COMPUTATION OF TAX LIABILITY OF INDIVIDUALS

Q. Mrs. X age 35years, her income from different sources-

a. Income from salary Rs. 6,50,000
b. Income from House property Rs. 7,00,000
c. Long-term capital gains from Land Rs. 2,00,000
d. Income from KBC Rs. 10,00,000
e. LIC contribution Rs. 2,50,000
f. TDS on KBC income @30%
g. Donation for National Defence fund Rs.1,00,000.
h. ( 100% amount eligible for deduction u/s 80 G)

Alternate Minimum Tax (AMT) w.e.f. 2013-14 (sec 115 JC to 115JF)

- Who is liable to pay (AMT)

- Persons other than a company are liable to pay AMT if:
a. He has claimed deduction under sections
80IA,80IAB,80IB,80IC,80ID,80IE,80JJA,80LA,80QQB, 80RRB or 10AA.
b. Income tax payable by him on his total income for a previous year in accordance
with the provisions of ITA is less than the AMT payable for such previous year.
- Exception: An individual or a HUF or an AOP, or a BOI or an artificial juridical person
shall not be liable to pay AMT if adjusted income does not exceed Rs.20 lakh.
- Tax liability: Adjusted total income shall be deemed to be the total income. On the
adjusted total income, the assessee shall be liable to pay tax @18.5%+ education cess @
4%.
 _______

- Illustration: Mr. X
Net profit as per Profit& Loss A/c = 68,00,000
Less: Deduction u/s 10AA(Income of unit in SEZ) = 63,00,000
Profits and gains from business = 5,00,000
Tax Computation under normal provisions:
Tax on Rs. 2,50,000 = Nil
Tax on next 2,50,000 @5% = 12,500
Gross Tax = 12,500
Add: Health and Education cess@4% = 5,00
Net Tax= 13,000

- Tax Computation under AMT:

Computation of Adjusted Total Income:
Total Income = 5,00,000
Add: Deduction u/s 10AA (Income of unit in SEZ) = 63,00,000
Adjusted Total Income = 68,00,000
Computation of AMT:
18.5% of 68,00,000 = 12,58,000
Add: Surcharge @10% = 1,25,800
Total = 13,83,800
Add: Health &Education cess@4% = 55,352
AMT = 14,39,152
Tax liability of ‘X’ is AMT = Rs. 14,39150.
- Mr. ‘X’ will get AMT credit of Rs.14,39,150-13,000 = 14,26,150

Tax credit in respect of tax paid on adjusted total income

1. The tax credit shall be the difference between the tax paid under AMT and the tax
payable on the total income computed under other provisions of the Act. Suppose tax
payable on total income is Rs. 20,000 and tax has been paid under AMT Rs. 50,000.
The tax credit will be allowed Rs. 50,000 – 20,000= Rs. 30,000.
2. The tax credit will be allowed to be carried forward for maximum of 15 A.Y. (w.e.f.
A.Y. 2018-19) succeeding the A.Y. in which the credit becomes allowable.
3. The tax credit will be allowed in the year in which the tax payable on total income is
more than the tax payable under AMT.
4. The set-off will be allowed to the extent of an amount equal to the difference between
the tax payable on the total income and the tax payable under AMT.
5. Suppose c/f tax credit for A.Y. 2020-21 is Rs. 40,000. For A.Y. 2021-22, the tax
payable on total income is Rs. 1,00,000 and tax payable under AMT is Rs. 80,000. Rs.
20,000 can be set-off in A.Y.2021-22 and the assessee will pay Rs. 80,000 only.
6. No interest shall be payable on tax credit.

Income tax applicable to Individual and HUF under new optional tax regime (Section
115BAC).
- A new tax regime for Individual and HUF has been proposed by the Finance Act, 2020 to
tax the income of such assessees at lower tax rates if they agree to forego prescribed
deductions and exemptions under the Income Tax Act.
- Special provision for calculating income of assessees opting for this section is prescribed
under the said section.
Individual or HUF exercising option under section 115BAC
- Not liable to pay AMT
- Availing a new slab rate is one -time non-revocable process.
- For availing this scheme, an individual has to forgo all tax benefits provided for –
a. Leave travel concession
b. HRA
c. Standard deduction
d. Interest on housing loan on self-occupied or vacant property
e. Exemption of Rs. 1500 per minor child in respect of income of minor child-
clubbed in the hand of parent assessee.
f. Deduction provided under section 80C, 80D, 80 E and 80 TTA

Income tax slabs under the new tax regime for FY 2023-24
The differences between the proposed new tax regime for FY 2023-24 and the existing
new tax regime (applicable till FY 2022-23) are as follows:
- Basic exemption limit has been hiked to Rs 3 lakh from Rs 2.5 lakh
- The number of income tax slabs has been reduced from 6 to 5
- The tax rebate under Section 87A has been hiked to taxable income level of Rs 7 lakh
from Rs 5 lakh. The amount of tax rebate has doubled to Rs 25,000 from Rs 12,500
- The highest surcharge rate has been reduced from 37% to 25%
- Standard deduction of Rs. 50,000 introduced for salaried individual and pensioners.

Under the new regime, the income tax slabs announced in the latest Union Budget 2025-
26 are:
• Income up to Rs 4,00,000: Nil
• Income from Rs 4,00,001 to Rs 8,00,000: 5%
• Income from Rs 8,00,001 to Rs 12,00,000: 10%
• Income from Rs 12,00,001 to Rs 16,00,000: 15%
• Income from Rs 16,00,001 to Rs 20,00,000: 20%
• Income from Rs 20,00,000 to Rs 24,00,000: 25%
• Income above Rs 24,00,000: 30%.
• Importantly, those earning up to Rs 12.75 lakh a year (including a standard deduction
of Rs 75,000) will have to pay zero tax during FY25-26.
 COMPUTATION OF TAX LIABILITY OF COMPANY

SEC. 115JB Minimum Alternative Tax (MAT)

- In case of company income tax shall payable shall be higher of the following two
amounts:
1. Tax on total income computed as per the normal provisions of the Act charging at
normal rates and special rates.
2. 18.5% of book profit.

[The rate of MAT has been reduced from 18.5% to 15% Finance Act, 2019]

Sec. 115JAA - Tax credit in respect of tax paid under MAT

- MAT credit available = Tax paid u/s 115JB – Tax payable on the total income under
normal provisions of the Act.
- The amount of tax credit so determined shall be allowed to carried forward and set off
in a year when the tax becomes payable on the income computed under the regular
provisions.
- However, no carry farward shall be allowed beyond the 15th A.Y. immediately
succeeding the A.Y. in which the tax credit becomes allowable.
Finance (No. 2) Act, 2019

- W.e.f. FY 2019-20
a. Domestic company
- an option to pay income tax @ 22%
- Condition- they will not avail any exemption or incentive
- The effective rate of tax for these companies shall be 25.17% inclusive of surcharge &
cess.
- Such companies shall not be required to pay MAT

b. New Manufacturing Domestic Company

- W.e.f FY 2019-20, any new domestic company incorporated on or after 1 st October
2019 making fresh investment in manufacturing an option to pay income tax @ 15%
- Condition- they will not avail any exemption or incentive and commences their
production on or before 31st March, 2023
- The effective rate of tax for these companies shall be 17.01% inclusive of surcharge &
cess.
- Such companies shall not be required to pay MAT

- A company which do not opt for the concessional tax regime and avails tax exemption/
incentive shall continue to pay tax at the pre-amended rate.

- However these companies can opt for the concessional tax regime after the expiry of
their tax holiday/exemption period.
- After the exercise of the option they shall be liable to pay tax @ 22% and option once
exercised cannot be subsequently withdrawn.
- Further, in order to provide relief to companies which continue to avail exemptions/
incentives, the rate of MAT has been reduced from 18.5% to 15%.

ANGEL TAX
 - Who are angel investors?
- Angel investors (also called informal investors, angel funders, private investors, seed
investors or business angels) are affluent individuals who inject capital for startups in
exchange for ownership equity or convertible debt
- These investors invest their money in an entrepreneurial company unlike institutional
venture capitalists, who invest other people’s money.
- Unlike venture capitalists and bankers, many angel investors are not motivated solely
by profit. They may be motivated as such by the enjoyment of helping a young
business succeed as by the money they stand to gain.

What is Angel Tax?

- Introduced in the Finance Act of 2012, the angel tax is aimed at curbing money
laundering through the purchase of shares at a high premium.
- Angel tax of about 30% plus applicable cess is levied on the amount that exceeds the
fair market value of shares issued by unlisted companies, which is treated as income
from other sources.
- Angel tax is levied on investments made by external investors in startups or
companies. To clarify, the entire investment is not taxed – only the amount that is
considered above “fair value” valuations of the startup, classified as ‘income from
other sources’ in the Income Tax Act of India.

Legal Position of Angel Taxation in India

- There is a section 56(2)(viib) of the Income tax act 1961, which states that:-
a. when a closely held company issues equity shares and
b. any investor subscribes for such shares and
c. pays such consideration per share which is above the fair value of such shares,
d. then such excess i.e. (Consideration per share less Fair Value per Share) is to be
treated as income from other sources of such receiver company and
e. Consequently, such company has to pay tax on such excess amount @ 30%
plus cess as applicable.
- This section is the core of Angel Taxation.
- Simply speaking when this section becomes applicable to a closely held company and
such company is a startup company, then tax paid on such excess receipts is termed as
 Angel Tax and Similarly the persons investing in its shares are termed as Angel
Investors.

Eligibility criteria for startup recognition

a. The Start-up should be incorporated as a private limited company or registered as a

partnership firm or a limited liability partnership.
b. An entity shall be considered as a start-up up to 10 years from the date of its
incorporation.
c. Turnover should be less than INR 100 Crores in any of the previous financial years.

Following benefits shall be available to an eligible start-up or its shareholders:

a. Exemption from levy of angel tax under section 56(2)(viib);

b. Deductions under section 80-IAC of the income tax Act;- 100% deduction of
profits for 3 consecutive financial years out of the first 10 years.

Tax Exemption under Section 56 of the Income Tax Act (Angel Tax)

a. The entity should be a recognized Start-up;

b. Aggregate amount of paid up share capital and share premium of the Start-up
after the proposed issue of share, if any, does not exceed INR 25 Crore.

PLACE OF SUPPLY

Time of supply

- The time of supply fixes the point when the liability to charge GST arises.
- Generally, GST is payable when supply is made or when payment is received whichever
is earlier.

Inter-state supplies

- Section 7 of IGST Act

- Supply of goods and services where ‘Location of the supplier’ and ‘place of supply are
in-
 a. Two different States
b. Two different Union territories
c. A state and a Union territory
- Shall be treated as a supply of goods and Services in the course of inter-state trade or
commerce.

Intra-State Supplies

- Section 8 of IGST act

- Supply of goods and services where –The ‘location of the supplier’ and the ‘place of
supply of goods and services are in the same State or same Union territory Shall be
treated as intra-state supply.

