Business Taxation Material (Unit 2) PDF

BUSINESS TAXATION MATERIAL (UNIT 2) INDEX: S.NO PARTICULARS PAGE.NO 1. Glossary 2 2. Levy 7 4. Registration Under GST Law 14 5. Supply 22 6....

BUSINESS TAXATION MATERIAL (UNIT 2) INDEX: S.NO PARTICULARS PAGE.NO 1. Glossary 2 2. Levy 7 4. Registration Under GST Law 14 5. Supply 22 6. List of Glossaries 34 1  GLOSSARY SUPPLY Supply includes sale, transfer, exchange, barter, license, rental, lease and disposal. If a person undertakes either of these transactions during the course or furtherance of business for consideration, it will be covered under the meaning of Supply under GST. CLASSIFICATION OF SUPPLIES UNDER GST Supplies under GST are primarily classified into two broad categories: Taxable Supplies Taxable supplies are those which are subject to GST. Businesses involved in such supplies must register under GST and comply with related obligations. These supplies can be further classified into: Regular Taxable Supplies: This is the most common type, encompassing the sale or transfer of goods or services for consideration, attracting a standard GST rate. Zero-Rated Supplies: The applicable GST rate is zero while these supplies are taxable. This category often includes exports. Reverse Charge Supplies: In certain cases, the recipient of the supply, rather than the supplier, is liable to pay GST. This mechanism is employed for specific transactions like job work or imports. 2  Non-Taxable Supplies Exempt Supplies: Exempt supplies are those specifically excluded from the purview of GST. While no GST is levied on these supplies, businesses dealing in exempt supplies might still need to register under GST if their turnover exceeds the prescribed threshold. Examples include: Agricultural produce Certain educational services Newspapers Non-GST Supplies: These supplies are entirely outside the scope of GST. They are neither taxable nor exempt. Examples include: Sale of immovable property Transactions in securities Personal use of goods or services Other Important Classifications Composite Supply: This involves a principal supply and one or more ancillary supplies, all considered as a single supply. The rate of the principal supply determines the GST rate applicable to the composite supply. Mixed Supply: Involves two or more independent supplies, none dominating the other. The GST rate is calculated based on the value of each supply. Import of Goods and Services: Importing goods and services into India is also considered a supply under GST. Certificate of GST Registration The certificate every GST registered taxpayer will receive upon completing registration and must display at their business premises. Consideration The total amount paid or payable in money or kind. Taxable Person A person/business who is registered for GST or a person who is required to be registered. 3 Voluntary Compliance When taxpayers comply with their GST obligations without the intervention of the tax officer – e.g., whether the business should apply for registration, deregistration, report a change in circumstances, or report GST liability. Goods and Services Tax Network (GSTN) Is a non-profit, public-private partnership company. Its main purpose is to provide IT infrastructure and services to Central and State Governments, taxpayers, and other stakeholders to facilitate the implementation of GST. Goods Refers to all types of movable property, including actionable claim, growing crops, grass, and things attached to the land that are agreed to be severed before supply or under a contract of supply. Excludes securities and money. GST Council Is the council designated by the Indian government with the task of governing the GST, deciding GST rules, and ensuring proper implementation of GST in the country. GSTIN / Goods and Services Taxpayer Identification Number – GSTIN is a unique PAN-based 15-digit number given to a taxpayer registered under the GST law. (A taxpayer will have to register for the GST across all the states where they have a branch of their organization, and the GSTIN will vary from state to state even if the PAN is the same.) Taxable event - Under GST, Supply is considered a taxable event for charging tax. The liability to pay tax arises at the 'time of supply of goods or services'. Principal - the term “principal” refers to a person on whose behalf an agent supplies or receives goods or services. Agent - The GST Act defines an Agent as a person including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another. Principal agent relationship - A principal and agent relationship involves the agent acting on behalf of the principal to supply goods or services. The agent facilitates transactions without owning the goods and follows terms outlined in a mutual agreement, defining roles and responsibilities in the supply process. 