CA – Final
Simplifying the complex laws
FINAL – MAY / NOV 2018
GST
No.
5
Chapters
Section 9 – Taxable Event for GST
Pg. No.
114 - 127
By
Prof. Jimit Doshi
ID-T - GST
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Taxable Event under GST [Section 9]
SUMMARY
CGST / SGST / UTGST
किसपे
कितना
IGST
Intra-state supply
Inter-state supply
(excluding supply of A/L for H/C)
(excluding supply of A/L for H/C)
Max 20%
Max 40%
(as it is merger of CGST + SGST)
िौनसे वैल्यू पे
Sec 15 of CGST Act
GST on specified Petroleum
products
GST will be levied in future from a GST will be levied in future from a
notified date
notified date
Sec 15 of CGST Act
CGST / SGST / UTGST
IGST
किसिे पास से
1. FORWARD CHARGE (Supplier, being taxable person, liable to pay)
Generally
Supplier (taxable person)
liable to pay
Supplier (taxable person)
liable to pay
2. REVERSE CHARGE (Recipient liable to pay GST)
RCM on notified supply of goods
and/or services
Recipient liable to pay
Recipient liable to pay
RCM in case of supply of goods and /
or services by Unregistered supplier to
registered recipient
Registered Recipient liable to
pay
Registered Recipient liable to
pay
3. E-COMMERCE OPERATOR-ECO (ECO= Digital platform owner liable to pay)
Liability of pay GST on notified
services* put on ECO
ID-T - GST
ECO liable to pay [In certain
cases, his representative or
appointed person in the
taxable territory]
ECO liable to pay [In certain
cases, his representative or
appointed person in the
taxable territory]
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Section 9 – Levy and Collection of CGST
1) Levy and Collection of CGST [Charging Section]
Subject to the provisions of sub-section (2),
there shall be LEVIED a tax called the “Central Goods and Services Tax”
 on all Intra - State Supplies of goods or services or both,
… except on the supply of alcoholic liquor for human consumption,
 on the VALUE determined under section 15 and
 at such RATES, not exceeding 20%, as may be notified by the Government on the
recommendations of the Council
and COLLECTED IN SUCH MANNER AS MAY BE PRESCRIBED
and shall be paid by the TAXABLE PERSON.
2) CGST on petroleum crude, high speed diesel, motor spirit (commonly known as petrol),
natural gas and aviation turbine fuel – from a notified date
The Central Tax on the supply of petroleum crude, high speed diesel, motor spirit
(commonly known as petrol), natural gas and aviation turbine fuel shall be levied with
effect from such date as may be notified by the Government on the recommendations of the
Council.
No tax by implication – Tax only if specifically provided by law:
Article 265 of the Constitution of India mandates that no tax shall be levied or collected except by the
authority of law.
The Charging Section is a must in any taxing statute for levy and collection of tax.
Before imposing any tax, it must be shown that the transaction falls within the ambit of the taxable event
and that the person on whom the tax is so imposed also gets covered within the scope and ambit of the
charging Section by clear words used in the Section.
No one can be taxed by implication.
Levy & Collection of ‘CGST, SGST / UTGST’, ‘IGST’
Intra-State Supply
CGST - Sec 9 of CGST Act
SGST (supply within State)
UTGST (supply within UT) - Sec 7 of UTGST Act
ID-T - GST
Inter-State Supply (Including imports)
Sec 5 of IGST Act - IGST
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Analysis - - - Section 9(1) and 9(2)
Section 9 is the CHARGING SECTION of the CGST Act.
Event
Intra - State Supplies [as defined u/s 7 of IGST Act, 2017]
Of What
of goods [Sec 2(52)] or services [Sec 2(102)] or both
except on the supply of alcoholic liquor for human consumption [Refer Constitution
background]
• Even where a supply involves both, goods and services, the law provides that such supplies would
be classified as either supply of goods or supply of services as per Schedule II
• Similarly, where more than one goods or services or both are involved, then, it is either a mixed
supply or composite supply and treated accordingly as per Sec 8
• Supply of alcoholic liquor for industrial consumption – Liable to GST
On what
VALUE as determined under section 15 + Valuation Rules [for all Acts]
Rate
1)
2)
3)
4)
Collection
Government would notify the manner of collection of tax [Refer CGST Rules – Rule 85 to
88] and the person who will be liable to pay such tax [Taxable person – 2(107) of CGST
Act].
