Jaipur Branch of CIRC of ICAI

Jaipur Branch of CIRC of ICAI
Event : Ek Kadam GST ki Aur Date & Day : 26th May, 2017 (Friday) Subject : ) Constitutional Aspects 2) New Taxation Regime – Concepts 3) Challenges Taxable Event (including relevant definitions and schedules) 4) Time of Supply Venue : Branch Auditorium, D-1 Institutional Area, Jhalana Doongari, Jaipur Presented by : CA Naresh Sheth May 26, 2017 CA Naresh Sheth

Important Constitutional Amendments
May 26, 2017 CA Naresh Sheth

The Constitution (101st Amendment) Act, 2016
Position – post enactment Present Position New Article 246A is inserted empowering (Section 2): Central and State Government to make laws with respect to GST - this enables both Centre and State to levy tax on goods and services both Parliament has exclusive power to make laws with respect to GST where supply of goods/services take place in the course of inter-state trade or commerce In respect of petroleum and petroleum products [specified in article 279(A)(5)], aforesaid provisions to apply from date to be notified by GST Council Article 246 read with Union List (List I of Seventh Schedule): Union does not have power to levy tax on sale of goods Article 246 read with State List (List II of Seventh Schedule): States do not have power to levy tax on: Manufacture of goods (except alcoholic beverages, opium, narcotic drugs, etc) Services May 26, 2017 CA Naresh Sheth

The Constitution (101st Amendment) Act, 2016
Position – post enactment Present Position Article 366 (12): Goods definition remains same ‘Goods’ includes all materials, commodities and articles Article 366(12A) is inserted (Section 14): “Goods and Services Tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption Not defined Article 366 (26A) is inserted (Section14): “Services” means anything other than goods ‘Service’ not defined Alcoholic liquor for human consumption is specifically excluded from purview of GST May 26, 2017 CA Naresh Sheth

Specific Products / Sectors – Post GST scenario
Central Excise VAT CST State Excise Input Tax Credit position Petroleum products No (Till notified date) Yes up to notified date (Entry 84 of List I) (Entry 54 of List II) Yes (Entry 92A of List 1) Inputs to suffer GST. Input GST will not be set-off against output Central Excise or VAT liability Consumers (B2B) will not be entitled to input tax credit of Central Excise or VAT against GST Tobacco products [Article 246A r.w. Article 366 (12)] (deletion of Entry 54 of List II) Yes?? (Entry 92A of List I) Considered as sin goods and will suffer both GST and Excise Input GST will be set off against output GST. Input GST will not be set off against output excise liability Consumers (B2B) cannot take input tax credit of Central Excise May 26, 2017 CA Naresh Sheth

Central Excise VAT CST State Excise Remarks Alcoholic liquor for human consumption No [excluded from GST under article 366 (12A) defining ‘goods and services tax’] Yes (Entry 54 of List II) (Entry 92A of List 1) (Entry 51 of List II) Inputs to suffer GST. Input GST will not be set-off against output State Excise or VAT liability Consumers (B2B) will not be entitled to input tax credit of State Excise or VAT against GST May 26, 2017 CA Naresh Sheth

Central Excise VAT CST State Excise Remarks Sale or purchase of Newspapers and advertisement therein Yes No Deletion of Entry 92 of List II It falls under Article 246A r.w. article 366(12A) Advertisement other than in newspapers and advertisements broadcast by radio or television Deletion of Entry 55 of List II May 26, 2017 CA Naresh Sheth

GST Regime – Salient Features

Major Indirect Tax Levies in present regime
Central Taxes State Taxes Local body Taxes Central Excise Duty Excise under M&TP Act Custom Duty Basic CVD SAD Service Tax R&D and other cesses VAT/Sales Tax & CST Entertainment Tax Luxury Tax Taxes on lottery, betting and gambling State Cesses and Surcharges Entry tax Stamp Duty Electricity Duty Profession Tax Octroi LBT Property Tax Entertainment Duty Gram Panchayat Tax May 26, 2017 CA Naresh Sheth

Major Taxes to be subsumed in GST
Central Taxes State Taxes Local Body Taxes Central Excise Duty Additional Excise Duty Excise under M&TP Act Countervailing Duty Special Additional Duty Service Tax VAT/Sales Tax & CST Purchase tax Entertainment Tax Luxury Tax Taxes on lottery, betting and gambling Entry tax Octroi LBT May 26, 2017 CA Naresh Sheth

Major Taxes to be retained Post-GST
Central Taxes State Taxes Local Body Taxes Central Excise on: Tobacco products Petroleum Products Basic Custom Duty State Excise on Alcohol liquor State VAT on: Alcohol liquor Petroleum Products Stamp Duty Electricity Duty Profession tax Road tax Taxes on Mineral Rights Property Tax Entertainment Duty Gram Panchayat Tax May 26, 2017 CA Naresh Sheth

