Levy & Collection of Central / State GST Rohini Aggarawal B. Com (H), CWA, CA, LLB rohini@arxadvisors.in

Section – 7 : Levy & Collection of CGST/ SGST There shall be levied a tax called the Central/State Goods and Services Tax (CGST/SGST) on all intra-State supplies of goods and/or services at the rate specified in the Schedule . . . to this Act and collected in such manner as may be prescribed. The CGST/SGST shall be paid by every taxable person in accordance with the provisions of this Act. Notwithstanding anything contained in sub-section (2), the Central or a State Government may, on the recommendation of the Council, by notification, specify categories of supply of goods and/or services the tax on which is payable on reverse charge basis and the tax thereon shall be paid by the person receiving such goods and/or services and all the provisions of this Act shall apply to such person as if he is the person liable for paying the tax in relation to such goods and/or services.

Supply under Model GST Law

Section -3 : Meaning and Scope of Supply Supply includes all forms of supply of goods and/or services such as sale, transfer,, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business, Importation of service, whether or not for a consideration and whether or not in the course or furtherance of business, and a supply specified in schedule I, made or agreed to be made without a consideration. (2) Schedule II, in respect f matters mentioned therein, shall apply for determining what is, or is to be treated as a supply of goods or a supply of services.

Section -3 : Meaning and Scope of Supply (2A) Where a person acting as an agent who, for an agreed commission or brokerage, either supplies or receives any goods and/or services on behalf of any principal, the transaction between such principal and agent shall be deemed to be a supply. (3) Subject to sub-section 2, the Central or a State Government may, upon recommendation of the Council, specify, by notification, the transactions that are to be treated as – (i) a supply of goods and not as a supply of services; or (ii) a supply of services and not as a supply of goods; or (iii) neither a supply of goods nor a supply of services. (4) Notwithstanding anything contained in sub-section (1), the supply of any branded service by an aggregator, as defined in section 43B, under a brand name or trade name owned by him shall be deemed to be a supply of the said service by the said aggregator.

Schedule -I : Matters to be treated as supply without consideration Permanent transfer/ disposal of business assets Temporary application of business assets to a private or non-business use Services put to a private or non-business use. Assets retained after deregistration. Supply of goods and/or services by a taxable person to another taxable or non-taxable person in the course or furtherance of business Provided that the supply of goods by a registered taxable person to a job-worker in terms of Section 43A shall not be treated as supply of goods.

Schedule -II : Matters to be treated as supply of Goods/ Services Transfer Any transfer of title in goods Any transfer of title in goods under an agreement which stipulates that property in goods will pass at a future date upon payment of full consideration as agreed Transfer of Business Assets Where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person. Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

Schedule -II : Matters to be treated as supply of Goods/ Services Supply of Services Transfer Any transfer of goods or of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services. Land & Building Any lease, tenancy, easement, license to occupy land is a supply of services Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. Treatment or Process – Any treatment or process which is being applied to another person’s goods is a supply of services. Transfer of Business Assets Where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services.

Schedule -II : Matters to be treated as supply of Goods/ Services Supply of Services The following shall be treated as supply of services Renting of immovable property; Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer wholly or partly, except where the entire consideration is received after issuance of completion certificate, where required, by the competent authority or before its first occupation, whichever is earlier. Competent Authority : it means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following Architect Chartered Engineer Licensed surveyor

Schedule -II : Matters to be treated as supply of Goods/ Services Supply of Services The following shall be treated as supply of services temporary transfer or permitting the use or enjoyment of any intellectual property right; development, design, programming, customisation, adaption, upgradation, enhancement, implementation of information technology software; agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; Works contract including transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; and Supply, by way of as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply of service is for cash, deferred payment or other valuable consideration.

Taxable Person as per Model GST Law

Section -9 : Taxable Person Taxable person means a person who carries on any business at any place in India / state of _________________ and who is registered or required to be registered under Schedule III of this Act: Supplier making taxable supply more than 9 lacs/ 4 lacs Shall not be liable for registration if aggregate turnover consists only goods/services on which are not liable to tax Threshold will include all supplies made by taxable person on his own account or made on behalf of principal Turnover of section 43A shall not be included in turnover of job worker Notwithstanding anything contained in paragraph 1, every person who on the day immediately preceding of the appointed day is registered or holds a license under an earlier law, shall be liable to be registered under this Act with effects from the appointed day

Section -9 : Taxable Person Notwithstanding anything contained in paragraph 1 & 2 , where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee, or the successor as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. Notwithstanding anything contained in paragraph 1 & 2, in case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or , as the case may be, de-merger of two or more companies by an order of High Court, the transferee shall be liable to be registered, where required w.e.f. date on which ROC issue Certificate of Incorporation giving effect such order of the High Court.

