1. Key legal concepts under revised Model GST Law (Nov 2016)
By:- Puneet Agrawal
B. Com (H), CA, LLB
Partner
Athena Law Associates

2. Contents This presentation covers: Taxable event - Supply
Meaning, Exceptions, etc.
Interstate and Intrastate supply
Imports and Exports
Levy - Charging Section
Taxable Person

3. Taxable Event under GST - Supply

4. Meaning of Supply (Section 3 of CGST)
Supply is defined in an inclusive manner and it includes all forms of supply such as:
sale transfer
barter exchange
license rental
lease disposal
made or agreed to be made
for consideration
by a person in the course or furtherance of business
Supply also includes:
Importation of service, for a consideration, whether or not in the course or furtherance of business
Supply to be specified by Notifications issued by Central or State Government

5. Supply without consideration (Schedule I of CGST Act)
Supplies specified in Schedule I made or agreed to made without consideration. This schedule includes:- 
Permanent transfer/disposal of business assets where ITC has been availed on such assets.
Supply between related persons or between distinct persons as specified in Section 10 when made in the course of furtherance of business.
Supply between an agent and his principal, i.e.,
when agent received goods for principal and supplies goods to the principal; and
when goods supplied by principal to agent where the agent undertakes to supply the goods on behalf of principal.
Importation of service by taxable person from a related person or from any of his other establishments outside India, in the course of furtherance of business.
Persons sent abroad for training purposes in related companies.

6. Supply – not to include
Activities or transactions falling under Schedule III to be treated neither as supply of goods nor a supply of services:
Services rendered by an employee in course of his employment.
Services rendered by a Court or Tribunal.
Services rendered by any person performing his duties and functions in the capacity of the office held by him under the Constitution.
Services by a foreign diplomatic mission located in India.
Services of funeral, burial, crematorium or mortuary.

7. Supply – not to include
Activities or transactions undertaken by Central or State Governments, or local authorities in which they are engaged as public authorities specified in Schedule IV to be treated neither as supply of goods nor a supply of services such as:
Services provided by a Government or local authority to another Government or local authority excluding services by dept. of posts, life insurance and agency services;
Services provided by a Government or local authority to individuals in discharge of its statutory powers or functions such as issuance of passports, visas, birth or death certificate, right to use natural resources to farmer for agriculture
Services provided by Government towards- (i) diplomatic or consular activities; (ii) citizenship, naturalization and aliens; (iii) admission into, and emigration and expulsion from India; (iv) currency, coinage and legal tender, foreign exchange; (v) trade and commerce with foreign countries, import and export across customs frontiers, interstate trade and commerce; or (vi) maintenance of public order.
Any services provided by a Government or a local authority in the course of discharging any liability on account of any tax levied by such Government or authority.

8. Composite Supply & Mixed Supply

9. Composite Supply – Meaning
Section 2(27) of the Model GST law defines Composite Supply as follows:
a supply made by a taxable person to a recipient
comprising two or more supplies of goods or services, or any combination thereof,
which are naturally bundled and supplied in conjunction with each other in the ordinary course of business,
one of which is a principal supply
In a composite supply where two or more supplies are being made, one of which is a principal supply, it shall be treated as a supply of such principal supply.
Example: Goods packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is the principal supply.

10. Composite Supply – Tax Liability Section 3(5)(a)
The tax liability on a composite supply shall be determined in the following manner —
(a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply;
S. 2 (78) - principal supply shall mean:
the supply of goods or services which constitutes the predominant element of a composite supply and
to which any other supply forming part of that composite supply is ancillary and
does not constitute, for the recipient an aim in itself, but a means for better enjoyment of the principal supply

11. Mixed Supply – Meaning & Tax Liability
Mixed supply has been defined in Section 2(66) of the Model GST Law as:
two or more individual supplies of goods or services, or any combination thereof
made in conjunction with each other by a taxable person for a single price
where such supply does not constitute a composite supply
Example: Supply of canned foods, sweets, chocolates, cakes when supplied for a single price – tax shall be at the highest rate applicable on any of the product.
Tax Liability-Section 3(5)(b)
A mixed supply comprising of two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax.

12. Determination of what is or is to be treated as supply of goods or a supply of services (Schedule-II)

13. Supply of Goods Transfer of title in goods
Transfer of title in goods – when it shall pass at a future date upon payment of full consideration as agreed
Transfer or disposal of business assets
Business assets transferred by a person who ceases to be taxable person, except –
When business transferred as going concern
When business carried by personal representative who is a deemed taxable person
Goods supplied by any unincorporated association or body of persons to a member for consideration.

