Analysis of charging provision under Central Goods and Services Tax (CGST) Act, 2017
The abbreviation ‘GST’ stand for Goods and Services Tax. GST was introduced by the Constitution(One Hundred and First Amendment) Act, 2016. The principal legislations governing GST law are the Central Goods and Services Tax Act (“CGST Act”), the State Goods and Services Tax Act (“SGST Act”)/Union Territory Goods and Services Tax Act (“UTGST Act”) and the Integrated Goods and Services Tax Act (“IGST Act”).
The CGST Act is an Act of Parliament and extends to the whole of India. The provisions of sections 1,2,3,4,5,10,22,23,24,25,26,27,28,29,30,139,146 and 164 came into force w.e.f 22.6.2017 vide Notification No. 1/2017-Central Tax dated 19-6-2017.
The provisions of sections 6-9,11-21,31-41,42 except the proviso to sub-section (9) of section 42; section 43 except the proviso to sub-section 9 of section 43; sections 44-50, 53-138,140-145,147-163, 165-174 came into force w.e.f 1.7.2017 vide Notification No. 9/2017-Central Tax dated 28.6.2017.
Charging Section
Section 9 of the CGST Act is the charging section. As per this section, there shall be levied a tax called the Central Goods and Services Tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under Section 15 and at such rates, not exceeding 20% as may be notified by the government on the recommendations of the Council and collected in such manner as may be prescribed and which shall be paid by the taxable person.
(i) Intra-State supply
A. An ‘intra-State supply of goods’ is defined under Section 2(64) of the CGST Act. As per this section, an ‘intra-State supply of goods’ shall have the same meaning as assigned to it in Section 8 of the IGST Act. An ‘intra-State supply of services’ is defined under Section 2(65) of the CGST Act. As per this section, an ‘intra-State supply of services’ shall have the same meaning as assigned to it in Section 8 of the IGST Act
B. As per Section 8(1) of the IGST Act, subject to the provisions of Section 10, supply of goods where the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as an intra-State supply. The proviso mentions what supplies of goods shall not be treated to be an intra-State supply. Section 8(2) states that subject to the provisions of Section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or Union Territory shall be treated as intra-State supply.
C. The phrase ‘location of the supplier’ of goods as used in Section 8(1) is not defined under either the CGST, SGST, UTGST or the IGST Acts. It is to be given its ordinary meaning. The place of supply of goods can be found under Chapter V of the IGST Act. Section 10 defines the place of supply of goods other than the supply of goods imported into or exported from India. Section 11 defines the place of supply of goods imported into or exported from India. The phrase ‘location of the supplier’ of services as used in Section 8(2) is defined under Section 2(15) of the IGST Act as ‘location of the supplier of services’ and varies with respect to various supplies as mentioned therein. The place of supply of services can also be found under Chapter V. Section 12 defines the place of supply of services where the location of the supplier of services and the location of the recipient of services is in India and the place of supply varies with respect to various supplies as mentioned therein. Section 13 defines the place of supply of services where the location of supplier of services or the location of recipient of services is outside India and the place of supply varies with respect to various supplies as mentioned therein.
ii) Value determined under Section 15
A. As per Section 15 of the CGST Act, the value of the supply of goods or services shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration of the supply.
B. The value of the supply shall include:
a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than the CGST, SGST, UTGST, and the GST(Compensation to States) Act, if charged separately by the supplier [Section 15(2)(a)].
b) the amount the supplier is liable to pay in relation to such supply, but the recipient has paid and which is not included in the supply [S.15(2)(b)]
c) incidental expenses including commission and packing [S.15(2)(c)]
d) interest or late fee or penalty for delayed payment of any consideration for any supply [S.15(2)(d)]
e) subsidies directly linked to the price excluding subsidies provided by the Central Governments and State Governments [S.15(2)(e)]. The subsidy shall be included in the value of the supply of the supplier who receives such subsidy [Explanation to S.15(2)]
(iii) GST Council
A. The GST Council was constituted vide insertion of Article 279-A in the Constitution of India, 1950 by Section 12 of the Constitution(One Hundred and First Amendment) Act, 2016 (“Amendment Act”) w.e.f 12-9-2016. Article 279A(1) states that the President shall, within sixty days from the date of commencement of the Amendment Act by order, constitute a Council to be called the Goods and Services Tax Council. Article 279-A(2) states that the GST Council shall consist of the Union Finance Minister, the Union Minister of State in charge of Revenue or Finance, the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government.
B. The Members of the GST Council may choose amongst themselves a Vice Chairperson for such period as they may decide [Article 279-A(3)]
C. The GST Council shall make recommendations to the Union and States on the workings of GST law for example, the taxes, cesses, surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax[Article 279-A(4)(a)] or the goods and services tax that may be subjected to, or exempted from the goods and services tax [Article 279-A(4)(b)].
D. The GST Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit(commonly known as petrol), natural gas and aviation turbine fuel [Article 279-A(5)].
E. Half the members of the GST Council shall constitute the quorum for its meetings.[Article 279-A(7)]
F. The GST Council shall determine the procedure in the performance of its functions.[Article 279-A(8)]
G. Every decision of the GST Council shall be taken at a meeting, by a majority of not less than 3/4ths of the weighted votes of the members present and voting, the vote of the central government shall have a weightage of 1/3rd of the total votes cast and the votes of all the State Governments taken together shall have a weightage of two thirds of the total votes cast, in that meeting.[Article 279-A(9)]
H. No act or proceedings of the GST Council shall be invalid merely by reason of any vacancy in or any defect in the constitution of the Council, any defect in the appointment of a person as a Member of the Council, any procedural irregularity of the Council not affecting the merits of the case. [Article 279-A(10)]
I. The GST Council shall establish a mechanism to adjudicate any dispute between the government of India and one or more States, between the Government of India and any State or States on one side and one or more other States on the other side, or between two or more States, arising out of the recommendations of the Council or implementation thereof. [Article 279-A(11)]
(iv) Taxable person
Taxable person means a person who is registered or liable to be registered under Section 22 or Section 24[S.2(107)].
The basic provision is that every supplier making a taxable supply of goods or services or both shall be liable to be registered under the CGST Act, 2017 in the State or Union Territory, other than special category States, if his aggregate turnover in a financial year exceeds twenty lakh rupees[S.22(1)]. If a taxable supply is made from a special category state, the person is liable to be registered if the aggregate turnover is above rupees ten lakhs [first proviso to S.22(1)]. Sub-sections 2, 3 and 4 further deal with registration. Section 23 deals with persons not liable for registration for example agriculturist or exempt person. Section 24 deals with compulsory registration in certain cases. Section 25 deals with procedure for registration. Section 30 deals with revocation of cancellation of registration.
Conclusion
GST is a novel law. The analysis of the charging section has been made as it is essential to understand the working of GST law which is based on the charging section and any tax levied de hors(outside the scope of) the charging section would be an illegal levy since tax cannot be levied save and except by the charging section as contained in the GST or any other tax enactments.
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