Place of Supply

Sec 2(71) - Location of the supplier of services

Location of the supplier of services means-

(a) Where a supply is made from a place of business for which the registration has been
obtained, the location of such place of business;
(b) Where a supply is made from a place other than the place of business for which
registration has been obtained (a fixed establishment elsewhere), the location of such
fixed establishment;
(c) Where a supply is made from more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provisions of the supply; and
(d) In absence of such places, the location of the usual place of residence of the supplier.

Section 2(70)- Location of the recipient of services

Location of the recipient of services means-

(a) Where a supply is received at a place of business for which the registration has been
obtained, the location of such place of business;
(b) Where a supply is received at a place other than the place of business for which
registration has been obtained (a fixed establishment elsewhere), the location of such
fixed establishment;
 (c) Where a supply is received at more than one establishment, whether the place of
business or fixed establishment, the location of the establishment most directly
concerned with the provisions of the supply; and
(d) In absence of such places, the location of the usual place of residence of the recipient.

Place of Supply of Goods

Sec 10 of IGST act - Place of supply of goods other than supply of goods imported into, or
exported from India.

(1) The place of supply of goods, other than supply of goods imported into, or exported from
India, shall be as under,-

(a) where the supply involves movement of goods, whether by the supplier or the recipient or
by any other person, the place of supply of such goods shall be the location of the goods at
the time at which the movement of goods terminates for delivery to the recipient;

Section 10(1)(a)

- Nature of Transaction- Where the supply involves movement of Goods, whether by the
supplier or by the recipient or by any other person,
- Place of Supply- Location of the goods at the time at which the movement of goods
terminates for delivery to the recipient.
- Note: Thus, irrespective of the number of states the goods pass through during the course
of its journey, the state in which the movement of goods terminates for delivery to the
recipient is the place of supply of goods.
- Example- X Ltd. of Mumbai receives order from Y Ltd. of Jaipur for supply of certain
goods. The price quoted by X being inclusive of freight. X arranges for the transportation
of the goods to Jaipur. The delivery of goods is taken by Y at Jaipur.

(b) where the goods are delivered by the supplier to a recipient or any other person on the
direction of a third person, whether acting as an agent or otherwise, before or during
movement of goods, either by way of transfer of documents of title to the goods or otherwise,
it shall be deemed that the said third person has received the goods and the place of supply of
such goods shall be the principal place of business of such person;
Section 10(1)(b)

- Nature of Transaction- Where the goods are delivered by the supplier to a recipient or
any other person on the direction of a third person, whether acting as an agent or
otherwise, before or during movement of goods, either by way of transfer of documents
of title to the goods or otherwise
- Place of Supply-
a. It shall be deemed that the said third person has received the goods; and
b. The place of supply of such goods shall be the principal place of business of
such person.

(c) where the supply does not involve movement of goods, whether by the supplier or the
recipient, the place of supply shall be the location of such goods at the time of the delivery to
the recipient;

Section 10 (1)(c)

- Nature of transaction- Where the supply does not involve movement of goods, whether
by the supplier or the recipient,
- Place of Supply - Location of such goods at the time of the delivery to the recipient.

(ca) where the supply of goods is made to a person other than a registered person, the place
of supply shall, notwithstanding anything contrary contained in clause (a) or clause (c), be
the location as per the address of the said person recorded in the invoice issued in respect of
the said supply and the location of the supplier where the address of the said person is not
recorded in the invoice.

Explanation-For the purposes of this clause, recording of the name of the State of the said
person in the invoice shall be deemed to be the recording of the address of the said person;

(d) where the goods are assembled or installed at site, the place of supply shall be the place
of such installation or assembly;
Section 10(1)(d)

- Nature of transaction- Where the good are assembled or installed at site,

- Place of Supply- Place of such installation or assembly.

(e) where the goods are supplied on board a conveyance, including a vessel, an aircraft, a
train or a motor vehicle, the place of supply shall be the location at which such goods are
taken on board.

Section 10(1) (e)

- Nature of transaction- Where the goods are supplied on board a conveyance, including a
vessel, an aircraft, a train or a motor vehicle,
- Place of Supply- Location at which such goods are taken on board.

Section 10(2)

- Where the place of supply of goods cannot be determined, shall be determined in such
manner as may be prescribed.

Import or Export of Goods

- Sec 11 of IGST Act

Import of goods

- means bringing goods into India from a place outside India.

- All imports are deemed as inter-state supplies – IGST + Applicable custom duties

Export of goods-

- means taking goods out of India to a place outside India.

- Under GST Law, export of goods has been treated as :
a. Inter-state supply
b. Zero rated supply
- Sec.11(a) Goods imported into India – Location of Importer
- Sec. 11(b) Goods exported from India – Location outside India

Place of Supply of Services

Section 12 of the IGST Act - Place of supply of services where location of supplier and
recipient is in India.

(1) The provisions of this section shall apply to determine the place of supply of services
where the location of supplier of services and the location of the recipient of services is in
India.

Section Nature of Transaction Place of Supply

12 (2) General provisions: The place of supply
of services, -
(a) made to a registered person - be the location of such
(b) made to any person other than a person;
registered person-
(i) where the address on record exists - The location of the
recipient
(ii) In other cases - The location of the
supplier of services

12 (3) Services provided in relation to - The location at which the

immovable property- immovable property or
(a) directly in relation to an boat or vessel, as the case
immovable property, including may be, is located or
services provided by architects, intended to be located.
interior decorators, surveyors,
engineers and other related
experts or estate agents, any
service provided by way of grant
of rights to use immovable
property or for carrying out or co-
ordination of construction work;
or
(b) by way of lodging
accommodation by a hotel, inn,
guest house, home stay, club or
campsite, by whatever name
 called, and including a house boat
or any other vessel; or
(c) by way of accommodation in any
immovable property for
organising any marriage or
reception or matters related
thereto, official, social, cultural,
religious or business function
including services provided in
relation to such function at such
property; or
(d) any services ancillary to the
services referred to in clauses (a),
(b) and (c),

- If the location of the immovable - The place of supply shall

property or boat or vessel is be the location of the
located or intended to be located recipient.
outside India.

12(4) Restaurant and catering services, personal The location where the services
grooming, fitness, beauty treatment, are actually performed
health service including cosmetic and
plastic surgery
12(5) Services in relation to training and
performance appraisal to:
(a) a registered person, - The location of such
person
(b) a person other than a registered - The location where the
person services are actually
performed
12(6) Services provided by way of admission to The place where the event is
a cultural, artistic, sporting, scientific, actually held or where the park or
 educational, entertainment event or such other place is located
amusement park or any other place and
services ancillary thereto
12(7) Services provided by way of:
(a) Organisation of a cultural, artistic,
sporting, scientific, educational, or
entertainment event including supply of
services in relation to a conference, fair,
exhibition, celebration, or similar events;
(b) Services ancillary to the organisation
of any of the events or services referred
in clause (a), or assigning sponsorship to
such events,
(i) to a registered person, - The location of such
(ii) to a person other than a registered person;
person
- If event is held in India
- Place where the event is
- If event is held outside India actually held –
- Location of the recipient
12(8) Supply of services by way of
transportation of goods, including by
mail or courier to,
(a) a registered person - The location of such person;
(b) a person other than a registered -The location at which such
person goods are handed over for their
transportation.
However, where the transportation of -The place of destination of such
goods is to a place outside India, goods

12(9) Supply of passenger transportation

service to,—
(a) a registered person - The location of such
 person
(b) a person other than a registered - The place where the
person passenger embarks on the
Where the right to passage is given for conveyance for a
future use and the point of embarkation is continuous journey
not known at the time of issue of right to
passage, the place of supply of such
service shall be determined in accordance
with the provisions of sub-section (2).

12(10) Supply of services on board a The location of the first

conveyance, including a vessel, an scheduled point of departure of
aircraft, a train or a motor vehicle that conveyance for the journey.

12(11) Telecommunication services including

data transfer, broadcasting, cable and
direct to home television services to any
person shall,
(a) in case of services by way of - The location where the
fixed telecommunication line, telecommunication line, leased
leased circuits, internet leased circuit or cable connection or dish
circuit, cable or dish antenna, antenna is installed for receipt of
services;
(b) in case of mobile connection for - The location of billing address
telecommunication and internet of the recipient of services on the
services provided on post-paid record of the supplier of services;
basis,

(c) In cases where mobile connection

for telecommunication, internet
service and direct to home
television services are provided
on pre-payment basis through a
 voucher or any other means,––
(i) through a selling agent or a re-
seller or a distributor of subscriber - Address of the selling agent or
identity module card or re-charge re-seller or distributor as per the
voucher record of the supplier at the time
of supply;
(ii) by any person to the final
subscriber, The location where such
prepayment is received or such
vouchers are sold;

(d) In any other cases

- The address of the recipient as
per the records of the supplier of
services and where such address
is not available, the place of
supply shall be location of the
supplier of services

12(12) Supply of banking and other financial -The location of the recipient of
services, including stock broking services services on the records of the
to any person supplier of services

If the location of recipient of services is -The location of the supplier of

not on the records of the supplier, services.

12(13) Supply of insurance services ––

(a) to a registered person, - Location of such person;
(b) to a person other than a registered - Location of the recipient of
person services on the records of the
supplier of services.

12(14) Advertisement services to the Central Place of supply shall be taken as

Government, a State Government, a being in each of such States or
 statutory body or a local authority meant Union territories and the value of
for the States or Union territories such supplies specific to each
identified in the contract or agreement State or Union territory shall be
in proportion to the amount
attributable to services provided
by way of dissemination in the
respective States or Union
territories as may be determined
in terms of the contract or
agreement entered into in this
regard or, in the absence of such
contract or agreement, on such
other basis as may be prescribed.

Place of Supply
Section 13 of IGST - Place of supply of services where the Location of supplier of service
or the Location of the recipient of services is outside India.

- The provisions of Sec 13 of IGST acts to determine the Import and Export of Services
in various types of Supply of Services.

(1) The provisions of this section shall apply to determine the place of supply of services
where the location of the supplier of services or the location of the recipient of services is
outside India.

A. General Principle- 13(2)

(2) The place of supply of services except the services specified in sub-sections (3) to (13)
shall be the location of the recipient of services:

Provided that where the location of the recipient of services is not available in the ordinary
course of business, the place of supply shall be the location of the supplier of services.

- As per Section 13(2), generally the place of supply of services shall be the location of
the recipient of service.
 - However, if the location of the recipient of service is not available in the ordinary
course of business, the place of supply shall be the location of the supplier of service.

B. Specific Situation. Sec.13(3) to 13(13)

(3) The place of supply of the following services shall be the location where the services are
actually performed, namely:

(a) services supplied in respect of goods which are required to be made physically available
by the recipient of services to the supplier of services, or to a person acting on behalf of the
supplier of services in order to provide the services:

Provided that when such services are provided from a remote location by way of electronic
means, the place of supply shall be the location where goods are situated at the time of
supply of services:

Provided further that nothing contained in this clause shall apply in the case of services
supplied in respect of goods which are temporarily imported into India for repairs and are
exported after repairs without being put to any other use in India, than that which is required
for such repairs;

- Section 13(3)(a) deals with : Services supplied in respect of goods that are required to
be made physically available by the recipient.
- The intention of this section is “Where the services are performed by the supplier of
services on the goods that are made available by the recipient of services or any
person acting on his behalf, then the place of supply where the services are performed
shall be the place of supply. However, if the services are performed from a remote
location through electronics means, the place of supply shall be the place where the
goods were situated.
- This provision does not cover situations where the goods are imported temporarily
into India for repairs and are exported after repairs.
- Where the seller is provided in more than one location, including a location in taxable
territory its place of supply shall be the location in the taxability territory as per
Sec.13(6) of IGST Act,2017.
Specific Situation: Section 13(3)(b): Services supplied to an individual which require
physical presence.