4 Distinct person - Distinct persons refer to individuals with distinct GST Identification Numbers (GSTINs) associated with a single legal entity (single PAN), whether located within the same state, across two different states, or in a different country. Actionable claims - an actionable claim refers to a claim to any debt, whether secured or unsecured, excluding lottery, betting, and gambling. GST treats actionable claims differently than other goods and services, with significant business implications. Composition scheme - The composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 75 lakhs ( Rs. 50 lakhs in case of few States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Negative list : The negative list encompasses items and services not covered under GST, as specified in Schedule III of the CGST Act. 5 UNIT – II LEVY, REGISTRATION AND SUPPLY 6 LEVY According to Sec 22(1) of CGST Act, 2017 every supplier shall be liable to be registered under this act in the State or Union territory from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds 40 lakh rupees; Provided that where such person makes taxable supplies of goods or services or both from any of the North Eastern States shall be liable to be registered if his aggregate turnover in a financial year exceeds 20 lakhs rupees. TAXABLE EVENT: Taxable event under GST is supply of goods or services or both. CGST and SGST/UTGST will be levied on intra-state supplies. IGST will be levied on Inter-state supplies. Various taxable events are: sale, service, purchase, barter, exchange, lease, rental, disposal All comes under one event i.e., Supply PROVISIONS RELATING TO LEVY AND COLLECTION OF CGST&SGST 1. 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. 2. The tax shall be levied on the value determined under section 15 and at such rates, not exceeding 20% may be notified by the Government on the recommendations of the Council. 3. The tax shall be collected in such manner as may be prescribed and shall be paid by the taxable person. 4. 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. 5. Taxation on reverse charge basis The Government may specify categories of supply of goods or services or both, that are subject to taxation on reverse charge basis, based on the recommendations of the Council by notification 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. 6. Supply by unregistered supplier to registered person In respect of the supply of taxable goods or services or both by an unregistered supplier to a registered person, the central tax 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. 7 7. Taxation of E-commerce operators The Government may specify categories of intra-state supply of services, the tax in 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. Provided 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. 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. LEVY AND COLLECTION SECTION 5 OF IGST (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-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 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., 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: Provided that the integrated tax 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 said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962. (2) The integrated 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. (3) 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) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such 8  supply of 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 such supply of goods or services or both. (5) The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on inter-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: 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 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. COMPOSITION LEVY Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of section 9 pertaining to reverse charge mechanism, a registered person, whose aggregate turnover in the preceding financial year did not exceed Rs.1.5 crore may opt to pay, tax under the composition schemes at the rates prescribed in Rule 7 of the CGST rules, 2017. In case of the following states (known as special category states), the aggregate turnover shall not exceed Rs.75 lakhs to opt for composition levy : a) Arunachal Pradesh; b) Assam; c) Manipur; d) Meghalaya; e) Mizoram; f) Nagaland; g) Sikkim; h) Tripura; i) Himachal Pradesh. 9  COMPOSITION SCHEME RATES TYPE OF CGST SGST TOTAL BUSINESS Manufacturer and 0.5% 0.5% 1.0% Traders (goods) Restaurants not2.5% 2.5% 5.0% serving alcohol Other service0.5% 0.5% 1.0% providers Persons not entitled to avail Composition Scheme: The Section 10(2) of the CGST Act, 2017 specifies the benefit of composition scheme shall not be granted if a taxable person is: Engaged in the supply of services (other than restaurant and outdoor catering service); Manufacturer of ice cream, pan masala, aerated water and tobacco Engaged in making any supply of goods which are not leviable to tax under this Act; (exempted goods) Engaged in making any inter-state outward supplies of goods; Engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and A manufacturer of such goods as may be notified by the Government on the recommendations of the Council Conditions and Restrictions for Composition Levy The person opting for the scheme must neither be a casual taxable person nor a non-resident taxable person. If the registered person opt in one state composition levy, such person compulsorily opt for composition levy in another state also, provided the registration person should have the same PAN number. 