GST Laws and Practice Solved Question
Paper 2023
Dibrugarh University BCOM 6th
SEM CBCS Pattern
6 SEM TDC GST L&P (CBCS) C 614
2023 (May / June)
COMMERCE (Core)
Paper: C-614 (GST Law and Practice)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
The figures in the margin indicate
full marks for the questions
1. (a) Fill in the blanks: 1x4=4
(1)
GST is Destination based tax
on consumption of goods and services.
(2)
GST number has 15 digits.
(3)
Indian GST model is chosen from Canadian
dual GST model.
(4)
For delayed payment of GST, interest is payable at 18% per annum.
(b) Write True or False: 1x4=4
(1)
Input tax credit (ITC) cannot be availed when tax paid on advance receipt.
Ans:
True
(2)
The Union Finance Minister is a Chairperson of the GST Council.
Ans:
True
(3)
Filing of GSTR-3B is compulsory for all normal and casual taxpayer, even if
there is no business activity.
Ans:
True
(4)
The full form of GSTIN is Goods and Services Taxpayer Inclusion Number.
Ans:
True, Goods and Services Tax Identification Number
2. Write short notes on any four of
the following: 4x4=16
(a) Cascading effect of tax.
Ans:
The pre-GST regime indirect tax structure in India was complex, with multiple
taxes being levied at different stages of the supply chain. This often resulted
in cascading of taxes, where the same goods were taxed multiple times at
different stages, leading to a higher overall tax burden for businesses and
consumers. The GST was introduced in India in 2017 to simplify the indirect tax
structure and eliminate cascading of taxes. Under the GST, all indirect taxes
are subsumed into a single tax, making it easier for businesses to comply with
the tax laws and reducing the overall tax burden.
Since
only the value added at each stage is taxed under GST, there is no tax or
cascading of taxes under GST system. GST does not differentiate between goods
and services and thus the two are taxed at a single rate.
GST
aims to simplify the indirect tax structure in India by subsuming all indirect
taxes into a single tax. This eliminates the cascading of taxes and reduces the
compliance burden for businesses, as they no longer have to deal with multiple
tax rates, forms, and compliance requirements.
(b) Deemed supply under GST.
Ans:
Deemed supply is a type of supplies under GST in which there is inadequate
or no consideration for the supply of goods and services received.
Activities to be treated as supply
even if made without consideration
1. Permanent transfer or disposal of business assets where input
tax credit has been availed on such assets.
2. Supply of goods or services or both between related persons or
between distinct persons as specified in section 25, when made in the course or
furtherance of business:
Provided that gifts not exceeding ` 50,000/- in value in a
financial year by an employer to an employee shall not be treated as supply of
goods or services or both.
3. Supply of goods—
(a) by a principal to his agent where the agent undertakes to
supply such goods on behalf of the principal; or
(b) by an agent to his principal where the agent undertakes to
receive such goods on behalf of the principal.
4. Import of services by a (w.e.f. 1-2-2019 the term ‘taxable’
omitted) person from a related person or from any of his other establishments
outside India, in the course or furtherance of business.
As per Section 7(1) Supply includes
(a) all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, licence, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course or furtherance of
business;
(b) import of services for a consideration whether or not in the
course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be
made without a consideration; (w.e.f. 29th Aug 2018 ‘and’ omitted
retrospectively from 1.7.2017)
(d) w.e.f. 29th Aug 2018, omitted retrospectively from 1.7.2017:
the activities to be treated as supply of goods or supply of services as
referred to in Schedule II.
w.e.f. 29th Aug 2018, applicable retrospectively from 1.7.2017
(1A) where certain activities or transactions constitute a supply
in accordance with the provisions of sub-section (1), they shall be treated
either as supply of goods or supply of services as referred to in Schedule II.”
(c) GST Council.
Ans:
In order to implement GST in India, Constitutional (122nd Amendment)
Bill (CAB in short) was introduced in the Parliament and passed by Rajya Sabha
on 03rd August, 2016 and Lok Sabha on 08th August, 2016.
The CAB was passed by more than 15 states and thereafter Hon’ble President gave
assent to “The Constitution (One Hundred and First Amendment) Act, 2016” on 9th
of September, 2016. Since then the “GST
Council” had been notified bringing into existence the Constitutional body
to decade issues relating to GST.
