CHAPTER — 4 INTER-STATE AND INTRA-STATE TRANSACTIONS UNDER GST (Place of Supply) introduction ; In order to levy of taxes under GST, to identity the nature of supply. Nature of supply means. supply of goods or service or bath may be levied tax under GST. Nature of supply may be divided into two factors, Inter-state supply TAX: IGST Nature of supply Intra-state supply TAX = CGST+SGXT ANTER-STATE AND INTRA-STATE TRANSACTIONS UNDER GST Inter-state and intra-state transactions under GST the determination of nature of supply may be divided into 3 types : |. Inter-state supply of goods and services — sec 7 of IGST Act. ll. Intra -state supply of goods and services - sec 8 of IGST Act. il, Supply of territorial waters ~section 9 of IGST Act. 1. What is inter-state supply of goods and services ? ‘A. Under sec 7 of the IGST Act the following are considered as inter-state supply. The following provisions may be regarding for inter-state supply : a) Inter-state supply of goods [section 7(1)] ‘Supply of goods in the course of inter-state trade or commerce, inter-state supply means where the location of the supplier and place ot supply are in two ditterent states. b) import of goods [section 7(2)] Sec 7(2) of the IGST Act provides that goods are imported from outside india, the IGST will be charged.¢) Inter-state supply of services [section 7(3)] Supply of services in the course of inter-state trade or commerce inter-state ‘supply of service means any supply where the location of the supplier and place of supply of services are in two different states. 4) Import of services [section 7(4)] Sec 7(4) provides when the services may be imported from outside India and place of supply in india, It shall be considered as a transaction for inter-state trade or commerce, the IGST will be charged. ¢) inter-state supaly of goods or services or both [section 7(5)] inter-state supply ot goods or service or both may be chargeable tor central GST and State GST. The following contents may be chargeable for supply of goods and services : |. __ Export and import of intra-state supply of goods and services shall be treated to be inter-state supply, |GST and CGST may be chargeable, i Any SEZ units may provide any supply of goods and services |s chargeable to the GST Act. lit, ‘Supply which is not Intra-state supply should be treated as a inter-state. The 1GST will be chargeable. 2, What Is Intra-state supply of goods and services ? A. Intra-state transactions under GST the transactions which are covered under intra-state supply. The section makes the provisions in respect of supply of goods or service or both in the course of intra-state trade or commerce. The following provisions may be regarding for Intra-state supply of goods and services : a) Intra-state supply of goods [section 8{1)] ‘Supply ot goods where the location ot a supplier and place ot supply may be both on the same state. b) Intra-state supply of services [section 8(2)] Intra-state supply of service means when a location of supply of service and place of service may be both on in the same state.LIES IN HAL WA 9 OF 7 Section 9 of the IGST Act provides supply of territorial waters, the supply ot goods and services by seaport between the 12 nautical miles from the baseline on the coast of India Any of supplies for territorial water, the IGST may be chargeable. PLACE OF SUPPLY The Central Government has notitied separate act tor levy ot taxes tor CGST and IGST, every state government with notified for levy of taxes in SGST on supplies of goods and services. if when the supplier location of and place of supply of goods and services within the same state, the CGST and SGST may be chargeable. In case ot when a supplier location at supply of goods and services and place of supply of goods and services for two different states, the IGST will be chargeable. 3. Discuss the rules regarding determining the place of supply ? A Place of Supply LPlace of supply ILPlace of supply [Link] provisions for supply of of goods of services 7 ‘online information & database access Supply within Exports & Services in Services in Section 14 of Indiasec10, Importsof —Indiaseci2 —Exportsand =——IGST Act, 2017 IesT supply of goods Imports sec 13 sec 11, IGST 1. PLACE OF SUPPLY OF GOODS ‘The place of supply of goods determine as to which place shall be considered as place of supply for chargeable of taxes under GST. Place of supply of goods may be further divided Into two types: (A. Whenasunoly of eoads is within India (Section 10, IGST Act 2017) The following provisions may be regarding as follows :a) Place. of supply is where movement of goods terminated ~ Section 10(1) ‘Where the goods are required to be transter trom one place to another place the place ot supply shall be the place where movement of goods terminated in case of IGST may be chargeable It should be treated as inter-state supply. b) Goods delivered on the direction of the third persan - Section 10(2) In such case if the goods are delivered to any person as per the provisions of the act, when the goods have been delivered on the direction of