(b) services supplied to an individual, represented either as the recipient of services or a

person acting on behalf of the recipient, which require the physical presence of the recipient
or the person acting on his behalf, with the supplier for the supply of services.

- This section covers the scenario where the services supplied to an individual,
represented either as the recipient of service or a person acting on behalf of the
recipient, which require the physical presence of the receiver or the person acting on
behalf of the recipient, with the supplier for the supply of the service.
- Where the services provided in more than one location , including a location in
taxable territory its place of supply shall be the Location in the taxable territory as per
Sec.13(6) of IGST Act, 2017.

Specific Situation: Section 13(4) - Supply of service in relation to Immovable Property”.

(4) The place of supply of services supplied directly in relation to an immovable property,
including services supplied in this regard by experts and estate agents, supply of
accommodation by a hotel, inn, guest house, club or campsite, by whatever name called,
grant of rights to use immovable property, services for carrying out or co-ordination of
construction work, including that of architects or interior decorators, shall be the place
where the immovable property is located or intended to be located.

- This section defines about the cases where the place of supply will be the place where the
immovable property is located or is intended to be located:-
a. Services supplied directly in relation to an immovable property including
services supplied in this regard by experts and estate agents,
b. Supply of hotel accommodation by a hotel, inn, guest house, club or campsite,
c. Grant of rights to use immovable property,
d. Services for carrying out or co-ordination of construction work including
architects or interior decorators,
- Where the service is provided in more than one location including a location in taxable
territory its place of supply shall be the location in the taxable territory as per Section
13(6) of IGST Act, 2017.
Specific Situation: Section 13(5) - Supply of service in relation to admission to events

(5) The place of supply of services supplied by way of admission to, or organisation of a
cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration,
conference, fair, exhibition or similar events, and of services ancillary to such admission or
organisation, shall be the place where the event is actually held.

- This section covers services by way of admission to or organization of, a cultural, artistic,
sporting, scientific, educational or entertainment event to celebration, conference, fair,
exhibition or similar events and of services ancillary to such admission shall be the place
where such event is actually held.
- Where the service is provided in more than one location including a location in taxable
territory its place of supply shall be the location in the taxable territory as per section
13(6) of IGST Act,2017.

Specific Situation: Section 13(6) and 13(7) - deals with Supply of services as referred in
section 13(3) to 13(5) is supplied both in foreign countries and in India.

(6) Where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is
supplied at more than one location, including a location in the taxable territory, its place of
supply shall be the location in the taxable territory.

(7) Where the services referred to in sub-section (3) or sub-section (4) or sub-section (5) are
supplied in more than one State or Union territory, the place of supply of such services shall
be taken as being in each of the respective States or Union territories and the value of such
supplies specific to each State or Union territory shall be in proportion to the value for
services separately collected or determined in terms of the contract or agreement entered
into in this regard or, in the absence of such contract or agreement, on such other basis as
may be prescribed.

- In the above cases “the place of supply “is Location in India.

Specific Situation: Section 13(8) - supply of services by Banking Companies, NBFC,

Intermediaries etc.,

(8) The place of supply of the following services shall be the location of the supplier of
services, namely:
(a) services supplied by a banking company, or a financial institution, or a non-banking
financial company, to account holders;

(b) intermediary services;

(c) services consisting of hiring of means of transport, including yachts but excluding
aircrafts and vessels, up to a period of one month.

- These following services are covered in the above services.

a. Non-Banking financial company to their account holders,
b. Intermediary services,
c. Services consisting of hiring of means of transport including Yachts but
excluding aircrafts and vessels, up to a period of one month.
- In the above cases “The Place of Supply” is Location of service Providers.

Specific Situation: Section 13(9) of IGST Act,2017- Supply of services by way of

transportation of goods other than courier and mail, where the location of the service
provider or service recipient is outside India.

(9) The place of supply of services of transportation of goods, other than by way of mail or
courier, shall be the place of destination of such goods.

- In the above case “Place of supply” is- Destination of the goods

- GST Council in its 49th meeting- Place of supply – location of the recipient of services
[ Finance Act- 2023]

Specific Situation: Section 13(10) - Supply of passenger transportation services

(10) The place of supply in respect of passenger transportation services shall be the place
where the passenger embarks on the conveyance for a continuous journey.

- The place of supply - place where the passenger embarks on the conveyance for a
continuous journey

Specific Situation: Section 13(11) - Supply of services on board a conveyance.

(11) “Place of supply of services provided on board a conveyance during the course of a
passenger transport operation including services intended to be wholly or substantially
consumed while on board shall be the first scheduled point of departure of that conveyance
of the journey” i.e. “Location from where the conveyance started its journey”.

Specific Situation: Section 13(12) - services provided for online information and database
access or retrieval services” OIDAR

(12) The place of supply of online information and database access or retrieval services shall
be the location of the recipient of services.

- In the above case the place of supply of service shall be the location of recipient of
service.
- Explanation : For the purpose of this sub-section, person receiving such services shall be
deemed to be located in the taxable territory if any two of the following non-contradictory
conditions are satisfied , they are”:-
a. The location of address presented by the recipient of service via internet is in
taxable territory,
b. The credit card or debit card or store value card or charge card or smart card or
any other card by which the recipient of service settles payment has been issued in
the taxable territory,
c. The bill address of recipient of service is in the taxable territory,
d. The internet protocol address of the device used by the recipient of service is in
the taxable territory,
e. The bank of recipient of service in which the account used for payment is
maintained is in the taxable territory,
f. The country code of the subscriber identity module i.e. SIM Card, used by the
recipient of service is of taxable territory,
g. The location of the fixed land line through which the service is received by the
recipient is in taxable territory.

Meaning of “Online information and database access or retrieval services under IGST
Act, 2017
- As per section 2(17) of IGST Act, 2017, Online information and data base access or
retrieval services means services whose delivery is mediated by information technology
over the internet or an electronic network and the nature of which renders their supply
essentially automated and involving minimal human intervention and impossible to
ensure in the absence of information technology and includes electronic services such as:-
a. Advertising on the internet,
b. Providing cloud services,
c. Provision of e-books, movie, music, software and other intangibles via
telecommunication networks or internet,
d. Providing data or information, retrievable or otherwise to any person, in electronic
form through a computer network,
e. Online supplies of digital content i.e. movies, television shows, music etc.,
f. Digital data storage, and
g. Online gaming.

Specific Situation: Section 13(13) - Power of Central Government

(13) In order to prevent double taxation or non-taxation of the supply of a service, or for the
uniform application of rules, the Government shall have the power to notify any description
of services or circumstances in which the place of supply shall be the place of effective use
and enjoyment of a service.

GST REGISTRATION

- Every person who is registered under existing indirect laws being subsumed in GST
- Every person whose turnover in a year exceeds Rs. 40 lakhs ( Rs. Twenty lakhs for
special category states)- [Supply of Goods]
- Every person whose turnover in a year exceeds Rs. 20 lakhs ( Rs. Ten lakhs for special
category states)- [Supply of Services]
- Voluntary registration permitted even if no liability.
- Registration (GSTIN) to be granted State-wise.
- PAN mandatory for GSTIN
- Separate registration permitted for multiple business verticals in a State.
- Single registration for IGST/CGST/SGST/UGST

Mandatory Registration (irrespective of threshold)

- Persons making inter-State taxable supply

- Persons required to pay tax under reverse charge
- Casual and non-resident taxable persons
- E-Commerce operator /Those required to collect TDS
- Persons supplying goods through e-commerce operator
- Persons making supplies on behalf of a registered taxable person
- Input Service Distributer
- Every person supplying online information and data base access or retrieval services
from a place outside India to a person in India, other than a registered person

When to Register

- With in 30 days from the date from the date of liable to registration.
- In case casual taxable person or non-resident taxable person at least 5 days prior to the
commencement of the business.

Complete Online Document Submission & Application Tracking

- Filing of Application for GST Registration

- Secure GST Identification Number
- Dedicated manager to process your GST registration end to end
- Completely Online – No need to visit office

Documents Required for GST Registration

 - PAN of the Applicant
- Aadhaar card
- Proof of business registration or Incorporation certificate
- Identity and Address proof of Promoters/Director with Photographs
- Address proof of the place of business
- Bank Account statement/Cancelled cheque
- Digital Signature
- Letter of Authorization/Board Resolution for Authorized Signatory

Penalty for not obtaining GST registration

- An offender not paying tax or making short payments (genuine errors) has to pay a
penalty of 10% of the tax amount due subject to a minimum of Rs.10,000.
- The penalty will at 100% of the tax amount due when the offender has deliberately
evaded paying taxes

COMPOSITION SCHEME

- Composition Scheme is a simple and easy scheme under GST for taxpayers.
- Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of
turnover.
- This scheme can be opted by any taxpayer whose turnover is less than Rs. 1.5 crore.

Who can opt for Composition Scheme

- A taxpayer whose turnover is below Rs 1.5 crore can opt for Composition Scheme.
- In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakh.
- Turnover of all businesses registered with the same PAN should be taken into
consideration to calculate turnover.

Who cannot opt for Composition Scheme

- The following people cannot opt for the scheme:

a. Taxpayer supplying exempt supplies.
b. Supplier of services other than restaurant related services
 c. Manufacturer of ice cream, pan masala, or tobacco
d. Casual taxable person or a non-resident taxable person
e. Businesses which supply goods through an e-commerce operator

GST rates for a composition Scheme

Composition Scheme under GST for Service Providers

- The Composition Scheme under GST for service providers provides a new tax
structure offering a set tax rate of 6% with 3% CGST and 3% SGST.
- The composition scheme is open to independent service providers as well as mixed
suppliers of products and services with a prior fiscal year’s annual turnover of up to
Rs. 50 lakh.

GST ON E-COMMERCE

- Sec. 2(44) of the CGST Act, 2017 - Electronic Commerce means the supply of goods
and services or both, including digital products over digital or electronic network.
- No physical presence of e-commerce operator in the taxable territory- Representative
liable to tax.
- No physical presence of e-commerce operator in the taxable territory and also does
not have a representative in the said territory- E-commerce operator shall appoint a
person in the taxable territory for the purpose of paying tax.

E-commerce operator

- Sec. 2(45) of the CGST Act, 2017 E-commerce operator to mean any person who
owns, operates or manages digital or electronic facility or platform for electronic
commerce.