Section 2(36) of Assam Goods & Services Taxes Act, 2017
defines “Council” as the Goods and Services Tax Council established under
article 279A of the Constitution.
On September 16, 2016, Government of India issued notifications
bringing into effect all the sections of CAB setting firmly into motion the
rolling out of GST. This notification sets out an outer limit of time of one
year, that is till 15-9-2017 for bringing GST into effect but GST was
introduced on 1st July, 2017.
Constitution
of GST Council
As per Article 279(A) (1) of the amendment Constitution, the GST
Council has to be constituted by the President within 60 days of the
commencement of Article 279A. The notification for bringing into force Article
279A with effect from 12th September, 2016 was issued on 10th
September, 2016.
As per Article 279A of the amendment Constitution, the GST Council
which will be a joint forum of the Centre and the States, and shall consist of
the following members:
(a) Union Finance Minister – Chairperson.
(b) The Union Minister of State, in-charge of Revenue of finance –
Member.
(c) The Minister in-charge of finance or taxation or any other
Minister nominated by each State Government and Union Territories of India –
Members.
As per the Article 279A (4), the Council will make recommendations
to the Union and the States on important issues related to GST, like the goods
and services that may be subjected or exempted from GST, model GST Laws,
principles that govern Place of Supply, threshold limits, GST rates including the
floor rates with brands, special rates for raising additional resources during
natural calamities/disasters, special provisions for certain States, etc.
(d) Dual System of GST.
Ans:
India has adopted a dual GST system, which was imposed concurrently by the
Centre and States as CGST & SGST. Center has the power of tax intra-state
sales and states are empowered to tax services.
The
implementation of GST has brought about a fundamental shift in the financial
relations between the Central Government and the State Governments in India.
GST is a unified tax system that replaced multiple indirect taxes levied by
both the Central and State Governments. Under GST, both the Central and State
Governments share the authority to levy and collect taxes on goods and services.
This has led to greater harmonization and uniformity in the tax structure
across States, promoting economic integration.
The
GST system follows a dual structure, comprising Central GST (CGST) and State
GST (SGST), levied concurrently by the Central and State governments,
respectively. Additionally, an Integrated GST (IGST) is levied on interstate
supplies and imports, which is collected by the Central Government but
apportioned to the destination state.
In
terms of revenue distribution, the GST Council plays a crucial role. It is a
joint forum consisting of the Union Finance Minister and representatives from
all States and Union Territories. The Council makes decisions on various
aspects of GST, including tax rates, exemptions, and revenue sharing between
the Central and State Governments. Except for one decision, all decisions of
the Council were taken by consensus.
(e) Casual taxable person.
A
casual taxable person is one who has a registered business in some State in
India, but wants to effect supplies from some other State in which he is not
having any fixed place of business. Such person needs to register in the State
from where he seeks to supply as a casual taxable person.
GST
law prescribe special procedure for registration, as also for extension of the
operation period of such casual taxable persons. They have to apply for
registration at least five days in advance before making any supply. Also,
registration is granted to them or period of operation is extended only after
they make advance deposit of the estimated tax liability.
In
case of a casual taxable person, the liability to register under GST arises
when the person is a supplier and the aggregate turnover in the financial year
is above the threshold limit of 20 lac rupees. However, there are certain
categories of suppliers who are required to get compulsory registration
irrespective of their turnover.
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Also Read: GST Law and Practice Important Questions
3. (a) What are the basic features of
indirect taxes? Mention the list of indirect taxes in the pre-GST regime.
7+7=14
Ans: Features of Indirect-taxes:
1. Major source of revenue for government: Indirect taxes
are an important source of tax revenues for Governments all over the world and
continue to grow as more and more countries are moving to consumption oriented
tax regimes. In India, indirect taxes contribute more than 50% of the total tax
revenues of Central and State Governments.
2. Imposed on commodities and services: It is levied on
commodities at the time of manufacture or purchase or sale or import/export
thereof.
3. Impossible to escape from Indirect taxes: Since indirect
taxes are included in the prices of goods and services, it is difficult for
anyone to escape from indirect taxes.
4. Regressive in nature: Indirect taxes
are regressive in nature because it imposed a significant burden on a tax
payer’s income. But after introduction of GST Act, it turned in progressive
because the end consumer is tax bearer.
5. Shifting of tax burden: In the indirect
taxes the tax burden is shifted by the tax payer to the end consumer. Price of
goods and services serves as vehicle for indirect taxes. For example, GST paid
by the supplier of the goods is recovered from the buyer by including the tax
in the cost of the commodity.
