Law of Taxation unit -4.pdf

By
Smt.Sowmya.K
PRINCIPAL
SBRR Mahajana Law College
Mysore
1
Smt.SOWMYA.K, SBRR Mahajana Law College

Smt.SOWMYA.K, SBRR Mahajana Law College 2

SECURITIES TRANSACTION TAX
STT is levied on every purchase or sale of securities that are listed on
the Indian stock exchanges. This would include shares, derivatives or equity-
oriented mutual funds units
The securities transaction tax (STT) was introduced in India a few
years ago, to stop tax avoidance of capital gains tax. Earlier, many people
usually didn’t declare their profits on the sale of stocks and avoided paying
capital gains tax. The government could tax only those profits, which have
been declared by people. To stop this situation, the then Finance Minister P
Chidambaram in the Union Budget 2004-05—introduced STT. Transactions
in stock, index options and futures would also be subject to transaction tax.
This tax is payable whether you buy or sell a share and gets added to the price
of the stock at the time the transaction is made. Since brokers have to
automatically add this tax to the transaction price, there is no way to avoid
it. The Finance Ministry has supported the introduction of the STT to
simplify the tax regime on financial market transactions. According to the
ministry, STT is a clean and efficient way of collecting taxes from financial
markets. In the words, STT is a neat, efficient and easy-to-administer tax and
it has the great advantage of virtually eliminating tax avoidance.

STT is levied on every purchase or sale of securities that are listed on the
Indian stock exchanges. This would include shares, derivatives or equity-oriented
mutual funds units. The rate of tax that is deducted is determined by the central
government, and it varies with different types of transactions and securities. STT is
deducted at source by the broker or AMC, at the time of the transaction itself, the net
result is that it pushes up the cost of the transaction done.
Scope of STT
According to the Securities Contracts (Regulation) Act, 1956, STT would be applicable
on following securities.
 Shares, bonds, debentures, debenture stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate
 Derivatives
 Units or any other instrument issued by any collective investment scheme to the
investors in such schemes
 Security receipt as defined in section 2(zg) of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002
 Government securities of equity nature
 Rights or interest in securities
 Equity-oriented mutual funds
 STT is not applicable for any off-market transaction.

E WAY BILL
Meaning
E-way bill is an electronic document generated on the GST portal evidencing movement of
goods. It has two Components-
Part A comprising of details of - GSTIN of recipient, place of delivery (PIN Code), invoice
or challan number and date, value of goods, HSN code, transport document number (Goods Receipt
Number or Railway Receipt Number or Airway Bill Number or Bill of Lading Number) and
reasons for transportation; and
Part B comprising of transporter details (Vehicle number). As per Rule 138 of the CGST
Rules, 2017,every registered person who causes movement of goods (which may not necessarily be
on account of supply) of consignment value more than Rs. 50000/- is required to furnish above
mentioned information in part A of e-way bill. The part B containing transport details helps in
generation of e-way bill.
Purpose of E-Way Bill
E-way bill is a mechanism to ensure that goods being transported comply with the
GST Law and is an effective tool to track movement of goods and check tax evasion.
Responsibility to generate E-Way Bill
E-way bill is to be generated by the consignor or consignee himself if the transportation is
being done in own/hired conveyance or by railways by air or by Vessel. If the goods are handed
over to a transporter for transportation by road, E-way bill is to be generated by the Transporter.
Where neither the consignor nor consignee generates the e-way bill and the value of goods is more
than Rs.50,000/- it shall be the responsibility of the transporter to generate it. Further, it has been
provided that where goods are sent by a principal located in one State to a job worker located in any
other State, the e-way bill shall be generated by the principal irrespective of the value of the
consignment.

