Delve into the detailed analysis of CGST Act, 2017, Section 2 definitions, including “actionable claim,” “address of delivery,” “address on record,” “adjudicating authority,” “agent,” “aggregate turnover,” “agriculturist,” and “appellate authority.” Understand the legal nuances, significance, and implications of each definition for proper compliance with GST regulations.
Section 2 (1) – Actionable claim:
The relevant section is as follows:
“actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882);
Section 2(1) of the Central Goods and Services Tax (CGST) Act defines the term “actionable claim.”:
1. Actionable Claim: An actionable claim refers to any claim that can be enforced in the court of law. It includes claims arising out of a contract, debt, or any legal obligation, whether such claims are in the form of a written instrument or not. In simpler terms, it refers to a right to demand something from someone.
2. Nature of Claim: The term encompasses various types of claims, such as claims for payment of a sum of money, claims for the delivery of goods, claims for performance of a contract, claims for compensation, claims for the enforcement of rights, and so on. These claims must have a legal backing and be capable of being enforced through legal proceedings.
3. Inclusion of Written Instruments: The definition explicitly mentions that the claim can exist in written as well as non-written form. This means that a claim can be established through a formal contract, agreement, or any other legally recognized document, or it can also arise from an informal understanding or arrangement between parties.
4. Relevance to CGST Act: The definition of “actionable claim” in the CGST Act is significant because it helps in determining the tax implications related to the supply of goods or services. Certain provisions of the CGST Act apply differently to actionable claims as compared to other types of supplies, and understanding the scope of actionable claims becomes essential for proper tax treatment.
Overall, Section 2(1) of the CGST Act defines “actionable claim” as a claim that can be enforced through legal proceedings, including claims arising from contracts, debts, statutory dues or any other legal obligations, whether in written or non-written form.
Section 2(2) – Address of Delivery:
Section 2(2) of the Central Goods and Services Tax (CGST) Act, 2017 defines “Address of Delivery.”
The relevant section is as follows:
“Address of Delivery” means the address of the recipient of goods or services or both indicated on the tax invoice issued by a registered person for delivery of such goods or services or both.
In simpler terms, the Address of Delivery refers to the location where the recipient of goods or services wants them to be delivered. It is the address provided by the recipient, at the time of registration, which is mentioned on the tax invoice issued by a registered person.
A detailed explanation of the components within the definition:
1. Recipient: The term “recipient” refers to the individual or business entity that is receiving the goods or services. In the context of the CGST Act, this recipient can be a registered person or an unregistered person.
2. Goods or Services or both: The Address of Delivery applies to both goods and services or any combination of both. The CGST Act covers transactions involving the supply of goods, supply of services, or a mix of both.
3. Tax Invoice: A tax invoice is an official document issued by a registered person to the recipient, indicating the details of the transaction. It includes information such as the names and addresses of the parties involved, the description and quantity of goods or services, the applicable tax rates, and other relevant details.
4. Registered Person: A registered person is an entity that is registered under the CGST Act and holds a valid Goods and Services Tax Identification Number (GSTIN). They are authorized to collect and remit GST on their supplies of goods or services.
To summarize, Section 2(2) of the CGST Act defines the Address of Delivery as the recipient’s address mentioned in the registration and on the tax invoice issued by a registered person. This provision is significant for determining the place where goods or services should be delivered as per the recipient’s specifications.
Section 2(3) – Address on Record:
Section 2(3) of the CGST Act states:
“Address on Record” means the address of the recipient as available in the records of the supplier.
In simpler terms, “Address on Record” refers to the address of the recipient (customer /buyer) as available in the records of the supplier (seller). A detailed explanation of the provision as under::
1. Address of the Recipient: The provision pertains to the address of the recipient of goods or services. The recipient can be an individual, a company, or any other legal entity who is receiving the supply.
2. Records of the Supplier: The address on record is based on the records maintained by the supplier. It refers to the information regarding the recipient’s address that the supplier has on file or maintains in their records.
3. Importance in GST Compliance: The address on record is relevant for various aspects of GST compliance. It is used to determine the place of supply, tax liability, and issuance of tax invoices. The supplier relies on the address on record to correctly identify and address the recipient for compliance purposes.
4. Accuracy and Updates: It’s crucial for the supplier to maintain accurate and up-to-date records of the recipient’s address. If there are any changes to the recipient’s address, it should be communicated to the supplier to ensure that the correct address is used for GST compliance.
The address on record plays a significant role in the GST compliance framework as it helps in identifying the correct recipient and ensuring the accuracy of tax-related documents and transactions.
It’s important to note that the GST law and related rules provide further details and requirements regarding the maintenance of records, invoicing, and address-related provisions. These requirements may vary based on the nature of the transaction, the type of taxpayer, and specific provisions under the CGST Act and related rules.
To summarize, Section 2(3) of the CGST Act defines “Address on Record” as the address of the recipient as available in the records of the supplier. It is used to determine the recipient’s address for GST compliance purposes, including the place of supply, tax liability, and issuance of tax invoices. Maintaining accurate and up-to-date records of the recipient’s address is essential for GST compliance.
Section 2(4) – Adjudicating authority:
Section 2(4) of the CGST Act pertains to the definition of “Adjudicating Authority.”
The relevant section is as follows:
“adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the [Central Board of Indirect Taxes and Customs], the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, [the National Appellate Authority for Advance Ruling,] [the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171];
Section 2(4). Adjudicating Authority: New Definition: “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171” Earlier Definition: “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal;
1. Adjudicating Authority: The term “Adjudicating Authority” refers to any authority, appointed or authorized by the CGST Act or the Commissioner of CGST, for the purposes of the Act. This authority is responsible for passing orders in relation to the various provisions under the Act, including but not limited to adjudication of penalties, deciding on the liability of a person for any contravention of the Act, and settling disputes between taxpayers and the tax authorities.
2. Powers and Functions: The Adjudicating Authority is vested with certain powers and functions to ensure the proper administration and enforcement of the CGST Act. These powers may include conducting inquiries, summoning persons for evidence, examining witnesses, and recording statements. The Authority has the jurisdiction to determine penalties, issue orders, and make decisions in accordance with the provisions of the Act.
3. Independence and Impartiality: The Adjudicating Authority is expected to function independently and impartially. It should act in accordance with the principles of natural justice, giving both the taxpayer and the tax authorities an opportunity to present their cases and provide evidence. The authority should evaluate the facts and circumstances of each case before making a decision.
4. Appeals and Review: The orders passed by the Adjudicating Authority are subject to the appellate process. A person aggrieved by the order has the right to file an appeal before the appropriate Appellate Authority, as prescribed by the CGST Act. The Act also provides for a mechanism of review in certain situations, allowing for the reconsideration of decisions made by the Adjudicating Authority.
Overall, Section 2(4) of the CGST Act defines the term “Adjudicating Authority” as an authority appointed or authorized by the Act or the Commissioner of CGST, responsible for passing orders and making decisions regarding penalties, contraventions, and disputes under the Act. The Adjudicating Authority functions independently and impartially, adhering to the principles of natural justice, and its orders are subject to the appellate process and, in some cases, review.
Section 2(5) – Agent:
Section 2(5) of the CGST Act defines the term “Agent.”:
“agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another;
1. Agent: As per the CGST Act, an “Agent” refers to a person who is authorized to act on behalf of another person, known as the “Principal.” The Agent acts on behalf of the Principal in various transactions related to the supply of goods or services.
2. Authority to Act: For an individual to be considered an Agent under the CGST Act, they must have the legal authority or authorization to act on behalf of the Principal. This authority can be explicit or implicit and may arise from a contractual agreement or other legal arrangements between the Agent and the Principal.
3. Scope of Agency: The Agent’s role may involve representing the Principal in matters such as the supply or receipt of goods/services, the issuance of tax invoices, the receipt and payment of tax, filing of returns, and any other activities as authorized by the Principal. The Agent acts as a facilitator, executing transactions on behalf of the Principal.
4. Responsibilities and Liabilities: The Agent assumes certain responsibilities and liabilities under the CGST Act. They are responsible for carrying out their duties diligently and in accordance with the instructions of the Principal. Any acts or omissions by the Agent in relation to the authorized transactions may be attributed to the Principal. Consequently, the Agent may be held liable for any non-compliance or contravention of the provisions of the Act.
5. Agent-Principal Relationship: The relationship between the Agent and the Principal is crucial in determining the tax implications and obligations under the CGST Act. The Act specifies that the Agent and Principal are jointly and severally liable for any tax payments, penalties, or other obligations arising from the authorized transactions conducted by the Agent.
It is important to note that the definition of an Agent provided in Section 2(5) of the CGST Act serves to clarify the role and legal status of an Agent within the GST framework. This definition helps in determining the rights, duties, and liabilities of Agents and Principals in relation to GST compliance and transactions.
Section 2(6) –Aggregate Turnover:
Section 2(6) of the CGST Act pertains to the definition of “Aggregate Turnover.”:
“aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess;
1. Aggregate Turnover: The term “Aggregate Turnover” refers to the total value of all taxable supplies (both goods and services) made by a taxpayer, including exempt supplies and exports of goods or services. It encompasses all supplies made by the taxpayer within India, whether on their own account or on behalf of other persons, but excludes taxes levied under the CGST Act, SGST Act, UTGST Act, and the IGST Act.
2. Inclusions in Aggregate Turnover: The definition of Aggregate Turnover includes various types of supplies made by the taxpayer, such as:
a. Taxable Supplies: It encompasses the value of all supplies that attract GST. This includes supplies made for consideration (whether monetary or non-monetary), supplies made without consideration, and supplies deemed to be made under specific circumstances as outlined in the CGST Act.
b. Exempt Supplies: It also includes the value of supplies that are exempt from GST. Exempt supplies are those goods or services that are not liable to GST and are specified as exempt in the Act or by the government.
c. Export of Goods or Services: The value of goods or services exported by the taxpayer is included in the Aggregate Turnover. These supplies are treated as zero-rated under the GST regime.
d. Supplies on Behalf of Other Persons: If a taxpayer acts as an agent on behalf of other persons and makes supplies in that capacity, the value of those supplies is included in their Aggregate Turnover.
3. Exclusions from Aggregate Turnover: The following are excluded when calculating the Aggregate Turnover:
Taxes Levied: Any taxes levied under the CGST Act, SGST Act, UTGST Act, and IGST Act are not considered part of the Aggregate Turnover.
4. Significance: The Aggregate Turnover is a crucial parameter in determining various aspects under the CGST Act, such as the applicability of registration requirements, eligibility for composition scheme, determination of threshold limits, and the need for GST audits, among others. It helps in categorizing taxpayers and ensuring compliance with the provisions of the Act based on their turnover.
Understanding the concept of Aggregate Turnover is essential for taxpayers as it determines their compliance obligations, tax liability, and eligibility for certain provisions under the CGST Act.
Section 2(7) – Agriculturist:
Section 2(7) of the CGST Act defines the term “Agriculturist.” :
“agriculturist” means an individual or a Hindu Undivided Family who undertakes cultivation of land–
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family;
1. Agriculturist: As per the CGST Act, an “Agriculturist” refers to an individual or a Hindu Undivided Family (HUF) who undertakes cultivation of land by himself or by employing family members. The primary occupation of an agriculturist is agriculture, including cultivation of crops, farming, and other activities related to agricultural land.
2. Scope of Agricultural Activities: The definition of Agriculturist includes individuals or HUFs engaged in agricultural activities such as:
a. Cultivation of Land: This includes activities like ploughing, sowing, planting, growing, and harvesting crops.
b. Farming and Animal Husbandry: It encompasses activities related to rearing and breeding of livestock, poultry, and fish, as well as dairy farming and beekeeping.
c. Sale of Agricultural Produce: An agriculturist may also engage in the sale of produce grown on their land, such as crops, fruits, vegetables, and other agricultural products.
3. Exemption from GST: The CGST Act provides an exemption for agriculturists from the requirement of obtaining GST registration and the payment of GST on their agricultural income. This exemption is based on the understanding that agricultural activities are outside the purview of GST and are not considered taxable supplies.
4. Limitations and Exceptions: It’s essential to note that the definition of Agriculturist is specific to the CGST Act and may have certain limitations or exceptions depending on the context and other provisions of the Act.
For example, if an agriculturist engages in activities beyond traditional agriculture, such as processing and packaging of agricultural produce or providing agricultural-related services for a fee, those activities may fall under the scope of GST and require compliance with the relevant provisions.
The definition of Agriculturist provided in Section 2(7) of the CGST Act aims to recognize and provide relief to individuals and HUFs engaged primarily in agricultural activities. By exempting agriculturists from GST obligations, the Act acknowledges the unique nature of their occupation and the fact that agricultural income is not subject to GST.
Section 2(8) – Appellate Authority:
Section 2(8) of the CGST Act pertains to the definition of “Appellate Authority.”
“Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section 107;
1. Appellate Authority: The term “Appellate Authority” refers to an authority established or constituted under the CGST Act to hear and dispose of appeals filed against the orders or decisions of lower-level tax authorities. The Appellate Authority provides a platform for taxpayers to seek redressal and challenge the decisions made by the lower authorities under the GST regime.
2. Role and Functions: The Appellate Authority plays a vital role in the appellate process and ensures that taxpayers have an avenue to contest decisions that they believe are incorrect or unjust. The authority has the power to review the facts, evidence, and legal interpretations presented by both the taxpayer and the lower tax authorities. It can modify, confirm, or annul the orders or decisions being appealed against.
3. Independence and Impartiality: The Appellate Authority is expected to function independently and impartially, adhering to the principles of natural justice. It should evaluate the merits of each case based on the evidence and arguments presented, and make decisions free from bias or undue influence.
4. Composition and Appointment: The CGST Act empowers the government to establish one or more Appellate Authorities at various levels, such as the state level, the central level, or any other appropriate jurisdiction. The members of the Appellate Authority are appointed by the government and typically comprise individuals with expertise in law, taxation, or related fields.
5. Decisions and Orders: The decisions and orders passed by the Appellate Authority are binding on the parties involved and are enforceable under the provisions of the CGST Act. These decisions serve as final adjudication at the appellate stage, unless further challenged before a higher appellate forum, such as The Appellate Tribunal or the High Court.
The inclusion of the definition of “Appellate Authority” in Section 2(8) of the CGST Act ensures the availability of a structured appellate mechanism for taxpayers to seek review and rectification of decisions made by lower tax authorities. This definition establishes the authority’s role, composition, functions, and powers, promoting transparency, fairness, and effective dispute resolution within the GST framework.
Section 2(9) – Appellate Tribunal:
Section 2(9) of the CGST Act defines the term “Appellate Tribunal.” :
“Appellate Tribunal” means the Goods and Services Tax Appellate Tribunal constituted under section 109;
1. Appellate Tribunal: The term “Appellate Tribunal” refers to a statutory body established under the CGST Act. The Appellate Tribunal serves as an independent appellate forum for taxpayers to challenge the decisions of the lower-level authorities, including the Appellate Authority, and seek resolution of disputes related to GST.
2. Role and Functions: The Appellate Tribunal has the power to hear and dispose of appeals filed against the orders or decisions of the lower tax authorities and the Appellate Authority. It acts as an impartial adjudicating body, reviewing the evidence, facts, and legal interpretations of the case. The Tribunal has the authority to modify, confirm, annul, or set aside the decisions being appealed against.
3. Composition and Appointment: The CGST Act empowers the government to constitute the Appellate Tribunal at various levels, including the state level, the central level, or any other appropriate jurisdiction. The Tribunal is typically composed of judicial and technical members with expertise in law, taxation, or related fields. These members are appointed by the government based on their qualifications and experience.
4. Powers and Procedures: The Appellate Tribunal is vested with the powers of a civil court, including the ability to summon and enforce the attendance of witnesses, examine them under oath, and compel the production of documents. It follows the principles of natural justice, giving parties the opportunity to present their cases, provide evidence, and make submissions. The Tribunal has the authority to pass orders, issue directions, and pronounce judgments in accordance with the provisions of the CGST Act.
5. Binding Nature of Decisions: The decisions and orders passed by the Appellate Tribunal are binding on the parties involved and have the same effect as an order or judgment of a civil court. These decisions serve as final adjudication unless further challenged before a higher judicial authority, such as the High Court or the Supreme Court.
The inclusion of the definition of “Appellate Tribunal” in Section 2(9) of the CGST Act ensures the existence of an independent and specialized forum for taxpayers to appeal against decisions of lower tax authorities. The definition establishes the Tribunal’s role, composition, powers, and procedures, emphasizing its significance in promoting fair and efficient dispute resolution within the GST framework.
Section 2 (10) – Appointed day:
Section 2(10) of the CGST Act defines the term “Appointed day.” :
“appointed day” means the date on which the provisions of this Act shall come into force;
1. Appointed Day: The term “Appointed day” refers to a specific date specified by the government or the relevant authorities for the commencement or enforcement of certain provisions or sections of the CGST Act. It marks the official start date for the application of those provisions.
2. Commencement of Provisions: The CGST Act contains various provisions that may come into effect on different dates. The Appointed day serves as a reference point to determine when specific provisions, rules, or regulations of the Act become operational and enforceable.
3. Phased Implementation: In certain cases, the government may choose to implement the provisions of the CGST Act gradually or in a phased manner. In such instances, different provisions may have different appointed days to allow for a smooth transition and ensure effective implementation of the GST regime.
4. Impact on Taxpayers: The Appointed day has significance for taxpayers as it determines when specific provisions relating to registration, compliance, tax rates, input tax credit, and other aspects of the CGST Act come into force. Taxpayers need to be aware of the provisions applicable from the appointed day to ensure compliance with the legal requirements and fulfil their obligations under the GST framework.
5. Notification and Publication: The government typically notifies the appointed day through official gazettes or notifications, making it publicly available to taxpayers and other stakeholders. This ensures transparency and allows affected parties to prepare for the implementation of the relevant provisions.
The definition of “Appointed day” in Section 2(10) of the CGST Act provides clarity regarding the specific date on which various provisions of the Act come into effect. It helps establish a clear timeline for the enforcement of provisions, ensuring a smooth transition and effective implementation of the GST regime.
Section 2(11) –Assessment:
Section 2(11) of the CGST Act defines the term “Assessment.” :
“assessment” means determination of tax liability under this Act and includes self assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment;
1. Assessment: “Assessment” refers to the process of determining the tax liability of
a taxpayer under the provisions of the CGST Act. It involves evaluating the taxpayer’s records, returns, and other relevant documents to ascertain the correct amount of tax payable.
2. Purpose of Assessment: The primary purpose of assessment is to ensure that taxpayers comply with their tax obligations and pay the correct amount of GST. It involves examining the taxpayer’s financial and transactional information to verify the accuracy of their tax returns and determine any additional tax liability or refunds.
3. Types of Assessment:
a. Self-Assessment: Under the GST regime, taxpayers are generally required to self-assess their tax liability and file periodic returns accordingly. Self-assessment involves calculating and reporting the output tax liability, input tax credit, and net tax payable by the taxpayer.
b. Provisional Assessment: In certain cases, when the taxpayer is unable to determine the exact tax liability due to specific reasons, provisional assessment may be conducted. This allows for a temporary assessment based on available information, with a final assessment to follow at a later date.
c. Scrutiny Assessment: Tax authorities may undertake scrutiny assessments to verify the correctness and completeness of the taxpayer’s self-assessment. This involves a detailed examination of the taxpayer’s records, books of accounts, invoices, and other supporting documents.
d. Best Judgment Assessment: If a taxpayer fails to furnish the required returns or does not cooperate in the assessment process, the tax authorities may resort to best judgment assessment. In such cases, the authorities estimate the taxpayer’s liability based on the available information and their own judgment.
4. Time Limit for Assessment: The CGST Act prescribes time limits for different types of assessments. For example, self-assessment is typically required to be done within the prescribed time frames for filing returns, while scrutiny assessments and best judgment assessments have their own specified time limits.
5. Finalization of Assessment: Once the assessment is completed, the tax authorities issue an assessment order, which states the determined tax liability, any penalties or interest, and other relevant details. The taxpayer has the right to appeal against the assessment order if they disagree with it.
The definition of “Assessment” provided in Section 2(11) of the CGST Act establishes the process by which tax authorities determine the tax liability of taxpayers. It outlines the different types of assessments, the purpose of assessment, and the rights and obligations of taxpayers in relation to the assessment process under the GST regime.
Section 2(12) – Associated Enterprises:
Section 2(12) of the CGST Act defines the term “Associated Enterprises.” :
“associated enterprises” shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961 (43 of 1961);
1. Associated Enterprises: “Associated Enterprises” refers to two or more enterprises that are related to each other in a specific manner as defined under the CGST Act. The relationship between these enterprises can have an impact on the determination of the value of supplies made between them for GST purposes.
2. Definition under the Act: The CGST Act does not explicitly define “Associated Enterprises.” However, the concept of Associated Enterprises is primarily derived from the provisions of transfer pricing regulations. Transfer pricing deals with the pricing of transactions between related entities to ensure that the prices are at arm’s length and not manipulated to avoid taxes.
3. Related Enterprises: Under the CGST Act, enterprises are considered associated if there is direct or indirect control, ownership, or management relationship between them. The Act specifies that enterprises can be associated if one enterprise has the ability to control or influence the other in making financial, commercial, or operational decisions.
4. Impact on Value of Supplies: The concept of Associated Enterprises becomes relevant in determining the value of supplies made between them for GST purposes. The Act provides that where the supplier and recipient are associated enterprises, the transaction value may not be considered the sole basis for determining the value of supply. The transaction value may need to be adjusted if it is influenced by the relationship between the associated enterprises and does not reflect the open market value.
5. Transfer Pricing Regulations: To determine the arm’s length value of supplies between associated enterprises, the provisions of transfer pricing regulations may be applicable. Transfer pricing regulations aim to ensure that transactions between associated enterprises are conducted on terms similar to those that would be agreed upon between unrelated or independent entities.
Understanding the concept of Associated Enterprises is important for businesses that have transactions with related entities. It helps in determining the appropriate value of supplies and ensuring compliance with transfer pricing regulations and the provisions of the CGST Act related to the valuation of supplies made between associated enterprises.
Section 2(13) – Audit:
Section 2(13) of the CGST Act defines the term “Audit.” :
“audit” means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder;
1. Audit: “Audit” refers to the examination and verification of records, books of accounts, and other relevant documents of a registered taxpayer by a competent authority. The purpose of an audit is to ensure that the taxpayer’s financial statements, compliance with GST provisions, and other related records are accurate and in accordance with the requirements of the CGST Act.
2. Types of Audit:
a. Regular Audit: Regular audits are conducted by tax authorities to verify the correctness and completeness of a taxpayer’s records and compliance with GST provisions. These audits may be scheduled or conducted randomly, based on risk parameters or selection criteria determined by the tax department.
b. Special Audit: In certain cases, the tax authorities may order a special audit if they believe that the taxpayer’s records are complex or the nature of the business requires expert examination. The special audit is conducted by a chartered accountant or a cost accountant nominated by the tax authorities.
3. Purpose of Audit:
a. Verification of Compliance: Audits aim to verify that the taxpayer has complied with the provisions of the CGST Act, including timely filing of returns, payment of tax, maintenance of records, and adherence to other legal obligations.
b. Detection of Errors or Fraud: Audits help identify any errors, omissions, or discrepancies in the taxpayer’s records that may indicate unintentional mistakes or potential fraudulent activities. The tax authorities can take appropriate action based on the findings of the audit.
c. Assessment of Tax Liability: The audit process may result in the reassessment of the taxpayer’s tax liability if discrepancies or underreporting of tax are discovered. The tax authorities may initiate proceedings to recover any additional tax due, along with interest and penalties, based on the audit findings.
4. Rights and Obligations: During an audit, the taxpayer has certain rights, such as the right to be informed about the audit, the right to present records and information, and the right to be heard. The taxpayer is obligated to provide access to the relevant documents and cooperate with the audit process.
5. Audit Report and Actions: Upon completion of the audit, the tax authorities issue an audit report that summarizes the findings, observations, and any recommendations. Depending on the outcome of the audit, the tax authorities may take actions such as initiating recovery proceedings, imposing penalties, or conducting further investigations.
The definition of “Audit” provided in Section 2(13) of the CGST Act establishes the scope and purpose of audits conducted by tax authorities. It ensures that taxpayers maintain accurate records, comply with GST provisions, and facilitates effective monitoring and enforcement of the tax regime.
Section 2(14) –Authorised Bank:
Section 2(14) of the CGST Act defines the term “Authorised Bank.” :
“authorised bank” shall mean a bank or a branch of a bank authorised by the Government to collect the tax or any other amount payable under this Act;
1. Authorised Bank: “Authorised Bank” refers to a bank or a branch of a bank that has been authorized by the Commissioner or any other officer empowered by the government to collect tax or any other amount under the CGST Act. It serves as a designated entity for accepting payments from taxpayers on behalf of the government.
2. Collection of Tax: Under the GST regime, taxpayers are required to pay their tax liabilities through designated channels. The government designates specific banks or branches as authorized banks to collect taxes from taxpayers. These authorized banks play a crucial role in facilitating the smooth payment of taxes.
3. Payment Mechanisms: Authorized banks provide various payment mechanisms for taxpayers to remit their tax dues, such as cash, cheque, demand draft, electronic funds transfer (EFT), Real-Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT), or any other approved electronic payment method.
4. Responsibility and Accountability: Authorized banks have the responsibility to ensure the accurate collection and remittance of taxes received from taxpayers. They are accountable for maintaining proper records, reconciling transactions, and providing necessary reports to the tax authorities.
5. Designation by the Commissioner: The Commissioner or any other officer empowered by the government has the authority to designate banks or branches as authorized banks. The designation is based on factors such as the bank’s credibility, infrastructure, ability to handle transactions, and compliance with regulatory requirements.
6. Collection and Accounting of Tax: When a taxpayer makes a payment of tax or any other amount to an authorized bank, it is considered as a payment made to the government. The authorized bank is responsible for accounting for these collections and remitting them to the appropriate government account.
The definition of “Authorised Bank” in Section 2(14) of the CGST Act ensures a standardized and regulated process for the collection of taxes from taxpayers. It establishes the role and responsibility of authorized banks in accepting and accounting for tax payments, promoting transparency, and streamlining the tax collection mechanism under the GST.
Section 2(15) – Authorised Representative:
Section 2(15) of the CGST Act defines the term “Authorised Representative.” :
“authorised representative” means the representative as referred to in section 116;
1. Authorised Representative: “Authorised Representative” refers to a person authorized by a taxpayer to appear on their behalf before any officer of the tax department or the Appellate Authority or Appellate Tribunal during any proceedings under the CGST Act. The authorized representative acts as a representative of the taxpayer and represents their interests in the proceedings.