Every E-commerce transaction involves below 3 parties:

 a. Seller
b. Buyer
c. ECO i.e. E-commerce Operator

E-commerce transaction- Two models

Registration under the Goods and Service Tax Act, 2017

- Under Section 24 (ix) of the CGST Act, 2017 every person supplying goods or
services through electronic commerce operators is required to be compulsorily
registered, without any threshold exemption limit.
- However, the Government has power to exempt specified suppliers from registration
and moreover, Vide Notification No. 65/2017-C.T., dated 15-11-2017; the Central
Government, exempted persons making supplies of services, other than supplies
specified under sub-section (5) of section 9 of the said Act through an electronic
commerce operator and having an aggregate turnover, to be computed on all India
basis, not exceeding an amount of twenty lakh rupees in a financial year.

Goods and Service Tax Act, 2017 on the E-commerce transactions:

- Section 9(5) of the CGST Act, 2017 which deals with the chargeability of some
aspects of e-commerce transactions as per this section government through notification
specify categories of services specify the tax on 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.
- Three services, namely (i) Motor Cab (ii) Hotels and accommodation and (iii)
Housekeeping services have been notified under Section 9(5) of the CGST Act, 2017.

Who is liable to pay GST on E-commerce

- In case of services notified under Section 9(5) of CGST Act, 2017 provided through
e-commerce operator then in that case e-commerce operator is liable as if he is a
supplier of the service even if payment is not directly received by the e-commerce
operator.
- In rest of the cases suppliers of goods or services as the case may be liable to pay the
GST on such supply.
- Liability in case where Commission Charged from Suppliers by the e-commerce
operator then, supplier i.e. operator is liable for GST and normal provision shall apply
in this particular case, supplier will issue invoice to the receiver for using its service
and shall levy GST on such supply.

GST SET OFF CHAIN

- Manufacturer purchase goods from other State for Rs. 100 and on which IGST
paid@10%= 10
- Manufacture:
a. Purchase value of Input= 100, Value added = 30
b. GST on out put 130 @10%= 13
c. Net GST= Out put – Input tax credit (13-10 =3)
- Wholesaler:
a. Purchase value of Input= 130, Value added = 20
b. GST on out put 150 @10%= 15
c. Net GST= Out put – Input tax credit(15-13 =2)
- Retailer :
a. Purchase value of Input= 150, Value added = 10
b. GST on out put 160 @10%= 16
 c. Net GST= Out put – Input tax credit(16-15 =1)
- Ultimate Output Liability recovered from consumer

Utilization of credit

- Utilization of IGST- IGST and the remaining amount, if any may be utilized towards
the payment of CGST and SGST, in that order.
- Utilization of SGST- SGST and the remaining amount, if any may be utilized towards
the payment of IGST.
- Utilization of CGST- CGST and the remaining amount, if any may be utilized towards
the payment of IGST

Transitional Provisions

- Existing taxpayers to be issued Provisional Registration valid for 6 months (extendible)

- Upon furnishing of prescribed information, final RC to be granted
- Cenvat credit/VAT carried forward in return allowed as ITC under GST
- Un-availed Cenvat/VAT credit on capital goods, not carried forward in return, shall also
be allowed as ITC under GST
- Eligible duties and taxes in respect of inputs held in stock permissible as credit to
registered persons
- Eligible duties and taxes in respect of inputs held in stock available as credit to taxable
person switching over from compounding
- Transitional credit available generally only if both laws permit and invoice is not more
than 12 months old
- Proceedings under earlier law to be conducted under old law

RETURNS PROCESS UNDER GST

Why Returns?

- Means of compliance verification

- Mode for transfer of information to tax administration
- To declare tax liability for a given period
- Providing necessary inputs for taking policy decision

Features of Tax Returns in GST

- Based on transactions – Invoice based

 (GST returns are invoice-wise, not just summary totals.)
- Designed for system-based matching of Input Tax Credit and other details (import,
export etc.)
GST returns are designed for automated cross-verification of data between:
Supplier’s outward supply (GSTR-1), Recipient’s inward supply (GSTR-2B or
GSTR-3B), Imports, Exports (from ICEGATE data)
- Auto-population from details of outward supplies
(Once the supplier files GSTR-1 (details of outward supplies), the buyer’s return gets
auto-populated in GSTR-2B (static) and partially in GSTR-3B (summary).
- Auto-reversal of ITC in case of mismatch
- Concepts of ledgers – cash, ITC and liability
In the GST portal, every registered person has three electronic ledgers:
a. Electronic Cash Ledger – for tax payments made in cash.
b. Electronic Credit Ledger – for ITC available from purchases.
c. Electronic Liability Ledger – for tax, interest, late fee, penalty liabilities.
System automatically adjusts credit and cash against liabilities during return filing.
- No revised returns – changes through rectifications and reported in the return for the
month in which error detected
GST does not allow filing a “revised return” like in VAT or income tax.
Correction Mechanism: Errors or omissions are rectified in the return of the month in
which the error is noticed.
Example: If you forgot to include an invoice in January, and realize it in March, you
include it in March’s return.
1. GSTR-1 Return
- Information with regard to outward supplies of goods and services shall be required to
be reported under the aforesaid return, in simple words once can say that all sales
transaction during the period whether monthly or quarterly is to be reported.
- Apart from this all credit as well as debit notes are also required to be reported under
this return.
- GSTR-1 return is required to be filed by normal taxpayers monthly.
- However, normal taxpayers having turnover up to Rs.1.5 crores in the previous
financial year, can file it on a quarterly basis.

- Statement of Outward Supplies

 a. What information?
b. Basic details to be filed by 10th of the next month- can be easily done by a
computer
c. Invoice level details; GSTIN of recipient
d. Invoice details – Number, date, HSN/SAC, ….Value, Taxable value…. POS
e. Tax – IGST, CGST, SGST/UTGST – Rate and Tax amount
- What is not required to be uploaded?
a. Invoice level information for B2C invoice < Rs. 2.5 lacs
b. Consolidated information of all B2C supplies sufficient
c. HSN/SAC ….. < Rs.1.5 crore

2. GSTR-2A Return
- GSTR-2A return is an auto-populated return which contains details of all inward
supplies of goods and services (Purchases made from registered suppliers during a tax
period).
- All data which is filled in GSTR 1 return will be automatically be arise in GSTR-
2A return here you can tally the details to get the inputs for that specified period.

GSTR 3

- Auto-populated based on GSTR-1 and GSTR-2

Outward Supplies

a. All B2B inter and intra state supplies

 b. All B2C inter-State supplies above the value of Rs. 2.5 lacs
c. Exports
d. Revision of tax of previous periods

Inward Supplies

a. Inter and intra state supplies received

b. Imports
c. Amendment to tax of previous periods
d. Credit to ITC Ledger

3. GSTR-3B Return
- In order to remove the hardship to all the taxpayer, GSTR -3B Return was
introduced here a summary return is required to be filed by the registered
taxpayer where information with regard to inward, outward supplies, input and
tax liabilities.
- As of now the return shall be filed within due date and if not filled then taxpayer is
required to pay late fees.

4. GSTR-4/CMP-08 return
- GSTR-4 return is a return which is filed by registered taxpayers who have opted for
the Composition Scheme as provided under GST Act.
- CMP-08 return has replaced the GSTR-4 return.
- It shall be filed by the taxpayer who has opted for composition scheme. The return
shall be filed quarterly.

5. GSTR-5 return
- GSTR-5 return is a return which shall be filed by the non-resident foreign taxpayers
(NRF taxpayer), who are registered under GST Act and do business in India.
- The return shall be filed monthly where information with regard to outward supplies
made, inward supplies received, credit/debit notes, tax liability and taxes paid shall be
filed.
6. GSTR-6 return
- GSTR-6 return is a monthly return which shall be filed by an Input Service
Distributor (ISD).
- ISD shall fill details with regard to the input tax credit which is being received and
distributed by them.

7. GSTR-7 return
- GSTR-7 return is also a monthly return which shall be filed by TDS (Tax deducted
at source) deductor under GST Act.
- Information with regard to TDS deducted, TDS liability payable and refund are
require to be shown in this return.

8. GSTR-8 return
- GSTR-8 return is a monthly return which shall be filed by E-Commerce Operators
registered under the GST Act, they collect Tax at source (TCS).
- The return contains details with regard supplies made through the platform of E-
commerce operator, and the TCS collected on the same.
- The GSTR-8 return is to be filed on a monthly basis.

9. GSTR-9 return
- GSTR-9 return is an annual return which shall be filed by all taxpayers registered
under GST.
- The information with regard to all outward supplies made, inward supplies pertaining
to previous year is required to be filed.
- It can be said that the return is a consolidated return of all monthly or quarterly
returns.
- It is to be filed by all the registered taxpayer except the taxpayer as provided under the
Act.

10. GSTR-9A return

- GSTR-9A return is an annual return for the taxpayer who opted for Composition
Scheme under the GST Act in any financial year.
- It can be said that it is a consolidated return for all the monthly/quarterly returns filed
during that financial year.

11. GSTR-10 return

 - GSTR-10 return is a return which is filed by a taxable person whose registration has
been cancelled or if he has surrendered it.
- It is also known as final return and the same has to be filed within a period of 3
month.

12. GSTR-11 return

- GSTR-11 return is a return which is to be filed by a registered person to whom a
Unique Identity Number (UIN) has been issued, this is in order to get a refund under
GST Act for the goods and services purchased by them in India.

Standardized forms/ certificates

- Form GSTR-1 -Details of outward supplies of taxable goods or services effected

- Form GSTR-1A - Details of outward supplies as added, corrected or deleted by the
recipient
- Form GSTR-2 - Details of inward supplies of taxable goods and/or services
claiming input tax credit
- Form GSTR-2A - Details of inward supplies made available to the recipient on the
basis of FORM GSTR-1 furnished by the suppliers
- GSTR-3 - Monthly return on the basis of finalization of details of outward supplies
and inward supplies
- GSTR-3A - Notice to a registered taxable person who fails to furnish return
- Form GSTR-4 - Quarterly Return for compounding Taxable persons
- Form GSTR-4A - Details of inward supplies made available to the recipient
registered under composition scheme on the basis of FORM GSTR-1 furnished by
the supplier
- Form GSTR-5 - Return for Non-Resident foreign taxable person
- Form GSTR-6 - ISD return
- Form GSTR-6A - Details of inward supplies made available to the ISD recipient on
the basis of FORM GSTR-1 furnished by the supplier
- Form GSTR-7 - Return for authorities deducting tax at source
- Form GSTR-7A - TDS Certificate
 - Form GSTR-8 - Details of supplies effected through e-commerce operator and the
amount of tax collected
- Form GSTR-9 - Annual return
- Form GSTR-9A- Simplified Annual return by Compounding taxable persons
registered under section 8
- Form GSTR-9B - Reconciliation Statement
- Form GSTR-10 - Final return
- Form GSTR-11 - Details of inward supplies to be furnished by a person having UIN

Correction in returns

- No Revision of returns
a. As per the return taxes have already been paid and fund transfers already settled
b. No significance as the basis now is individual transaction
- All changes through rectifications reported in subsequent returns
- If an invoice has been left out in GSTR-1 or GSTR-2 : can be uploaded in subsequent
returns but to pay interest for any tax not paid on this account
- If any invoice has been wrongly entered but remains unmatched – can be amended in
subsequent returns
- Post transaction changes to be done through debit or credit notes
- Other details like B2C supplies can be amended in subsequent returns
- Delayed uploading coupled with payment of interest
- All changes, credit or debit notes to be carried out before September of the next financial
year - To enable any auto-reversal before Annual Return

Annual Return

- Annual summary of all transactions

- Accounts to be certified by Chartered Accountant etc. if turnover more than Rs. 2 Crore
- Personal Details
- Details of Expenditure
a. Purchases – goods/services – intra/inter state
b. Imports
- Details of Income
a. Supplies – goods/services – intra/inter state
b. Exports
- Not to be filed by ISD, TDS Deductor, Casual Taxpayer, and Non resident taxpayer

First and Final Returns

- First Return- Required when the liability to register and pay tax arose before grant of
registration
- Final Return- On closure of business/Reversal of credit on goods in stock

REFUNDS

- Time limit for claiming refund enhanced 2 years from the relevant date.
- Refund of Input tax Credit allowed in case of exports or where the credit accumulation is
on account of inverted duty structure.
Inverted Duty Structure- This occurs when:
a. Tax rate on inputs > Tax rate on output (finished goods or services).
b. Leads to accumulated credit in the Electronic Credit Ledger, which cannot be used.
- Refund shall be granted within 60 days from the date of receipt of application.
- In case of refund claim on account of exports, 90% of the claim can be given immediately
within seven days on provisional basis.
- No need to furnish evidence against unjust enrichment, if the refund claim is less than Rs.
2 lakhs. Self-certification would suffice.
- Interest payable after 3 months from the date of receipt of application till the date of
refund.