Validity of E-Way Bill
The validity of e-way bill depends on the distance to be travelled by the goods. For
a distance of less than 100 Km the e-way bill will be valid for a day from the relevant
date. For every 100 Km thereafter, the validity will be additional one day from the
relevant date. The “relevant date” shall mean the date on which the e-way bill has been
generated and the period of validity shall be counted from the time at which the e-way bill
has been generated and each day shall be counted as twenty-four hours. In general, the
validity of the e-way bill cannot be extended. However, Commissioner may extend the
validity period only by way of issue of notification for certain categories of goods which
shall be specified later. Further, if under circumstances of an exceptional nature, the goods
cannot be transported within the validity period of the e-way bill, the transporter may
generate another e-way bill after updating the details in Part B of FORM GST EWB-01.
Exceptions to e-way bill requirement
No e-way bill is required to be generated in the following cases –
a) Transport of goods as specified in Annexure to Rule 138 of the CGST Rules, 2017
b) goods being transported by a non-motorised conveyance;
c) goods being transported from the port, airport, air cargo complex and land customs
station to an inland container depot or a container freight station for clearance by
Customs;
d) in respect of movement of goods within such areas as are notified under rule 138(14)
(d) of the SGST Rules, 2017 of the concerned State; and
e) Consignment value less than Rs. 50,000/-

STATE GOODS AND SERVICES TAX ACT, 2017 [SGST]
SGST, short for State Goods and Service Tax, is one of the three main
categories of Goods and Service Tax, i.e. (CGST, IGST, and SGST) and carries a
concept of one tax one nation. SGST falls under the State Goods and Service Tax
Act 2016.
Features of SGST
 SGST is levied and collected by the states on all goods and services supplied for
consideration.
 The tax collected is deposited to the accounts of the respective state
 Each state has its separate SGST act under its State Goods and Service Tax
Department. However, the basic features of the GST law for all the states like the
charges, valuation, taxable event, measure, classification, etc would remain the same
across the respective act of each state
 SGST is not applicable to the exempted goods and services as they do not come
under the influence of GST. Furthermore, SGST is also not applicable where the
aggregate annual turnover is less than the prescribed limit.
 Intra-State Supply is referred to any supply where the supplier and the place of
supply reside in the same State or Union Territory. In such a case of supply of goods
and services, a seller must collect both CGST and SGST. Once both the taxes are
collected, the CGST part gets deposited with the Central Government. And the
SGST gets deposited with the respective State Government.

Integrated Goods and Service Tax [IGST]
Meaning
"Integrated Goods and Services Tax” (IGST) means the tax levied under this Act
on the supply of any goods and/or services in the course of inter-State trade or
commerce and for this purpose.”
Integrated goods and services tax (IGST) would mean the tax levied under IGST
Act on the supply of any goods and / or services in the course of inter-state trade or
commerce.
This IGST based on the principle-IGST rate= CGST rate + SGST rate (more or less)
Salient Features of the enactment
 The IGST Act comprises of the following 11 Chapters, 33 Sections and 8 Definitions.
 The Act is called the Integrated Goods and Services Tax Act, 2017 (in short IGST), an
Act enacted to levy, collect and administer IGST in India.
 This Act shall be applicable to the whole of India, i.e., including the State of Jammu &
Kashmir. And shall come into force from a date which will be notified by the Central
Government by way of a notification.
 The IGST Model gives meaning to the GST Act of which IGST is one of the
components. The IGST Act clarifies that Centre would levy IGST which would
be CGST plus SGST on all inter-State transactions of taxable goods and services with
appropriate provision for consignment or stock transfer of goods and services.

