Download CA. Naresh Sheth -

Jaipur Branch of CIRC of ICAI
Event
:
Ek Kadam GST ki Aur
Date & Day
:
26th May, 2017 (Friday)
Subject
:
1) Constitutional Aspects
2) New Taxation Regime – Concepts
3) Challenges Taxable Event (including relevant definitions and schedules)
4) Time of Supply
Venue
:
Branch Auditorium, D-1 Institutional Area, Jhalana Doongari, Jaipur
Presented by
:
CA Naresh Sheth
May 26, 2017
CA Naresh Sheth
1
Important
Constitutional
Amendments
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2
The Constitution (101st Amendment) Act, 2016
Position – post enactment
Present Position
 New Article 246A is inserted empowering (Section 2):
• Central and State Government to make laws with respect
to GST
- this enables both Centre and State to levy tax on goods
and services both
• Parliament has exclusive power to make laws with respect
to GST where supply of goods/services take place in the
course of inter-state trade or commerce
 Article 246 read with Union List (List I of
Seventh Schedule):
• Union does not have power to levy tax on sale of
goods
 Article 246 read with State List (List II of
Seventh Schedule):
• States do not have power to levy tax on:
• In respect of petroleum and petroleum products
[specified in article 279(A)(5)], aforesaid provisions to
apply from date to be notified by GST Council
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 Manufacture of goods (except alcoholic
beverages, opium, narcotic drugs, etc)
 Services
3
The Constitution (101st Amendment) Act, 2016
Position – post enactment
Present Position
Article 366 (12):
Article 366 (12):
Goods definition remains same
‘Goods’ includes all materials, commodities and articles
Article 366(12A) is inserted (Section 14):
Not defined
“Goods and Services Tax” means any tax on supply of
goods, or services or both except taxes on the supply
of the alcoholic liquor for human consumption
Article 366 (26A) is inserted (Section14):
‘Service’ not defined
“Services” means anything other than goods
 Alcoholic liquor for human consumption is specifically excluded from purview of GST
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Specific Products / Sectors – Post GST scenario
Products
GST
Central
Excise
VAT
CST
State
Excise
Input Tax Credit position
Petroleum
products
No
(Till notified
date)
Yes up to
notified
date
(Entry 84 of
List I)
Yes up to
notified
date
(Entry 54
of List II)
Yes
(Entry
92A of
List 1)
No
• Inputs to suffer GST.
• Input GST will not be set-off
against output Central Excise or
VAT liability
• Consumers (B2B) will not be
entitled to input tax credit of
Central Excise or VAT against GST
Tobacco
products
Yes
[Article
246A r.w.
Article 366
(12)]
Yes
(Entry 84 of
List I)
No
(deletion
of Entry
54 of List
II)
Yes??
(Entry
92A of
List I)
No
• Considered as sin goods and will
suffer both GST and Excise
• Input GST will be set off against
output GST.
• Input GST will not be set off
against output excise liability
• Consumers (B2B) cannot take
input tax credit of Central Excise
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Specific Products / Sectors – Post GST scenario
Products
GST
Central
VAT
CST
Excise
Alcoholic liquor for
human consumption
May 26, 2017
No
No
State
Remarks
Excise
Yes
Yes
Yes
• Inputs to suffer GST.
[excluded
(Entry
(Entry
(Entry 51 • Input GST will not be set-off
from GST
54 of
92A of
of List II)
under article
List II)
List 1)
against output State Excise
or VAT liability
366 (12A)
• Consumers (B2B) will not be
defining
entitled to input tax credit
‘goods and
of State Excise or VAT
services tax’]
against GST
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Specific Products / Sectors – Post GST scenario
Products
GST
Central
VAT
CST
Excise
Sale or purchase of
Yes
No
State
Remarks
Excise
No
No
No
Deletion of Entry 92 of List II
Newspapers and
It falls under Article 246A r.w.
advertisement therein
article 366(12A)
Advertisement other
Yes
No
No
No
No
Deletion of Entry 55 of List II
than in newspapers
It falls under Article 246A r.w.
