONCLUSION OF PROCEEDINGS : Where the
person chargeable with tax makes payment of tax and interest under section
73(8) or, as the case may be, tax, interest and penalty under section 74(8)
within 30 days of the service of a notice under sub-rule 142(1), or where the
person concerned makes payment of the amount referred to in section 129(1)
within 14 days of detention or seizure of the goods and conveyance, he shall
intimate the proper officer of such payment in FORM GST DRC-03 and the proper
officer shall issue an order in FORM GST DRC-05 concluding the proceedings in
respect of the said notice.

17.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

4) 142(4)-FURNISHING OF REPLY TO NOTICE - The representation referred to in

section 73(9) or section 74(9) or section 76(3) or the reply to any notice issued
under any section whose summary has been uploaded electronically in FORM GST
DRC-01 under rule 142(1) shall be furnished in FORM GST DRC-06.

5) RULE-142(5)-SUMMARY OF ORDER - A summary of the order issued under section

52 or section 62 or section 63 or section 64 or section 73 or section 74 or section
75 or section 76 or section 122 or section 123 or section 124 or section 125 or
section 127 or section 129 or section 130 shall be uploaded electronically in FORM
GST DRC-07, specifying therein the amount of tax, interest and penalty payable by
the person chargeable with tax.

6) RULE-142(6)-ORDER TO BE RECOVERY NOTICE: The order referred to in rule

142(5) shall be treated as the notice for recovery.

7) RULE-142(7)-SUMMARY OF RECTIFICATION OR WITHDRAWAL ORDER - Where

a rectification of the order has been passed in accordance with the provisions
of section 161 or where an order uploaded on the system has been withdrawn, a
summary of the rectification order or of the withdrawal order shall be uploaded
electronically by the proper officer in FORM GST DRC-08

7. TAX WRONGFULLY COLLECTED AND PAID TO CENTRAL GOVERNMENT OR

STATEGOVERNMENT- SECTION 77
1) CGST AND SGST/ UTGST PAID INSTEAD OF IGST- REFUND OF CGST AND SGST/
UTGST [SECTION 77(1)]:
A registered person who has paid the Central tax and State tax or, as the case may
be, the central tax and the Union territory tax on a transaction considered by him
to be an intra-State supply, but which is subsequently held to be an inter-State

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.15

 DEMANDS AND RECOVERY

supply, shall be refunded the amount of taxes so paid in such manner and subject
to such conditions as may be prescribed.

2) IGST PAID INSTEAD OF CGST AND SGST/UTGST - NO INTEREST ON CGST AND

SGST/UTGST [SECTION 77(2)]:
A registered person who has paid integrated tax on a transaction considered by
him to be an inter-State supply, but which is subsequently held to be an intra-
State supply, shall not be required to pay any interest on the amount of central
tax and State tax or, as the case may be, the central tax and the Union territory
tax payable.

8. INITIATION OF RECOVERY PROCEEDINGS.SECTION 78

1) RECOVERY PROCEEDINGS: The recovery proceedings are final steps towards the
realization of any tax or amount, which has been confirmed as payable after
following the due process of adjudication by the proper officer.

2) IF DEMAND NOT PAID WITHIN 3 MONTHS FROM SERVICE OF ORDER - Any

amount payable by a taxable person in pursuance of an order passed under this
Act shall be paid by such person within a period of 3 months from the date of
service of such order failing which recovery proceedings shall be initiated.

3) PROPER OFFICER MAY REQUIRE PAYMENT OF AMOUNT PRIOR TO EXPIRY

OF 3 MONTHS TO PROTECT INTEREST OF REVENUE : Where the proper officer
considers it expedient in the interest of revenue, he may, for reasons to be
recorded in writing, require the said taxable person to make such payment within
such period less than a period of 3 months as may be specified by him.

17.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

9. RECOVERY OF TAX-SECTION 79
1) RECOVERY OF TAX [SECTION 79] : Where any amount payable by a person to the
Government under any of the provisions of this Act or the rules made thereunder is
not paid, the proper officer shall proceed to recover the amount by one or more of
the following modes, namely:-

a. DEDUCTION FROM REFUNDS : The proper officer may deduct or may require any
other specified officer to deduct the amount so payable from any money owing to
such person [referred as ‘defaulter’] which may be under the control of the proper
officer or such other specified officer.

b. DETENTION AND SALE - [SECTION 79(1) (b) READ WITH RULE 144]:
I. DETENTION AND SALE OF GOODS : The proper officer may recover or may require
any other specified officer to recover the amount so payable from a defaulter by
detaining and selling any goods [through a process of auction, including e-auction]
belonging to such person which are under the control of the proper officer or such
other specified officer.

II. PREPARATION OF INVENTORY AND ESTIMATION OF MARKET VALUE : The proper

officer shall prepare an inventory and estimate the market value of such goods and
proceed to sell only so much of the goods as may be required for recovering the
amount payable along with the administrative expenditure incurred on the recovery
process.

III. CANCELLATION OF AUCTION, IF DEFAULTER PAYS DUES : Where the defaulter

pays the amount under recovery, including any expenses incurred on the process of
recovery, before the issue of the notice for auction, the proper officer shall cancel
the process of auction and release the goods.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.17

 DEMANDS AND RECOVERY

c) GARNISHEE PROCEEDINGS - RECOVERY FROM A THIRD PERSON [SECTION

79(1)(C) READ- RULE 145]:
I. NOTICE TO GARNISHEE: The proper officer may, by a notice in prescribed form,
in writing, require any other person from whom money is due/may become due to
such person or who holds/may subsequently hold money for/on account of such
person to pay to the Government either forthwith upon the money becoming due
or being held, or within the time specified in the notice not being before the
money becomes due or is held, so much of the money as is sufficient to pay
the amount due from such person or the whole of the money when it is equal
to or less than that amount.

II. GARNISHEE TO COMPLY WITH NOTICE: Every person to whom the notice is
issued hereunder shall be bound to comply with such notice. Where any such
notice is issued to a post office, banking company or an insurer, it shall not be
necessary to produce any pass book, deposit receipt, policy or any other document
for the purpose of any entry, endorsement or the like being made before payment
is made, notwithstanding any Rule, practice or requirement to the contrary.

III. NON COMPLIANCE OF NOTICE - GARNISHEE DEEMED TO BE DEFAULTER : In

case the person to whom notice is issued hereunder, fails to make the payment
in pursuance thereof to the Government, he shall be deemed to be a defaulter in
respect of the amount specified in the notice and all the consequences of this Act
or the rules made thereunder shall follow.

IV. GARNISHEE NOTICE MAY BE AMENDED/REVOKED- The officer issuing such

notice may, at any time, amend or revoke the notice or extend the time for
making any payment in pursuance of the notice.

17.18 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

V. GARNISHEE DISCHARGED FROM DEFAULTER’S LIABILITY TO THE EXTENT OF

SUCH PAYMENT: Any person making any payment in compliance with the notice
issued hereunder shall be deemed to have made the payment under the authority
of the person in default.
Further, such payment being credited to the Government shall be deemed to
constitute a good and sufficient discharge of the liability of such person to the
person in default to the extent of the amount specified in the receipt.

VI. GARNISHEE PERSONALLY LIABLE IF PAYMENT IS MADE TO DEFAULTER : Any

person discharging any liability to the person in default after service on him of the
notice shall be personally liable to the Government to the extent of the liability
discharged or to the extent of the liability of the person in default for tax, interest
and penalty, whichever is less.

VII. GARNISHEE NOT PERSONALLY LIABLE IF HE SHOWS THAT HE DID NOT OWE TO
DEFAULTER: Where a person on whom a notice is served hereunder proves to the
satisfaction of the officer issuing the notice that:
 the money demanded/ any part thereof was not due to the person in default or
 he did not hold any money for/on account of the person in default, at the time the
notice was served on him, nor is the money demanded or any part thereof, likely to
become due to the said person/be held for/ on account of such person,
nothing contained in this section shall be deemed to require the person on whom the
notice has been served to pay to the Government any such money or part thereof.