14. Supply of services
Transfer of right to use goods or of undivided share in goods, without the transfer of title
Lease, tenancy, easement, license to occupy land
Lease or letting out of building for business of commerce either wholly or partly
Treatment or process, applied to another’s goods (Job work)
Goods meant for business purposes put to private use or made available for any use other than business use whether or not for a consideration
Renting of immovable property
Construction of complex, building, civil structure or part thereof intended for sale to buyer, wholly or partly – except where entire consideration is received after issuance of completion certificate or before first occupation whichever is earlier.

15. Contd.. Supply of services
Temporary transfer or permitting to use any Intellectual property rights – Copyright, trademark and patent
Development, design, programming, customization, upgradation of information technology software
Agreeing to do or refrain, tolerate an act.
Works contract
supply of goods, being food or any other article for human consumption and or any drink (other than alcoholic liquor for human consumption) as part of service or in any other manner whatsoever.

16. Principles to determine Interstate and Intrastate Supply

17. Insterstate Supply
Principles for determining supply of goods/ services in the course of interstate trade or commerce
supply of goods in the course of inter-State trade or commerce means
any supply where the location of the supplier and the place of supply are in different States (Subject to the provisions of Section 7 of IGST Act)
supply of services in the course of inter-State trade or commerce means
any supply where the location of the supplier and the place of supply are in different States. (Subject to the provisions of Section 9 of IGST Act)
Supply of goods in the course of import into the territory of India till they cross the customs frontiers of India shall be deemed to be a supply of goods in the course of inter-State trade or commerce.
Supply of services in the course of import into the territory of India shall be deemed to be a supply of services in the course of inter-State trade or commerce.

18. Contd…Insterstate Supply
Principles for determining supply of goods/ services in the course of interstate trade or commerce
Supply of goods and/or services, when the supplier is located in India and the place of supply is outside India, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce. [Exports]
Supply of goods and/ or services to or by a SEZ developer or an SEZ unit, shall be deemed to be a supply of goods and/or services in the course of inter-State trade or commerce.
Residuary provision for deeming supplies to be interstate supplies - any supply of goods and/or services in the taxable territory, not being an intra-State supply and not covered elsewhere

19. Intrastate Supply
Principles for determining supply of goods/ services in the course of intrastate trade or commerce
Intra-State supply of goods means
any supply of goods where location of the supplier and the place of supply are in the same State (Subject to the provisions of Section 7 of IGST Act)
intra-State supply of goods shall not include:
supply of goods to or by a SEZ developer or to or by an SEZ unit;
supply of goods brought into India in the course of import till they cross the customs frontiers of India.
Intra-State supply of services means
any supply of services where the location of the supplier and the place of supply are in the same State (Subject to the provisions of Section 9 of IGST Act)
intra-State supply of services shall not include:
supply of services to or by a SEZ developer or to or by an SEZ unit.

20. Zero rated supply S. 2(29) & S. 16 (IGST) - Zero rated supply
Supply of any goods and/or services in terms of Section 16 of IGST Act.
Sec. 16 defines the following supplies to be Zero-rated supplies:
Export of goods and/or services; or
Supply of goods and/or services to a SEZ developer or a SEZ unit.
Credit of ITC may be availed for making zero-rated supplies even if such supply is an exempted supply, except as provided in S. 17(3) of CGST Act (S. 17(3) - apportionment of credit by NBFCs)
A registered taxable person exporting goods/ services shall be eligible to claim refund in terms of S. 16(3), i.e., either by exporting under bond and claiming refund of ITC or export goods on payment of IGST and claim refund.
A SEZ developer or SEZ Unit receiving zero rated supply shall be eligible to refund of IGST paid on such supply, subject to conditions to be specified.