and advertisements
article 366(12A)
broadcast by radio or
television
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7
GST Regime –
Salient Features
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8
Major Indirect Tax Levies in present regime
Central Taxes
State Taxes
Local body Taxes
•
Central Excise Duty
• VAT/Sales Tax & CST
•
Octroi
•
Excise under M&TP Act
• Entertainment Tax
•
LBT
•
Custom Duty
• Luxury Tax
•
Property Tax
• Taxes on lottery, betting and
gambling
•
Entertainment Duty
•
Gram Panchayat Tax
o Basic
o CVD
o SAD
•
Service Tax
•
R&D and other cesses
• State Cesses and Surcharges
• Entry tax
• Stamp Duty
• Electricity Duty
• Profession Tax
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Major Taxes to be subsumed in GST
Central Taxes
State Taxes
Local Body Taxes
•
Central Excise Duty
• VAT/Sales Tax & CST
•
Octroi
•
Additional Excise Duty
• Purchase tax
•
LBT
•
Excise under M&TP Act
• Entertainment Tax
•
Countervailing Duty
• Luxury Tax
•
Special Additional Duty
• Taxes on lottery, betting
•
Service Tax
and gambling
• Entry tax
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Major Taxes to be retained Post-GST
Central Taxes
•
Central Excise on:
o Tobacco products
o Petroleum Products
•
Basic Custom Duty
State Taxes
Local Body Taxes
• State Excise on Alcohol liquor
•
Property Tax
• State VAT on:
•
Entertainment Duty
•
Gram Panchayat Tax
o Alcohol liquor
o Petroleum Products
• Stamp Duty
• Electricity Duty
• Profession tax
• Road tax
• Taxes on Mineral Rights
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11
GST – Model and Philosophy
Meaning
• Broad based and comprehensive levy on goods and services consumed in economy
Dual Model
• Central GST (CGST) to be levied on intra state supplies by Central Government
• State GST (SGST) to be levied on intra state supplies by State Government
Union Territory GST (UTGST) to be levied on intra state supplies by Union Territory
• CGST & SGST or CGST & UTGST would be levied simultaneously on intra-state supply
• Integrated GST (IGST) to be levied on inter state supplies by Central Government and to
distributed between Centre and States or Union Territory
Destination Based
Consumption Tax
• At present VAT is collected and retained by originating state
• Under GST, tax to accrue to the taxing authority which has jurisdiction over the place of
consumption also termed as place of supply
• Supplies imported into country to attract GST
• Supplies exported outside country not to attract GST
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GST – Other Features
Exemptions
• Exemptions under existing service tax legislation are grandfathered under GST
• Exemptions in respect to supply of goods yet to be notified by GST council
GST Audit
• Mandatory GST audit of accounts of registered person whose turnover during financial
year exceeds prescribed limit
• It is in addition to Income Tax audit
Anti-profiteering
measure
• Any reduction in rate of tax on any supply of goods or services or the benefit of input
tax credit shall be passed to recipient by way of commensurate reduction in prices
• Government to constitute an Authority to examine whether reduction in tax rate have
actually resulted in a commensurate reduction in prices
GST Compliance
Rating
• Every registered person to be assigned GST compliance rating score based on his record
of compliance with provisions of the Act
• Such rating to be placed in public domain
• Parameters to determine compliance rating score are yet to be prescribed
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Taxable Event
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Broad Framework of GST
Taxable Event
When to pay
- Supply
- Time of Supply
How much to pay
May 26, 2017
Whom to pay
(Jurisdiction)
- Place of Supply
What compliance to be done
- Valuation
- Registration
- Rate of tax
- Payment
- Input Tax Credit
- Returns
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15
Taxable event in GST Regime vs. Existing regime
Tax
Taxable Event in Existing laws
Service Tax
Provision of Service
Excise Duty
Manufacture of excisable goods
VAT/Sales Tax
Transfer of title in goods within state
CST
Transfer of title in goods outside state
Purchase Tax
Purchase of specified goods
CVD
On import in lieu of excise duty
SAD
On import in lieu of VAT
Entry Tax / LBT
Entry of specified goods in the State for sale, use or
consumption
Taxable Event in GST Regime
Supply of goods or services
or both
Entertainment tax Provision of entertainment
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GST levy – Trigger points
Taxable Person /
Distinct Person
Supply
(outward)
Goods
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Supply
(inward)
Procured from
unregistered
supplier
Services
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Procurement of
specified goods
or services
17
Reverse Charge Mechanism
•
Recipient to discharge GST under
Reverse Charge
Recipient to discharge GST
under RCM as if he is the
person liable for paying
the tax on supply
•
On procurement of
notified goods or
services u/s 9(3) of
CGST Act and
relevant provision of
IGST Act, UTGST Act
and SGST Act
On procurement of
goods or services
from unregistered
supplier u/s 9(4) of
CGST Act and
relevant provision of
IGST Act, UTGST Act
and SGST Act
Recipient to make
payment on his own
account and on own GSTN
number
•
It is not TDS paid on
behalf of supplier
•
Recipient is entitled to ITC
subject to ITC provisions
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18
Taxable person &
Distinct person
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Person [Section 2(84) of CGST Act]
 “Person” includes Individual
HUF
Company
Firm
LLP
AOP or BOI, whether
Corporation established by or
Government company
incorporated or not, in India
under Central, State or
or outside India
Provincial Act
body corporate incorporated
co-operative society registered society as defined under
by or under the laws of a
under any law relating to
the Societies Registration
country outside India
cooperative societies
Act, 1860 (21 of 1860)
Central or state government
every artificial juridical person, not falling within any of the
Local Authority
Trust
preceding sub-clauses
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Taxable Person and Registered Person
 Taxable person means [Section 2(107) of CGST Act]:
•
a person who is registered; or
•
liable to be registered under section 22 or section 24;
 Registered person means [Section 2(94) of CGST Act]:
•
a person who is registered u/s 25 of CGST Act; but
•
does not include a person having a Unique Identity Number
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Distinct Person
 Distinct person u/s 25(4) and (5) of CGST Act:
•
A person having registration in more than one state or union territory to be treated as distinct person in
respect of each such registration
•
Different establishments of same person in more than one state or union territory to be treated as
establishments of distinct persons
 Distinct person means [explanation 1 to section to section 8 of IGST Act]:
•
An establishment in India and any other establishment outside India
•
An establishment in a State or Union territory and any other establishment outside that State
•
An establishment in a State or Union territory and business vertical registered within that state or union
territory
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22
Persons liable to be registered – Section 22
Every supplier
Aggregate turnover exceeds Rs. 20 lakh (Rs 10 lakhs for special category states)
Aggregate Turnover for this section includes:
• all supplies made whether on own his own account or on behalf of all his principals
• supply of goods after completion of job-work by registered job-worker and value
of such goods not to be included in aggregate T/O of registered job worker
Existing assesses
Assesses under excise, service tax, VAT and other laws which are to be subsumed in
GST w.e.f. appointed day
Transferee or successor
Where business is transferred as a going concern w.e.f. date of such transfer or
of business
succession
Transferee of business
In case of amalgamation / demerger by order of HC w.e.f. date on which ROC gives
certificate of incorporation giving effect to order of HC
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Compulsory registration – Section 24
Persons making inter-state supply
Casual taxable person
Persons required to pay tax under RCM
Agent
Input service distributor
Non resident taxable person
Electronic commerce operator liable
Every E-commerce operator
Person who supplies through E-commerce
to pay tax u/s sec 9(5)
operator [other than supplies u/s 9(5)] who
are required to collect tax u/s 52
Every person supplying online
Persons required to deduct
such other person or class of persons as
information and database access or
TDS u/s 51
may be notified by CG or SG on
retrieval services from outside India
recommendation of Council
to unregistered taxable person in
India
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Persons not liable to be registered – Section 23
 Any person engaged exclusively in the business of supplying goods or services or both that are not liable to
tax or are wholly exempt from tax under CGST Act or under IGST Act
 Agriculturist, to the extent of supply of produce out of cultivation of land
•
Agriculturist means an individual or HUF who undertakes cultivation of land [section 2(7) of CGST
Act]:
o By own labour; or
o By the labour of family; or
o By servants on wages payable in cash or kind or by hired labour under personal supervision or
personal supervision of any member of the family
•
Term ‘agriculture’ was earlier defined under RMGL to include floriculture, horticulture, sericulture, raising
of crops, grass or garden produce and grazing
•
Whether ‘cultivation of land’ includes floriculture, horticulture, sericulture, grass or garden produce and
grazing?
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25
May 26, 2017
Aggregate Turnover [Section 2(6) of CGST Act]
Aggregate Turnover
Means
Excludes
Aggregate value of:
•
Taxable supplies
•
Exempt supplies u/s 11
•
Nil rated supplies
•
Non-taxable supplies
•
Export supplies
•
Inter-state supplies
•
Value of inward supply
on which tax is
Exempt Supplies u/s
2(47)
payable under RCM
•
CGST, SGST, UTGST,
IGST and cess
computed on all India basis of person having same PAN
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Supply
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Supply – Broad Concept
 Concept of a supply is broader than a sale :
• Transfer of title in goods is required for Sales
• Supply doesn’t require transfer of title in goods
 Presence of two persons for “taxable supply”:
•
Pre-requisite for VAT and Service tax
•
Not pre-requisite for Excise
•
Will not be a pre-requisite for GST
•
Even self-supplies may be a taxable supply in GST
 Presence of Consideration for “taxable supply”:
•
Pre-requisite for VAT and Service tax
•
Not pre-requisite for Excise
•
Will not be a pre-requisite for GST
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Definition of Supply
 Section 7 defines “Supply” to Include………………….
 Definition of “Supply” is inclusive definition and hence one has to understand normal meaning of Supply
 Apart from what is provided in the section 3, the transactions covered under the general meaning of supply
can also be covered
 Dictionary meanings of “Supply”:
•
“Make(something needed or wanted) available to someone; provide”- Oxford Dictionary
•
“To provide materials, goods and services- an act of providing something” – Cambridge Dictionary
•
“To make (something) available to be used : to provide someone or something with : To make available”Merriam- Webster Dictionary
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Relevant extracts of definition of “Supply” under foreign laws
 Australia GST Act u/s 9 and 10 defines “Supply” to mean:
1)
A supply is any form of supply whatsoever
2)
Without limiting subsection (1), supply includes any of these…………………….
 United Kingdom u/s 5(2) of VAT Act, 1994:
•
Subject to any provisions made by that Schedule and to Treasury orders under sub-sections (3) to (6)
belowa)
“supply” in this Act includes all forms of supply, …………………………………………………
 Malaysian GST Act u/s 4 defines “Supply” to mean:
•
All forms of supply, including supply of imported services, done for a consideration and anything which
is not a supply of goods but is done for a consideration is a supply of services
 Canadian GST Act defines “Supply to mean:
•
Subject to sections 133 and 134, the provisions of property or a service in any manner, including
sale, transfer, barter, exchange, license, rental, lease, gift or disposition
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Supply u/s 7(1) of CGST Act
All forms of supply of Goods or Services or both
Sec. 7(1)(a)
Sec. 7(1)(b)
Sec. 7(1)(c)
Sec. 7(1)(d)
Sale, transfer, barter,
exchange, license, rental,
lease, disposal made or
agreed to be made
Importation of Services
Activities specified
in Schedule - I
Activities to be
treated as supply of
services as referred
in Schedule - II
For consideration
In the course or furtherance
of business
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For consideration
Whether or not in the course
or furtherance of business
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Without
consideration
Excludes Supply u/s 7(2):
• Activities specified in Schedule – III
• Notified supplies made by CG / SG /
Local Authority as public authority
31
‘Consideration’
Consideration [section 2(31) of CGST Act] includes:
 Any payment made / to be made in money or otherwise
 The monetary value of any act or forbearance
 Deposit (refundable or not) to be treated as consideration only when adjusted
against supply
In respect of /
in response to or
for the inducement of the
supply of goods and/or
services
whether by recipient or by
any other person
Consideration excludes:
 Subsidy given by Central or State Government
Issues under deliberation:
•
What is the meaning of term ‘otherwise’? Does it include consideration in kind?
