The power of charging tax in a statute is created by charging section. So, before charging tax on any transaction it must fall within the ambit of taxable event, also the person liable to pay tax must get covered within the ambit of charging section.
Section 9(1) is the charging provision of the CGST Act & Section 7(1) is charging provision of UTGST Act. It provides that there shall be levied a tax (CGST and SGST or UT GST) on all the Intra State supplies of Goods and/or services, (either it can only be supply of goods or supply of services or supply of both together) except on the supply of Alcoholic Liquor for Human Consumption. However this Alcoholic Liquor for Human Consumption has been kept out of charging section because Article 366(12A) of the constitution as amended by 101st Constitutional Amendment Act, 2016 defines “GST” as a tax on supply of Goods and/or Services except supply of Alcoholic Liquor for Human Consumption. So, Alcoholic Liquor for Human Consumption is kept out of “GST” by way of definition of GST in constitution of India. The valuation of supply is determined under section 15 of CGST Act, which states that the value of such supply shall be transaction value, which is the price actually paid or payable, given, the conditions that the supplier and the recipient are not related, and price is the sole consideration for the supply. Section 15 also deals with item which are to be included as a part of transaction value and items which are not to be included in the value, and the tax rate shall be notified by the Government on the recommendation of GST Council which shall not exceed 20%(on CGST/SGST EACH), and collected in such manner as may be prescribed and shall be paid by taxable person, where taxable person has been defined under section 2(107) of CGST Act, which means a person who is registered or liable to be registered under section 22/24.
Section 5(1) is the charging provision of IGST Act, where tax shall be levied on all Inter-State supplies of Goods and/or Supplies, except on supply of Alcoholic Liquor for Human Consumption on the value determined under section 15 of CGST Act and at such rates, not exceeding 40% as may be notified by the Government on the recommendation of GST Council, collected in prescribed manner & paid by taxable person.
Further, the provision to section 5(1) states that integrated tax on Goods imported into India shall be levied and collected in accordance with the provision of section 3 of Custom Tariff Act, 1975 and its valuation will be done as per said Act. So, the computation of custom duty under GST will have two components, i.e., Basic custom duty and IGST. Further, this IGST will subsume the current levy of CVD & SAD.
Thus, in GST, intra(Location of supply and place of supplier same state) and interstate (Location of supplier and place of supply in different states) supplies are taxable. Hence the term Supply will hold the greatest significance for determining taxability. The Provision is summarized as under:
– On intra State supplies CGST and SGST/UTGST , on Inter State IGST, to be levied
– Alcoholic liquor for Human Consumption is kept out of GST
– Transaction value to be determined as per Section 15 of CGST Act.
– Maximum rate of which is 20% each in case of CGST and SGST/UTGST, For IGST maximum rate is 40%
– Manner of payment is prescribed ( Ref : Draft Rules : Payment of Tax)
Section 9(2) of CGST Act, section 7(2) of UTGST Act and Section 5(2) of IGST Act provides similar intent which provides that levy of GST on petroleum crude, high speed diesel, motor spirit, natural gas, and aviation turbine fuel shall be from such date as may be notified by Government on recommendation of GST Council.
The Provision is summaried as under :
Currently petroleum crude, high speed diesel, motor spirit, natural gas, and aviation turbine fuel will not be chargeable under new GST regime but it shall be from such date which is to be notified by Central Government.
Section 9(3) of CGST Act, section 7(3) of UTGST Act and Section 5(3) of IGST Act provides that the Government may on the recommendations of the Council, by notification, specify categories of supply of Goods and/or Services, the tax on which shall be paid on reverse charge basis by the recipient of such Good and/or Services and all the provisions of this act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such Goods and/or Services.
Section 9(4) of CGST Act, section 7(4) of UTGST Act and Section 5(4) of IGST Act provides that the respective taxes in respect of the supply of taxable Goods and/or Services by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods and/or services.
Where reverse charge would mean the liability to pay tax by the recipient of supply of Goods and/or services instead of the supplier of such Goods and/or Services. So, this section enlarges the scope of reverse charge to cover goods as well, unlike in Service Tax, where only services are covered under Reverse Charge basis.
The Provision is summaried as under :
– Categories are to be specified, on which tax shall be paid on reverse charge
– Supply by a supplier who is not registered , will make the recipient pay tax under reverse charge
Section 9(5) of CGST Act, section 7(5) of UTGST Act and Section 5(5) of IGST Act provides that the Government may, on the recommendations of the council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services.
Here, Government is empowered to specify categories of ‘services’ on which tax to be paid by electronic commerce operator, so this extend the scope of charging section where apart from recipient and supplier, e-commerce companies will be taxed. Provisio to above section states, if e-commerce operator does not have a physical presence in the taxable territory, then a person representing such e-commerce operator for any purpose be liable to tax. If there is no representative, the operator will appoint a person in taxable territory who will be liable to pay tax.