ADVANCE RULINGS

An advance ruling helps the applicant in planning his activities, which are liable for payment
of GST, well in advance. It also brings certainty in determining the tax liability, as the ruling
given by the Authority for Advance Ruling is binding on the applicant as well as Government
authorities. Further, it helps in avoiding long drawn and expensive litigation at a later date.
Seeking an advance ruling is inexpensive and the procedure is simple and expeditious. It thus
provides certainty and transparency to a taxpayer with respect to an issue which may
potentially cause a dispute with the tax administration. A legally constituted body called
Authority for Advance Ruling (AAR) can give a binding ruling to an applicant who is a
registered person or is desirous of obtaining registration. The advance ruling given by the
Authority can be appealed before an Appellate authority for Advance Ruling (AAAR).

“Advance ruling” means a decision provided by the Authority or the Appellate Authority to
an applicant on matters or on questions specified in 97(2) or 100(1) of the CGST Act, 2017,
in relation to the supply of goods or services or both being undertaken or proposed to be
undertaken by the applicant.

- An applicant can apply for advance ruling even before taking up a transaction (proposed
supply of goods or services) or in respect of a supply which is being undertaken.
- The only restriction is that the question being raised is already not pending or decided in
any proceedings in the case of applicant.
- Advance ruling to be issued within 90 days.
- Advance ruling shall be binding on concerned officer or jurisdictional officer in case of
applicant and only on the applicant
- Advance ruling to continue unless there is a change in law or facts.

Issues on which ruling can be asked?- 97(2)

c. Classification
d. Applicability of a notification
e. Determination of time and value of supply
f. Admissibility of input tax credit of tax paid or deemed to have been paid
g. Determination of the liability to pay tax on any goods or services under the Act
h. Whether applicant is required to be registered under the Act;
i. Whether any particular thing done by the applicant with respect to any goods or
services amounts to or results in a supply of goods or services.

BENEFITS OF GST
Flaws of GST Model

- Major flaw of this model is, Local Dealers have to pay CGST in addition to SGST.
- In Addition to this, CGST mainly represents the Excise/service tax and SGST mainly
represents the VAT portion but, because of ‘No differentiation between Goods and
Services’ service supply within the state would attract SGST as GST is levied at each
stage in the supply chain and Assessee have to Pay CGST as well SGST.
- The issue which still needs to be resolved are, the revenue sharing between States and
Centre, and a framework for exemption, thresholds and composition.

These slides are to be read in the lights of –

a. The CGST Act, 2017

b. The IGST Act, 2017
c. The UTGST Act, 2017
d. The GST (Compensation to States) Act, 2017
e. The CGST Rues, 2017
f. Recent Notifications and Circulars
 E-WAY BILL

- E-way bill is an electronic permit or electronic generated document for movement of

goods from one place to another place which is to be generated on the E-way bill portal
i.e. on [Link].

When should E-way Bill be generated?

- If the value of goods of consignment is more than Rs. 50,000/-

Exceptions:

- specified goods meant for Job work,

- goods meant for export with Customs seal from factory to Port, airport, ICD,
- imported goods,
- goods sent on approval basis,
- exhibition or fairs purposes,
- removal for testing,
- removal from factory to weighbridge for weighment of goods and back to factory up
to 20 kms.,
- inward supply from unregistered person,
- Sales return,
- For own use and exempted goods.

E-way Bill needs to be generated mandatory even if the value of consignment of goods is
less than Rs. 50,000 where –

1. Movement of goods in inter-state by principal to the Job-worker;

2. Handicraft goods are transported from one State or Union territory to another State or
Union territory by a person who has been exempted from the requirement of obtaining
registration under clauses (i) and (ii) of section 24 of the CGST Act.

- The term “Consignment Value”, means value determined as per section 15 of the
CGST Act as mentioned on the invoice, bill of supply or delivery challan as the case
may be including the applicable tax thereon.
- However, such consignment value shall exclude the value of exempted supply, where
the invoice is issued in respect of both exempt and taxable supply of goods.
(“Notification No. 12/2018”)
Who should generate E-way Bill?

- The primary responsibility to generate E-way Bill shall be of the registered person who
causes the movement of goods, i.e. the consignor or the consignee, as the case may be.
- However, if such consignor or consignee doesn’t generate the EWB, it may be generated
by transporter as well, if authorized by the registered person.
- In case of supply of goods by an unregistered person to registered person, the liability to
generate EWB is on the recipient.

- As per revised Rule 138 (2) under Notification No. 12/2018, it has been provided that E-
way Bill shall be required to be generated, in case the goods are transported by consignor
or consignee in his own vehicle or in a hired one or a public conveyance, by road. In such
case, the registered person causing the movement of goods may raise the EWB after
furnishing the vehicle no. in Part B of FORM GST EWB – 01 if the value of goods being
transported is more than Rs.50,000/-.

- Railway has been exempted from generation and carrying of e-way bill with the condition
that without the production of e-way bill, railways will not deliver the goods to the
recipient. But railways are required to carry invoice or delivery challan, etc.

When E-way Bill is not required to be generated?

i. the goods being transported are specified in Annexure under Rule 138(14) of
the Central Goods and Services Tax Rules,2017- like vegetables, fresh milk, etc
ii. the goods are being transported by a non-motorized conveyance- like a hand cart
iii. the goods are being transported from the port, airport, air cargo complex and land
Customs Station to Inland Container Depot or Container Freight Station (for clearance
by Customs);
iv. the movement of goods within areas notified under clause (d) of sub-rule (14) of the
Goods and Services Tax Rules of the Concerned State-
v. goods (other than de-oiled Cake) specified in the Schedule appended to Notification
No.2/2017-C.T.(Rate), dated the 28th June,2017, i.e. goods exempted from GST;
vi. alcoholic liquor for human consumption, petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural gas or aviation turbine fuel;
vii. goods which have been declared as ‘no supply’ in Schedule III of CGST Act,2017;
viii. where the goods are being transported under Customs bond from an inland container
depot or a container freight station to a Customs port, airport, air cargo complex and
land Customs station, or from one Customs station or Customs port to another
Customs station or Customs port, or under Customs supervision or under Customs
seal;
ix. where the goods being transported are transit cargo from or to Nepal or Bhutan;
x. where the goods being transported are exempt from tax under Notification No.
7/2017-C.T.(Rate), dated 28th June,2017 as amended from time to time
and Notification No. 26/2017-C.T.(Rate), dated the 21st September,2017 as
amended from time to time;
xi. any movement of goods caused by defence formation under Ministry of defence as a
consignor or consignee;
xii. where the consignor of goods is the Central Government, Government of any State or
a local authority for transport of goods by rail;
xiii. where empty cargo containers are being transported; and
xiv. where the goods are being transported up to a distance of twenty kilometers from the
place of business of the consignor to a weighbridge for weighment or from the
weighbridge back to the place of business of the said consignor subject to condition
that the movement of goods is accompanied by a delivery challan issued in
accordance with Rule 55.

Blocking and Unblocking of E-way Bill:

- E-way bill generation is blocked for taxpayers who have not filed their returns for the
previous two consecutive months/quarters.
- Thus, if a taxpayer has not filed GSTR-3B for two or more consecutive months, then
he/she cannot generate e-way bills to do dispatches and receive goods, resulting in a
standstill.
- Only when a taxpayer files GSTR-3B, the e-way bills will get unblocked on the next day.
- The system of e-way bill blocking was implemented from the 2nd of December 2019.
- For example, if a taxpayer has not filed his GSTR-3B for April 2021 and May 2021, then
his GSTIN will get blocked in the e-way bill portal from June. The main intention of the
government is to track down the non-filers of GST returns and make them compliant.

What if E-way is not generated?

 - The same will be considered as contravention of statutory provisions of GST law.
- As per Section 122 (xiv) of the CGST Act,2017, a taxable person shall be liable to
pay a penalty of Rs.10,000/- or an amount equivalent to the tax evaded.
- As per section 129 of CGST Act 2017, all such goods and conveyance used as a
means of transport for carrying the said goods and documents relating to such goods
and conveyance shall be liable to detention or seizure to recover applicable tax and
penalty from the person transporting goods and the owner of the goods.

Gati Kintetsu Express Pvt Ltd. v Commissioner, Commercial Tax of MP, 2018

Petitioner is a Private Limited company engaged in the business of multi model

transportation of shipments, supply chain management and other allied services such as door
to door pick-up and delivery of the shipments etc.

Section 68 of the Act provides for inspection of goods in movement, which reads as under :-

1. The Government may require the person in charge of a conveyance carrying any
consignment of goods of value exceeding such amount as may be specified to carry with him
such documents and such devices as may be prescribed.

3. Where any conveyance referred to in sub-section (1) is intercepted by the proper officer at
any place, he may require the person to charge of the said conveyance to produce the
documents prescribed under the said sub-section and devices for verification, and the said
person shall be liable to produce the documents and devices and also allow the inspection of
goods.

Vehicle of the petitioner company was checked on 27.04.2018. On enquiry, the driver (person
incharge of a conveyance) of the vehicle produced the bill and challan, but e- way bill on
enquiry, it was found that the petitioner transporter company who was transporting the goods
from Pune(Wadki), Maharashtra to Noida via Indore and other different places has not
uploaded/updated the part-B of the e-way bill which is a required condition to be fulfilled in
accordance with Rule 138(5) of the M. P. Goods and Service Tax Rules, 2017.

As per Rule 138 of the Rules of 2017, any registered person who causes movement of goods
or assignment valuation exceeding Rs.50,000/- must upload the information in a shape of e-
way bill containing Part-A and Part-B.
23. In the present case, the distance was more than 1200-1300 kilometers and it is mandatory
for the petitioner to file the Part-B of the e-way bill giving all the details including the vehicle
number before the goods are loaded in the vehicle. Thus, he admittedly violated the
provisions of the Rules and Act of 2017.