•
Whether mere book entry would amount to payment made ?
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‘Business’
 Business includes [section 2(17) of CGST Act]:
•
Whether or not for pecuniary benefit and irrespective of volume, frequency, continuity or regularity of
following:
•
Trade
Commerce
Manufacture
Profession
Vocation
Adventure
Wager
Or any other similar activity
Supply / acquisition of goods (Including capital assets) and services in connection commencement or
closure of business
•
Provision of facilities / benefits to its members by:

Club

Association

Society

Or any such body
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For subscription /
other consideration
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‘Business’
 Business includes [section 2(17) of CGST Act]:
•
Admission of person(s) to any premises for consideration
•
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 commerce or vocation
•
Services provided by a race club by way of totalisator or a licence to book maker in such club
•
Any activity undertaken by CG or SG or local authority in which they are engaged as public authorities
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Supplies without consideration under Schedule I
 Permanent transfer / disposal of business assets where ITC has been availed on such assets
•
Assets transferred on succession of business,
•
conversion of entity (firm to LLP, company to LLP, firm to company, LLP to company),
•
Amalgamation or merger,
•
Disposal of computer to charitable organization
•
Proprietor/ partners transferring goods for personal use
•
Can GST be levied when ITC was claimed under earlier Law?
 Supply of goods or services between related persons or between distinct persons specified u/s 25 when
made in course or furtherance of business:
•
Branch / Depot transfer
•
Services provided by Head Office/ corporate office to its Branch offices or regional offices
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Supplies without consideration under Schedule I
Supply by employer to employees –
•

gifts not exceeding Rs. 50,000 in value in a financial year shall not be treated as supply
 Supply of goods by or to agent:
•
by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or
•
by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.
 Importation 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.
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36
Schedule II – Matters to be treated as deemed
supply of ‘goods’ or ‘services’ u/s 7
Transaction
Nature of Supply
Clause
Transfer of title in goods
Goods
1(a)
Transfer of:
• rights in goods; or
• undivided share in goods
Service
1(b)
Transfer of title in goods at future date upon payment of full consideration
Goods
1(c)
Lease, tenancy, easement, license to occupy land
Service
2(a)
Lease or letting out of building including commercial, industrial or
residential complex (wholly or partly) for business or commerce
Service
2(b)
Treatment or processing of other’s goods (job work)
Service
3
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Without transfer of title
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37
Schedule II – Matters to be treated as deemed
supply of ‘goods’ or ‘services’ u/s 7
Transaction
Nature of Supply
Clause
Transfer of business assets:
• Transfer / disposal of goods forming part of business asset (with or
without consideration)
• When a person ceases to be a taxable person except when:
 Business transferred as going concern
 Business carried on by a personal representative (deemed to be a
taxable person)
Goods
4(a)
• Business assets put to private use or for any purpose other than business
(With or without consideration)
Service
4(b)
Renting of immovable property
Service
5(a)
Sale of under construction flats / units (money received before CC or First
occupation certificate)
Service
5(b)
Temporary transfer or permitting use or enjoyment of IPR
Service
5(c)
Development, design, programming, customization etc. of IT Software
Service
5(d)
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4(c)
38
Schedule II – Matters to be treated as deemed
supply of ‘goods’ or ‘services’ u/s 7
Transaction
Nature of Supply
Clause
Agreeing to the obligation to:
• Refrain from an act; or
• Tolerate an act or situation; or
• Do an act
Service
5(e)
Transfer of right to use any goods for any purpose whether or not for
specified period for consideration
Service
5(f)
Works Contract including transfer of property in goods
Service
6(a)
Supply of food as a part of service (Outdoor catering and restaurant sale)
Service
6(b)
Supply of goods by an unincorporated association to its members
Goods
7
 Relevance of bifurcating above transactions as goods or services:
• Place of supply
• Time of supply
• Rates
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Schedule III – Activities or transactions not to be treated as
supply
 Services by employee to employer in the course of or in relation to his employment
• Supply of goods by employee to employer – taxable supply
• Supply of goods/ services by employer to employee – taxable supply [not taxable up to Rs. 50,000]
 Services by any Court or Tribunal established under any law for the time being in force (court
includes district court, High Court and Supreme Court)
 Functions or duties performed by:
• Members of Parliament
• Members of State Legislature
• Members of Panchayats
• Members of Municipalities
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40
Schedule III – Activities or transactions not to be treated as
supply
• Members of other local authorities
• any person who holds any post in pursuance of the provisions of the Constitution in that capacity
• 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
 Services of funeral, burial, crematorium or mortuary including transportation of the deceased
 Sale of land and sale of building [subject to clause 5(b) of Schedule II]
 Actionable claims, other than lottery, betting and gambling
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41
Composite Supply

Composite supply means [sec 2(30) of CGST Act] :
•
a supply made by a taxable person to a recipient consisting of two or more 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 the principal supply.
