Exempted Supplies Under GST :- V Chapter (Procedural Aspects)

1. Registration in cases of supply of exempt goods and/or services

Section 9 provides that a taxable person is liable to pay tax under the GST laws. Taxable person has been defined as a person who is registered or liable to be registered. Section 22 and Section 24 of the CGST Act provide the criteria which when fulfilled requires a person to take registration. Section 22 provides for registration of every supplier effecting the taxable supplies if his turnover exceeds the threshold limit of Rs.20 lacs and Rs.10 lacs in special category States. Every supplier shall be liable to be registered under the Act in the State from which he makes a taxable supply of Goods or Services or both. It is important to note that registration is required ‘in’ the State ‘from where’ taxable supplies are made. Section 24 lays down a list of persons who are required to obtain registration without any monetary limit i.e. even if they do not have supplies of Rs 20 Lakhs. Such person includes electronic commerce operators, input service distributors, non-resident taxable persons etc.

Further, Section 23 of the CGST Act provides that the following persons shall not be liable to take registration:

— any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;
— an agriculturist, to the extent of supply of produce out of cultivation of land.
— The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act. Accordingly, the Central Government vide Notification No. 05/2017-Central Tax, dt. 19-06-2017 has, w.e.f 22nd June 2017 amended section 23 of CGST Act, 2017 to include the persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis by the recipient of such goods or services or both under section 9(3) of the CGST Act, 2017 in the category of persons exempt from obtaining registration under the aforesaid Act.

Thus, a person who is making exclusive supply of exempt goods or services or both is not required to obtain registration; however, if he is engaged in the supply of any taxable goods or services, he shall be required to take registration. It is worth noting that the above Rs 20 Lakhs limit as specified in Section 22 shall be arrived at after adding both taxable as well as exempt supplies. Thus, even if a person has Rs 19.5 lakhs of exempt supplies but Rs. 1 lakh of taxable supplies, he is required to take registration.

2. Documents, e-way bills and records required in case of exempt supplies and consequences on non-compliance

Document required to be issued in case of Exempt Supply:

Section 31(3)(c) of the CGST Act provides that a registered person supplying exempt goods or services or both or paying tax under the provisions of section 10 shall issue, instead of a tax invoice, a bill of supply containing such particulars and in such manner as may be prescribed. It is further provided that a registered person has an option not to issue bill of supply if the value of the goods or services or both supplied (per invoice) is less than Rs. 200/-, subject to the following conditions-

(i) the recipient is not a registered person; and (ii) the recipient does not require such invoice.
In such a situation, the registered person shall issue a consolidated bill of supply for such supplies at the close of each day in respect of all such supplies.

Contents of Bill of Supply
A bill of supply shall contain the following particulars-
(a) name, address and GSTIN of the supplier;
(b) a consecutive serial number not exceeding 16 characters;
(c) date of issue;
(d) name, address and GSTIN of registered recipient;
(e) HSN Code for goods or SAC for services;
(f) description of goods or services or both;
(g) value of supply of goods or services or both taking into account discount or abatement, if any; and
(h) signature or digital signature of the supplier or his authorised representative.
In terms of the First Proviso to rule 46, the Central Government vide Notification No. 12/ 2017-Central Tax, dated 28-Jun-2017 had specified the requirement of mentioning the number of digits of HSN code on invoice or bill of supply based on the annual turnover of previous financial year which is provided as under:


It is further provided that, in case of export of goods or services which are exempt under GST, the bill of supply shall carry an endorsement “supply meant for exports/ supply to SEZ developer/ unit for authorised operations under bond or LUT without payment of IGST” and shall specify the following details, namely-

(i) Name and address of the recipient;
(ii) Address of delivery; and
(iii) Name of the country of destination.

It is important to note here that vide Circular No. 45/ 19/ 2018-GST, dated 30-May-2018, it has been clarified that in case of export of exempted or non-GST goods without payment of IGST LUT/ bond is not required. Under such a scenario, a view can be taken that in case of export of exempted goods or services, the bill of supply may carry endorsement as “supply meant for exports/ supply to SEZ developer/ unit for authorised operations”.
It is also clarified in rule 49 that any invoice issued under any other Act in respect of non-taxable supply shall be treated as bill of supply under GST. For example, invoice issued under State VAT Act, for supply of alcoholic liquor meant for human consumption shall be considered as bill of supply for the purpose of GST Act.

Invoice-cum-bill of supply

Rule 46A of CGST Rules, 2017 overrides rule 46 or rule 49 or rule 54, to provide that a registered person supplying taxable goods as well as exempted goods or services or both to an unregistered person may issue a single “invoice-cum-bill of supply” for all such supplies.

