Goods And Services Tax Referencer

1. GST Referencer
Team
CA Mohan Aggarwal
CA Saurabh Agarwal
CA Divesh Gupta

2. Goods and Services Tax (GST) in India
GST is one indirect tax for the whole nation, which will make India one unified common market.
GST is a single tax on the supply of goods and services, right from the manufacturer to the
consumer. Credits of input taxes paid at each stage will be available in the subsequent stage
of value addition, which makes GST essentially a tax only on value addition at each stage. The
final consumer will thus bear only the GST charged by the last dealer in the supply chain, with
setoff benefits at all the previous stages.
Indian system of taxation of goods and services is characterized by cascading, distortionary tax
on production of goods and services which leads to miss-allocation of resources, hampering
productivity and slower economic growth. To remove this hurdle, a pure and simple tax system
like GST (Goods and Service Tax) is need of the hour in the country.
Which taxes at the Centre and State level are being subsumed into GST?
At the Central level, Central Excise Duty, Additional Excise Duty, Service Tax, Additional
Customs Duty and Special Additional Duty of Customs will be subsumed.
At the State level, Value Added Tax/Sales Tax, Entertainment Tax (other than the taxes levied
by the local bodies), Central Sales Tax (levied by the Centre and collected by the States),
Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling will
be subsumed.

3. Roadmap of GST in India
 122nd Constitutional Amendment Bill has been passed by Rajya sabha
and Lok Sabha.
 122nd Constitutional Amendment Bill to be ratified by atleast 50% of the
State Legislatures under Article 368 of the Constitution.
 Assent by President of India to the 122nd Constitutional Amendment Bill.
 After Constitutional amendment, GST Council (GSTC) to be constituted
within 60 days under Section 279A of the amended Constitution.
 GSTC to recommend GST Law and procedure. IGST and CGST bill for
parliament/Centre and Model SGST bill for State Legislature.
 CGST and IGST Laws to be introduced in Parliament and to be passed
by simple majority.
 SGST Laws to be passed by concerned state legislatures.
 Once Approval from Parliament and States, GSTN (GST network a
Section 8 Company) will launch the IT Platform for implementation of
GST.

4. Relevance of term ‘Supply’ in GST
 The taxable event for levy of Goods and Services Tax (GST) is ‘supply’ and hence
Section 3 of the Model GST Law, released by the Finance Ministry on 14th June
2016, covers the meaning and scope of ‘supply’.
 As GST will be applicable on ‘supply’, erstwhile taxable events such as
‘manufacture’, ‘sale’, ‘provision of services’ will lose their relevance.
 Certain supplies, even if made without consideration, such as permanent transfer
of business assets, self-supply of goods or services, assets retained after
deregistration, will attract GST. Even ‘barter’ of goods transaction which were
hitherto un-taxed in the VAT regime, will attract GST.
 The liability to pay GST will arise at the time of supply as determined for goods
and services.
Taxable Event
Under GST
Supply
Provision of Services
Under Todays Regime
Sales
Manufacturing

5. Meaning and scope of supply
Sec 2(92) “Supply” shall have the meaning as assigned to it in section 3
Sec 3 Meaning & scope of supply
Sub-
section 1
Supply includes
 all forms of supply of goods [sec. 2(48)] and/or services [sec. 2(88)]
 such as sale, transfer, barter, exchange, license, rental, lease or
disposal made or agreed to be made
 for a consideration [sec. 2(28)]
 by a person [sec. 2(74)]
 in the course or furtherance of business, [sec. 2(17)]
Supply includes
 importation of service, [sec. 2(52)]
 whether or not for a consideration and
 whether or not in the course or furtherance of business, and
Supply includes
 a supply specified in Schedule I,
 made or agreed to be made
 without a consideration.

6. Section 3 Meaning & scope of supply
Sub-
Section 2
Schedule II,
 in respect of matters mentioned therein,
 Shall apply for determining what is, or is to be treated as a supply of
goods or a supply of services.
Sub-
section 2A
 Where a person acting as an agent [sec. 2(5)] who,
 for an agreed commission or brokerage,
 either supplies or receives any goods and/or services
 on behalf of any principal [sec. 2(77)],
 The transaction between such principal and agent
 shall be deemed to be a supply.
Sub-
section 3
 Subject to sub-section (2),
 the Central or a State Government may,
 upon recommendation of the Council,
 specify, by notification,
 the transactions that are to be treated as—
(i) a supply of goods and not as a supply of services; or
(ii) a supply of services and not as a supply of goods; or
(iii) Neither a supply of goods nor a supply of services.

7. Section 3 Meaning & scope of supply
Sub
section 4
 Notwithstanding anything contained in sub-section (1),
 the supply of any branded service
 by an aggregator, as defined in section 43B,
 under a brand name or trade name owned by him
 shall be deemed to be a supply of the said service by the said
aggregator

8. SCHEDULE I
MATTERS TO BE TREATED AS SUPPLY WITHOUT CONSIDERATION
1 Permanent transfer/disposal of business assets.
2 Temporary application of business assets to a private or non-business
use.
3 Services put to a private or non-business use.
4 Assets retained after deregistration.
5 Supply of goods and / or services by a taxable person to another
taxable or nontaxable person in the course or furtherance of business.
Provided that the supply of goods by a registered taxable person to a
job-worker in terms of section 43A shall not be treated as supply of
goods.

