Article 246A of the Constitution, which was introduced by the Constitution (101 amendment) Act, 2016 confers concurrent powers to both parliament and state legislatures to make laws with respect to GST.  However clause 2 of Article 246A read with Article 269A provides exclusive power to the Parliament to legislate with respect to interstate trade or commerce.

Supply of goods and or services.  CGST and SGST will be levied on intra State supplies while IGST will be levied on interstate supplies.  The charging section is section 7(1) of CGST and SGST Act and Section 4(1) of the IGST Act.

Reverse charge applies to supplies of both goods and services.

The receiver of goods will not be able to get Input tax credit (ITC).  Further, the recipients who are registered under composition schemes would be liable to pay tax under reverse charge.

For instance in respect of exchange of goods, namely gold bracelet for hotel services,  the transaction of supply of bracelet  from consumer to the hotel will not be an independent supply as the same is not in the course of business.  It is a consideration for a supply made by the hotel to him.  The same will be a taxable supply by the hotel.

Supplies made without consideration will also come within the purview of supply under GST.  Only those cases which are specified under Schedule I to the Model GST law.

Central Government or State Government on recommendation of the GST council can notify a transaction to be the supply of goods and or services.

A taxable person be eligible to opt for composition scheme would become applicable for all the businesses verticals or registrations which are separately held by the person with same permanent Account number (PAN).

Composition scheme is applicable subject to the condition that the taxable person does not affect inter -State supplies. A taxable person under composition scheme is not eligible to claim input tax credit.

A customer who buys  goods from taxable person who is under composition scheme is not eligible for composition input tax credit because a composition scheme supplier cannot issue a tax invoice.  The taxable person under composition scheme is restricted from collection tax.  It means that a composition scheme supplier cannot issue a tax invoice.

The threshold for composition scheme is Rs. 50 Lakhs of aggregate turnover in a financial year.

The methodology to compute aggregate turnover is given in Section 2(6).  Accordingly  ‘aggregate turnover’  means ‘Value of all supplies irrespective of taxable and non taxable supplies, exempt supplies and exports and it excludes taxes levied under CGST Act, SGST Act and IGST Act.  Value of inward supplies, Value of supplies taxable under reverse charge of a person having the same PAN.

Such a taxable person who as not eligible for the composition scheme would be liable to pay tax, interest and in addition he shall also be liable to a penalty equivalent to the amount of tax payable as per sub-Section (3) of Section 8 of Model GST Law.

The category of registered persons, eligible for composition levy under section 10 and these rules, specified in column (2) of the Table below shall pay tax under section 10 at the rate specified in column (3) of the said Table:

S No Category of registered persons Rate of tax
1 Manufacturers, other than manufacturers of such goods as may be notified by the Government one per cent
2 Suppliers making supplies referred to in clause (b) of paragraph 6 of Schedule II two and a half per cent
3 Any other supplier eligible for composition levy under section 10 and these rules half per cent

When exemption from whole of tax collected on goods and or services has been granted unconditionally and the taxable person providing such goods or services shall not collect the tax on such goods and services.

Remission of tax or duty means relieving the tax payer from the obligation to pay tax on goods when they are lost or destroyed due to any natural causes/ calamities.  Remission is subject to conditions stipulated under the law and rules made there under.

According to Section 11 of Model GST law permits remission of tax on supply of goods.  Remission of tax will apply only when tax is payable as per law i.e. taxable event should have happened and tax is required to be paid as per law.  Under GST law, levy is applicable upon supply of goods where goods are last or destroyed before supply,  taxable event does not occur in order to pay tax.  Accordingly, question remission of tax does not arise.

On plain reading of the language of Section 11, remission is allowed only for those cases where supply of goods is found to be deficient in quantity due to natural causes.

Under Section 10 of the Model GST Law, the Central or the State Government on the recommendation of the GST council can exempt the supplies from the levy of GST either generally or subject to conditions.

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September 2021