6. Inflationary: As indirect
taxation directly affects the prices of commodities and services a rise in
indirect taxes leads to inflationary trend.
7. Uniform tax rate: Rate of indirect
taxes are not differing from person to person or state to state.
Types of Indirect Taxes in India
At present, there are mainly two indirect taxes which are leviable
in India - Goods and Service Tax (GST) & Custom Duty.
1. Goods
and Service Tax (GST): Goods and Services Tax Law in India is
a comprehensive, multi-stage, destination-based tax that is levied on every
stage of value addition, from the manufacturer to the consumer. GST is a
uniform domestic indirect tax law for the entire country.
Before the Goods and Services Tax could be introduced, the
structure of the indirect tax levy in India was inefficient and complicated,
cluttered with various levies at various stages. GST subsumed the following Indirect
Taxes:
Taxes have been subsumed by GST includes both
Central and State Taxes. Following is the list of taxes, both Central and
State, subsumed by the GST:
Central
Taxes:
a.
Central Excise Duty.
b.
Duties of Excise (Medicinal &
Toilet Preparation).
c.
Additional Duties and Excise (Goods of
Special Importance).
d.
Additional Duties of excise (Textile
& Textile Products).
e.
Additional Duties of Customs (CVD).
f.
Special Additional Duty of Customs
(SAD).
g.
Central Surcharges and Cesses so far
as they relate to supply of goods and service.
h.
Service Tax.
State
Taxes:
a.
State Value Added Tax (VAT)/Sales tax.
b.
Central Sales Tax.
c.
Luxury tax.
d.
Entry tax (All forms)
e.
Entertainment Tax (other than the tax
levied by the local bodies).
f.
Taxes of Advertisement.
g.
Purchase Tax.
h.
Taxes on lotteries, betting and
gambling.
i.
State Surcharges and Cesses so far as
they relate to supply of goods and services.
Under the GST regime, tax is levied at every point of sale. In the
case of intra-state sales, Central GST and State GST are charged. Cases of
inter-state sales are chargeable to the Integrated GST.
2. Customs
Duty
Customs Duty is defined under the Customs Act, 1962 and enables
the government to levy duty on exports and imports, prohibit export and import
of goods, prescribe procedures for importing and exporting, and determine
offenses, penalties, assessments, etc.
Customs duty-related matters fall under the Central Board of
Excise & Customs (CBEC). The CBEC, in turn, is a division of the Department
of Revenue of the Ministry of Finance. CBEC also formulates policies that
concern the collection or levying of customs duties, customs duty evasion,
smuggling prevention, and administrative decisions related to customs formations.
Or
(b) Write the evolution of indirect
taxation in India. 14
Ans:
History and
Evolution of Indirect Taxes in India
The history of Indirect Taxation in India dates back to few
centuries and cue of the same is found in Kautilya’s Arthasashtra. During those
days, taxes were collected in kind in the form of crop and / or any
agricultural product. Such collections were generally ear-marked for some
specific purposes or for the development of the State. Taxes were also raised
separately for meeting internal and external exigencies like famine, flood, war
etc.
Kautilya has also described in great detail the system of tax administration
in the Mauryan Empire. It is remarkable that the present day tax system is in
many ways similar to the system of taxation in vogue about 2300 years ago.
Arthasastra mentioned that each tax was specific and there was no scope for
arbitrariness. Tax collectors determined the schedule of each payment, and its
time, manner and quantity being all pre-determined.
With the advent of Industrial Revolution in the early 1800’s,
European markets were inundated with machine-made material with clothing fabric
being the most prominent. The inundation was so intense that selling
manufactured item was becoming impossible due to market saturation. Indian
market was flooded with British products. Few rare exceptions were there, few
products like clothes were also produced in India in cottage industries as for
obvious reasons, compared to the imported British products, and prices were
lower. At that point only the British thought to impose taxes on India made
products. The modern history of indirect taxes starts from the early 20th
century while Excise duty was imposed on Salt, Sugar, Motor Spirit etc.
Gradually, the base of Excise duties was increased. The Central Excise Act was
formulated in 1944 and thereafter has gone for gradual change year by year.
When the British left India in 1947, they left India with a
structure, especially that of revenue, which hasn’t completely changed till
now. Also there were reasons why they implemented this structure.