10  The goods held in stock by him on the appointed day have not been purchased in the course of inter- State trade or commerce or imported from a place outside India or received from his branch situated outside the State or from his agent or principal outside the State. The person should pay the tax if he purchase from unregistered person and should not have stock also goods purchased from unregistered persons. The person shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and The person shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business The person shall not collect the tax from recipient The person shall not be entitled to Input Tax Credit. Form Purpose of Form Number/Name GST CMP-01 Intimation for tax payment under composition scheme (for provisionally registered business entity/individual) within 30 days GST CMP-02 To opt for composition scheme (registered under gst and switches to composition scheme) GST CMP-03 To provide details of stock/inward supply from unregistered business/person – within 60 days GST CMP-04 To withdraw from GST composition scheme GST CMP-05 Show cause notice issued by appropriate tax official on contravention of GST Act rules 11 GST CMP-06 Reply to show cause notice issued in Form GST CMP-05 GST CMP-07 Order indicating acceptance/rejection of show cause notice reply provided in Form GST CMP-06 GST REG-01 To register under composition scheme GST ITC-01 Details of inputs available with the composition registered supplier in the form of raw materials, semi-finished and finished goods Any person who has been granted registration on a provisional basis and who opts to pay tax under section 10 shall electronically file an intimation in FORM GST CMP-01, duly signed on the common portal either directly or through a Facilitation Centre notified by the Commissioner, prior to the appointed date, but not later than thirty days after the said day, or such further period as may be extended by the Commissioner in this behalf. Where intimation is filed after the appointed day, the registered person shall not collect any tax from the appointed day but shall issue bill of supply for supplies made after the said day. Any registered person who opt to pay tax shall electronically file an intimation in FORM GST CMP-02, duly signed, on the common portal either directly or through a Facilitation Centre notified by the Commissioner prior to the commencement of the financial year. Any person who files an intimation under sub-rule (1) to pay tax under section 10 shall furnish the details of stock, including the inward supply of goods received from unregistered persons, held by him on the day preceding the date from which he opts to pay tax under the said section, electronically within 60 days of the date from which the option for composition levy is exercised or within such further period as may be extended by the Commissioner in this behalf in FORM GST CMP-03 12 Any intimation under sub-rule (1) or sub-rule (3) in respect of any place of business in any State or Union territory shall be deemed to be an intimation in respect of all other places of business registered on the same PAN. Validity of composition levy The option exercised by a registered person to pay tax under section 10 shall remain valid so long as he satisfies all the conditions mentioned in the said section and these rules. 1. The person referred to in rule 6(1) shall be liable to pay tax under section 9(1) from the day he ceases to satisfy any of the conditions mentioned in section 10 or these rules and shall issue tax invoice for every taxable supply made thereafter 2. He shall also file an intimation for withdrawal from the scheme within 7 days of occurrence of such event. 3. Where a registered person intends to withdraw from composition scheme, he shall send an intimation of withdrawal duly signed or verified through EVC, electronically on the Common Portal, before such withdrawal in FORM GST CMP-04 Where the proper officer has reasons to believe that the registered person was not eligible to pay tax under section 10 or has contravened the provisions of the Act or these rules, he may issue a notice to such person in FORM GST-CMP-05 to show cause within 15 days of the receipt of such notice, as to why option to pay tax under section 10 should not be denied. Upon receipt of notice, the registered person shall file his response to the SCN within 15 days of the date of receipt in FORM GST CMP-06 Upon receipt of reply from the registered person, the proper officer shall issue an order within 30 days of receipt of such reply, either accepting the reply, or denying the option to pay tax under section 10 from the date of option or from the date of the event concerning such contravention, as the case may be in FORM GST CMP-07 Persons required to file i) Every person who has furnished intimation u/R.6(2); or ii) Every person who has filed an application for withdrawal u/R.6(3); or iii) Every person in respect of whom order is passed u/R.6(5). The statement of inputs, semi-finished goods or finished goods held in stock as at the date of withdrawal or denial of option shall be filed electronically within 30 days from the date of such withdrawal or order passed under rule 6(5), as the case may be. 13  INTIMATION NOT FOR EVERY YEAR: The registered person paying tax under composition levy may not file a fresh intimation every year and he may continue to pay tax under the said section subject to the provisions of the act and these rules. Provided the option availed of by a registered person under composition levy shall lapse with effect from the day on which his aggregated turnover during a financial year exceeds the limit. EFFECTIVE DATE FOR COMPOSITION LEVY: 1) The option to pay tax under section 10 shall be effective from the beginning of the financial year, where the intimation is filed under this rule. 2) The intimation shall be considered only after grant of registration to the applicant and his opinion to pay tax under section10 shall be effective from the date fixed under Registration Rule. PENALTY FOR WRONGLY AVAILED COMPOSITION LEVY: If the proper officer has reasons to believe that a taxable person has paid tax despite not being eligible, such person shall, in addition to any tax that may be payable by him under any other provisions of this Act, be liable to a penalty and