Provisions relating to issue of documents by registered person can be summarized as follows-


E-way Bill in case of exempt supplies

Section 68 of CGST Act, 2017 read with rule 138 of CGST Rules, 2017 requires every registered person who causes movement of goods of consignment whose value is exceeding Rs. 50,000/- to generate an e-way bill on the common portal in respect of such supply, before commencement of movement of goods. Explanation 2 to rule 138(1) provides that the consignment value of goods shall be the value, determined in accordance with the provisions of section 15, declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in respect of the said consignment and also includes the central tax, State or Union territory tax, integrated tax and cess charged, if any, in the document and shall exclude the value of exempt supply of goods where the invoice is issued in respect of both exempt and taxable supply of goods. Thus, value of exempted goods shall not be considered for the purpose of computing the limit of Rs 50,000. Thus, in case of pure supply of exempted goods, other than de-oiled cake as specified in rule 138(14) of CGST Act, 2017, no e. way bill is required.

However, rule 55A of CGST Rules, 2017 requires the person-in-charge of the conveyance to carry a copy of the tax invoice or the bill of supply issued in accordance with the provisions of rules 46, 46A or 49 in a case where such person is not required to carry an e-way bill.

Example :

•  If a registered person transporting goods of consignment value of Rs. 70,000/- which includes exempt supply of Rs. 30,000/-, then, the e-way bill is not required to be generated because the consignment value is calculated as Rs. 40,000/- which is below the limit of Rs. 50,000/-.
•  A registered person transporting exempt goods of consignment value of Rs. 70,000/- is not required to generate e-way bill but the person-in-charge of the conveyance must carry the bill of supply.

Records required to be maintained by supplier of taxable/ exempt supplies

As per section 35(1) of CGST Act, 2017, every registered person shall keep and maintain, at his principal place of business mentioned in its registration certificate, a true and correct account of the following:

•  Production and manufacture of goods.
•  Inward and outward supply of goods or services or both – Such detail should include names and complete addresses of suppliers from whom he has received the goods or services chargeable to tax under the Act.
•  Stock of goods – It has been provided that such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap and wastage thereof.
•  Input tax credit availed.

•  Output tax payable and paid.
•  Such other particulars as may be prescribed.

Thus, every supplier of exempted goods also needs to maintain proper sale purchase register, stock register and manufacturing records.

In addition to the above, rule 56 requires every registered person to keep and maintain the following records-

•  Account of the goods or services imported or exported
•  Account of supplies attracting payment of tax on reverse charge
•  Account of advances received, paid and adjustments made thereto.
•  A register of tax delivery challan issued or received during any tax period.

It is important to mention that other requisites of books of accounts including the place at which these are required to be maintained, manner in which these are to be maintained, manner of making entries in registers etc. has to be complied with. Section 36 of CGST Act, 2017 requires a registered person to keep and maintain books of accounts or other records for a period of 72 months from the due date of furnishing the annual return (i.e. 31st December of subsequent financial year) for the year pertaining to such accounts and records. Thus, records for FY 2017-18 are to be maintained till 31st December 2025.

Consequences on Non-Compliances

Section 122 of CGST Act, 2017 provides penalty for certain offences. A registered person supplying exclusively exempted goods or services or both shall have to pay a penalty of Rs. 10,000/- if he fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder.




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How To Use IMPORT EWB DATA Function In GSTR-1 - Full Explain

How can I import invoice-details, declared in e-Way Bill System, into Form GSTR-1?

To import invoice-details, declared in e-Way Bill System, into Form GSTR-1; perform following steps:

1. Login at GST Portal, navigate to GSTR-1 page of the selected tax period and generate GSTR-1 Summary

2. Import invoices, declared in e-Way Bill System, into the following three tiles of the generated GSTR-1 Summary page:

I. 4A, 4B, 4C, 6B, 6C - B2B Invoices (To import invoice-details for taxable outward supply transactions between registered taxable entities/persons from e-Way Bill System)

II. 5A, 5B - B2C (Large) Invoices (To import invoice-details for taxable outward inter-State supply transactions between a Registered Supplier and an Unregistered Buyer, where the invoice value is more than Rs 2.5 lakh, from e-Way Bill System)

III. 12 - HSN-wise-summary of Outward Supplies (To download the summarized HSN-wise invoice-details of all outward supplies)



I. 4A, 4B, 4C, 6B, 6C - B2B Invoices

To import B2B EWB invoices in the Form GSTR-1, perform following steps:

1. Click the IMPORT EWB DATA button in the "4A, 4B, 4C, 6B, 6C - B2B Invoices" tile.

Note: EWB details will be available in GST portal based on the e-Way bills pertaining to outward supply raised during the relevant tax period.

















2c. If the number of B2B EWB invoices are more than 500

If the number of invoices are more than 500, following page gets displayed. Perform the steps as mentioned below or click the BACK button to go to the previous page.