Non entering of vehicle number in Part-B of e-Way Bill – violation of the provisions of
Section 68 read with Rule 138 of the CGST Act, 2017. – It is mandatory to file Part-B
including vehicle Number before the goods are loaded in the vehicle.

Godrej Consumer Products Ltd. vs. ACST & E-Cum Proper Officer Circle Baddi, 2020)

- Due to a typographic error while generating E-Way bill, petitioner mentioned approx.
distance between Puducherry to Himachal Pradesh as 20 Kilometers instead of 2000
Kilometers, as a result of which, a validity of one day had been calculated by E-Way
bill portal instead of twenty days. On very next day interception of consignment
happened before reaching destination, and a penalty of equal to tax amount was
imposed.
- Kerala High Court- Typographic errors in E-way bill can be treated as minor Errors
and cannot became the reason for interception, set aside the order of revenue authority
and the penalty of Rs. 500/- under SGST and Rs. 500/- under CGST u/s 125 of
CGST/HPGST Act, 2017 is imposed on the Appellant in accordance to CBIC Circular
No. 64/38/2018-GST, dated 14th September 2018

Neva Plantation Private Limited, 2020 (HP)

- Machine sent for repair without E-way bill. Authority raised demand of taxes and
penalty u/s 129 of the CGST Act.
- Held: The Authority held that there it is very clear that goods are only sent for repair
and it is not a sale transaction. Thus, provisions of section 129 of the Act are not
attracted and the order is set aside. The tax and penalty deposited by the appellant
under section 129(1) may be refunded.

Case: Kun Motor Co. Pvt. Ltd. Versus Assistant State Tax Officer, Kerala State GST
Department, Thiruvananthapuram- 2019

- No E-way bill issued for transportation of new car purchased and driven for delivery
to the customer who uses it for personal use.
 - Held: Supply of new vehicle by dealer terminated on its purchase and its subsequent
movement was not the transaction of supply. The car had come into possession of
purchaser and used for some distance which indicated that it was “used personal
effect”. There was no taxable transaction for movement of the car, detention of car
was illegal. The provisions of Section 129 of the SGST Act were not attracted

K.B. Enterprises v Asstt. Commissioner of State Taxes & Excise, 2020

- Appellant’s vehicle was carrying goods to transport said goods to purchasing dealer –
Said vehicle was intercepted for checking by Commercial Tax Officer – Driver/person
in-charge of vehicle had tendered documents accompanying vehicle such as invoice,
Goods Receipt Note, E-way Bill in respect of consignment – Commercial Tax Officer
found all documents were in order except mistake in vehicle no. in part-B of e-way
bill – Goods were detained by Commercial Tax Officer and penalty was imposed
under section 129(1)
- Held that: In case a consignment of goods is accompanied with an invoice or any
other specified document and also an e-way bill, proceedings under section 129 of the
CGST Act may not be initiated in case of minor mistakes like error in one or two
digits/characters of the vehicle number.
- Penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and the
respective HPSGST Act should be imposed.

Integrated Constructive Solutions v. ACST & E-Cum-Proper Officer, 2020

- Competent Authority detained goods of assessee under transport on ground that

vehicle No. at time of checking was PB10CT6249; whereas in E-way Bill vehicle No.
was PB35Q8464 and initiated proceedings under section 129(3)
- Assessee’s explanation before Competent Authority was that due to break down of
vehicle No. PB35Q8464 goods had been shifted to new vehicle No. PB10CT6249 and
upgradation of new vehicle in already generated E-way Bill could not be done due to
weak internet connectivity – In between assessee had also updated Part-B of E-way
Bill – However, Competent Authority vide order passed under section 129(3)
imposed tax and penalty upon assessee amounting to Rs. 16.28 crores.
- Held that: Since Competent Authority had passed order in a mechanical manner and
had ignored corrected and updated E-way Bill as produced by assessee within two
hours of detaining goods, tax and penalty imposed under section 129(3) was
 unsustainable. As assessee had made procedural lapse and violated provisions of GST
Act, it was liable to pay minor penalty under section 122.

ACST v. Satyam Shivam Papers Ltd., 2022

- Traffic blockage due to agitation, failure to deliver consignment within validity period
of e-way bill.
- SC affirmed the judgement passed by the Telangana HC and held that tax evasion
cannot be presumed on mere non-extension of validity of e-way bill by the assesse
due to traffic blockage and agitation. Further imposed a cost of Rs. 69000 payable to
the assesse on Sales Tax Officer for illegally imposing penalty.

GST ON IMPORT & EXPORT

- The provision of Integrated Goods and Service Tax Act 2017 is under Article 269A.
- Explanation to Article 269A (1) makes the supply of goods or services in the course of
import into territory of India deemed to be in the course of interstate trade or commerce.
- Consequently, all provision of levy of tax on supply of goods and services in the course
of interstate trade or commerce in IGST Act shall be applicable to imports.
- Custom Duty on Imports and Export are not subsumed in GST.
- Consequently, Import Duty and GST both will be levied on the value of imports.

Imports

- 2(10) ‘‘import of goods” with its grammatical variations and cognate expressions,
means bringing goods into India from a place outside India;

- 2(11) ‘‘import of services” means the supply of any service, where––

a. the supplier of service is located outside India;
b. the recipient of service is located in India; and
c. the place of supply of service is in India;

- As per Section 7(2) supply of goods till the goods cross custom frontiers of India, is
treated as interstate sale.
- As per section 7(4) the supply of services imported in territory of India is treated as
interstate supply.
- As per section 13 the place of supply of services shall be the location of recipient of
services, except as provided in section 13(3) to (13).
- Now the Section 5, first Proviso states that the integrated tax on goods imported into
India shall be levied and collected in accordance with the provisions of section 3 of the
Customs Tariff Act, 1975 on the value as determined under the said Act at the point
when duties of customs are levied on the said goods under section 12 of the Customs
Act, 1962.
- The goods imported into India will be liable to IGST but not under IGST Act instead
under section 3(7) of Customs Tariff Act.
- As per Taxation Laws (Amendment) Act, 2017 changes have been brought about in
Customs in the wake of introduction of GST.
- One change is that, in addition to basic customs duty levied under section 12 of Customs
Act, section 3(7) of Customs Tariff Act, levies IGST on import of goods.

- The import of goods or services is liable to IGST. The rate will as per the Notification
1/2017-Integrated Tax (Rate), dt. 28-06-2017 under the Integrated Goods and Service
Tax Act 2017.
- By Notification 1/2017-Integrated Tax (Rate), dt. 28-06-2017 in respect of receipt of
service from person located in non- taxable territory to any person other than non-
taxable online recipient, IGST shall be payable under reverse charge mechanism by
any person located in the taxable territory other than non-taxable online recipient, who
is in receipt of receipt of service.
- As per section 5 (1) the IGST tax is payable by taxable person. Taxable person is
defined in CGST Act, which is applicable to IGST Act, as per section 2(24) and 21 of
IGST Act, to mean that the person who is registered or liable to be registered under
section 22 or 24 of CGST Act. The section 24(i) person making interstate taxable supply
is also liable to registration. Import is treated as interstate supply.

- As per the provisions contained in Section 7(1) (b) of the CGST Act, 2017, import of
services for a consideration whether or not in the course or furtherance of business shall
be considered as a supply.
 - Although import for personal purposes is included in the definition of supply, the entry
10(a) to Notification No. 9/2017-Int (Rate), dated 28.6.2017 exempts import of
services under entire Chapter 99 from payment of GST.

- Information and database access or retrieval services, when recipient is non taxable
person the supplier of services shall be liable to pay tax. Thus, in respect of import of
online information and database access or retrieval services (OIDAR) by unregistered,
non-taxable recipients, the supplier located outside India will be responsible for
payment of taxes. The service provider (or intermediary as the case may be) will be
required to take a single registration for paying IGST under the Simplified Registration
Scheme. Notification no.2/2017 – Integrated tax, dated 19th June 2017

Exemptions:

The Import of certain services are exempted as per Notification No 9/2017 (E-10) dt
28.06.2017. Entry 10 provides exemption as follows:

- Services received from a provider of service located in a non- taxable territory by –

1. The Central Government, State Government, Union territory, a local authority, a
governmental authority; or
2. An individual in relation to any purpose other than commerce, industry or any other
business or profession;
3. An entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961) for
the purposes of providing charitable activities;
4. A person located in a non-taxable territory:
- The exemption is not applicable to –
(i) online information and database access or retrieval services received by persons
specified in entry (1) or entry (2) above; or
(ii) services by way of transportation of goods by a vessel from a place outside India up to
the customs station of clearance in India received by persons specified in the entry.

Export

- Section 2 of IGST defines:

a. 2(5) “export of goods” with its grammatical variations and cognate expressions,
means taking goods out of India to a place outside India
b. 2(6) “export of services” means the supply of any service when,–
 i. the supplier of service is located in India;
ii. the recipient of service is located outside India;
iii. the place of supply of service is outside India;
iv. the payment for such service has been received by the supplier of service in
convertible foreign exchange or Indian Rupees wherever permitted by
Reserve Bank of India;
v. the supplier of service and the recipient of service are not merely
establishments of a distinct person in accordance with Explanation 1 in
section 8;
- {Section 8, Explanation 1- provides that where an establishment in India and any other
establishment outside India; then such establishments shall be treated as establishments
of distinct persons.]

GST on Export

- The export of goods or services is treated as zero rated supply.

- Supply of goods or services to Developer of SEZ or Unit in SEZ are also treated as zero
rated supply.
- “Zero rated supply” is a term and that does not mean that it is NIL rated IGST is not
payable. It only means that benefits of Section 16 of IGST Act will be available to
transaction which fall under zero rated supply.
- The benefits are:
1. He is entitled to clear the goods for export without payment of IGST under Bond
or LOU under Rule 96A.
2. He can claim refund of unutilisied tax credit.
3. He can pay IGST and claim refund of such tax paid. (This is discontinued wef
1.4.2021 except for notified goods or notified persons)

Example.

- “A” is manufacturer of TV Sets:

- “A” Exports television less than 32” worth Rs 30,00,000.00.
- IGST liability @ 18% 5,40,000.00
- In first option he can execute Bond or LOU and export without payment of IGST and
subsequently claim refund of ITC related to input of this products. It is difficult to give
 working of the ITC related to input for export when there are intra state and interstate
sales also. Hence, this mode is cumbersome.
- Second, option is make payment of IGST of Rs 5,40,000.00 after deducting available
ITC and then claim refund of Rs 5,40,000.00 which will cover payment of IGST and
ITC.

- Refund of tax paid on export is provided in Section 49(6) and S 54(3)(i) of CGST Act
read with section 16 of IGST Act. The Relevant rules are Rule 89, 96, 96A and 96B.

- Amendment is section 16 of IGST by Finance Act 2021 has made in definition of zero
rated supply where by the supply of goods or services to SEZ developer or SEZ unit
shall be treated as zero rated supply only when the same is for authorised operations.
- Earlier words for authorised operations was not condition precedent.
- Now after amendment, only one option available to the exporter that is he has clear the
goods only under Bond Or LOU.
- The second option of paying the IGST and claim the refund has been restricted for the
assesses who have been notified as class of goods or services or class of taxable persons
who can export on payment of IGST and claim refund of the taxes so paid.