the provisions of Section 73 and 74 shall apply for determination of tax and penalty. SUBMISSION OF QUARTERLY RETURNS: Every registered person paying tax under composition levy shall after adding, correcting or deleting the details in FORM GSTR-4A, furnish a quarterly returns in FORM GSTR-4 electronically of turnover in the State or Union Territory, inward supplies of goods, services or both, tax payable and tax paid through the common portal, either directly or facilitation Centre within 18 days after the end of such quarter. REGISTRATION UNDER GST LAW 1. INTRODUCTION: In any tax system, Registration is the most fundamental requirement for identification of tax taxpayers ensuring tax compliance in the economy. Registration of any business entity under the GST Law implies obtaining a unique number from the concerned tax authorities for the purpose of collecting tax on behalf of the government and to to avail Input Tax Credit for the taxes on his inward supplies. Without registration, a person can neither collect tax from his customers nor claim any Input Tax Credit of tax paid by him. 14  2. NEED AND ADVANTAGES OF REGISTRATION: a) He is legally recognized as supplier of goods or services or both. b) He is legally authorized to collect taxes from his customers and pass on the credit of the taxes paid on the goods or services supplied to the purchasers/recipients. c) He can claim Input Tax Credit of taxes paid and can utilize the same for payment of taxes due on supply of goods or services. d) Seamless flow of Input Tax Credit from suppliers to recipients at the national level. e) Registered person is eligible to apply for Government bids or contracts or assignments. f) Registered person under GST can easily gain trust from customers. 3. LIABILITY TO REGISTER: a) Mandate to Register: GST being a tax on the event of “Supply”, every supplier needs to get registered. b) Exception to Register: In case of small businesses having all India aggregate turnover below Rs. 40 lakh (in case of special category States 20 lakh) need not register. The small businesses having turnover below the threshold limit can, however, voluntarily opt to register. Special Category States under GST: 1. Arunachal Pradesh 2. Assam 3. Manipur 4. Meghalaya 5. Mizoram 6. Nagaland 7. Sikkim 8. Tripura 9. Himachal Pradesh 10. Uttarakhand Persons who are engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax or an agriculturist, to the extent of supply of produce out of cultivation of land are not liable to register under GST. 15  (c) Meaning: the aggregate turnover includes supplies made by him on behalf of his principals, but excludes the value of job worked goods if he is a job worker. 4. NATURE OF REGISTRATION: a) The registration in GST is PAN based and state specific. Supplier has to register in each of such state or union territory from where he effects supply. Registration under GST is not tax specific, which means that there is single registration for all the taxes i.e., CGST, SGST/UTGST, IGST and cesses. b) In GST registration, the supplier is allotted a 15 digit GST identification number called “GSTN” common portal. The first 2 digit of the GSTN is the state code Next 10 digits are the PAN of the legal entity Next 2 digits are the Entity code and Last 1 digit is check sum number c) A given PAN based legal entity would have one GSTIN per stat, that means a business entity having its branches in multiple states will have to separate wise registration for the branches in different states. But within a state, an entity with different branches would have single registration wherein it can declare one place as principal place business and other branches as additional place of business. However, a business entity having separate business verticals in a state may obtain separate registration for each of its business verticals. d) Category of suppliers who need to register compulsorily irrespective of the size of their turnover are: Inter state suppliers A person receiving supplies on which tax is payable by recipient on reverse charge basis Casual taxable person who is not having fixed place of business in the state or union territory from where he wants to make supply Non resident taxable persons who are not having fixed place of business in India 16  A person who supplies on behalf of some other taxable person (i.e., Agent of some Principal) E commerce operators, who provide platform to the suppliers to supply through it Suppliers who supply through an e- commerce operator Those e-commerce operator who are notified as liable for GST payment TDS deductor Those supplying online information and data base access or retrieval services from outside India to a non registered person in India. A casual taxable person is one who has a registered business in some state in India, but wants to effect supplies from some other state in which he is not having any fixed place of business. Such person needs to register in the state from where he seeks to supply as a casual taxable person. Example: A person who has a place of business in Bangalore supplies taxable consulting services in Pune where he has no place of business would be treated as a casual taxable person in Pune. A Non-resident taxable person is one who is a foreigner and occasionally wants to effect taxable supplies from any state in India, and for that he needs GST registration. GST law prescribes special procedure for registration, as also for extension of the operation period of such Casual and Non-resident taxable persons. They have to apply for registration at least five days in advance before making any supply. Also, registration is granted to them or period of operation is extended only after they make advance deposit of the estimated tax liability. In respect of supplies to some notified agencies of United Nations organisation, multinational financial institutions and other organisations, a unique identification number (UIN) is issued. SUO MOTU REGISTRATON BY PROPER OFFICER Where the proper officer finds that a person liable to registration under the act has failed to apply for such registration, such officer may register the said person on a temporary basis and issue an order in prescribed form. Such person shall either: i. Submit an application for registration in prescribed form within 90 days from the date of grant of temporary registration or ii. file an appeal against such temporary registration. 