Exempted Supplies Under GST :- IV Chapter

Principles of Exemption

1. Basic principles of construction of exemption provisions

It is expected that Laws are drafted by experts in the chosen fields and the language employed would
therefore, leave little room for difficulties in construction / interpretation. But experience in reality is often different. When a draftsman translates his intent into law, while keeping in mind the objects and reasons for the relevant statute, there could always be a flaw. Therefore, ambiguous words, expressions, inconsistencies do creep in. Interpretation can be understood as follows:

•  Interpretation is independent of facts;
• The application of a provision would most certainly depend on facts of a given case and its surrounding circumstances.

In essence, interpretation means understanding the true sense of the provision which the legislature
intends to convey ensuring that the reader understands it the same way; The word construction is nothing but drawing conclusions that the provisions of law desire to convey. To that extent interpretation and construction are not synonymous. However, these words are being used interchangeably. The basic principles of construction of any provision, be it taxability or exemption are largely the same.

Some of these principles are the following:

(a) A construction of a statute must at the threshold be never open to judicial interpretation. For example, no law can be enacted unless the Constitution empowers the legislature to do so.
(b) A statute must be construed based on the intent of the person who wants to legislate. It must convey the “true and legal” meaning as the legislature intended; it must be exhaustive; it must cover all possible intended situations; the language employed must be simple, cogent and easy to understand while the words used must convey plainly the intent and object of the legislature; importantly the spirit of the legislature must be conveyed through the construction of a statute.
(c) It must be so drafted or constructed that it must be read as a whole and in its context; There must be no mischief; there must be no scope of vivisecting the construction; the purpose of the construction is to reach the intended recipient.
(d) Each word, phrase, expression or sentence must be so construed that the general purpose of the Act must be met.
(e) Equal attention must be paid in construction of a statute that it serves the dominant and ancillary
purposes with equal force.
(f) A beneficial interpretation of a statute must not result into an exercise in futility.
(g) A plain or literal reading of a statute must ensure equity without ambiguity;
(h) The language employed must ensure grammatical accuracy; must not permit addition, rejection or
substitution of words; avoid technical words, words used by business etc., to have the desired effect of a construction.
(i) The construction of a statute must ensure that there is no injustice, hardship or inconvenience caused to a person who is not the intended recipient.
(j) Headings, punctuations must be taken care of. These often cause ambiguity and lack of clarity to a reader.
(k) Illustrations can be provided to supply clarity;
(l) Wherever definitions are required they must be supplied by the statute. To the extent possible referential legislation must be avoided since different statutes may have different objects.
(m) Any construction involving a proviso must be clear – either to “except” or “include” or “qualify” and nothing more. Generally, a proviso must not lead to a different construction.
(n) The provision so enacted must lay emphasis on “substance” rather than on “form”.
(o) Many times, a provision contains an explanation. The job of an explanation is to explain the “words” contained in the provision. It is definitely a part and parcel of the provision. An explanation when inserted is generally understood to go back to the date on which the provision is deemed to be operational. When an explanation is appended to a clause in a Section then the explanation is deemed to apply only to that clause. However, when an explanation is added at the end of a section having several sub-sections / clauses then it is deemed to apply to all sub-sections and clauses unless the explanation qualifies with words such as “for the purposes of clause (a) of sub-section (3) of section 12” etc. An explanation generally supports the main object of the enactment itself.
(p) Sometimes a provision contains or refers to a Schedule. A Schedule attached or appended to an Act forms part of the enactment. A schedule generally carries details and it avoids a section being
overburdened with such details. Generally, a Schedule is a matter of convenience.
(q) Several provisions commence with the expressions “notwithstanding anything c ontained …..”. It is generally known as a non-obstante clause. It means the relevant provision has an over-riding effect
over a particular section or circumstance or any other enactment itself.
(r) Apart from all of these a provision sometimes uses the words “deem, deemed or deeming etc.,”.
Usage of such words implies that the provision creates a legal fiction. Normally, the fiction created is
for the purpose of that provision alone and it cannot be extended to any other provision of the
enactment.
These are some of the basic principles of construction of a provision. If a draftsman has to bear all these principles in mind and go ahead with constructing an exemption provision he will be overburdened. It is for these reasons that a draftsman generally constructs the provision first and then applies these legal principles to ensure that even in case of a judicial review or challenge the provision stands the test of law. It is certainly a huge responsibility on the part of a draftsman to keep these guiding principl es in mind while drafting an exemption provision which backs the legislative intent.

Non-GST supplies.

Often one gets confused between non-taxable supply and non-GST supply. Under Section 2(78) “nontaxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act.
In common parlance, a non-GST supply is a transaction which is outside the scope of the GST legislation.
A transaction which qualifies to be called a supply can be taxable, non-taxable, Nil rated, Zero rated or an exempt supply. It must be noted that all such supplies are in fact “suppl ies” under the GST laws but by virtue of the statute they are not liable to tax.