third person the place of supply will be location of third person. ¢) Mdhere supply. doesot involve movement of goods — Section 10(3) Where the supply does not involve movement of goods the supplier and the place of supply shall be the location of such goods at the time of the delivery to the consumed ¢) Where the goods are assembled or installed at.a sits - Section 10(4) ‘When the goods are assembled or installation at a site the place of supply of such goods shall be chargeable to the GST. ¢) Where the goods are supplied on road conveyance - Section 10(5) ‘When goods are supplied by road transportation or railway transportation or water transportation and alr transportation, the transportation charges may be ineluded in the supply of goods and services, IGST may be chargeable. #) Supplpother than above points - Section 10(6) if the place of supply cannot be determined from sec 10(1) to sec 10(5}, it shall be determined prescribed by Central Government on recommendation of GST council. B. Place of supoly for exports & imparts of goods (Section 11, IGST Act 2017) Sec 11 of IGST Act 2017, provides for determination of place of supply of goods imparted and exported from india, the exports and imports of goods may be chargeable to the IGST. I. PLACE OF SUPPLY OF SERVICE Place of supply of service further divided into two types ‘A. When supply of service is within India - Section 12 of IGST Act 2017 Sec 12 of IGST act 2017 provides for determination of place of supply of services, when the location ot a supplier of service and the place ot supply of service may be both are in India. The following provisions may be regarding in the place of supply of service.a) Supply of registered person — Section 12(1) IGST Act provides the place ot supply ot service made toa registered person; the registered person is taxable on supply of services. b) Supaly to non-registered person — Section 12(2) ‘Supply has been made to a person who is unregistered the place of supply of service may be chargeable to IGST Act 2017. ¢) Place of supoly for services covered under sec 17(3) & sec 17(d)of GST Act. 2017 ‘The services which are mentioned under section 12(3) and section 12(4), the place of supply of services shall be chargeable under this act. 8. Place of supply for exports & imports of services — Section 13 of IGST Act, 2017 Where the location of the supplier of services for exports and imports of services is outside India, then the place of supply shall be chargeable under this act. Ill. SPECIAL PROVISIONS FOR SUPPI ACCESS - Section 14 of IGST Act, 2017 As per sec 14 of the IGST Act, 2017 provides supply of online information and database access, services may be delivered by Information Technology over the internet and the nature of which renders thelr supply of goods and services may be chargeable in this act. 4. Explain the rules for determination of time of supply of goods under GST ? ‘A_Incidence of Tax : It means when the liability to pay tax arises. In simple words, incidence of tax means ‘tax liability’. Every statute is required to determine the time when the incidence of tax may be arise, sec 3 of Central Excise Act provides tax is payable on manufacturing goods. Thus incidence of tax arise on the day process of manufacture has been completed. The tax liability is required to determine on the date on which services are deemed to have been rendered. Incidence of Tax under GST it ls essential to determine the time when the supply of goods and services have been made. Incidence of Tax under GST may be arise on supply of goods and services, itis necessary to determine the time of supply of goods and services.Time of Supply The liability of GST (Including CGST, SGST, UTGST and IGST) depends upon time of supply. The time when goods or services are supplied, shall be determined the date when the tax becomes payable under GST. Sec 12 of CGST Act makes the provisions for determining the time of supply of goods and sec 13 of CGST Act makes provisions for determining the time of supply ot service, | Determination of time of supply of goods Determination of time of supply of goods may be provide the following conditions : @.Se0-12(2) Time of Supply of goods under forwarding charges Ita supplier, when supply of goods payable on any forwarding charges Is chargeable to GST. bSect2/4) Time of supply of gods covered under reverse charge {ta supplier payable any of reverse charge tor time ot supply of goods is chargeable to GST. C-S8012(4)- Goods supplied through the vouchers The Issue of vouchers tor purchase and sale ‘of goods in the business organisation, the vouchers value may be chargeable to the GST. Sec 1215). Residual Valus Sec 12(5) provides that iit Is not possible to determine the time of supply as per the Provisions mentioned in sec 12(2}, sec 12(3) and sec 12(4) the time of supply shall be as follows : (i)_ Incase of where periodical return has to be filed. (il) tn any other case, it will be the date on which tax Is paid. 4". Determination of time of supply of services (Sec 13 of CGST Act, 2017) According to the CGST Act provides