17  5) STANDARDISATION OF PROCEDURES a) Registration formats: A total of 30 formats have been prescribed in the CGST rules for registration. For every process in the registration chain such as application for registration, acknowledgement, query, rejection, registration certificate, show cause notice for cancellation, amendment, field visit report etc, there are standard formats. This will make the process uniform all over the country. b) Time limit to make application: An application has to be submitted online through common portal (GSTN) within thirty days from the date when liability to register arose. The casual and Non-Resident taxable persons need to apply at least five days prior to the commencement of the business. For transferee of a business as going concern, the liability to register arises on date of transfer. c) Time limit for confirming Registration: The proper officer has to either raise a query or approve the grant of registration within three working days failing which, registration would be considered as deemed to have been approved. The applicant would have to respond within seven working days starting from the 4th day of filing the original application. The proper officer would have to grant or reject the application for registration within 7 working days thereafter. 6) PHYSICAL VERIFICATION FOR REGISTRATION: a) Physical verification is to be resorted to only where it is found necessary in the subjective satisfaction of the proper officer. b) This can be undertaken only after granting the registration, and the verification report along with the supporting documents and photographs, shall have to be uploaded on the common portal within fifteen working days. 7) CHANGES IN REGISTRATION DETAILS: a) Approval of Proper Officer required: In case of change in legal name of the business, or the state of place of business or additional place of business, the taxable person will apply for amendment within 15 days of the event necessitating the change. The Proper Officer then will approve the amendment within next 15 days. b) Amendment in details: For other changes like the same day to day functionaries, email Ids, mobile numbers etc. No approval of the Proper Officer is required, and the amendment can be affected by the taxable person on his own on the common portal. 18  8) CANCELLATION OF REGISTRATION: Cancellation of registration Voluntary Suo Motu registration registration Where the proper officer Where the registered person no more considers the registration liable requires GST number for cancellation in view of certain defaults a) The GST law provides for two scenarios where cancellation of registration can take place- When the taxable person no more requires it (voluntary cancellation), and When the Proper Officer considers the registration liable for cancellation in view of certain specified defaults (Suomotu cancellation) like when the registrant is not doing business from the registered place of business or if he issues tax invoice without making the supply of goods or services. b) Time limit for cancellation: The taxable person desirous of cancellation of registration will apply on the common portal within 30 days of the event warranting cancellation c) Declaration: Taxable person will also declare in the application, the stock held on the date with effect from which he seeks cancellation. He will also work out and declare the quantum of dues of payments and credit reversal, and the particulars of payments made towards discharge of such liabilities. d) Cancellation in case of voluntary registration: In case of voluntary registration ( taken despite not being liable for), no cancellation is allowed until expiry of one year from the effective date of registration. If satisfied, the Proper Officer has to cancel the registration within 30 days from the date of application or the date of reply to notice ( if issued, when rejection is concluded by the officer) 9) REVOCATION OF CANCELLATION: a) In case where registration is cancelled suomotu by the proper officer, the taxable person can apply within 30 days of service of cancellation order, requesting the officer or revoking the cancellation ordered by him. b) Before applying, the person has to make good the defaults ( by filing all pending returns, making payment of all dues and so) for which registration was cancelled by the officer. 19 c) The proper officer if satisfied will revoke the cancellation earlier ordered by him. But in case the officer concludes to reject the request for revocation of cancellation, he will first observe the principle of natural justice by way of issuing notice to the person and hearing him on the issue. 