2. Whether an exemption is mandatory or optional

One of the most burning issues that bothers the tax fraternity as well as trade and industry is whether to avail an exemption or not ?. More Importantly, whether availing an exemption can be optional or would it be mandatory. In order to answer this vexed issue, we need to understand some basics of availment / non-availment of exemptions:

(a) If the output stands exempted, it necessarily envisages that input tax credit shall accordingly stand
restricted.
(b) Once the output is exempt, there can be no tacit collection of taxes meaning the incidence of taxes
(even at the general rate) cannot be passed on to the customer through a pricing mechanism.
(c) If the exemption is product / service specific, entity specific, period or area specific, cap on value
etc., it appears that availment of such exemption is mandatory. It may not be possible to pay output
tax, say at a general rate and continue to avail input tax credits.
(d) Merely because a customer may be willing to pay taxes on exempted goods or services, it does not mean that the supplier can collect taxes; in fact, in such cases it will amount to excess / unauthorised collection of taxes resulting in forfeiture of taxes whereas input tax credits will continue to stand restricted. Thus, it can amount to a double whammy.
(e) Some tax experts believe that once tax stands collected on the output, availability of input tax credit would be automatic; This is an issue which has been subject to judicial reviews on several occasions and on most occasions, has been held in favour of Revenue;
(f) The principles underlying the grant of an exemption would generally be to alleviate the difficulties
faced by a particular sector of business and to make them more competitive or to boost or encourage the economy of a particular area in a State or country (and to make them competitive); or to encourage small and medium size trade and industry to invest the profits arising out of price advantage back into business resulting in higher economic activity etc. If these are broadly the underlying principles then availment of exemptions on an optional basis would defeat the very purpose of grant of exemption and thus, it appears that such a scheme would not be possible;
(g) Difficulty often arises when the trade and industry is not very certain as to whether a particular
product / service stands exempted since there may be a classification issues. In such over-riding circumstances, it is always better to seek an advance ruling to avoid possible forfeiture of taxes and thereafter, avail the input tax as a dis-allowance. Even in this situation it is advisable not to collect
taxes, since taxes collected are to be remitted to the exchequer. In such a situation, if later it turns
out that the goods / service is really exempt from payment of taxes then the question of restriction of
input tax credits will most certainly arise.
(h) In any of these situations it would be important to understand the effect of taxation in the following situations :

What if taxes are not collected by a Supplier considering the fact that goods / services stand exempt but it later turns out to be a taxable transaction :- This is a situation faced quite often by the trade and industry. Assuming that factually it is a legal issue and the supplier has not collected taxes Courts have often come to the rescue of the supplier by stating that if output taxes are payable, then the corresponding input taxes would stand allowed even if it is not availed (or restricted) in the original returns; however, once output tax becomes payable and the taxes are collected by the tax office in terms of section 74 then the recipient cannot avail any input tax credits under the provisions of the GST laws; this situation is quite scary and therefore the law to this extent needs a re-look.
Can the Supplier in the above situation pass on the output tax paid by him through a debit note or
supplementary invoice :- In the normal course, if before the tax office raises the issue and collects the taxes ,the supplier or recipient becomes aware that the transaction claimed as exempt is actually taxable, then a debit note could be raised. In this situation, it will turn out to be tax neutral so far as the supplier and the recipient are concerned. The challenge of availing input tax credits at a later date (assuming it is not claimed / availed within the prescribed period) would continue to haunt the supplier. This situation also needs to be looked into by f law makers.

Considering, each of the situations cited supra, the supplier has to be very careful. In case of a doubt, the best way would be to seek an advance ruling to settle the issue.

3. Retrospective application of an exemption

It is a settled position that the Union and the States are competent to legislate any law retrospectively within the Constitutional framework. This power is generally used for curing defects in law or to nullify the impact of Court judgements. It is also a settled position of law that there can be retroactive amendments imposing an additional liability. However, machinery and procedural provisions can be subject to retrospective amendment. A retrospective operation of law which is oppressive and appears to take away a benefit already bestowed can be held to be confiscatory in nature and it can therefore be said to be violative of Articles 14 and 19 of the Constitution.
A retrospective amendment cannot affect an existing right and create a new obligation. For instance, if exemption is provided to say, sale of footwear costing less than Rs.500/- then a retrospective amendment cannot be made to provide that it applies only to plastic footwear.