Person
liable to
pay tax
The person liable to pay tax can be –
a) Supplier of goods or services or both [Forward Charge Mechanism]
b) Receiver of goods or services or both [Reverse Charge Mechanism]
c) Neither the supplier of service nor the receiver of service [in case of E - Commerce
Operator]
Taxable
person
[Sec 2(107)]
Taxable person = Person
… who is registered or
… who is liable to be registered u/sec 22 or Sec 24
• Sec 22 - Persons liable for registration (it makes every supplier liable for registration if his
aggregate turnover in a FY exceeds threshold exemption limit of 20 Lakhs / 10 Lakhs)
• Sec 24 - Compulsory registration in certain cases (it provides for compulsory registration of
certain suppliers notwithstanding that their aggregate turnover is below the exempted threshold
limit provided in Sec 22 (like, inter-state supplies, person supplying goods through E-commerce
operator etc)
CGST on
Petrol,
Diesel etc
from
notified
However, CGST on supply of the following items has not been levied immediately.
It shall be levied with effect from such date as may be notified by the Government on the
recommendations of the Council:
• Petroleum crude
• High speed diesel
ID-T - GST
Recommended by the Council
Notified by Government [Rates notified are 0%, 0.125%, 1.5%, 2.5%, 6%, 9% and 14%]
Maximum rate – 20% [IGST – 40%]
Tax amount does not change with intra or inter – state nature
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•
•
•
date
[Sec 9(2)]
Motor spirit (commonly known as petrol)
Natural gas and
Aviation turbine fuel
Currently –
Manufacturer = Central Excise Duty + VAT / CST
Trader = VAT / CST
3) Reverse Charge Mechanism of CGST
The Government may, on the recommendations of the Council, by notification, specify
categories of supply of goods or services or both,
 the tax on which shall be paid on reverse charge basis by the recipient of such goods or
services or both and
 all the provisions of this Act shall apply to such recipient as if he is the person liable for
paying the tax in relation to the supply of such goods or services or both.
4) Purchase from unregistered supplier – Always RCM on registered person
The central tax in respect of the supply of taxable goods or services or both
… by a supplier, who is not registered,
… to a registered person*
shall be paid by such person on REVERSE CHARGE basis as the recipient and all the
provisions of this Act shall apply to such recipient as if he is the person liable for paying the
tax in relation to the supply of such goods or services or both.
Analysis - - - Section 9(3) and 9(4) – RCM under GST
Difference between
Sec 9(3) and 9(4)
Sec 9(3) is for notified goods / services; while Sec 9(4) is for any goods / services
For Sec 9(3) RCM, Govt is required to issue a notification. RCM tax would apply
even between registered persons;
while Sec 9(4) works in an automatic route. No notification is required. Further, 9(4)
RCM will be triggered only when it is between unregistered and registered person
[Registered to registered transactions not covered]
Notifications
issued u/s 9(3)
RCM on specified goods – 4/2017 [Refer below]
RCM on specified services – 13/2017 [9 Categories of Intra – State and 11 categories
of Inter – State]
No RCM tax is
supply is exempt
If supply itself is exempt, there cannot be any tax thereon and if there is no tax, there
cannot be any tax under reverse charge
All provisions
apply to recipient
Under RCM, provisions relating to registration, file returns, tax invoices, payment
vouchers etc needs to be complied by recipient
