4.Levy-Collction-of-tax18 (1).pptx

Standardised PPT on GST
INDIRECT TAXES COMMITTEE
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA

© Indirect Taxes Committee, ICAI
2
Levy & Collection
(Sec 7-9)

Scope of Supply – Section 7 of CGST Act
3
Section 7 - Meaning and scope of supply
Section 7(1)(a) Section 7(1)(b) Section 7(1)(c) Section 7(1)(d)
All forms of supply
of goods and / or
services, made or
agreed to be made,
- for a consideration
- in the course or
furtherance of
business
such as:
- sale,
- transfer,
- barter,
- exchange,
- license,
- rental,
- lease or
- disposal
Importation of
service,
- for a
consideration
- whether or not
in the course or
furtherance of
business
Supplies specified*
- To be treated as supplies made or agreed to be
made without a consideration
*Schedule I:
1. Permanent transfer / disposal of business
assets for which ITC has been availed
2. Supplies between related persons/ distinct
persons in the course or furtherance of business
(gifts of less than Rs. 50,000 in value in a FY by
employer to employee not to be treated as supply)
3. Supply of goods by / to principal to / by agent
where agent undertakes to supply / receive such
goods on behalf of principal
4. Importation of service from a related person
or from any of his other establishments outside
India, in the course or furtherance of business.
• Activities to be treated as
supply of goods or supply
of services – Sch II
Section 7(2)
• Activities not to be
considered as supply
(Sch-III)
• Activities/ Transactions
undertaken by CG/SG/
Local Authority as may be
notified
Section 7(3)
By Notification on
recommendation of GST
Council treat activity as
• Supply of goods and not
service
• Supply of service and not
goods

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Section 7(1)(d) – Activities to be treated as supply of goods or supply of services – Schedule II
Sl No Matters Supply of
1 Transfer
(a) Any transfer of title in goods Goods
(b) Any transfer of right in goods or undivided share in goods without
the transfer of title thereof
Services
(c) Any transfer of title in goods wherein the property in goods will pass
at a future date upon payment of full consideration as agreed
Goods
2 Land and Building
(a) Any lease, tenancy, easement, licence to occupy land 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,(renting of residential dwelling for use as residence is
exempt vide Notification No.12/2017 – CT (Rate) dated 28.06.2017)
Services
3 Any treatment or process applied to another person’s goods Services

5
Sl No Matters Supply of
4 Transfer of business assets
(a) Transfer / Disposal of goods so as to no longer to form part of business assets,
whether or not for a consideration
Goods
(b) Goods 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 (Transfer of a going concern, as a whole or an independent part
thereof, is an exempted service vide Notification 12/2017-CT (Rate) dated 28.06.2017 )
Services
(c) Any person ceases to be a taxable person, any goods forming part of assets of
any business carried on by him – shall be deemed to be supply in the course or
furtherance of his business immediately before he ceases to be a taxable person,
except –
(a) Business is transferred as a going concern to another person; or
(b) Business is carried on by a personal representative who is deemed to be a
taxable person
Goods

6
Sl No Matters
5 Following to be treated as Supply of Services
(a) Renting of immovable property (unless the supply is otherwise exempted (such as renting
of residential dwelling for the purpose of residence)
(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. Construction
includes additions, alterations, replacements or remodeling of any existing civil structure
(c) Temporary transfer or permitting the use or enjoyment of any intellectual property right
(d) Development, design, programming, customization, adaptation, upgradation,
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) 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

7
Sl No Matters
6 Following Composite Supplies to be treated as Supply of Services
(a) Works Contract as per Sec. 2(119) of CGST Act
“works contract” means a contract for building, construction, fabrication, completion,
erection, installation, fitting out, improvement, modification, repair, maintenance,
renovation, alteration or commissioning of any immovable property wherein transfer of
property in goods (whether as goods or in some other form) is involved in the execution of
such contract;
(b) 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 or other valuable consideration.
Illustration: Restaurant Services or Catering Services
7 Supply of goods by any unincorporated AOP or BOP to a member thereof for cash,
deferred payment or other valuable consideration shall be treated as supply of goods