The basic framework for the tax system in independent India was provided
in the constitutional assignment of tax powers. The principle of separation in
tax powers between the central and state governments is adopted as the basis of
policy. Schedule VII enumerates the subject matters of taxation with the use of
three lists: List – I: mentioning the areas on which only the parliament is
competent to makes law, List – II: dealing with the areas on which only the
state legislature can make laws, and List – III: Listing the areas on which
both the Parliament and the State Legislature can make laws upon concurrently
is provided in Schedule VII. While there are separate heads of taxation
provided under this I and II of Seventh Schedule of Indian Constitution, there
is no head of taxation in the Concurrent List.
After India got independence in 1947, funds were a major problem
for the government for their administration and also to allocate funds for
achieving a socialistic pattern of society. As a result, “Excise Duty”
introduced during British regime was not abolished but an additional tax known
as “Custom Duty” was imposed on imported goods to provide protection to Indian
industries across various sectors and to raise additional revenue. But
gradually during 1960-1970’s, it was observed that the Indian Technology had
become obsolete as compared to their foreign counterparts. The high customs
duty had become a protective wall incentivizing low production, obsolete
technology although there were other reasons too like license raj etc.
At the above scenarios led India ultimately to a scenario where
India did not have Foreign Reserves even to support three weeks of imports.
International Monetary Fund (IMF) imposed liberalization as a pre-requisite for
providing a bail-out to India which was reflected in the Budget presented by the
then Finance Minister Mr. Man Mohan Singh. Liberalization measures also include
reduction of import tariffs like the customs duty which led to development of
technology within India.
Reforms on taxation in India in notable scale were started by two
committees appointed in the 1970s; though the reforms suggested by them were
implemented from late 1980s.
L. K. Jha is considered as the architect of the indirect tax
reform in India. L. K. Jha Committee was appointed in 1970s, but their
suggestions were considered only after decades.
L. K. Jha, who was considered as an accomplished reformer was an
Indian Civil Service Officer. He was taught by eminent economists including
Lord Keynes (Cambridge) and Harold Laski (LSE) and became the Governor of the
RBI. Jha represented a generation of quality educated people opting for Indian
Civil Services.
In 1976, Jha suggested VAT in the form of MAN VAT (VAT at the
Manufacturing level).
Following Jha’s recommendations a dare move was made by V. P.
Singh when he introduced MODVAT (Modified Value Added Taxation) in 1986, when
he was Finance Minister. MODVAT was a predecessor of the present day VAT and it
was the almost the same MANVAT suggested by L. K. Jha. Initially, it was
introduced for selected commodities under the Union Excise Duties (UED).
Few years later, Dr. Manmohan Singh, the architect of economic
reforms in India, carried forward from where V. P. Singh left. He extended
MODVAT to almost all commodities and reduced excise duty rates. Later, Yeshwant
Sinha, the then Finance Minister, introduced a full-fledged VAT for Union
Excise Duties (UED) in the name CENVAT in 1999.
In order to persuade the states to rationalize their tax systems,
the government of India appointed a State Finance Ministers’ Committee to make
recommendations to phase in the VAT within a given time frame. This was later
transformed into the Empowered Committee of State Finance Ministers’. The
committee’s recommendation that the VAT be implemented in 2003 was postponed
repeatedly, until April, 2005. The major landmark in tax reform at the state
level was in simplifying and rationalizing the sales tax system the
introduction of value added tax in states from 1st April, 2005. The
introduction of the VAT was a major reform exercise, even if it may cause some
confusion and uncertainty. The VAT tax base has strengthened the information
base for tax administration resulting in improved compliance for other taxes
and thereby enhancing the overall productivity of the tax system. VAT was
introduced in Assam in the year 2005.
The attempt of a nationwide VAT was an unthinkable one even at the
beginning of the new millennium as it means state sales tax and central excise
duties and services taxes are to be merged into one. For the states, the sales
tax is the largest source of tax revenue.
But still, the advantage of a single tax and its beneficial impact
on unifying the economy and promoting economic activities, the first move
towards introduction of Goods and Services Tax (GST) in India was made by Atal
Bihari Vajpayee government in the year 2000 by initiating discussions with
State Finance Ministers. In 2004, Vijay Kelkar suggested a comprehensive GST
and in the next year, Mr. P Chidambaram, the then Finance Minister, set launch
of GST as a budget goal.