10) STAGES OF REGISTRATION Registration procedure under GST u/s 25 of CGST Every person who is liable to be registered shall apply for registration within 30 days from the date on which he becomes liable to registration, before applying for registration declare his  Legal name of business  PAN  Mobile number  E-. mail address State or Union Territory In PART A of Form GST REG-01 on Common Portal. On successful verification of these numbers, a reference number will be generated. Applicant shall submit PART B of Form GST REG-01, duly signed, along with documents specified in the said Form at Common Portal. Form GST REG-02; Acknowledgement of Application If these documents are found to be in order, the Proper Officer shall approve the registration within 3 working days from the date of submission. Deemed registration If the Proper Officer fails to take actions in 3 working days from the date of submission, the registration is deemed to have been approved. 20  Form GST REG-03 and GST REG-04 A) Where the application is found to be deficient for any reason then Proper Officer requires any further information he shall intimate to the applicant. FORM GST REG-03 - Within 3 working days from the Date of submission B) The applicant shall submit the reply with clarification - Form GST REG-04 Within 7 working days from the date of receipt of such information  The Proper Officer is satisfied with the clarification he may approve the grant of registration to the applicant within 7 working days on receipt of such clarification.  If no reply is furnished by applicant in response to notice issued or Proper Officer is not satisfied with the clarification, he shall reject such application with reasons in writing and inform the applicant in Form GST REG-05.  Where no action is taken in 7 working days on the clarification received from the applicant, the registration is deemed to have been granted.  Certificate of registration: Certificate of registration shall be granted in Form GST REG-06. Certification of registration contains Goods and Service Tax Identification (GSTIN)  Two characters for the State code  Two characters for the PAN  Two characters for the entity code,  One checksum character. 21  SUPPLY SCOPE OF SUPPLY As per Section 7 (1) of CGST Act 2017, “supply” includes– (a) All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) Import of services for a consideration whether or not in the course or furtherance of business; (c) The activities specified in Schedule I made or agreed to be made without a consideration; and (d) The activities to be treated as supply of goods or supply of services as referred to in Schedule II (2) Notwithstanding anything contained in sub-section (1),– (a) Activities or transactions specified in Schedule III (Refer below); or (b) Such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (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. ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION SCHEDULE – 1 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets. 22  2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business: Provided that gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. RELATED PERSON:  Officers or directors of one another’s businesses  Legally recognized partners in business  Employer and employee  The supplier or recipient directly or indirectly owns, controls or holds twenty-five per cent or more of the outstanding voting stock or shares.  One of them directly or indirectly controls the other  Both of them are directly or indirectly controlled by a third person  Together they directly or indirectly control a third person  They are members of the same family DISTINCT PERSON:  A Distinct Person can be defined as a taxable person who has obtained or is required to obtain more than one registration in the same state or a different state. Or an establishment of a person who has obtained or is required to obtain a registration, and also has the establishment in another state.  Each of his/her registration and establishment will be treated as a Distinct Person, and any supply between them will be taxable. 3. Supply of goods— (a) by a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or (b) by an agent to his principal where the agent undertakes to receive such goods on behalf of the principal. 23  4. 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. ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES SCHEDULE - 2 1. Transfer (a) any transfer of the title in goods is a supply of goods; (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods. 2. Land and Building (a) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. 3. Treatment or process Any treatment or process which is applied to another person’s goods is a supply of services. 4. Transfer of business assets (a) where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person; (b) where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services; 24  (c) where any person ceases to be a taxable person, any goods forming part of the assets of any business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless— (i) the business is transferred as a going concern to another person; or (ii) the business is carried on by a personal representative who is deemed to be a taxable person. 5. Supply of services The following shall be treated as supply of services, namely:— (a) Renting of immovable property; (b) Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier. Explanation.