2. Levy and Collection of Tax: Scope of Supply
(1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
(2) Not withstanding anything contained in sub-section (1), –– (a) activities or transactions specified in Schedule III; or
(b) such activities or 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) Subject to the provisions of sub-sections (1) and (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.
8. The tax liability on a composite or a mixed supply shall be determined in the following manner, namely: —
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed
supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.
3. Levy and Collection of Tax: Scope of Supply
9. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services 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 and at such rates, not exceeding
twenty per cent., as may be notified by the 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 central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be
levied with effect from such date as may be notified by the Government on the recommendations of the Council.
(3) 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 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 central 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 Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be
paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce
operator as if he is the supplier liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic
commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also, he does not have a
representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person
shall be liable to pay tax.
4. Composition levy
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, whose
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, an amount calculated at such
rate as may be prescribed, but not exceeding, ––
(a) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer,
(b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of
paragraph 6 of Schedule II, and (c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers, subject to such conditions and
restrictions as may be prescribed:
Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore rupees, as may be
recommended by the Council.
(2) The registered person shall be eligible to opt under sub-section (1), if: —
(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;
(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; and
(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council: Provided that where more than one
registered persons are having the same Permanent Account Number (issued under the Income-tax Act, 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.
5. Composition levy
(3) The option availed of by a registered person under
sub-section (1) shall lapse with effect from the day on
which his aggregate turnover during a financial year
exceeds the limit specified under sub-section (1).
(4) A taxable person to whom the provisions of sub-
section (1) 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. (5) If the proper officer
has reasons to believe that a taxable person has paid
tax under sub-section (1) 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.
6. Composition levy
A. Levy and Collection of GST Under CGST Act. (Section 9)
1. Levy of central goods and service tax [Section 9(1)]:
Under CGST Act, central tax called as the central goods and services tax (CGST) shall be levied on all intra-State supplies of goods or services or both, except
on the supply of alcoholic liquor for human consumption.
It shall be levied on the value determined under section 15 and at such rates, not exceeding 20%, as may be notified by the Government on the recommendations
of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. [Similar rates have been prescribed
under SGST/UTGST]
2. Central tax on petroleum products to be levied from the date to be notified [Section 9(2)]:
The central tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied
with effect from such date as may be notified by the Government on the recommendations of the Council.
3. Tax payable on reverse charge basis [Section 9(3)]:
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.
Further, 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. Tax payable on reverse charge if the supplies are made to a registered person by unregistered person [Section 9(4)]:
The central 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. [Section 9(4) has been deferred till 30.6.2018]
7. Composition levy
5. Tax payable on intra-State supplies by the electronic commerce operator on notified services [Section 9(5)]
As per section 2(45) of the CGST Act, 2017, “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or
platform for electronic commerce.
Further, “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network.
Thus, Electronic Commerce Operators (ECO), like flipkart, uber, makemy-trip, display products as well as services which are actually supplied by some other
person to the consumer, on their electronic portal. The consumers buy such goods/services through these portals. On placing the order for a particular
product/service, the actual supplier supplies the selected product/service to the consumer. 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.
The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid
by the electronic commerce operator (ECO), if such services are supplied through it.
Further, all the provisions of this Act shall apply to such electronic commerce operator (ECO) as if he is the supplier liable for paying the tax in relation to the
supply of such services.
However, where an electronic commerce operator (ECO) does not have a physical presence in the taxable territory, any person representing such electronic
commerce operator (ECO) for any purpose in the taxable territory shall be liable to pay tax.
Where an electronic commerce operator (ECO) does not have a physical presence in the taxable territory and also he does not have a representative in the said
territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
8. Composition levy
The Government vide Notification No. 17/2017 CT (R) dated 28.06.2017 has notified the following categories of services supplied
through ECO for this purpose—
1.services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle;
2.services by way of providing accommodation in hotels, inns, guest houses, clubs, 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 under section 22(1) of the CGST Act.
B. Levy and Collection of GST Under IGST Act. (Section 5)
The provisions under section 5 of the IGST Act are similar to section 9 of CGST Act except—
1.the word CGST has been substituted by IGST under IGST Act
2.under IGST Act, tax called integrated tax is to be levied on all interState supplies and on goods imported into India.