GST – Model and Philosophy
Meaning Broad based and comprehensive levy on goods and services consumed in economy Dual Model Central GST (CGST) to be levied on intra state supplies by Central Government State GST (SGST) to be levied on intra state supplies by State Government Union Territory GST (UTGST) to be levied on intra state supplies by Union Territory CGST & SGST or CGST & UTGST would be levied simultaneously on intra-state supply Integrated GST (IGST) to be levied on inter state supplies by Central Government and to distributed between Centre and States or Union Territory Destination Based Consumption Tax At present VAT is collected and retained by originating state Under GST, tax to accrue to the taxing authority which has jurisdiction over the place of consumption also termed as place of supply Supplies imported into country to attract GST Supplies exported outside country not to attract GST CA Naresh Sheth May 26, 2017

GST – Other Features Exemptions
Exemptions under existing service tax legislation are grandfathered under GST Exemptions in respect to supply of goods yet to be notified by GST council GST Audit Mandatory GST audit of accounts of registered person whose turnover during financial year exceeds prescribed limit It is in addition to Income Tax audit Anti-profiteering measure Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed to recipient by way of commensurate reduction in prices Government to constitute an Authority to examine whether reduction in tax rate have actually resulted in a commensurate reduction in prices GST Compliance Rating Every registered person to be assigned GST compliance rating score based on his record of compliance with provisions of the Act Such rating to be placed in public domain Parameters to determine compliance rating score are yet to be prescribed May 26, 2017 CA Naresh Sheth

Taxable Event May 26, 2017 CA Naresh Sheth

Whom to pay (Jurisdiction) What compliance to be done
Broad Framework of GST Taxable Event - Supply When to pay - Time of Supply Whom to pay (Jurisdiction) - Place of Supply How much to pay - Valuation - Rate of tax - Input Tax Credit What compliance to be done - Registration - Payment - Returns May 26, 2017 CA Naresh Sheth

Taxable event in GST Regime vs. Existing regime
Taxable Event in Existing laws Taxable Event in GST Regime Service Tax Provision of Service Supply of goods or services or both Excise Duty Manufacture of excisable goods VAT/Sales Tax Transfer of title in goods within state CST Transfer of title in goods outside state Purchase Tax Purchase of specified goods CVD On import in lieu of excise duty SAD On import in lieu of VAT Entry Tax / LBT Entry of specified goods in the State for sale, use or consumption Entertainment tax Provision of entertainment May 26, 2017 CA Naresh Sheth

GST levy – Trigger points
Taxable Person / Distinct Person Supply (outward) Supply (inward) Goods Services Procured from unregistered supplier Procurement of specified goods or services May 26, 2017 CA Naresh Sheth

Reverse Charge Mechanism
Recipient to discharge GST under RCM as if he is the person liable for paying the tax on supply Recipient to make payment on his own account and on own GSTN number It is not TDS paid on behalf of supplier Recipient is entitled to ITC subject to ITC provisions Recipient to discharge GST under Reverse Charge On procurement of notified goods or services u/s 9(3) of CGST Act and relevant provision of IGST Act, UTGST Act and SGST Act On procurement of goods or services from unregistered supplier u/s 9(4) of CGST Act and relevant provision of IGST Act, UTGST Act and SGST Act May 26, 2017 CA Naresh Sheth

Taxable person & Distinct person

Person [Section 2(84) of CGST Act]
“Person” includes - Individual HUF Company Firm LLP AOP or BOI, whether incorporated or not, in India or outside India Corporation established by or under Central, State or Provincial Act Government company Local Authority body corporate incorporated by or under the laws of a country outside India co-operative society registered under any law relating to cooperative societies society as defined under the Societies Registration Act, 1860 (21 of 1860) Trust Central or state government every artificial juridical person, not falling within any of the preceding sub-clauses May 26, 2017 CA Naresh Sheth

Taxable Person and Registered Person
Taxable person means [Section 2(107) of CGST Act]: a person who is registered; or liable to be registered under section 22 or section 24; Registered person means [Section 2(94) of CGST Act]: a person who is registered u/s 25 of CGST Act; but does not include a person having a Unique Identity Number May 26, 2017 CA Naresh Sheth

Distinct Person Distinct person u/s 25(4) and (5) of CGST Act:
A person having registration in more than one state or union territory to be treated as distinct person in respect of each such registration Different establishments of same person in more than one state or union territory to be treated as establishments of distinct persons Distinct person means [explanation 1 to section to section 8 of IGST Act]: An establishment in India and any other establishment outside India An establishment in a State or Union territory and any other establishment outside that State An establishment in a State or Union territory and business vertical registered within that state or union territory May 26, 2017 CA Naresh Sheth