9. SCHEDULE II
MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES
1 Transfer
1. Any transfer of the title in goods is a supply of goods.
2. Any transfer of goods or of right in goods or of undivided share in goods
without the transfer of title thereof, is a supply of services.
3. Any transfer of title in goods under an agreement which stipulates that
property in goods will pass at a future date upon payment of full
consideration as agreed, is a supply of goods.
2 Land and Building
1. Any lease, tenancy, easement, license to occupy land is a supply of
services.
2. 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.
3 Treatment or process
1. Any treatment or process which is being applied to another person’s
goods is a supply of services.

10. SCHEDULE II
MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES
4 Transfer of business assets
1. 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, whether or not for a consideration, such
transfer or disposal is a supply of goods by the person.
2. 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, whether or not for a consideration, the usage or making available
of such goods is a supply of services.
3. Where any goods, forming part of the business assets of a taxable person, are
sold by any other person who has the power to do so to recover any debt owed
by the taxable person, the goods shall be deemed to be supplied by the
taxable person in the course or furtherance of his business.
4. 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—
a) the business is transferred as a going concern to another person; or
b) the business is carried on by a personal representative who is deemed to
be a taxable person.

11. SCHEDULE II
MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES
5 The following shall be treated as “supply of service”
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 before
its first occupation, whichever is earlier.
Explanation- For the purposes of this clause-
1. The expression "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:–
i. An architect registered with the Council of Architecture constituted
under the Architects Act, 1972; or
ii. a chartered engineer registered with the Institution of Engineers
(India); or
iii. a licensed surveyor of the respective local body of the city or town or
village or development or planning authority.
2. The expression "construction" includes additions, alterations, replacements or
remodeling of any existing civil structure;

12. SCHEDULE II
MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES
5 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;
e) Agreeing to the obligation to refrain from an act, or to tolerate an act or a
situation, or to do an act;
f) Works contract including transfer of property in goods (whether as goods or in
some other form) involved in the execution of a works contract;
g) 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; and
h) Supply, by way of or as part of any service 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 other valuable consideration.
6 The following shall be treated as supply of goods
a) supply of goods by any unincorporated association or body of persons to a member
thereof for cash, deferred payment or other valuable consideration.

13. Sec-7 levy and Collection of CGST/SGST
Sub Section 1 Sub Section 2 Sub Section 3
CGST and SGST shall
be levied on all Intra-
State supply of goods
& services.
CGST and SGST shall be
paid by every taxable
person [Sec(9)]
CG /SG may specify categories of
supple of Goods & Services on
which tax will be payable under
reverse charge mechanism.
At the rate specified in
relevant schedule
and collected in the
prescribed manner

14. Section-9:-Taxable Person means
Sub-Section 1 Sub-Section 2 Sub-Section 3
Person who carry on business at
any place in India or any state
and who is:
 Registered or
 Required to be reg. under
Sch. III
Exceptions:
 An Agriculturist[Sec 2(8)]
 A person required to be
registered under Para I of
Sch. III, If aggregate
turnover ≤ Rs. 10 lakhs
 A person required to be
registered under Para I of
Sch. III, If aggregate
turnover ≤ Rs. 5 lakhs and
conduct business in any of
the North East States
including Sikkim.
CG, SG and Local
authority in respect of
activities/ transactions
in which they are
engaged as public
authorities other than
activities/ transaction
mentioned in
Schedule-IV.
Persons excluded:
 Providing services as
employee to his employer.
 Exclusively supplying Goods/
Services not taxable under
this Act.
 Person under section 7(3)
receiving services for
personal use not exceeding
a specified limit, other than
for use in the course or
furtherance of his business.

15. SECTION-8: COMPOSITION LEVY
Sub-Section 1 Sub-Section 2 Sub-Section 3
 Notwithstanding anything to the
contrary contained in the Act But
 Subject to reverse charge
provision[Sec7(3)].
Such taxable
person shall neither
collect any tax nor
be entitled to take
any credit of input
tax to discharge
liability under
composition
scheme.
 If proper officer has
reasons to believe that a
person is not eligible to
opt this scheme, such
person shall, in addition
to differential tax, be
liable to penalty
equivalent to the amount
of differential tax payable
as aforesaid.
 Show cause notice shall
be given before levy of
penalty.
On the recommendation of GST Council,
Proper officer of SG/CG with Prescribed
condition & restriction may permit-
 A Reg. Taxable Person to pay amount
calculated at rate prescribed not less
than 1% if
 Aggregate turnover[Section 2(46)] in a
F.Y.≤ Rs 50 Lacs.
Provided that:
 No such permission to a person
affecting Inter-State Supply of Goods &
services.
 No such permission unless the all reg.
taxable persons having same PAN opt
for this scheme.

16. SECTION-10: POWER TO GRANT EXEMPTION FROM TAX
Sub-
Section 1
CG/SG may exempt any goods & services from whole or any part of the
tax leviable by notification either :
 absolutely or,
 subject to such conditions as may be prescribed
If it is in public interest to do so, on the recommendation of GST council.
Sub-
Section 2
CG/SG may exempt any goods & services from tax leviable by Special
Order:
 Under circumstances of exceptional nature.
If it is in public interest to do so, on the recommendation of GST council.
Sub-
Section 3
CG/SG may issue explanation within one year from date of issue of
notification under sub-section (1) or order issued under sub-section (2) for
clarifying:
 the scope or
 applicability of any notification or order.
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