After year of deliberations between sales and centre, GST was
introduced in India on and from 1st July, 2017 where all the states
except the state of Jammu and Kashmir joined this mission of “One National One Tax”. However, the
state of Jammu and Kashmir also introduced the GST in its state from 8th
of July, 2017.
4. (a) What is Goods and Services Tax
(GST)? State the necessary pre-conditions for levy of Goods and Services Tax
(GST) on goods and services. 7+7=14
Ans:
Meaning of GST: According to Article 366 (12A) of Constitution of India, as
amended by 101st Constitutional Amendment Act, 2016 defines the Goods and
Services Tax (GST) “as a tax of supply of goods or services or both, except
supply of alcoholic, liquor for human consumption”.
GST is a destination based tax on consumption of goods and
services, right from the manufacturer to the consumer, to be levied on the same
taxable event by both the states and the union government. It is levied at all
stages right from manufacture up to final consumption with credit of taxes paid
at previous stages available as set off. In a nutshell, only value addition is
taxed. The burden of tax is to be borne by the final consumer. Concept of
destination based tax is that the GST will accrue to the GST authority which has
jurisdiction over the place of consumption. On each ‘supply’ of goods or
services or both, there will be a State GST (SGST) as well as a Central GST
(CGST).
Features
of GST
Salient features of GST are as follows:
1. Dual
GST: India has adopted a dual GST system, which was
imposed concurrently by the Centre and States as CGST & SGST. Center has
the power of tax intra-state sales and states are empowered to tax services.
Now GST has extended to all over the India.
2. One Nation One Tax:
GST is considered to be the biggest indirect tax reform of Independent India.
After introduction of GST, one type of tax is chargeable although with multiple
tax rate of different items of goods and services.
3. Exemptions: Apart
from providing relief to small-scale business, the law also contains provisions
for granting exemption from payment of tax on essential goods and/or services.
Necessary pre-conditions for levy of
Goods and Services Tax (GST) on goods and services (Only for Members)
Or
(b) (1) Define Goods under GST. 7
According
to Section 2(52) “goods means every kind of movable property other than money
and securities; and includes actionable claims, growing crops, grass, and
things attached to or forming part of the land which are agreed to be severed
before sale or under the contract of sale.”
This
definition covers a broad spectrum of items commonly bought, sold, or traded in
markets. It encompasses physical commodities such as electronics, clothing,
furniture, and vehicles. However, it goes beyond the conventional understanding
of goods to include certain intangible entities and natural produce.
The
definition extends to "actionable claims," which represent legal
entitlements to assets or benefits, such as debts owed. Additionally, it
includes growing crops, acknowledging agricultural produce in its formative
stages. Furthermore, "goods" encompass grass and items annexed to or
forming part of the land, provided there's an agreement to detach them before
sale or as part of a contractual arrangement.
This
definition is crucial for businesses and taxpayers because it decides what gets
taxed under GST and what doesn't. Businesses use it to figure out their GST
obligations when buying and selling goods. Plus, it helps them claim input tax
credit, which is like a discount on the GST they pay when purchasing goods.
(2) Distinguish between composite supply and
mixed supply. 7
Ans:
Composite and Mixed Supplies (Section 8 of CGST Act, 2017):
Composite supply is when two or more goods are sold in
a combination, it becomes difficult to identify the rate of tax to be levied.
For such goods or services, CGST Act, 2017 has provided with two terms:
(i) Composite supply and
(ii) Mixed supply.
Composite supply is similar to the concept of “bundled
service” as under service tax laws in the existing regime. Both Composite
supply and Mixed supply consist of two or more taxable supplies of goods or
services or both but the main difference between the two is that Composite
supply is naturally bundled i.e., goods or services are usually provided
together in normal course of business and cannot be separated. Whereas in Mixed
supply, the goods or services can be sold separately.
Composite Supply: Composite supply consists of two or more
goods/services, which is naturally supplied with each other in the ordinary
course of business and one of them is a principal supply. The items cannot be
supplied separately. Principal supply means the supply of goods or services,
which constitute the predominant element of a composite supply and to which
another supply is ancillary/secondary. Following two conditions are necessary
for composite supply:
(a) Supply of two or more goods or services together, AND
(b) It should be a natural bundle and they cannot be separated.