A taxing statute cannot be termed to be retrospective, if it taxes an event that is continuing when the
amendment or Act came into force. For instance, in respect of agreements entered into under the erstwhile laws between a developer and a customer, taxes can be levied under the GST laws to the extent the contract is continuing.
It is a settled position of law that any retrospective amendment, if beneficial, is deemed to be good law. In one of the States’ tax exemptions were granted to manufacturing industries located in a particular backward area. It so happened, that a few Granite Industries engaged purely in cutting and polishing of granites came up in that area and availed tax exemptions. The Department later took up a position that “cutting and polishing of granites” does not result in manufacture. All the granite industries in that area went up in arms – and the Government later relented and granted exemption retrospectively. Having understood this case history, let us now look at the issues that arise when the Government grants an exemption retrospectively:

(a) A registered person may have already collected taxes from his customers for the past tax periods
and may not have paid to the Government, in which case, such a retrospective amendment would
have the effect of an unjust enrichment in his hands (if taxes so collected have not been made over
to the Government). It is possible that he may have availed input tax credits, in which case, such
input tax credits already availed would need to be reversed resulting in payment of taxes along with
interest and penalties. The taxes so collected from his customers also need to be paid to the Government. In this scenario following consequences arise :

•  The customers from whom taxes have been collected and paid to the Government stand to get refunds.
•  Alternatively, the taxes so collected from customers and paid to the credit of the Government can stand forfeited, if such customers, do not come forward to make such refund claims. In this scenario, can the Government be said to be unjustly enriched.
•  Tax, interest and penalties levied on the registered person on account of input tax reversals would have to be borne by the supplier as costs.
•  If taxes have been collected by the registered person from his customers and not paid to the Government, then it could lead to initiation of prosecution proceedings depending on the quantum of taxes and nature of the offence.

(b) If the registered person has not collected taxes but has remitted taxes from his own pocket then :

•  it will result in a refund situation provided the Supplier has not availed any input tax set off;
• if he has availed input tax setoff, then the resultant effect could be a smaller or lower amount of refund. 

From 1st February 2019, Changes in GST (Amendment) Acts 2018 - GST NEWS

In order to give effect to decisions taken in 28th GST Council meeting Government has taken one more step i.e. notification of GST amendment Act 2018. The GST bill got affirmation from President on 29th August 2018 and GST amendment Act is effective with effect From 1st February 2019.

• The Central Goods and Services Tax (Amendment) Act 2018
• The Integrated Goods and Services Tax (Amendment) Act 2018
• The Union Territory Goods and Services Tax (Amendment) Act 2018
• The Goods and Services Tax (Compensation to States) Amendment Act 2018.

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Changes in Central GST Act 2017, From 1st February 2019

Following are the Changes in the Relevant Sections of CGST Act 2017 by replacing it with the Central GST Amendment Act 2018:

Definitions of CGST Act 2017

Section 2(4).  Adjudicating Authority:

New Definition: “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171”

Earlier Definition: “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal;


Section 2(17) (h). Definitions of CGST Act 2017: business

New Definition: activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club; and

Earlier Definition: services provided by a race club by way of totalisator or a licence to bookmaker in such club; and


Section 2(18). Definitions of CGST Act 2017: business vertical

This definition has been deleted in its entirety.

Earlier Definition: “business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.


Section 2(35). Definitions of CGST Act 2017: cost accountant

New Definition: “cost accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959.

Earlier Definition: “cost accountant” means a cost accountant as defined in clause (c) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959.


Section 2(69) (f). Definitions of CGST Act 2017: local authority

New Definition: a Development Board constituted under article 371 and article 371J of the Constitution;

Earlier Definition: a Development Board constituted under article 371 of the Constitution;


Section 2(102). Definitions of CGST Act 2017: services

New Definition: “services” means anything other than goods, money and securities but 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;

Explanation.––For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities;

Earlier Definition: “services” means anything other than goods, money and securities but 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;


Section 7. The scope of supply:
Amended relating to “Scope of Supply” in order to clarify the scope of supply
(1)(b)
Replaced clause: import of services for consideration whether or not in the course or furtherance of business and;

Earlier clause: import of services for consideration whether or not in the course or furtherance of business;

(1)(c)
Replaced clause: the activities specified in Schedule I, made or agreed to be made without a Consideration;
[Note: The word “and” after the word “consideration” is omitted and always deemed to have been omitted]

Earlier clause: the activities specified in Schedule I, made or agreed to be made without consideration; and

(1)(d)
This clause has been deleted in its entirety.

Earlier clause: the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

(1A) newly inserted after sub-section (1) of Section 7:

“ 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 ”

(3)
Replaced sub-section: Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.

Earlier sub-section: (3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as—
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.



Section 9. Levy and collection:
Amended so as to restrict the levy of tax on reverse charge basis under Section 9(4) on receipt of supplies of certain specified categories of goods or services or both by notified classes of registered persons from unregistered suppliers on the recommendations of the Council. This is against the earlier provision that was applicable for all purchases from the unregistered supplier.