VIII. Certificate: Where the third person makes the payment of the amount specified in
the notice, the proper officer shall issue a certificate in prescribed form to the third
person clearly indicating the details of the liability so discharged.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.19

 DEMANDS AND RECOVERY

d) RECOVERY BY SALE OF MOVABLE/IMMOVABLE PROPERTY [SECTION 79(1) (D)

READ WITH RULES 147, 148, 149, 150 & 154]:
1. COLLECTION BY DISTRAIN AND DETENTION OF ANY MOVABLE OR IMMOVABLE
PROPERTY : The proper officer may, in accordance with the rules to be made in
this behalf, distrain any movable or immovable property belonging to or under the
control of such person, and detain the same until the amount payable is paid;
and in case, any part of the said amount payable or of the cost of the distress or
keeping of the property, remains unpaid for a period of 30 days next after any
such distress, may cause the said property to be sold [through auction including
e-auction] and with the proceeds of such sale, may satisfy the amount payable
and the costs including cost of sale remaining unpaid and shall render the surplus
amount, if any, to such person [Section 79(1) (d)].

II. PREPARATION OF LIST OF DEFAULTERS MOVABLE/IMMOVABLE PROPERTY

AND THEIR ATTACHMENT/ SEIZURE : The proper officer shall prepare a list of
movable and immovable property belonging to the defaulter, estimate their value
as per the prevalent market price and issue an order of attachment or distraint
and a notice for sale prohibiting any transaction with regard to such movable and
immovable property as may be required for the recovery of the amount due.

IN CASE OF ATTACHEMENT/DISTRAINT OF
Immovable property order shall be affixed on the property till the confirmation of
A movable property proper officer shall seize the property and take its custody.

III. ALL TAXES PAYABLE BY THE PERSON GETTING TITLE-Stamp duty/any other
tax/fee payable on transfer of such property shall be paid by the transferee to
the Government.

17.20 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

IV. ATTACHMENT OF DEBTS, SHARES ETC. : Any property in a debt not secured by
a negotiable instrument, a share in a corporation, or other movable property not in
the possession of the defaulter except for property deposited in/in the custody of
any Court shall be attached in the manner provided in Rule 151.

V. INVESTIGATION OF OBJECTIONS AGAINST ATTACHMENT/ POSTPONEMENT OF SALE, IF

CLAIM MADE THAT PROPERTY CANNOT BE ATTACHED/ REJECTION OF CLAIM : Where

any claim is preferred/any objection is raised with regard to the attachment/distraint of any

property by a person claiming that he had some interest in/ was in possession of, the property

in question, proper officer shall investigate the same and postpone the sale till such time.

If proper officer finds merit in his claims/objection upon investigation, proper officer
will release the property, wholly or partly. Otherwise, the proper officer will reject
the claim and proceed with the process of sale through auction.

VI. AUCTION CANCELLED IF DEFAULTER PAYS THE DUES- : Where the defaulter
pays the amount under recovery, including any expenses incurred on the process of
recovery, before the issue of the notice for auction, the proper officer shall cancel
the process of auction and release the goods.

VII. DISPOSAL OF PROCEEDS OF SALE OF GOODS AND MOVABLE OR IMMOVABLE

PROPERTY: The amounts so realized from the sale of goods, movable or immovable
property, for the recovery of dues from a defaulter shall-
a. First, be appropriated against the administrative cost of the recovery process.
b. Next, be appropriated against the amount to be recovered.
c. Next, be appropriated against any other amount due from the defaulter under
the CGST Act or the IGST Act or the UTGST Act or any of the SGST Act and the
rules made thereunder; and
d. Any balance, be paid to the defaulter

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.21

 DEMANDS AND RECOVERY

VIII. SALE THROUGH BROKER IN CASE OF SECURITIES ETC.: Where the property to
be sold is a negotiable instrument or a share in a corporation, the proper officer
may, instead of selling it by public auction, sell such instrument or a share
through a broker and the said broker shall deposit to the Government so much of
the proceeds of such sale, reduced by his commission, as may be required for the
discharge of the amount under recovery and pay the amount remaining, if any, to
the owner of such instrument or a share.

IX. PROHIBITION AGAINST BIDDING OR PURCHASE BY OFFICER: Any officer/other

person who has a duty to perform in connection with such sale will not acquire
any interest in property sold.

X. No such sale will take place on Sundays/other general holidays recognized by

Government.

XI. Proper officer may seek assistance from jurisdictional police station.

e) RECOVERY AS ARREARS OF LAND REVENUE - The proper officer may prepare a

certificate in prescribed form signed by him specifying the amount due from such
person and send it to the Collector of the district in which such person owns any
property or resides or carries on his business or to any officer authorized by the
Government and the said Collector or the said officer, on receipt of such certificate,
shall proceed to recover from such person the amount specified thereunder as if
it were an arrear of land revenue.

f) RECOVERY AS FINE IMPOSED BY MAGISTRATE - Notwithstanding anything

contained in the Code of Criminal Procedure, 1973, the proper officer may file an
application to the appropriate Magistrate in prescribed form to recover from the

17.22 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

person concerned the amount specified thereunder and such Magistrate shall proceed
to recover from such person amount specified thereunder as if it were a fine imposed
by him.

g) RECOVERY THROUGH EXECUTION OF A DECREE, ETC.: Where any amount is

payable to the defaulter in the execution of a decree of a Civil Court for the payment
of money or for sale in the enforcement of a mortgage or charge, the proper officer
shall send a request to the said court and the court shall, subject to the provisions
of the Code of Civil Procedure, 1908, execute the attached decree, and credit the
net proceeds for settlement of the amount recoverable. [Rule 146]

h) Recovery through surety: Where any person has become surety for the amount due
by the defaulter, he may be proceeded against under this Chapter as if he were the
defaulter.

i RECOVERY FROM COMPANY IN LIQUIDATION : Where the company is under

liquidation as specified in Section 88, the Commissioner shall notify the liquidator
for the recovery of any amount representing tax, interest, penalty or any other
amount due under the Act in prescribed form.

2) RECOVERY OF AMOUNT SPECIFIED IN BOND [SECTION 79(2)] : Where the

terms of any bond or other instrument executed under this Act or any rules or
regulations made thereunder provide that any amount due under such instrument
may be recovered in the manner laid down in Section 79(1), the amount may,
without prejudice to any other mode of recovery, be recovered in accordance with
the provisions of that section.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.23

 DEMANDS AND RECOVERY

3) SGST/UTGST OFFICER MAY ALSO RECOVER CGST DUES FROM DEFAULTER

AND CREDIT THE SAME TO CENTRAL GOVERNMENT [SECTION 79(3)] : Where
any amount of tax, interest or penalty is payable by a person to the Government
under any of the provisions of this Act or the rules made thereunder and which
remains unpaid, the proper officer of State tax or Union territory tax, during the
course of recovery of said tax arrears, may recover the amount from the said
person as if it were an arrear of State tax or Union territory tax and credit the
amount so recovered to the account of the Government.

4) APPORTIONMENT OF AMOUNT COLLECTED TO STATE/ CENTRAL GOVERNMENT

[SECTION 79(4)] : Where the amount recovered under Section 79(3) is less than
the amount due to the Central Government and State Government, the amount to
be credited to the account of the respective Governments shall be in proportion
to the amount due to each such Government.
Recovery of tax dues can be made from establishment with separate registration
with same PAN [Explanation]: The word person shall include “distinct persons”
as referred to in Section 25(4)/(5). Thus, recovery can be made from distinct
person located in other States/UTs in order to ensure speedy recovery from the
other establishments of the registered person.

10. PAYMENT OF TAX AND OTHER AMOUNT IN INSTALMENTS.SECTION 80

1) EXTENSION OF TIME OR PAYMENT IN INSTALLMENTS ON APPLICATION OF
TAXABLE PERSON: On an application filed by a taxable person, the Commissioner
may, for reasons to be recorded in writing, extend the time for payment, or
allow payment of any amount due under this Act, by such person in monthly
instalments not exceeding 24, subject to payment of interest under Section 50
and subject to such conditions and limitations as may be prescribed.
Self-Assessed tax - benefit of extension/ instalment is not available: However,

17.24 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

the extension and instalments shall not be allowed for the amount due as per the
liability self-assessed in any return.

2) DEFAULT IN SINGLE INSTALMENT RENDERS ENTIRE AMOUNT PAYABLE AT

ONCE- Where there is default in payment of any one instalment on its due date,
the whole outstanding balance payable on such date -
 Shall become due and payable forthwith and
 Shall, without any further notice being served on the person, be liable for recovery.