2. Representation in Proceedings: Tax proceedings, such as assessments, audits, investigations, and appeals, may require the presence of the taxpayer or their representative. The authorized representative is appointed to attend these proceedings, present arguments, produce evidence, and make submissions on behalf of the taxpayer.
3. Appointment and Authorization: The taxpayer has the right to appoint any person as their authorized representative. The authorization may be in the form of a written letter of authorization or a power of attorney, which empowers the representative to act on behalf of the taxpayer in specific proceedings.
4. Qualifications and Eligibility: The CGST Act specifies the qualifications and eligibility criteria for a person to be appointed as an authorized representative. The Act may require the representative to possess specific qualifications, such as being a qualified chartered accountant, cost accountant, or advocate, or meeting any other prescribed criteria.
5. Rights and Responsibilities: The authorized representative has the right to participate in the proceedings, examine documents, present arguments, cross-examine witnesses, and seek adjournments or clarifications. They are responsible for diligently representing the interests of the taxpayer, adhering to the code of conduct, and acting in a professional and ethical manner.
6. Communication and Correspondence: The authorized representative is the point of contact between the taxpayer and the tax authorities during the proceedings. They receive communication, notices, and orders on behalf of the taxpayer and are responsible for ensuring timely responses and compliance with the requirements.
7. Limitations and Withdrawal: The appointment of an authorized representative does not empower them to sign any documents on behalf of the taxpayer or undertake actions outside the scope of representation. The taxpayer retains the right to withdraw the authorization or change the authorized representative at any time by providing appropriate notice to the concerned authorities.
The definition of “Authorised Representative” in Section 2(15) of the CGST Act facilitates the effective representation of taxpayers in various proceedings under the Act. It establishes the authority, rights, and responsibilities of authorized representatives, ensuring fair and efficient participation in the proceedings on behalf of taxpayers.
Section 2(16) – Board:
Section 2(16) of the CGST Act defines the term “Board.” :
“Board” means the 1[Central Board of Indirect Taxes and Customs] constituted under the Central Boards of Revenue Act, 1963 (54 of 1963);
1. Board: “Board” refers to the Central Board of Indirect Taxes and Customs (CBIC) constituted under the Central Boards of Revenue Act, 1963. The CBIC is the apex body responsible for administering and implementing the indirect tax laws in India, including the CGST Act.
2. Functions and Powers: The Board has several functions and powers as prescribed under the CGST Act and other relevant laws. Some of the key functions of the Board include:
a. Policy Formulation: The Board is responsible for formulating policies and procedures related to the administration of the GST regime, including the interpretation of the law and issuing clarifications or circulars.
b. Supervision and Guidance: The Board provides guidance, instructions, and directions to the tax authorities for the proper implementation of the provisions of the CGST Act. It ensures uniformity and consistency in the application of the law across different jurisdictions.
c. Facilitating Compliance: The Board is responsible for developing and implementing measures to facilitate compliance with GST provisions by taxpayers. This includes the design and maintenance of IT systems for filing returns, payment of taxes, and other compliance-related activities.
d. Dispute Resolution: The Board oversees the resolution of disputes, appeals, and adjudication under the CGST Act. It may issue orders or instructions to facilitate the timely and effective resolution of such matters.
3. Composition: The Board consists of several members, including a Chairman, appointed by the Central Government. The Chairman and other members of the Board are selected based on their expertise and experience in the field of indirect taxation.
4. Powers of the Board: The Board has the power to issue orders, instructions, and circulars for the proper implementation of the CGST Act. These orders and instructions are binding on the tax authorities and taxpayers.
5. Delegation of Powers: The Board may delegate its powers and functions to the officers subordinate to it, subject to certain conditions and limitations. This enables the efficient execution of tasks and responsibilities related to the administration of the CGST Act.
The definition of “Board” provided in Section 2(16) of the CGST Act establishes the Central Board of Indirect Taxes and Customs (CBIC) as the governing body responsible for the administration and implementation of the GST regime in India. The Board plays a crucial role in policy formulation, guidance, supervision, and facilitating compliance with GST provisions, ensuring the smooth functioning of the indirect tax system.
Section 2(17) – Business:
“business” includes––
(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;
(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);
(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) 1[activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and]
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
Section 2(17) (h). Definitions of CGST Act 2017: business New Definition: activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club; and Earlier Definition: services provided by a race club by way of totalisator or a licence to bookmaker in such club;
Section 2(17) of the Central Goods and Services Tax (CGST) Act, 2017 provides the definition and detailed explanation of the term “business.” It is important to understand this definition as it determines the scope and applicability of various provisions under the CGST Act.
According to Section 2(17), “business” includes any trade, commerce, manufacture, profession, vocation, adventure, wager, or any other similar activity, whether or not it is undertaken with the motive of making a profit. Let’s break down this definition to understand its components:
1. Trade: It refers to the buying and selling of goods or services. It involves activities such as purchase, sale, exchange, or supply of goods or services.
2. Commerce: It encompasses various activities related to the distribution, exchange, and transportation of goods. It involves activities like warehousing, transportation, packaging, and advertising.
3. Manufacture: It refers to the process of transforming raw materials into finished goods through various operations, such as production, assembling, or processing.
4. Profession: It includes activities carried out by professionals who provide specialized services based on their expertise, such as doctors, lawyers, architects, consultants, etc.
5. Vocation: It refers to any occupation or trade that involves a person’s skills, training, or expertise. It can include activities like teaching, painting, singing, writing, etc.
6. Adventure: It encompasses activities that involve uncertain outcomes or risks. For example, speculative trading, gambling, betting, or any other activity involving chance or speculation.
7. Wager: It refers to activities related to placing bets or wagers on the outcome of certain events, such as sports betting, gambling, or lottery.
8. Any other similar activity: This part of the definition covers any other activity that is akin to trade, commerce, manufacture, profession, vocation, adventure, or wager. It ensures that activities not explicitly mentioned but having similar characteristics are also considered as “business.”
It’s worth noting that the definition of “business” under the CGST Act includes activities undertaken with or without the motive of making a profit. This means that even if an activity is not conducted for profit, it can still be considered as “business” for the purposes of the Act.
Understanding the definition of “business” is essential because the CGST Act imposes various obligations, such as registration, tax payment, invoicing, and compliance requirements, on persons engaged in business activities. Therefore, it is crucial to determine whether a particular activity falls within the definition of “business” to ascertain the applicability of GST provisions.
Please note that while I strive to provide accurate and up-to-date information, it’s always recommended to refer to the official government sources or consult a legal professional for precise interpretation and understanding of legal provisions.
Section 2(18) –Business Vertical
Omitted in CGST Act.
Section 2(18). Definitions of CGST Act 2017: business vertical This definition has been deleted in its entirety. Earlier Definition: “business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.
However it is better to understand the concept of the definition ‘Business Vertical, the explanation is given hereunder:
Section 2(18) of the Central Goods and Services Tax (CGST) Act, 2017 provides the definition and detailed explanation of the term “business vertical.” Understanding this definition is important to determine the treatment of specific business divisions or segments under the GST framework.
According to Section 2(18), “business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which are subject to risks and returns that are different from those of other business verticals.
A Detailed definition to understand its components is as under:
1. Distinguishable component: A business vertical should be identifiable or distinguishable from other parts of the enterprise. This means that it should have a separate organizational structure, separate records of accounts, and separate management.
2. Engaged in the supply of goods or services: A business vertical should be involved in the provision of individual goods or services or a group of related goods or services. It may refer to a specific product line, service division, or any other identifiable unit within the enterprise.
3. Subject to risks and returns: A business vertical should have its own set of risks and returns that are different from those of other business verticals within the same enterprise. This means that the profitability, market dynamics, and risks associated with the particular vertical are distinct from other verticals.
The concept of “business vertical” is relevant for determining the applicability of certain provisions of the CGST Act. For example, if an enterprise has multiple business verticals, the registration, invoicing, and tax payment obligations may vary for each
vertical. The tax liability may be determined separately for each business vertical based on their individual transactions and operations.
Additionally, the concept of business vertical is significant in cases where input tax credit (ITC) is used. ITC can generally be availed on inputs or input services used for making taxable supplies. However, if inputs or input services are used exclusively for a particular business vertical, the ITC pertaining to that vertical can be claimed separately.
It’s important to note that the determination of a business vertical is a factual and contextual analysis, considering factors such as organizational structure, accounting practices, risk allocation, and the nature of goods or services provided. The ultimate determination of whether a component qualifies as a business vertical is subject to interpretation and may require debate.
Section 2(19) – Capital Goods:
“capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;
According to Section 2(19), “capital goods” means goods which are used or intended to be used in the course or furtherance of business and are not intended for sale.
1. Used or intended to be used: Capital goods refer to goods that are either currently being used or are intended to be used in the course or furtherance of business activities. This implies that they are directly or indirectly involved in the business operations.
2. In the course or furtherance of business: Capital goods must have a direct connection to the business activities carried out by the person. They are assets that contribute to the production or provision of goods or services.
3. Not intended for sale: Capital goods are not intended to be sold as a part of the normal business operations. They are meant for long-term use and are not considered as inventory or stock-in-trade.
Examples of capital goods include machinery, equipment, vehicles, furniture, computers, buildings, and other durable assets that are used in the business for an extended period.
The treatment of capital goods under the GST framework is important for two main reasons:
1. Input Tax Credit (ITC): Businesses can claim input tax credit on the GST paid on the purchase or acquisition of capital goods. This allows them to offset the tax paid on capital goods against their output tax liability.
2. Depreciation: Capital goods are subject to depreciation as per the provisions of the Income Tax Act, 1961. The depreciation is a tax deduction that reflects the wear and tear or obsolescence of the asset over time.
It’s worth noting that the definition of capital goods excludes certain specific items such as land, buildings (except when used as a part of composite supply along with the construction services), and goods that are not eligible for ITC. These exclusions are mentioned under the CGST Act and related rules.
The definition of capital goods is crucial for determining the eligibility of input tax credit and the calculation of depreciation for tax purposes. It ensures that businesses can appropriately claim tax benefits and account for the use of assets in their operations.
Section 2(20) – Casual Taxable Person:
“casual taxable person” means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business;
According to Section 2(20), a “casual taxable person” refers to a person who occasionally undertakes transactions involving the supply of goods or services in the course or furtherance of business, but who does not have a fixed place of business.
1. Occasionally undertakes transactions: A casual taxable person engages in the supply of goods or services, but not on a regular or frequent basis. This means that the person conducts business activities occasionally, for short durations, or on a sporadic basis.
2. In the course or furtherance of business: The transactions undertaken by a casual taxable person should be related to business activities. These activities can include trade, commerce, manufacture, profession, vocation, adventure, or any other similar activity mentioned under the definition of “business” in Section 2(17) of the CGST Act.
3. Does not have a fixed place of business: A casual taxable person does not have a permanent or fixed establishment or place of business. This means that they do not have a physical location, such as an office, shop, factory, or warehouse, where their business activities are conducted.
Casual taxable persons are required to register under the GST regime if they meet the threshold specified by the government. The registration process for casual taxable persons may differ from the regular registration process, and they may be subject to specific compliance requirements based on their temporary nature of business operations.
Some common examples of casual taxable persons are individuals or entities who participate in exhibitions, trade fairs, or conferences to make occasional sales, or those who engage in seasonal businesses for short periods.
It’s important to note that the GST provisions for casual taxable persons are designed to ensure compliance and tax payment for their business activities, even though they do not have a fixed place of business. This helps in preventing tax evasion and maintaining the integrity of the GST system.
Section 2(21) – Central Tax:
“central tax” means the central goods and services tax levied under section 9;
According to Section 2(21), “Central Tax” means the tax levied under the Central Goods and Services Tax Act. It refers to the tax imposed by the central government on the supply of goods or services within a state or union territory (UT) in India.
The CGST Act establishes a comprehensive tax system wherein both the central and state governments have the authority to levy taxes on intra-state supplies of goods or services. Therefore, Central Tax is the component of GST that is levied by the central government.
The Central Tax is collected by the central government and is primarily governed by the CGST Act and related rules and regulations. It is distinct from the State Tax, which is levied by the respective state or UT governments.
The revenue collected through Central Tax is utilized by the central government for various purposes, including funding central schemes, infrastructure development, public welfare, and other expenditures at the national level.
The rate of Central Tax applicable to different goods or services is determined by the GST Council, which comprises the central and state government representatives. The Council has the authority to revise tax rates from time to time based on economic conditions, revenue requirements, and policy considerations.
The Central Tax is paid by the registered taxpayers on the supply of goods or services made within a state or UT. The taxpayers are required to collect Central Tax from their customers and subsequently deposit it to the central government through the online GST portal.
It’s important to note that the CGST Act also provides provisions for input tax credit, which allows registered taxpayers to setoff the Central Tax paid on inputs against their output tax liability. This mechanism helps in eliminating cascading effects and ensures that taxes are levied only on the value addition at each stage of the supply chain.
Understanding the concept of Central Tax is crucial for businesses and taxpayers as it determines their compliance obligations, tax liability, and the procedures for tax payment, return filing, and claiming input tax credit under the CGST Act.
Section 2(22) – Cess:
Section 2(22) of the CGST Act defines “Cess” as follows:
“cess” shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States) Act;
In simpler terms, “Cess” refers to a tax that is imposed under any other existing law but is not part of the Goods and Services Tax (GST).
A detailed explanation of the provision:
1. Tax Levied under any Act: The term “Act” in this context refers to any legislation or law enacted by the government. It could be a central or state law that imposes a tax other than the GST.
2. Not included in the GST: The CGST Act is specifically focused on the implementation and regulation of the GST system in India. However, certain taxes, apart from the GST, may still be levied under other laws. These taxes are referred to as “Cess” under the CGST Act.
Examples of Cess taxes that were in existence before the implementation of GST include Education Cess, Krishi Kalyan Cess, and Swachh Bharat Cess.
It’s important to note that the CGST Act primarily deals with the provisions related to GST, and Cess, being a separate tax levied under a different law, is not governed by the provisions of the CGST Act. Therefore, the administration, collection, and rules related to Cess would be determined by the respective laws under which they are imposed.
Finally, Section 2(22) of the CGST Act defines “Cess” as a tax levied under any Act other than the GST. It highlights that while the CGST Act governs the GST system, any separate taxes or levies imposed under other laws are considered as Cess and are not part of the GST framework.
Section 2(23) – Chartered Accountant:
Section 2(23) of the CGST Act states:
“chartered accountant” means a chartered accountant as defined in clause (b) of subsection (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949).
In simpler terms, “Chartered Accountant” refers to a professional who is qualified and registered under the Chartered Accountants Act, 1949.
A detailed explanation of the provision:
1. Definition Reference: The provision refers to the definition of “Chartered Accountant” as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949. This means that the definition of Chartered Accountant under the CGST Act aligns with the definition provided in the Chartered Accountants Act, 1949.
2. Qualification and Registration: A Chartered Accountant is a professional who has obtained the necessary qualifications and has been registered under the Chartered Accountants Act, 1949. The Chartered Accountants Act, 1949 (38 of 1949) is an Act of Parliament that regulates the profession of Chartered Accountancy in India.
3. Responsibilities and Expertise: Chartered Accountants are professionals with specialized knowledge and expertise in the fields of accounting, auditing, taxation, financial management, and related areas. They are authorized to provide services such as auditing financial statements, conducting tax audits, providing tax advisory, handling financial reporting, and advising on various financial matters.
4. Role in GST Compliance: Chartered Accountants play a crucial role in the Goods and Services Tax (GST) compliance framework. They assist businesses and individuals in fulfilling their tax obligations under the GST regime. This includes services such as GST registration, filing of GST returns, GST audits, and providing advice on GST-related matters.
It’s important to note that the role and responsibilities of Chartered Accountants extend beyond GST compliance and cover a wide range of financial and accounting services. They are recognized professionals who adhere to ethical standards and professional conduct while carrying out their duties.
Finally, Section 2(23) of the CGST Act defines “Chartered Accountant” as a professional who is qualified and registered under the Chartered Accountants Act, 1949. Chartered Accountants possess specialized knowledge and expertise in the fields of accounting, auditing, taxation, and financial management. They play a significant role in assisting businesses and individuals in complying with the GST provisions and fulfilling their tax obligations.
Section 2(24) – Commissioner:
Section 2(24) of the Central Goods and Services Tax (CGST) Act, 2017 defines
“Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act;
According to Section 2(24) of the CGST Act, “Commissioner” refers to the Commissioner of Central Tax appointed under the CGST Act. The Commissioner holds a key position in the tax administration hierarchy and is responsible for overseeing the implementation and enforcement of the CGST Act within their jurisdiction.
The Commissioner is an officer of the central government who exercises powers and performs duties under the CGST Act. They are appointed by the central government and may be designated as the Principal Commissioner of Central Tax, Commissioner of Central Tax, or any other similar designations.
The Commissioner has several important responsibilities and powers, which include:
1. Administrative Functions: The Commissioner is responsible for the administration of the CGST Act within their jurisdiction. They oversee the registration of taxpayers, the processing of returns, the conduct of audits, and other administrative functions related to tax compliance.
2. Adjudication: The Commissioner may be authorized to act as an adjudicating authority in certain cases. They have the power to adjudicate on matters related to the determination of tax liability, penalty imposition, and any other disputes arising under the CGST Act.
3. Inspection, Search, and Seizure: The Commissioner has the power to authorize inspection, search, and seizure operations in cases where there are reasonable grounds to believe that a person has committed a tax-related offense or contravened the provisions of the CGST Act.
4. Recovery of Tax Arrears: The Commissioner is empowered to initiate and oversee the recovery of tax arrears, including the attachment and sale of assets to recover outstanding tax amounts.
5. Appeals: The Commissioner may also act as an appellate authority for certain matters. They can hear and decide on appeals against the orders passed by subordinate officers, such as the Assistant Commissioner or Deputy Commissioner.
The Commissioner, being a high-ranking officer, has a significant role in ensuring the proper administration of the GST law, preventing tax evasion, and maintaining compliance. They have the authority to issue guidelines, circulars, and instructions to clarify the interpretation and implementation of the law within their jurisdiction.
It’s important to note that the powers and functions of the Commissioner may vary based on the specific provisions of the CGST Act, delegated powers by the government, and any subsequent amendments or notifications issued by the relevant authorities.
Section 2(25) – Commissioner in the Board:
Section 2(25) of the Central Goods and Services Tax (CGST) Act, 2017 defines:
“Commissioner in the Board” means the Commissioner referred to in section 168;
The term “Commissioner in the Board” based on the organizational structure and roles within the tax administration.
In the context of taxation, a “Commissioner in the Board” typically refers to a high-ranking officer who holds a leadership position within the tax administration or tax regulatory board. This could be the central board responsible for the administration of GST, such as the Central Board of Indirect Taxes and Customs (CBIC) in India.
Commissioners in the Board are usually responsible for overseeing and managing various aspects of the tax system. Their roles and responsibilities may include:
1. Policy Formulation: Commissioners in the Board play a crucial role in formulating tax policies, rules, and regulations related to GST. They contribute to the development and implementation of tax laws to ensure smooth tax administration.
2. Implementation and Compliance: They are responsible for implementing and monitoring the compliance of the GST law within their jurisdiction. This includes ensuring the registration of taxpayers, processing returns, conducting audits, and taking appropriate actions to address non-compliance.
3. Administration: Commissioners in the Board oversee the administrative functions of the tax authority. They provide guidance, direction, and supervision to subordinate officers, ensuring the effective and efficient functioning of the tax administration.
4. Dispute Resolution: They may also have a role in resolving disputes or appeals arising from tax assessments or other tax-related matters. Commissioners in the Board may act as appellate authorities, hearing appeals against decisions made by lower-level tax officers.
5. Policy Interpretation: Commissioners in the Board may provide interpretations and clarifications on various aspects of the GST law, issuing circulars, notifications, or guidelines to address queries from taxpayers, professionals, or other stakeholders.
It’s important to note that the specific roles, functions, and designations within the tax administration hierarchy may vary across jurisdictions and can be subject to changes or updates over time.
Section 2(26) – Common Portal
Section 2(26) defines:
“common portal” means the common goods and services tax electronic portal referred to in section 146;
According to Section 2(26) of the CGST Act, the “Common Portal” refers to the online platform established by the government for facilitating the administration of GST. It serves as a central digital interface for taxpayers, tax authorities, and other stakeholders to interact, file returns, make payments, and perform various other activities related to GST compliance.
The Common Portal serves as a single-window system for all GST-related transactions and processes. It enables taxpayers to perform the following functions:
1. Registration: Taxpayers can register for GST through the Common Portal by submitting the necessary information and documents. The Portal facilitates the issuance of a unique Goods and Services Tax Identification Number (GSTIN) to each registered taxpayer.
2. Return Filing: Taxpayers can file their GST returns, including regular returns, annual returns, and composition scheme returns, through the Common Portal. The Portal provides the necessary forms and formats for accurately reporting the tax liability and input tax credits.
3. Payment of Tax: The Common Portal allows taxpayers to make payments for their GST liability. It provides various online payment options, including net banking, credit/debit cards, and other electronic modes of payment.
4. Claiming Input Tax Credit: Taxpayers can claim input tax credit on their eligible purchases by furnishing the details through the Common Portal. This helps in offsetting the tax liability on output supplies and avoiding double taxation.
5. Amendments and Corrections: Taxpayers can make amendments or corrections to their GST registration details, returns, or other information through the Common Portal. This ensures accuracy and compliance with the GST law.
6. Communication and Notices: The Common Portal serves as a communication channel between taxpayers and tax authorities. Taxpayers can access any notices, communications, or messages issued by the tax authorities through the Portal.
The Common Portal is operated and maintained by the Goods and Services Tax Network (GSTN), a non-profit organization formed to provide the technological infrastructure for GST implementation. The GSTN works in collaboration with the central and state governments to ensure the smooth functioning of the Common Portal and related IT systems.
The establishment of the Common Portal and the use of technology in GST administration have streamlined compliance, reduced paperwork, and improved transparency in tax processes. It enables seamless communication between taxpayers and tax authorities, leading to increased efficiency and effectiveness in tax administration.
As the Common Portal is a critical component of GST compliance, taxpayers are required to access and utilize it for various activities such as registration, return filing, and payment of taxes. It’s important to keep up with any updates, notifications, or guidelines issued by the government regarding the use of the Common Portal.
Section 2(27) – Common Working Days:
Section 2(27) of the CGST Act defines “Common Working Days” as follows:
“common working days” in respect of a State or Union territory shall mean such days in succession which are not declared as gazetted holidays by the Central Government or the concerned State or Union territory Government;
In simpler terms, “Common Working Days” refer to the days of the week that are not considered Sundays or public holidays.
A detailed explanation of the provision:
1. Days of the Week: The provision refers to the days of the week, which include Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, and Sunday.
2. Sundays: Sundays are generally regarded as a non-working day and are considered a common day of rest in many countries. Therefore, Sundays are excluded from the definition of “Common Working Days” in the CGST Act.
3. Public Holidays: Public holidays are specific days recognized by the government and are typically non-working days. The CGST Act does not provide an exhaustive list of public holidays, as these may vary based on the jurisdiction. The definition of “Common Working Days” excludes public holidays as well.
So, “Common Working Days” encompass all the weekdays (Monday to Friday) and Saturdays, excluding Sundays and public holidays. This definition is relevant in various contexts within the CGST Act, such as determining timelines, working hours, or compliance requirements related to business activities.
It’s important to note that the specific public holidays and their applicability may vary across different states or jurisdictions within India. Therefore, it is advisable to refer to the relevant state-specific laws or notifications for the list of public holidays applicable in a particular area.
Finally, Section 2(27) of the CGST Act defines “Common Working Days” as the days of the week excluding Sundays and public holidays. This definition is significant in determining working days for various purposes under the CGST Act.
Section 2(28) – Company Secretary:
“company secretary” means a company secretary as defined in clause (c) of sub-section 1 of section 2 of the Company Secretaries Act, 1980 (56 of 1980).
According to Section 2(28) of the CGST Act, “Company Secretary” refers to a Company Secretary as defined in clause (c) of sub-section (1) of Section 2 of the Companies Act, 2013. The Companies Act, 2013 is a separate legislation that governs the incorporation, management, and functioning of companies in India.
Under the Companies Act, 2013, a Company Secretary is a professional who possesses the necessary qualifications and knowledge to handle the legal, regulatory, and compliance aspects of company administration. The Company Secretary is responsible for ensuring that the company complies with various legal and regulatory requirements and acts as a vital link between the company, its board of directors, shareholders, and regulatory authorities.
The roles and responsibilities of a Company Secretary under the Companies Act, 2013 may include:
1. Compliance: A Company Secretary ensures compliance with applicable laws, rules, and regulations, including those related to company formation, maintenance of statutory registers, filing of various forms, and adherence to corporate governance norms.
2. Board Meetings and Shareholder Meetings: The Company Secretary assists in the preparation and conduct of board meetings and shareholder meetings. They help in drafting agendas, preparing meeting minutes, and ensuring that the decision-making process is conducted in compliance with legal requirements.
3. Corporate Governance: A Company Secretary plays a crucial role in promoting and maintaining good corporate governance practices within the company. They advise the board of directors on corporate governance principles, ethical standards, and best practices.
4. Legal Documentation: The Company Secretary assists in the preparation, review, and maintenance of legal documents such as contracts, agreements, resolutions, and other corporate records.
5. Communication and Reporting: A Company Secretary is responsible for ensuring effective communication between the company and its stakeholders. They help in the preparation and filing of various reports, returns, and disclosures as required by law.
6. Secretarial Audit: The Company Secretary may conduct secretarial audits to ensure compliance with applicable laws and regulations and to identify any non-compliance or irregularities.
It’s important to note that the specific roles and responsibilities of a Company Secretary may vary based on the size of the company, the industry sector, and other factors. The Companies Act, 2013 provides detailed provisions and regulations regarding the qualifications, appointment, and functions of Company Secretaries.
Section 2(29) – Competent Authority:
“competent authority” means such authority as may be notified by the Government;
According to Section 2(29) of the CGST Act, “Competent Authority” refers to an authority appointed or authorized by the CGST Act or any other law to perform specific functions or exercise certain powers under the Act.
The Competent Authority may be appointed or authorized by the government at the central or state level, and their appointment or authorization is aimed at facilitating the effective administration and enforcement of the GST law.
The specific powers and functions of the Competent Authority may vary depending on the provisions of the CGST Act or any other law. However, some common responsibilities or powers that may be vested in the Competent Authority include:
1. Inspections and Investigations: The Competent Authority may have the power to conduct inspections, audits, and investigations to ensure compliance with the provisions of the CGST Act. They may inspect business premises, examine records, and gather evidence to detect tax evasion or non-compliance.