3.maximum rate under section 5(1) of the IGST Act is 40% (i.e. 20% CGST + 20% UTGST).
C. Levy and Collection of GST Under UTGST Act. (Section 7)
The provisions under section 7 of the UTGST Act are similar to section 9 of CGST Act except—
1.the word CGST has been substituted by the word UTGST under the UTGST Act.
2.under UTGST Act, tax called UT tax is be levied on all intra-State supplies,
3.maximum rate 7(1) of UTGST Act is 20%.
9. Time & Value of Supply of Goods under
GST
1. Time of Supply (Sections 12 to 14 of the CGST Act,
2017)
•Time of supply (TOS) is very important concept of GST as it
helps you identify the time at which liability to pay tax to the
Government arises.
•The liability to pay CGST/SGST on the goods and services
shall arise at the time of supply of goods and services, as
determined in accordance with the provisions of section 12 of
the CGST Act (TOS of goods) and section 13 of CGST Act
(TOS of services).
There were frequent changes in the provisions determining the
time of supply in case of receipt of advances in respect of
supply of goods and services. Earlier, advances received in
case of goods were also made taxable. But post the
notifications which were being issued on 13th October 2017 &
15th November 2017, advances in case of goods were not
required to be taxed. But till date any advance received in case
of services is taxable.
10. Time & Value of
Supply of Goods
under GST
A registered person is required to issue tax invoice before or at the time of removal
of goods for the supply to the recipient or delivery of goods or making goods
available to the recipient.
•Supplier shall mean the person supplying the goods and services and shall also
include an agent acting on behalf of such supplier.
•Recipient means:
•Person liable to pay consideration for such goods or services, if
consideration is payable.
•Person to whom goods are delivered or possession is given, if consideration
is not payable.
•Person to whom the services is rendered, if consideration is not payable.
•Time of Supply of Goods is explained in the below diagram:
•The time of supply in respect of reverse charge mechanism of supply of goods
shall be determined as per the provisions of section 12(3) of CGST Act, 2017. It
clearly states that, time of supply of goods under reverse charge shall be earlier of
the following:
•Date of receipt of goods, or
•Date of the payment. It shall be deemed that the payment has been made on
earlier of:
•Payment details are entered into books of account (say cash book, bank
book etc.) of recipient of supply.
•Date of debit in his bank account
•Day immediately following 30 days of issue of invoice by the supplier.
11. Time & Value of
Supply of
Goods under
GST
Why are time place and value of supply important?
Time of supply means the point in time when goods/services
are considered supplied’. When the seller knows the ‘time’, it
helps him identify due date for payment of taxes.
Place of supply is required for determining the right tax to be
charged on the invoice, whether IGST or CGST/SGST will
apply.
Value of supply is important because GST is calculated on
the value of the sale. If the value is calculated incorrectly, then
the amount of GST charged is also incorrect
Time of Supply
Time of supply means the point in time when goods/services
are considered supplied’. When the seller knows the ‘time’, it
helps him identify due date for payment of taxes.
CGST/SGST or IGST must be paid at the time of supply.
Goods and services have a separate basis to identify their
time of supply. Let’s understand them in detail.
12. Time & Value of
Supply of Goods
under GST
Time of Supply of Goods
Time of supply of goods is earliest of:
1. Date of issue of invoice
2. Last date on which invoice should have been issued
3. Date of receipt of advance/ payment*.
For example:
Mr. X sold goods to Mr. Y worth Rs 1,00,000. The invoice was issued on 15th January. The payment was
received on 31st January. The goods were supplied on 20th January.
*Note: GST is not applicable to advances under GST. GST in Advance is payable at the time of issue of the
invoice. Notification No. 66/2017 – Central Tax issued on 15.11.2017
Let us analyze and arrive at the time of supply in this case.
Time of supply is earliest of –
1.Date of issue of invoice – 15th January
2.Last date on which invoice should have been issued – 20th January.
Thus the time of supply is 15th January.
What will happen if, in the same example an advance of Rs 50,000 is received by Mr. X on 1st January?