11. TRANSFER OF PROPERTY TO BE VOID IN CERTAIN CASES.SECTION 81

1) WHERE A PERSON, —
 after any amount has become due from him,
 creates a charge on or parts with the property belonging to him or in his possession
 by way of sale, mortgage, exchange, or any other mode of transfer whatsoever of
any of his properties
 in favour of any other person
 with the intention of defrauding the Government revenue,
such charge or transfer shall be void as against any claim in respect of any tax or
any other sum payable by the said person.

2) SUCH CHARGE OR TRANSFER SHALL NOT BE VOID IF IT IS MADE -

 for adequate consideration,
 in good faith and
 without notice of the pendency of such proceedings under this Act or without notice
of such tax or other sum payable by the said person, or with the previous permission
of the proper officer.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.25

 DEMANDS AND RECOVERY

12. TAX TO BE FIRST CHARGE ON PROPERTY. SECTION 82

Notwithstanding anything to the contrary contained in any law for the time being
in force, save as otherwise provided in the Insolvency and Bankruptcy Code, 2016,
any amount payable by a taxable person or any other person on account of tax,
interest or penalty which he is liable to pay to the Government shall be a first
charge on the property of such taxable person or such person.

13. PROVISIONAL ATTACHMENT TO PROTECT REVENUE IN CERTAIN

CASES- SECTION 83
1) Where during the pendency of any proceedings under section 62 or section 63 or
section 64 or section 67 or section 73 or section 74, the Commissioner is of the
opinion that for the purpose of protecting the interest of the Government revenue,
it is necessary so to do, he may, by order in writing attach provisionally any
property, including bank account, belonging to the taxable person in such manner
as may be prescribed.
2) Every such provisional attachment shall cease to have effect after the expiry of a
period of one year from the date of the order made under sub-section (1).

14. CONTINUATION AND VALIDATION OF CERTAIN RECOVERY PROCEEDINGS-

SECTION 84
Where any notice of demand in respect of any tax, penalty, interest or any
other amount payable under this Act, (hereafter in this section referred to as
“Government dues”), is served upon any taxable person or any other person and
any appeal or revision application is filed or any other proceedings is initiated in
respect of such Government dues, then––
a. Where such Government dues are enhanced in such appeal, revision or other
proceedings, the Commissioner shall serve upon the taxable person or any other
person another notice of demand in respect of the amount by which such

17.26 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 DEMANDS AND RECOVERY

Government dues are enhanced and any recovery proceedings in relation to such
Government dues as are covered by the notice of demand served upon him before
the disposal of such appeal, revision or other proceedings may, without the service of
any fresh notice of demand, be continued from the stage at which such proceedings
stood immediately before such disposal;

b. Where such Government dues are reduced in such appeal, revision or in other
proceedings––
I. It shall not be necessary for the Commissioner to serve upon the taxable persona
fresh notice of demand.
II. The Commissioner shall give intimation of such reduction to him and to the
appropriate authority with whom recovery proceedings is pending.
III. Any recovery proceedings initiated on the basis of the demand served upon him prior
to the disposal of such appeal, revision or other proceedings may be continued in
relation to the amount so reduced from the stage at which such proceedings stood
immediately before such disposal.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 17.27

 DEMANDS AND RECOVERY

17.28 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 18 | LIABILITY TO PAY
IN CERTAIN CASES

1. LIABILITY IN CASE OF TRANSFER OF BUSINESS. -SECTION 85

1) LIABILITY ARISING PRIOR TO TRANSFER -JOINTLY AND SEVERAL LIABILITY
OF TRANFEROR AND TRANSFREE-Where a taxable person, liable to pay tax under
this Act, transfers his business in whole or in part, by sale, gift, lease, leave and
license, hire or in any other manner whatsoever, the taxable person and the person
to whom the business is so transferred shall, jointly and severally, be liable wholly
or to the extent of such transfer, to pay the tax, interest or any penalty due from
the taxable person up to the time of such transfer, whether such tax, interest or
penalty has been determined before such transfer, but has remained unpaid or is
determined thereafter.

2) LIABILITY ARISING POST TRANFER-TRANSFREE LIABLE FOR TAX DUES-Where

the transferee of a business referred to in sub-section (1) carries on such business
either in his own name or in some other name, he shall be liable to pay tax on the
supply of goods or services or both effected by him with effect from the date of
such transfer and shall, if he is a registered person under this Act, apply within the
prescribed time for amendment of his certificate of registration.

2. LIABILITY OF AGENT AND PRINCIPAL.SECTION 86

 Where an agent supplies or receives any taxable goods on behalf of his principal,
such agent and his principal shall, jointly and severally, be liable to pay the tax
payable on such goods under this Act

3. LIABILITY IN CASE OF AMALGAMATION OR MERGER COMPANIES.SEC-87

1) MERGER EFFECTIVE FROM RETROSPECTIVE DATE- When
 Two or more companies are amalgamated or merged in pursuance of an order of
court or of Tribunal or otherwise and

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 18.1

 LIABILITY TO PAY IN CERTAIN CASES

 the order is to take effect from a date earlier to the date of the order and
 any two or more of such companies have supplied or received any goods or services
or both to or from each other during the period commencing on the date from
which the order takes effect till the date of the order,
Then………….
w such transactions of supply and receipt shall be included in the turnover of supply
or receipt of the respective companies and
w they shall be liable to pay tax accordingly.

2) COMPANIES TO BE TREATED AS DISTINCT DURING AFORESAID PERIOD-

Notwithstanding anything contained in the said order, for the purposes of this
Act, the said two or more companies shall be treated as distinct companies for
the period up to the date of the said order and the registration certificates of the
said companies shall be cancelled with effect from the date of the said order.

4. LIABILITY IN CASE OF COMPANY IN LIQUIDATION. SECTION 88

1) LIQUIDATOR TO INTIMATE DEPARTMENT WITHIN 30 DAYS-When any company
is being wound up whether under the orders of a court or Tribunal or otherwise,
every person appointed as receiver of any assets of a company (hereafter in
this section referred to as the “liquidator”), shall, within thirty days after his
appointment, give intimation of his appointment to the Commissioner.

2) DEPARTMENT TO INFORM DUES TO LIQUIDATOR WITHIN 3 MONTHS-The

Commissioner shall, after making such inquiry or calling for such information as he
may deem fit, notify the liquidator within three months from the date on which he
receives intimation of the appointment of the liquidator, the amount which in the
opinion of the Commissioner would be sufficient to provide for any tax, interest or
penalty which is then, or is likely thereafter to become, payable by the company.

18.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LIABILITY TO PAY IN CERTAIN CASES

3) DIRECTOR OF A PRIVATE COMPANYIN LIQUIDATION LIABLE IF NON RECOVERY

BECAUSE OF HIS FAULT-When any private company is wound up and any tax,
interest or penalty determined under this Act on the company for any period,
whether before or in the course of or after its liquidation, cannot be recovered, then
every person who was a director of such company at any time during the period for
which the tax was due shall, jointly and severally, be liable for the payment of such
tax, interest or penalty, unless he proves to the satisfaction of the Commissioner
that such non-recovery cannot be attributed to any gross neglect, misfeasance or
breach of duty on his part in relation to the affairs of the company.

5. LIABILITY OF DIRECTORS OF PRIVATE COMPANY- SECTION 89

1) DIRECTOR OF PRIVATE COMPANY LIABLE IF NON RECOVERY BECAUSE OF HIS FAULT-
Notwithstanding anything contained in the Companies Act, 2013, where any interest or
penalty due from a private company in respect of any supply of goods or services or both
for any period cannot be recovered, then, every person who was a director of the private
company during such period shall, jointly and severally, be liable for the payment of such tax,
interest or penalty unless he proves that the non-recovery cannot be attributed to any gross
neglect, misfeasance or breach of duty on his part in relation to the affairs of the Company.

2) CONVERSION OF PRIVATE COMPANY INTO PUBLIC COMPANY-Where a private

company is converted into public company and the tax, interest or penalty in respect
of any supply of goods or services or both for any period during which such company
was a private company cannot be recovered before such conversion, then, nothing
contained in sub-section (1) shall apply to any person who was a director of such
private company in relation to any tax, interest or penalty in respect of such supply
of goods or services or both of such private company:
Provided that nothing contained in this sub-section shall apply to any personal
penalty imposed on such director.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 18.3

 LIABILITY TO PAY IN CERTAIN CASES

6. LIABILITY OF PARTNERS OF FIRM TO PAY TAX-SECTION 90

Notwithstanding any contract to the contrary and any other law for the time
being in force, where any firm is liable to pay any tax, interest or penalty under
this Act, the firm and each of the partners of the firm shall, jointly and severally,
be liable for such payment:

 Provided that where any partner retires from the firm, he or the firm, shall intimate
the date of retirement of the said partner to the Commissioner by a notice in that
behalf in writing and such partner shall be liable to pay tax, interest or penalty
due up to the date of his retirement whether determined or not, on that date:

 Provided further that if no such intimation is given within one month from the
date of retirement, the liability of such partner under the first proviso shall
continue until the date on which such intimation is received by the Commissioner.