2. Search and Seizure: In cases where there are reasonable grounds to believe that a person has contravened the provisions of the CGST Act, the Competent Authority may have the power to authorize search and seizure operations. This allows them to seize goods, documents, or assets that are relevant to the investigation.
3. Adjudication: The Competent Authority may act as an adjudicating authority to determine tax liability, impose penalties, and decide on any disputes arising under the CGST Act. They may conduct hearings, examine evidence, and pass orders on matters related to tax assessment, penalties, or other issues.
4. Recovery of Dues: The Competent Authority may have the power to initiate and oversee the recovery of outstanding tax dues. This includes the authority to attach and sell assets, issue recovery notices, and take other necessary actions to recover the dues.
5. Issuance of Orders and Notifications: The Competent Authority may issue orders, notifications, or guidelines to provide clarity on the interpretation and implementation of the provisions of the CGST Act. These orders and notifications help in guiding taxpayers and other stakeholders on compliance requirements and procedures.
It’s important to note that the specific powers, functions, and scope of authority of the Competent Authority may be defined in different sections of the CGST Act or other related laws. The appointment or authorization of the Competent Authority is typically made by the government through official notifications or orders.
For precise interpretation and understanding of the legal provisions related to the Competent Authority and their powers, it is advisable to refer to the relevant sections of the CGST Act.
Section 2(30) – Composite Supply:
“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
According to Section 2(30) of the CGST Act, “Composite Supply” refers to a supply made by a taxable person consisting of two or more taxable supplies of goods or services or both, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business. These supplies are treated as a single supply for the purposes of taxation.
To further understand composite supply, it’s essential to grasp the key elements of this definition:
1. Multiple Taxable Supplies: A composite supply involves two or more taxable supplies of goods or services or both. These supplies can be distinct and separate from each other, but they are combined and provided together as part of a single transaction.
2. Natural Bundling: The taxable supplies included in a composite supply are “naturally bundled.” This means that the supplies are typically provided together or are commonly associated with each other in the ordinary course of business. They may be interdependent or essential to the overall purpose or functionality of the transaction.
3. Ordinary Course of Business: The supplies in a composite supply are provided together as a regular practice or in the ordinary course of the supplier’s business. This means that they are not incidental or sporadic but form a usual part of the supplier’s offerings.
4. Single Supply Treatment: From a taxation perspective, a composite supply is treated as a single supply, even though it consists of multiple taxable supplies. This means that the tax rate, tax liability, and other provisions applicable to the composite supply are determined based on the principal supply within the composite supply.
Determining whether a supply qualifies as a composite supply is important for various purposes under the GST law. For example:
1. Taxability and Rate of Tax: The taxability and rate of tax applicable to a composite supply are determined based on the principal supply within the composite supply. The principal supply is the primary supply that gives the composite supply its essential character.
2. Invoice and Documentation: In the case of a composite supply, the supplier issues a single invoice for the entire supply. The invoice should indicate the nature of the composite supply and the tax rate applicable to the principal supply.
3. Input Tax Credit (ITC): Input tax credit can be claimed for the supplies forming part of a composite supply based on the tax paid on the principal supply. The ITC eligibility is determined based on the taxability and eligibility criteria of the principal supply.
Understanding the concept of composite supply is crucial for proper classification, tax determination, and compliance with the GST law. It helps in ensuring accurate invoicing, reporting, and tax treatment of transactions involving multiple supplies.
It’s important to note that the GST law provides specific rules and guidelines for determining the principal supply within a composite supply. These rules help in identifying the supply that gives the composite supply its essential character for tax purposes.
For precise interpretation and understanding of the legal provisions related to composite supply, it is advisable to refer to the relevant sections of the CGST Act, related rules, notifications, and clarifications issued by the government.
Section 2(31) – Consideration
“consideration” in relation to the supply of goods or services or both includes––
(a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government;
(b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government:
Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;
According to Section 2(31) of the CGST Act, “consideration” refers to any payment made by the recipient of supply to the supplier in return for the supply of goods or services. It can be in the form of money, goods, services, or even the monetary value of any other act or forbearance. In simpler terms, consideration represents the value given or agreed to be given in exchange for the supply of goods or services.
The definition of consideration under the CGST Act is broad and inclusive. It encompasses not only monetary payments but also non-monetary transactions, such as barter exchanges or the provision of services in lieu of payment. The Act recognizes that consideration can take various forms, as long as there is a reciprocal exchange between the supplier and the recipient.
The determination of consideration is significant for the calculation of GST liability. The value of consideration forms the basis for determining the taxable value of a supply, which is the value on which Goods and Services Tax (GST) is levied. In most cases, the consideration is expressed as a monetary amount, and GST is calculated based on this amount. However, there are specific rules and provisions within the Act that provide guidance on how to determine the value of consideration in different scenarios, such as discounts, subsidies, or free supplies.
Finally, Section 2(31) of the CGST Act defines consideration as the payment made by the recipient to the supplier for the supply of goods or services. It encompasses monetary and non-monetary transactions and is crucial in determining the taxable value for the calculation of GST liability.
Section 2(32) – Continuous supply of Goods:
“continuous supply of goods” means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, specify;
Section 2(32) of the CGST Act, 2017 defines the term “continuous supply of goods.” It is important to note that the term “continuous supply” relates to goods, not services.
According to Section 2(32) of the CGST Act, a continuous supply of goods refers to a supply of goods that is agreed upon by the supplier and the recipient, where the goods are continuously or periodically supplied, or where the obligation to supply the goods is ongoing.
The key factors that determine a continuous supply of goods are:
1. Agreement: There must be an agreement between the supplier and the recipient for the supply of goods on a continuous or periodic basis.
2. Continuous or periodic supply: The supply of goods should be continuous or periodic, meaning that it occurs regularly or at specified intervals.
3. Obligation to supply: There must be an obligation on the part of the supplier to make such supplies over a defined period.
Examples of continuous supply of goods can include the regular provision of goods under a long-term contract, the supply of goods on hire or lease, or any other arrangement where goods are provided continuously or periodically over a defined period.
The concept of continuous supply of goods is significant in determining the tax liability and the time of supply for such transactions. It helps establish the point in time when the liability to pay Goods and Services Tax (GST) arises on such supplies.
It is important to note that the specific rules and provisions governing the continuous supply of goods, including the determination of the time of supply and invoicing requirements, are further detailed in the CGST Act and its associated rules. Therefore, for a comprehensive understanding of the provisions related to continuous supply of goods,
Section 2(33) – Continuous Supply of Services:
“continuous supply of services” means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify;
“Continuous Supply of Services” means a supply of services that is provided, or is to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with the obligation for periodic payment of consideration.
In simpler terms, “Continuous Supply of Services” refers to the provision of services under a contract that extends beyond a period of three months, with a recurring or periodic payment obligation.
A detailed explanation of the provision:
1. Supply of Services: The provision pertains specifically to the supply of services rather than the supply of goods. Services refer to activities or performances provided by one party to another in exchange for consideration.
2. Continuous or Recurrent Basis: The services covered under this provision are those that are provided continuously or on a recurring basis. This means that the services are ongoing and are not completed in a single instance. The service provider is obligated to perform or provide the services over an extended period of time.
3. Contractual Obligation: The services covered under “Continuous Supply of Services” are provided under a contractual agreement between the service provider and the recipient. The terms and conditions of the contract outline the scope of the services, the duration of the contract, and other relevant details.
4. Period Exceeding Three Months: To qualify as a continuous supply of services, the contract duration must exceed a period of three months. If the contract specifies that the services will be provided for three months or less, it would not fall under the definition of continuous supply.
5. Periodic Payment of Consideration: In a continuous supply of services, there is an obligation for the recipient to make periodic payments to the service provider. The consideration (payment) is made at regular intervals as agreed upon in the contract.
This definition of “Continuous Supply of Services” is significant within the CGST Act for various purposes, such as determining the time of supply, invoicing requirements, and the determination of taxable value for such supplies.
The specific rules and provisions may apply to continuous supplies of services under the CGST Act and its related regulations. These rules provide guidance on matters such as invoicing, payment of tax, and other compliance requirements specific to continuous supplies.
Finally, Section 2(33) of the CGST Act defines “Continuous Supply of Services” as the provision of services under a contract for a period exceeding three months, with a recurring or periodic payment obligation. This provision is relevant for determining the treatment and requirements related to such continuous supplies of services under the GST Act.
Section 2(34) – Conveyance:
“conveyance” includes a vessel, an aircraft and a vehicle;
“Conveyance” means a vehicle used for transportation of goods.
In simpler terms, “Conveyance” refers to a vehicle that is used for the transportation of goods. It includes any vehicle or mode of transportation used to move goods from one place to another.
A detailed explanation of the provision:
1. Transportation of Goods: The provision defines conveyance as a vehicle specifically used for the transportation of goods. It encompasses any mode of transportation, such as a truck, car, van, ship, aircraft, or any other means used for carrying goods.
2. Scope of Application: The definition of conveyance is relevant in various provisions of the CGST Act that deal with the movement and transportation of goods. It may apply to provisions related to the levy of taxes, invoicing, e-way bills, inspections, and other compliance requirements related to the movement of goods.
3. Inclusion of Different Modes of Transportation: The provision does not limit the definition of conveyance to any particular mode of transportation. It covers both land-based vehicles (such as trucks or cars) and other modes of transportation like ships, aircraft, or any other means used for the transportation of goods.
The concept of conveyance is significant in the GST regime as it helps in determining the tax liability, compliance requirements, and documentation related to the movement of goods. It allows for the identification and tracking of goods during transit to ensure appropriate tax administration and prevent tax evasion.
It is necessary to note that the CGST Act and related rules may provide further details, rules, or conditions regarding the conveyance, such as requirements for maintaining records, filing of declarations, or issuance of necessary documents like invoices or e-way bills.
Finally, Section 2(34) of the CGST Act defines “Conveyance” as a vehicle used for the transportation of goods. It encompasses any mode of transportation used to move goods from one place to another. The concept of conveyance is relevant in various provisions of the CGST Act related to the movement, taxation, and compliance requirements of goods under the GST Act.
Section 2(35) – Cost Accountant:
“cost accountant” means a cost accountant as defined in 1[clause (b)] of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959);
Section 2(35). Definitions of CGST Act 2017: cost accountant New Definition:
“cost accountant” means a cost accountant as defined in clause (b) of sub-section
(1) of section 2 of the Cost and Works Accountants Act, 1959. Earlier Definition:
“cost accountant” means a cost accountant as defined in clause (c) of sub-section
(2) of section 2 of the Cost and Works Accountants Act, 1959.
Section 2(35) of the CGST Act, 2017 defines the term “cost accountant.” According to this section:
“Cost accountant” means a person who holds a valid certificate of practice under the provisions of sub-section (1) of section 6 of the Cost and Works Accountants Act, 1959 and who has been appointed by a person referred to in section 2(17) of the CGST Act to conduct an audit of cost records of the person’s business.
In simple terms, a cost accountant refers to a professional who holds a valid certificate of practice under the Cost and Works Accountants Act, 1959. They are appointed by a person who falls under the definition of “person” as defined in section 2(17) of the CGST Act. The purpose of this appointment is to conduct an audit of the cost records of that person’s business.
The Cost and Works Accountants Act, 1959 is a legislation in India that governs the profession of cost accountancy. It establishes the Institute of Cost Accountants of India and provides guidelines and regulations for the practice of cost accounting in the country.
In the context of the CGST Act, a cost accountant may be appointed to conduct an audit of the cost records maintained by a person for the purpose of GST compliance. The audit conducted by a cost accountant helps ensure the accuracy and compliance of the cost records with the relevant provisions of the CGST Act.
It’s important to note that the role and responsibilities of a cost accountant under the CGST Act may be further detailed in the Act itself or in rules, regulations, or notifications issued by the government. Therefore, for a comprehensive understanding of the provisions related to cost accountants and their role in GST Act.
Section 2(36) – Council:
“Council” means the Goods and Services Tax Council established under article 279A of the Constitution;
According to this section: “Council” refers to the Goods and Services Tax (GST) Council established under Article 279A of the Constitution.
The GST Council is a constitutional body formed to make recommendations on important issues related to GST, including tax rates, exemptions, threshold limits, administrative procedures, and more. It consists of the following members:
1. The Union Finance Minister, who acts as the Chairperson of the Council.
2. The Minister of Finance or any other Minister nominated by each state government.
3. The Minister of Finance or any other Minister nominated by the Union territories with a legislature.
The primary objective of the GST Council is to ensure uniformity in tax rates and policies across the country, streamline the GST implementation process, and resolve any disputes that may arise between the Centre and the states or among states themselves.
The Council holds regular meetings to discuss and decide on various matters related to GST. It functions based on a majority decision, with each member having one vote. However, for decisions related to certain specific matters, such as those affecting the tax base or special provisions for certain states, a three-fourths majority is required.
The decisions of the GST Council are binding on both the Central Government and the State Governments. These decisions play a crucial role in shaping the GST framework and determining important aspects such as tax rates, input tax credit mechanisms, filing procedures, and more.
The CGST Act may provide a definition for the term “Council,” the detailed functioning, powers, and procedures of the GST Council are outlined in the relevant provisions of the Constitution and the GST (Compensation to States) Act, 2017.
For a comprehensive understanding of the provisions related to the GST Council and its functioning, it is advisable to refer to the relevant sections of the CGST Act, the Constitution, and other relevant laws and regulations.
Section 2(37) –Credit Note:
“credit note” means a document issued by a registered person under sub-section (1) of section 34;
Section 2(37) of the CGST Act, 2017 defines the term “credit note.”
A credit note, as per the CGST Act, refers to a document or an electronic record that is issued by a registered supplier to the recipient when the taxable value or tax charged in the original invoice exceeds the actual taxable value or tax liability on the supply of goods or services.
In simpler terms, a credit note is issued by a supplier to rectify an error or make an adjustment to the original invoice. It is typically used in situations where there is an overstatement of the taxable value or tax amount in the original invoice, or if there is a change in the goods or services provided, resulting in a decrease in the value or tax liability.
A credit note contains the following details:
1. Name, address, and Goods and Services Tax Identification Number (GSTIN) of the supplier.
2. Name, address, and GSTIN of the recipient.
3. A unique identification number of the credit note.
4. Date of issue of the credit note.
5. Details of the original invoice being credited, such as invoice number, date, and taxable value.
6. Corrected taxable value or tax amount.
7. Reasons for issuing the credit note.
The recipient of a credit note can adjust the amount mentioned in the credit note against their tax liability in their future GST returns. This adjustment helps in correcting the overstatement of the tax liability that occurred due to the original invoice.
The issuance and treatment of credit notes are governed by specific rules and provisions laid out in the CGST Act and its associated rules. These rules specify the conditions and time limits for issuing credit notes, the adjustments to be made in the recipient’s tax liability, and the necessary documentation and record-keeping requirements.
To ensure compliance with the relevant provisions, it is advisable for businesses to consult the specific sections and rules within the CGST Act.
Section 2(38) – Debit Note:
“debit note” means a document issued by a registered person under sub-section (3) of section 34;
Section 2(38) of the CGST Act, 2017 defines the term “debit note.” its meaning and explanation as under:
As per the CGST Act, a “debit note” refers to a document or an electronic record issued by a registered supplier to the recipient. It is issued for the purpose of increasing the tax liability or to adjust the value of a taxable supply previously declared in a tax invoice or any other document.
In simpler terms, a debit note is issued by a supplier when there is a need to increase the taxable value or tax amount mentioned in an earlier tax invoice due to various reasons, such as:
1. Additional goods or services are supplied that were not included in the original invoice.
2. Price revision or renegotiation of the original transaction resulting in an increase in the value.
3. Errors or omissions in the original invoice.
4. Change in the taxable value or tax liability of the original supply.
A debit note contains the following information:
1. Name, address, and Goods and Services Tax Identification Number (GSTIN) of the supplier.
2. Name, address, and GSTIN of the recipient.
3. A unique identification number assigned to the debit note.
4. Date of issue of the debit note.
5. Details of the original tax invoice or document being adjusted, such as invoice number, date, and taxable value.
6. Revised taxable value and tax amount after the adjustment.
7. Reasons for issuing the debit note.
The recipient of a debit note needs to account for the increase in tax liability and adjust it accordingly in their GST returns. The adjustment is made by increasing the taxable value or input tax credit amount, depending on the circumstances and the applicable rules.
The issuance, treatment, and adjustment of debit notes are subject to specific rules and provisions outlined in the CGST Act and its related rules. These rules define the conditions, time limits, and procedures for issuing and utilizing debit notes.
Section 2(39) –Deemed Exports:
“deemed exports” means such supplies of goods as may be notified under section 147;
According to Section 2(39) of the CGST Act, “deemed exports” refers to such supplies of goods that are notified as deemed exports under the provisions of the Act or the rules made thereunder.
Deemed exports are not actual physical exports of goods but are treated as such for the purpose of certain benefits and provisions under the Goods and Services Tax (GST) regime. These supplies are considered to be consumed within the country, even though they are supplied to a recipient located in India.
The supplies falling under the category of deemed exports are generally made to specified entities or projects, such as:
1. Supplies to Export Oriented Units (EOUs) or units in Special Economic Zones (SEZs).
2. Supplies to projects financed by multilateral or bilateral agencies or the International Organization for Economic Cooperation and Development (OECD).
3. Supplies to nominated agencies or organizations as specified by the government.
The purpose of treating such supplies as deemed exports is to extend certain benefits and concessions to support the growth of specific sectors and encourage manufacturing and exports. Some of the benefits available to deemed exporters include:
1. Refund of GST paid on inputs used in the deemed export supplies.
2. Exemption or concessional rate of GST on procurement of goods or services required for the deemed export supplies.
3. Relaxation in compliance requirements and documentation for deemed export transactions.
The specific conditions, eligibility criteria, and procedures for availing benefits under the deemed export category are outlined in the relevant provisions of the CGST Act, rules, and notifications issued by the government.
For comprehensive understanding and accurate information regarding the deemed export provisions and benefits, businesses should refer to the specific sections, rules, and government notifications within the CGST Act and related regulations.
Section 2(40) – Designated Authority:
“designated authority” means such authority as may be notified by the Board;
According to Section 2(40) of the CGST Act, the term “designated authority” refers to an authority appointed or authorized by the government to exercise certain powers or perform specific functions under the Act.
The designated authority is entrusted with specific responsibilities and powers for the administration and enforcement of the provisions of the CGST Act. This authority can be either an individual or a body, depending on the nature of the powers and functions conferred upon them.
The CGST Act empowers the designated authority to perform various tasks, which may include:
1. Conducting audits: The designated authority may be authorized to conduct audits of registered persons to ensure compliance with the provisions of the Act.
2. Inspection and search: They may have the power to carry out inspections, searches, and seizures of goods, documents, or premises to prevent tax evasion and enforce compliance.
3. Assessment and determination of tax liability: The designated authority may be responsible for assessing the tax liability of a person, including the determination of taxable value, applicable tax rates, and input tax credit eligibility.
4. Refund processing: They may play a role in the processing and verification of refund claims made by taxpayers.
5. Other functions: The designated authority may also be assigned additional functions and powers related to the administration and enforcement of the CGST Act, such as issuing clarifications, rulings, or orders to resolve disputes or provide guidance.
The specific powers, functions, and scope of authority of the designated authority can be further detailed in the rules, regulations, or notifications issued by the government. These details provide clarity on the extent of their authority and the procedures to be followed.
For a comprehensive understanding of the designated authority and its role in the implementation of the CGST Act, it is advisable to refer to the specific sections, rules, and relevant government notifications within the Act and related regulations.
Section 2(41) – Document:
“document” includes written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act, 2000 (21 of 2000);
As per Section 2(41) of the CGST Act, the term “document” includes any written, printed, or electronically generated record that provides evidence of a transaction or any matter related to the supply of goods or services.
In the context of the CGST Act, a document refers to any form of record that captures information related to the transaction or other aspects covered under the Act. It can take various forms, such as:
1. Physical documents: These include written or printed records, such as invoices, receipts, contracts, agreements, purchase orders, delivery notes, credit notes, debit notes, or any other document that contains information related to the supply of goods or services.
2. Electronic documents: These are records generated, sent, received, or stored electronically. They may include digital copies of invoices, electronic records of transactions, emails, PDF files, spreadsheets, or any other electronic record that captures the necessary information related to the supply.
The term “document” is defined broadly to encompass both physical and electronic forms of records. This is to ensure that all relevant records and evidence can be considered for the purpose of complying with the provisions of the CGST Act, including tax calculation, input tax credit, returns filing, and other related requirements.
The specific requirements for maintaining and presenting documents, including the format, content, retention period, and other related obligations, are outlined in the CGST Act, rules, and notifications issued by the government. These provisions aim to ensure transparency, accuracy, and compliance with the GST law.
To comply with the document-related requirements of the CGST Act, businesses should refer to the specific sections, rules, and guidelines within the Act.
Section 2(42) – Drawback:
“drawback” in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such goods;
“Drawback” means the rebate of duty or tax, wholly or partially, charged on any imported goods or on any materials used in the manufacture or processing of such goods, which are exported.
In simpler terms, “Drawback” refers to the refund or rebate of the duty or tax paid on imported goods or materials used in the manufacture or processing of goods that are subsequently exported.
A detailed explanation of the provision:
1. Rebate of Duty or Tax: Drawback involves the refund or rebate of the duty or tax paid on imported goods or materials. Duty or tax refers to any customs duty, excise duty, or other applicable taxes levied on the importation of goods or the materials used in their manufacture or processing.
2. Imported Goods: Drawback is applicable to goods that have been imported into the country. These goods may be subject to certain duties or taxes at the time of importation.
3. Materials Used in Manufacture or Processing: Drawback also covers materials that are used in the manufacture or processing of goods. This includes any components, parts, or raw materials that are imported and incorporated into the final product.
4. Exported Goods: The eligibility for drawback arises when the goods, which were subject to duty or tax payment or the materials used in their manufacture or processing, are subsequently exported. Export refers to the movement of goods out of the country to a foreign destination.
The purpose of drawback is to provide relief to exporters by refunding or partially refunding the duty or tax paid on imported goods or materials. This helps to maintain competitiveness in the international market by reducing the cost burden on exporters.
The pecific rules, procedures, and rates for drawback are determined by the customs authorities and may vary based on the nature of goods, their classification, and the applicable rates of duty or tax. These rules and rates are administered by the Customs department and are separate from the provisions of the CGST Act.
To conclude, Section 2(42) of the CGST Act defines “Drawback” as the rebate or refund of the duty or tax paid on imported goods or materials used in the manufacture or processing of goods that are subsequently exported. The purpose of drawback is to provide relief to exporters and maintain competitiveness in the international market.
Section 2(43) – Electronic Cash Ledger:
“electronic cash ledger” means the electronic cash ledger referred to in subsection (1) of section 49;
Section 2(43) of the CGST Act, 2017 defines the term “electronic cash ledger.” The meaning and explanation as under:
According to Section 2(43) of the CGST Act, an “electronic cash ledger” refers to an electronic register maintained on the GST portal. It reflects the amount of tax deposited by a taxpayer, which includes the amount deposited as tax liability, interest, penalty, or any other amount payable under the CGST Act or the Integrated Goods and Services Tax (IGST) Act.
The electronic cash ledger serves as an account for each registered taxpayer, where they can view the balance of cash available for payment of any liability under GST. It is an online ledger maintained by the Goods and Services Tax Network (GSTN), the technology backbone for the GST system in India.
The electronic cash ledger contains the following details:
1. Opening balance: The amount of cash balance available at the beginning of a specific period.
2. Amount deposited: The tax, interest, penalty, or any other amount deposited by the taxpayer during a given period.
3. Adjustment of liabilities: The utilization of the cash balance in the ledger to offset tax liabilities, interest, penalties, or other dues.
Taxpayers can make deposits into the electronic cash ledger through various modes, such as internet banking, credit/debit card, or over-the-counter payment at authorized banks. The payments made by the taxpayer are reflected in their electronic cash ledger after successful completion.
The balance in the electronic cash ledger can be utilized to make payments toward tax liabilities, interest, penalties, or any other dues under the GST regime. When a taxpayer files their GST return, they can utilize the balance in the electronic cash ledger to set off the tax liability or claim a refund, subject to the provisions of the Act and relevant rules.
The taxpayers shall regularly monitor their electronic cash ledger and maintain sufficient funds to meet their GST obligations. Any discrepancies or issues related to the electronic cash ledger should be promptly addressed with the appropriate authorities or through the GST portal.
The specific provisions, rules, and procedures related to the electronic cash ledger are laid out in the CGST Act, its associated rules, and notifications issued by the government. For accurate and detailed information.
Section 2(44) – Electronic Commerce or E-commerce:
“electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network;
Section 2(44) of the CGST Act, 2017 defines the term “electronic commerce” or “e-commerce.” its meaning and explanation is as under:
As per Section 2(44) of the CGST Act, “electronic commerce” or “e-commerce” refers to the supply of goods or services over an electronic network. It includes online platforms, digital marketplaces, or any other means of conducting business transactions electronically.
In simpler terms, electronic commerce or e-commerce involves buying, selling, or providing goods or services through electronic means, such as the internet or other computer networks. It encompasses various online business models, including business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C), and other forms of electronic trading.
E-commerce transactions typically involve the use of electronic payment methods, online platforms, and digital communications to facilitate the exchange of goods or services between buyers and sellers. These transactions may occur within a single jurisdiction or involve cross-border trade.
Under the CGST Act, e-commerce operators and sellers conducting business through electronic platforms have specific compliance obligations, such as obtaining GST registration, collecting and remitting GST, issuing invoices, and filing GST returns. Certain provisions, such as tax collection at source (TCS) by e-commerce operators, have been introduced to regulate e-commerce transactions and ensure tax compliance.
The specific requirements, rules, and procedures related to e-commerce under the CGST Act are outlined in separate provisions and notifications issued by the government. These provisions aim to address the unique challenges and characteristics of electronic commerce transactions.
To ensure compliance with the GST provisions related to e-commerce, businesses operating in the e-commerce sector should refer to the specific sections, rules, and notifications within the CGST Act.
Section 2(45) – Electronic Commerce operator or E-commerce operator:
“electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;
Section 2(45) of the CGST Act, 2017 defines the term “electronic commerce operator”
or “e-commerce operator.” The meaning and explanation is as under::
As per Section 2(45) of the CGST Act, an “electronic commerce operator” or “e-commerce operator” refers to any person who owns, operates, or manages an electronic platform that facilitates the supply of goods or services between suppliers and customers. The electronic platform can be a website, portal, mobile application, or any other digital interface.
The key role of an e-commerce operator is to facilitate transactions between buyers and sellers on the electronic platform. They provide the technological infrastructure, online marketplace, or digital space where suppliers can list their products or services for sale, and customers can browse, select, and purchase goods or services.
