CGST Act, 2017 (Updated 30092020) PDF

As on 30.09.2020 THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 (12 OF 2017) AS AMENDED BY THE :-  THE CENTRAL GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ACT, 2017 (NO. 26 OF 2017);  THE FINANCE ACT, 2018 (NO. 13 OF 2018);  THE CENTRAL GOOD...

As on 30.09.2020 THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 (12 OF 2017) AS AMENDED BY THE :-  THE CENTRAL GOODS AND SERVICES TAX (EXTENSION TO JAMMU AND KASHMIR) ACT, 2017 (NO. 26 OF 2017);  THE FINANCE ACT, 2018 (NO. 13 OF 2018);  THE CENTRAL GOODS AND SERVICES TAX (AMENDMENT) ACT, 2018 (NO. 31 OF 2018);  THE FINANCE (NO. 2) ACT, 2019 (NO. 23 OF 2019);  THE FINANCE ACT, 2020 (NO. 12 OF 2020);  THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020. Note: This updated version of the Central Goods and Services Tax Act, 2017 as amended upto 30th September, 2020 has been prepared for convenience and easy reference of the trade and industry and has no legal binding or force. The Acts as published in the official Gazette of the Government of India only have the force of law. Any errors in this document may kindly be brought to notice by sending an email on [email protected]. CHAPTER I PRELIMINARY Table of Contents CHAPTER I PRELIMINARY 2 CHAPTER II ADMINISTRATION 20 CHAPTER III LEVY AND COLLECTION OF TAX 23 CHAPTER IV TIME AND VALUE OF SUPPLY 31 CHAPTER V INPUT TAX CREDIT 38 CHAPTER VI REGISTRATION 48 CHAPTER VII TAX INVOICE, CREDIT AND DEBIT NOTES 60 CHAPTER VIII ACCOUNTS AND RECORDS 65 CHAPTER IX RETURNS 67 CHAPTER X PAYMENT OF TAX 78 CHAPTER XI REFUNDS 88 CHAPTER XII ASSESSMENT 95 CHAPTER XIII AUDIT 98 CHAPTER XIV INSPECTION, SEARCH, SEIZURE AND ARREST 101 CHAPTER XV DEMANDS AND RECOVERY 107 CHAPTER XVI LIABILITY TO PAY IN CERTAIN CASES 120 CHAPTER XVII ADVANCE RULING 126 CHAPTER XVIII APPEALS AND REVISION 131 CHAPTER XIX OFFENCES AND PENALTIES 152 CHAPTER XX TRANSITIONAL PROVISIONS 166 CHAPTER XXI MISCELLANEOUS 179 SCHEDULE I 196 SCHEDULE II 197 SCHEDULE III 200 REMOVAL OF DIFFICULTY ORDERS 200 1  CHAPTER I PRELIMINARY MINISTRY OF LAW AND JUSTICE (Legislative Department) New Delhi, the 12th April, 2017/Chaitra 22, 1939 (Saka) The following Act of Parliament received the assent of the President on the 12th April, 2017, and is hereby published for general information:— THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 NO. 12 OF 2017 [12th April, 2017.] An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:— CHAPTER I PRELIMINARY 1. Short title, extent and commencement.— (1) This Act may be called the Central Goods and Services Tax Act, 2017. (2) It extends to the whole of India [*****.]1 (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be 1 Omitted ―except the State of Jammu and Kashmir‖ by The Central Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017 (No. 26 of 2017) – Brought into force w.e.f. 8th July, 2017. 2 CHAPTER I PRELIMINARY construed as a reference to the coming into force of that provision. 2. Definitions.— In this Act, unless the context otherwise requires,–– (1) ―actionable claim‖ shall have the same meaning as assigned to it in section 3 of the Transfer of Property Act, 1882; (2) ―address of delivery‖ means the address of the recipient of goods or services or both indicated on the tax invoice issued by a registered person for delivery of such goods or services or both; (3) ―address on record‖ means the address of the recipient as available in the records of the supplier; (4) ―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]2, 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]3; (5) ―agent‖ means 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; (6) ―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; (7) ―agriculturist‖ means an individual or a Hindu Undivided Family who undertakes cultivation of land— 2 Substituted for ―Central Board of Excise and Customs‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 3 Substituted for ―the Appellate Authority and the Appellate Tribunal‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 3 CHAPTER I PRELIMINARY (a) by own labour, or (b) by the labour of family, or (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family; (8) ―Appellate Authority‖ means an authority appointed or authorised to hear appeals as referred to in section 107; (9) ―Appellate Tribunal‖ means the Goods and Services Tax Appellate Tribunal constituted under section 109; (10) ―appointed day‖ means the date on which the provisions of this Act shall come into force; (11) ―assessment‖ means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment; (12) ―associated enterprises‖ shall have the same meaning as assigned to it in section 92A of the Income-tax Act, 1961; (13) ―audit‖ means the examination of records, returns and other documents maintained or furnished by the registered person under this Act or the rules made thereunder or under any other law for the time being in force to verify the correctness of turnover declared, taxes paid, refund claimed and input tax credit availed, and to assess his compliance with the provisions of this Act or the rules made thereunder; (14) ―authorised bank‖ shall mean a bank or a branch of a bank authorised by the Government to collect the tax or any other amount payable under this Act; (15) ―authorised representative‖ means the representative as referred to in section 116; (16) ―Board‖ means the [Central Board of Indirect Taxes and Customs]4 constituted under the Central Boards of Revenue Act, 1963; 4 Substituted for ―Central Board of Excise and Customs‖ by The Finance Act, 2018 (No. 13 of 2018) – Brought into force w.e.f. 29th March, 2018. 4 CHAPTER I PRELIMINARY (17) ―business‖ includes –– (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) [activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and]5 (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; (18) [*****];6 5 Substituted for ―(h) services provided by a race club by way of totalisator or a licence to book maker in such club; and.‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 6 Omitted ―(18) ―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. Explanation.