7. LIABILITY OF GUARDIANS, TRUSTEES, ETC-SECTION 91

Where the business in respect of which any tax, interest or penalty is payable
under this Act is carried on
 by any guardian, trustee, or agent of a minor or other incapacitated person
 on behalf of and for the benefit of such minor or other incapacitated person,
The tax, interest or penalty shall be levied upon and recoverable
 from such guardian, trustee, or agent
 in like manner and to the same extent as it would be determined and recoverable
from any such minor or other incapacitated person, as if he were a major or
capacitated person and as if he were conducting the business himself,
 and all the provisions of this Act or the rules made thereunder shall apply
accordingly.

18.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LIABILITY TO PAY IN CERTAIN CASES

8. LIABILITY OF COURT OF WARDS, ETC-SECTION 92

Where the estate or any portion of the estate of a taxable person
 owning a business
 in respect of which any tax, interest or penalty is payable under this Act
 is under the control of the Court of Wards, the Administrator General, the Official
Trustee or any receiver or manager (including any person, whatever be his designation,
who in fact manages the business) appointed by or under any order of a court,
THEN
 the tax, interest or penalty shall be levied upon and be recoverable from such Court
of Wards, Administrator General, Official Trustee, receiver, or manager
 in like manner and to the same extent as it would be determined and be recoverable
from the taxable person as if he were conducting the business himself,
 and all the provisions of this Act or the rules made thereunder shall apply accordingly.

9. SPECIAL PROVISIONS REGARDING LIABILITY TO PAY TAX, INTEREST OR

PENALTY IN CERTAIN CASES-SECTION 93
1) SAVE AS OTHERWISE PROVIDED IN THE INSOLVENCY AND BANKRUPTCY CODE,
2016, WHERE A PERSON, LIABLE TO PAY TAX, INTEREST, OR PENALTY UNDER
THIS ACT, DIES, THEN–
a. If a business carried on by the person is continued after his death by his legal
representative or any other person, such legal representative or other person, shall
be liable to pay tax, interest or penalty due from such person under this Act; and
b. If the business carried on by the person is discontinued, whether before or after
his death, his legal representative shall be liable to pay, out of the estate of the
deceased, to the extent to which the estate is capable of meeting the charge, the
tax, interest or penalty due from such person under this Act, whether such tax,
interest or penalty has been determined before his death but has remained unpaid
or is determined after his death.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 18.5

 LIABILITY TO PAY IN CERTAIN CASES

2) PARTITION OF HUP/AOP MEMBERS LIABLE JOINTLY AND SEVERALLY FOR

DUES UPTODATE OF PARTITION-Save as otherwise provided in the Insolvency
and Bankruptcy Code, 2016, where a taxable person, liable to pay tax, interest or
penalty under this Act, is a Hindu Undivided Family or an association of persons
and the property of the Hindu Undivided Family or the association of persons
is partitioned amongst the various members or groups of members, then, each
member or group of members shall, jointly and severally, be liable to pay the tax,
interest or penalty due from the taxable person under this Act up to the time of
the partition whether such tax, penalty or interest has been determined before
partition but has remained unpaid or is determined after the partition.

3) DISSOLUTION OF FIRM -PARTNERS AT THE TIME JOINTLY & SEVERALLY LIABLE

-Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a
taxable person, liable to pay tax, interest or penalty under this Act, is a firm, and the
firm is dissolved, then, every person who was a partner shall, jointly and severally,
be liable to pay the tax, interest or penalty due from the firm under this Act up to
the time of dissolution whether such tax, interest or penalty has been determined
before the dissolution, but has remained unpaid or is determined after dissolution.

4) TERMINATION OF TRUST/GUARDIANSHIP -WARDS OR BENEFICIARY LIABLE-

Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a
taxable person liable to pay tax, interest, or penalty under this Act, ––
a. is the guardian of a ward on whose behalf the business is carried on by the guardian; or
b. is a trustee who carries on the business under a trust for a beneficiary, then, if the guardianship
or trust is terminated, the ward or the beneficiary shall be liable to pay the tax, interest or
penalty due from the taxable person up to the time of the termination of the guardianship
or trust, whether such tax, interest or penalty has been determined before the termination of
guardianship or trust but has remained unpaid or is determined thereafter

18.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 LIABILITY TO PAY IN CERTAIN CASES

10. LIABILITY IN OTHER CASES.SECTION 94

1) WHERE A TAXABLE PERSON IS A FIRM OR AN ASSOCIATION OF PERSONS OR
A HINDU UNDIVIDED FAMILY AND SUCH FIRM, ASSOCIATION OR FAMILY HAS
DISCONTINUED BUSINESS––
a. the tax, interest, or penalty payable under this Act by such firm, association or
family up to the date of such discontinuance may be determined as if no such
discontinuance had taken place; and
b. every person who, at the time of such discontinuance, was a partner of such firm, or
a member of such association or family, shall, notwithstanding such discontinuance,
jointly and severally, be liable for the payment of tax and interest determined and
penalty imposed and payable by such firm, association or family, whether such tax and
interest has been determined or penalty imposed prior to or after such discontinuance
and subject as aforesaid, the provisions of this Act shall, so far as may be, apply as
if every such person or partner or member were himself a taxable person.

2) CHANGE IN CONSTITUTION -Where a change has occurred in the constitution of a

firm or an association of persons, the partners of the firm or members of association,
as it existed before and as it exists after the reconstitution, shall, without prejudice
to the provisions of section 90, jointly and severally, be liable to pay tax, interest or
penalty due from such firm or association for any period before its reconstitution.

3) The provisions of sub-section (1) shall, so far as may be, apply where the taxable
person, being a firm or association of persons is dissolved or where the taxable person,
being a Hindu Undivided Family, has effected partition with respect to the business
carried on by it and accordingly references in that sub-section to discontinuance
shall be construed as reference to dissolution or to partition.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 18.7

 LIABILITY TO PAY IN CERTAIN CASES

18.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 19 | ADVANCE RUILING
SECTION 95-106

1. ADVANCE RULINGS-
1) Under the GST Act, taxpayers have been provided with a mechanism to get clarification
or answers to the questions related to any specified matter or any matter related to
the supply of goods and services.
2) To get the clarification, a taxpayer can approach a body called AAR or Authority
for Advance Ruling which then gives a decision in the form of Advance Ruling over
the matter. If there are matters over which the AAR cannot issue an Advance
Ruling then the applicant or any other concerned party like a jurisdictional officer,
concerned officer, any interested person can approach AAAR or Appellate Authority
for Advance Ruling.
3) Any advice, information or undertaking provided by a tax authority to a specific
taxpayer or a group of tax payers concerning their tax situation and on which they
are entitled to rely.
4) Advance ruling is an interpretation of tax laws by tax authorities, given to taxpayers
who are confused about various tax laws.
5) The rules and procedures related to Advance Ruling are covered by section 95 to
section 106 of the Chapter XVII of the CGST Act.
6) If a taxpayer or any concerned party has a question on the supply of goods and
services or any specified matter, he can approach AAR or AAAR, which then gives a
decision to resolve the query. Advance Ruling applies not only to the supplies which
are being undertaken but also on supplies which are proposed to be undertaken
POINT TO BE NOTED-

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.1

 ADVANCE RUILING SECTION 95-106

2. ADVANCE RULING – OBJECTIVES

I. Provide certainty in advance for tax liability in relation to an activity proposed to
be undertaken by the applicant
II. Attract Foreign Direct Investment (FDI) if the tax liability is transparently shown
along with accurate taxation
III. Reduce litigation and other disagreements
IV. Disclose the ruling efficiently in a transparent and inexpensive manner

3. ADVANTAGE OF ADVANCE RULING-

I. It ensures clarity and certainty of the tax liability under the GST Act & Customs
in advance in relation to an activity proposed to be undertaken by the applicant.
II. Finality and thereby avoidance of protracted litigation.
III. Speedy decisions.
IV. Inexpensive process.
V. Transparency.