E-commerce operators may also offer additional services such as payment processing, order fulfilment, logistics, customer support, and marketing. They act as intermediaries in the online marketplace and enable seamless transactions between buyers and sellers.
Under the CGST Act, e-commerce operators have specific compliance responsibilities, including:
1. Tax Collection at Source (TCS): E-commerce operators are required to collect tax at a specified rate from the value of the goods or services supplied through their platform. This collected tax is then remitted to the government.
2. Registration: E-commerce operators are mandated to obtain GST registration, irrespective of their turnover. They must comply with the provisions related to registration, including obtaining a unique Goods and Services Tax Identification Number (GSTIN).
3. Maintenance of records: E-commerce operators are required to maintain proper records of transactions facilitated through their platform. This includes details of suppliers, customers, invoices, and other relevant information.
4. Furnishing of information: E-commerce operators need to provide information related to supplies made through their platform to the tax authorities as and when required.
These compliance obligations ensure that e-commerce transactions are properly accounted for and taxed under the GST regime. They also help in curbing tax evasion and ensuring tax compliance in the e-commerce sector.
The specific requirements, rules, and procedures applicable to e-commerce operators are outlined in the CGST Act, its related rules, and relevant notifications issued by the government. E-commerce operators should refer to these provisions.
Section 2(46) – Electronic Cash Ledger:
“electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49;
As per Section 2(46) of the CGST Act, an “electronic credit ledger” refers to an electronic register maintained on the GST portal. It reflects the input tax credit (ITC) available to a registered taxpayer.
The electronic credit ledger serves as an account for each registered taxpayer, where they can view the balance of input tax credit available for utilization against their tax liabilities under the GST regime.
The electronic credit ledger contains the following details:
1. Opening balance: The amount of input tax credit available at the beginning of a specific period, which includes the credit carried forward from previous tax periods.
2. ITC claimed: The input tax credit claimed by the taxpayer for eligible inputs, input services, and capital goods.
3. ITC reversed: The input tax credit reversed or reduced due to various reasons, such as non-payment to suppliers within the specified time, goods or services used for non-business purposes, or goods lost, stolen, or destroyed.
4. Adjustment of liabilities: The utilization of the input tax credit in the ledger to offset tax liabilities, including the payment of tax, interest, penalty, or any other dues under the GST Act.
The electronic credit ledger enables taxpayers to keep track of their available input tax credit and utilize it to meet their GST obligations. It helps in ensuring the proper utilization of input tax credit, minimizing tax liabilities, and avoiding unnecessary cash outflows.
Taxpayers can view their electronic credit ledger on the GST portal and use the available input tax credit to pay their tax liabilities. Any remaining credit after adjusting the liabilities can be carried forward to subsequent tax periods or claimed as a refund, subject to the provisions of the Act and relevant rules.
It is essential for taxpayers to regularly monitor their electronic credit ledger, reconcile it with their books of accounts, and ensure proper compliance with the input tax credit provisions under the GST law.
Section 2(47) – Exempt Supply:
“exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
According to Section 2(47) of the CGST Act, an “exempt supply” refers to the supply of goods or services or both that are specifically exempt from the levy of Goods and Services Tax (GST). It means that no GST is charged or collected on such supplies.
Exempt supplies are different from taxable supplies, which are subject to GST at the applicable rates. Exempt supplies are listed as exempt under the provisions of the CGST Act or any notification issued by the government.
The purpose of exempting certain supplies from GST is to provide relief or exemptions for specific categories of goods or services that are considered essential, socially beneficial, or merit special treatment. Examples of exempt supplies may include certain agricultural products, healthcare services, education services, financial services, and specific government-related activities.
It’s important to note that when a supply is classified as an exempt supply, the supplier is not eligible to claim input tax credit (ITC) on the inputs, input services, or capital goods used in making such supplies. This means that the supplier cannot offset the tax paid on their purchases against the tax collected on exempt supplies.
While exempt supplies do not attract GST, they are still subject to other regulatory requirements, such as registration, record-keeping, and compliance with other applicable laws. The treatment of exempt supplies and related compliance obligations may vary based on specific provisions, notifications, and exemptions provided under the CGST Act.
It is necessary for businesses to carefully determine whether their supplies fall under the category of exempt supplies to ensure proper tax treatment and compliance with the GST law.
Section 2(48) – Existing Law:
“existing law” means any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation;
According to Section 2(48) of the CGST Act, “existing law” refers to any law, ordinance, regulation, notification, order, or any other instrument that was in force or had effect immediately before the commencement of the CGST Act on July 1, 2017. In other words, it refers to the laws or provisions that were applicable prior to the implementation of the GST regime.
The term “existing law” is significant because the CGST Act, along with the Integrated Goods and Services Tax (IGST) Act and the State Goods and Services Tax (SGST) Acts, replaced the previous indirect tax laws in India. The GST regime aimed to create a unified and harmonized tax system by subsuming various indirect taxes levied by the central and state governments.
The concept of “existing law” recognizes that there were pre-GST laws and provisions that governed the taxation of goods and services. These pre-GST laws, such as the Central Excise Act, 1944, the Service Tax Act, 1994, and various state VAT (Value Added Tax) laws, were in force before the implementation of GST.
The term “existing law” is relevant in the context of the transitional provisions under the CGST Act. These transitional provisions specify the treatment of taxes, credits, registrations, and other matters related to the pre-GST regime during the transition to the GST regime.
Under the transitional provisions, certain provisions of the existing laws are carried forward or continue to have effect for specific purposes. These provisions help determine the treatment of existing tax credits, refunds, pending proceedings, and other matters under the new GST regime.
The use of the term “existing law” helps establish a connection between the previous tax regime and the GST regime. It ensures a smooth transition from the old indirect tax system to the new GST framework while preserving certain rights, obligations, and procedures established under the pre-GST laws.
Please note that the specific provisions and treatment of “existing law” under the CGST Act may vary based on the particular context and transitional provisions provided in the Act. Businesses and taxpayers should refer to the relevant sections, rules, and notifications within the CGST Act
Section 2(49) – Family:
Section 2(49) of the CGST Act defines “Family” as follows:
“family” means,––
(i) the spouse and children of the person, and
(ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said person;
“Family” means the spouse, parents, grandparents, children, grandchildren, and siblings of the person.
In simpler terms, “Family” refers to the immediate relatives of an individual, including their spouse, parents, grandparents, children, grandchildren, and siblings.
1. Spouse: The term “spouse” refers to the legally recognized partner of an individual in a marriage or a registered partnership.
2. Parents: Parents refer to the biological or adoptive father and mother of an individual.
3. Grand Parents: Grandparents are the parents of an individual’s parents. They include the paternal and maternal grandparents.
4. Children: Children refer to the biological or legally adopted sons and daughters of an individual.
5. Grand Children: Grandchildren are the children of an individual’s children.
6. Siblings: Siblings are the brothers and sisters of an individual. They include both full siblings (sharing both biological or adoptive parents) and half-siblings (sharing one biological or adoptive parent).
The definition of “Family” provided in Section 2(49) is relevant in various contexts within the CGST Act, such as determining the eligibility for certain provisions, exemptions, or benefits based on familial relationships.
The definition of “Family” provided in the CGST Act is specific to the Act itself and may not necessarily be identical to the definition of “family” in other laws or contexts. Different laws and regulations may have variations in defining “family” based on their specific requirements and objectives.
Finally, Section 2(49) of the CGST Act defines “Family” as the immediate relatives of a person, including their spouse, parents, grandparents, children, grandchildren, and siblings. This definition is relevant within the CGST Act for determining various provisions related to familial relationships.
Section 2(50) – Fixed Establishment:
“fixed establishment” means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs;
Section 2(50) of the CGST Act defines “Fixed Establishment” as follows:
“Fixed Establishment” means a place (other than the registered place of business) that is characterized by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services or to receive and use services for its own needs.
In simpler terms, “Fixed Establishment” refers to a place, other than the registered place of business, that has a sufficient level of permanence and suitable infrastructure in terms of human and technical resources to either provide services or receive and utilize services for its own requirements.
A detailed explanation of the provision:
1. Place other than the registered place of business: The provision refers to a location that is distinct from the registered place of business of a person. It means that an entity may have a primary registered place of business and one or more fixed establishments located elsewhere.
2. Sufficient degree of permanence: A fixed establishment is characterized by a level of permanence, indicating that it is not temporary or sporadic in nature. It implies that the establishment has a lasting presence in a particular location.
3. Suitable structure: The fixed establishment should possess an appropriate structure in terms of human and technical resources. This means that it should have the necessary infrastructure, personnel, and equipment to carry out its intended activities effectively.
4. Supply or use of services: A fixed establishment may be engaged in supplying services to customers or using services for its internal requirements. It can either act as a service provider or a recipient of services, depending on its specific business activities.
The concept of fixed establishment is significant within the CGST Act, particularly in determining the place of supply for services, determining the liability to pay tax, and compliance obligations related to the fixed establishment.
The determination of whether a place qualifies as a fixed establishment may depend on various factors, including the nature of the business, the extent of activities conducted at the location, the level of resources available, and other relevant circumstances.
To conclude, Section 2(50) of the CGST Act defines “Fixed Establishment” as a place, other than the registered place of business, that has a sufficient level of permanence and suitable infrastructure to either provide services or receive and utilize services for its own requirements. This concept is relevant within the CGST Act for determining the place of supply and compliance obligations related to such fixed establishments.
Section 2(51) – Fund:
“Fund” means the Consumer Welfare Fund established under section 57;
Section 2(51) of the CGST Act, 2017 defines the term “fund.” The meaning and explanation as under:
As per Section 2(51) of the CGST Act, the term “fund” refers to the Goods and Services Tax (GST) Fund established under Article 266 of the Constitution. This fund is maintained by the Central Government and is utilized for various purposes under the GST regime.
The GST Fund is primarily used for the following purposes:
1. Compensation Cess: The fund is utilized for the payment of compensation to states for any revenue loss they may incur due to the implementation of GST. The compensation cess collected on certain goods and services is credited to this fund.
2. Refunds: The fund is used for providing refunds to eligible taxpayers for excess taxes paid or for any other valid reasons as prescribed under the GST law.
3. Other purposes: The fund may be utilized for other purposes as authorized by the GST Council or as specified under the CGST Act or any other relevant law.
The GST Fund is administered and managed by the Central Government, which maintains accounts and records to keep track of the inflows and outflows from the fund. The utilization of the fund is subject to the provisions and guidelines prescribed by the government and the GST Council.
The related provisions and guidelines regarding the operation and utilization of the GST Fund may be detailed in separate rules, regulations, notifications, or orders issued by the government or the GST Council. These provisions ensure proper management, transparency, and accountability in the use of the fund.
Section 2(52) – Goods:
“goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
As per Section 2(52) of the CGST Act defines “goods” as any kind of movable property other than money and securities, but includes actionable claims, growing crops, grass, and things attached to or forming part of the land that are agreed to be severed before supply or under a contract of supply.
In simpler terms, “goods” under the CGST Act refer to any movable property that can be bought, sold, or exchanged, excluding money and securities. It covers tangible items that can be physically moved, transferred, or consumed. Additionally, certain specific items are considered as goods under the CGST Act:
1. Actionable Claims: These refer to claims that can be enforced by legal action, such as debts, contracts, or rights to receive payment for goods or services.
2. Growing Crops: This refers to crops that are still growing or attached to the land and have not yet been harvested.
3. Grass and Things Attached to or Forming Part of Land: It includes vegetation like grass and items that are permanently attached to the land, such as trees, buildings, and fixtures.
It’s important to note that the definition of “goods” under the CGST Act is broad and encompasses a wide range of tangible and intangible items. The classification of an item as “goods” is crucial for determining its taxability under the GST regime, as different rates and provisions may apply based on the nature of the goods.
Section 2(53) – Government:
“Government” means the Central Government;
Section 2(53) of the CGST Act, 2017 defines the term “Government.”
According to Section 2(53) of the CGST Act, the term “Government” refers to the central government in relation to the CGST Act. It signifies the governing authority at the central level responsible for administering and implementing the provisions of the CGST Act.
In the context of the GST regime, the Government refers to the Central Government of India, which has the authority to levy and collect Goods and Services Tax (GST) on the supply of goods and services. The Central Government formulates policies, issues regulations, and provides overall guidance for the implementation of GST across the country.
The Government plays a significant role in the GST system, including the following responsibilities:
1. Legislation and Policy Formulation: The Government is responsible for enacting legislation, such as the CGST Act, to establish the legal framework for GST implementation. It also formulates policies and guidelines related to GST compliance, rates, exemptions, and other matters.
2. Tax Administration: The Government is responsible for administering and managing the collection, assessment, and enforcement of GST. It sets up the necessary infrastructure, including tax authorities, to ensure compliance with GST laws and regulations.
3. Rate Determination: The Government, in consultation with the GST Council, determines the rates of GST for various goods and services. It may revise the rates from time to time based on economic factors, revenue requirements, and policy considerations.
4. Refunds and Compensation: The Government oversees the process of granting refunds to eligible taxpayers for excess tax payments and handling compensation payments to states for revenue losses due to the implementation of GST.
5. Policy Coordination: The Government works in coordination with the GST Council, which includes representatives from the central and state governments, to make decisions on GST-related matters. The Government represents the central perspective in the decision-making process.
The term “Government” in the context of the CGST Act specifically refers to the Central Government. State governments also play a role in the GST regime and have separate State Goods and Services Tax (SGST) Acts to administer GST at the state level.
For accurate and up-to-date information on the roles, responsibilities, and functions of the Government in relation to GST, it is advisable to refer to the CGST Act, relevant rules, notifications, and official communications issued by the Central Government.
Section 2(54) – GST (Compensation to States) Act:
“Goods and Services Tax (Compensation to States) Act” means the Goods and Services Tax (Compensation to States) Act, 2017;
The GST (Compensation to States) Act, 2017 is a separate legislation passed by the Indian Parliament to provide compensation to the states for any revenue losses they may incur due to the implementation of the Goods and Services Tax (GST) regime.
Under the GST regime, certain goods and services are subject to the levy of compensation cess, which is collected by the central government. The GST (Compensation to States) Act establishes the legal framework for providing compensation to the states from the proceeds of the compensation cess.
The Act outlines the mechanism for calculating and distributing the compensation amount to the states. It sets out the principles, rules, and procedures for determining the base year revenue, calculating the compensation amount, and disbursing the funds to the respective states.
The GST (Compensation to States) Act also establishes the GST Compensation Fund, which serves as a dedicated fund for receiving and disbursing the compensation amount. The fund is managed and administered by the central government.
The objective of the GST (Compensation to States) Act is to provide financial protection to the states for any potential revenue loss they may face during the initial years of GST implementation. The compensation mechanism is intended to ensure a smooth transition to the new tax system and mitigate the impact of any revenue shortfalls experienced by the states.
The the provisions and details of the GST (Compensation to States) Act may be subject to amendments and updates over time. Therefore, for the most accurate and up-to-date information regarding the provisions and implications of the Act.
Section 2(55) – GST Practitioner:
“goods and services tax practitioner” means any person who has been approved under section 48 to act as such practitioner;
Section 2(55) of the CGST Act, 2017 defines the term “GST Practitioner.” The meaning and explanation:
As per Section 2(55) of the CGST Act, a “GST Practitioner” refers to a person approved by the proper authorities who can assist taxpayers in the GST compliance process. These practitioners are authorized to perform specific tasks and activities on behalf of the taxpayers under the GST regime.
Here are some key points to understand about GST Practitioners:
1. Authorized Assistance: GST Practitioners are authorized to provide assistance to taxpayers in relation to GST compliance. They can help taxpayers with activities such as filing GST returns, applying for registrations, maintaining records, and other related tasks.
2. Approval and Registration: To become a GST Practitioner, an individual needs to be approved by the proper authorities. They must apply for registration as a GST Practitioner and satisfy the prescribed eligibility criteria, such as having the required qualifications and experience.
3. Representation: GST Practitioners can represent taxpayers before the GST authorities during proceedings, such as assessments, audits, or appeals. They act as authorized representatives for the taxpayers they assist, enabling them to interact with the tax authorities on the taxpayers’ behalf.
4. Limited Role: The role of a GST Practitioner is limited to specific activities related to GST compliance. They cannot perform all functions on behalf of taxpayers, such as signing or accepting refunds on behalf of the taxpayers.
5. Responsibility and Code of Conduct: GST Practitioners have a responsibility to ensure the accuracy and correctness of the information and documents provided on behalf of the taxpayers. They are required to adhere to a code of conduct prescribed by the authorities, which includes maintaining confidentiality and acting in the best interest of the taxpayers.
6. Revocation or Suspension: The registration of a GST Practitioner can be revoked or suspended if they are found to violate the prescribed code of conduct or engage in fraudulent or malpractice activities.
The introduction of GST Practitioners aims to facilitate and streamline the compliance process for taxpayers. By engaging a GST Practitioner, taxpayers can receive expert assistance and guidance in fulfilling their GST obligations effectively.
The specific qualifications, eligibility criteria, and procedures for becoming a GST Practitioner may be detailed in separate rules and regulations issued by the authorities. Therefore, for accurate and up-to-date information regarding the requirements and functions of GST Practitioners, it is advisable to refer to the CGST Act, relevant rules, notifications.
Section 2(56) – India:
“India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters;
Section 2(56) of the CGST Act, 2017 defines the term “India.”
According to Section 2(56) of the CGST Act, “India” means the territory of India as defined under Article 1(2) of the Constitution of India. It includes its territorial waters, the exclusive economic zone, and the continental shelf as specified under the Territorial Waters, Continental Shelf, Exclusive Economic Zone, and Other Maritime Zones Act, 1976.
In simpler terms, “India” refers to the geographical area that constitutes the country of India, including its land territory, coastal areas, and maritime zones. It encompasses the entire territory over which the Government of India has sovereignty, jurisdiction, and control.
The definition of “India” under the CGST Act is significant for determining the territorial scope and applicability of the Goods and Services Tax (GST) regime. The GST law is applicable within the boundaries of India, and the tax liabilities, compliances, and regulations prescribed under the CGST Act apply to the supply of goods and services made within the country.
The territorial waters, exclusive economic zone, and continental shelf are also considered part of India for the purpose of the GST law. This implies that the GST regime may apply to certain transactions or activities carried out in these areas, subject to specific provisions or exemptions as per the relevant laws and regulations.
It’s important to note that the definition of “India” under the CGST Act aligns with the constitutional definition and takes into account the relevant laws related to maritime zones. It is advisable to refer to the CGST Act, the Constitution of India, and other relevant legislations for a comprehensive understanding of the territorial boundaries and applicability of the GST law in India.
A general explanation of the term “India” under the CGST Act and does not cover all possible interpretations or legal aspects. For specific and detailed guidance, it is recommended to refer to the relevant provisions of the CGST Act.
Section 2(57) – Integrated Goods and Services Tax (IGST) Act
“Integrated Goods and Services Tax Act” means the Integrated Goods and Services Tax Act, 2017;
Section 2(57) of the Integrated Goods and Services Tax (IGST) Act provides a definition for the term “integrated goods and services.”
Integrated Goods and Services Tax (IGST) Act: The IGST Act is a legislation passed by the Government of India as part of the Goods and Services Tax (GST) regime. It deals specifically with the taxation of the supply of goods and services between different states in India, as well as imports and exports.
1. Section 2(57): Section 2(57) is a specific provision within the IGST Act that defines the term “integrated goods and services.” Definitions in tax legislation are essential for clarity and consistency in its interpretation and implementation.
2. Integrated Goods and Services: The term “integrated goods and services” refers to any supply of goods or services or both in the following situations:
a. Supply between different states: It covers the supply of goods and services that occur between two or more states within India. For example, if a business in Delhi supplies goods to a customer in Maharashtra, it falls under the purview of integrated goods and services.
b. Importation into India: It includes the supply of goods or services brought into India from a foreign country. When goods or services are imported, they are treated as if they are supplied from one state to another within India, and the relevant tax is levied accordingly.
c. Exportation from India: It encompasses the supply of goods or services that are sent out of India to a foreign country. Similar to imports, exports are treated as if they are supplied from one state to another, and the applicable tax is levied accordingly.
4. Purpose and Implications: The purpose of including a specific definition for integrated goods and services in the IGST Act is to ensure that appropriate tax treatment is applied to transactions involving inter-state supplies, imports, and exports. It helps establish a clear framework for taxation and ensures consistency across different transactions and jurisdictions.
By defining integrated goods and services, the legislation enables the government to levy and collect the Integrated Goods and Services Tax (IGST) on such supplies. The IGST is a component of the overall GST, which is a destination-based tax that aims to create a harmonized and unified tax structure across India.
In summary, Section 2(57) of the IGST Act provides a comprehensive definition of integrated goods and services. It covers supplies between states, importation into India, and exportation from India, establishing the scope and taxation framework for these transactions within the GST Act.
Section 2(58) – Integrated Tax:
Section 2(58) of the CGST Act defines “Integrated Tax” as follows:
“integrated tax” means the integrated goods and services tax levied under the Integrated Goods and Services Tax Act;
“Integrated Tax” means the integrated goods and services tax levied under the Integrated Goods and Services Tax Act, 2017.
In other terms, “Integrated Tax” refers to the tax levied under the Integrated Goods and Services Tax (IGST) Act, 2017, which is applicable to the supply of goods and services between different states in India or in the course of import/export. A detailed explanation of the provision:
1. Integrated Goods and Services Tax (IGST): The provision refers to the tax levied under the IGST Act, 2017. The IGST Act is a part of the overall indirect tax framework implemented in India after the introduction of the Goods and Services Tax (GST) regime.
2. Supply of Goods and Services between States: The IGST is applicable when there is a supply of goods or services that involves movement between different states within India. It aims to harmonize the taxation of inter-state transactions and eliminate the cascading effect of taxes.
3. Import and Export: The IGST Act also covers the supply of goods or services in the course of import and export. It governs the taxation of such cross-border transactions to ensure consistency and prevent double taxation.
The IGST is designed to facilitate the seamless flow of goods and services across state borders by ensuring a unified tax structure. It helps in simplifying the taxation process for businesses engaged in inter-state trade and international trade.
It’s important to note that the rate of IGST is determined by the GST Council, which consists of representatives from the central and state governments. The rates may vary depending on the type of goods or services supplied and other relevant factors.
Finally, Section 2(58) of the CGST Act defines “Integrated Tax” as the tax levied under the Integrated Goods and Services Tax (IGST) Act, 2017. The IGST applies to the supply of goods and services between different states within India and in the course of import/export. It aims to ensure a unified tax structure and promote seamless trade across state borders.
Section 2(59) – Input:
“input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business;
In the context of GST, “input” refers to any goods or services that are used or intended to be used in the course of business for the production or supply of goods or services. Inputs can be categorized into two types:
1. Input Goods: Input goods refer to any tangible goods that are used or intended to be used in the production or supply of other goods or services. For example, raw materials, components, machinery, equipment, or any other physical items used in the production process can be considered as input goods.
2. Input Services: Input services refer to any services that are used or intended to be used in the course of business for the production or supply of other goods or services. This includes services such as accounting, legal services, marketing, transportation, consulting, and more.
Inputs are significant in the GST framework as businesses can claim input tax credit (ITC) on the taxes paid on inputs. Input tax credit allows businesses to offset the taxes paid on inputs against the output tax liability on the final goods or services they supply. It helps to avoid cascading taxes (tax on tax) and promotes the seamless flow of credits throughout the supply chain.
The CGST Act, along with the Integrated Goods and Services Tax (IGST) Act and the State Goods and Services Tax (SGST) Act, provides provisions and rules for determining and claiming input tax credit, including the eligibility criteria, conditions, and procedures to be followed.
Section 2(60) – Input Services:
“input service” means any service used or intended to be used by a supplier in the course or furtherance of business;
In the context of GST, “input services” refer to services that are used or intended to be used by a registered person for the furtherance of their business. These services are utilized in the course of business operations to produce or provide goods or services.
Input services are an essential component of the input tax credit (ITC) mechanism under GST. Registered businesses can claim input tax credit on the taxes paid for input services, which allows them to offset these taxes against their output tax liability.
Examples of input services may include:
1. Professional services: Services provided by professionals such as legal, accounting, consulting, or auditing services.
2. Business support services: Services like advertising, marketing, market research, recruitment, security, or cleaning services that support the business operations.
3. Transportation services: Freight, logistics, or courier services used for the movement of goods.
4. Communication services: Telephone, internet, or other communication services utilized for business purposes.
5. Financial and banking services: Services such as banking, insurance, investment, or loan services availed for business needs.
Please note that input services must be used for the furtherance of business activities. They should have a direct or indirect connection to the production or provision of goods or services.
The specific provisions regarding input services, including eligibility, conditions, documentation, and procedures for claiming input tax credit, are outlined in the CGST Act and related rules and regulations.
Section 2(61) –Input Service Distributor:
“Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office; [Refer to Rules 54(1), 39(1)]
An Input Service Distributor refers to an office of a supplier of goods or services that receives invoices for input services and distributes the credit of taxes paid on those input services to its various branches or units.
Some important points to understand about Input Service Distributor (ISD):
1. Definition: An Input Service Distributor is defined as an office of a supplier of goods or services that has received services used for business purposes and has been registered as an ISD under GST.
2. Role: The primary role of an ISD is to distribute the credit of taxes paid on input services to the recipient branches or units of the same entity that are registered under GST. It acts as a channel for distributing the input tax credit (ITC) to eligible recipients.
3. Distribution of Credit: The ISD receives invoices from the input service providers and issues an ISD invoice or document containing the details of input services received. Based on the ISD invoice, the credit of input tax paid on those services is distributed to the respective recipient branches or units in a manner specified by the CGST Act and related rules.
4. Eligibility: An entity can register as an Input Service Distributor if it has multiple branches or units that are separately registered under GST. It should be engaged in the supply of goods or services or both to its branches or units.
5. Conditions and Compliance: The CGST Act specifies certain conditions and compliance requirements for an ISD, such as filing regular returns (GSTR-6) to report the details of input services received and distributed, maintaining proper records, and ensuring that the distribution of input tax credit is done correctly and in accordance with the applicable rules.
The provisions related to Input Service Distributors are outlined in the CGST Act and the Integrated Goods and Services Tax (IGST) Act, along with relevant rules and regulations.
Section 2(62) –Input Tax:
“input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes–
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy;
Input tax refers to the Goods and Services Tax (GST) paid on the purchase or acquisition of goods or services by a registered taxpayer for use in the course of business. It includes both the Central GST (CGST) and the State GST (SGST) components.
Some important points to understand about input tax :
1. Definition: Input tax is the tax that a registered taxpayer pays while purchasing goods or services from another registered person. It is an essential component of the overall tax liability calculation for businesses under GST.