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42
Mixed Supply

Mixed supply means [sec 2(74) of CGST Act] :
•
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
drink 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
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43
Composite Supply & Mixed Supply – Taxability
[Section 8 of CGST Act]

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

A mixed supply comprising two or more supplies shall be treated as supply of that particular supply which
attracts the highest rate of tax
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Definition of ‘Goods’
 Goods means [section 2(52) of CGST Act]:
• Every kind of movable property
• Other than:
- Money [Sec. 2(75)]
- Securities [Sec. 2(101)]
• But includes
Clause 6 of Schedule III:
Actionable claims other than lottery, betting and gambling
are neither to be treated as supply of goods or nor supply
of service
-
Actionable claim [sec 2(1)];
-
Growing crops, grass and things attached to or forming part of land which are agreed to be
severed before supply or under contract of supply
 In addition to above, Schedule II deems certain supply to be that of goods
 Whether electricity is liable to GST?
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45
‘Money’
 Money means [Section 2(75) of CGST Act]:
Indian legal tender
Foreign currency
Cheque
Promissory note
Bill of exchange
Letter of credit
Draft
Pay order
Traveller cheque
Money order
Postal or electronic
remittance
Any other instrument
recognised by RBI
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
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46
‘Actionable claims’
 Actionable claim [Section 2(1) of CGST Act] shall have the same meaning assigned to it in section 3 of
Transfer of Property Act, 1882
 Whether factoring of debts is an actionable claim? Is it taxable?
 Whether winning of lottery is actionable claim? Is it taxable?
 Recently, High Court of Sikkim in case of M/s Future Gaming and Hotels Services Pvt Ltd [2017-TIOL589-HC-Sikkim-ST] upheld the constitutional validity of levy of service tax on lottery services. However, it
struck down the levy on the ground of absence of valuation mechanism for lottery services. Whether this
decision will be valid in GST also?
May 26, 2017
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47
Definition of ‘Service’
 Services means anything other than[section 2(102) of CGST Act]:
Goods
Money
Security
 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
In addition to above, Schedule II deems certain supply to be that of services
May 26, 2017
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48
Definition of ‘Service’
 Whether ‘works contract’, ‘construction contracts’ and other deemed sales can be treated as ‘Service’ when
constitution considers it to be deemed sales under Article 366(29A)?
 Whether Intangible property is ‘Goods’ or ‘Service’ ?
•
Whether distinction between temporary transfer and permanent transfer will still be relevant?
•
Whether permanent transfer of package software, brand, trade mark, copyright, patent, theatrical
rights, non theatrical rights etc. will be supply of ‘Goods’ under GST ?
•
Clause 5(c) of Schedule II includes temporary transfer of Intangible property as supply of ‘service’?
 Whether immovable property (other than land and building) not being goods is now service?
•
Clause 5 of Schedule III provides that sale of land and sale of building (after receipt of CC or first
occupation) are neither supply of goods nor supply of service
•
Whether development right / FSI / TDR, etc. is land?
•
Whether structure / plant embedded in Earth is building?
May 26, 2017
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Post GST - Supply chain
Outside India
Imports
Overseas
Vendor
BCD- Cost**
IGST*
Zero rated
Exports
Maharashtra
Purchase/service
IGST*
Purchase / Service
Vendor
Gujarat
Vendor
Factory
CGST + SGST*
* Cenvatable
** Not cenvatable
*** B2B Cenvatable &
B2C non-cenvatable
Transfer
Transfer
Sale
May 26, 2017
CGST + SGST***
No tax
IGST*
Warehouse
Sale
Customer
Overseas
customer
Retailer
Sale
CGST + SGST*
CGST + SGST*
Distributor
CA Naresh Sheth
Sale CGST
+
SGST***
Agent
Sale
India
Warehouse
CGST + SGST***
Customer
50
Time of Supply
May 26, 2017
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Time of Supply - Meaning
 Time of supply would mean the point at which:
–
•
Supply is deemed to have been made
•
Taxable event occurs
•
Supplier is entitled to charge GST to customer (where contractually agreed)
Above position is confirmed at Q1 of Chapter 5 of FAQs issued by CBEC on 31.03.2017
 Time of supply is relevant to determine:
•
Applicable tax rate
•
Applicability of relevant provisions, rules and notifications
•
Due date for tax payment
May 26, 2017
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52
Point of Taxation in existing vs. GST regime
Tax
Point of Taxation in Existing laws
Point of Supply in GST Regime
Earlier date of:
Service Tax
• Issue of invoice / Completion of service
• Receipt of payment
Excise Duty
Manufacture of goods but payable on removal of goods
from place of removal
VAT / Sales Tax /
Time of sale / time of transfer of title or possession of
Time of supply as determined
CST
goods
u/s 12, 13 and 14 of CGST Act
• Date on which bill of entry is presented - in case goods
are cleared for home consumption
CVD / SAD
• Date on which bill of entry for home consumption is
presented - in case of goods cleared from warehouse
• Date of payment of duty – in any other case
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53
Time of Supply of
Goods
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54
Time Of Supply of Goods – Relevant legal provisions
 Section 12(1) of CGST Act
•
Liability to pay CGST on the goods arises at the time of supply of goods, as determined in accordance
with provisions of this section
 Section 20 of IGST Act
•
Provisions of Section 12 of CGST Act applicable to IGST also and hence all provisions and Rules relating
to time of supply of goods will apply to payment of IGST
 Section 21 of UTGST Act
•
Provisions of Section 12 of CGST Act applicable to UTGST also and hence all provisions and Rules relating
to time of supply of goods will apply to payment of UTGST
May 26, 2017
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55
Time of Supply of Goods – Straight Charge
General provision
for
• normal supply
• Continuous
supply
[Section 12(2)]
Earliest of following dates:
a)
Date of issue of invoice by the supplier or the last date on which he is required
to issue invoice u/s 31; or
b)
Receipt of payment (earlier of entry in books or credit in bank account)
Provided that where the supplier of taxable goods receives an amount up to Rs.