Section -9 : Taxable Person Notwithstanding anything contained in paragraph 1 & 2, the following categories of persons shall be required to registered under this act Person making inter-state taxable supply, irrespective of threshold specified under paragraph-1 Casual taxable persons , irrespective of threshold specified under paragraph-1 Persons required to pay tax under Reverse Charge Non-resident taxable persons, irrespective of threshold specified under paragraph-1 Persons who are required to deduct tax under section 37 Persons who supply goods and/or services on behalf of other registered taxable persons whether as agent or otherwise, Input Service Distributor Persons supply goods/ services through electronic commerce operator Electronic commerce operator Aggregator who supplies services under his brand or trade name Other notified persons by Central / State Government on the recommendation of the council

Section -9 : Taxable Person Not to be treated as taxable person An agriculturist Persons required for registration under paragraph-1 of schedule –III, shall not be considered as a taxable person unless aggregate turnover in a financial year exceeds 10 Lacs/ 5 Lacs Any person provides services as an employee to his employer in the course of or in relation to his employment Any person exclusively supplying goods and/or services that are not liable to tax under this Act. Any person, liable to pay tax under Section 7(3) (i.e. Reverse Charge), receiving services of value not exceeding ____________ rupees in a year for personal use, other than for use in the course of furtherance of his business. The Central/ State Government or any local authority shall be regarded as taxable person in respect of activities or transactions in which they are engaged as public authorities other than activities or transactions as specified in Schedule –IV of this Act.

Schedule -IV : Activities for which CG/SG/LA not treated as taxable person Service Provided by Central Government (CG) or a Local Authority (LA) to another Government or local authority excluding the following services: Services by the Department of posts by say of speed post, express parcel post, life insurance and agency services; Services in relation to an aircraft or a vessel, inside or outsider the precincts of a port or an aircraft; or Transport of goods or passengers. Services provided by a Government or local authority to individuals in discharge of its statutory powers or functions such as – Issuance of passport, visa, driving licence, birth certificate or death certificate; and Assignment of right to use natural resources to an individual farmer for the purpose of agriculture.

Schedule -IV : Activities for which CG/SG/LA not treated as taxable person Service Provided by Government or Local Authority or a Governmental Authority; Any activity in relation to any function entrusted to a municipality under article 243W of the constitution; Any activity in relation to any function entrusted to a panchayat under article 243G of the constitution; Health care; and Education Any Services provided by a Government or a local authority in the course of discharging any liability on account of any tax levied by such Government or authority.

Schedule -IV : Activities for which CG/SG/LA not treated as taxable person Services provided by Government towards- diplomatic or consular activities; Citizenship, naturalization and aliens; Admission into, and emigration and expulsion from India; Currency, coinage and legal tender, foreign exchange; Trade and commerce with foreign countries, import and export across customs frontiers, interstate trade and commerce; or Maintenance of public order. Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import or export of cargo on payment of Merchant Overtime Charges (MOT).

Schedule -IV : Activities for which CG/SG/LA not treated as taxable person Services provided by a Government or a local authority by way of - Tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payables to the Government or the local authority under such contract; Assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1st April 2016. Provided the exemption shall apply only to service tax payable on one time charges payable, in full upfront or in instalments, for assignment of right to use such natural resource; Services provided by Government or local authority by way of – Registration required under any law for the time being in force; or Testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force.

Composition Levy as per Model GST Law

Section 8: Composition Levy The proper officer of the Central or a State Government may permit a registered taxable person, whose aggregate turnover in a financial year does not exceed fifty lakh of rupees, to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not less than one percent of the turnover during the year (which year ?). subject to such conditions and restrictions as may be prescribed AND subject to subsection (3) of section 7 ( revere charge tax) Section 2(6) “aggregate turnover” means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be; Explanation.- Aggregate turnover does not include the value of supplies on which tax is levied on reverse charge basis and the value of inward supplies.

Section 8: Composition Levy All the registered taxable persons having the same PAN must opt to pay tax under composition Taxable person shall not collect any tax from the recipient of the supplies made by him nor shall be eligible for any credit of input tax No permission for composition shall be granted to a taxable person who effects any inter-state supplies of goods and/ or services

Section 8: Composition Levy If the proper officer has reasons to believe that a taxable person was not eligible to pay tax under composition, such person shall, in addition to any tax that may be payable under other provisions of this Act, be liable for penalty of equivalent to the amount of tax payable as aforesaid No penalty can be imposed without giving a notice and a reasonable opportunity of being heard is given

Exemption under Model GST Law

Section -10 : Power to Grant Exemption Section 10(1) – General Exemption If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by notification, exempt generally either absolutely or subject to such conditions as may be specified in the notification, goods and/or services of any specified description from the whole or any part of the tax leviable thereon.

Section -10 : Power to Grant Exemption Section 10(2) – Specific Exemption If the Central or a State Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendation of the Council, by special order in each case, exempt from payment of tax, under circumstances of an exceptional nature to be stated in such order, any goods and/or services on which tax is leviable.

Section -10 : Power to Grant Exemption Section 10(3) & (4) – Miscellaneous Provisions The Central or a State Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be. Every notification issued under sub-section (1) or sub-section (3)and every order issued under sub-section (2) shall unless otherwise provided, come into force on the date of its issue by the Central or a State Government for publication in the Official Gazette; and be made available on the official website of the department of the Central or a State Government.

CA. Rohini Aggarawal rohini@arxadvisors.in THANKS CA. Rohini Aggarawal rohini@arxadvisors.in