Persons liable to be registered – Section 22
Every supplier Aggregate turnover exceeds Rs. 20 lakh (Rs 10 lakhs for special category states) Aggregate Turnover for this section includes: all supplies made whether on own his own account or on behalf of all his principals supply of goods after completion of job-work by registered job-worker and value of such goods not to be included in aggregate T/O of registered job worker Existing assesses Assesses under excise, service tax, VAT and other laws which are to be subsumed in GST w.e.f. appointed day Transferee or successor of business Where business is transferred as a going concern w.e.f. date of such transfer or succession Transferee of business In case of amalgamation / demerger by order of HC w.e.f. date on which ROC gives certificate of incorporation giving effect to order of HC May 26, 2017 CA Naresh Sheth

Compulsory registration – Section 24
Persons making inter-state supply Casual taxable person Persons required to pay tax under RCM Agent Input service distributor Non resident taxable person Electronic commerce operator liable to pay tax u/s sec 9(5) Every E-commerce operator Person who supplies through E-commerce operator [other than supplies u/s 9(5)] who are required to collect tax u/s 52 Every person supplying online information and database access or retrieval services from outside India to unregistered taxable person in India Persons required to deduct TDS u/s 51 such other person or class of persons as may be notified by CG or SG on recommendation of Council May 26, 2017 CA Naresh Sheth

Persons not liable to be registered – Section 23
Any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or are wholly exempt from tax under CGST Act or under IGST Act Agriculturist, to the extent of supply of produce out of cultivation of land Agriculturist means an individual or HUF who undertakes cultivation of land [section 2(7) of CGST Act]: By own labour; or By the labour of family; or By servants on wages payable in cash or kind or by hired labour under personal supervision or personal supervision of any member of the family Term ‘agriculture’ was earlier defined under RMGL to include floriculture, horticulture, sericulture, raising of crops, grass or garden produce and grazing Whether ‘cultivation of land’ includes floriculture, horticulture, sericulture, grass or garden produce and grazing? CA Naresh Sheth May 26, 2017

Aggregate Turnover [Section 2(6) of CGST Act]
Means Excludes Aggregate value of: Taxable supplies Exempt supplies u/s 11 Nil rated supplies Non-taxable supplies Export supplies Inter-state supplies computed on all India basis of person having same PAN Value of inward supply on which tax is payable under RCM CGST, SGST, UTGST, IGST and cess Exempt Supplies u/s 2(47) May 26, 2017 CA Naresh Sheth

Supply May 26, 2017 CA Naresh Sheth

Supply – Broad Concept Concept of a supply is broader than a sale :
Transfer of title in goods is required for Sales Supply doesn’t require transfer of title in goods Presence of two persons for “taxable supply”: Pre-requisite for VAT and Service tax Not pre-requisite for Excise Will not be a pre-requisite for GST Even self-supplies may be a taxable supply in GST Presence of Consideration for “taxable supply”: May 26, 2017 CA Naresh Sheth

Definition of Supply Section 7 defines “Supply” to Include………………….
Definition of “Supply” is inclusive definition and hence one has to understand normal meaning of Supply Apart from what is provided in the section 3, the transactions covered under the general meaning of supply can also be covered Dictionary meanings of “Supply”: “Make(something needed or wanted) available to someone; provide”- Oxford Dictionary “To provide materials, goods and services- an act of providing something” – Cambridge Dictionary “To make (something) available to be used : to provide someone or something with : To make available”- Merriam- Webster Dictionary May 26, 2017 CA Naresh Sheth

Relevant extracts of definition of “Supply” under foreign laws
Australia GST Act u/s 9 and 10 defines “Supply” to mean: A supply is any form of supply whatsoever Without limiting subsection (1), supply includes any of these……………………. United Kingdom u/s 5(2) of VAT Act, 1994: Subject to any provisions made by that Schedule and to Treasury orders under sub-sections (3) to (6) below- “supply” in this Act includes all forms of supply, ………………………………………………… Malaysian GST Act u/s 4 defines “Supply” to mean: All forms of supply, including supply of imported services, done for a consideration and anything which is not a supply of goods but is done for a consideration is a supply of services Canadian GST Act defines “Supply to mean: Subject to sections 133 and 134, the provisions of property or a service in any manner, including sale, transfer, barter, exchange, license, rental, lease, gift or disposition May 26, 2017 CA Naresh Sheth