––For the purposes of this clause, factors that should be considered in determining whether goods or services are related include–– (a) the nature of the goods or services; (b) the nature of the production processes; (c) the type or class of customers for the goods or services; (d) the methods used to distribute the goods or supply of services; and (e) the nature of regulatory environment (wherever applicable), including banking, insurance, 5 CHAPTER I PRELIMINARY (19) ―capital goods‖ means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business; (20) ―casual taxable person‖ 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; (21) ―central tax‖ means the central goods and services tax levied under section 9; (22) ―cess‖ shall have the same meaning as assigned to it in the Goods and Services Tax (Compensation to States) Act; (23) ―chartered accountant‖ means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949; (24) ―Commissioner‖ means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act; (25) ―Commissioner in the Board‖ means the Commissioner referred to in section 168; (26) ―common portal‖ means the common goods and services tax electronic portal referred to in section 146; (27) ―common working days‖ in respect of a State or Union territory shall mean such days in succession which are not declared as gazetted holidays by the Central Government or the concerned State or Union territory Government; or public utilities;‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 6 CHAPTER I PRELIMINARY (28) ―company secretary‖ means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980; (29) ―competent authority‖ means such authority as may be notified by the Government; (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; (31) ―consideration‖ in relation to the supply of goods or services or both includes– (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or forbearance, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government: Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply; (32) ―continuous supply of goods‖ means a supply of goods which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, whether or not by means of a wire, cable, pipeline or other conduit, and for which the supplier invoices the recipient on a regular or periodic basis and includes supply of such goods as the Government may, subject to such conditions, as it may, by notification, 7 CHAPTER I PRELIMINARY specify; (33) ―continuous supply of services‖ means a supply of services which is provided, or agreed to be provided, continuously or on recurrent basis, under a contract, for a period exceeding three months with periodic payment obligations and includes supply of such services as the Government may, subject to such conditions, as it may, by notification, specify; (34) ―conveyance‖ includes a vessel, an aircraft and a vehicle; (35) ―cost accountant‖ means a cost accountant as defined in [clause (b)]7 of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959; (36) ―Council‖ means the Goods and Services Tax Council established under article 279A of the Constitution; (37) ―credit note‖ means a document issued by a registered person under sub- section (1) of section 34; (38) ―debit note‖ means a document issued by a registered person under sub- section (3) of section 34; (39) ―deemed exports‖ means such supplies of goods as may be notified under section 147; (40) ―designated authority‖ means such authority as may be notified by the Board; (41) ―document‖ includes written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act, 2000; (42) ―drawback‖ in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such goods; 7 Substituted for ―clause (c)‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) –Brought into force w.e.f. 01st February, 2019. 8 CHAPTER I PRELIMINARY (43) ―electronic cash ledger‖ means the electronic cash ledger referred to in sub- section (1) of section 49; (44) ―electronic commerce‖ means the supply of goods or services or both, including digital products over digital or electronic network; (45) ―electronic commerce operator‖ means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; (46) ―electronic credit ledger‖ means the electronic credit ledger referred to in sub-section (2) of section 49; (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; (48) ―existing law‖ means any law, notification, order, rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation; (49) ―family‖ means,–– (i) the spouse and children of the person, and (ii) the parents, grand-parents, brothers and sisters of the person if they are wholly or mainly dependent on the said person; (50) ―fixed establishment‖ means a place (other than the registered place of business) which is characterised by a sufficient degree of permanence and suitable structure in terms of human and technical resources to supply services, or to receive and use services for its own needs; (51) ―Fund‖ means the Consumer Welfare Fund established under section 57; (52) ―goods‖ 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 9 CHAPTER I PRELIMINARY of supply; (53) ―Government‖ means the Central Government; (54) ―Goods and Services Tax (Compensation to States) Act‖ means the Goods and Services Tax (Compensation to States) Act, 2017; (55) ―goods and services tax practitioner‖ means any person who has been approved under section 48 to act as such practitioner; (56) ―India‖ 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; (57) ―Integrated Goods and Services Tax Act‖ means the Integrated Goods and Services Tax Act, 2017; (58) ―integrated tax‖ means the integrated goods and services tax levied under the Integrated Goods and Services Tax Act; (59) ―input‖ means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business; (60) ―input service‖ means any service used or intended to be used by a supplier in the course or furtherance of business; (61) ―Input Service Distributor‖ means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office; (62) ―input tax‖ in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes— 10 CHAPTER I PRELIMINARY (a) the integrated goods and services tax charged on import of goods; (b) the tax payable under the provisions of sub-sections (3) and (4) of section 9; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; (d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; (63) ―input tax credit‖ means the credit of input tax; (64) ―intra-State