1,000/- in excess of amount indicated in tax invoice, the time of supply , to the
extent of such excess shall be the date of issue of such invoice
Explanation 1
For the purposes of clause (a) and (b), 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
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Time of Supply of Goods - General
 Meaning of ‘date of issue of invoice’:
•
Date of invoice
•
Date on which invoice is posted, couriered or emailed
•
Date on which invoice reaches the customer
•
Any other date
 ‘Advance received against goods supplied will be liable to tax:
•
Supplier may have to keep separate records
•
Issues as to adjustment of advances
•
Blockage of the funds
•
Issue of adjusting GST on refund of advance on cancellation of order
•
Hardship of reconciling financial statements and returns
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Invoice to be issued - Normal supply of goods [section 31(1)]
before or at the time of :
“Removal” in relation to
goods means [section
2(96)]:
a)
•
Dispatch of the goods
for delivery by supplier
or any person acting on
behalf of supplier; or
•
Collection of goods by
the recipient or any
other person acting on
behalf of recipient
A Registered Taxable Person supplying taxable goods shall issue the invoice
Removal of goods for supply to the recipient , where the supply involves
movement of goods; or
b)
in any other case, delivery of goods or making available thereof to the
recipient
issue a tax invoice showing:
• Description
• Quantity
• value of goods
• tax charged
• other prescribed particulars
Government may (on recommendation of GST council) specify the categories of goods or supplies in respect
of which the tax invoice shall be issued in such time and such manner as prescribed
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Time of Supply for sales requiring movement of goods
/ not requiring movement of goods
Issue of
Date of
Last date for
invoice
removal*
issue of invoice
30/09/2017
30/09/2017
01/10/2017
30/09/2017
30/09/2017
01/10/2017
30/09/2017
30/09/2017
Receipt of consideration
Time of Supply
30/09/2017
05/11/2017
30/09/2017
30/09/2017
05/11/2017
30/09/2017
05/08/2017 - Rs. 40,000
05/08/2017 – Rs. 40,000
15/10/2017 - Rs. 60,000
30/09/2017 – Rs. 60,000
05/08/2017 - Rs. 40,000
05/08/2017 – Rs. 40,000
15/10/2017 - Rs. 60,000
30/09/2017 – Rs. 60,000
30/09/2017
30/09/2017
* In case where sale do not require movement of goods, date on which goods are made available to recipient
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Continuous Supply of Goods - Issue of Invoice
[Section 31(4)]
Continuous Supply of Goods:
Where successive statements of accounts or successive payments are
[Section 31(4)]
involved, Invoice to be issued before or at the time of:
o Issue of each such statement; or
o Date of receipt of successive payments
Continuous Supply of Goods means [section 2(32)]:
•
Supply of goods provided or agreed to be provided
•
on continuous or recurrent basis
•
Under a contract
•
Whether or not by means of a wire, cable, pipeline, or other conduit
•
For which supplier invoices recipient on regular or periodic basis
•
Includes supply of such goods as Government may notify in this regard
May 26, 2017
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Time of Supply of Goods – Continuous Supply of goods
 Successive statement of account or successive payments are involved:
Tea vendor, Milk Vendor, Grocery Vendor, Stationery vendor, Water supply, Mahanagar Gas supply, steam
supply, etc where supply is on recurrent basis
Date of invoice
Date of issue of
statement
Receipt
Time of Supply
30/09/2017
30/09/2017
01/11/2017
30/09/2017
30/09/2017
30/09/2017
01/08/2017
01/08/2017
01/11/2017
N.A.