Supply u/s 7(1) of CGST Act
All forms of supply of Goods or Services or both Sec. 7(1)(a) Sec. 7(1)(b) Sec. 7(1)(c) Sec. 7(1)(d) Sale, transfer, barter, exchange, license, rental, lease, disposal made or agreed to be made Importation of Services Activities specified in Schedule - I Activities to be treated as supply of services as referred in Schedule - II Without consideration For consideration For consideration Excludes Supply u/s 7(2): Activities specified in Schedule – III Notified supplies made by CG / SG / Local Authority as public authority Whether or not in the course or furtherance of business In the course or furtherance of business May 26, 2017 CA Naresh Sheth

‘Consideration’ Consideration [section 2(31) of CGST Act] includes:
Any payment made / to be made in money or otherwise The monetary value of any act or forbearance Deposit (refundable or not) to be treated as consideration only when adjusted against supply Consideration excludes: Subsidy given by Central or State Government Issues under deliberation: What is the meaning of term ‘otherwise’? Does it include consideration in kind? Whether mere book entry would amount to payment made ? In respect of / in response to or for the inducement of the supply of goods and/or services whether by recipient or by any other person May 26, 2017 CA Naresh Sheth

For subscription / other consideration
‘Business’ Business includes [section 2(17) of CGST Act]: Whether or not for pecuniary benefit and irrespective of volume, frequency, continuity or regularity of following: Supply / acquisition of goods (Including capital assets) and services in connection commencement or closure of business Provision of facilities / benefits to its members by: Club Association Society Or any such body Trade Commerce Manufacture Profession Vocation Adventure Wager Or any other similar activity For subscription / other consideration May 26, 2017 CA Naresh Sheth

‘Business’ Business includes [section 2(17) of CGST Act]:
Admission of person(s) to any premises for consideration Services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade commerce or vocation Services provided by a race club by way of totalisator or a licence to book maker in such club Any activity undertaken by CG or SG or local authority in which they are engaged as public authorities May 26, 2017 CA Naresh Sheth

Supplies without consideration under Schedule I
Permanent transfer / disposal of business assets where ITC has been availed on such assets Assets transferred on succession of business, conversion of entity (firm to LLP, company to LLP, firm to company, LLP to company), Amalgamation or merger, Disposal of computer to charitable organization Proprietor/ partners transferring goods for personal use Can GST be levied when ITC was claimed under earlier Law? Supply of goods or services between related persons or between distinct persons specified u/s 25 when made in course or furtherance of business: Branch / Depot transfer Services provided by Head Office/ corporate office to its Branch offices or regional offices May 26, 2017 CA Naresh Sheth

Supplies without consideration under Schedule I
Supply by employer to employees – gifts not exceeding Rs. 50,000 in value in a financial year shall not be treated as supply Supply of goods by or to agent: by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal, or by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. Importation of services by a taxable person from: a related person or from any of his other establishments outside India in the course or furtherance of business. May 26, 2017 CA Naresh Sheth

Schedule II – Matters to be treated as deemed supply of ‘goods’ or ‘services’ u/s 7
Transaction Nature of Supply Clause Transfer of title in goods Goods 1(a) Transfer of: rights in goods; or undivided share in goods Service 1(b) Transfer of title in goods at future date upon payment of full consideration 1(c) Lease, tenancy, easement, license to occupy land 2(a) Lease or letting out of building including commercial, industrial or residential complex (wholly or partly) for business or commerce 2(b) Treatment or processing of other’s goods (job work) 3 Without transfer of title May 26, 2017 CA Naresh Sheth

Transaction Nature of Supply Clause Transfer of business assets: Transfer / disposal of goods forming part of business asset (with or without consideration) When a person ceases to be a taxable person except when: Business transferred as going concern Business carried on by a personal representative (deemed to be a taxable person) Goods 4(a) 4(c) Business assets put to private use or for any purpose other than business (With or without consideration) Service 4(b) Renting of immovable property 5(a) Sale of under construction flats / units (money received before CC or First occupation certificate) 5(b) Temporary transfer or permitting use or enjoyment of IPR 5(c) Development, design, programming, customization etc. of IT Software 5(d) May 26, 2017 CA Naresh Sheth

Transaction Nature of Supply Clause Agreeing to the obligation to: Refrain from an act; or Tolerate an act or situation; or Do an act Service 5(e) Transfer of right to use any goods for any purpose whether or not for specified period for consideration 5(f) Works Contract including transfer of property in goods 6(a) Supply of food as a part of service (Outdoor catering and restaurant sale) 6(b) Supply of goods by an unincorporated association to its members Goods 7 Relevance of bifurcating above transactions as goods or services: Place of supply Time of supply Rates May 26, 2017 CA Naresh Sheth