The seller making supply outside the state will pay IGST on value
addition after adjusting available credit of IGST, CGST, and SGST
on his purchases. And the exporting State will transfer to the Centre
the credit of SGST used in payment of IGST.
On the other hand, the Importing dealer will claim credit of IGST
while discharging his output tax liability in his own State. The Centre
will then transfer to the importing State the credit of IGST used in
payment of SGST.
Integrated GST shall also apply to import of goods and services into
India. The basic ideology stipulates that any supply of goods or
services in the course of import of goods or services into Indian
territory shall be deemed to supply involving inter-state trade or
commerce and hence liable to IGST.
Interstate trade or commence will, therefore include :
1. Supplies made in the course of – Inter-state trade or commence
2. Import into Indian territory (deemed to be inter-state)
3. Export (deemed to be inter-state)

Union Territory Goods and Service Tax Act [UTGST]
The Constitution(One Hundred and first Amendment) Act, 2016 inserted a new clause ,
Clause 26B in Article 366 of the Constitution. As per this clause-State with reference to Articles
246A, 268,269,269Aand 279Aincludes a Union territory with Legislature.
Even State for the purposes of GST, includes a Union territory with Legislature. Delhi and
Puducherry are Union Territories with legislature and are considered as – States technically SGST
cannot be levied in a Union Territory without legislature. This applies to following Union Territories
of India:
1) Andaman and Nicobar Islands
2) Lakshadweep
3) Dadra and Nagar Haveli
4) Daman and Diu
5) Chandigarh
Objectives of the enactment
a) It provides for levy of tax on all intra- State supplies of goods or services or both, except
alchoholic liquor for human consumption, at the rates recommended by the GST Council.
b) It empowers the Central Government to grant exemptions on the recommendationof the GST
Council.
c) Enables apportionment of tax and settlement of funds on account of transfer of input tax credit
between the Central Government, State Governments and Union Territories;
d) Empowers recovery of tax, interest or penalty payable by a person and remaining unpaid;
e) Empowers establishing of an Authority for Advance Ruling to enable the taxpayers to seek
binding clarity on taxation matters;
f) Provides for elaborate transitional provisions for smooth transition of taxpayers to GST regime;
and
g) Allows application of certain provisions of the CGST Act, 2017 to the extent relevant for the
purposes of this Act;

3. Officers under this Act
The Administrator may, by notification, appoint Commissioners and such other class of
officers as may be required for carrying out the purposes of this Act and such officers shall
be deemed to be proper officers for such purposes as may be specified therein: Provided
that the officers appointed under the existing law shall be deemed to be the officers
appointed under the provisions of this Act.
4. Authorisation of officers
The Administrator may, by order, authorise any officer to appoint officers of Union
territory tax below the rank of Assistant Commissioner of Union territory tax for the
administration of t his Act.
5. Powers of officers
(1) Subject to such conditions and limitations as the Commissioner may impose, an officer
of the Union territory tax may exercise the powers and discharge the duties conferred or
imposed on him under this Act.
(2) An officer of a Union territory tax may exercise the powers and discharge the duties
conferred or imposed under this Act on any other officer of a Union territory 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 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 Union territory tax.

6. Authorisation of officers of Central Tax as proper officer in certain circumstances
(1) Without prejudice to the provisions of this Act, the officers appointed under the Central
Goods and Services Tax Act are authorised 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 Central Goods and Services Tax Act, as authorised by the said Act under intimation
to the jurisdictional officer of central tax;
(b) where a proper officer under the Central 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 Central Goods and Services Tax Act.
7. Levy and collection
(1) Subject to the provisions of sub-section (2), there shall be levied a tax called the Union
territory tax on all intra-State supplies of goods or services or both, except on the supply of
alcoholic liquor for human consumption, on the value determined under section 15 of the
Central Goods and Services Tax Act and at such rates, not exceeding twenty per cent., as
may be notified by the Central Government on the recommendations of the Council and
collected in such manner as may be prescribed and shall be paid by the taxable person.
(2) The Union territory tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect
from such date as may be notified by the Central Government on the recommendations of the
Council.

