Simplified GST Series – Important Definations –IGST ACT 2017

Hello readers, I have completed articles on CGST ACT 2017 … Now starting IGST ACT 2017 today –

Today I will discuss some important definations that we all should be familiar with —

  • Section 2 (5)- Export of goods with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India;
  • Export of goods will be treated as ‘zero-rated supplies. Accordingly, while no tax would be payable on such supplies, the exporter will be eligible to claim the corresponding input tax credits.
  • The input tax credits would be available to an exporter even if the supplies were exempt supplies so long as the eligibility of the input taxes is established.
  • Unlike export of services which requires fulfilment of certain conditions for a supply to qualify as ‘export of services’ like the nature of currency in which payment is required to be made, location of the exporter etc., export of goods doesn’t require fulfilment of any such conditions.
  • The movement of goods is alone relevant and not the location of the exporter/ importer. This means that even if an order is received from a person outside India for delivery of goods within India, it will NOT be considered as export of goods.

Section 2(6)- export of services means the supply of any service when, ––

  • the supplier of service is located in India
  • the recipient of service is located outside India
  • the place of supply of service is outside India;
  • the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India and
  • the supplier of service and the recipient of service are not merely establishments of adistinct person in accordance with Explanation 1 in section 8
  • Establishments will be treated as establishment of distinct persons under the following Situations-
Situation Location of one establishment Location of other establishment
1 India Outside India
2 State or UT Outside that State or UT
3 State or UT Other Places of Business independently registered in that State or Union Territory

Therefore, where both the establishments are located in a State/ Union Territory under the same GSTIN, the establishments will not be considered as distinct persons.

Section 2(7)- 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.

Fixed Establishment- refers to place

  • Having a sufficient degree of permanence
  • Having a structure of human and technical resources
  • Other than the registered place of business

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

  • The place of supply of goods in case of imports would be the location of the importer.
  • The integrated tax would be levied on the value of goods as determined under the Customs law in addition to the custom duties levied on such imports.
  • The importer will be liable to pay integrated tax on a reverse charge basis and the same will have to be discharged by cash only and credit cannot be utilized for discharging such a liability

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

(i) the supplier of service is located outside India

(ii) the recipient of service is located in India; and

(iii) the place of supply of service is in India;

The phrase “import of service” is very broad and covers all such supplies where

(a) The supplier is located outside India,

(b) The recipient is located in India

(c) Place of supply is in India.

  • Supplies, where the supplier and recipient are mere establishments of a person, would also qualify as “import of service
  • The importer will be liable to pay integrated tax on a reverse charge basis and the same will have to be discharged by cash only and credit cannot be utilized for discharging such a liability;
  • Import of service made for a consideration alone would be taxable, whether or not in the course of business.
  • The threshold limits for registration would not apply and the importer would be required to obtain registration irrespective of his turnover

Section 2(14)- Location of recipient of services –

  • where a supply is received at a place of business for which the registration has been obtained, the location of such place of business
  • 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
  • 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
  • in absence of such places, the location of the usual place of residence of the recipient

Section 2(15)- “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 provision of the supply; and

(d) in absence of such places, the location of the usual place of residence of the supplier;

Section 2(23)- Zero rated supply-

The following taxable supplies of goods and/ or services are considered as ‘zero rated supplies’:

(a) Export of goods or services or both

(b) Supply of goods or services or both to a SEZ developer or SEZ unit Input tax credit can be availed for making zero-rated supplies, even though such zero-rated supplies may be an exempt supply.

Queries /doubts related to above mailed at mamta0581@gmail.com

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