Section 10. Composition levy:
Amended so as to raise the statutory threshold of turnover for a taxpayer to be eligible for the composition scheme from Rs 1 crore to Rs 1.5 crores, and to allow the composition taxpayers to supply services (other than restaurant services), for up to a value not exceeding ten per cent. of turnover in the preceding financial year, or five lakh rupees, whichever is higher.


Section 12. Time of supply of goods:
Amended and the said amendment is drafting in nature.
12(2)(a)
Replaced clause: the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or
[Note: The word “under sub-section (1) of” is omitted]

Earlier clause: the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) of section 31, to issue the invoice with respect to the supply; or


Section 13. Time of supply of services:

Amended and the said amendment is drafting in nature.
Replaced clauses:
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under section 31 or the date of receipt of payment, whichever is earlier; or
[Note: The word “under sub-section (2) of” is omitted in both clauses]

Earlier clauses:
(a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
(b) the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or



Section 16. Eligibility and conditions for taking the input tax credit:

Amended in order to provide for the input tax credit in cases of “Bill- to-ship-to” model in the case of supply of services. The said Amendment further seeks to include the provisions relating to the new return format as specified in the proposed new section 43A, for availing the input tax credit.



Section 17. Apportionment of credit and blocked credits:
Amended in order to further expand the scope of eligibility of input tax credit.

Newly inserted explanation to Section 17(3):
‘Explanation.—For the purposes of this sub-section, the expression
‘‘value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.’;
Section 17(5) amended as follows:

Clause (a) and (b) replaced with (a), (aa), (ab) and (b):
Replaced clauses:
(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:—
(A) further supply of such motor vehicles; or
(B) transportation of passengers; or
(C) imparting training on driving such motor vehicles;

(aa) vessels and aircraft except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or
(C) imparting training on navigating such vessels; or
(D) imparting training on flying such aircraft;
(ii) for transportation of goods;

(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):
Provided that the input tax credit in respect of such services shall be available—
(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;
(ii) where received by a taxable person engaged—
(I) In the manufacture of such motor vehicles, vessels or aircraft; or
(II) In the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;
(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel concession:
Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.”.

Earlier clause (a) and (b):
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles
or conveyances;
(ii) for transportation of goods;
(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where––
(A) the Government notifies the services which are obligatory for an
employer to provide to its employees under any law for the time being in
force; or
(B) such inward supply of goods or services or both of a particular
category is used by a registered person for making an outward taxable
supply of the same category of goods or services or both or as part of a
taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or
home travel concession;



Section 20. The manner of distribution of credit by Input Service Distributor:
Amended in order to exclude the amount of tax levied under Entry 92A of List I of the Seventh Schedule of the Constitution from the value of turnover for the purposes of distribution of credit.
Replaced clause (c) of the explanation: the term ‘‘turnover’’, in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entries 84 and 92A of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule.

Earlier clause (c) of the explanation: the term ‘‘turnover’’, in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule.


Section 22. Persons liable for registration:
Amended so as to increase the threshold turnover for registration in special category States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand from ten lakh rupees to twenty lakh rupees.


Section 24. Compulsory registration in certain cases:
Amended so as to provide for mandatory registration for only those e-commerce operators who are liable to collect tax at source under section 52 of the Act.
Replaced clause (x) every electronic commerce operator who is required to collect tax at source under section 52

Earlier clause (x) every electronic commerce operator


Section 25. Procedure for registration:
Amended also as to allow persons having multiple places of business in a State or Union territory to obtain a separate registration for each such place of business, and to insert the provisions for separate registration for a person having a unit(s) in a Special Economic Zone or being a Special Economic Zone developer, distinct from his other units located outside the Special Economic Zone.

Newly inserted second proviso under sub-section (1):

“Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005, in a Special Economic Zone or being a Special Economic Zone developer shall have to apply for a separate registration, as distinct from his place of business located outside the Special Economic Zone in the same State or Union territory.”

Proviso to Section 25(2):

Replaced proviso: Provided that a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.

Earlier Proviso: Provided that a person having multiple business verticals in a State or Union territory may be granted a separate registration for each business vertical, subject to such conditions as may be prescribed.



Section 29. Cancellation of registration:
Amended so as to provide for temporary suspension of registration while the cancellation of registration is under process.

in the marginal heading after the word “Cancellation”, the words “or suspension” shall be inserted;
in sub-section (1), after clause (c), the following proviso shall be inserted, namely:—
“Provided that during the pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.”;
in sub-section (2), after the proviso, the following proviso shall be inserted, namely:—

“Provided further that during the pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.”.


Section 34. Credit and debit notes:
Amended so as to allow registered persons to issue consolidated credit or debit notes in respect of multiple invoices issued in a Financial Year, by replacing sub-section (1) and (3), at words: “Where a tax invoice has” or “a credit note” or “a debit note” with “Where one or more tax invoices have” or “one or more credit notes for supplies made in a financial year” or “one or more debit notes for supplies made in a financial year” respectively.