Mixed supply: In Mixed supply two or more individual supplies
combination of goods or services with each other for a single price. Each of
these items can be supplied separately and is not dependent on each other. In
other words, the combination of goods or services are not bundled due to
natural necessities, and they can be supplied individually in the ordinary
course of business. For tax liability purpose, mixed supply consisting of two
or more supplies shall be treated as a supply of that item which has the
highest tax rate.
5. (a) What is the meaning of the term
‘inspection’? Who can order for carrying out ‘inspection’ and under what
circumstances? When do goods become liable to confiscation under the provisions
of the CGST/SGST Act? 4+5+5=14
Ans:
The term ‘Inspection’ is the act of examining something, often closely, Search
denotes an action of Government agencies to go, look through or examine
carefully a place, area, person, object etc. In order to find something
concealed or for the purpose of discovering evidence of concealment of GST. But
the search of a person or vehicle or premises etc, can only be done under the
proper and valid authority of law. Seize means to take possession of goods through
legal process, contrary to the wishes of the owner or to take forcible
possession.
GST
officers are authorized to inspect any place of business or any documents or
records related to the business for the purpose of verifying the correctness of
the returns filed, assessing the tax liability, and enforcing the GST laws.
During an inspection, GST officers may examine the books of accounts,
documents, and records of the business, and may also seek explanations from the
person in charge of the business regarding any discrepancies or irregularities
they may find.
Section
67 of the CGST Act gives the power of Inspection, Search and Seizure to Proper
Officer. In Circular No. 3/3/2017 – GST dated 05 July 17, Proper officer has
been defined under the Central Goods and Services Tax Act, 2017 or the rules
made there under. For the function under section 67 of the CGST Act, proper
officer is designated as an officer, not
below the rank of Joint Commissioner. So any officer below the rank of
Joint Commissioner does not have any power under section 67 until he/she was
authorized by a Proper officer.
Confiscation of Goods
As
per section 130 of the CGST Act, any person:
(i)
supplies or receives any goods in contravention of any of the provisions of
this Act or the rules made thereunder with intent to evade payment of tax;
(ii)
does not account for any goods on which he is liable to pay tax under this Act;
(iii)
supplies any goods liable to tax under this Act without having applied for
registration;
(iv)
contravenes any of the provisions of this Act or the rules made thereunder with
intent to evade payment of tax;
(v)
uses any conveyance as a means of transport for carriage of goods in
contravention of the provisions of this Act or the rules made thereunder unless
the owner of the conveyance proves that it was so used without the knowledge or
connivance of the owner himself, his agent, if any, and the person in charge of
the conveyance.
Then,
all such goods or conveyances shall be liable to confiscation.
Or
(b) What are the safeguards provided
in the GST Act in respect of search and seizure? 14
Ans:
Safeguards provided for in respect of Search or Seizure (Only for Members)
6. (a) Explain the mechanism under the
CGST Act, 2017 for claiming Input Tax Credit while making payment of taxes. 14
Ans: Meaning of Input Tax Credit
The
word input tax credit is the combination of three words – Input, tax and
credit.
Input
Means (Sec. 2(59) of the CGST Act, 2017): It means any goods other than
capital goods used or intended to be used by a supplier in the course or
furtherance of business.
Input Tax
Means (Sec. 2(62) of the CGST Act, 2017): In relation to a registered person, it means the Central tax,
State tax, integrated tax or Union territory tax charged on any supply of goods
or services or both made to him and includes:
(a) the
integrated goods and services tax charged on import of goods;
(b) the tax
payable under the provisions of Sec 9(3) and Sec. 9(4) of the CGST Act, 2017;
(c) the tax
payable under Sec 5(3) and Sec. 5(4) of the IGST Act, 2017;
(d) the tax
payable under SGST Act (i.e. person liable to pay GST under RCM);
(e) The tax
payable under UTGST Act (i.e. person liable to pay GST under RCM),
But does not
include the tax paid under the composition levy.
Input Tax
Credit (Sec 2(63) of the CGST Act, 2017): It means the credit of input tax. It is deducted while calculating
GST liability under regular scheme.
Eligibility for Claiming Input Tax
Credit (ITC):
Eligibility for Claiming Input Tax Credit has
been mentioned in Section 16(1) of the AGST Act, 2017. According to this
section eligibility for claiming ITC is that:
(1)
The person must be registered under
the GST Act; and
(2)
Purchase of goods or services or both
made by him are used or intended to be used in the course of furtherance of his
business and the said amount shall be credited to the Electronic Credit Ledger
of such person.