for determination of time of supply of service mentioned the following provisions may be taxable: (a) Sec 13(2)- Time of supply of service covered under forwarding charges. (b) Sec 13(3) - Time of supply of service on reverse charge. (c) Sec 13(4) - Supply of service through vouchers. (d) Sec 13(5) - Residual value of service not covered under sec 13(2), sec 13(3) & sec 13(4),5. What is the purpose of determining value of supply ? A. The amount on which tax shall be levied under GST depends on value of supply. It includes all intra-state supply and inter-state supply. The value of supply of goods and services may be calculated using the following formula : GST Rate = Value of Supply x Rate of GST/100 ‘Transaction Value Sec 15 of CGST Act, 2017 makes provisions for the purpose of determining the transaction value of goods and services in different circumstances. Value of Supnly under GST GST will be charged on the transaction value. Transaction value is the price actually paid or payable for the supply of goods and services between unrelated parties. The Value of Supply under GST shall include the following conditions may be satisfled. The value of supply may be taxable: a) Any taxes, duties, fees, cess and charges levied under any act, if charged separately by the supplier. b) Any amount that the supplier is liable to pay tax, which has been incurred by receiver and is not included in the price. ¢) The value will be included incidental expenses in relation to sales payable by supplier, such expenses like packing charges, forwarding charges, commission etc., d) Any subsidies linked to supply tor supplier except the government subsidies will be included, the value of subsidy may be taxable for value of supply. e) Any interest, penalty, late fee for delay payment of consideration will be Included in the value of supply. 6. How to calculate transaction value or value of taxable supply ? A. Transaction value shall be considered as the value of taxable supply. Detailed provisions of transaction value under sec 15 of CGST calculate the transaction value or value of taxable supply. The following steps may be given for value of supply : STEP 4 : Determine the value of taxable supply [sec 15(1)] ‘Transaction value of the value of supply of goods and services which satistied the following conditions :- a} Transaction value of the supply of goods or services or both. b) Transaction value the price is actually pald or payable bby supplier. ¢) Nature of supply must be tind out, d) The price must be the sole consideration. e} Supplier and receiver must not be related1) Value of supply of goods and services must be only of taxable supply. ‘STEP2 : Include any taves in the transaction value [sec 15(2)] Section 15(2) specifies the expenses which shall be included in the transaction value. The following conditions may be arise in the value of supply :~ a) Value. doesnot include GST. but includes other taxes Any taxes, duties, tees and charges levied any statue other than SGST and CGST. It charged separately for any of taxes in any of the act. b) Amount paid byreceiveron behalf ot supplier Any amount which the supplier is liable to pay, connected to the supply, this amount pald by receiver on behaff of supplier. The amount may be chargeable. ¢) Incidental expenses incurred betore supply Incidental expenses including commission and packaging charged by supplier tothe receiver of a supply. Incidental expenses may be chargeable. 4) Interest (or) late fee (or) penalty Interest (or) late fee (or) penalty for delay payment of any consideration for supply of goods, the value of supply may be taxable. ¢) Subsidy linked to supply Subsidy linked to supply will be included in the transaction value, except government subsidy the remaining amount of subsidy may be taxable. ‘STEP3 Deductions from the transaction value Under section 15(3) of CGST Act the value of supply shall not include any discount, before the making of time ot supply provided such discount has been recorded in the respect of such supply. Discount shown on Invoice price before the supply of goods, the transaction value will not be include any discount before making the supply. Discount allowed by giving credit note, after the supply the deductions may be applicable for transaction value. 7. Discuss in detail the GST Valuation Rules ? A. GST Act provides the valuation goods tor supply at goods and services, determination ot value of supply in different circumstances. Rule no: to Rule no:9 prescribed for valuation of supply.RULE 1: When consideration is not whole in money Rule no:1 of determination of value of supply provides where the supply of goods and services is not for consideration in whole in money, the value of supply shall be a) The open market value of such supply, open market value means full value in money. b) Itopen market value is not avaliable, It open market value is not avallable for goods or services are not sold in open market. In simple means non-monetary tems shall be determined in monetary items. RULE 2: Supply between related person other than through