Section 35. Accounts and other records:
Amended so as to provide that any Department of the Central or State Government or local authority which is subject to audit by the Comptroller and Auditor-General of India need not get their books of account audited by any Chartered Accountant or Cost Accountant.

Newly inserted proviso
“Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”.

Section 39. Furnishing of returns: Amended so as to provide for prescribing the procedure for quarterly filing of returns with monthly payment of taxes.
Replaced sub-section (1):

Every registered person, other than an Input Service Distributor or a
non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such form, manner and within such time as may be prescribed, a return, electronically, of inward and outward supplies of
goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed. on or before the twentieth day of the month succeeding such calendar month or part thereof.

Newly inserted proviso to sub-section (1):

“Provided that the Government may, on the recommendations of the Council, notify certain classes of registered persons who shall furnish return for every quarter or part thereof, subject to such conditions and safeguards as may be specified therein.”;

Newly inserted proviso to sub-section (7)

“Provided that the Government may, on the recommendations of the
Council, notify certain classes of registered persons who shall pay to the
Government the tax due or part thereof as per the return on or before the last date on which he is required to furnish such return, subject to such conditions and safeguards as may be specified therein.”;
Replaced sub-section (9) and its proviso:

Subject to the provisions of sections 37 and 38, if any registered person
after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in such form and manner as may be prescribed, subject to payment of interest under this Act:

Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year to which such details pertain, or the actual date of furnishing of relevant annual return, whichever is earlier.



Section 43A: Procedure for furnishing return and availing input tax credit.

Newly inserted section:
“43A. (1) Notwithstanding anything contained in sub-section (2) of section 16, section 37 or section 38, every registered person shall in the returns furnished under sub-section (1) of section 39 verify, validate, modify or delete the details of supplies furnished by the suppliers.
(2) Notwithstanding anything contained in section 41, section 42 or section 43, the procedure for availing of input tax credit by the recipient and verification thereof shall be such as may be prescribed.
(3) The procedure for furnishing the details of outward supplies by the supplier on the common portal, for the purposes of availing input tax credit by the recipient shall be such as may be prescribed.
(4) The procedure for availing input tax credit in respect of outward supplies not furnished under sub-section (3) shall be such as may be prescribed and such procedure may include the maximum amount of the input tax credit which can be so availed, not exceeding twenty per cent. of the input tax credit available, on the basis of details furnished by the suppliers under the said sub-section.
(5) The amount of tax specified in the outward supplies for which the details have been furnished by the supplier under sub-section (3) shall be deemed to be the tax payable by him under the provisions of the Act.
(6) The supplier and the recipient of a supply shall be jointly and severally liable to pay tax or to pay the input tax credit availed, as the case may be, in relation to outward supplies for which the details have been furnished under sub-section (3) or sub-section (4) but return thereof has not been furnished.
(7) For the purposes of sub-section (6), the recovery shall be made in such manner as may be prescribed and such procedure may provide for non-recovery of an amount of tax or input tax credit wrongly availed not exceeding one thousand rupees.
(8)The procedure, safeguards and threshold of the tax amount in relation to outward supplies, the details of which can be furnished under sub-section (3) by a registered person,—
(i) within six months of taking registration;
(ii) who has defaulted in payment of tax and where such default has continued for more than two months from the due date of payment of such defaulted amount, shall be such as may be prescribed.”.
Section 48. Goods and services tax practitioners: Amended so as to allow Goods and Services Tax Practitioners to perform other functions such as filing the refund claim, filing the application for cancellation of registration, etc.

Replaced sub-section (2) by inserting words highlighted:
A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 and to perform such other functions in such manner as may be prescribed.



Section 49. Payment of tax, interest, penalty and other amounts:
Amended in order to provide that the credit of State tax or Union territory tax can be utilised for payment of integrated tax only when the balance of the input tax credit on account of central tax is not available for payment of integrated tax.

Replaced Sub-section (2):
The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41 or section 43A, to be maintained in such manner as may be prescribed.
Inserted new provisos below clause (c) and (d)
“Provided that the input tax credit on account of State tax/Union Territory Tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”



Section 49A : Utilisation of input tax credit subject to certain conditions:
Newly inserted: This Section seeks to specify that a taxpayer would be able to utilise the input tax credit on account of central tax, State tax or Union territory tax only after exhausting all the credit on account of integrated tax available to him towards payment or integrated tax, Central tax, State tax or Union territory tax.


Section 49B: Order of utilisation of input tax credit:
Newly inserted: This Section seeks to empower the Government to prescribe any specific order of utilisation of input tax credit of any of the taxes for the payment of any tax.