Schedule III – Activities or transactions not to be treated as supply
Services by employee to employer in the course of or in relation to his employment Supply of goods by employee to employer – taxable supply Supply of goods/ services by employer to employee – taxable supply [not taxable up to Rs. 50,000] Services by any Court or Tribunal established under any law for the time being in force (court includes district court, High Court and Supreme Court) Functions or duties performed by: Members of Parliament Members of State Legislature Members of Panchayats Members of Municipalities May 26, 2017 CA Naresh Sheth

Schedule III – Activities or transactions not to be treated as supply
Members of other local authorities any person who holds any post in pursuance of the provisions of the Constitution in that capacity any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause Services of funeral, burial, crematorium or mortuary including transportation of the deceased Sale of land and sale of building [subject to clause 5(b) of Schedule II] Actionable claims, other than lottery, betting and gambling May 26, 2017 CA Naresh Sheth

Composite Supply Composite supply means [sec 2(30) of CGST Act] :
a supply made by a taxable person to a recipient consisting of two or more supplies of goods or services or both 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 Illustration : Where goods are 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. May 26, 2017 CA Naresh Sheth

Mixed Supply Mixed supply means [sec 2(74) of CGST Act] :
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 Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately May 26, 2017 CA Naresh Sheth

Composite Supply & Mixed Supply – Taxability [Section 8 of CGST Act]
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 A mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax May 26, 2017 CA Naresh Sheth

Definition of ‘Goods’ Goods means [section 2(52) of CGST Act]:
Every kind of movable property Other than: Money [Sec. 2(75)] Securities [Sec. 2(101)] But includes Actionable claim [sec 2(1)]; Growing crops, grass and things attached to or forming part of land which are agreed to be severed before supply or under contract of supply In addition to above, Schedule II deems certain supply to be that of goods Whether electricity is liable to GST? Clause 6 of Schedule III: Actionable claims other than lottery, betting and gambling are neither to be treated as supply of goods or nor supply of service May 26, 2017 CA Naresh Sheth

‘Money’ Money means [Section 2(75) of CGST Act]:
When used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination; but shall not include any currency that is held for its numismatic value Indian legal tender Foreign currency Cheque Promissory note Bill of exchange Letter of credit Draft Pay order Traveller cheque Money order Postal or electronic remittance Any other instrument recognised by RBI May 26, 2017 CA Naresh Sheth

‘Actionable claims’ Actionable claim [Section 2(1) of CGST Act] shall have the same meaning assigned to it in section 3 of Transfer of Property Act, 1882 Whether factoring of debts is an actionable claim? Is it taxable? Whether winning of lottery is actionable claim? Is it taxable? Recently, High Court of Sikkim in case of M/s Future Gaming and Hotels Services Pvt Ltd [2017-TIOL HC-Sikkim-ST] upheld the constitutional validity of levy of service tax on lottery services. However, it struck down the levy on the ground of absence of valuation mechanism for lottery services. Whether this decision will be valid in GST also? May 26, 2017 CA Naresh Sheth

Definition of ‘Service’
Services means anything other than[section 2(102) of CGST Act]: Includes: activities relating to the use of money; or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged Goods Money Security In addition to above, Schedule II deems certain supply to be that of services May 26, 2017 CA Naresh Sheth

Definition of ‘Service’
Whether ‘works contract’, ‘construction contracts’ and other deemed sales can be treated as ‘Service’ when constitution considers it to be deemed sales under Article 366(29A)? Whether Intangible property is ‘Goods’ or ‘Service’ ? Whether distinction between temporary transfer and permanent transfer will still be relevant? Whether permanent transfer of package software, brand, trade mark, copyright, patent, theatrical rights, non theatrical rights etc. will be supply of ‘Goods’ under GST ? Clause 5(c) of Schedule II includes temporary transfer of Intangible property as supply of ‘service’? Whether immovable property (other than land and building) not being goods is now service? Clause 5 of Schedule III provides that sale of land and sale of building (after receipt of CC or first occupation) are neither supply of goods nor supply of service Whether development right / FSI / TDR, etc. is land? Whether structure / plant embedded in Earth is building? May 26, 2017 CA Naresh Sheth

Post GST - Supply chain Outside India Zero rated Overseas Vendor
Imports Overseas customer BCD- Cost** IGST* Exports Maharashtra Purchase/service Vendor Gujarat IGST* Purchase / Service Vendor Factory CGST + SGST* Transfer Warehouse * Cenvatable ** Not cenvatable *** B2B Cenvatable & B2C non-cenvatable Transfer No tax IGST* Sale Warehouse Sale CGST + SGST*** CGST + SGST*** Transfer Sale IGST*** IGST* Sale CGST + SGST* Agent Customer Sale Sale Distributor Retailer Sale Customer CGST + SGST* May 26, 2017 CA Naresh Sheth CGST + SGST*** CGST + SGST*** India