01/11/2017
01/11/2017
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Time of Supply of Goods - Reverse Charge
Earliest of:
Reverse
Charge
[Section 12(3)]
a)
Date of Receipt of goods; or
b)
Date of payment (earlier of entry in books or debit in bank account)
c)
Date immediately following 30 days from the date of issue of invoice, or any other
document, by the supplier
Where it is not possible to determine the time under clause (a),(b) and (c), the time of
supply shall be the date of entry in the books of account of recipient of supply
 Inward records of receipt of goods may have to be maintained
 Advances paid against goods supplied will also trigger RCM
 Whether provision made in books of account (no credit to party account) will trigger RCM?
May 26, 2017
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Time of Supply - Sale on approval or return basis
Sale on
approval or
return basis
a)
Receiver approves goods within 6 months:
•
b)
Earlier of date of approval or date of payment
Receiver does not approves goods within 6 months:
•
Earlier of 6 months from date of removal or date of payment
Invoice to be issued earlier of [Section 31(7)]:
•
Before or at the time when it is known that supply
has taken place (sales conclusion)
•
6 months from the date of removal
May 26, 2017
CA Naresh Sheth
Sale on approval or return basis is
common in articles like:
•
Diamonds
•
Apparels
•
Fashion accessories
63
Time of Supply - Vouchers
Supply of Vouchers
[Section 12(4)]
-
Loyalty voucher
by shops
-
Gift vouchers
-
Shareholders
The time of supply shall be:
a)
where supply is identifiable at issue of voucher – Date of issue of
voucher
b)
In all other cases – Date of redemption of voucher
coupons
Issue:
If tax is paid on issue of voucher but voucher is not redeemed within validity period, what will be tax
implication in such case?
May 26, 2017
CA Naresh Sheth
64
Time of Supply - Residuary provision
Residuary
Provision
[Section 12(5)]
In case it is not possible to determine the time of supply under the
provisions of the sub-section (2),(3) or (4) the time of supply shall be:
a)
Where periodical return has to be filed, date on which return is to be filed
b)
In any other case, date on which GST is paid
 What are the probable cases falling in residuary clause?
•
Probably Schedule I case - permanent transfer or disposal of business asset
•
Probably unaccounted supplies?
May 26, 2017
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65
Time of Supply – Interest, late fee or penalty for delayed
payment for goods
Addition in value of
supply by way of:
[Section 12(6)]
Time of supply shall be date on which supplier receives such addition in
-
Interest
value
-
Late fee
-
Penalty for
delayed payment
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66
Time of Supply of
Services
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67
Time Of Supply of Services – Relevant legal provisions
 Section 13(1) of CGST Act
•
Liability to pay CGST on the goods arises at the time of supply of services, as determined in
accordance with provisions of this section
 Section 20 of IGST Act
•
Provisions of Section 13 of CGST Act applicable to IGST also and hence all provisions and Rules relating
to time of supply of goods will apply to payment of IGST
 Section 21 of UTGST Act
•
Provisions of Section 13 of CGST Act applicable to UTGST also and hence all provisions and Rules relating
to time of supply of goods will apply to payment of UTGST
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Time of Supply of Service
General provision :
• normal supply
• continuous supply
[Section 13(2)]
Earliest of following dates :
a)
When invoice made in time prescribed u/s 31:
• Date of issue of invoice
• Date of receipt of payment (earlier of entry in books or credit in bank)
b)
When invoice is not made in time prescribed u/s 31:
• Date of provision of service
• Date of receipt of payment (earlier of entry in books or credit in bank)
c)
In case where clause (a) or (b) do not apply, the date on which recipient
shows receipt of services in his books of accounts
Where the supplier of taxable services receives an amount up to Rs. 1,000/- in excess of amount indicated
in tax invoice, the time of supply, to the extent of such excess shall be the date of issue of such invoice
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Invoice to be issued – Normal supply of services
General
provision Section 31(2)
A Registered Taxable Person supplying taxable services shall issue a tax invoice:
Either Before or after the provision of service but within the prescribed period*
showing:
• Description
• value of services
• tax charged
• other prescribed particulars
*30 days as
prescribed
in
Invoice Rules
Government may (on recommendation of GST council) specify the categories of services, subject to conditions,
in respect of which:
•
any other document issued in relation to supply shall be deemed to be tax invoice
•
tax invoice may not be issued
May 26, 2017
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Time of Supply of Services – Normal Supply
Date of provision
Last date of issue
of service
of invoice
25/09/2017
24/10/2017
25/09/2017
24/10/2017
25/09/2017
24/10/2017
May 26, 2017
Date of issue of invoice
09/10/2017
(within prescribed time)
11/12/2017
(not within prescribed time)
24/10/2017
CA Naresh Sheth
Date of
payment
Time of Supply
10/09/2017
10/09/2017
30/10/2017
25/09/2017
31/12/2017
24/10/2017
71
Continuous Supply of Services - Issue of Invoice
[Section 31(5)]
Continuous Supply of Services:
Due date of payment is ascertainable from contract:
[Section 31(5)]
o On or before due date of payment
b) Due date of payment is not ascertainable from contract:
o Before or at the time when supplier receives payment
c) Payment is linked to completion of Event:
o On or before date of completion of event
Continuous Supply of Services means [section 2(33)]:
•
Supply of services provided or agreed to be provided
•
on continuous or recurrent basis
•
Under a contract for a period exceeding 3 months with periodic payment obligations; and
•
Includes supply of such service as Government may notify in this regard
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Time of Supply – Continuous Supply of Services
 Examples of continuous supply of service:
• Property rent
• Locker rent
• Annual maintenance contract
• Works contract
• Telecom services
• Sale of under construction units / flats
• Retainership contracts
 Issues and points for consideration:
•
Government is yet to notify “other cases of continuous supply of services”
May 26, 2017
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Time of Supply– Continuous Supply of Services
Due date of payment / Date
Date of issue of
Last date of
of provision of service
invoice
issue of invoice
Date of Receipt
Time of supply
If due date of payment is ascertainable from contract:
27/10/2017
27/10/2017
27/10/2017
05/11/2017
27/10/2017
27/10/2017
20/11/2017
27/11/2017
05/10/2017
05/10/2017
If due date of payment is not ascertainable from contract:
May 26, 2017
01/10/2017
05/11/2017
CA Naresh Sheth
05/11/2017
01/10/2017
74
Time of Supply– Continuous Supply of Services
Due date of payment / Date
Date of issue of
Last date of
of provision of service
invoice
issue of invoice
Date of Receipt
Time of supply
Payment linked to completion of event:
May 26, 2017
25/10/2017
25/10/2017
25/10/2017
07/11/2017
25/10/2017
25/10/2017
15/11/2017
25/10/2017
05/11/2017
25/10/2017
25/10/2017
15/11/2017
25/10/2017
10/09/2017
10/09/2017
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Time of Supply – Cessation of Service Contract
Cessation of
service
contract
Earliest of following dates :
a)
When invoice made in time prescribed u/s 31:
• Date of issue of invoice
• Date of receipt of payment (earlier of entry in books or credit in bank)
b)
When invoice is not made in time prescribed u/s 31:
• Date of provision of service
• Date of receipt of payment (earlier of entry in books or credit in bank)
Where supply of services ceases before completion of supply, Invoice to be issued [Section 31(6)]:
•
When supply ceases and
•
Such invoice to be issued to the extent to supply made before such cessation
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Time of Supply of Service - Reverse Charge
Earliest of:
Reverse
Charge
[Section 13(3)]
a)
Date of payment (earlier of entry in books or debit in bank account)
b)
Date immediately following 60 days from the date of issue of invoice, or any
other document, by the supplier
Where it is not possible to determine the time under clause (a) or (b), the time of
supply shall be the date of entry in the books of account of recipient of supply
In case of ‘Associated Enterprise’ where the supplier is located outside India, time of supply shall be:
 Date of entry in the books of accounts of recipient, or
 Date of payment
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CA Naresh Sheth
whichever is earlier
77
Time of Supply - Vouchers
Supply of Vouchers
[Section 13(4)]
The time of supply shall be:
-
a)
Health club
voucher
vouchers
-
Recharge
vouchers
where supply is identifiable at issue of voucher – Date of issue of
b)
In all other cases – Date of redemption of voucher
Issue:
If tax is paid on issue of voucher but voucher is not redeemed within validity period, what will be tax
implication in such case?
May 26, 2017
CA Naresh Sheth
78
Time of Supply - Residuary provision
Residuary
Provision
[Section 13(5)]
In case it is not possible to determine the time of supply under the
provisions of the sub-section (2),(3) or (4) the time of supply shall be:
a)
Where periodical return has to be filed, date on which return is to be filed
b)
In any other case, date on which GST is paid
 What are the probable cases falling in residuary clause?
•
Probably Schedule I case – transaction between HO and Branch of service provider
May 26, 2017
CA Naresh Sheth
79
Time of Supply – Interest, late fee or penalty for delayed
payment for services
Addition in value of
supply by way of:
[Section 13(6)]
Time of supply shall be date on which supplier receives such addition in
-
Interest
value
-
Late fee
-
Penalty for
delayed payment
May 26, 2017
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80
Change in rate of tax – Section 14
Provision of service
Date of Invoice
Date of receipt
Time of Supply
Before rate change
After rate change
After rate change
Invoice date or receipt date,
whichever is earlier
Before rate change
Before rate change
After rate change
Date of invoice
Before rate change
After rate change
Before rate change
Date of receipt
After rate change
Before rate Change
After rate change
Date of receipt
After rate change
Before rate change
Before rate change
Invoice date or receipt date,
whichever is earlier
After rate change
After rate change
Before rate change
Date of invoice
Same as
Rule 4 of
POTR
Date of receipt of payment:
-
Date of credit in bank account when such credit is after 4 working days from change in effective rate of tax
-
If not then, date when payment is entered in the books of account of supplier
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Words of Caution
 Presentation is based on CGST Act, IGST Act and UTGST Act
 Views expressed are the personal views of faculty based on his interpretation of GST Act
 Presentation is done in educational meeting. Such meeting is arranged with a clear understanding that
neither the Faculty nor Jaipur Branch of CIRC of ICAI will be responsible for any error, omission, commission
and result of any action taken by a member or anyone on the basis of this presentation.
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82
THANK YOU
[email protected]
May 26, 2017
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83