Section 52: Collection of tax at source:
Amended in order to give the reference of section 39 of CGST Act 2017 Furnishing of Returns

Replaced sub-section (9):
Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the corresponding details furnished by the supplier under section 37 or section 39, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.

Section 54. Refund of tax:
Amended in order to provide that the principle of unjust enrichment will apply in case of a refund claim arising out of supplies of goods or services or both made to a Special Economic Zone developer or unit, and to allow receipt of payment in Indian rupees, where permitted, by the Reserve Bank of India in case of export of services.

Replaced clause (a) of sub-section (8) of Section 54:
“refund of tax paid on export of goods or services or both or on inputs or input services used in making such exports;”
[Note: replaced the word ‘zero-rate supplies’ with ‘exports’]
Replaced item 1 of clause (c) to point (2)-Relevant date of the explanation as follows:

“In the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of––
(i) receipt of payment in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India, where the supply of services had been completed prior to the receipt of such payment; or
(ii) issue of invoice, where payment for the services had been received
in advance prior to the date of issue of the invoice;”

Replaced the clause (e) to point (2)-Relevant date of the explanation is as follows:
In the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises;

Section 79. Recovery of tax:
Amended to enable recovery to be made from distinct persons registered in different States or Union territories in order to ensure a speedy recovery from other establishments of the registered person by inserting following explanation:

‘Explanation.––For the purposes of this section, the word person shall include “distinct persons” as referred to in sub-section (4) or, as the case may be, sub-section (5) of section 25.’.

Section 107. Appeals to Appellate Authority:
Amended Authority”, in order to specify twenty-five crore rupees as the upper limit of the amount of pre-deposit payable for the filing of appeal before the Appellate Authority.

Section 112. Appeals to Appellate Tribunal:
Amended in order to specify fifty crore rupees as the upper limit of the amount of pre-deposit payable for the filing of appeal before the Appellate Tribunal.

Section 129. Detention, seizure and release of goods and conveyances in transit:
Amended in order to increase the time limit before which proceedings shall be initiated.

Replaced sub-section(6) of Section 129:
Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130.

Section 140. Transitional arrangements for the input tax credit:
Amended in order to clarify with retrospective effect from 1st July 2017 that the cesses and additional duty of excise (on textile and textile articles) levied under the pre-Goods and Services Tax laws shall not be a part of the transitional input tax credit under the goods and services tax.

Section 143. Job work procedure:
Amended in order to empower the Commissioner to extend the time limit for return of inputs and capital goods sent on job work, up to a period of one year and two years, respectively.

Newly inserted second proviso to Section 143(1)(b):
“Provided further that the period of one year and three years may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year and two years respectively.”.
In SCHEDULE I. of CGST Act 2017 “Activities to be treated as supply even if made without consideration”. : Amended

Replaced para 4 is as follows:
Import 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.

SCHEDULE II of CGST Act 2017:
Amended the title of Schedule II of the principal Act from “Activities to be treated as a supply of goods or supply of services” to “Activities or transactions to be treated as a supply of goods or supply of services”.

SCHEDULE III of CGST Act 2017:
“Activities or transactions which shall be treated neither as a supply of goods nor a supply of services”.

Newly inserted paras after 6:

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.
8.
(a) Supply of warehoused goods to any person before clearance for home consumption;
(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption.”;
Newly inserted explanation 2:
‘Explanation 2.––For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962.’.


Changes in IGST Act 2017, From 1st February 2019

Following are the Changes in the Relevant Sections of IGST Act 2017 by replacing it with the Integrated GST Amendment Act 2018:

Section 2(6). Definitions. “export of services

Section 2(16). Definitions. “non-taxable online recipient”

Section 5. Levy and collection:

Amended to empower the Central Government to notify classes of registered persons to pay tax on reverse charge basis in respect of receipt of supplies of certain specified Categories of goods or services or both from unregistered suppliers;


Section 8. Intra-State supply.

Words ‘‘being a business vertical’’ shall be omitted.


Section 12. Place of supply of services where the location of supplier and recipient is in India:

Amended to provide that if the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods;


Section 13. Place of supply of services where the location of supplier or location of the recipient is outside India:

Provisions of Section 13(1)(3)(a) Amended and shall not apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process;


Section 17. Apportionment of tax and settlement of funds:

Amended to make a provision for settlement of balance in the integrated tax account equally between the Central Government and the State Governments or the Union territories, as the case may be, on ad hoc basis and shall be adjusted against the amount apportioned under the said sub-sections.


Section 20. Application of provisions of Central Goods and Services Tax Act.

Amended to specify the amount of pre-deposit payable for the filing of appeals —

(a) before the Appellate Authority to be capped at fifty crore rupees;
(b) before the Appellate Tribunal to be capped at one hundred crore rupees.


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