ID-T - GST
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under RCM
Recipient = Liable to pay GST = Taxable Person
GST registration –
If already registered as a taxpayer (as having his FCM liability) – No Separate
registration is required for discharge of RCM Liability
If not already registered as a taxpayer (as not having his FCM liability) – Separate
registration is required for discharge of RCM Liability
Special provisions
for RCM tax
 Aggregate turnover does not include value of reverse charge supplies received –
Sec 2(6)
 “Output tax” excludes tax payable on reverse charge basis – Sec 2(82); thus, credit
cannot be used to pay it – it needs to be paid in cash
 Time of Supply of goods and services is given u/s 12(3) and 13(3)
 Details of such reverse charge is to be furnished u/s 38
Special provisions have been made for reverse charge as regards ToS, payment of tax,
invoicing etc
Payment of tax
Tax has to be paid in cash (i.e ITC cannot be used for RCM tax liability)
ITC of tax paid
Tax so paid is eligible for ITC
Reverse
Charge
[Sec 2(98)]
MEANS
[in relation to
any goods or
services or
both]
the liability to pay tax
- by the recipient of supply of goods or services or both
… instead of the supplier of such goods or services or both
- under section 9(3) of CGST Act [Notified Reverse Charge] or
- under section 9(4) of CGST Act [reverse charge on purchase from
unregistered person], or
- under section 5(3) or 5(4) of IGST Act
Note –
 It is pertinent to note that, e-commerce operators are notified under section 9(5). Hence, they are
not covered by the meaning of reverse charge.
 Even otherwise, e-commerce operators only covers supply of services and not goods; hence, Sec 12(3)
cannot apply
The provisions of reverse charge are contained in 2 sections –
1) Section 9(3) of CGST Act – This empowers CG to issue a notification and specify the supply of goods
or services which are liable to reverse charge [corresponding provision – Sec 5(3) of IGST Act]
 Govt has issued the following notifications in this regard
Notification No 4/2017 (Rate)
RCM for Goods
For eg – When an Agriculturist supplies Tobacco leaves to a registered person, tax will be payable by
registered person under RCM
ID-T - GST
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2) Section 9(4) of CGST Act – It provides that when goods or services or both are received by registered
person from unregistered person, tax will be paid by registered person [Note that – there is no
requirement to issue a notification in this regard]
Notifications relating to RCM – u/s 9(3)
Exemption from
Exemption from Registration, if all supplies are under RCM [Notification 5/2017]
registration
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)
… as the category of persons exempted from obtaining registration under the
aforesaid Act
Notifications relating to RCM – u/s 9(4)
Intra – State
Intra – State purchases from unregistered person – No RCM for small purchases
Purchase from
upto Rs 5,000 in a day [Notification 8/2017]
URP
CG exempts intra-State supplies of goods or services or both
ID-T - GST
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… received by a registered person
… from any supplier, who is not registered,
… from the whole of the central tax leviable thereon under section 9(4) of CGST Act
Provided that the said exemption shall not be applicable where
… the aggregate value of such supplies of goods or service or both
… received by a registered person
… from any or all the suppliers, who is or are not registered,
exceeds Rs 5,000 in a day.
