This article has been written with a view to educate traders of the key highlights from the GST Laws that would have a bearing on the business carried on by them and to elicit comments, initiate debates and provide a basic understanding to the reader. It is fondly hoped that this article would provide to the reader some insight into the legal requirements that a trader must meet in order to strike a balance between trade and compliance.

The information cited in this article has been drawn from various sources. While every effort has been made to keep, the information cited in this article error free, the Institute or any office of the same does not take the responsibility for any typographical or clerical error which may have crept in while compiling the information provided in this article.

Contents

1. Introduction

2. Levy

3. Time of Supply of Goods

4. Place of Supply of Goods

5. Value of Supply

6. Input Tax Credits

7. Payment

8. Accounts and Records

9. Documentation

10. Compliance Requirements

11. Assessment and Audit

12. Offences & Penalties

Chapter 1

Introduction

Goods and Services Tax (GST), the biggest reform in the history of indirect tax in India, which is at present cross one year, is still in its very nascent stages of development. The Government, trade, industry and professionals and practitioners are grappling with various legal and procedural issues. The GSTN too, is in the process of settling down.

In this backdrop, it is necessary that small traders across the country need a working knowledge of the Law and other procedural aspects. This article is an attempt towards that end. We believe that this article will provide an insight into the various theoretical and practical aspects of the GST laws.

This article provides an analysis as well as an understanding of such issues to the reader.

Chapter 2
Levy

1. GST is a tax leviable on the “supply” of goods and/ or services. Therefore, for levy of GST, there must be a supply of one or more goods, a supply of one or more services, or a supply of a combination of goods and services. In other words, the term “supply” would replace the significance attached to the term “sale” particularly, in the case of traders. The provisions of the VAT laws were attracted when a dealer effected a “sale”. Therefore, traders would have to re-apply their minds to understand the taxation implications on every supply effected by them, irrespective of the fact that such a supply may not qualify as “sale”. The concept of ‘supply’ is elaborated in the ensuing paragraphs.

2. Levy of GST may be as follows:

(a) Central tax – CGST – levied under Section 9 of the Central Goods and Services Tax Act, 2017;

(b) State tax – SGST – levied under Section 9 of the relevant State’s Goods and Services Tax Act, 2017;

(c) Union Territory tax – UTGST – levied under Section 7 of the Union Territory Goods and Services Tax Act, 2017;

(d) Integrated tax – IGST – levied under Section 5 of the Integrated Goods and Services Tax Act, 2017; and

(e) Compensation cess – levied under Section 8 of the Goods and Services Tax (Compensation to States) Act, 2017.

3. GST shall be leviable on a taxable supply effected in India. The nature of GST to be levied would depend on various factors, including the location of the supplier / place of supply / location of the recipient. The GST law also prescribes that IGST will be levied on goods imported into India, while the levy and collection would be under the provisions of the Customs Act, 1961, on the value determined under that law. As regards exports and supplies to SEZ units / developers, the GST law treats the supplies as taxable supplies, while giving them a special status – zero-rated supplies.

4. Every person effecting a supply will be liable to pay GST (CGST+SGST or IGST, as the case may be) on every taxable supply, if such person is a taxable person at the time of supply. The time of supply would be determined based on several factors. The three determinants of supply – time of supply, place of supply and value of supply, have been discussed in detail in Chapters–3, 4 and 5 of this article.

5. Certain categories of supplies have been specified by the Government as supplies on which GST is payable on reverse charge basis – Notification No. 4/2017 and 13/2017-Central Tax (Rate), dated 28-Jun-2017 as amended from time to time, for goods and services, respectively. In other words, in case of notified goods and services, the recipient of the supply will be the person liable to pay tax. In this regard the law imposes mandatory registration on a trader who is otherwise not liable for registration (say, the turnover in the year is expected to be below the threshold limit of Rs.20 Lakhs), even if a single inward supply liable to reverse charge is effected during the year, thereby obligating him to pay taxes on all his taxable supplies effected by him thenceforth. The GST law also provides for levy of tax on reverse charge basis in case of all inward supplies (goods as well as services) from unregistered persons, much like the URD purchase tax that was prevalent under the hitherto State VAT laws in case of purchase of goods from unregistered dealers. With the levy follows other compliance requirements such as issue of invoice, payment voucher, etc. This levy has been relaxed by way of an exemption upto September 30, 2019 (vide Notification No. 22/2018-Central Tax (Rate) dt.6-Aug-2018), for the reason that this levy has caused undue hardship to trade and industry in complying with the requirements arising from this charge. Given the above, an amendment has been made (Notification giving effect to the amendment is awaited) in this regard wherein this levy shall be made applicable only to certain classes of registered persons, and shall be limited to the inward supply of specified goods and / or services.

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