2. Credit Mechanism: Input tax credit (ITC) allows registered taxpayers to claim and offset the tax paid on inputs against their output tax liability. It ensures that tax is levied only on the value added at each stage of the supply chain, preventing double taxation and promoting the seamless flow of credits.
3. Eligibility: To claim input tax credit, certain conditions must be met. The taxpayer must be registered under GST and the goods or services must have been used or intended to be used for business purposes. The supplier must have issued a valid tax invoice or document complying with the requirements of the CGST Act and related rules.
4. Documentation and Compliance: To avail input tax credit, taxpayers must maintain proper records, including tax invoices, debit or credit notes, and other prescribed documents. They need to reconcile the input tax credit claimed in their returns with the details provided by their suppliers.
5. Reverse Charge Mechanism: In certain cases, where the liability to pay tax is shifted to the recipient under the reverse charge mechanism, the tax paid by the recipient is treated as input tax for them and can be claimed as input tax credit.
The provisions related to input tax, input tax credit, and other related aspects are outlined in the CGST Act, along with the Integrated Goods and Services Tax (IGST) Act, and State GST (SGST) Acts, as well as relevant rules and regulations.
Section 2(63) – Input Tax Credit:
“input tax credit” means the credit of input tax;
Input Tax Credit (ITC) is a mechanism under the GST regime that allows registered taxpayers to claim a credit for the tax paid on inputs (goods or services) used for business purposes. It enables the offsetting of the tax paid on inputs against the tax liability on output supplies.
Some important points to understand about Input Tax Credit (ITC):
1. Definition: Input Tax Credit (ITC) refers to the credit a taxpayer can claim for the GST paid on inputs used in the course of business activities.
2. Eligibility Criteria: To claim ITC, certain conditions need to be met, such as the supplier being registered under GST, possession of a valid tax invoice or other prescribed documents, and the inputs being used for business purposes.
3. Utilization of ITC: The ITC can be utilized to offset the tax liability on outward supplies of goods or services. It can be used to pay the CGST, SGST, IGST, or any other tax liability under the GST regime.
4. ITC on Capital Goods: Input Tax Credit can also be claimed on capital goods, which are durable assets used in the business for an extended period. The credit on capital goods is available in a phased manner over subsequent tax periods.
5. Reversal of ITC: There are certain circumstances where the taxpayer may need to reverse or reduce the claimed ITC. For example, if the inputs or capital goods are used partly for business and partly for non-business purposes, or if the goods or services are used for exempt supplies.
6. Documentation and Compliance: Proper documentation, such as tax invoices, debit notes, or other prescribed documents, is necessary to substantiate the claim for ITC. The taxpayer is required to maintain records of input tax paid and comply with the provisions related to claiming and utilizing ITC as per the CGST Act and related rules.
It’s important to note that the specific provisions regarding Input Tax Credit, including the eligibility criteria, conditions, restrictions, and procedures for claiming and utilizing ITC, are outlined in the CGST Act, along with relevant rules and regulations.
Section 2(64) – Intra State Supply of Goods:
“intra-State supply of goods” shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act;
Intra-state supply of goods refers to the movement or sale of goods within the boundaries of a particular state in India. It involves the supply of goods from a supplier located in one state to a recipient located in the same state.
Some important points to understand about intra-state supply of goods:
1. Definition: Intra-state supply of goods means the supply of goods where the location of the supplier and the place of supply are in the same state.
2. Applicable Taxes: In the case of intra-state supply of goods, both the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST) are levied. The CGST is collected by the central government, while the SGST is collected by the respective state government.
3. Tax Liability: The supplier of goods is liable to charge and collect both CGST and SGST on intra-state supplies. The recipient of the goods can claim input tax credit (ITC) on the taxes paid, which can be utilized to offset their own tax liability.
4. Place of Supply: The place of supply for intra-state supply of goods is determined based on the provisions of the CGST Act and the Integrated Goods and Services Tax (IGST) Act. It is generally the location of the recipient where the goods are delivered.
5. Compliance and Reporting: The supplier of goods engaged in intra-state supply is required to comply with the applicable provisions of the CGST Act, including registration, invoicing, filing of returns, payment of taxes, and maintaining proper records.
Please note that the specific provisions related to intra-state supply of goods, including the determination of the place of supply and the tax liability, are outlined in the CGST Act and related rules and regulations.
Section 2(65) – Intra State Supply of Services:
“intra-State supply of services” shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act;
Intra-state supply of services refers to the provision or delivery of services that takes place within the boundaries of a particular state in India. It involves the supply of services from a supplier located in one state to a recipient located in the same state.
Some important points to understand about intra-state supply of services:
1. Definition: Intra-state supply of services means the supply of services where the location of the supplier and the place of supply are in the same state.
2. Applicable Taxes: In the case of intra-state supply of services, both the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST) are levied. The CGST is collected by the central government, while the SGST is collected by the respective state government.
3. Tax Liability: The supplier of services is liable to charge and collect both CGST and SGST on intra-state supplies. The recipient of the services can claim input tax credit (ITC) on the taxes paid, which can be utilized to offset their own tax liability.
4. Place of Supply: The place of supply for intra-state supply of services is determined based on the provisions of the CGST Act and the Integrated Goods and Services Tax (IGST) Act. It is generally the location of the recipient where the services are actually performed.
5. Compliance and Reporting: The supplier of services engaged in intra-state supply is required to comply with the applicable provisions of the CGST Act, including registration, invoicing, filing of returns, payment of taxes, and maintaining proper records.
It’s important to note that the specific provisions related to intra-state supply of services, including the determination of the place of supply and the tax liability, are outlined in the CGST Act and related rules and regulations.
Section 2(66) – Tax Invoice:
“invoice” or “tax invoice” means the tax invoice referred to in section 31;
Section 2(66) of the Central Goods and Services Tax (CGST) Act defines the term “tax invoice.” A tax invoice is a document issued by a registered supplier of goods or services that contains specific details and serves as evidence of the supply and the associated tax liability.
A detailed explanation of the concept of a tax invoice:
1. Definition: A tax invoice is a written or electronic document issued by a registered supplier to the recipient of goods or services. It provides a summary of the supply made and the tax charged on the transaction.
2. Content and Requirements: A tax invoice must contain certain mandatory details as prescribed by the CGST Act and related rules. These details include the name, address, and Goods and Services Tax Identification Number (GSTIN) of the supplier and recipient, a unique invoice number, date of issue, description of goods or services supplied, quantity, value, and applicable tax rates.
3. Legal Validity: A tax invoice is a legally valid document that substantiates the supply of goods or services and acts as proof for claiming input tax credit (ITC) by the recipient. It is an important document for both the supplier and the recipient to comply with the GST regulations.
4. Time of Issuance: A tax invoice must be issued at the time of supply, which can be either before or after the supply, depending on the nature of the transaction. For goods, the tax invoice should generally be issued before or at the time of removal of goods, while for services, it should be issued within a specific time frame as per the CGST Act.
5. Multiple Copies: A tax invoice may have multiple copies, including the original copy for the recipient, duplicate copies for the transporter or supplier, and additional copies for record-keeping purposes.
6. Amendments and Corrections: In case of any errors or omissions in a tax invoice, the CGST Act allows for amendments and corrections to be made within a specified time period and under prescribed conditions.
7. Digital Invoicing: The CGST Act allows for the issuance of tax invoices in electronic form, such as through electronic data interchange (EDI) or other electronic modes, subject to certain specified requirements and compliance with the relevant rules.
It’s important for registered suppliers to issue accurate and compliant tax invoices, as they play a crucial role in the GST compliance framework and facilitate the seamless flow of input tax credit.
Section 2(67) – Inward Supply:
“inward supply” in relation to a person, shall mean receipt of goods or services or both whether by purchase, acquisition or any other means with or without consideration;
Section 2(67) of the Central Goods and Services Tax (CGST) Act defines the term “inward supply.” Inward supply refers to the receipt of goods or services by a registered person from a supplier, whether it is for consideration or without consideration.
A detailed explanation of the concept of inward supply:
1. Definition: Inward supply refers to the receipt of goods or services by a registered person from a supplier. It encompasses all types of transactions where goods or services are received, whether it is in the course of business or for personal use.
2. Registration Requirement: Inward supply is relevant for registered persons under the GST regime. Registered persons are required to account for their inward supplies and comply with the applicable provisions of the CGST Act, including reporting and payment of taxes.
3. Tax Liability: Inward supply is closely linked to the concept of input tax credit (ITC) under the GST system. Registered persons can claim ITC on the tax paid on inward supplies, subject to certain conditions and restrictions. The ITC can be utilized to offset the tax liability on outward supplies.
4. Consideration and Without Consideration: Inward supply can occur both with consideration, where goods or services are received in exchange for payment, and without consideration, where goods or services are received without any payment involved. Even supplies received as gifts, free samples, or for personal use fall under the category of inward supply.
5. Documentation and Compliance: Registered persons are required to maintain proper records and documentation of their inward supplies. This includes retaining tax invoices, debit notes, or other prescribed documents received from the supplier as evidence of the transaction.
6. Relevance for Compliance: Inward supply is crucial for GST compliance, as it forms the basis for reporting in various GST returns, such as the GSTR-1 (Outward Supplies) and GSTR-3B (Monthly Summary Return).
Understanding and correctly accounting for inward supplies is essential for registered persons to ensure accurate reporting, claim eligible ITC, and comply with the provisions of the CGST Act.
Section 2(68) – Job Work:
“job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;
Section 2(68) of the Central Goods and Services Tax (CGST) Act defines the term “job work.” Job work refers to a process in which goods are sent by a principal (the person supplying the goods) to a job worker (a person performing the job work) for carrying out specific processes or treatments on the goods.
A detailed explanation of the concept of job work:
1. Definition: Job work involves the processing or treatment of goods supplied by a principal on behalf of the principal. The job worker performs specific operations or processes on the goods, as instructed by the principal.
2. Principal and Job Worker: The principal is the person who supplies the goods for job work, and the job worker is the person who undertakes the job work on behalf of the principal. The job worker may perform various activities such as manufacturing, processing, assembling, packaging, or any other treatment on the goods.
3. Ownership and Control: Even though the goods are sent to the job worker, the ownership and control of the goods remain with the principal. The job worker works on the goods as per the instructions provided by the principal and returns the processed goods to the principal.
4. Input Tax Credit: The principal can send inputs or semi-finished goods to a job worker without payment of tax under specific conditions. The principal can claim input tax credit (ITC) on the inputs or semi-finished goods sent for job work and can utilize the ITC for payment of taxes on subsequent supplies.
5. Time Limit and Return of Goods: The goods sent for job work must be returned to the principal within a specified time period. If the goods are not returned within the prescribed time, the job worker may be required to pay the applicable tax on such goods.
6. Obligations and Compliance: Both the principal and the job worker have certain obligations and compliance requirements under the CGST Act. They must maintain proper records of the goods sent for job work, maintain accounts of the job work process, and comply with relevant provisions related to invoicing, documentation, and returns.
Job work provisions under the CGST Act facilitate the outsourcing of certain processes or treatments without the need for the principal to physically move the goods. It allows for specialized operations to be carried out by job workers, thereby promoting efficiency and cost-effectiveness in the supply chain.
Section 2(69) – Local Authority:
“local authority” means––
(a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution;
(b) a “Municipality” as defined in clause (e) of article 243P of the Constitution;
(c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund;
(d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006);
(e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution;
(f) a Development Board constituted under article 371 1[and article 371J] of the Constitution; or
(g) a Regional Council constituted under article 371A of the Constitution;
Section 2(69) (f). Definitions of CGST Act 2017: local authority New Definition: a Development Board constituted under article 371 and article 371J of the Constitution; Earlier Definition: a Development Board constituted under article 371 of the Constitution;
Section 2(69) of the Central Goods and Services Tax (CGST) Act defines the term “local authority.” In the context of the CGST Act, a local authority refers to a specific type of entity that has been granted certain powers and functions by law and is responsible for the administration of specific areas or jurisdictions.
A detailed explanation of the concept of a local authority:
1. Definition: A local authority, as per the CGST Act, refers to a body or an authority constituted or established by a government or any statutory authority to carry out specific functions within a defined area or jurisdiction.
2. Examples of Local Authorities: Local authorities can include various entities depending on the local government structure in different states or union territories in India. Some examples of local authorities are municipal corporations, municipalities, panchayats, development authorities, town planning authorities, or any other authority specified by the government.
3. Administrative Powers: Local authorities have been granted powers and functions by law to administer and govern the specific areas or jurisdictions they are responsible for. These powers can include the provision of public services, such as water supply, sanitation, waste management, roads and infrastructure development, urban planning, property tax administration, etc.
4. Taxation Powers: Local authorities may also have the power to impose and collect taxes, fees, or charges within their jurisdictions. These could include property taxes, trade licenses, advertisement taxes, or any other taxes or fees authorized by law.
5. GST Implications: The CGST Act treats local authorities as distinct entities for the purpose of GST. Certain supplies made by or to local authorities may be subject to specific provisions, exemptions, or restrictions under the CGST Act, depending on the nature of the transaction and the applicable notifications or rules.
6. Registration and Compliance: Local authorities that are engaged in taxable supplies or exceed the threshold for GST registration are required to register under the CGST Act and comply with the relevant provisions, including invoicing, return filing, and payment of taxes.
It’s important to note that the specific powers, functions, and responsibilities of local authorities may vary based on the governing laws and regulations of the respective states or union territories in India. The CGST Act provides a general framework for the treatment of local authorities under the GST regime.
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 receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence of the recipient;
In the context of the GST Act, the “location of the recipient of services” refers to the place where the recipient of services is located or where they have their business establishment. It is an important factor in determining the applicability of taxes and the place of supply for services.
Some important points to understand about the location of the recipient of services:
1. Determining the Place of Supply: The place of supply for services plays a crucial role in determining the applicable tax regime (CGST, SGST/UTGST, or IGST) and the corresponding tax liability. The GST Act provides specific rules for determining the place of supply of various types of services.
2. Location of the Recipient: The location of the recipient of services is determined based on the registered address or principal place of business of the recipient. In the case of an unregistered recipient, it is determined based on their usual place of residence.
3. Inter-State and Intra-State Supply: The location of the recipient is particularly relevant in distinguishing between inter-state and intra-state supplies. If the location of the recipient and the place of supply are in different states, it is considered an inter-state supply, and Integrated GST (IGST) is applicable. If the location of the recipient and the place of supply are in the same state, it is considered an intra-state supply, and the respective State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) or Union Territory Goods and Services Tax (UTGST) are applicable.
4. Registration Requirements: The location of the recipient of services is also relevant for determining the registration requirements under the GST Act. Depending on the turnover and the location of the recipient, they may need to register for GST and comply with the related provisions.
It’s important to note that the specific provisions related to the location of the recipient of services, including the determination of the place of supply and the tax liability, are outlined in the GST Act and related rules and regulations.
Section 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;
In the context of the GST Act, the “location of the supplier of services” refers to the place where the supplier of services is located or where they have their business establishment. It is an important factor in determining the applicability of taxes and the place of supply for services.
Some important points to understand about the location of the supplier of services:
1. Determining the Place of Supply: The place of supply for services is a critical aspect in determining the applicable tax regime (CGST, SGST/UTGST, or IGST) and the corresponding tax liability. The GST Act provides specific rules for determining the place of supply of various types of services.
2. Location of the Supplier: The location of the supplier of services is determined based on the registered address or principal place of business of the supplier. It is the place from where the services are effectively rendered or provided.
3. Inter-State and Intra-State Supply: The location of the supplier is particularly relevant in distinguishing between inter-state and intra-state supplies. If the location of the supplier and the place of supply are in different states, it is considered an inter-state supply, and Integrated GST (IGST) is applicable. If the location of the supplier and the place of supply are in the same state, it is considered an intra-state supply, and the respective State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) or Union Territory Goods and Services Tax (UTGST) are applicable.
4. Registration Requirements: The location of the supplier of services is also relevant for determining the registration requirements under the GST Act. Suppliers of services exceeding the prescribed turnover thresholds are required to register for GST and comply with the related provisions.
It’s important to note that the specific provisions related to the location of the supplier of services, including the determination of the place of supply and the tax liability, are outlined in the GST Act and related rules and regulations.
Section 2(72) – Manufacture:
“manufacture” means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term “manufacturer” shall be construed accordingly;
In the context of the GST Act, “manufacture” refers to the process of producing, making, fabricating, or creating a new product or commodity. It involves the transformation of raw materials or inputs into a finished or marketable product through various processes.
Some important points to understand about the concept of manufacture:
1. Transformation of Inputs: Manufacturing involves the transformation of inputs or raw materials into a new product. This transformation can occur through physical, chemical, or mechanical processes, resulting in the creation of a different product with new characteristics, identity, and use.
2. Value Addition: The process of manufacture generally involves value addition to the inputs. Value addition refers to the enhancement in the value, quality, utility, or attractiveness of the product as a result of the manufacturing process.
3. Inclusion of Processes: Manufacturing processes can vary significantly depending on the nature of the product. It can include activities such as cutting, shaping, molding, assembling, refining, blending, packing, labeling, or any other process that leads to the production of a new or distinct product.
4. Exclusions from Manufacture: Not all processes or activities qualify as manufacture for GST purposes. Processes such as mere packaging, labeling, sorting, repacking, or alterations that do not result in a new product may not be considered as manufacturing activities.
5. GST Implications: The concept of manufacture is significant under the GST regime for determining the taxability, classification, and valuation of goods. The supply of manufactured goods is subject to GST, and the applicable tax rates, exemptions, and input tax credit provisions are based on the classification of the product.
It’s important to note that the specific provisions related to the definition and implications of manufacture, including the determination of the tax liability, classification, and valuation, are outlined in the GST Act and related rules and regulations.
Section 2(73) – Market Value:
“market value” shall mean the full amount which a recipient of a supply is required to pay in order to obtain the goods or services or both of like kind and quality at or about the same time and at the same commercial level where the recipient and the supplier are not related;
In general, “market value” refers to the prevailing price at which goods or services are traded in the open market between a willing buyer and a willing seller. It is the value that is typically determined based on the forces of supply and demand in a competitive market.
The concept of market value is relevant in various aspects of the GST Act, including the determination of the value of taxable supplies for the purpose of calculating the applicable GST.
Some important points to understand about the concept of market value:
1. Transaction Value: In most cases, the market value of goods or services is determined based on the transaction value. The transaction value is the price actually paid or payable for the supply of goods or services, including any taxes, duties, or other charges. It represents the open market value of the transaction.
2. Arm’s Length Transaction: The market value is generally considered to be the value of goods or services in an arm’s length transaction. An arm’s length transaction is a transaction between two parties who are unrelated or not influenced by any special relationship that may affect the price.
3. Comparable Transactions: The determination of market value often involves considering comparable transactions in the market. This includes analysing similar transactions for similar goods or services to establish a benchmark value.
4. Valuation Rules: The GST Act provides specific rules for the valuation of goods and services in certain situations where the transaction value may not be available or reliable. These rules outline alternative methods for determining the market value, such as the value of similar goods or services, cost-based methods, or any other reasonable means.
5. Documentation: It is important for businesses to maintain proper documentation to support the determination of market value. This includes invoices, contracts, price lists, and any other relevant records that demonstrate the basis for determining the value of the supply.
Please note that the specific provisions related to the determination and implications of market value may vary depending on the context and specific provisions of the GST Act.
Section 2(74) – Mixed Supply:
“mixed supply” means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply;
Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately.
Section 2(74) of the Central Goods and Services Tax (CGST) Act defines the term “mixed supply.” A detailed explanation given below:
1. Definition: Mixed supply, as per the CGST Act, refers to a supply of two or more individual goods or services or any combination thereof that are provided together as a single supply, but they are not naturally bundled or ordinarily supplied together.
2. Nature of Mixed Supply: In a mixed supply, two or more goods or services are supplied together as a package or bundle, but they can also be supplied separately. These goods or services are not typically provided together or commonly bundled in the ordinary course of business.
Example: To understand the concept more better, an example. Suppose a restaurant offers a meal combo that includes a burger, fries, and a soft drink. While these items are supplied together as a package, they can also be purchased individually. In this case, the meal combo constitutes a mixed supply because the items are bundled together, but they can be supplied separately as well.
3. Tax Treatment: In the case of a mixed supply, the tax treatment is determined based on the principal supply. The principal supply refers to the main or predominant component of the mixed supply that gives the bundle its essential character. The tax rate and tax liability applicable to the principal supply are applied to the entire mixed supply.
4. Determining Principal Supply: The determination of the principal supply in a mixed supply is crucial for tax purposes. Factors considered in identifying the principal supply include the value of the individual supplies, the nature of the goods or services, the objective of the recipient, and industry practices.
5. Invoice and Compliance: Invoices for mixed supplies should clearly mention the principal supply and its corresponding tax rate and value. Businesses providing mixed supplies must comply with the invoicing, return filing, and payment requirements for the principal supply.
It’s important to note that the specific provisions related to mixed supplies, including invoicing, taxation, and compliance requirements, are outlined in the GST Act and related rules and regulations.
Section 2(75) – Money:
“money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
Section 2(75) of the Central Goods and Services Tax (CGST) Act defines the term “money.” A detailed explanation given hereunder:
1. Definition: As per the CGST Act, “money” refers to the Indian legal tender or any foreign currency, coins, banknotes, promissory notes, cheques, electronic money, or other forms of payment recognized as legal tender.
2. Inclusion: The term “money” includes various forms of monetary instruments and payment methods that are widely accepted as a medium of exchange. It encompasses physical currencies such as coins and banknotes as well as digital or electronic forms of money like electronic funds transfers, digital wallets, and other electronic payment methods.
3. Legal Tender: Money is recognized as a legal tender, which means it is legally accepted as a means of payment to settle obligations or debts. The Indian rupee is the official legal tender in India, and other currencies can be used for specific purposes as per applicable laws and regulations.
4. Transactional Use: Money is primarily used for conducting financial transactions, such as the purchase of goods and services, settlement of debts, and other monetary exchanges. It serves as a universally accepted medium of exchange and a store of value.
5. Taxable Supply: The CGST Act treats the supply of money as an exempt supply, meaning it is not subject to Goods and Services Tax (GST). This exemption ensures that the act of providing money as a form of payment does not attract additional tax liability.
6. Consideration in Supply: Money plays a crucial role in determining the consideration or value of a taxable supply. When goods or services are supplied for a monetary consideration, the value of the supply is typically expressed in terms of the money exchanged.
It’s important to note that while Section 2(75) of the CGST Act defines “money,” the specific provisions related to the treatment of money in the context of GST, including valuation, tax liability, and other aspects, are outlined in the GST Act and related rules and regulations.
Section 2(76) –Motor Vehicle:
“motor vehicle” shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);
In the context of the GST Act, “motor vehicle” refers to any self-propelled vehicle designed to transport goods or passengers on the road. It typically includes various types of vehicles powered by an engine, such as cars, motorcycles, buses, trucks, and other similar vehicles.
Some important points to understand about the concept of motor vehicle:
1. Transportation Purpose: Motor vehicles are primarily used for transportation purposes, either for carrying goods or passengers. They are equipped with an engine and are designed to be driven on roads or other designated areas.
2. Self-Propelled: A distinguishing characteristic of motor vehicles is that they are self-propelled, meaning they can move and operate independently without being towed or pushed by an external force.
3. Road Use: Motor vehicles are intended to be used on roads, highways, or other public or private areas designated for vehicular traffic. They are subject to regulations and requirements related to vehicle registration, licensing, insurance, and compliance with road safety rules.
4. Tax Treatment: The GST Act provides specific provisions regarding the tax treatment of motor vehicles. The supply of motor vehicles is generally subject to GST, and the applicable tax rates, exemptions, and input tax credit provisions depend on various factors such as the type of vehicle, its purpose (commercial or personal), and its classification under the Harmonized System of Nomenclature (HSN).
5. Input Tax Credit: Businesses involved in the supply or use of motor vehicles for taxable purposes may be eligible to claim input tax credit on the GST paid on the purchase of motor vehicles, subject to certain conditions and restrictions.
It’s important to note that the specific provisions related to motor vehicles, including tax rates, input tax credit eligibility, and compliance requirements, are outlined in the GST Act and related rules and regulations.
Section 2(77) – Non-Resident Taxable Person:
“non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India;
Section 2(77) of the Central Goods and Services Tax (CGST) Act defines the term “non-resident taxable person.” A detailed explanation is as under:
1. Definition: As per the CGST Act, a non-resident taxable person refers to any person who occasionally undertakes transactions involving the supply of goods or services or both, whether as a principal, agent, or in any other capacity, but who does not have a fixed place of business or residence in India.
2. Occasional Transactions: A non-resident taxable person is involved in transactions in India on an occasional basis. This means that they are not engaged in regular or continuous supplies of goods or services in India but rather undertake transactions for specific purposes or limited periods.
3. Fixed Place of Business or Residence: A non-resident taxable person does not have a permanent establishment, branch, or fixed place of business in India. They may not have a physical presence or a residential address in India but are still liable to register and comply with the GST provisions for the transactions they undertake.
4. Registration Requirement: Non-resident taxable persons are required to obtain a GST registration in India for the duration of their transactional activities. They need to apply for registration using the non-resident taxable person (NRTP) registration process and obtain a unique identification number (UIN) for compliance purposes.
5. Compliance and Tax Liability: Non-resident taxable persons are subject to the same compliance requirements as resident taxpayers in terms of filing returns, maintaining records, issuing invoices, and paying the applicable GST on their supplies. They are also required to appoint an authorized representative in India for GST-related matters.
6. Refund of Taxes: Non-resident taxable persons may be eligible to claim a refund of any excess taxes paid in India, subject to the conditions and procedures specified under the GST Act and related rules.
The specific provisions related to the registration, compliance, tax liability, and refund procedures for non-resident taxable persons are outlined in the GST Act and related rules and regulations.
Section 2(78) – Non Taxable Supply:
“non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;
Non-taxable supply refers to a supply of goods or services that is not subject to Goods and Services Tax (GST). These supplies are exempted from the levy of GST, meaning that no GST is applicable on the transaction.
Some important points to understand about non-taxable supplies:
1. Exemption: Non-taxable supplies are specifically excluded from the scope of GST. They are not liable for GST, and therefore, no GST is charged or collected on these supplies.
2. Nature of Supplies: Non-taxable supplies can vary depending on the specific provisions of the GST Act. They may include certain essential goods, basic food items, specific healthcare services, educational services, and other supplies that are exempted from GST for various reasons, such as social welfare, public interest, or international agreements.
3. Documentation: In the case of non-taxable supplies, the invoices or other relevant documents issued for these supplies should clearly indicate that they are exempt from GST. This helps in maintaining proper records and distinguishing them from taxable supplies.