21. Levy of GST

22. Levy of CGST/SGST (Section 8 of CGST/SGST Act)
CGST/ SGST to be levied:
On intra-state supplies of goods and/or services
On value determined under Section 15 of the act
Rate – to be notified by Central or State government – NOT EXCEEDING 14%
To be paid by EVERY taxable person
Central / State government – specify categories of supply of goods/services payable on reverse charge basis – tax to be paid by recipient of such goods and services
E-commerce Operators: Central/state government shall specify categories of services on which e-com operators liable to pay tax if supplied through e-com portal.
In absence of physical presence of e-commerce operator, representative to be taxed
In absence of physical presence and representative, person to be appointed for the purpose of paying tax
Power to Grant Exemption: Exemptions may be granted by the Central/ State Govt. in terms of Section 11 of the Act

23. Levy of IGST (Section 5 of IGST Act)
IGST to be levied:
on all supplies of goods and/or services - in the course of inter-State trade or commerce
on value determined under section 15 of CGST Act
at such rates as may be notified by the Central Government in this behalf - NOT EXCEEDING 28%,
IGST on goods imported into India shall be levied and collected in accordance with S. 3 of the Customs Tariff Act, 1975 at the point when duties of Customs are levied on the said goods under section 12 of the Customs Act, 1962, on a value as determined under the first mentioned Act.
Central government to specify categories of supply of goods/services payable on reverse charge basis – tax to be paid by recipient of such goods and services
E-commerce Operators: Central Government shall specify categories of services on which e-com operators liable to pay tax if supplied through e-com portal.
In absence of physical presence of e-commerce operator, representative to be taxed
In absence of physical presence and representative, person to be appointed for the purpose of paying tax
Exemptions granted by the Central Govt. in terms of Section 11 of CGST Act to apply mutatis mutandis.

24. Composition Levy

25. Composition Levy (S. 9 of CGST)
Notwithstanding anything to the contrary contained in the Act-
and subject to sub-section S. 8 (3) – Reverse Charge
and on recommendation of the Council
the proper officer of the Central or a State Government
may subject to such conditions and restrictions as may be prescribed
permit a registered taxable person
whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees
to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed
but not less than 2.5% in case of a manufacturer
and 1% in any other case of the turnover

26. Composition Levy…Contd..
Provided, no such permission shall be granted to a taxable person-
engaged in supply of services
who makes supply of goods not leviable to tax
who makes intra-state outward supplies
who makes supply of goods through an e-commerce operator who is required to collect tax at source
manufacturer of goods notified for this purpose
All registered taxable persons having same PAN must also opt for composition scheme
The taxable person shall not collect and shall not be entitled to any credit of input tax.
Permission to avail the scheme is withdrawn from the day, aggregate turnover exceeds Rs. 50 lakh.

27. Taxable Person

28. Taxable Person (S. 10 of CGST)
Taxable Person means a person who is registered or liable to be registered under Schedule V of this Act.
A person who has obtained or is required to obtain more than one registration, whether in one State or more than one State, shall, in respect of each such registration, be treated as distinct persons for the purposes of this Act.
An establishment of a person who has obtained or is required to obtain registration in a State, and any of his other establishments in another State shall be treated as establishments of distinct persons for the purposes of this

29. Persons liable to be registered – Sch. V
Every supplier shall be liable to be registered in the state from where he makes a taxable supply of goods and/or services if:
his aggregate turnover in a financial year exceeds Rs. twenty lakh, or
in cases of taxable person is conducting business in any of the states of Arunachal Pradesh, Assam, Sikkim, J&K, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Himachal Pradesh and Uttarakhand, his aggregate turnover in a financial year exceeds Rs. ten lakh
Aggregate turnover – It is the aggregate value of all taxable supplies, computed on all India basis, excluding taxes charged under CGST/ SGST/ IGST
Every person who was registered or held a license on the day immediately preceding appointed day under an earlier law liable to be registered w.e.f. the appointed day.
In case of transfer/ succession of business by a taxable person – the transferee/ successor shall be liable to register w.e.f. Date of transfer/ succession.
In case of amalgamation/ de-merger by order of a High Court – the transferee liable to register w.e.f. date on which RoC issues a certificate of incorporation.
Person not liable to registration may voluntarily register.
Persons NOT liable to registration:
Person engaged EXCLUSIVELY in business of supplying goods and/or services that either are not liable to tax or are wholly exempted
Agricultuist

30. Person liable to be registered – Sch. V
Compulsory registration of the following categories irrespective of the initial threshold limit or existing license or registration in preceding law:
Person making inter-state taxable supply,
Casual taxable persons,
Person required to pay tax under reverse charge,
E-commerce operator who shall pay tax if supplying notified service under Section 8(4),
Non-resident taxable persons
Person supplying goods/services on behalf od other taxable person
Input service distributor,
E-commerce operator under Section 56
Every other E-commerce operator
Input service distributor
Tax deductor at source under section 46 (government, government body, authority, etc.)
Other notifies persons or classes of persons

31. Puneet Agrawal, Partner
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Puneet Agrawal, Partner
Athena Law Associates
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