4. DEFINITIONS- SECTION 95
a. Advance ruling means a decision provided by the Authority or the Appellate
authority to an applicant on matters or on questions specified in sub-section (2)
of section 97 or sub-section (1) of section 100, in relation to the supply of goods or
services or both being undertaken or proposed to be undertaken by the applicant;
b. Appellate Authority means the Appellate Authority for Advance Ruling referred to
in section 99;
c. Applicant means any person registered or desirous of obtaining registration under
this Act;
d. Application means an application made to the Authority under sub-section (1) of
section 97;
e. Authority means the Authority for Advance Ruling referred to in section 96.

19.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

5. AUTHORITY FOR ADVANCE RULING- SECTION 96

Subject to the provisions of this Chapter, for the purposes of this Act, the Authority
for advance ruling constituted under the provisions of a State Goods and Services
Tax Act or Union Territory Goods and Services Tax Act shall be deemed to be the
Authority for advance ruling in respect of that State or Union territory.

6. APPLICATION FOR ADVANCE RULING- SECTION 97

1) AN APPLICANT desirous of obtaining an advance ruling under this Chapter may
make an application in such form and manner and accompanied by such fee as may
be prescribed, stating the question on which the advance ruling is sought.

2) The question on which the advance ruling is sought under this Act, shall be in
respect of, ––
a. Classification of any goods or services or both.
b. Applicability of a notification issued under the provisions of this Act.
c. Determination of time and value of supply of goods or services or both.
d. Admissibility of input tax credit of tax paid or deemed to have been paid.
e. Determination of the liability to pay tax on any goods or services or both.
f. Whether applicant is required to be registered.
g. Whether any particular thing done by the applicant with respect to any goods or
services or both amounts to or results in a supply of goods or services or both, within
the meaning of that term.

7. PROCEDURE ON RECEIPT OF APPLICATION-SECTION 98

1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded
to the concerned officer and, if necessary, call upon him to furnish the relevant records:
Provided that where any records have been called for by the Authority in any case,
such records shall, as soon as possible, be returned to the said concerned officer.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.3

 ADVANCE RUILING SECTION 95-106

2) The Authority may, after examining the application and the records called for and
after hearing the applicant or his authorized representative and the concerned officer
or his authorized representative, by order, either admit or reject the application:
 Authority shall not admit the application where the question raised in the application is already pending

or decided in any proceedings in the case of an applicant under any of the provisions of this Act:
 No application shall be rejected under this sub-section unless an opportunity of
hearing has been given to the applicant:
 Application is rejected; the reasons for such rejection shall be specified in the order.

3) A copy of every order made under sub-section (2) shall be sent to the applicant
and to the concerned officer.

4) Where an application is admitted under sub-section (2), the Authority shall, after
examining such further material as may be placed before it by the applicant or obtained
by the Authority and after providing an opportunity of being heard to the applicant
or his authorized representative as well as to the concerned officer or his authorized
representative, pronounce its advance ruling on the question specified in the application.

5) Where the members of the Authority differ on any question on which the advance
ruling is sought, they shall state the point or points on which they differ and make
a reference to the Appellate Authority for hearing and decision on such question.

6) The Authority shall pronounce its advance ruling in writing within ninety days
from the date of receipt of application.

7) A copy of the advance ruling pronounced by the Authority duly signed by the members
and certified in such manner as may be prescribed shall be sent to the applicant,
the concerned officer and the jurisdictional officer after such pronouncement.

19.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

8. APPELLATE AUTHORITY FOR ADVANCE RULING.SECTION 99

Subject to the provisions of this Chapter, for the purposes of this Act, the Appellate
Authority for Advance Ruling constituted under the provisions of a State Goods and
Services Tax Act or a Union Territory Goods and Services Tax Act shall be deemed
to be the Appellate Authority in respect of that State or Union territory.

9. APPEAL TO APPELLATE AUTHORITY- SECTION 100

1) The concerned officer, the jurisdictional officer or an applicant aggrieved by any
advance ruling pronounced under sub-section (4) of section 98, may appeal to the
Appellate Authority.

2) Every appeal under this section shall be filed within a period of thirty days from
the date on which the ruling sought to be appealed against is communicated to the
concerned officer, the jurisdictional officer, and the applicant:

 Provided that the Appellate Authority may, if it is satisfied that the appellant was
prevented by a sufficient cause from presenting the appeal within the said period
of thirty days, allow it to be presented within a further period not exceeding thirty
days.

3) Every appeal under this section shall be in such form, accompanied by such fee and
verified in such manner as may be prescribed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.5

 ADVANCE RUILING SECTION 95-106

10. ORDERS OF APPELLATE AUTHORITY-SECTION 101

1) The Appellate Authority may, after giving the parties to the appeal or reference
an opportunity of being heard, pass such order as it thinks fit, confirming, or
modifying the ruling appealed against or referred to.

2) The order referred to in sub-section (1) shall be passed within a period of ninety
days from the date of filing of the appeal under section 100 or a reference under
sub-section (5) of section 98.

3) Where the members of the Appellate Authority differ on any point or points
referred to in appeal or reference, it shall be deemed that no advance ruling can
be issued in respect of the question under the appeal or reference.

4) A copy of the advance ruling pronounced by the Appellate Authority duly signed by
the Members and certified in such manner as may be prescribed shall be sent to
the applicant, the concerned officer, the jurisdictional officer and to the Authority
after such pronouncement.

11. RECTIFICATION OF ADVANCE RULING-SECTION 102

 The Authority or the Appellate Authority may amend any order passed by it under
section 98 or section 101, so as to rectify any error apparent on the face of the record,
if such error is noticed by the Authority or the Appellate Authority on its own accord,
or is brought to its notice by the concerned officer, the jurisdictional officer, the
applicant or the appellant within a period of six months from the date of the order:
 Provided that no rectification which has the effect of enhancing the tax liability
or reducing the amount of admissible input tax credit shall be made unless the
applicant or the appellant has been given an opportunity of being heard.

19.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

12. APPLICABILITY OF ADVANCE RULING-SECTION 103

1) The advance ruling pronounced by the Authority or the Appellate Authority under this
Chapter shall be binding only—
a. on the applicant who had sought it in respect of any matter referred to in sub-
section (2) of section 97 for advance ruling.
b. On the concerned officer or the jurisdictional officer in respect of the applicant.

2) The advance ruling referred to in sub-section (1) shall be binding unless the law,
facts or circumstances supporting the original advance ruling have changed.

13. ADVANCE RULING TO BE VOID IN CERTAIN CIRCUMSTANCES-SECTION 104

1) Where the Authority or the Appellate Authority finds that advance ruling pronounced
by it under sub-section (4) of section 98 or under sub-section (1) of section 101 has
been obtained by the applicant or the appellant by fraud or suppression of material
facts or misrepresentation of facts, it may, by order, declare such ruling to be void
ab-initio and thereupon all the provisions of this Act or the rules made there under
shall apply to the applicant or the appellant as if such advance ruling had never
been made:
 Provided that no order shall be passed under this sub-section unless an opportunity
of being heard has been given to the applicant or the appellant.
Explanation.––The period beginning with the date of such advance ruling and ending
with the date of order under this sub-section shall be excluded while computing the
period specified in sub-
sections (2) and (10) of section 73 or sub-sections (2) and (10)of section 74.

2) A copy of the order made under sub-section (1) shall be sent to the applicant, the
concerned officer and the jurisdictional officer.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.7

 ADVANCE RUILING SECTION 95-106

14. POWERS OF AUTHORITY AND APPELLATE AUTHORITY-SECTION 105

1) The Authority or the Appellate Authority shall, for the purpose of exercising its
powers regarding—
a. discovery and inspection.
b. enforcing the attendance of any person and examining him on oath;
c. (issuing commissions and compelling production of books of account and other
records,
have all the powers of a civil court under the Code of Civil Procedure, 1908.
2) The Authority or the Appellate Authority shall be deemed to be a civil court for
the purposes of section 195, but not for the purposes of Chapter XXVI of the
Code of Criminal Procedure, 1973, and every proceeding before the Authority or
the Appellate Authority shall be deemed to be a judicial proceedings within the
meaning of sections 193 and 228, and for the purpose of section 196 of the Indian
Penal Code.

