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1. Alcoholic liquor for human consumption: At the time of implementation of GST in India, the words inserted in the Article 366(12A) of the constitution that “any tax on supply of goods or services or both except supply of alcoholic liquor for human consumption”.

So, even after leavy of GST in India Alcoholic liquor for human consumption will not attract GST. Instead, it will attract VAT (Value added tax) on Intra-state supplies and state excise on Inter-state supplies. So, all the tax revenue on Alcoholic Liquor will be in the hands of state governments.

2. Non-GST Supplies: At the time of implementation of GST in India, it was concluded that Central Excise and VAT will continue to levy on the Manufacturing/production of the following items –

  • Petroleum crude oil,
  • Diesel & Petrol,
  • Petroleum crude,
  • Aviation turbine fuel (ATF) and
  • Natural Gas

And, State Excise and VAT will continue to levy on the intra-state supply of following items –

  • Petroleum crude oil,
  • Diesel & Petrol,
  • Petroleum crude,
  • Aviation turbine fuel (ATF) and
  • Natural Gas

It was held that GST Council will recommend the date from which GST will be levied on these items. And till date GST Council has not specified the date.

Basically, Non-GST items are those items which are kept outside the ambit of GST even after they falls within the definition of Supply.

3. Negative List of Supplies: Section 7(2) read with Schedule III of CGST act, 2017 provides the list of supplies shall be treated neither as a supply of goods nor a supply of services-

4. Services by an employee to the employer during employment

5. Services by any court or Tribunal established under any law

6. (a) Functions performed by Member of Parliament, Legislature, Panchayats, Municipalities and Other Local authorities

(b) Duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity

(c) Duties performed by any person as a Chairperson/Member/Director in a body established by the Central Govt. or a State Govt. or local authority and who is not deemed as an employee before the commencement of this clause

4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased

5. Sale of Land & Building

6. Actionable claims, other than lottery, betting and gambling. (Even it is covered under the definition of Goods Under GST)

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India

8. (a) Supply of warehoused goods to any person before clearance for home consumption

(b) Supply of goods by the consignee to any other person by endorsement of document of title after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.

Supplies which were set outside the ambit of the definition of supply, even it fulfils the condition of section 7(1).

It is an exhaustive list which is mentioned in the CGST act. It means, to make amendment in the negative list government needs to amend the CGST act by passing bill in the parliament.

4. Exempted Supply:

As per Section 11(1) & (2) of the CGST Act, Government may, on the recommendation of the council, by Notification & Special-order exempt generally, either absolutely or subject to such conditions as may be specified, goods or services or both from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification in the public interest or in each case, under circumstances of an exceptional nature to be stated in such order.

It means under section 11 of CGST Act, Government has retained the to make the any supply exempt from GST by way of notification or special order in the public interest on the recommendation of council.

As per Section 2(47) of CGST Act, Exempted supply means – Supply of any goods or services or both which attracts (i) Nil rate of tax, (ii)Wholly exempt from tax under section 11 of CGST Act, and (iii) includes non-taxable supplies.

5. Zero Rated Supply:

If a good or service is exempted from payment of tax, it cannot be said that it is zero rated.

The inputs and input services which go into the making of the good or provision of service has already suffered tax and only the final product is exempted. When the output is exempted, GST Act do not allow availment/utilisation of credit on the inputs and input services used for supply of the exempted output. Thus, in a true sense the entire supply is not zero rated. The concept of zero rating of supplies aims to correct this anomaly.

By zero rating it is meant that the entire value chain of the supply is exempt from tax. This means that in case of zero rating, not only is the output exempt from payment of tax, there is no bar on taking/availing credit of taxes paid on the input side for making/providing the output supply. Such an approach would in true sense make the goods or services zero rated.

As per GST Law, Zero rated supply includes –

(i) Supplies made to any country other than India; and

(ii) Supplies made to customers located in SEZ or SEZ developers.

Since, the outward supply is non taxable, the Input tax paid to the suppliers will be refunded.

Also Read: Zero Rating of Supplies in GST

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April 2024