agent ‘The value of supply of goods and services between related person, other than the supply through an agent shall be open market value of such supply, If the open market value Is not available and If the value is not determined for the rule 4&5. ‘RULES : Value of supply of goods made or received through an agent GST Act provides by a principle to his agent where the agent undertakes to supply of goods on behalf of principle, value of supply of goods between the principle and agent shall be the open market value of goods being supplied and value of supply is not determined, RULE 4 : Value of supply of goods and services both on base on cast ‘The value of supply ot goods and service both shall be cost ot production, cost ot acquiring and cost of providing services. This principle shall be applied for the purpose of determining the cost of service. RULES : Rasidual Method Incase where the value of supply of goods or services cannat be determined under rule fto:1 to rule no:4, value shall be determined by using reasonable means which shall be consistent with the provisions of section 15. RULE 6 : Value incase of certain supply ‘The value in respect of supplies specified below shall at the option of the supplier can be determined in toreign currency, alr travel agent, lite insurance business, buying and selling of second-hand goods, redeemable vouchers and value of service provided by one person to another person may be chargeable for valuation of supply under GST. RULE 7 : Value of supply incase of pure agent In many cases the supply of service incurred some expenditure on behalf of receiver of service and recover same from him. The rule no:7 of valuation rules providing of such expenditure in determining the transaction value. RULES : Rate of exchange of currency for determination of value ‘As per rule 8 of valuation rules exchange for determination of value of taxable goods and services shall be applicable reference rate for the currency as determined by RALas on the date of time of supply in the section 12 & section 13 of the GST Act.RULES: of calculatir of supply of ti Rule 9 of valuation rules provides for calculating the tax element where the amount paid in the supply of goods and service. 8. What Is Input Tax Credit(ITC)? Explain the conditions for claiming ITC under GST ? A. Input Tax Credit(ITC) has its origin in the concept of MODAVAT, MODAVAT means Moditied Value Added Tax, which was introduced in the year 1986, MODAVAT was Introduced only for manufacturing level. Then after 2004, MODAVAT was replaced by CENVAT. CENVAT means Central Value Added Tax which provides Credit of Input Tax as well as input service and output of tax and output of service. In 2005 VAT was introduced in the concept of Input Tax Credit. Input Tax Credit means credit allowed of tax payed on inputs. Output tax means tax pald ‘on outputs. Anput Tax under GsT Section 2(62) of CGST Act provides Input Tax in relation to a registered person payable on tax CGST of SGST or UTGST and IGST will be charged on supply of goods or services or both. Ina simple language Input Tax under GST includes : a) IGST willbe levied on inter-state supply of goods and services. b) CGST will be levied on intra-state supply of goods and services. ¢) SGST will be levied on intra-state supply of goods and services. 4d) UTGST will be levied on intra-state supply of goods and services for UT level. e) IGST will be levied on import of goods and services. In this case the composition levy may not be applicable or may not be included in the Input tax. input Tax Credit - Types Input Tax Credit may be divided into 3 types : Ny input Input means any goods other than the capital goods is called Input. li) Input Service ‘Any services which are used by supplier for supply of goods and services in the normal course ot business. iti) Capital Goods ‘The value of goods which is capitalized in the books of accounts and the value of capital goods may be recorded in the balance sheet.i i i Section 16 of CGST pravides every registered person shall be to tax credit, Input tax charged on supply of goods and services, There are four conditions for availability of ITC. a) Document necessary for available in Tc Section 16(2) provides the sum of documents which the registered person must possess to available for ITC. The documents are tax invoice, debit note, any other tax paying under Customs Act 1962. b) Rex Goods Section 16(3) provides that the person shall receive the goods or services, the registered taxable person can use the input ot goods and input of service. ¢) Taxactually paid to the credit of appropriate government Section 16(4) provides that the supplier should have actually paid to the credit of appropriate government the tax amount on the supply made by him. ) Registered person must have furnished the return under section 39 Section 16(5) provides for the time limit for available of credit by registered taxable person, it prescribed the time limit in the tollowing two events. i) Filing of return under section 39 for the month of September, (ii) Filing ot annual return.