It should be noted that ITC will not be allowed
if depreciation has been claimed on tax component of a capital goods. However,
the person must fulfill such conditions and restrictions as may be prescribed
and in the manner specified in section 49 relating to payment of taxes,
interest, penalty and other amount.
Conditions for Claiming Input Tax
Credit (ITC):
As per Section 16 of the GST Act, 2017,
following four conditions are stipulated for taking Input Tax Credit:
(a)Possession of a tax invoice: The
registered taxable person is in possession of a tax invoice or debit note
issued by a supplier registered under this Act, or such other taxpaying
documents as may be prescribed issued by a supplier [Section 16(2)(a)];
(b) Receipt of Goods and/or Services:
The taxable person must have received the goods and / or services; [Section
16(2)(b)];
(1) Where
goods are received in lots/installments, credit will be available against the
tax invoice upon receipt of last lot or installment.
(2) Goods
deemed to be received by a registered person when the supplier delivers the
goods to the recipient/any other person on the direction provided by the
registered person.
(c) Payment of Tax to the Government:
Subject to the provisions of section 41 or section 43A, the tax charged in
respect of such supply has been actually paid to the Government, either in cash
or through utilisation of input tax credit admissible in respect of the said
supply [Section 16(2)(c)]; and
Where a recipient fail to pay to the
supplier of goods or services or both, other than supplies on which tax is
payable on revenue charge basis, or tax thereon within 180 days of issue of
invoice and he has already availed input credit based on the invoice, the said
credit will be added to his output tax liability along with interest.
(d) Furnishing of GST Return:
GST return must be furnished in GSTR-3 under section 39 of the AGST Act.
Documents Required for claiming Input
Tax Credit (ITC):
Input tax credit can be claimed only by a
person having GST registration and based on proper documentation and filing of Form GSTR-2 returns. The following
documentary requirements must be satisfied by a taxpayer for claiming input tax
credit.
(1) An
invoice issued by the Supplier as per the GST Rules for Invoice;
(2) An
invoice issued by recipient under RCM (Reverse Charge Mechanism);
(3) A
debit note issued by a supplier;
(4) A
bill of entry or any similar document prescribed under Indian Customs Act,
1962; and
(5) An
Input Service Distributor invoice/Input Service Distributor credit note or any
document issued by an Input Service Distributor.
Or
(b) (1) Who are required to file
Annual Return under the CGST Act, 2017? 4
Ans:
Meaning of Annual Return: Annual Return is the return that is required to be
filed annually for every financial year by the eligible registered person,
except a few specified categories of persons. It is a summary statement
containing all the transactions occurred and reported in the periodical returns
filed during the financial year. Further, it also captures the adjustments made
to the transactions of the previous year after the end of the year. It is also
the last option available with the assessee to disclose all transactions
pertaining to the period of filing. Thus, we can say Annual Return is very
comprehensive return.
Who is required to file annual return?
As
per section 44 of the CGST Act, every registered person is required to furnish
an annual return for every financial year except a few categories of persons as
provided in section 44(1). Hence, there is a need to file the Annual Return by
every registered person including the person paying tax under the composition
scheme under section 10 of the Act.
Who is not required to file annual
return?
There
is no requirement to file the Annual Return by:
-
An Input Service Distributor (ISD)
-
A person paying tax under section 51 or section 52 (TDS / TCS)
-
A casual taxable person and (CTP)
-
A non-resident taxable person (NRTP)
Due date of filling annual return:
As
per section 44 of CGST Act, Annual returns must be filed on or before the 31st
day of December following the end of the financial year, for which the return
is being filed for all category of taxable person.
(2) Haloi Enterprises had made
supplies of Rs. 7,30,000 to Deka Enterprises Municipal Authorities of Dibrugarh
on such supplies levied the tax @ 10% of Rs. 73,000. CGST and SGST chargeable
on the supply was Rs. 55,000. Packing charges not included in the price of Rs.
7,30,000 amounted to Rs. 30,000. Subsidy of Rs. 25,000 was received from an NGO
on the sale of such goods and the price of Rs. 7,30,000 is after taking into
account the amount of subsidy so received. Discount offered is @ 1% which was
mentioned on the invoice. Determine the value of supply. 10
Ans: Only for Members
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