—For the purposes of this clause— (1) the expression “competent authority” means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of nonrequirement of such certificate from such authority, from any of the following, namely:— (i) An architect registered with the Council of Architecture constituted under the Architects Act, 1972; or 20 of 1972. (ii)A chartered engineer registered with the Institution of Engineers (India); or (iii) A licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression “construction” includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and 25  (f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration. 6. Composite supply The following composite supplies shall be treated as a supply of services, namely:— (a) works contract as defined in clause (119) of section 2; and (b) supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration. 7. Supply of Goods The following shall be treated as supply of goods, namely:— Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES SCHEDULE – 3 1. Services by an employee to the employer in the course of or in relation to his employment. 2. Services by any court or Tribunal established under any law for the time being in force. 3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) the duties performed by 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. 4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased. 5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. 6. Distinct person, other than lottery, betting and gambling. 26 Explanation.—For the purposes of paragraph 2, the term “court” includes District Court, High Court and Supreme Court. TYPES OF SUPPLY: 1. COMPOSITE SUPPLY As per Section 2(30)Composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable 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 a principal supply. 2. MIXED SUPPLY As per Section 2(74), Mixed supply means 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 drinks 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. TAXABILITY OF COMPOSITE AND MIXED SUPPLY-SECTION 8 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 a supply of that particular supply which attracts the highest rate of tax. 3. PRINCIPAL SUPPLY [SECTION 2(90)] Principal supply means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary. 4. EXEMPT SUPPLY [SECTION 2(47)] Exempt supply means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11 or under section 6 of the Integrated Goods and Services Tax Act and includes non taxable supply. 27  5. INWARD SUPPLY [SECTION 2(67)] Inward supply, in relation to a person, shall mean receipt of goods or services or both whether by purchase, acquisition or any other means with or without consideration. 6. OUTWARD SUPPLY [SECTION 2(83)] Outward supply in relation to a taxable person, means supply of goods or services or both, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other mode, made or agreed to be made by such person, in the course or furtherance of business. 7. NON-TAXABLE SUPPLY Non-taxable 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. 8. TAXABLE SUPPLY [SECTION 2(108)] Taxable supply means a supply of goods or services or both which is leviable to tax under this Act. 9. ZERO-RATED SUPPLY – SECTION 16 OF IGST ACT 1. Zero rated supply means any of the following supplies of goods or services or both, namely:- a) export of goods or services or both; or b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. 2. Subject to the provisions of section 17(5) of the CGST Act, credit of input tax may be availed for making zero-rated supplies notwithstanding that such supply may be an exempt supply. 3. A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely a) he may supply goods or services or both under bond or Letter of Undertaking without payment of integrated tax and claim refund of unutilised input tax credit; or b) he may supply goods or services or both on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of Section 54 of the CGST Act or the Rules made thereunder. 28  10. INTER-STATE SUPPLY- SECTION 7 OF IGST ACT 1. Supply of goods is treated as inter-state supply if the location of supplier and place of supply are in - 1. two different States; 2. two different Union territories; or 3. a State and a Union territory. Shall be treated as a supply of goods in the course of inter-state trade or commerce. 2. Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce. 3. Supply of service is treated as inter-state supply if the location of supplier and place of supply are in - 1. two different States; 2. two different Union territories; or 3. a State and a Union territory. 4. Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce. 5. Supply of goods or services shall be treated as interstate supply in the following cases – 1. Supply when the supplier is located in India and the place of supply is outside India; 2. Supply to or by a Special Economic Zone developer or a Special Economic Zone unit; 3. Supply in the taxable territory, not being an intra-State supply and not covered elsewhere in this section. Shall be treated as a supply of goods in the course of inter-state trade or commerce. 11. INTRA-STATE SUPPLY – SECTION 8 OF IGST ACT a. Supply of goods shall be treated as intra- State supply where the location of the supplier and the place of supply of goods are in the same State or same Union territory. The following supply of goods shall not be treated as intra-State supply, namely:— i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit; ii) goods imported into the territory of India till they cross the customs frontiers of India; or iii) supplies made to a tourist referred to in section 15 b. Supply of services shall be treated as intra- State supply where the location of the supplier and the place of supply of goods are in the same State or same Union territory. Provided that the Inter-state supply of services shall not include Supply of services to or by a Special Economic Zone developer or a Special Economic Zone unit. EXPLANATION 1: Where a person has, 29 i) an establishment in India and any other establishment outside India; ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory then such establishments shall be treated as establishments of distinct persons. EXPLANATION 2 - A person carrying on a business through a branch or an agency or a representational office in any territory shall be treated as having an establishment in that territory. 