4. Input Tax Credit: For supplies classified as non-taxable, the supplier may not be eligible to claim input tax credit on the GST paid on the inputs, input services, or capital goods used for making those supplies. The denial of input tax credit ensures that there is no accumulation of tax credits on supplies that are not subject to GST.
It’s important to note that the specific provisions related to non-taxable supplies, including the list of exempted goods or services and any conditions or limitations, are outlined in the GST Act and related rules and regulations.
Section 2(79) – Non-taxable Territory:
“non–taxable territory” means the territory which is outside the taxable territory;
In the context of the GST Act, a non-taxable territory refers to a geographical area or jurisdiction where the provisions of the GST Act do not apply. This means that supplies made to or within such territories are not subject to Goods and Services Tax (GST).
Some important points to understand about non-taxable territories:
1. Geographical Area: A non-taxable territory refers to a specific region or jurisdiction that is outside the scope of the GST Act. It could be a country, a part of a country, or any other designated area that is not covered under the GST legislation.
2. Tax Exemption: Supplies made to or within non-taxable territories are exempted from GST. This means that no GST is levied, and no tax liability arises on such supplies. The exemption is based on the principle that the GST Act only applies within the specified tax jurisdiction.
3. International Transactions: Non-taxable territories are typically associated with cross-border transactions, where goods or services are supplied to entities or individuals located in jurisdictions that are not covered by the GST Act. The tax treatment of such transactions is determined by the relevant provisions of international trade agreements, customs laws, or other applicable regulations.
4. Documentation: For supplies made to non-taxable territories, the invoices or other relevant documents should clearly indicate that the supply is being made to a non-taxable territory. This helps in maintaining proper records and ensuring compliance with the GST Act.
It’s important to note that the specific provisions related to non-taxable territories, including any exceptions, conditions, or limitations, may vary depending on the GST legislation of the respective jurisdiction.
Section 2(80) – Notification:
“notification” means a notification published in the Official Gazette and the expressions “notify” and “notified” shall be construed accordingly;
Section 2(80) of the Central Goods and Services Tax (CGST) Act defines the term “notification.” A detailed explanation is given as under:
1. Definition: As per the CGST Act, a “notification” refers to a formal communication or announcement issued by the government, central tax authorities, or any other authorized entity under the provisions of the GST Act.
2. Communication of Information: Notifications are used to communicate various types of information, instructions, rules, regulations, procedures, clarifications, exemptions, or amendments related to the GST Act. They serve as an official means to inform taxpayers and other stakeholders about changes, updates, or specific provisions under the GST regime.
3. Legal Effect: Notifications issued under the CGST Act have legal force and are binding on taxpayers, tax authorities, and other relevant parties. They have the same effect as the provisions of the act itself and need to be followed and implemented accordingly.
4. Content and Format: Notifications typically contain specific details, such as the effective date, subject matter, provisions, conditions, or requirements applicable to the concerned stakeholders. They may include changes in tax rates, thresholds, compliance procedures, forms, deadlines, or any other aspects related to GST administration.
5. Publishing and Accessibility: Notifications are usually published in official government gazettes, websites, or other authorized channels. They are made available to the public, taxpayers, tax professionals, and other stakeholders to ensure transparency and provide clarity on the applicable GST provisions.
6. Updates and Amendments: The GST law is dynamic, and notifications play a crucial role in keeping stakeholders informed about changes, amendments, or updates to the law. New notifications can introduce or modify provisions, while existing notifications can be amended or rescinded based on the evolving needs of the GST system.
It’s important for taxpayers and other stakeholders to stay updated with the notifications issued under the CGST Act to ensure compliance and adherence to the relevant GST provisions.
Section 2(81) – Other Territory:
“other territory” includes territories other than those comprising in a State and those referred to in sub-clauses (a) to (e) of clause (114) ;
In the context of the GST Act, “other territory” refers to a jurisdiction or geographical area that is not specifically defined as a taxable territory but is subject to specific provisions under the GST legislation. It refers to areas or regions that have their own distinct tax regulations and may have separate provisions for the application of GST.
Some important points to understand about other territories:
1. Unique Tax Provisions: Other territories may have their own unique tax provisions or regulations that differ from the standard GST rules applicable in the taxable territory. These provisions are specifically designed to cater to the specific requirements or circumstances of the particular territory.
2. Separate Compliance: Businesses or individuals operating in other territories may need to comply with the tax regulations of that specific territory, including registration, filing returns, payment of taxes, and maintaining records. These compliance requirements may vary from the general provisions applicable to taxable territories.
3. Cross-border Transactions: Other territories are often associated with cross-border transactions, where goods or services are supplied between the taxable territory and the other territory. In such cases, specific provisions and procedures may apply to determine the tax liability, valuation, documentation, and other aspects of the transactions.
4. Administrative Arrangements: To facilitate the implementation and administration of GST in relation to other territories, administrative arrangements or agreements may exist between the governments or tax authorities of the taxable territory and the other territory. These arrangements help in addressing coordination, cooperation, and compliance-related issues.
It’s important to note that the specific provisions and requirements related to other territories, including any exceptions, conditions, or limitations, may vary depending on the GST legislation and the specific arrangement between the taxable territory and the other territory.
Section 2(82) – Output Tax:
“output tax” in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis;
Output tax refers to the tax collected or chargeable on the supply of goods or services made by a registered taxpayer. It is the tax amount that a taxpayer is required to collect from their customers or recipients of the supply and subsequently remit to the tax authorities.
Some important points to understand about output tax:
1. Tax Liability: As per the GST Act, every registered taxpayer is liable to collect and pay output tax on the taxable supplies they make. The rate of output tax will depend on the applicable GST rate for the particular goods or services supplied.
2. Invoicing and Tax Collection: When a registered taxpayer supplies goods or services, they issue tax invoices to their customers or recipients. The tax invoice includes the details of the transaction, such as the price, quantity, tax rate, and the amount of tax charged, which represents the output tax.
3. Taxable Value: The output tax is calculated based on the taxable value of the supply, which is the price charged for the goods or services supplied, excluding the GST amount. The taxable value is determined as per the provisions of the GST Act and related rules.
4. Tax Payment and Reporting: The registered taxpayer is responsible for collecting the output tax from their customers and remitting it to the tax authorities within the prescribed timelines. They need to maintain proper records of the output tax collected and report it in the GST returns filed periodically.
5. Set-off against Input Tax Credit: The output tax collected by the registered taxpayer can be set off against the input tax credit available to them. Input tax credit allows taxpayers to claim the GST paid on their purchases or inputs against the GST collected on their supplies, thereby reducing their overall tax liability.
It’s important to note that the specific provisions related to output tax, including any exceptions, conditions, or limitations, are outlined in the GST Act and related rules and regulations.
Section 2(83) – Outward Supply:
“outward supply” in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such person in the course or furtherance of business;
Section 2(83) of the Central Goods and Services Tax (CGST) Act defines the term “outward supply.” A detailed explanation is given hereunder:
1. Definition: As per the CGST Act, “outward supply” refers to the supply of goods or services made by a registered taxpayer to another person. It encompasses all transactions where goods or services are provided or transferred by the supplier to the recipient.
2. Nature of Supply: An outward supply can include the sale, transfer, barter, exchange, license, rental, lease, or disposal of goods or services. It encompasses both tangible goods, such as products or commodities, as well as intangible services, such as professional services, consulting, or software development.
3. Tax Liability: Every registered taxpayer is liable to collect and pay the applicable Goods and Services Tax (GST) on their outward supplies. The rate of GST depends on the category of goods or services supplied.
4. Invoicing and Tax Collection: When making an outward supply, the registered taxpayer is required to issue a tax invoice to the recipient. The tax invoice contains details of the transaction, such as the supplier’s and recipient’s details, description and quantity of the goods or services supplied, applicable GST rate, and the amount of tax charged.
5. Taxable Value: The taxable value of an outward supply is the consideration or the amount charged for the supply, excluding the GST amount. The taxable value is determined based on the provisions of the CGST Act and related rules.
6. Reporting in GST Returns: The registered taxpayer needs to report their outward supplies in the GST returns filed periodically. They must provide the details of the supplies made, including the taxable value and the GST charged.
7. Compliance Requirements: Registered taxpayers are required to comply with various provisions of the CGST Act regarding outward supplies. This includes issuing proper tax invoices, maintaining records of the supplies made, collecting and remitting the applicable GST, and adhering to the reporting and compliance requirements outlined by the tax authorities.
It’s important to note that the specific provisions and requirements related to outward supply, including any exceptions, conditions, or limitations, are outlined in the CGST Act and related rules and regulations.
Section 2(84) – Person:
“person” includes–
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a firm;
(e) a Limited Liability Partnership;
(f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India;
(g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013);
(h) any body corporate incorporated by or under the laws of a country outside India;
(i) a co-operative society registered under any law relating to co-operative societies;
(j) a local authority;
(k) Central Government or a State Government;
(l) society as defined under the Societies Registration Act, 1860 (21 of 1860);
(m) trust; and
(n) every artificial juridical person, not falling within any of the above;
Section 2(84) of the Central Goods and Services Tax (CGST) Act defines the term “person.” a detailed explanation given hereunder:
1. Definition: As per the CGST Act, “person” includes any individual, partnership firm, Hindu Undivided Family (HUF), company, association of persons, body of individuals, society, trust, government, local authority, or any other legal entity recognized by law.
2. Wide Applicability: The term “person” in the CGST Act is used to broadly refer to any entity or individual that is subject to the provisions of the act. It encompasses both natural persons (individuals) and legal persons (entities).
3. Tax Liability: The CGST Act imposes various tax liabilities, compliance requirements, and obligations on persons who engage in taxable supplies of goods or services. Such persons are required to register under GST, collect and pay applicable taxes, file returns, and maintain proper records as per the provisions of the act.
4. Inclusion of Various Entities: The term “person” in Section 2(84) encompasses a wide range of entities, including individuals, businesses, organizations, governments, and other legal entities. This ensures that all relevant entities are covered under the GST framework.
5. Legal Entity Status: The definition of “person” also covers legal entities such as companies, partnerships, societies, trusts, and others. These entities are recognized as separate legal entities with their own rights, liabilities, and obligations under the law.
6. Liability and Compliance: Persons, whether individuals or legal entities, are responsible for fulfilling their tax obligations, complying with the provisions of the CGST Act, and maintaining accurate records. They are subject to audits, assessments, and penalties in case of non-compliance.
7. Role in Transactions: The term “person” is relevant in the context of various GST transactions, including the supplier of goods or services, recipient of goods or services, intermediaries, agents, importers, exporters, and any other party involved in the supply chain.
It’s important to note that the term “person” is a crucial concept within the CGST Act and is used extensively throughout the legislation to determine the rights, responsibilities, and liabilities of individuals and entities operating within the GST framework.
Section (85) – Place of Business:
“place of business” includes––
(a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or
(b)a place where a taxable person maintains his books of account; or
(c) a place where a taxable person is engaged in business through an agent, by whatever name called;
[Notes by Team OPG:- Circular No. 61/35/2018 dated 04/09/2018 may be referred to, wherein it was clarified that in given cases godowns of the transporters may also be declared as additional place of business of the owner of the goods.]
Section 2(85) of the Central Goods and Services Tax (CGST) Act defines the term “place of business.” A detailed explanation is given hereunder:
1. Definition: As per the CGST Act, “place of business” refers to any establishment, branch, office, warehouse, factory, or any other premises, where a registered person carries out business activities, including administrative or business-related functions.
2. Physical Presence: The term “place of business” implies a physical location or premises where business operations are conducted. It includes both owned and leased premises and covers various types of establishments, such as offices, factories, warehouses, shops, or any other premises where business activities occur.
3. Business Operations: A place of business is where a registered person engages in various business-related activities, including manufacturing, trading, provision of services, storage of goods, maintenance of records, administrative functions, or any other operations related to the business.
4. Determining Tax Jurisdiction: The concept of a place of business is significant for determining the tax jurisdiction and registration requirements under the GST regime. The location of the place of business is used to determine the applicable State or Union Territory for registration and compliance purposes.
5. Multiple Places of Business: A registered person may have multiple places of business, each with its own distinct address and operations. In such cases, the registered person is required to declare and register each place of business separately under the GST regime, following the prescribed procedures.
6. Importance for Tax Compliance: The identification of the place of business is crucial for tax compliance purposes, including issuing tax invoices, maintaining proper records, filing returns, and determining the liability for payment of Goods and Services Tax (GST) based on the place of supply rules.
7. Virtual or Digital Establishments: With the growth of e-commerce and digital business models, the concept of a place of business also includes virtual or digital establishments. In such cases, the place of business is determined based on the location where significant business activities are performed or managed, even if there is no physical presence.
It’s important to note that the term “place of business” plays a significant role in determining the tax liabilities, compliance requirements, and jurisdictional aspects under the CGST Act. The provisions related to place of business are used to ensure proper registration, record-keeping, and tax administration for businesses operating under the GST regime.
Section 2(86) – Place of Supply:
“place of supply” means the place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act;
Section 2(86) of the CGST Act defines “Place of Supply” as follows:
“Place of Supply” means the location of the recipient of services on which the tax is payable.
In simpler terms, “Place of Supply” refers to the location where the recipient of services is located, and it determines the jurisdiction under which the tax on those services is payable. A detailed explanation is given hereunder:
1. Location of the Recipient: The place of supply is determined based on the location of the recipient of services. It is the geographical location where the recipient is established or has a fixed establishment or, in the absence of both, their usual place of residence.
2. Tax Payable: The place of supply is significant because it determines the applicable tax jurisdiction. The tax on the services supplied is payable in the jurisdiction where the recipient is located.
The determination of the place of supply is crucial for various purposes under the GST regime, including:
a. Levy and Collection of Tax: The place of supply helps in determining the jurisdiction under which the tax on services is levied and collected.
b. Applicable Tax Rates: The place of supply is used to determine the applicable tax rates, as different states within India may have different rates of tax.
c. Jurisdictional Control: The place of supply determines the jurisdictional control for the administration and enforcement of tax laws.
It’s important to note that the determination of the place of supply for different types of services is specified in the Integrated Goods and Services Tax (IGST) Act, 2017, and the respective rules and regulations. The rules provide specific criteria and conditions to ascertain the place of supply for various types of services, such as transportation, telecommunications, banking, insurance, etc.
The concept of the place of supply ensures that the tax is paid to the appropriate tax authority based on the location of the recipient. It helps in maintaining clarity and consistency in the application of tax laws and prevents the possibility of double taxation or non-taxation.
To conclude, Section 2(86) of the CGST Act defines “Place of Supply” as the location of the recipient of services, on which the tax is payable. The determination of the place of supply is significant for determining the applicable tax jurisdiction and ensuring compliance with tax obligations under the GST regime.
Section 2(87) – Prescribed:
“prescribed” means prescribed by rules made under this Act on the recommendations of the Council;
Section 2(87) of the Central Goods and Services Tax (CGST) Act, 2017 defines the term “Prescribed.” A detailed explanation is given hereunder:
In simpler terms, “Prescribed” refers to something that is determined or specified by the rules framed under the CGST Act, 2017. These rules are made based on the recommendations of the GST Council. A detailed explanation is given hereunder:
1. Rules under the CGST Act: The CGST Act provides the framework and guidelines for the implementation of the Goods and Services Tax (GST) regime in India. However, certain specific details, procedures, and requirements are not explicitly mentioned in the Act itself. These additional details and procedures are prescribed by the rules made under the Act.
2. Recommendations of the Council: The GST Council, consisting of representatives from the central and state governments, is responsible for making recommendations on various aspects of the GST law, including the rules. The rules prescribed under the CGST Act are formulated based on the recommendations made by the GST Council.
3. Legal Force: When something is prescribed under the CGST Act, it carries legal force and must be complied with. This includes any requirements, procedures, forms, formats, or other specific details that are prescribed by the rules.
The term “Prescribed” is used throughout the CGST Act to refer to various provisions, requirements, forms, and procedures that are specified in the rules. It signifies that these details have been determined by the rule-making authority and are binding on taxpayers and other entities involved in GST compliance.
It’s important to note that the specific rules prescribed under the CGST Act are contained in the Central Goods and Services Tax Rules, 2017. These rules provide detailed provisions related to registration, payment of tax, invoices, input tax credit, returns, assessments, and other aspects of GST compliance.
To summarize, Section 2(87) of the CGST Act defines “Prescribed” as something determined or specified by the rules made under the Act on the recommendations of the GST Council. The term is used to denote the additional details, procedures, and requirements that are prescribed by the rules for effective implementation and compliance with the GST law.
Section 2(88) – Principal:
“principal” means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both;
Section 2(88) of the Central Goods and Services Tax (CGST) Act defines the term “principal.” A detailed explanation is given hereunder:
1. Definition: As per the CGST Act, “principal” refers to a person for whom an agent carries out business activities. The agent acts on behalf of the principal, and any transaction conducted by the agent is considered as if it is conducted by the principal.
2. Agent-Principal Relationship: The concept of the principal-agent relationship is fundamental to the understanding of this section. The principal is the person on whose behalf the agent acts, and the agent is authorized to act on behalf of the principal in specific business transactions or activities.
3. Representation and Authority: The principal grants authority to the agent to act on their behalf, typically through a legally binding agreement. The agent may have the power to negotiate and enter into contracts, make decisions, or perform other activities within the scope of the agency relationship.
4. Liability and Rights: Transactions conducted by the agent on behalf of the principal have legal implications for both parties. The principal is ultimately responsible for the actions and obligations arising from these transactions, while the agent acts as an intermediary or representative.
5. Attribution of Activities: Section 2(87) ensures that any supply of goods or services made by an agent on behalf of the principal is attributed to the principal for the purposes of the CGST Act. This means that the principal is considered the supplier, and the tax liability, compliance requirements, and other provisions of the act apply to the principal in relation to these supplies.
6. Input Tax Credit: The concept of the principal-agent relationship is relevant to the claiming of input tax credit. The principal may be eligible to claim input tax credit on the tax paid by the agent on the supplies made on their behalf, subject to the conditions and provisions of the CGST Act.
7. Documentation: The principal-agent relationship should be properly documented, outlining the roles, responsibilities, and authority granted to the agent. This documentation is essential for establishing the agency relationship and determining the attribution of supplies for GST purposes.
It’s important to note that the principal-agent relationship under Section 2(87) of the CGST Act has implications for the determination of tax liabilities, compliance requirements, and input tax credit provisions. The principal is held accountable for the supplies made by the agent on their behalf.
Section 2(89) – Principal Place of Business:
“principal place of business” means the place of business specified as the principal place of business in the certificate of registration;
Section 2(89) of the Central Goods and Services Tax (CGST) Act defines the term “principal place of business.” A detailed explanation is given hereunder:
1. Definition: The principal place of business, as per the CGST Act, refers to the primary location where a registered person carries out the most significant business activities or where central records and accounts are maintained.
2. Primary Business Location: The principal place of business is the primary or main location where the registered person conducts business operations. It typically represents the central hub or headquarters from which significant business decisions are made, and key business functions are performed.
3. Business Operations: The principal place of business is the central point from which various business activities are conducted, including manufacturing, trading, provision of services, storage of goods, administrative functions, and other core operational activities.
4. Determining Tax Jurisdiction: The principal place of business is crucial for determining the applicable State or Union Territory for registration and compliance purposes. It helps establish the tax jurisdiction under the GST regime and determines the location where the registered person’s primary tax obligations lie.
5. Documentation and Records: The principal place of business is where the central records, accounts, and books of the registered person are maintained. It serves as the primary location for storing and managing financial and business-related documents, such as invoices, ledgers, tax records, and other relevant records.
6. Address for Communication: The principal place of business also serves as the address for communication between the registered person and the tax authorities. Any official communication, notices, or correspondence from the tax department will be sent to the address of the principal place of business.
7. Multiple Places of Business: In cases where a registered person has multiple places of business, each with its own distinct address and operations, one of those places will be considered the principal place of business. The registered person is required to declare and register the principal place of business separately under the GST regime.
8. Importance for Compliance: The principal place of business plays a significant role in fulfilling various compliance requirements, such as filing returns, maintaining proper records, issuing tax invoices, and determining the liability for payment of Goods and Services Tax (GST) based on the place of supply rules.
It’s important to note that the determination of the principal place of business is based on factors such as the nature of business operations, significant decision-making authority, maintenance of central records, and the location where the most substantial business activities occur.
Section 2(90) – Principal Supply:
“principal supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;
Section 2(90) of the CGST Act defines “Principal Supply” as follows:
In simpler terms, “Principal Supply” refers to the primary or main supply of goods or services in a transaction that forms the major component of a composite or mixed supply. Other supplies in the transaction are dependent on or ancillary to this principal supply.
A detailed explanation is given hereunder:
1. Composite Supply: A composite supply refers to a transaction where multiple goods or services are supplied together as a single package, and they are naturally bundled or provided in conjunction with each other. In a composite supply, there is a principal supply that forms the main part of the transaction.
2. Mixed Supply: A mixed supply refers to a transaction where multiple goods or services are supplied together, but they are not naturally bundled or provided in conjunction with each other. In a mixed supply, there is also a principal supply that represents the primary element of the transaction.
3. Predominant Element: The principal supply is determined based on the predominant element in the composite or mixed supply. It is the supply that holds the most significance, value, or importance in the transaction. Other supplies in the composite or mixed supply are ancillary to this principal supply.
The identification of the principal supply is important for various purposes, such as determining the applicable tax rate, tax treatment, and compliance requirements under the GST regime. The tax liability and treatment may vary based on the principal supply in a composite or mixed supply transaction.
It’s important to note that the determination of the principal supply is based on the facts and circumstances of each transaction. The nature of the goods or services, their relative importance, and the intention of the parties involved are considered in determining the principal supply.
To summarize, Section 2(90) of the CGST Act defines “Principal Supply” as the supply of goods or services that constitutes the predominant element in a composite or mixed supply transaction. It represents the primary or main part of the transaction, upon which other supplies depend. The identification of the principal supply is significant for determining the applicable tax rate and treatment under the GST regime.
Section 2(91) – Proper Officer:
“proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board; (Details of proper officer given under chapter “other relevant materials)
Section 2(91) of the Central Goods and Services Tax (CGST) Act defines the term “proper officer.” A detailed explanation is given hereunder:
1. Definition: In the context of the CGST Act, “proper officer” refers to an officer appointed or authorized by the Commissioner of CGST/SGST (Central Goods and Services Tax/State Goods and Services Tax) or any other officer notified by the government to perform various functions under the act.
2. Authorized Officer: The proper officer is an authorized officer who is entrusted with specific powers and responsibilities under the CGST Act. These officers are responsible for implementing, administering, and enforcing the provisions of the act within their designated jurisdiction.
3. Functions and Powers: The proper officer has several functions and powers, including but not limited to the following: a. Verification and inspection of records and premises of registered persons. b. Conducting audits and investigations to ensure compliance with the provisions of the act. c. Initiating assessments, re-assessments, and audits to determine the tax liability of registered persons. d. Issuing show-cause notices, conducting inquiries, and adjudicating on tax-related matters. e. Seizing goods, documents, or assets in cases of suspected tax evasion or non-compliance. f. Conducting search and seizure operations based on credible information of tax offenses. g. Arresting persons involved in tax evasion or other specified offenses. h. Imposing penalties, fines, or initiating legal proceedings as per the provisions of the act.
4. Powers of Entry and Inspection: The proper officer has the authority to enter any premises, place of business, or any other location where taxable supplies are made, stored, or records are maintained. They can inspect the records, goods, or documents related to the business activities to ensure compliance with the CGST Act.
5. Assistance and Cooperation: It is mandatory for taxpayers to provide reasonable assistance and cooperation to the proper officer during inspections, audits, or investigations. Failure to comply with the instructions or hindering the proper officer in the discharge of their duties may attract penalties under the act.
6. Communication and Notices: The proper officer may issue various notices, including show-cause notices, demand notices, and any other communication related to the tax liability or compliance requirements. It is essential for taxpayers to respond to these notices within the specified time frame to avoid further consequences.
7. Decision-making Authority: The proper officer has the authority to make decisions on matters such as registration, cancellation of registration, refund claims, and other tax-related issues within their jurisdiction.
The designation of proper officers is an integral part of the administration and enforcement of the CGST Act. They play a crucial role in ensuring compliance, preventing tax evasion, and maintaining the integrity of the GST system.
Section 2(92) – Quarter:
“quarter” shall mean a period comprising three consecutive calendar months, ending on the last day of March, June, September and December of a calendar year;
Section 2(92) of the Central Goods and Services Tax (CGST) Act defines the term “quarter.” A detailed explanation is given hereunder:
1. Definition: In the context of the CGST Act, “quarter” refers to a three-month period used for the calculation and reporting of tax liabilities and compliance requirements under the GST (Goods and Services Tax) regime.
2. Time Period: A quarter represents a specific duration of time that is divided into four equal parts, with each part spanning three consecutive months. The CGST Act follows a quarterly reporting system for certain taxpayers, where they are required to furnish returns and pay taxes on a quarterly basis.
3. GST Return Filing: The concept of quarters is relevant for filing GST returns, such as GSTR-1 (outward supplies), GSTR-3B (summary return), and GSTR-4 (composition scheme). Taxpayers under the quarterly filing system are required to submit these returns for each quarter, providing details of their supplies, purchases, and tax liability.
4. Due Dates: The CGST Act specifies the due dates for filing quarterly returns. Typically, the due date for the filing of quarterly returns falls after the end of each quarter. For example, the GSTR-1 for a particular quarter may be due by the 11th day of the following month, while the GSTR-3B may be due by the 20th day of the following month.
5. Payment of Tax: Along with the filing of quarterly returns, taxpayers are required to pay the applicable tax liability for the respective quarter. The due date for tax payment is usually aligned with the return filing due date.
6. Compliance and Reconciliation: The quarterly reporting system provides taxpayers with a specific timeframe to reconcile their transactions, determine their tax liability, and fulfil compliance requirements. It allows them to review their business activities and calculate the tax payable accurately.
7. Exceptions: It’s important to note that not all taxpayers are eligible for the quarterly filing system. Small taxpayers under the composition scheme, for example, may have different reporting requirements and filing frequencies. Additionally, taxpayers with a turnover above a specified threshold may be required to file returns on a monthly basis.
The concept of quarters in the CGST Act ensures that taxpayers have a systematic and structured approach to report and pay their tax liabilities. It provides a defined timeframe for compliance and facilitates the smooth functioning of the GST regime.
Section 2(93) – Recipient of supply of Goods / Services:
“recipient” of supply of goods or services or both, means–
(a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and
(c) where no consideration is payable for the supply of a service, the person to whom the service is rendered,
and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied;
Section 2(93) of the CGST Act defines “Recipient of supply of goods or services” as follows:
“Recipient of supply of goods or services” means:
(a) where a consideration is payable for the supply of goods or services, the person who is liable to pay that consideration;
(b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and
(c) where no consideration is payable for the supply of a service, the person to whom the service is rendered.