Refund claim is not mandatory:

- One must keep in mind that refund is alternate to adjust ITC against GST dues.
- If no refund application is made or no refund granted, say within a period of two years
as provided in section 54, the amount of ITC will not extinguish and the same remains
available for adjustment against GST dues.

GST (COMPENSATION TO STATE) ACT, 2017

Projected growth rate” means the rate of growth projected for the transition period as
per section 3 and the rate is 14%

Section 4: Base Year

Tax revenue of the state in FY 2015-2016 (during transition period)

Chart Showing Cess rates under the GST (compensation to states) Act 2017 on Various
Goods
 TAX COLLECTION AT SOURCE:

- Section 52 of the CGST Act, 2017 deals with the TCS provisions according to this
section every e-commerce operator will deduct 1% TCS before making payment to the
supplier or vendor and such value shall be computed on the net value of taxable
supplies.
- The “net value of taxable supplies” means the aggregate value of taxable supplies of
goods or services or both, other than the services on which entire tax is payable by the e-
commerce operator, made during any month by all registered persons through such
operator reduced by the aggregate value of taxable supplies returned to the suppliers
during the said month.

CUSTOMS DUTY

When goods are imported into or exported from India, various types of customs duties can
apply

Types of Customs Duties

1. Basic Customs Duty

- BCD is the primary charges levied on imported goods. The rate of BCD varies
depending on the type of goods being imported and their country of origin. Such value
is determined as per the rules laid down in the Customs Valuation (Determination of
Value of Imported Goods) Rules, 2007. BCD is an important source of revenue for the
 Indian government, and it is used to protect domestic industries by making imported
goods more expensive than locally produced goods.
2. Integrated Tax
- Applied on imported goods as if it were a supply under GST.
3. Goods and Services Tax Compensation cess
- Levied under Section 3(9) of the Customs Tariff Act on import of specific luxury/sin
goods. Cess is applicable only on notified items like tobacco, coal, aerated drinks,
luxury cars, etc.
4. Protective Duties
- To protect domestic industry. Protective duties are imposed to shield domestic industries
from unfair competition from imported goods. These duties are designed to make
imported products less attractive by increasing costs through additional tariffs, thereby
safeguarding local producers.
(a) Safeguard Duty
- Imposed when there's a sudden surge in imports causing serious injury to a domestic
industry. Time-limited and subject to review.
- These duties provide a breathing space for domestic industries to adjust and become
more competitive. Safeguard measures are measures introduced by a country that
qualify as “emergency” actions under ‘WTO’Agreement on Safeguards. These actions
are intended to prevent or mitigate serious injury to the member state’s domestic
industry.
(b) Countervailing Duty on subsidized articles
- Countervailing Duty, also known as Additional Customs Duty (ACD), is imposed to
counteract the impact of subsidies provided by exporting countries on their products.
- It is levied on the assessed value of imported goods and is intended to ensure a level
playing field for domestic producers.
- The purpose of ACD is to prevent the evasion of excise duty on goods produced in India
by imposing an equivalent duty on imported goods. The WTO only permits
countervailing duties to be charged after the importing nation has conducted an in-depth
investigation into the subsidized exports
(c) Anti-Dumping Duty
- Dumping is said to occur when the goods are exported by a country to another country
at a price lower than its normal value. Thus, the purpose of anti-dumping duty is to
rectify the trade distortive effect of dumping and re-establish fair trade. The use of anti-
 dumping measure as an instrument of fair competition is permitted by the WTO. In fact,
anti-dumping is an instrument for ensuring fair trade and is not a measure of protection
per se for the domestic industry. It provides relief to the domestic industry against the
injury caused by dumping.

Taxable event under customs

- The "taxable event" is the point at which customs duty liability arises.

a. In case of Importation

Kiran Spinning Mills v. Collector, 1999

- The appellants had between 4th of April, 1977 and 20th of September, 1978 imported
acrylic polyster fibre. The imported articles were placed in the bonded warehouse after
they had landed in India. On 3rd of October, 1978 the Additional Duty of Excise
(Textiles and Textile Articles) Ordinance, 1978 was promulgated. In terms of the
Ordinance articles were charged with an additional duty to excise equal to 10 per cent of
the basic excise duty payable on such articles. It is not in dispute the correspondingly
under Section 3 of the Customs Tariff Act, 1975 additional duty on such articles which
were imported became payable equivalent to the additional excise duty levied under the
said Ordinance. The articles which were imported by the appellants were cleared from
the bonded warehouse after 4th October, 1978. The Customs Authorities demanded an
additional duty at the rate of 10 per cent under the aforesaid Ordinance.
- Held: In the case of duty of customs the taxable event is the import of goods within the
customs barriers. In other words, the taxable event occurs when the customs barrier is
crossed. In the case of goods which are in the warehouse the customs barriers would be
crossed when they are sought to be taken out of the customs and brought to the mass of
goods in the country.
- Import being complete, when the goods entered the territorial waters is the contention
which has already been rejected by this Court. The taxable event, therefore, being the
day of crossing of customs barrier, and not on the date when the goods had landed in
India or had entered the territorial waters. We find that on the date of the taxable event
the additional duty of excise was leviable under the said Ordinance and, therefore,
additional duty under Section 3 of the Tariff Act was rightly demanded from the
appellants.
Garden Silks Mills Ltd. v. UOI, 1999

- the import of goods is completed when the goods become part of the mass of goods
within the country, the taxable event being reached at the time when the goods reach the
customs barriers.
b. In case of Exportation

Mangalore Refinery &Petrochemicals Ltd. v. CC[ 2015] 323 ELT 433 (SC)

GST CASE LAW

Case: Union of India v. Mohit Minerals (P.) Ltd.

- Facts of the Case- The assessee had challenged the IGST levy on reverse charge basis
on the Ocean Freight in respect of import of goods under CIF contracts for which it was
already paying the IGST at the time of import with the value of imported coal under the
Customs laws.
- The Hon’ble Gujarat High Court held that IGST levy on ocean freight is ultra-vires the
levy provisions of the IGST Act. Against the said order, the Government filed the appeal
before the Apex Court.
- The Apex Court held that there is no legal fiction or power to bifurcate the composite
supply into supply of goods and supply of services and to levy reverse charge GST on
supply of services component under section 5(4) of the IGST Act. Given this, the GST
on reverse charge basis can’t be levied on ocean freight in CIF contracts as it is part of
‘composite supply’ attracting section 2(30) and section 8 of CGST Act.
- In view of the above, it was held that the impugned notifications are validly issued
under Sections 5(3) and 5(4) of the IGST Act, but it would be in violation of Section 8
of the CGST Act and the overall scheme of the GST legislation as no such power can be
noticed with respect to interpreting a composite supply of goods and services as two
segregable supply of goods and supply of services.

Sec.2 (30) "composite supply"

means a supply made by a taxable person to a recipient consisting of two or more taxable
supplies of goods or services or both, or any combination thereof, which are naturally
bundled and supplied in conjunction with each other in the ordinary course of business, one
of which is a principal supply;

Illustration.- Where goods are packed and transported with insurance, the supply of goods,
packing materials, transport and insurance is a composite supply and supply of goods is a
principal supply;

Section 8. Tax liability on composite and mixed supplies.-

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.

Case: L’Oreal India (P.) Ltd. v. Union of India

Facts of the Case

- The National Anti-Profiteering Authority (NAA) found that the petitioner had not only
collected excess base prices from his customers after reduction in rate of tax but also
compelled them to pay additional GST.
- The petitioner contended that instead of reducing prices, it had given extra grammage
of product.
- However, the NAA directed the petitioner to deposit profiteered amount as it denied the
benefit of tax reduction to the ordinary buyers by charging excess GST.
- The petitioner filed writ petition against the same.

High Court Held

- The Honorable High Court observed that the petitioner had not only collected excess
base prices from his customers after reduction in rate of tax but also compelled them to
pay additional GST and thereby failed to grant commensurate reduction in prices.
 - Under Section 171 of CGST Act, 2017, any benefit of reduction in rate of taxes or
benefit of input tax credit on any supply of goods or services can only be by way of
commensurate reduction in prices.
- The Court noted that when a statute clearly provides for a manner in which something is
to be done, and a duty is cast upon supplier to extend benefit of rate reduction by way of
commensurate reduction in prices, then the supplier can’t insist that instead of reducing
prices, he will give extra grammage of product.
- Therefore, the Court held that the petitioner had acted in contravention of provisions of
section 171(1) and directed to deposit principal profiteered amount after deducting GST
imposed on net profiteered amount in six equated instalments.

Case: Munjaal Manishbhai Bhatt v Union of India

Facts of the Case

- The writ applicant was a practicing advocate and he entered into an agreement to
purchase bungalow.
- A separate and distinct consideration was agreed upon between the parties to the
agreement for the sale of land and construction of a bungalow on the land.
- He received an invoice levying tax at the rate of 9% CGST and 9% SGST on the entire
consideration payable for land as well as construction of bungalow after deducting 1/3rd
of the value towards the land.
- It filed writ petition to challenge the mandatory deduction of 1/3rd of total
consideration towards the value of land as sale of land is neither supply of goods nor
services.

High Court Held

- The Honorable High Court observed that the paragraph 2 of the Notification No.
11/2017-Central Tax (Rate) dated 28.6.2017 provides for a mandatory fixed rate of
deduction of 1/3rd of total consideration towards the value of land.
- Such deeming fiction is not only contrary to the scheme of the GST Acts but mandatory
uniform rate of deduction is discriminatory, arbitrary and violative of Article 14 of the
Constitution of India.
- It was also observed that when detailed statutory mechanism for determination of value
is available then the impugned deeming fiction can’t be justified on the basis that it is
 meant to curb avoidance of tax when in fact such fiction is leading to arbitrary
consequences.
- Thus, it was held that the mandatory deeming fiction for deduction of value of land was
liable to be quashed and set aside.

Case: Union of India v. Bharti Airtel Ltd.

- The grievance of the petitioner was regarding rectification of Form GSTR- 3B for the
period from July to September 2017.
- The Delhi High Court allowed rectification of Form GSTR-3B in respect of the period
in which error had occurred and held that Circular No. 26/26/2017-GST, dated 29-12-
2017 imposing restriction of rectification of GST Returns only in the period in which
error is noticed, is arbitrary and is to be struck down.
- Against this order, the Revenue filed an appeal before the Supreme Court.
- The Honorable Apex Court observed that the impugned Circular provided for reporting
differential figures and rectification of errors in subsequent periods in which error is
noticed. Significantly, the registered person is not denied the opportunity to rectify
omission or incorrect particulars, which he could do in the return to be furnished for the
month or quarter in which such omission or incorrect particulars are noticed.
- Thus, it is not a case of denial of availing of ITC as such.
- The Circular has been issued exercising power under section 168(1) of CGST Act, 2017,
it is not contrary to Section 39(9) and therefore, the Apex Court upheld the validity of
the impugned Circular.