Time of Supply May 26, 2017 CA Naresh Sheth

Time of Supply - Meaning
Time of supply would mean the point at which: Supply is deemed to have been made Taxable event occurs Supplier is entitled to charge GST to customer (where contractually agreed) Above position is confirmed at Q1 of Chapter 5 of FAQs issued by CBEC on Time of supply is relevant to determine: Applicable tax rate Applicability of relevant provisions, rules and notifications Due date for tax payment May 26, 2017 CA Naresh Sheth

Point of Taxation in existing vs. GST regime
Point of Taxation in Existing laws Point of Supply in GST Regime Service Tax Earlier date of: Issue of invoice / Completion of service Receipt of payment Time of supply as determined u/s 12, 13 and 14 of CGST Act Excise Duty Manufacture of goods but payable on removal of goods from place of removal VAT / Sales Tax / CST Time of sale / time of transfer of title or possession of goods CVD / SAD Date on which bill of entry is presented - in case goods are cleared for home consumption Date on which bill of entry for home consumption is presented - in case of goods cleared from warehouse Date of payment of duty – in any other case May 26, 2017 CA Naresh Sheth

Time of Supply of Goods May 26, 2017 CA Naresh Sheth

Time Of Supply of Goods – Relevant legal provisions
Section 12(1) of CGST Act Liability to pay CGST on the goods arises at the time of supply of goods, as determined in accordance with provisions of this section Section 20 of IGST Act Provisions of Section 12 of CGST Act applicable to IGST also and hence all provisions and Rules relating to time of supply of goods will apply to payment of IGST Section 21 of UTGST Act Provisions of Section 12 of CGST Act applicable to UTGST also and hence all provisions and Rules relating to time of supply of goods will apply to payment of UTGST May 26, 2017 CA Naresh Sheth

Time of Supply of Goods – Straight Charge
Earliest of following dates: Date of issue of invoice by the supplier or the last date on which he is required to issue invoice u/s 31; or Receipt of payment (earlier of entry in books or credit in bank account) Provided that where the supplier of taxable goods receives an amount up to Rs. 1,000/- in excess of amount indicated in tax invoice, the time of supply , to the extent of such excess shall be the date of issue of such invoice General provision for normal supply Continuous supply [Section 12(2)] Explanation 1 For the purposes of clause (a) and (b), the supply shall be deemed to have been made to the extent it is covered by the invoice or as the case may be, the payment May 26, 2017 CA Naresh Sheth

Time of Supply of Goods - General
Meaning of ‘date of issue of invoice’: Date of invoice Date on which invoice is posted, couriered or ed Date on which invoice reaches the customer Any other date ‘Advance received against goods supplied will be liable to tax: Supplier may have to keep separate records Issues as to adjustment of advances Blockage of the funds Issue of adjusting GST on refund of advance on cancellation of order Hardship of reconciling financial statements and returns May 26, 2017 CA Naresh Sheth

Invoice to be issued - Normal supply of goods [section 31(1)]
A Registered Taxable Person supplying taxable goods shall issue the invoice before or at the time of : Removal of goods for supply to the recipient , where the supply involves movement of goods; or in any other case, delivery of goods or making available thereof to the recipient issue a tax invoice showing: “Removal” in relation to goods means [section 2(96)]: Dispatch of the goods for delivery by supplier or any person acting on behalf of supplier; or Collection of goods by the recipient or any other person acting on behalf of recipient Description Quantity value of goods tax charged other prescribed particulars Government may (on recommendation of GST council) specify the categories of goods or supplies in respect of which the tax invoice shall be issued in such time and such manner as prescribed May 26, 2017 CA Naresh Sheth

Last date for issue of invoice Receipt of consideration
Time of Supply for sales requiring movement of goods / not requiring movement of goods Issue of invoice Date of removal* Last date for issue of invoice Receipt of consideration Time of Supply 30/09/2017 05/11/2017 01/10/2017 05/08/ Rs. 40,000 05/08/2017 – Rs. 40,000 15/10/ Rs. 60,000 30/09/2017 – Rs. 60,000 * In case where sale do not require movement of goods, date on which goods are made available to recipient May 26, 2017 CA Naresh Sheth

Continuous Supply of Goods - Issue of Invoice [Section 31(4)]
Where successive statements of accounts or successive payments are involved, Invoice to be issued before or at the time of: Issue of each such statement; or Date of receipt of successive payments Continuous Supply of Goods means [section 2(32)]: Supply of goods provided or agreed to be provided on continuous or recurrent basis Under a contract Whether or not by means of a wire, cable, pipeline, or other conduit For which supplier invoices recipient on regular or periodic basis Includes supply of such goods as Government may notify in this regard May 26, 2017 CA Naresh Sheth