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Section 7(2) – Activities not to be treated as supply
Section 7(2)(a) Section 7(2)(b)
Activities or transactions specified*
* Schedule III
1. Services by employee to employer in course of or in relation to his employment
2. Services by court or Tribunal established under any law for the time being in
force
3. (a) functions performed by the M.Ps, Members of State Legislature, Members of
Panchayats, Members of Municipalities and Members of other local authorities
(b) duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity
(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 Construction Activity of Schedule II, sale of building
6. Actionable claims, other than lottery, betting and gambling
Activities or transactions
undertaken by
- Central Govt, or
- State Govt, or
- Local authority
- in which they are engaged
as public authorities
as may be notified by the
Government on the
recommendations of the GST
Council
(Activity in relation to
function entrusted to
Panchayat under Article
243G of the Constitution
notified vide Notification
No. 14/2017- CT(Rate) dt.
28.06.2017)

Tax liability on composite and mixed
supplies– Section 8 of CGST Act
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Section 8 – Tax Liability on Composite or Mixed Supply
A supply consisting of 2 or more supplies Treated as Supply of
Composite supply of 2 or more supplies and one
of which is a principal supply
Principal Supply
Mixed supply of 2 or more supplies That particular supply
which attracts highest
rate of tax

Tax liability on composite and mixed
supplies– Sec 8 of CGST Act
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Composite Supply [Sec 2(30)]:
means 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.
Illustration: 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
Principal Supply [Sec 2(90)]:
means the supply of goods or services which constitutes the predominant element of a composite supply
and to which any other supply forming part of that composite supply is ancillary
Mixed Supply [Sec 2(74)]:
means two or more individual supplies of goods or services, or any combination thereof, made in
conjunction with each other by a taxable person for a single price where such supply does not constitute a
composite supply:
Illustration : 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

Certain Clarifications vide Circulars- Tax
liability on composite and mixed supplies
 Para 5(3) of Circular No.32/06/2018-GST dated 12.02.2018: Food supplied to the in-
patients as advised by the doctor/nutritionists is a part of composite supply of health care.
 Circular No.11/11/2017-GST dated 20.10.2017: In case of printing of books, pamphlets,
brochures, annual reports, and the like, where only content is supplied by the publisher or the
person who owns the usage rights to the intangible inputs while the physical inputs including
paper used for printing belong to the printer, supply of printing of the content supplied by the
recipient of supply is the principal supply.
 In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins,
wall paper etc. falling under Chapter 48 or 49, printed with design, logo etc. supplied
by the recipient of goods but made using physical inputs including paper belonging to
the printer, the predominant supply is that of goods and the supply of printing of the
content supplied by the recipient of supply is ancillary to the principal supply of
goods and therefore such supplies would constitute supply of goods.
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Certain Clarifications vide Circulars- Tax
liability on composite and mixed supplies
 Circular No. 34/8/2018-GST dated 01.03.2018: The activity of bus body building is a
composite supply. As regards which of the components is the principal supply, the
Circular directs that it be determined on the basis of facts and circumstances of each
case.
 Re-treading of tyres– In re-treading of tyres, which is a composite supply, the pre-
dominant element is the process of re-treading which is a supply of service, and the
rubber used for re-treading is an ancillary supply.
 The Circular also specifies that “Value may be one of the guiding factors in this
determination, but not the sole factor. The primary question that should be asked is
what is the essential nature of the composite supply and which element of the supply
imparts that essential nature to the composite supply”
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Tax liability on composite and mixed supplies–
Section 8 of CGST Act
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Description Composite Supply Mixed Supply
Naturally bundled Yes No
Each supply available for supply individually No Yes/No
One is predominant supply for recipient Yes Yes/No
Other supply(ies) are ancillary or they are
received because of predominant supply
Yes No
Each supply priced separately Yes/No No
Supplied together Yes Yes
All supplies can be goods Yes Yes
All supplies can be services Yes Yes
A combination of one / more goods and one /
more services
Yes Yes
While, the above tests could be guiding principles in determining as to whether a supply is
composite or mixed supply the end user test could be adopted as one of the criteria; Every supply
will have to be independently analysed.