15. PROCEDURE OF AUTHORITY AND APPELLATE AUTHORITY-SECTION 106

The Authority or the Appellate Authority shall, subject to the provisions of this
Chapter, have power to regulate its own procedure

16. RULES RELATING TO ADVANCE RUILING-103-107

RULE- 103 QUALIFICATION AND APPOINTMENT OF MEMBERS OF THE AUTHORITY
FOR ADVANCE RULING.
 The Central Government and the State Government shall appoint officer of the
rank of Joint Commissioner as member of the Authority for Advance Ruling.

RULE-104 Form and manner of application to the Authority for Advance Ruling. -
1) An application for obtaining an advance ruling under sub-section (1) of section
97 shall be made on the common portal in FORM GST ARA-01 and shall be

19.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

accompanied by a fee of five thousand rupees, to be deposited in the manner

specified in section 49.
2) The application referred to in sub-rule (1), the verification contained therein and
all the relevant documents accompanying such application shall be signed in the
manner specified in rule 26.

RULE-105 Certification of copies of advance rulings pronounced by the Authority.

 A copy of the advance ruling shall be certified to be a true copy of its original by
any member of the Authority for Advance Ruling.

RULE-106 Form and manner of appeal to the Appellate Authority for Advance
Ruling. -
1) An appeal against the advance ruling issued under sub-section (6) of section 98
shall be made by an applicant on the common portal in FORM GST ARA-02 and
shall be accompanied by a fee of ten thousand rupees to be deposited in the manner
specified in section 49.

2) An appeal against the advance ruling issued under sub-section (6) of section 98
shall be made by the concerned officer or the jurisdictional officer referred to in
section 100 on the common portal in FORM GST ARA-03 and no fee shall be payable
by the said officer for filing the appeal.

3) The appeal referred to in sub-rule (1) or sub-rule (2), the verification contained
therein and all the relevant documents accompanying such appeal shall be signed,-
a. in the case of the concerned officer or jurisdictional officer, by an officer authorized
in writing by such officer; and
b. in the case of an applicant, in the manner specified in rule 26.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.9

 ADVANCE RUILING SECTION 95-106

RULE-107 Certification of copies of the advance rulings pronounced by the

Appellate Authority. –
A copy of the advance ruling pronounced by the Appellate Authority for Advance
Ruling and duly signed by the Members shall be sent to-
a. the applicant and the appellant.
b. the concerned officer of central tax and State or Union territory tax;
c. the jurisdictional officer of central tax and State or Union territory tax; and
d. The Authority, in accordance with the provisions of sub-section (4) of section 101
of the Act.

CASE-1 ROD RETAIL PVT. LTD. – AAR DELHI- ISSUE HELD BY AAR
Whether the supply of goods to international outbound passengers, holding
international boarding passes, from retail outlets located in international airports
and claimed to be beyond the Customs Frontiers of India, should be considered as
zero rated supply, being export of goods, or subjected to GST?
HELD BY AAR:
I. Such supply cannot be treated as ‘export’ or ‘zero rated supply’ and GST is payable
at the applicable rates. As per GST Law, goods are said to be exported only when
they cross the territory of India.
II. Goods cannot be said to be exported merely on crossing the Customs Frontier of
India.
III. When goods are exported by air, the export will be completed only when goods
cross the airspace limits of the territory or the territorial waters of India
IV. Outlets are located at the security hold area of international airports, which is not
outside India but is within the territory of India.
V. Hence, the applicant is not taking goods out of India and the supply cannot be
treated as ‘export’ or ‘zero rated supply’.

19.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

CASE-2 ISSUE HELD BY AAR IN THE MATTER OF SHRI SANJEEV SHARMA –

AAR DELHI
Whether GST is applicable on the sale of undivided share in land and superstructure
(under Construction)? If yes, what is the tax rate and value on which tax is applicable?
HELD BY AAR:
I. GST is applicable on two-thirds of the total amount. The rate of GST is 18 per cent
based on the following: Sale of land is specifically excluded from the scope of supply
under GST and hence GST is not applicable on it.
II. However, as per GST Law, construction activity is treated as supply of services.
III. The supply in the given case is a composite supply consisting of three components, namely
a. land,
b. goods and
c. services.
IV. Land and its superstructure become inseparable and cannot be sold individually. In
such a scenario, since GST is not applicable on land, the value of land has to be
excluded from the taxable value.
V. As per GST Notification, the deemed value of land has been fixed at one-third of
the total amount.

CASE-3 RAJENDRA SHUKLA – AAR MAHARASHTRA

Whether private coaching services for entrance examination come under the
ambit of GST?
HELD BY AAR
I. Education services are taxed at the rate of 18 per cent under GST. However, there is
a GST exemption for the education services provided by/to an educational institution
as defined under the Notification.
II. Private tutorial coaching is not covered under the said definition of ‘educational
institution’. Thus, GST is applicable on these services.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.11

 ADVANCE RUILING SECTION 95-106

CASE-4 GOGTE INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED –

AAR KARNATAKA
Whether hotel accommodation and restaurant services provided within the premises
of a hotel which is outside an SEZ, to employees and guests of SEZ units, can be
treated as supply of goods and services to SEZ units and thus a zero-rated supply.
HELD BY AAR
In this case, place of supply shall be the hotel premises which is outside the SEZ.
Thus, the said services shall be an ‘intra-state’ supply and taxable under GST.
As per the provisions of GST Law, only supply of goods and services for authorized
operations of an SEZ are treated as supplies to SEZ and can be zero rated.
Place of supply of services by way of lodging and accommodation shall be the
location of the immovable property. Also, place of supply of restaurant services
shall be the location where the services are performed.

CASE-5 M/S DEEPAK & CO. (AAR DELHI)

What is the applicable tax rate on activities of supplying: food/ beverages on board trains and

on railway platforms as per the agreements with IRCTC/ Indian Railways newspapers in trains?

HELD BY AAR
Supplying food/beverages on board train or in food stalls on the railway platforms
is considered as a pure supply of goods. It does not have a service element and
would not be treated as a composite supply of services. A train is a mode of
transport and it cannot be called a restaurant.
Taxability would be as under:
Supply of goods, i.e. food, bottled water etc., shall be charged to GST on individual
values of goods (excluding the service charges) at their respective applicable rates.
Service charges invoiced separately are classified under the head ‘catering services
in train’ and GST is charged at the applicable rate.
Supply of newspapers invoiced separately shall be taxed at NIL rate of GST.

19.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

PROBLEM:1 Ranjan intends to start selling certain goods in Delhi. However, he

is not able to determine
a. The classification of the goods proposed to be supplied by him [as the classification
of said goods has been contentious]; and
b. The place of supply if he supplies said goods from Delhi to buyers in U.S.
Ranjan’s tax advisor has advised him to apply for the advance ruling in respect of
these issues. He told Ranjan that the advance ruling would bring him certainty and
transparency in respect of the said issues and would avoid litigation later. Ranjan
agreed with his view but has some apprehensions.
In view of the information given above, you are required to advise Ranjan with
respect to following:
I. The tax advisor asks Ranjan to get registered under GST law before applying for the
advance ruling as only a registered person can apply for the same. Whether Ranjan
needs to get registered?
II. Can Ranjan seek advance ruling to determine (a) the classification of the goods
proposed to be supplied by him and (b) the place of supply, if he supplies said goods
from Delhi to buyers in U.S?
III. Ranjan is apprehensive that if at all advance ruling is permitted to be sought, he
has to seek it every year. Whether Ranjan’s apprehension is correct?
IV. The tax advisor is of the view that the order of Authority for Advance Ruling (AAR)
is final and is not appealable. Whether the tax advisor’s view is correct?
V. Sambhav - Ranjan’s friend - is a supplier registered in Delhi. He is engaged in supply
of the goods, which Ranjan proposes to supply at the same commercial level that
Ranjan proposes to adopt.
He intends to apply the classification of the goods as decided in the advance ruling
order to be obtained by Ranjan, to the goods supplied by him in Delhi. Whether
Sambhav can do so? (RTP May, 2018)

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.13

 ADVANCE RUILING SECTION 95-106

ANSWER:1
I. REGISTRATION NOT MANDATORY FOR ADVANCE RULING: As per provisions of
Section 95(c) of the CGST Act, 2017, Advance ruling under GST can be sought by
a registered person or a person desirous of obtaining registration under GST law.
Therefore, it is not mandatory for a person seeking advance ruling to be registered.