Sec.39(9)

(9) Where any registered person after furnishing a return under sub-section (1) or sub-
section (2) or sub-section (3) or subsection (4) or sub-section (5) discovers any omission or
incorrect particulars therein, other than as a result of scrutiny, audit, inspection or
enforcement activity by the tax authorities, he shall rectify such omission or incorrect
particulars in the return to be furnished for the month or quarter during which such omission
or incorrect particulars in such form and manner as may be prescribed, subject to payment
of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed
after the thirtieth day of November following the end of the financial year to which such
details pertain, or the actual date of furnishing of relevant annual return, whichever is
earlier.

Case: Commissioner of Customs v. Indo Rubber and Plastic Works

- The appellant was engaged in importing and distributing of ‘Li Ning’ brand of sports
goods.
- There was nothing in agreement as a pre-condition of sale/import that a fixed amount or
fixed percentage of the invoice value of imported goods was to be spent by the appellant
on marketing, advertising, sponsorship and promotional expenses/payments.
- The department contended that Advertising, Marketing and promotion (‘AMP’)
expenses incurred by the appellant were required to add in the value of imported goods.

- However, the Tribunal held that mere making of marketing, advertising; sponsorship
and promotional expenses/payments by the appellant in consultation with the Singapore
seller did not attract provisions of Rule 10(1) (e).

- Moreover, the activity of marketing, advertising, sponsorship and sales promotion was a
post-import activity and expenses/payments were incurred by the appellant on its own
account and not for discharge of any obligation of the seller under terms of sale and the
appellant had not paid any amount on behalf of the seller.
- Therefore, it was held that such expenses/payments made by the appellant to promote
‘Li Ning’ brand was not a condition of sale and, hence, same were not liable to be
included in the value of imported goods in terms of Rule 10(1)(e).
- The department challenged the order. The Apex Court observed that there was no merit
in the appeal and accordingly, dismissed the appeal.

Case: Bright Star Plastic Industries v Additional Commissioner of Sales Tax

- The Show-cause notice was issued to the petitioner for cancellation of registration
alleging the claim of ITC on fake invoices issued by a non-existent supplier.
- It filed the reply but registration was cancelled holding that clarification submitted was
not satisfactory.
- It filed for revocation of cancellation of registration but it was also rejected. Thereafter,
the appeal was filed before the Appellate Authority and the same was also rejected. It
filed a writ petition against the same.
- The Honorable High Court observed that the department would have to show that
somehow the purchasing dealer and selling dealer acted in connivance to defraud the
revenue.
- However, the department failed to show that the petitioner as a purchasing dealer
deliberately availed of the ITC in respect of the transactions with an entity knowing that
such an entity was not in existence.
- Thus, the department was directed to restore the petitioner’s registration by issuing
appropriate orders/directions.

Case: Comsol Energy (P.) Ltd. v. State of Gujarat

- The applicant filed refund claims of IGST paid on Ocean Freight under reverse charge
mechanism after the decision of Court in its own case wherein levy of IGST on such
service was held unconstitutional.
- The department issued Deficiency Memo on an erroneous premise that the refund claim
was not filed within the statutory time limit as provided under section 54 of the GST
Act. It filed a writ application against the same.
- The Court observed that the levy of the IGST under the RCM on the Ocean Freight for
the service provided by a person located in non-taxable territory by way of
transportation of goods through the vessel from a place outside India to customs frontier
of India was already held as unconstitutional.
- Therefore, the amount of IGST collected by the Central Government was without
authority of law, the department was obliged to refund the amount erroneously
collected.
- Since section 54 would be applicable only for claiming refund of any tax paid under
provisions of GST Act and the amount collected by the department without the authority
of law not to be considered as tax collected by them, section 54 would not be applicable
and thus, deficiency memo was to be quashed and set aside.

Case: Chief Commissioner of CGST v Safari Retreats Private Ltd, 2024

- The petitioner, Safari Retreats Private Ltd. is a company engaged in constructing

shopping malls and thereafter, renting out such constructed units to tenants.
- The company accumulated ITC on goods and services used in the construction of these
malls, including cement, steel, and professional services.
 - However, when the company sought to offset the ITC against GST payable on rent, the
authorities denied the claim, citing the embargo under Section 17(5)(d) of the CGST
Act, 2017.
- This provision blocks ITC on goods and services used in the construction of immovable
property unless it relates to plant and machinery.
- Petitioner challenged the aforesaid embargo under Section 17(5)(d), arguing that ITC
should not be blocked when immovable property is used for further taxable supplies,
such as renting or leasing.
- Findings- The Supreme Court has held that the terms used in Section 17(5) (d) have to
be read differently from the words “plant and machinery” used elsewhere in the CGST
Act, and any different interpretation would cause violence to the intention of the
legislature when drafting this section of the CGST Act.
- The words in the aforesaid Section should necessarily be interpreted pertaining
individually to “plant” or “machinery”.
- Accordingly, the Supreme Court held that a “functionality test” in each case should be
resorted to assess whether a building qualifies as a ‘plant’ (for example – if it is
constructed for a specialized purpose).
- If the same is true, then subject to other conditions under the CGST Act pertaining to the
availing input tax credit being fulfilled, and the supply being a “service”, the input credit
of goods or service or both used for such construction may be eligible to be taken.
- For works contract service under Section 17(5)(c), the Supreme Court held that benefit
of input tax credit was not available except for the exceptions provided in the said sub-
clause.
- On the issue of constitutional validity of Sections 17(5) (c and d) and Section 16(4), the
Supreme Court held there was no ambiguity and accordingly the question of reading
down the provisions did not arise.

Impact on Industry

- Businesses must carefully analyze their operations to determine whether their buildings
play an essential functional role and can qualify as ‘plant’ for the purpose of claiming
ITC under GST law.
- The judgment highlights the fine balance between preventing tax avoidance and
maintaining the seamless credit system central to the GST regime.
 - Nonetheless, the judgement provides a window of opportunity to real estate, hospitality,
malls, co-working spaces and other like sectors, where the construction can now be
assessed in terms of the Supreme Court judgement, and input credit, which was
previously held to be ab-initio unavailable, be allowed to be availed leading to tax
efficiency in these sectors.

Case: Bharti Airtel Ltd. v. Commissioner of Central Excise, Pune, 2024

- Back ground- Conflicting views of Bombay High Court (BHC) in Bharti Airtel’s case
and Delhi High Court (DHC) in Vodafone Mobile Case on whether mobile towers and
pre-fabricated buildings (PFB)/structures will be covered under the definition of capital
goods and are inputs as defined under CENVAT Rules.
- Consequently, whether mobile service providers will be entitled to credit.

Bombay HC:

- tower and parts which are fixed to the earth and become immovable properties. These
are not goods and consequently, not “capital goods” under CENVAT Rules.

Delhi HC held that:

- applied the permanency test and held that towers are fastened to the civil foundation
to make these wobble free and stable. They can be unbolted and reassembled without
any damage and relocated to a new site and are not permanently annexed to the earth.
- towers and shelters act as components and parts and in alternative as accessories to
the BTS and antenna, thus fall under “capital goods”.
- applied functional utility test and held that each component of BTS has to work in
tandem with one another and because of these utility and functions, these items would
be considered to be “inputs” within the ambit of Rule 2(k) of the CENVAT Rules.
- that the Assessee is entitled to the credit immediately on receiving the inputs
irrespective of the subsequent treatment i.e. by way of fastening, bolting etc.

Findings- SC

- Summarized the principles to determine the nature of property in para 11.8 (whether
movable or immovable) and held that on the basis of the permanency, intendment,
 functionality and marketability tests, towers and PFB do not qualify to be immovable
property but are movable properties, hence ‘goods’.
- The towers and PFB are not permanently annexed to the land or the building as the
tower can be removed or relocated without causing damage to it.
- The attachment of the tower to the building or the land is not for the permanent
enjoyment of the building or the land. The tower is fixed to the land or building for
enhancing the operational efficacy and proper functioning of the antenna which is
fixed on the tower by making it stable and wobble free.

GamesKraft Technologies Private Limited v Directorate General of Goods Services Tax

Intelligence, 2023, Karnataka High Court

Allegations under the Show Cause Notice issued to Gameskraft:

- Gameskraft is involved in betting / gambling and therefore engaged in supply of

actionable claims which are goods.
- Gameskraft has misclassified their supply as services under SAC 998439 instead of
actionable claims.
- Gameskraft has earned revenue of more than INR 70,000 crores (which is the entire
‘buy-in’ amount collected from the users) and not discharged appropriate tax liability
on such revenue.
- Gameskraft offers discounts / bonuses to induce the players to indulge in more game
plays.
- Games of skill played with monetary stakes partake the character of betting.

Arguments by Gameskraft and Impleading Parties:

- Gameskraft is an online intermediary who provides a platform for online gaming

amongst the users of the platform, for a consideration charged as Platform Fee.
- ‘Rummy’ has the highest traction over the platform of Gameskraft, which constitutes
96% of the total games played over the platform. This game has been consistently
held to be a ‘game of skill’ by several courts in the country, including the Supreme
Court.
- Revenue Department has made a malicious attempt to inflate the revenue figure of
Gameskraft, by portraying the entire ‘buy-in’ amount as their revenue. In this regard,
the Revenue Department has failed to consider the Terms and Conditions of the
 platform which clearly indicate that the monies deposited by the users are held in
‘trust’ by Gameskraft.
- Offering discounts / incentives to market its business and platform does not change
the nature of games played, which are games of skill.
- ‘Rummy’ has been held to be a game of skill by several courts including the
Karnataka High Court in the case of All India Gaming Federation.
- Revenue Department has been unable to provide any material or legal basis to justify
that the games offered by Gameskraft qualify as ‘betting or gambling’.
- Revenue Department has wrongly noted that Gameskraft is engaged in supplying
actionable claims, as it is only a facilitator for online games offered on their platform.
In any case, ‘actionable claims’ only in relation to games of chance are taxable under
the GST laws and will not be taxable in the present facts.

Relevant findings by Karnataka High Court:

- ‘Actionable claim’ other than lottery, betting and gambling are neither supply of goods
nor supply of services.
- Consequently, for imposition of tax on online games qualifying as games of skill, it
needs to be seen whether they can be classified as lottery, betting or gambling.
- Any game / competition that relies substantially upon exercise of skill cannot be
classified as ‘gambling’. Rummy is a game where exercise of substantial skill is the
activity of the player and such skill controls the outcome of the game and not chance.
When the outcome of a game is dependent substantially or preponderantly on skill,
staking on such game does not amount to betting or gambling.
- Rummy is a game of skill, even if played for stakes.
- Playing for stakes or not cannot be a criterion to determine whether a game qualifies as
a game of skill.
- Rummy is not a game where the outcome is being predicted or forecasted, but is a
game being played where success and the outcome of the game is substantially and
preponderantly dependent on the exercise of skill of the player.
- The phrase ‘betting and gambling’ featuring in Entry 34, List II of the Constitution
does not include games of skill.
- A statute that applies to both ‘betting’ or ‘gambling’ as well as game of skill, will be
severed to only apply to activities which amount to ‘betting’ or ‘gambling’.