Section 9(4) has been kept on hold till 31st March 2018
Notification No. 38/2017 – Central Tax (Rate) –
In the said notification, the proviso under Paragraph 1 shall be omitted
The exemption contained in the notification No. 8/2017-Central Tax (Rate) dated the 28th June, 2017 as
amended by this notification shall apply to all registered persons till the 31st day of March, 2018
Conditions
The exemptions shall operate as follows –
Supplier
Unregistered Person
Recipient
Registered Person
Supply
Intra – State [Inter – state or imports are not covered]
Exemption for
CGST and SGST / UTGST
Value
Up to Rs 5,000 in a day [aggregate value from all the suppliers]
TDS Deductor
Intra – State purchases from unregistered person – No RCM for small purchases upto
Rs 5,000 in a day [Notification 8/2017]
CG exempts
… intra-State supplies of goods or services or both received by
… TDS deductor under section 51 of the said Act,
… from any supplier, who is not registered,
… from the whole of the central tax leviable thereon u/s 9(4)
… subject to the condition that TDS deductor is not liable to be registered otherwise
than under sub-clause (vi) of section 24 of the said Act
Such tax under RCM exempt for supplies received by recipient in capacity of TDS Deductor
Condition – TDS Deductor is not liable to be registered in any other capacity
ID-T - GST
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5) Notified Services* through E-commerce: ECO (E-commerce operator) to pay CGST
The Government may, on the recommendations of the Council, by notification,
 specify categories of SERVICES
… the tax on intra-State supplies of which
… shall be paid by the Electronic Commerce Operator* if such services are supplied through
it,
… and all the provisions of this Act shall apply to such electronic commerce operator as if he
is the supplier liable for paying the tax in relation to the supply of such services
ECO located in non – taxable territory – ECO’s agent liable
Provided that where an electronic commerce operator does not have a physical presence in
the taxable territory*, any person representing such electronic commerce operator for any
purpose in the taxable territory shall be liable to pay tax
Provided further that where an electronic commerce operator does not have a physical
presence in the taxable territory and also he does not have a representative in the said
territory, such electronic commerce operator shall appoint a person in the taxable territory for
the purpose of paying tax and such person shall be liable to pay tax.
E-Commerce
[Sec 2(44)]
MEANS
Electronic
Commerce
Operator
[Sec 2(45)]
MEANS
•
•
•
•
•
•
ECO though which goods are
supplied (like, Flipkart,
Amazon)
ECO though which services are
supplied (like, OLA cabs)
ID-T - GST
Supply
of goods and/or services, including digital products,
over digital or electronic network.
ANY PERSON who owns, operates or manages
digital or electronic facility or platform
for e-commerce
ECO shall not be liable to pay GST. (However, TCS provisions
applicable)
In respect of notified services, ECO shall be liable to pay GST.
In respect of other services, ECO shall not be liable to pay GST.
(However, TCS provisions applicable)
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Notification No. 17/2017-Central Tax (Rate)
The Central Government, on the recommendations of the Council, hereby notifies that in case of the
following categories of services, the tax on intra-State supplies shall be paid by the electronic commerce
operator –
a) Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle;
b) Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other
commercial places meant for residential or lodging purposes,
… except where the person supplying such service through electronic commerce operator is liable for
registration under section 22(1) of CGST Act.
c) Services by way of house-keeping, such as plumbing, carpentering etc,
… except where the person supplying such service through electronic commerce operator is liable for
registration u/s 22(1) of the said CGST Act
CBEC - FAQ
What is meant by Reverse Charge?
 It means the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of such
goods or services in respect of notified categories of supply.
What will be the implications in case of receipt of supply from unregistered persons?
In case of receipt of supply from an unregistered person, the registered person who is receiving goods or services shall
be liable to pay tax under reverse charge mechanism
What are the different types of supplies which are liable to tax under reverse charge mechanism?
As per Section 9 of the CGST Act, 2017 there are two types of supplies which are liable to tax under reverse charge
mechanism which are:-.
1) Specified categories of supply of goods or services or both as notified by government on recommendation of the
council
2) Supply of taxable goods or services or both by an unregistered supplier to a registered person
Note: Parallel provisions are there under SGST Act / UTGST Act / IGST Act.
ID-T - GST
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Specific provisions for IGST Act
[Refer Chapter – Imports and Exports under GST]
IGST on Import of goods
IGST on goods imported into India shall be levied and collected
•
in accordance with the provisions of section 3 of the Customs Tariff Act, 1975
•
on the value as determined under the Customs Tariff Act, 1975
•
at the point when duties of customs are levied on the said goods under section 12 of the Customs
Act, 1962.
Analysis Under the GST regime, Article 269 A constitutionally mandates that the supply of goods, or of services, or
both in the course of import into the territory of India shall be deemed to be supply of goods, or of services,
or both in the course of inter-State trade or commerce for levy of integrated tax.
 So, Import of goods or services will be treated as deemed inter-State supplies and would be subject to
IGST.
 While IGST on import of services would be leviable under the IGST Act, the levy of the IGST on import
of goods would be levied under the Customs Act, 1962 read with the Custom Tariff Act, 1975.