Meaning and Scope of Supply
 Supply comprises:
• Included supplies
• Implied supplies (Sch. I)
• Excluded supplies (Sch. III)
 Chargeability to tax:
• Forward charge on supplier
• Reverse charge on imports
• Lateral charge (e-commerce)
 Supply characterization:
• Composite supply or
• Mixed supply
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 Cases to consider:
• Purpose of supply – business or not
• Same forms of supply apply to
services
• Supply by casual taxable person
• ISD or inter-branch service transfer
• Intra-State stock transfer
• Free samples and warranty are
supplies for consideration
• Material supplied for job-work
• Sch II not exhaustive but specific
• No supply, no tax but no credit too

Levy and Collection
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•Services
•Goods
•Goods and services
1: Subject
•Included
•Implied
•Excluded
2: Supply
•Specified for goods
•Specified for services
4: Time
•Inter-State
•Intra-State
3: Place

Levy and Collection of CGST – Sec 9
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 To be levied on all intra-State supplies of goods and / or services, except on alcoholic liquor for
human consumption;
 Value determined u/s 15 of CGST Act (Value of taxable supply);
 At the rates notified by Central Government;
 To be paid by every taxable person;
 CGST shall be levied on supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel with effect from such date
as may be notified by the Government on the recommendations of the GST Council;
 Central Government has the power to specify the categories of supply of goods and/ or
services on which Reverse Charge shall apply;
 Any supply received by the registered person from an unregistered person the CGST on such
supply will be paid by recipient of such supply and all the provisions of this Act shall apply to
such recipient as if he is the person liable to pay tax;
 Central Government has power to specify categories of services on which tax will be paid by
e-commerce operators as if such services are supplied by such operators.

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Composition Levy

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Manufacturer – 0.5%
Supplier covered
under Sch. II, Para
6(b) – 2.50%
Others – 0.50%
Eligible
Available
Availed
Allowed
Compliance
Composition Levy – Section 10 of CGST Act

 Option to pay an amount in lieu of tax; minimum rate to be:
 0.50% of the turnover in case of manufacturers ( other than specified);
 2.50% of the turnover in case of suppliers covered under Sch. II, Para 6(b)
such as Restaurants or Caterers
 0.50% of the turnover in other cases
 Note: State GST rate in addition expected to be equal.
 No tax to be collected; No Input Tax Credit available
 Aggregate Turnover < Rs. 1 Crore* in the preceding FY (all-India basis for
taxable persons having same PAN – who shall also opt for composition)
* Turnover Limit is Rs. 75 lakhs for Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh
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Not economically viable for Business to Business Transactions

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 No composition option in the following specific cases:
• Services supplied:
 Any / all services (includes goods treated as supply of services by Schedule II), other
than services covered under Schedule II, Paragraph 6(b) such as Restaurants
• Goods supplied:
 Non-taxable goods
 Inter-State outward supplies
 Through e-commerce operators required to collect tax at source under section 52
 Notified goods manufactured by the supplier
 Manufacture Of:
 Ice cream and other edible ice, whether or not containing cocoa
 Pan masala
 All goods, i.e. Tobacco and manufactured tobacco substitutes
 If aggregate turnover (all India basis) of preceding FY exceeds 1 Crore (If during the FY, the
aggregate turnover exceeds 75 Lakhs, no composition from the following day.)