(3) The Central 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 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.
(4) The Union territory tax in respect of the supply of taxable goods or services
or both by a supplier, who is not registered, to a registered person shall be paid
by such 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.
(5) The Central Government may, on the recommendations of the Council, by
notification, specify categories of services the tax on intra-State supplies of
which shall be paid by the electronic commerce operator if such services are
supplied through it, and all the provisions of this Act shall apply to such
electronic commerce operator as if he is the supplier liable for paying the tax in
relation to the supply of such services.
Provided that where an electronic commerce operator does not have a
physical presence in the taxable territory, any person representing such
electronic commerce operator for any purpose in the taxable territory shall be
liable to pay tax.
Provided further that where an electronic commerce operator does not have
a physical presence in the taxable territory and, he does not have a
representative in the said territory, such electronic commerce operator shall
appoint a person in the taxable territory for paying tax and such person shall be
liable to pay tax.

8. Power to grant exemption from tax
(1) Where the Central 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 generall y
either absolutely or subject to such 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 .
(2) Where the Central 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.
(3) The Central 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 sub -
section (1) or order issued under sub-section (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 sub-section (1) or order under sub-section (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.
(4) Any notification issued by the Central Government under sub-section (1) of section 11 or
order issued under sub-section (2) of the said section of the Central Goods and Services
Tax Act shall be deemed to be a notification or an order issued under this Act.
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, more than the effective rate, on such supply of goods or services or both.

CONCEPT OF SUPPLY
Statutory provisions
Supply has been defined in section 7 of GST Act. Schedule I specify the
activity which are considered as supply even when they are rendered without
consideration. Schedule II of Act specifies the matter which are to be considered as
supply of goods or supply of services.
Definition of supply
The word supply has been defined u/s. 7 of the GST Act in an inclusive
manner. The Section 1 of the GST Act provides that the supply will include all forms
of supply of goods or services or both agreed to be made for a consideration by the
person in a course or furtherance of business. The Section 7(1)(b) of the Act
provides that the import of service made in the course or furtherance of business or
not for consideration shall be considered as ‘supply’.
The Schedule-I specifies certain activities which will be considered as
‘supply’ even if made without consideration. The sub-section (1A) provides that the
transactions specified in Schedule-II is only for the purpose of classifying the
activity or transaction into goods or services. The sub-section (2) provides the power
to specify the activities of transaction under taken by Central Government, State
Government or Local Authority when the function is public authority which shall
not be considered as supply of goods or services. The Schedule-III specifies certain
transactions which are not considered as supply of goods or services.
15

Elements of Supply under GST
The CGST law of 2017 states that certain attributes specify the
basic supply elements. These include place, value and time.
1. Place: Supply of goods and services are location-dependent and
subject to changes based on location changes. Thus supply can be
intra-state, inter-state or specifically meant for exports. GST will be
calculated on the supply of these goods and services according to
their whereabouts.
2. Value: Manufacturers add value to goods or services based on their
usability and modes of production. The intrinsic value of the goods
and services determines the GST calculation on these commodities.
3. Time: Time is an important component of GST that determines GST
calculation. It determines the time limit for GST calculation and
payments apart from the due dates.
16

Taxable Supply under GST
 In simple terms, taxable supply refers to the supply of those goods and
services that incurs GST under the CGST Act, 2017. Now the payment of
taxes on these supplies depends on their intrinsic value (of the transaction)
and the price paid by the buyers. Valuation of taxable supply includes:
 Any legal form of taxes, duties or charges that are included with the
concerned goods and services charged or supported by State Goods and
Services Act, Union territory Goods and Services Act, etc.
 Any liabilities the supplier is liable to pay but are incurred by the buyer and
not included in the price of such goods.
 Any additional expenses incurred by the supplier, including packing and
commissions, which they charge from buyers.
 Interests, late fees and penalties for delay in supply considerations.
 All forms of subsidies are linked to the price of the good or service,
excluding those provisioned by government policies.
 Schedule II of GST law states that regular GST calculation applies to mixed
and composite supplies. Mixed supply refers to multiple orders or bulk
supplies and is valid for commodities that can be sold separately and are not
dependent. Composite supplies refer to complementary goods that are
inseparable, and owners can derive utility from each only when consumed
together.
17

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Law of Taxation unit -4.pdf