In simpler terms, “Recipient of supply of goods or services” refers to the person who receives or is entitled to receive the supply of goods or services. The definition varies depending on whether a consideration is payable for the supply or not.
A detailed explanation is given hereunder:
1. Consideration for Supply: If a consideration (payment) is payable for the supply of goods or services, the recipient is the person who is liable to pay that consideration. In such cases, the recipient is the person responsible for making the payment for the goods or services received.
2. No Consideration for Supply of Goods: If no consideration is payable for the supply of goods, the recipient is the person to whom the goods are delivered, made available, or to whom possession or use of the goods is given or made available. In other words, the recipient is the person who receives physical possession or control over the goods.
3. No Consideration for Supply of Services: If no consideration is payable for the supply of services, the recipient is the person to whom the service is rendered. In this case, the recipient is the person who receives the benefit of the service being provided, even if no payment is involved.
The identification of the recipient of supply is important for various purposes under the GST regime, such as determining the liability to pay tax, the place of supply, and compliance obligations. The recipient of supply may have specific responsibilities and obligations under the law, including the payment of tax or the availment of input tax credit.
It’s important to note that the recipient of supply can be different from the person who actually uses or consumes the goods or services. For example, in the case of business-to-business transactions, the recipient of supply may be a company or organization, while the ultimate user or consumer may be different.
To summarize, Section 2(93) of the CGST Act defines the “Recipient of supply of goods or services” as the person who receives or is entitled to receive the supply. The definition varies based on whether a consideration is payable for the supply or not. The identification of the recipient is significant for determining tax liability, place of supply, and compliance obligations under the GST regime.
Section 2(94) – Registered Person:
“registered person” means a person who is registered under section 25 but does not include a person having a Unique Identity Number;
Section 2(94) of the Central Goods and Services Tax (CGST) Act defines the term “registered person.” A detailed explanation is given hereunder:
1. Definition: A registered person, as per the CGST Act, refers to any person who is registered under the act or is liable to be registered. It includes businesses, individuals, or entities that are registered for the purposes of the Goods and Services Tax (GST).
2. GST Registration: A registered person is someone who has obtained a valid GST registration number known as the Goods and Services Tax Identification Number (GSTIN). GST registration is mandatory for businesses and individuals meeting the prescribed turnover threshold or engaging in certain specified activities.
3. Tax Compliance: Being a registered person imposes certain obligations and responsibilities under the CGST Act. These include filing regular GST returns, maintaining proper books of accounts, issuing tax invoices, collecting and remitting taxes, and complying with other provisions of the act.
4. Input Tax Credit (ITC): A registered person is eligible to claim input tax credit on the taxes paid on their purchases or input supplies used in the course of business. This helps offset the tax liability on the outward supplies made by the registered person.
5. Legal Recognition: Registration as a GST-registered person grants legal recognition to the individual or entity as a legitimate business entity engaged in taxable supplies of goods or services. It ensures compliance with the GST provisions and enables participation in the GST system.
6. Benefits and Compliance Facilitation: Being a registered person provides certain benefits, such as availing input tax credit, eligibility for certain exemptions or threshold benefits, and access to various compliance mechanisms under the GST regime. Registered persons can also participate in inter-state and international trade transactions.
7. Registration Threshold: The CGST Act sets a turnover threshold beyond which registration becomes mandatory for businesses. However, businesses below the threshold limit may also voluntarily choose to register to avail themselves of the benefits of GST registration or to meet specific requirements.
8. Cancellation and Surrender: Registered persons have the obligation to inform the tax authorities if they are no longer liable to be registered or if they want to cancel their registration voluntarily. The cancellation process involves following the prescribed procedures and fulfilling any pending obligations.
Being a registered person under the CGST Act establishes the legal identity of a business or individual for GST purposes. It facilitates compliance, enables tax credits, and ensures that the entity operates within the framework of GST laws.
Section 2(95) – Regulations:
“regulations” means the regulations made by the Board under this Act on the recommendations of the Council;
Section 2(95) of the Central Goods and Services Tax (CGST) Act defines the term “regulations.” A detailed explanation is given hereunder:
1. Definition: In the context of the CGST Act, “regulations” refers to the rules or guidelines framed by the Central Government or the Board (i.e., the Central Board of Indirect Taxes and Customs) for the proper implementation and administration of the provisions of the act.
2. Rule-Making Authority: The regulations are formulated by the Central Government or the Board under the powers conferred by the CGST Act. These regulations provide specific details, procedures, and guidelines to supplement the provisions of the act and ensure uniformity and clarity in their application.
3. Supplement to the Act: While the CGST Act provides the overarching legal framework for the GST regime, it may not cover all the procedural or operational aspects in detail. Regulations serve as subsidiary legislation that fills the gaps by providing additional specifications, procedures, and instructions.
4. Content of Regulations: The regulations may cover a wide range of matters, including but not limited to the following: a. Registration procedures and requirements. b. Filing of returns and payment of taxes. c. Determination of time and value of supply. d. Input tax credit eligibility and conditions. e. Place of supply rules. f. Procedures for audits, assessments, and appeals. g. Provisions for exemptions, composition scheme, and input service distributors. h. Anti-profiteering measures and compliance enforcement.
5. Public Consultation: Before issuing regulations, the government or the Board may invite public comments or suggestions on the draft regulations. This allows stakeholders and the public to provide their feedback and input, ensuring that the regulations are well-informed and take into account practical considerations.
6. Updates and Amendments: The regulations can be updated, amended, or repealed from time to time as per the requirements of the GST regime. Any changes or updates to the regulations are typically communicated through official notifications or circulars issued by the Central Government or the Board.
7. Force of Law: The regulations hold the force of law and are binding on taxpayers, tax authorities, and other relevant stakeholders. Non-compliance with the regulations may lead to penalties, fines, or other consequences as prescribed in the CGST Act.
The regulations under the CGST Act play a crucial role in providing detailed guidelines and procedures for the effective implementation and administration of the GST regime. They help ensure uniformity, clarity, and consistency in the application of the GST provisions, facilitating smooth tax administration and compliance.
Section 2(96) – Removal of Goods:
“removal’’ in relation to goods, means-
(a) despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier; or
(b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient;
Section 2(96) of the CGST Act defines “Removal of goods” as follows:
“Removal of goods” in relation to any supply of goods, means— (a) dispatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier; or (b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient.
In simpler terms, “Removal of goods” refers to the act of dispatching or collecting goods in relation to any supply. It includes the process of delivering goods by the supplier or on their behalf, as well as the collection of goods by the recipient or on their behalf.
A detailed explanation of the provision given hereunder:
1. Dispatch of Goods: The provision includes the dispatch of goods for delivery by the supplier. It refers to the act of sending or shipping the goods by the supplier to the recipient or any location designated by the recipient. The dispatch can be carried out directly by the supplier or through any person acting on their behalf, such as a logistics service provider.
2. Collection of Goods: The provision also includes the collection of goods by the recipient. It refers to the act of the recipient or any person acting on their behalf collecting the goods from the supplier or any location designated by the supplier. The collection can be carried out by the recipient themselves or through a representative or agent.
The concept of “Removal of goods” is important for determining the time and place of supply under the GST regime. It helps establish the point at which the supply of goods is deemed to have taken place, which affects the liability to pay tax and the determination of the place of supply.
It’s important to note that the terms “dispatch” and “collection” may have different meanings in specific contexts and industries. The precise interpretation and application of these terms may be clarified further through relevant rules, regulations, or judicial precedents.
To summarize, Section 2(96) of the CGST Act defines “Removal of goods” as the act of dispatching goods by the supplier or on their behalf, as well as the act of collecting goods by the recipient or on their behalf, in relation to any supply. The provision is relevant for determining the time and place of supply under the GST regime.
Section 2(97) – Return
“return” means any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder;
(Refer to section 39, Rule 39 and Rule 59 to 67A)
the meaning and detailed explanation of Section 2(97) of the Central Goods and Services Tax (CGST) Act, which defines the term “return”: A detailed explanation is given hereunder:
1. Definition: In the context of the CGST Act, “return” refers to the prescribed form or statement that a registered person is required to file with the tax authorities. The return contains details of the taxpayer’s business activities, such as supplies made, purchases, tax liability, and input tax credit.
2. Filing of Returns: The CGST Act specifies the types of returns that registered persons need to file, the frequency of filing, and the prescribed format. These returns include GSTR-1 (outward supplies), GSTR-3B (summary return), GSTR-9 (annual return), and various other returns based on the taxpayer’s specific circumstances.
3. Information and Compliance: The return filed by a registered person provides crucial information to the tax authorities for assessing their tax liability, verifying input tax credit claims, and ensuring compliance with the provisions of the CGST Act. It helps in determining the tax payable, reconciling transactions, and conducting audits, if required.
4. Contents of a Return: The return typically includes details such as the taxpayer’s business name, GSTIN (Goods and Services Tax Identification Number), turnover, taxable supplies made, exempt supplies, exports, imports, input tax credit availed, tax paid, and any other information required by the tax authorities.
5. Due Dates and Late Fees: The CGST Act prescribes specific due dates for filing returns. Failure to file a return within the prescribed timeline may attract late fees or penalties, as determined by the provisions of the act. Late fees are typically levied per day of delay, subject to a maximum limit.
6. Amendments and Revisions: If a registered person identifies any errors or omissions in a filed return, they can rectify them by filing an amendment or revision return within the prescribed time limits. This helps in ensuring accurate reporting and compliance with the GST provisions.
7. Annual Return: In addition to regular periodic returns, registered persons are required to file an annual return (GSTR-9) summarizing their annual business activities. The annual return provides a comprehensive overview of the taxpayer’s transactions, input tax credit, and tax liability for the entire financial year.
8. GST Return Filing System: The return filing process is an integral part of the GST return filing system, which aims to ensure transparency, accountability, and proper recording of business transactions for both taxpayers and the tax authorities.
It is important for registered persons to comply with the return filing requirements as specified by the CGST Act. Timely and accurate filing of returns helps in fulfilling tax obligations, maintaining proper records, and avoiding penalties or other adverse consequences.
Section 2(98) – Reverse Charge
“reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under subsection (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;
the meaning and detailed explanation of Section 2(98) of the Central Goods and Services Tax (CGST) Act, which defines the term “reverse charge”:
1. Definition: In the context of the CGST Act, “reverse charge” refers to a mechanism where the liability to pay the tax is shifted from the supplier of goods or services to the recipient of such goods or services. Normally, the supplier is responsible for collecting and remitting the tax to the government. However, under reverse charge, the recipient becomes liable for payment of the tax directly.
2. Applicability: Reverse charge is applicable in specific cases as prescribed by the CGST Act. These cases typically involve certain notified supplies or specific categories of taxpayers. The purpose of implementing reverse charge is to ensure proper compliance and prevent tax evasion in situations where it may be difficult for the supplier to be held accountable.
3. Supplies under Reverse Charge: The CGST Act specifies the supplies to which the reverse charge mechanism applies. This includes goods or services received from unregistered persons, certain specified goods or services notified by the government, and supplies from registered persons where the reverse charge provision is invoked.
4. Registered Recipient’s Responsibility: When a registered recipient receives supplies covered under reverse charge, they are required to self-assess the tax liability on such supplies and pay the applicable tax directly to the government. The recipient needs to comply with the invoicing, accounting, and reporting requirements for reverse charge transactions.
5. Input Tax Credit: The registered recipient who pays tax under reverse charge is generally eligible to claim input tax credit for the tax paid. This allows them to offset the tax liability on their outward supplies against the tax paid on reverse charge purchases, subject to the conditions and restrictions specified under the CGST Act.
6. Compliance and Record-Keeping: Both the supplier and the recipient of supplies covered under reverse charge need to maintain proper records and comply with the relevant reporting requirements. This includes recording the transaction details, issuing the necessary documents, and ensuring accurate reporting in the periodic returns filed with the tax authorities.
7. Threshold Exemption: The CGST Act provides a threshold exemption for reverse charge applicability. Below a certain specified threshold, the reverse charge mechanism may not be triggered, and the supplier remains responsible for collecting and remitting the tax.
The reverse charge mechanism aims to ensure that tax liabilities are properly discharged, particularly in cases where the supplier may not be registered or where it may be difficult to enforce compliance. It helps in preventing tax evasion and maintaining the integrity of the GST system.
Section 2(99) – Revisional Authority:
“Revisional Authority” means an authority appointed or authorised for revision of decision or orders as referred to in section 108;
Section 2(99) of the CGST Act defines “Revisional Authority” as follows:
“Revisional Authority” means an authority appointed or authorized under section 108 or section 109.
In simpler terms, “Revisional Authority” refers to an authority appointed or authorized under Section 108 or Section 109 of the CGST Act. These sections of the Act provide the legal framework for the appointment and powers of the Revisional Authority.
A detailed explanation of the provision is given hereunder:
1. Appointment of Revisional Authority: The CGST Act empowers the government to appoint or authorize specific authorities as Revisional Authorities. These authorities are entrusted with the responsibility of carrying out revisional activities as prescribed under the Act.
2. Powers and Functions: The Revisional Authority has certain powers and functions as provided under the CGST Act. These powers typically include the authority to revise orders or decisions made by lower authorities within the framework of the Act.
3. Section 108 and Section 109: Section 108 and Section 109 of the CGST Act specifically deal with Revisional provisions. Section 108 outlines the powers of Revisional authority and provides the general framework for Revisional activities.
Section 109, on the other hand, relates to the constitution of the Revisional Authority and specifies the composition and structure of such authorities.
The Revisional Authority plays an important role in ensuring proper administration, enforcement, and redressal of grievances under the GST regime. They have the power to review and revise orders or decisions made by lower authorities within the limits and procedures prescribed by law.
It’s important to note that the specific powers, functions, and procedures of the Revisional Authority may vary depending on the rules and regulations framed under the CGST Act. The rules may further elaborate on the appointment, jurisdiction, and powers of the Revisional Authority.
To summarize, Section 2(99) of the CGST Act defines “Revisional Authority” as an authority appointed or authorized under Section 108 or Section 109 of the Act. These authorities are responsible for carrying out revisional activities and have the power to revise orders or decisions made by lower authorities within the framework of the Act.
Section 2(100) – Schedule:
“Schedule” means a Schedule appended to this Act;
the meaning and detailed explanation of Section 2(100) of the Central Goods and Services Tax (CGST) Act, which defines the term “schedule”:
1. Definition: In the context of the CGST Act, “schedule” refers to the schedules appended to the act. Schedules contain additional provisions, rules, or classifications that complement the main provisions of the act. These schedules provide specific details, rates, exemptions, and other important information related to the implementation and administration of the GST law.
2. Schedules under CGST Act: The CGST Act contains multiple schedules that provide specific information on various aspects of GST. Some of the important schedules under the act include:
a. Schedule I: This schedule covers activities that are treated as supply even if they are made without consideration. It specifies instances such as transfer of goods between related persons, permanent transfer or disposal of business assets, and supply of goods or services between distinct persons.
b. Schedule II: This schedule deals with matters related to the classification of activities as supply of goods or supply of services. It provides specific guidance on whether certain activities should be considered as supply of goods or supply of services.
c. Schedule III: This schedule lists activities or transactions that are neither treated as supply of goods nor supply of services. It includes items such as services by an employee to an employer in the course of employment, sale of land (subject to certain conditions), and actionable claims other than lottery, betting, and gambling.
d. Schedule IV: This schedule pertains to activities that are deemed to be a supply of goods or services between distinct or related persons. It provides guidelines on the valuation of such supplies and determines the applicable tax liability.
e. Schedule V: This schedule specifies activities or transactions that are exempt from GST. It lists goods and services that are not subject to the levy of tax and are exempted from the payment of GST.
f. Schedule VI: This schedule contains the rules for determining the time of supply of goods and services, which is crucial for determining the applicable tax period and calculating the tax liability.
3. Importance of Schedules: The schedules under the CGST Act provide clarity, specificity, and detailed guidelines on various aspects of the GST law. They supplement the main provisions of the act and help in the proper interpretation and implementation of the GST regime. Schedules play a crucial role in determining the tax liability, exemptions, valuation, and other important aspects related to goods and services under GST.
It is important to refer to the relevant schedules under the CGST Act for specific information, rates, exemptions, and provisions related to various transactions and activities. The schedules are an integral part of the law and provide essential guidance for taxpayers, tax authorities, and other stakeholders involved in the GST system.
Section 2(101) – Securities:
“securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
The meaning and detailed explanation of Section 2(101) of the Central Goods and Services Tax (CGST) Act, which defines the term “securities”:
Section 2(101) of the CGST Act: “Securities” means securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956.
Explanation: The term “securities” in the context of the CGST Act refers to the definition provided in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (SCRA). The CGST Act refers to the definition of securities under the SCRA to maintain consistency and avoid ambiguity in the interpretation of the term.
The Securities Contracts (Regulation) Act, 1956 (SCRA) defines securities as any instrument or contract or right that is included in the definition of securities under the Securities Contracts (Regulation) Act, 1956, or listed on a recognized stock exchange. The SCRA provides an extensive definition of securities, which includes various financial instruments such as shares, debentures, bonds, derivatives, units of mutual funds, government securities, and other marketable securities.
The inclusion of the definition of securities from the SCRA in the CGST Act implies that transactions involving securities are subject to the provisions of the CGST Act. However, it is important to note that specific provisions and rules related to securities transactions, including taxation and exemptions, may be governed by other laws and regulations, such as the Securities and Exchange Board of India (SEBI) regulations.
In summary, Section 2(101) of the CGST Act adopts the definition of securities as provided in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956. This helps maintain consistency in the interpretation of the term “securities” for the purpose of the CGST Act, ensuring that transactions involving securities are treated appropriately under the GST law.
Section 2(102) – Services:
“services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
1[Explanation.––For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities;]
Section 2(102). Definitions of CGST Act 2017: services New Definition: “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; Explanation.
For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities; Earlier Definition: “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
The meaning and detailed explanation of Section 2(102) of the Central Goods and
Services Tax (CGST) Act, which defines the term “services”:
1. Definition: In the context of the CGST Act, “services” refer to any activity carried out by a person for another, usually in exchange for consideration, other than the supply of goods. Services can be tangible or intangible in nature and encompass a wide range of activities, such as professional services, consulting, renting or leasing of assets, transportation, telecommunication, hospitality, entertainment, and many more.
2. Inclusions: The definition of services is not exhaustive and covers various types of activities. It includes services provided in the ordinary course of business, services provided for a consideration (monetary or otherwise), services provided by a person to their employer in the course of employment, and services provided by any association or body of persons to its members for a consideration.
3. Exclusions: Certain activities are specifically excluded from the definition of services. For example, the sale, transfer, or disposal of business assets is considered a supply of goods and not services. Additionally, certain activities that are specifically listed in Schedule III of the CGST Act, such as the transfer of title in immovable property, actionable claims, and money, are also excluded from the definition of services.
4. Taxation of Services: The supply of services is subject to Goods and Services Tax (GST) in India. The person providing the services is generally required to charge GST on the value of the services rendered and collect it from the recipient. The GST rates for different services are specified by the government and may vary based on the type of service provided.
5. Place of Supply: The CGST Act also contains provisions regarding the determination of the place of supply for services. The place of supply helps in determining the applicable tax jurisdiction and the applicable Integrated Goods and Services Tax (IGST) or State Goods and Services Tax (SGST) and Central Goods and Services Tax (CGST) for interstate and intrastate services, respectively.
6. Input Tax Credit: Registered persons who provide taxable services can generally claim input tax credit on the taxes paid on their input goods and services used in the provision of services. Input tax credit allows businesses to offset the taxes paid on inputs against the taxes collected on outputs, reducing the overall tax liability.
7. Compliance and Reporting: Providers of services are required to maintain proper records of their services, issue invoices or other specified documents, and comply with the reporting requirements under the CGST Act. They need to file periodic returns, report the details of services provided, and pay the applicable taxes to the government within the prescribed timelines.
The definition of services under the CGST Act is comprehensive and covers a wide range of activities. It helps in determining the tax liability, compliance requirements, and eligibility for input tax credit related to the provision of services. It is important for businesses and individuals involved in the supply of services to understand the provisions of the CGST Act related to services and comply with the applicable requirements.
Section 2(103) State:
“State” includes a Union territory with Legislature;
Section 2(103) states:
“State” with reference to a provision of this Act, includes a Union territory with Legislature, but does not include the Union territories of– (a) Andaman and Nicobar Islands; (b) Lakshadweep; (c) Dadra and Nagar Haveli and Daman and Diu; (d) Chandigarh.
In simpler terms, “State” refers to a state of India as well as certain Union territories with a legislature. However, it excludes specific Union territories as listed in the provision.
A detailed explanation is given hereunder:
1. State: In the context of the CGST Act, “State” generally refers to any of the states in India. It encompasses the territorial units that have their own elected government and legislative assembly.
2. Union Territory with Legislature: The provision also includes certain Union territories that have a legislature. These Union territories have a higher degree of autonomy and are empowered to make their own laws. The CGST Act recognizes these Union territories as equivalent to states for the purposes of the Act.
3. Excluded Union Territories: However, there are certain Union territories that are explicitly excluded from the definition of “State” under the CGST Act. These excluded Union territories are:
a. Andaman and Nicobar Islands b) Lakshadweep c) Dadra and Nagar Haveli and Daman and Diu d) Chandigarh
For these Union territories, the provisions of the CGST Act do not apply as if they were a state.
The distinction between states and Union territories is significant under the GST regime because different administrative and constitutional arrangements may apply to them. Each state and Union territory with a legislature has its own separate GST law and administration. The inclusion or exclusion of specific Union territories as “States” under the CGST Act determines the applicability of the Act to those territories.
It’s important to note that while certain Union territories are excluded from the definition of “State” under the CGST Act, they may still be governed by the Integrated Goods and Services Tax (IGST) Act, which deals with inter-state transactions and Union territories without legislatures.
To summarize, Section 2(103) of the CGST Act defines “State” as a state of India and certain Union territories with a legislature. However, it excludes specific Union territories as listed in the provision. The definition of “State” determines the applicability of the CGST Act to these territories under the GST regime.
Section 2(104) – State Tax:
“State tax” means the tax levied under any State Goods and Services Tax Act;
the meaning and detailed explanation of Section 2(104) of the Central Goods and Services Tax (CGST) Act, which defines the term “State Tax”:
Section 2(104) of the CGST Act: “State Tax” means the tax levied under the State Goods and Services Tax Act.
Explanation: The term “State Tax” refers to the tax levied by the State Government under the State Goods and Services Tax (SGST) Act. The CGST Act is a part of the Goods and Services Tax (GST) regime in India, which involves the imposition of taxes at both the central and state levels.
Under the GST regime, there are two components of tax levied on the supply of goods and services: Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). The CGST is levied by the Central Government, while the SGST is levied by the respective State Governments.
The SGST Act is enacted by each state or union territory of India to govern the levy and administration of the SGST within their jurisdiction. The State Tax, as defined in Section 2(104) of the CGST Act, refers to the tax imposed under the SGST Act by the State Government.
The State Tax collected under the SGST Act remains with the state or union territory where the taxable supply of goods or services takes place. It is an important component of the GST revenue generated by the states, contributing to their fiscal resources for various development activities and public welfare initiatives.
The rates of State Tax may vary from state to state as each state has the power to determine its own tax rates, subject to certain guidelines and recommendations of the administration. The inclusion or exclusion of specific Union territories as “States” under the CGST Act determines the applicability of the Act to those territories.
It’s important to note that while certain Union territories are excluded from the definition of “State” under the CGST Act, they may still be governed by the Integrated Goods and Services Tax (IGST) Act, which deals with inter-state transactions and Union territories without legislatures.
To summarize, Section 2(103) of the CGST Act defines “State” as a state of India and certain Union territories with a legislature. However, it excludes specific Union territories as listed in the provision. The definition of “State” determines the applicability of the CGST Act to these territories under the GST regime.
Section 2(104) – State Tax:
“State tax” means the tax levied under any State Goods and Services Tax Act;
the meaning and detailed explanation of Section 2(104) of the Central Goods and Services Tax (CGST) Act, which defines the term “State Tax”:
Section 2(104) of the CGST Act: “State Tax” means the tax levied under the State Goods and Services Tax Act.
Explanation: The term “State Tax” refers to the tax levied by the State Government under the State Goods and Services Tax (SGST) Act. The CGST Act is a part of the Goods and Services Tax (GST) regime in India, which involves the imposition of taxes at both the central and state levels.
Under the GST regime, there are two components of tax levied on the supply of goods and services: Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST). The CGST is levied by the Central Government, while the SGST is levied by the respective State Governments.
The SGST Act is enacted by each state or union territory of India to govern the levy and administration of the SGST within their jurisdiction. The State Tax, as defined in Section 2(104) of the CGST Act, refers to the tax imposed under the SGST Act by the State Government.
The State Tax collected under the SGST Act remains with the state or union territory where the taxable supply of goods or services takes place. It is an important component of the GST revenue generated by the states, contributing to their fiscal resources for various development activities and public welfare initiatives.
The rates of State Tax may vary from state to state as each state has the power to determine its own tax rates, subject to certain guidelines and recommendations of the GST Council, which is a constitutional body consisting of the Union Finance Minister and the Finance Ministers of all states.
In summary, Section 2(104) of the CGST Act defines “State Tax” as the tax levied by the State Government under the State Goods and Services Tax Act. It highlights the distinction between the central tax (CGST) and the state tax (SGST) components of the GST system, which work in tandem to create a unified tax structure in India.
Section 2(105) – Supplier:
“supplier” in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied;
The meaning and detailed explanation of Section 2(105) of the Central Goods and Services Tax (CGST) Act, which defines the term “supplier”:
Section 2(105) of the CGST Act: “Supplier” means a person supplying the goods or services or both.
Explanation: The term “supplier” is a fundamental concept in the CGST Act and refers to a person who supplies goods or services or both. The definition of “supplier” under Section 2(105) is broad and encompasses any individual, company, partnership firm, limited liability partnership, or any other entity engaged in the supply of goods or services.
In the context of the CGST Act, “supply” refers to the transfer of goods or services or both, whether for consideration or without consideration, in the course of business. The person who undertakes such supply is regarded as the “supplier” for the purpose of the Act.
It is important to note that the term “supplier” is not limited to only those who produce or manufacture goods. It includes any person involved in the chain of supply, such as wholesalers, retailers, service providers, and even individuals making occasional supplies of goods or services.