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 Intimation for Composition Levy:
• File intimation electronically in Form GST CMP-01 prior to appointed day or within 30 days after the
said day or further period as may be extended by the Commissioner;
• If intimation filed after the appointed day then no tax to be collected and issue bill of supply;
• Any person applying for registration, if he opts to pay tax under Composition in the Form GST REG-
01 then it shall be considered as an intimation;
• Composition Supplier shall intimate in Form GST CMP-02 prior to commencement of financial year
and also furnish Form GST ITC-3 giving details of ITC within 60 days from the commencement of
relevant financial year;
• Composition Supplier shall furnish in GST CMP-03, details of:
o Stock
o Inward supply of goods received from unregistered person
held as on the preceding day from which he opts for composition, within 60 days from the date from
which option is exercised or such further period as may be extended by the Commissioner;
• Any intimations as above for any place of business in any State or Union Territory shall be deemed to
be intimation of all other place of business registered on the same PAN.
Composition Levy – Rule 3 of CGST Rules

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 Effective date for Composition Levy:
• If Composition scheme is opted from the appointed date then
effective date would be the appointed date.
• If Composition scheme is opted by already registered person then
effective date would be from the beginning of the financial year
• If the registered person has applied for Composition then the
intimation shall be considered only after the grant of registration to
the applicant

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 Conditions and Restrictions for Composition Levy: Person opting for Composition shall comply with
the following -
• Neither a casual taxable person nor a non-resident taxable person
• The goods held in stock by him on the appointed day have not been
o purchased in the course of inter-State trade or commerce, or
o imported into India, or
o received from his branch situated outside the State or from his agent or principal outside the State
• Goods held in stock have not been purchased from an unregistered person and where purchased tax
has been paid under reverse charge
• He shall pay tax under reverse charge on inward supplies received from unregistered persons
• He was not engaged in the manufacture of notified goods during the preceding financial year
• He shall mention words “composition taxable person, not eligible to collect tax on supplies” at the
top of the bill of supply issued by him
• He shall mention the words “composition taxable person” on every notice or signboard displayed at
a prominent place at his place of business and at every additional place or places of business
• Registered person who has opted for Composition may not file fresh intimation every year and may
continue to pay tax under composition
Conditions and Restrictions for Composition
Levy – Rule 5 of CGST Rules

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 Validity of Composition Levy:
• Option once exercised shall remain valid so long as he satisfies all the conditions prescribed
• The person shall be liable to pay tax under normal levy if he ceases to satisfy the conditions
prescribed and has also filed an intimation for withdrawal from the scheme in Form GST CMP-04
within 7 days of occurrence of such event
• A registered person who wants to opt out of Composition Scheme can also intimate in Form GST
CMP-04
• If proper officer has reasons to believe that a person is not eligible for Composition or contravened
any of the provisions then he may issue notice and a reply has to be filed by such person and based
on such reply the proper officer may either accept the reply or deny the option to pay tax under
Composition
• Upon an option to pay under Composition becoming invalid the person shall furnish details of the
stock of inputs and inputs contained in semi-finished or finished goods held in stock
• Any intimation of withdrawal of option or denial of the option 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 PAN

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Exemptions

Exempt supplies, non-taxable supplies and
zero-rated supplies
 Section 2(47) – “exempt supply” means supply of any goods and/ or services
• which attract nil rate of tax; or
• which may be exempt from tax under Section 11 or Section 6 of IGST Act
• and includes non-taxable supply
 Section 2(78) – “non-taxable supply” means a supply of goods and/or services
which is not leviable to tax under this Act or IGST Act
 Section 16(1) of IGST Act – “zero-rated supply” means any of the following
supplies of goods and/or services, namely -
a) Export of goods and/or services
b) Supply of goods and/or services to a SEZ developer or an SEZ unit
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Power to grant exemption from tax – Section
11 of CGST Act 27
S.11 (3)
Central or State Government, based on the recommendation of the Council
On taxable goods and/ or services of any specified description
Is satisfied that it is necessary,
in the public interest
By Notification - A
Exempt Generally
By Special Order – B
Exempt
Considers it necessary
For the purpose of clarifying the
scope or applicability of A or B
By Notification
Insert an explanation in A or B,
as the case may be, within 1 year
(such clarification to have
retrospective effect)
S.11 (1) S.11 (2)
Under exceptional
circumstances, explicitly
specified in such Order
Whole Tax
• Absolutely (not optional); or
• Subject to conditions
• Whole Tax; or
• Part tax

Thank You
For any Clarification, Please Contact
Indirect Taxes Committee of ICAI
Email: idtc@icai.in, Website: www.idtc.icai.org
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