Time of Supply of Goods – Continuous Supply of goods
Successive statement of account or successive payments are involved: Tea vendor, Milk Vendor, Grocery Vendor, Stationery vendor, Water supply, Mahanagar Gas supply, steam supply, etc where supply is on recurrent basis Date of invoice Date of issue of statement Receipt Time of Supply 30/09/2017 01/11/2017 01/08/2017 N.A. May 26, 2017 CA Naresh Sheth

Time of Supply of Goods - Reverse Charge
Earliest of: Date of Receipt of goods; or Date of payment (earlier of entry in books or debit in bank account) Date immediately following 30 days from the date of issue of invoice, or any other document, by the supplier Where it is not possible to determine the time under clause (a),(b) and (c), the time of supply shall be the date of entry in the books of account of recipient of supply Reverse Charge [Section 12(3)] Inward records of receipt of goods may have to be maintained Advances paid against goods supplied will also trigger RCM Whether provision made in books of account (no credit to party account) will trigger RCM? May 26, 2017 CA Naresh Sheth

Time of Supply - Sale on approval or return basis
Receiver approves goods within 6 months: Earlier of date of approval or date of payment Receiver does not approves goods within 6 months: Earlier of 6 months from date of removal or date of payment Invoice to be issued earlier of [Section 31(7)]: Before or at the time when it is known that supply has taken place (sales conclusion) 6 months from the date of removal Sale on approval or return basis is common in articles like: Diamonds Apparels Fashion accessories May 26, 2017 CA Naresh Sheth

Time of Supply - Vouchers
Supply of Vouchers [Section 12(4)] Loyalty voucher by shops Gift vouchers Shareholders coupons The time of supply shall be: where supply is identifiable at issue of voucher – Date of issue of voucher In all other cases – Date of redemption of voucher Issue: If tax is paid on issue of voucher but voucher is not redeemed within validity period, what will be tax implication in such case? May 26, 2017 CA Naresh Sheth

Time of Supply - Residuary provision
[Section 12(5)] In case it is not possible to determine the time of supply under the provisions of the sub-section (2),(3) or (4) the time of supply shall be: Where periodical return has to be filed, date on which return is to be filed In any other case, date on which GST is paid What are the probable cases falling in residuary clause? Probably Schedule I case - permanent transfer or disposal of business asset Probably unaccounted supplies? May 26, 2017 CA Naresh Sheth

Time of Supply – Interest, late fee or penalty for delayed payment for goods
Addition in value of supply by way of: [Section 12(6)] Interest Late fee Penalty for delayed payment Time of supply shall be date on which supplier receives such addition in value May 26, 2017 CA Naresh Sheth

Time of Supply of Services

Time Of Supply of Services – Relevant legal provisions
Section 13(1) of CGST Act Liability to pay CGST on the goods arises at the time of supply of services, as determined in accordance with provisions of this section Section 20 of IGST Act Provisions of Section 13 of CGST Act applicable to IGST also and hence all provisions and Rules relating to time of supply of goods will apply to payment of IGST Section 21 of UTGST Act Provisions of Section 13 of CGST Act applicable to UTGST also and hence all provisions and Rules relating to time of supply of goods will apply to payment of UTGST May 26, 2017 CA Naresh Sheth

Time of Supply of Service
Earliest of following dates : When invoice made in time prescribed u/s 31: Date of issue of invoice Date of receipt of payment (earlier of entry in books or credit in bank) When invoice is not made in time prescribed u/s 31: Date of provision of service In case where clause (a) or (b) do not apply, the date on which recipient shows receipt of services in his books of accounts General provision : normal supply continuous supply [Section 13(2)] Where the supplier of taxable services receives an amount up to Rs. 1,000/- in excess of amount indicated in tax invoice, the time of supply, to the extent of such excess shall be the date of issue of such invoice May 26, 2017 CA Naresh Sheth

Invoice to be issued – Normal supply of services
General provision - Section 31(2) A Registered Taxable Person supplying taxable services shall issue a tax invoice: Either Before or after the provision of service but within the prescribed period* showing: *30 days as prescribed in Invoice Rules Description value of services tax charged other prescribed particulars Government may (on recommendation of GST council) specify the categories of services, subject to conditions, in respect of which: any other document issued in relation to supply shall be deemed to be tax invoice tax invoice may not be issued May 26, 2017 CA Naresh Sheth

Time of Supply of Services – Normal Supply
Date of provision of service Last date of issue of invoice Date of issue of invoice Date of payment Time of Supply 25/09/2017 24/10/2017 09/10/2017 (within prescribed time) 10/09/2017 11/12/2017 (not within prescribed time) 30/10/2017 31/12/2017 May 26, 2017 CA Naresh Sheth