The supplier is a key participant in the GST framework as they are responsible for collecting and remitting the applicable taxes to the government. They are required to register under the GST regime if their annual turnover exceeds the prescribed threshold. The supplier is obligated to issue valid tax invoices or other prescribed documents for the supplies made, maintain proper records, and comply with the various provisions of the CGST Act.
The definition of “supplier” is essential for determining the liability of a person under the GST law, including registration requirements, invoicing, tax payment, and compliance obligations. It helps in identifying the party responsible for fulfilling the tax obligations associated with the supply of goods or services.
In summary, Section 2(105) of the CGST Act defines the term “supplier” as a person engaged in the supply of goods or services or both. It encompasses a wide range of individuals and entities involved in the supply chain, highlighting their responsibility to comply with the provisions of the Act and fulfil their tax obligations.
Section 2(106) – Tax Period
“tax period” means the period for which the return is required to be furnished;
The meaning and detailed explanation of Section 2(106) of the Central Goods and Services Tax (CGST) Act, which defines the term “tax period”:
Section 2(106) of the CGST Act: “Tax period” means the period for which the return is required to be filed.
Explanation: The term “tax period” is defined in Section 2(106) of the CGST Act as the period for which the return is required to be filed. In the context of the GST regime, a tax period refers to the time duration for which a registered person is required to report their taxable activities and file their GST returns.
Every registered person under the CGST Act, is obligated to file regular GST returns providing details of their outward supplies (sales), inward supplies (purchases), and tax liability. The tax period determines the frequency at which these returns need to be filed. The tax period varies based on the category of registered persons and the turnover threshold.
The tax period for most registered persons is monthly, where they are required to file their GST returns on a monthly basis. However, certain small taxpayers, composition scheme taxpayers, and certain other categories of registered persons may have the option to file returns on a quarterly basis.
The tax period begins from the start date and ends on the end date of the specified period. For example, if the tax period is monthly, it generally starts from the 1st day of the month and ends on the last day of the month. The specific dates for the tax period are usually prescribed by the tax authorities.
The filing of GST returns within the stipulated tax period is crucial for compliance with the GST law. It allows the tax authorities to assess the tax liability of the registered person, verify the accuracy of reported information, and reconcile the input tax credits and output tax liabilities. Timely filing of returns helps in avoiding penalties and ensures smooth compliance with the GST regulations.
It’s important to note that the tax period may be subject to changes or extensions by the government through notifications or circulars. It is advisable for registered persons to stay updated with the latest announcements and comply with the specified tax period for filing their GST returns.
In summary, Section 2(106) of the CGST Act defines “tax period” as the period for which the return is required to be filed. It determines the frequency at which registered persons need to file their GST returns, providing details of their taxable activities. The tax period varies based on the category of registered persons and the turnover threshold.
Section 2(107) –Taxable person:
“taxable person” means a person who is registered or liable to be registered under section 22 or section 24;
The meaning and detailed explanation of Section 2(107) of the Central Goods and Services Tax (CGST) Act, which defines the term “taxable person”:
Section 2(107) of the CGST Act: “Taxable person” means a person who is registered or liable to be registered under Section 22 or Section 24.
Explanation: The term “taxable person” is defined in Section 2(107) of the CGST Act. It refers to a person who is either registered under Section 22 or liable to be registered under Section 24 of the CGST Act.
1. Registration under Section 22: A person is considered a taxable person if they are registered under Section 22 of the CGST Act. Section 22 mandates the registration of any person who is liable to pay Goods and Services Tax (GST) if their aggregate turnover of taxable supplies in a financial year exceeds the prescribed threshold. The threshold for registration may vary based on the nature of the business and the state in which the person operates.
2. Liability to be registered under Section 24: In addition to persons who are registered under Section 22, a taxable person also includes those who are liable to be registered under Section 24 of the CGST Act. Section 24 specifies certain categories of persons who are required to obtain GST registration, irrespective of their turnover. These categories include inter-state suppliers, e-commerce operators, and persons liable to pay tax under reverse charge mechanism, among others.
Being a taxable person implies that the individual or entity is subject to the provisions of the CGST Act and is required to comply with various legal obligations, including the payment of GST, filing of GST returns, issuance of tax invoices, and maintenance of proper records.
Once a person is identified as a taxable person, they are allocated a unique Goods and Services Tax Identification Number (GSTIN) by the tax authorities. This GSTIN is used for all GST-related transactions and compliance purposes.
It’s worth noting that a taxable person may also be referred to as a registered person under the GST regime, as registration is a prerequisite for being recognized as a taxable person. However, the term “taxable person” has a broader scope as it encompasses not only registered persons but also those who are liable to be registered.
In summary, Section 2(107) of the CGST Act defines a “taxable person” as an individual or entity who is registered or liable to be registered under Section 22 or Section 24 of the Act. It includes persons whose turnover exceeds the prescribed threshold and those who fall under specific categories specified in Section 24. A taxable person is subject to the provisions of the CGST Act and has legal obligations relating to GST compliance.
Section 2(108) – Taxable Supply:
“taxable supply” means a supply of goods or services or both which is leviable to tax under this Act;
The meaning and detailed explanation of Section 2(108) of the Central Goods and Services Tax (CGST) Act, which defines the term “taxable supply”:
Section 2(108) of the CGST Act: “Taxable supply” means a supply of goods or services or both which is leviable to tax under this Act.
Explanation: The term “taxable supply” is defined in Section 2(108) of the CGST Act. It refers to a supply of goods, services, or both that is subject to the levy of Goods and Services Tax (GST) under the provisions of the CGST Act.
A taxable supply includes any transaction where there is a transfer of ownership, possession, or the right to use goods, or the provision of services in return for consideration. The supply can be in the form of sale, transfer, barter, exchange, license, rental, lease, or any other manner.
For a supply to be considered taxable, it must fulfil certain conditions:
1. Supply of Goods or Services or Both: The taxable supply can involve the transfer of goods, provision of services, or both. Goods refer to movable property, including all types of tangible items such as goods, products, merchandise, and commodities. Services, on the other hand, encompass intangible offerings such as professional services, consulting, repairs, maintenance, and various other service-oriented activities.
2. Leviable to Tax under the CGST Act: The taxable supply must be subject to the levy of GST under the provisions of the CGST Act. It means that the supply attracts the applicable GST rate, and the supplier is liable to collect GST from the recipient and remit it to the government.
The taxability of a supply depends on various factors such as the nature of the supply, the place of supply, the type of goods or services involved, and the relevant GST rate applicable to the supply. The GST rates for different goods and services are specified in the GST rate schedules, such as the GST Council’s notifications.
It’s important to note that certain supplies may be exempted from GST or may be subject to special provisions or reduced rates as per the provisions of the CGST Act, such as exempted supplies, zero-rated supplies, or supplies under composition scheme, among others.
Determining whether a supply is taxable or not is essential for determining the tax liability, issuance of tax invoices, claiming input tax credits, and complying with the GST regulations.
In summary, Section 2(108) of the CGST Act defines “taxable supply” as a supply of goods, services, or both that is leviable to tax under the provisions of the CGST Act. It includes transactions involving the transfer of ownership, possession, or the right to use goods, or the provision of services in return for consideration. The taxability of a supply depends on the nature of the supply and the applicable GST rate.
Section 2(109) –Taxable Territory:
“taxable territory” means the territory to which the provisions of this Act apply;
The meaning and detailed explanation of Section 2(109) of the Central Goods and Services Tax (CGST) Act, which defines the term “taxable territory”:
Section 2(109) of the CGST Act: “Taxable territory” means the territory to which the provisions of this Act apply.
Explanation: The term “taxable territory” is defined in Section 2(109) of the CGST Act. It refers to the geographical area or territory to which the provisions of the CGST Act apply.
The CGST Act is applicable throughout the territory of India, which includes the following:
1. State or Union Territory (UT) with Legislature: The provisions of the CGST Act apply to all the states of India, which are the entities having their own legislative assemblies. Each state has its own State Goods and Services Tax (SGST) Act, which is aligned with the CGST Act.
2. Union Territories without Legislature: The provisions of the CGST Act also apply to the Union Territories of India that do not have their own legislative assemblies, namely: a. Andaman and Nicobar Islands b. Chandigarh c. Dadra and Nagar Haveli and Daman and Diu d. Lakshadweep e. Pondicherry.
For these Union Territories, the CGST Act is implemented along with the Union Territory Goods and Services Tax (UTGST) Act.
The taxable territory is the geographical area where the CGST Act is enforceable, and the provisions of the Act regarding registration, tax liability, input tax credit, returns, and other compliance requirements apply within this territory.
It’s important to note that the CGST Act does not extend to areas outside the taxable territory. Any supplies or transactions taking place outside the taxable territory are not governed by the CGST Act but may be subject to other relevant tax laws or regulations, if any, applicable in those areas.
In summary, Section 2(109) of the CGST Act defines the “taxable territory” as the geographical area or territory to which the provisions of the CGST Act apply. It includes all the states of India with their own legislative assemblies, as well as certain Union Territories. The CGST Act provides the legal framework for taxation and compliance within the taxable territory, while transactions outside this territory may be subject to other applicable laws..
Section 2(110) – Telecommunication Service:
“telecommunication service” means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means;
The meaning and detailed explanation of Section 2(110) of the Central Goods and Services Tax (CGST) Act, which defines the term “telecommunication services”:
Section 2(110) of the CGST Act: “Telecommunication services” means services of any description (including electronic mail, voice mail, data services, audio-text services, video-text services, radio paging, and cellular mobile telephone services) which are made available to users by means of any transmission or reception of signs, signals, writing, images, and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means but shall not include broadcasting services.
Explanation: The term “telecommunication services” is defined in Section 2(110) of the CGST Act. It refers to services that involve the transmission or reception of various types of information or communication using signs, signals, writing, images, sounds, or any other form of intelligence through wire, radio, visual, or other electromagnetic means.
The definition includes a wide range of communication services, such as electronic mail (email), voice mail, data services, audio-text services, video-text services, radio paging, and cellular mobile telephone services. These services enable the exchange of information, data, messages, or content between users over various communication networks.
The essential elements of telecommunication services are as follows:
1. Transmission or Reception: Telecommunication services involve the transmission or reception of information or communication. This can include sending or receiving voice calls, text messages, multimedia messages, emails, and other forms of digital or analogue communication.
2. Transmission Medium: The transmission or reception of signals, signs, or information in telecommunication services can occur through various mediums, such as wire, radio waves, visual displays, or other electromagnetic means. This includes traditional wired networks, wireless networks, satellite systems, and optical fiber networks, among others.
3. Wide Scope of Services: The definition of telecommunication services is broad and covers a wide range of services. It includes both basic voice communication services and advanced data services, such as internet access, video streaming, and other multimedia services.
It’s important to note that broadcasting services are specifically excluded from the definition of telecommunication services. Broadcasting services are separately defined and regulated under the CGST Act.
Telecommunication services are subject to the applicable GST rates and regulations. The GST rate for telecommunication services may vary depending on the specific service and its classification under the GST rate schedule.
In summary, Section 2(110) of the CGST Act defines “telecommunication services” as services that involve the transmission or reception of various forms of communication using signs, signals, writing, images, sounds, or any other form of intelligence through wire, radio, visual, or other electromagnetic means. It includes a wide range of services, excluding broadcasting services, and is subject to the applicable GST rates and regulations.
Section 2(111) –State Goods and Services Tax (SGST) Act:
“the State Goods and Services Tax Act” means the respective State Goods and Services Tax Act, 2017;
The SGST Act is a separate legislation enacted by each state of India to govern the levy and administration of the State Goods and Services Tax. Under the Goods and Services Tax (GST) regime, both the central government and the state governments have the authority to levy and collect taxes on the supply of goods and services within their respective jurisdictions.
The SGST Act is aligned with the provisions of the CGST Act and is specific to each state or union territory (UT) that has its own legislative assembly. The SGST Act provides the legal framework for the levy, collection, and administration of the state goods and services tax.
Some important points regarding the SGST Act:
1. Levy of State Goods and Services Tax: The SGST Act empowers the state government to levy and collect the state goods and services tax on the intra-state supply of goods and services. The rate of SGST is determined by each state and may vary from state to state.
2. Input Tax Credit (ITC) and Set-Off: The SGST Act allows registered taxpayers to claim input tax credit for the tax paid on inputs, input services, and capital goods used in the course of business. This enables the set-off of the SGST liability against the input tax credit available.
3. Registration and Compliance: The SGST Act specifies the rules and procedures for registration of taxpayers, filing of returns, payment of taxes, and other compliance requirements within the state. It sets out the obligations and responsibilities of registered taxpayers under the state goods and services tax system.
4. Administration and Enforcement: The SGST Act establishes the administrative machinery at the state level for the implementation and enforcement of the state goods and services tax provisions. It empowers the state tax authorities to conduct audits, inspections, and investigations, and take necessary actions for the enforcement of tax laws.
5. Interplay with CGST: The SGST Act works in conjunction with the CGST Act. Both acts are complementary and together form the dual GST system. The SGST Act and the CGST Act share common definitions, principles, and procedures to ensure uniformity in the implementation of the GST across the country.
It’s important to note that while the CGST Act is a central legislation applicable throughout India, the SGST Act varies from state to state as it is enacted by each state government separately. The SGST Act operates alongside the CGST Act and the Integrated Goods and Services Tax (IGST) Act to create a comprehensive GST framework for the state.
Section 2(112) – Turnover in State / Union Territory:
Section 2(112) of the CGST Act states:
“turnover in State” or “turnover in Union territory” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess;
In simpler terms, “Turnover in State or Union territory” refers to the total value of taxable supplies, exempt supplies, exports, and inter-state supplies made by a taxable person within a particular State or Union territory. However, it excludes specific taxes such as central tax, state tax, union territory tax, integrated tax, and cess.
A detailed explanation of the provision is given hereunder:
1. Aggregate Value of Supplies: The “Turnover in State or Union territory” includes the aggregate value of all taxable supplies made by a taxable person within a State or Union territory. This encompasses the total value of goods or services supplied by the person, including both intra-state (within the same state or union territory) supplies and inter-state supplies originating from that state or union territory.
2. Exempt Supplies: The provision also considers the value of exempt supplies made by the taxable person within the state or union territory. Exempt supplies are those supplies that are not subject to GST, either due to the nature of the supplies or specific exemptions provided under the law.
3. Exclusions: The turnover calculation excludes certain components, namely central tax, state tax, union territory tax, integrated tax, and cess. These are separate components of the tax structure under the GST regime and are not considered part of the turnover for the purposes of this provision.
The turnover in a particular state or union territory is an essential factor in determining various aspects under the GST regime, such as the applicability of registration requirements, eligibility for certain schemes or exemptions, and the calculation of tax liability.
It’s important to note that the turnover in a state or union territory may be subject to specific rules, thresholds, and definitions prescribed by the relevant authorities. These may vary based on factors such as the type of business, turnover thresholds, and specific provisions under the CGST Act and related rules.
To summarize, Section 2(112) of the CGST Act defines “Turnover in State or Union territory” as the aggregate value of all taxable supplies, exempt supplies, exports, and inter-state supplies made by a taxable person within a specific state or union territory. It excludes specific taxes such as central tax, state tax, union territory tax, integrated tax, and cess. The turnover in a state or union territory is a crucial factor in determining various aspects under the GST Act.
Section 2(113) – Usual Place of Residence:
“usual place of residence” means––
(a) in case of an individual, the place where he ordinarily resides;
(b) in other cases, the place where the person is incorporated or otherwise legally constituted;
In simpler terms, “Usual Place of Residence” is defined differently based on whether it applies to an individual or a non-individual entity. For an individual, it refers to the place where they ordinarily reside. For non-individual entities, it refers to the place where their principal place of business is located.
A detailed explanation of the provision is given as under:
1. Usual Place of Residence for Individuals: For individuals, the usual place of residence refers to the place where they ordinarily reside. It denotes the place where the individual lives on a regular or habitual basis. This is typically the place where they have their home or fixed abode.
2. Usual Place of Residence for Non-Individual Entities: For non-individual entities such as companies, partnerships, or registered organizations, the usual place of residence refers to the place where their principal place of business is located. The principal place of business is the main or central location from where the entity conducts its business operations.
The determination of the usual place of residence is important for various provisions under the GST regime, such as registration requirements, determining the place of supply, and determining the taxable status of a person or entity.
It’s important to note that the determination of the usual place of residence may involve factors such as physical presence, intention, duration of stay, and other relevant circumstances. In cases where the determination is ambiguous or disputed, specific rules, guidelines, or legal interpretations may provide further clarity.
To summarize, Section 2(113) of the CGST Act defines “Usual Place of Residence” differently based on whether it applies to an individual or a non-individual entity. For individuals, it refers to the place where they ordinarily reside, while for non-individual entities, it refers to the place where their principal place of business is located. The usual place of residence is a relevant factor in determining various aspects under the GST regime, such as registration requirements and determining the place of supply.
Section 2(114) – Union Territory:
“Union territory” means the territory of-
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) 1[(c) Dadra and Nagar Haveli and Daman and Diu;
(d) 2Ladakh;]
(e) Chandigarh; 3[****]
(f) other territory.
1 Earlier, sub-clauses (c) and (d) were read as under:-
“(c) Dadra and Nagar Haveli;
(d) and Daman and Diu.
The above existing (c) and (d) clauses were clubbed vide Finance Act, 2020 dated 27-03-2020, which was made effective from 30/06/2020 vide Notification No. 49/2020 CT dated 24/06/2020. Earlier to that, “The Union Territory of Dadra and Nagar Haveli and Daman and Diu Central Goods and Service Tax (Amendment) Regulation 2020 both the clauses were clubbed and sub clause (d) was omitted w.e.f. 26/01/2020.
2 The word “Ladakh” has also been inserted vide Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020 dated 18-03-2020 in a new sub-clause (ea).
3 Existing word “and” has been omitted vide Jammu and Kashmir Reorganisation (Adaptation of Central Laws) Order, 2020 dated 18-03-2020
Explanation.––For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f) shall be considered to be a separate Union territory;
Section 2(114) of the Central Goods and Services Tax (CGST) Act defines the term “Union territory.” Here’s a meaning and detailed explanation of this section:
1. Meaning of Union Territory: The term “Union territory” refers to a distinct administrative unit or territory in India that is directly governed by the central government. Unlike states, which have their own legislative assemblies, Union territories are administered by a lieutenant governor or an administrator appointed by the President of India.
2. Inclusion of Union Territories in the CGST Act: The CGST Act, which is a central legislation, applies to the entire territory of India, including Union territories. The Act establishes a unified system of goods and services tax throughout the country, and its provisions are applicable to all Union territories.
3. Tax Administration in Union Territories: The CGST Act provides for the administration, levy, and collection of central goods and services tax in Union territories. The tax administration in Union territories is carried out by the central tax authorities, who are responsible for enforcing the provisions of the CGST Act in these territories.
4. Applicability of the CGST Act in Union Territories: All the provisions of the CGST Act, including the definitions, rules, procedures, rates of tax, and compliance requirements, are applicable to Union territories. This ensures uniformity in the implementation of the goods and services tax system across the country, irrespective of whether a territory is a state or a Union territory.
5. Specifics of Union Territories: India has several Union territories, including Delhi, Pondicherry, Chandigarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Andaman and Nicobar Islands, and the recently formed Jammu and Kashmir and Ladakh. Each Union territory may have specific regulations and administrative procedures to implement the CGST Act in their respective territories.
It’s important to note that the specific provisions and regulations regarding the implementation of the CGST Act in Union territories may be notified separately by the central government or the respective Union territory administrations.
Section 2(115) – Union Territory Tax:
“Union territory tax” means the Union territory goods and services tax levied under the Union Territory Goods and Services Tax Act;
Section 2(115) of the Central Goods and Services Tax (CGST) Act pertains to the definition of “Union Territory Tax.” The meaning and detailed explanation of this section given as under:
1. Union Territory Tax (UTT): Union Territory Tax refers to the tax levied under the Union Territory Goods and Services Tax (UTGST) Act. The UTGST Act is a separate legislation that applies to Union territories in India and provides for the levy and collection of tax on intra-Union territory supplies of goods and services.
2. Taxation in Union Territories: The UTGST Act, along with the CGST Act, forms the basis for the goods and services tax system in Union territories. While the CGST Act deals with tax administration and provisions applicable throughout the country, the UTGST Act specifically addresses the taxation aspects within Union territories.
3. Applicability of UTGST: The UTGST Act is applicable to the supply of goods and services within a Union territory. It provides for the levy of Union Territory Tax on such supplies and defines the rules and procedures for its collection, payment, and compliance.
4. Relation to CGST: The UTGST Act works in conjunction with the CGST Act, and the provisions of both acts must be read together to determine the tax liabilities and compliance requirements within Union territories. The UTGST Act may have its own specific provisions and rules tailored to the needs and requirements of the Union territories.
5. Tax Administration: The administration of Union Territory Tax is carried out by the tax authorities designated under the UTGST Act. These authorities are responsible for enforcing the provisions of the UTGST Act, including registration, assessment, audit, and other compliance-related activities within Union territories.
6. Union Territories: Union territories in India include Delhi, Pondicherry, Chandigarh, Dadra and Nagar Haveli and Daman and Diu, Lakshadweep, Andaman and Nicobar Islands, and the recently formed Jammu and Kashmir and Ladakh. Each Union territory has its own specific regulations and administrative procedures for the implementation of the UTGST Act.
It is essential to note that the provisions and regulations regarding Union Territory Tax may be subject to amendments and notifications issued by the central government or the respective Union territory administrations.
Section 2(116) –Union Territory Goods and Services Tax (UTGST) Act:
“Union Territory Goods and Services Tax Act” means the Union Territory Goods and Services Tax Act, 2017;
The Union Territory Goods and Services Tax Act (UTGST Act) is a separate legislation applicable to Union territories in India. It is similar to the State Goods and Services Tax (SGST) Act but applies specifically to Union territories. The UTGST Act provides for the levy and collection of tax on intra-Union territory supplies of goods and services.
The UTGST Act is implemented alongside the CGST Act to govern the goods and services tax system in Union territories. It contains provisions specific to Union territories, including regulations on tax rates, exemptions, registration, invoicing, returns, and other compliance requirements.
The purpose of the UTGST Act is to enable the Union territory governments to administer and regulate the GST within their respective territories. It allows them to exercise control over the taxation and collection of goods and services tax within Union territories.
Section 2(117) –Valid Return:
“valid return” means a return furnished under sub-section (1) of section 39 on which self-assessed tax has been paid in full;
in the context of GST compliance, a valid return refers to a return that meets all the prescribed requirements and conditions as per the provisions of the CGST Act, along with its rules and regulations. Under the GST regime, registered taxpayers are required to file periodic returns providing details of their inward supplies, outward supplies, and tax liabilities.
A valid return typically includes the following characteristics:
1. Timeliness: The return must be filed within the prescribed due date, which varies depending on the type of taxpayer and the specific return being filed.
2. Accuracy: The return should contain accurate and complete information regarding the taxpayer’s business transactions, including the correct calculation of tax liability, input tax credit, and other relevant details.
3. Compliance with prescribed formats: The return must be filed in the prescribed format as specified by the GST authorities. The format includes specific fields and data points that need to be filled in.
4. Payment of tax liability: The return should reflect the payment of any tax liability owed by the taxpayer. This includes the payment of tax on outward supplies and the utilization of eligible input tax credit.
5. Reconciliation: The return should reconcile the information provided in the return with the taxpayer’s books of accounts, ensuring consistency and accuracy.
It’s important to note that the specific requirements and conditions for a valid return may vary based on the type of return being filed, such as GSTR-1 for outward supplies, GSTR-3B for summary return, or GSTR-9 for annual return.
Section 2(118) –Voucher:
“voucher” means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument;
Section 2(118) of the Central Goods and Services Tax (CGST) Act defines the term “voucher.” A detailed, meaning and explanation is given as under:
According to Section 2(118) of the CGST Act: “voucher” means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both, and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument.
A voucher, as per the CGST Act, refers to an instrument that is used as a form of consideration or partial consideration for the supply of goods or services or both. The instrument can be in various forms, such as a physical paper document, an electronic voucher, a coupon, or any other medium that represents a value or entitlement.
The important points of a voucher as defined in the CGST Act are as follows:
1. Obligation to accept as consideration: A voucher must have a legal obligation attached to it, stating that it can be accepted as consideration, either in full or in part, for the supply of goods or services or both.
2. Indication of supply details: The voucher should indicate the goods or services or both that will be supplied, or it should provide information about the potential suppliers of those goods or services. This can be either mentioned on the instrument itself or in related documentation associated with the voucher.
3. Inclusion of terms and conditions: The voucher may include terms and conditions specifying how and where it can be used, the duration of its validity, any limitations or restrictions, and any other relevant details governing its use.
Vouchers are commonly used in various forms, such as gift cards, prepaid cards, discount coupons, promotional codes, and electronic vouchers. They serve as a means of payment or value exchange for specific goods or services, allowing the recipient to utilize the voucher according to the terms and conditions mentioned.
It’s important to note that vouchers may have specific implications under the GST regime, and their treatment for taxation purposes may vary based on the nature of the voucher and applicable GST rules. The CGST Act, along with relevant notifications and rules, provides guidelines for the tax treatment of vouchers under GST.
Section 2(119) –Works Contract:
“works contract” means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract;
In the context of the CGST Act, a works contract refers to a contract for the supply of goods and services wherein the transfer of property in goods is involved in the execution of a work. Works contracts typically involve the construction, erection, installation, repair, maintenance, renovation, or alteration of immovable property.
Under the GST regime, a works contract is considered a composite supply, as it involves the supply of both goods and services. The CGST Act provides specific provisions for the taxation of works contracts, including the determination of the tax liability and the treatment of input tax credits.
The GST applicable on works contracts depends on the nature of the contract, such as whether it is for the construction of an immovable property, the supply of goods for immovable property, or the supply of services. The GST rate applicable to works contracts can vary based on the type of work and the nature of the supply.
Section 2(120) – Words and expressions used and not defined in this Act:
Words and expressions used and not defined in this Act but defined in the Integrated Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act shall have the same meaning as assigned to them in those Acts;
It is important to note that Section 2(120) is generally included in legislation to provide a general interpretation provision. It states that words and expressions used in the Act but not specifically defined shall have the meanings assigned to them in common parlance, taking into account the context in which they are used.
When a specific definition is not provided for a particular word or expression in the CGST Act, it is generally understood to be interpreted based on its ordinary or common meaning. In such cases, the interpretation would depend on the context in which the word or expression is used and the intention of the legislation.
It’s important to consult the actual provisions of the CGST Act and relevant regulations to understand the specific definitions and interpretations of words and expressions used within the Act. Additionally, it’s advisable to refer to any subsequent amendments or notifications issued by the central government or the Goods and Services Tax Network (GSTN) for the most up-to-date and accurate information.
Author Bio