12. CONTINUOUS SUPPLY Continuous supply is of two types’ viz., continuous supply of goods and continuous supply of services. CONTINUOUS SUPPLY OF GOODS CONTINUOUS SUPPLY OF SERVICES [S.2(32)] [S.2(33)] i) means supplcompositioy of goods which isi) means supply of services which is provided, or provided, or agreed to be provided, continuouslyagreed to be provided, continuously or on or on recurrent basis, under a contract, whether orrecurrent basis, under a contract, for a period not by means of a wire, cable, pipeline or otherexceeding three months with periodic payment conduit; and obligations; and ii) for which the supplier invoices the ii) includes supply of such service as the recipient on a regular or periodic basis; Central or a State Government may, whether or not subject to any condition, by notification, specify; IMPORTANT DEFINITIONS: Job Work [Section 2(68)] means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly. Time limit for bringing back the job worked product a) The inputs, post completion of job work or otherwise, must be brought back by the principal manufacturer within 1 year of their being sent out for job work. 30  b) The capital goods, other than moulds, dies, jigs, fixtures or tools, must be brought back by the principal manufacturer within 3 years of their being sent out for job work. Registered person [S.2(94)] means a person who is registered under section 25 but does not include a person having a Unique Identity Number; Taxable person [S.2(107)] means a person who is registered or liable to be registered under section 22 or section 24; Non-resident taxable person [S.2(77)] means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India. Casual taxable person [S.2(20)] means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business. Recipient [S.2(93)] - Recipient of supply of goods or services or both, means - a) where a consideration is payable for the supply of goods or services or both _the person who is liable to pay that consideration; b) where no consideration is payable for the - i) supply of goods _ the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and ii) supply of a service _ the person to whom the service is rendered and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied. Supplier [S.2(105)] in relation to any goods or services or both – a) shall mean the person supplying the said goods or services or both and b) shall include an agent acting as such, on behalf of such supplier, in relation to the goods or services or both supplied. 31 Reverse Charge Mechanism The supplier of goods or services is liable to pay GST. However, in specified cases like imports and other notified supplies, the liability may be cast on the recipient under the reverse charge mechanism. Reverse charge means the liability to pay tax is on the recipient of supply of goods or services instead of the supplier of such goods or services in respect of notified categories of supply Central tax [S.2(21)] means the central goods and services tax levied under section 9. State tax [S.2(104)] means the tax levied under any State Goods and Services Tax Act. Integrated tax [S.2(58)] means the integrated goods and services tax levied under the Integrated Goods and Services Tax Act. Taxable Territory [S.2(109)] means the territory to which the provisions of this Act apply. Non-taxable territory [S.2(79)] means the territory which is outside the taxable territory. India [S.2(56)] means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters. Aggregate turnover as per Section 2(6) of CGST Act, 2017: The term “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-state supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, state tax, union territory tax, integrated tax and cess. Goods [S.2(52)] means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. 32  Services [S.2(102)] 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. Consideration [S.2(31)]  Essential conditions for the supply of goods or services to fall within the ambit of GST is made for consideration.  It can be in Money or in kind  Barter of goods or services is a consideration Subsidy given by CG or SG is not a consideration Deposit given for supply of goods or services is not a consideration unless supplier applies it. Business Vertical As per Section 18 of the CGST Act, 2017 “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 Example: One unit is doing business of food products and another is of garments. Both businesses are dealing in different nature of goods. Further, risks/returns of foods business are also varied from that of garments’ business. 33 LIST OF GLOSSARIES 1. Supply 2. Taxable supplies 3. Non - Taxable supplies 4. Consideration 5. Taxable person 6. Voluntary Compliance 7. Goods and Services Tax Network (GSTN) 8. Goods 9. GST Council 10. GSTIN / Goods and Services Taxpayer Identification Number 11. Taxable event 12. Principal 13. Agent 14. Principal agent relationship 15. Distinct person 16. Actionable claims 17. Composition scheme 18. Negative list 34