Duties levied on imports
 The IGST on goods shall be in addition to the applicable Basic Customs Duty (BCD) which is levied as
per the Customs Tariff Act.
 In addition, GST compensation cess, may also be leviable on certain luxury and demerit goods under
the Goods and Services Tax (Compensation to States) Cess Act, 2017.
Value for levy of IGST
 Value of the goods for the purpose of levying IGST and Compensation Cess shall be, assessable value
plus Customs Duty levied under the Act, and any other duty chargeable on the said goods under any
law for the time being in force as an addition to, and in the same manner as, a duty of customs.
Thus, Value for levy of IGST =
Value as per Customs Sec 14 [Transaction Value u/s 14(1) / Tariff Value u/s 14(2)]
+ Basic Customs Duty
+ any other Customs Duty (except IGST and GST Compensation Cess)
No EC/SHEC on ‘IGST and Compensation Cess” on Imports [Notification No 54/2017 – Customs]
The Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts
- all the goods falling within the First Schedule to the Customs Tariff Act, 1975,
- when imported into India,
- from whole of EC and SHEC
- which is leviable thereon under section 3(7) and 3(9) of the Customs tariff Act,1975, read with Finance
Act, 2004 and Finance Act, 2007.
ID-T - GST
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Thus, no EC / SHEC on IGST and GST Compensation Cess
Manner of Computation of Customs Duty
Computing on
Assessable Value
[Transaction Value / Tariff]
Basic Customs Duty
EC [on Imported Goods]
SHEC [on Imported Goods]
IGST [Inter – State Supply]
GST Compensation Cess
ID-T - GST
ROD
[General]
Amount
1,00,000
on AV [Section 14(1) / 14(2) Value]
10%
on BCD
2%
on BCD
1%
on AV + BCD + EC + SHEC
28%
on AV + BCD + EC + SHEC
12%
Total import duties of Customs
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10,000
200
100
30,884
13,236
54,420
CA – Final
APPLICATION OF PROVISIONS OF CGST ACT [SEC 20 OF IGST ACT]
IGST on Import of goods
Subject to the provisions of this Act and the rules made thereunder, the provisions of Central
Goods and Services Tax Act relating to,—
1) Scope of supply;
2) Composite supply and mixed supply;
3) Time and value of supply;
4) Input tax credit;
5) Registration;
6) Tax invoice, credit and debit notes;
7) Accounts and records;
8) Returns, other than late fee;
9) Payment of tax;
10) Tax deduction at source;
11) Collection of tax at source;
12) Assessment;
13) Refunds;
14) Audit;
15) Inspection, search, seizure and arrest;
16) Demands and recovery;
17) Liability to pay in certain cases;
18) Advance ruling;
19) Appeals and revision;
20) Presumption as to documents;
21) Offences and penalties;
22) Job work;
23) Electronic commerce;
24) Transitional provisions; and
25) Miscellaneous provisions including the provisions relating to the imposition of interest
and penalty,
shall, mutatis mutandis, apply, so far as may be, in relation to IGST as they apply in relation
to CGST as if they are enacted under this Act
Prof Jimit Doshi
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Certain modifications
1) TDS @ 2%
2) TCS only
upto 2%
3) Value to
include
other taxes
4) Penalty =
CGST +
SGST
Penalty
ID-T - GST
In the case of TDS, the deductor shall deduct tax at the rate of 2% from the payment
made or credited to the supplier
In the case of TCS, the operator shall collect tax at such rate not exceeding 2%, as may be
notified on the recommendations of the Council, of the net value of taxable supplies
For the purposes of this Act, the value of a supply shall include any taxes, duties, cesses,
fees and charges levied under any law for the time being in force other than this Act,
and the Goods and Services Tax (Compensation to States) Act, if charged separately by
the supplier
In cases where the penalty is leviable under
… CGST Act and SGST Act or UTGST Act,
… the penalty leviable under this Act shall be the sum total of the said penalties.
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