Continuous Supply of Services - Issue of Invoice [Section 31(5)]
Due date of payment is ascertainable from contract: On or before due date of payment b) Due date of payment is not ascertainable from contract: Before or at the time when supplier receives payment c) Payment is linked to completion of Event: On or before date of completion of event Continuous Supply of Services means [section 2(33)]: Supply of services provided or agreed to be provided on continuous or recurrent basis Under a contract for a period exceeding 3 months with periodic payment obligations; and Includes supply of such service as Government may notify in this regard May 26, 2017 CA Naresh Sheth

Time of Supply – Continuous Supply of Services
Examples of continuous supply of service: Issues and points for consideration: Government is yet to notify “other cases of continuous supply of services” Property rent Locker rent Annual maintenance contract Retainership contracts Works contract Telecom services Sale of under construction units / flats May 26, 2017 CA Naresh Sheth

Time of Supply– Continuous Supply of Services
Due date of payment / Date of provision of service Date of issue of invoice Last date of issue of invoice Date of Receipt Time of supply If due date of payment is ascertainable from contract: 27/10/2017 05/11/2017 20/11/2017 27/11/2017 05/10/2017 If due date of payment is not ascertainable from contract: - 01/10/2017 May 26, 2017 CA Naresh Sheth

Time of Supply– Continuous Supply of Services
Due date of payment / Date of provision of service Date of issue of invoice Last date of issue of invoice Date of Receipt Time of supply Payment linked to completion of event: 25/10/2017 07/11/2017 15/11/2017 05/11/2017 10/09/2017 May 26, 2017 CA Naresh Sheth

Time of Supply – Cessation of Service Contract
Earliest of following dates : When invoice made in time prescribed u/s 31: Date of issue of invoice Date of receipt of payment (earlier of entry in books or credit in bank) When invoice is not made in time prescribed u/s 31: Date of provision of service Where supply of services ceases before completion of supply, Invoice to be issued [Section 31(6)]: When supply ceases and Such invoice to be issued to the extent to supply made before such cessation May 26, 2017 CA Naresh Sheth

Time of Supply of Service - Reverse Charge
Earliest of: Date of payment (earlier of entry in books or debit in bank account) Date immediately following 60 days from the date of issue of invoice, or any other document, by the supplier Where it is not possible to determine the time under clause (a) or (b), the time of supply shall be the date of entry in the books of account of recipient of supply Reverse Charge [Section 13(3)] In case of ‘Associated Enterprise’ where the supplier is located outside India, time of supply shall be: Date of entry in the books of accounts of recipient, or Date of payment whichever is earlier May 26, 2017 CA Naresh Sheth

Time of Supply - Vouchers
Supply of Vouchers [Section 13(4)] Health club vouchers Recharge vouchers The time of supply shall be: where supply is identifiable at issue of voucher – Date of issue of voucher In all other cases – Date of redemption of voucher Issue: If tax is paid on issue of voucher but voucher is not redeemed within validity period, what will be tax implication in such case? May 26, 2017 CA Naresh Sheth

Time of Supply - Residuary provision
[Section 13(5)] In case it is not possible to determine the time of supply under the provisions of the sub-section (2),(3) or (4) the time of supply shall be: Where periodical return has to be filed, date on which return is to be filed In any other case, date on which GST is paid What are the probable cases falling in residuary clause? Probably Schedule I case – transaction between HO and Branch of service provider May 26, 2017 CA Naresh Sheth

Time of Supply – Interest, late fee or penalty for delayed payment for services
Addition in value of supply by way of: [Section 13(6)] Interest Late fee Penalty for delayed payment Time of supply shall be date on which supplier receives such addition in value May 26, 2017 CA Naresh Sheth

Change in rate of tax – Section 14
Same as Rule 4 of POTR Provision of service Date of Invoice Date of receipt Time of Supply Before rate change After rate change Invoice date or receipt date, whichever is earlier Date of invoice Before rate Change Date of receipt of payment: Date of credit in bank account when such credit is after 4 working days from change in effective rate of tax If not then, date when payment is entered in the books of account of supplier May 26, 2017 CA Naresh Sheth

Words of Caution Presentation is based on CGST Act, IGST Act and UTGST Act Views expressed are the personal views of faculty based on his interpretation of GST Act Presentation is done in educational meeting. Such meeting is arranged with a clear understanding that neither the Faculty nor Jaipur Branch of CIRC of ICAI will be responsible for any error, omission, commission and result of any action taken by a member or anyone on the basis of this presentation. May 26, 2017 CA Naresh Sheth

THANK YOU May 26, 2017 CA Naresh Sheth

Jaipur Branch of CIRC of ICAI

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