The time of supply for the advance of Rs 50,000 will be 1st January(since the date of receipt of advance is
before the invoice is issued). For the balance Rs 50,000, the time of supply will be 15th January.
13. Time of
Supply
for
Services
Time of Supply for Services
Time of supply of services is earliest of:
1.Date of issue of invoice
2.Date of receipt of advance/ payment.
3.Date of provision of services (if invoice is not issued within prescribed period)
Let us understand this using an example:
Mr. A provides services worth Rs 20000 to Mr. B on 1st January. The invoice was issued
on 20th January and the payment for the same was received on 1st February.
In the present case, we need to 1st check if the invoice was issued within the prescribed
time. The prescribed time is 30 days from the date of supply i.e. 31st January. The invoice
was issued on 20th January. This means that the invoice was issued within a prescribed
time limit.
The time of supply will be earliest of –
1.Date of issue of invoice – 20th January
2.Date of payment = 1st February
This means that the time of supply of services will be 20th January.
14. Time of
Supply
under
Reverse
Charge
Time of Supply under Reverse Charge
In case of reverse charge the time of supply for service receiver is earliest of:
1.Date of payment*
2.30 days from date of issue of invoice for goods (60 days for services)
*w.e.f. 15.11.2017 ‘Date of Payment’ is not applicable for goods and applies only to
services. Notification No. 66/2017 – Central Tax
For example:
M/s ABC Pvt. Ltd undertook service of a director Mr. X worth Rs. 50,000 on 15th
January. The invoice was raised on 1st February. M/s ABC Pvt Ltd made the payment
on 1st May.
The time of supply, in this case, will be earliest of –
1.Date of payment = 1st May
2.60 days from date of date of invoice – 2nd April
Thus, the time of supply of services is 2nd April.
15. Place of supply
Place of supply
It is very important to understand
the term ‘place of supply’ for
determining the right tax to be
charged on the invoice.
Here is an example:
LOCATION OF
SERVICE
RECEIVER
PLACE OF
SUPPLY
NATURE OF
SUPPLY
GST
APPLICABLE
Maharashtra Maharashtra Intra-state CGST +
SGST
Maharashtra Kerala Inter-state IGST
16. Place of Supply of Goods
Usually, in case of goods, the place of supply is where the goods
are delivered.
So, the place of supply of goods is the place where the ownership
of goods changes.
What if there is no movement of goods. In this case, the place of
supply is the location of goods at the time of delivery to the
recipient.
For example: In case of sales in a supermarket, the place of
supply is the supermarket itself.
Place of supply in cases where goods that are assembled and
installed will be the location where the installation is done.
For example, A supplier located in Kolkata supplies machinery to
the recipient in Delhi. The machinery is installed in the factory of
the recipient in Kanpur. In this case, the place of supply of
machinery will be Kanpur.
17. Place of
Supply
for
Services
Generally, the place of supply of services is the location of the service recipient.
In cases where the services are provided to an unregistered dealer and their location is not available the
location of service provider will be the place of provision of service.
Special provisions have been made to determine the place of supply for the following services:
Services related to immovable property
Restaurant services
Admission to events
Transportation of goods and passengers
Telecom services
Banking, Financial and Insurance services.
In case of services related to immovable property, the location of the property is the place of provision of
services.
18. Examples: Example 1:
Mr. Anil from Delhi provides interior designing services to Mr. Ajay(Mumbai). The
property is located in Ooty(Tamil Nadu).
In this case, place of supply will be the location of the immovable property i.e. Ooty,
Tamil Nadu.
Example 2:
A registered taxpayer offers passenger transport services from Bangalore to Hampi.
The passengers do not have GST registration. What will be the place of supply in this
case?
The place of supply is the place from where the departure takes place i.e. Bangalore
in this case.
19. Value of Supply of
Goods or Services
Value of supply means the money that a seller would
want to collect the goods and services supplied.
The amount collected by the seller from the buyer is
the value of supply.
But where parties are related and a reasonable
value may not be charged, or transaction may take
place as a barter or exchange; the GST law
prescribes that the value on which GST is charged
must be its ‘transactional value’. This is the value at
which unrelated parties would transact in the normal
course of business. It makes sure GST is charged
and collected properly, even though the full value
may not have been paid.