II. CLASSIFICATION ISSUE CAN BE RAISED: Section 97(2) of the CGST Act, 2017
stipulates the questions/matters on which advance ruling can be sought. It provides
that advance ruling can be sought for, inter alia, determining the classification of
any goods or services or both. Therefore, Ranjan can seek the advance ruling for
determining the classification of the goods proposed to be supplied by him.
Place of supply issue cannot be raised: Determination of place of supply is not
one of the specified questions/matters on which advance ruling can be sought
under Section 97(2). Further, Section 96 of the CGST Act, 2017 provides that AAR
constituted under the provisions of an SGST Act/UTGST Act shall be deemed to
be the AAR in respect of that State/Union territory under CGST Act also.
Thus, AAR is constituted under the respective State/Union Territory Act and not
the central Act. This implies that ruling given by AAR will be applicable only
within the jurisdiction of the concerned State/ Union territory.
It is also for this reason that the questions on determination of place of supply
cannot be raised with the AAR. Hence, Ranjan cannot seek the advance ruling
for determining the place of supply of the goods proposed to be supplied by him.
Alternative view relating to place of supply issue : However, it can be also be
argued that the question relating to determination of the liability to pay tax on
goods and/or services as provided under Section 96(2) (e) of the CGST Act, 2017
encompasses within its ambit the question relating to place of supply. This is
so because place of supply is one of the factors to determine as to whether the
supply is leviable to CGST & SGST or IGST.

19.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 ADVANCE RUILING SECTION 95-106

III. ADVANCE RULING TO BE BINDING: Section 103(2) of the CGST Act, 2017 stipulates
that the advance ruling shall be binding unless the law, facts or circumstances
supporting the original advance ruling have changed. Therefore, once Ranjan has
sought the advance ruling with respect to an eligible matter/question, it will be
binding till the time the law, facts and circumstances supporting the original
advance ruling remain same.

IV. APPEAL CAN BE FILED AGAINST SUCH RULING: No, the tax advisor’s view is not
correct. As per Section 100 of the CGST Act, 2017, if the applicant is aggrieved with
the finding of the AAR, he can file an appeal with Appellate Authority for Advance
Ruling (AAAR). Similarly, if the concerned/jurisdictional officer of CGST/SGST does
not agree with the findings of AAR, he can also file an appeal with AAAR.
Such appeal must be filed within 30 days from the receipt of the advance ruling.
The Appellate Authority may allow additional 30 days for filing the appeal, if it is
satisfied that there was a sufficient cause for delay in presenting the appeal.

V. APPLICABILITY ONLY FOR APPLICANT AND NOT TO OTHERS : Section 103 of the
CGST Act provides that an advance ruling pronounced by AAR is binding only on the
applicant who had sought it and on the concerned officer or the jurisdictional officer
in respect of the applicant. This implies that an advance ruling is not applicable to
similarly placed other taxable persons in the State. It is only limited to the person
who has applied for an advance ruling.
Thus, Sambhav will not be able to apply the classification of the goods that will be
decided in the advance ruling order to be obtained by Ranjan, to the goods supplied
by him in Delhi.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 19.15

 ADVANCE RUILING SECTION 95-106

19.16 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 CHAPTER - 20 | APPEAL & REVISION

1. INTRODUCTION-
I. Tax laws impose obligations. Such obligations are broadly of two kinds: tax-related
and procedure-related.
II. The taxpayer’s compliance with these obligations is verified by the tax officer
(by various instruments such as scrutiny, audit, anti-evasion, etc.), as a result of
which, sometimes there are situations of actual or perceived non-compliance. If the
difference in views persists, it results into a dispute, which is then required to be
resolved.
III. Tax law recognizes that on any given set of facts and laws, there can be different
opinions or viewpoints. Hence, it is likely that the taxpayer may not agree with the
“adjudication order” so passed by the tax officer.
IV. It is equally possible that the Department may itself not be in agreement with the
adjudication order in some cases. It is for this reason that the statute provides further
channels of appeal, to both sides. However, since the right to appeal is a statutory
right, the statute also places reasonable fetters on the exercise of that right.
V. The time limits prescribed by the statute for filing of appeals and the requirement
of pre-deposit of a certain sum before the appeal can be heard by the competent
authority are examples of such fetters on the statutory right.
VI. India has adopted a dual GST i.e., to say every supply attracting the levy will be
leviable to both CGST and SGST. So, does this mean that if a taxpayer is aggrieved
by any such transaction, he will have to approach both the authorities for exercising
his right of appeal? The answer is a plain NO.
VII. The Act makes provisions for cross empowerment between CGST and SGST/UTGST
officers so as to ensure that if a proper officer of one Act (say CGST) passes an
order with respect to a transaction, he will also act as the proper officer of SGST
for the same transaction and issue the order with respect to the CGST as well as
the SGST/UTGST component of the same transaction.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.1

 APPEAL & REVISION

VIII. The Act also provides that where a proper officer under one Act (say CGST) has
passed an order, any appeal/review/ revision/rectification against the said order will
lie only with the proper officers of that Act only (CGST Act). So also, if any order
is passed by the proper officer of SGST, any appeal/review/revision/rectification will
lie with the proper officer of SGST only.
IX. Chapter XVIII [Sections 107 to 121] of the CGST Act supplemented with Chapter
XIII [Rules 108 to 116] of the CGST Rules prescribe the provisions relating to
appeals and revision. State GST laws also prescribe identical provision relating to
appeals.

2. HIERARCHY OF APPEALS AND REVISION

20.2 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 APPEAL & REVISION

3. STRUCTURE OF APPELLATE TRIBUNAL

4. APPEARANCE BY AUTHORIZED REPRESENTATIVE-SEC 116

1) Any person who is entitled or required to appear before an officer appointed under
this Act, or the Appellate Authority or the Appellate Tribunal in connection with
any proceedings under this Act, may, otherwise than when required under this Act
to appear personally for examination on oath or affirmation, subject to the other
provisions of this section, appear by an authorized representative.

2) For the purposes of this Act, the expression “authorized representative” shall mean
a person authorized by the person referred to in sub-section (1) to appear on his
behalf, being—
his relative or regular employee; or
a. an advocate who is entitled to practice in any court in India, and who has not been
debarred from practicing before any court in India; or
b. any chartered accountant, a cost accountant or a company secretary, who holds a
certificate of practice and who has not been debarred from practice; or

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.3

 APPEAL & REVISION

c. a retired officer of the Commercial Tax Department of any State Government or

Union territory or of the Board who, during his service under the Government, had
worked in a post not below the rank than that of a Group-B Gazetted officer for
a period of not less than two years:
 Provided that such officer shall not be entitled to appear before any proceedings
under this Act for a period of one year from the date of his retirement or
resignation; or
d. Any person who has been authorized to act as a goods and services tax practitioner
on behalf of the concerned registered person.

3) No person,—
a. who has been dismissed or removed from Government service; or
b. who is convicted of an offence connected with any proceedings under this Act,
the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act
or the Union Territory Goods and Services Tax Act, or under the existing law or
under any of the Acts passed by a State Legislature dealing with the imposition
of taxes on sale of goods or supply of goods or services or both; or
c. who is found guilty of misconduct by the prescribed authority;
d. who has been adjudged as an insolvent, shall be qualified to represent any person
under sub-section (1)—
I. for all times in case of persons referred to in clauses (a), (b) and (c); and
II. for the period during which the insolvency continues in the case of a person
referred to in clause (d).

4) Any person who has been disqualified under the provisions of the State Goods
and Services Tax Act or the Union Territory Goods and Services Tax Act shall be
deemed to be disqualified under this Act.

20.4 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 APPEAL & REVISION

5. APPELLATE MECHANISM-

DESCRIPTION APPELLATE REVISIONAL APPELLATE HIGH SUPREME

AUTHORITY AUTHORITY TRIBUNAL COURT COURT

SECTION 107 108 112 117 118

Appeal can Order of Suo Motu a) Against Order of State/ Order of

be filed Adjudicating revision order of AA or Area bench of National/

against Authority b) Revisional Tribunal (If Regional bench

Authority case involves of Tribunal

substantial and against

question of orders of HC if

law) HC certifies fit

case for appeal

to SC

Departmental D e p a r t m e n t Not Applicable D e p a r t m e n t Order of State/ Order of

Appeal can file appeal can file appeal Area bench of National/

after review by on review by Tribunal (If Regional

Commissioner Commissioner case involves bench of

s u b s t a n t i a l Tribunal and

question of against orders

law) of HC if

HC certifies

fit case for

appeal to SC

Place of Appealable Revision power National / No Yes

supply extends Regional bench

matters of Tribunal

can hear

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.5

 APPEAL & REVISION

Other Appealable Revision power State/Area Yes Yes

matters extends bench of

Tribunal can

hear

Appeal Fee Nil Not applicable Rs. 1,000 per

lakh of tax or

ITC subject to

maximum of

Rs. 25,000

Time limit to 3 months + 1 Power 3 months Within 180 As per Code

file appeal month exercisable + 3 month days + of Civil

extension only after 3 extension condonation of Procedure,

months but delay without 1908.

within 3 years time limit

from date of

order [if no

appeal filed]

20.6 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 APPEAL & REVISION

Pre-deposit 100% of Not applicable 100% of All tax dues is All tax dues is

[Mandatory] admitted admitted required to be required to be

due (with due (with deposited deposited

interest/ interest/

penalty) penalty) +

+ 10% of Additional

disputed 20% of

tax (before disputed

interest/ tax (before

penalty) interest/

subject to penalty)

maximum of subject to

`50cr ( 25 Cr maximum of

CGST and 25 `100 cr ( 50

Cr SGST) Cr CGST and

50 Cr SGST)

If assessee Deposit Not applicable Pre-deposit Sums to be Sums to be

wins refunded with refunded with refunded refunded

interest interest

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.7

 APPEAL & REVISION

6. REVISION BY COMMISSIONER-
I. The GST Act also provides for the mechanism of revision, by the Revisional
Authority, of the orders passed by his subordinate officers.
II. If the Revisional Authority on examination of the case records is of the view that
the decision or order passed by any officer subordinate to him is erroneous in so
far as it is prejudicial to the interest of the revenue, and is illegal or improper
or has not taken into account material facts, he may, if necessary, stay the
operation of such decision or order for such period as he deems fit and after
giving the person concerned an opportunity of being heard and after making such
further inquiry as may be necessary, pass such order, as he thinks just and proper,
including enhancing or modifying or annulling the said decision or order.

III. The above power is subject to the condition that non-appealable orders and
decision cannot be revised. Further the power of revision cannot be exercised if: -
 the order has been subject to an appeal before AA or Tribunal or High Court or
Supreme Court; or
 the period of six months (from the date of communication of order) has not yet
expired or more than three years have expired after the passing of the decision or
order sought to be revised; or
 the order has already been taken for revision at an earlier stage; or
 the order sought to be revised is a revisional order in the first place.

POINT TO BE NOTED-

20.8 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 APPEAL & REVISION

7. APEAL TO HIGH COURT-SECTION 117

1) Any person aggrieved by any order passed by the State Bench or Area Benches of
the Appellate Tribunal may file an appeal to the High Court and the High Court may
admit such appeal, if it is satisfied that the case involves a substantial question of
law.

2) An appeal under sub-section (1) shall be filed within a period of one hundred and
eighty days from the date on which the order appealed against is received by the
aggrieved person and it shall be in such form, verified in such manner as may be
prescribed:
 Provided that the High Court may entertain an appeal after the expiry of the said
period if it is satisfied that there was sufficient cause for not filing it within such
period.

3) Where the High Court is satisfied that a substantial question of law is involved in
any case, it shall formulate that question and the appeal shall be heard only on the
question so formulated, and the respondents shall, at the hearing of the appeal, be
allowed to argue that the case does not involve such question:
 Provided that nothing in this sub-section shall be deemed to take away or abridge
the power of the court to hear, for reasons to be recorded, the appeal on any other
substantial question of law not formulated by it, if it is satisfied that the case
involves such question.

4) The High Court shall decide the question of law so formulated and deliver such
judgment thereon containing the grounds on which such decision is founded and
may award such cost as it deems fit.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.9

 APPEAL & REVISION

5) The High Court may determine any issue which––

a. has not been determined by the State Bench or Area Benches; or
b. Has been wrongly determined by the State Bench or Area Benches, by reason of
a decision on such question of law as herein referred to in sub-section (3).

6) Where an appeal has been filed before the High Court, it shall be heard by a
Bench of not less than two Judges of the High Court, and shall be decided in
accordance with the opinion of such Judges or of the majority, if any, of such
Judges.

7) Where there is no such majority, the Judges shall state the point of law upon
which they differ and the case shall, then, be heard upon that point only, by one
or more of the other Judges of the High Court and such point shall be decided
according to the opinion of the majority of the Judges who have heard the case
including those who first heard it.

8) Where the High Court delivers a judgment in an appeal filed before it under this
section, effect shall be given to such judgment by either side on the basis of a
certified copy of the judgment.

9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure,
1908, relating to appeals to the High Court shall, as far as may be, apply in the
case of appeals under this section.

20.10 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 APPEAL & REVISION

8. APPEAL TO SUPREME COURT-SECTION 118

1) An appeal shall lie to the Supreme Court—
a. from any order passed by the National Bench or Regional Benches of the Appellate
Tribunal; or
b. from any judgment or order passed by the High Court in an appeal made under
section 117 in any case which, on its own motion or on an application made by or on
behalf of the party aggrieved, immediately after passing of the judgment or order,
the High Court certifies to be a fit one for appeal to the Supreme Court.

2) The provisions of the Code of Civil Procedure, 1908, relating to appeals to the
Supreme Court shall, so far as may be, apply in the case of appeals under this
section as they apply in the case of appeals from decrees of a High Court.

3) Where the judgment of the High Court is varied or reversed in the appeal, effect
shall be given to the order of the Supreme Court in the manner provided in section
117 in the case of a judgment of the High Court

9. SUMS DUE TO BE PAID NOTWITHSTANDING APPEAL, ETC- SECTION 119

Notwithstanding that an appeal has been preferred to the High Court or the Supreme
Court, sums due to the Government as a result of an order passed by the National or
Regional Benches of the Appellate Tribunal under sub-section (1) of section 113 or
an order passed by the State Bench or Area Benches of the Appellate Tribunal under
sub-section (1) of section 113 or an order passed by the High Court under section
117, as the case may be, shall be payable in accordance with the order so passed.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.11

 APPEAL & REVISION

10. APPEAL NOT TO BE FILED IN CERTAIN CASES-SECTION 120

1) FIXATION OF MONETARY LIMITS FOR REGULATING THE FILING OF APPEALS
ETC-The Board may, on the recommendations of the Council, from time to time,
issue orders or instructions or directions fixing such monetary limits, as it may
deem fit, for the purposes of regulating the filing of appeal or application by the
officer of the central tax under the provisions of this Chapter.

2) CENTRAL TAX OFFICER MAY FILE AN APPEAL ETC IN ANY OTHER CASE
-Where, in pursuance of the orders or instructions or directions issued under sub-
section (1), the officer of the central tax has not filed an appeal or application
against any decision or order passed under the provisions of this Act, it shall not
preclude such officer of the central tax from filing appeal or application in any
other case involving the same or similar issues or questions of law.

3) Notwithstanding the fact that no appeal or application has been filed by the
officer of the central tax pursuant to the orders or instructions or directions issued
under sub- section (1), no person, being a party in appeal or application shall
contend that the officer of the central tax has acquiesced in the decision on the
disputed issue by not filing an appeal or application.

4) The Appellate Tribunal or court hearing such appeal or application shall have regard
to the circumstances under which appeal or application was not filed by the officer
of the central tax in pursuance of the orders or instructions or directions issued
under sub- section (1).

20.12 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719

 APPEAL & REVISION

11. NON-APPEALABLE DECISIONS AND ORDERS-SECTION 121

Notwithstanding anything to the contrary in any provisions of this Act, no appeal
shall lie against any decision taken or order passed by an officer of central tax if
such decision taken or order passed relates to any one or more of the following
matters, namely:—
a. an order of the Commissioner or other authority empowered to direct transfer of
proceedings from one officer to another officer: or
b. an order pertaining to the seizure or retention of books of account, register and other
documents; or
c. an order sanctioning prosecution under this Act; or
d. An order passed under section 80.

SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719 20.13

 APPEAL & REVISION

20.14 SALEEM QURAISHEE-9175664444 | INSPIRE ACADEMY-8888881719