supply of goods‖ shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act; (65) ―intra-State supply of services‖ shall have the same meaning as assigned to it in section 8 of the Integrated Goods and Services Tax Act; (66) ―invoice‖ or ―tax invoice‖ means the tax invoice referred to in section 31; (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; (68) ―job work‖ 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; (69) ―local authority‖ means–– (a) a ―Panchayat‖ as defined in clause (d) of article 243 of the Constitution; (b) a ―Municipality‖ as defined in clause (e) of article 243P of the Constitution; (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State 11 CHAPTER I PRELIMINARY Government with the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371[and article 371J]8 of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution; (70) ―location of the recipient of services‖ means,— (a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and (d) in absence of such places, the location of the usual place of residence of the recipient; (71) ―location of the supplier of services‖ means,— (a) where a supply is made from a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply is made from a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is made from more than one establishment, whether the place 8 Inserted by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 12 CHAPTER I PRELIMINARY of business or fixed establishment, the location of the establishment most directly concerned with the provisions of the supply; and (d) in absence of such places, the location of the usual place of residence of the supplier; (72) ―manufacture‖ means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term ―manufacturer‖ shall be construed accordingly; (73) ―market value‖ shall mean the full amount which a recipient of a supply is required to pay in order to obtain the goods or services or both of like kind and quality at or about the same time and at the same commercial level where the recipient and the supplier are not related; (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; (75) ―money‖ means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value; (76) ―motor vehicle‖ shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988; (77) ―non-resident taxable person‖ 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 13 CHAPTER I PRELIMINARY residence in India; (78) ―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; (79) ―non-taxable territory‖ means the territory which is outside the taxable territory; (80) ―notification‖ means a notification published in the Official Gazette and the expressions ―notify‖ and ―notified‖ shall be construed accordingly; (81) ―other territory‖ includes territories other than those comprising in a State and those referred to in sub-clauses (a) to (e) of clause (114) ; (82) ―output tax‖ in relation to a taxable person, means the tax chargeable under this Act on taxable supply of goods or services or both made by him or by his agent but excludes tax payable by him on reverse charge basis; (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; (84) ―person‖ includes— (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013; 14 CHAPTER I PRELIMINARY (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860; (m) trust; and (n) every artificial juridical person, not falling within any of the above; (85) ―place of business‖ includes–– (a) a place from where the business is ordinarily carried on, and includes a warehouse, a godown or any other place where a taxable person stores his goods, supplies or receives goods or services or both; or (b) a place where a taxable person maintains his books of account; or (c) a place where a taxable person is engaged in business through an agent, by whatever name called; (86) ―place of supply‖ means the place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act; (87) ―prescribed‖ means prescribed by rules made under this Act on the recommendations of the Council; (88) ―principal‖ means a person on whose behalf an agent carries on the business of supply or receipt of goods or services or both; (89) ―principal place of business‖ means the place of business specified as the principal place of business in the certificate of registration; (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; 15 CHAPTER I PRELIMINARY (91) ―proper officer‖ in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board; (92) ―quarter‖ shall mean a period comprising three consecutive calendar months, ending on the last day of March, June, September and December of a calendar year; (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 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 (c) where no consideration is payable for the 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; (94) ―registered person‖ means a person who is registered under section 25 but does not include a person having a Unique Identity Number; (95) ―regulations‖ means the regulations made by the Board under this Act on the recommendations of the Council; (96) ―removal‘‘ in relation to goods, means— (a) despatch of the goods for delivery by the supplier thereof or by any other person acting on behalf of such supplier; or (b) collection of the goods by the recipient thereof or by any other person acting on behalf of such recipient; (97) ―return‖ means any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder; (98) ―reverse charge‖ means the liability to pay tax by the recipient of supply of 16 CHAPTER I PRELIMINARY goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or sub- section (4) of section 5 of the Integrated Goods and Services Tax Act; (99) ―Revisional Authority‖ means an authority appointed or authorised for revision of decision or orders as referred to in section 108; (100) ―Schedule‖ means a Schedule appended to this Act; (101) ―securities‖ shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; (102) ―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;]9 (103) ―State‖ includes a Union territory with Legislature; (104) ―State tax‖ means the tax levied under any State Goods and Services Tax Act; (105) ―supplier‖ in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied; (106) ―tax period‖ means the period for which the return is required to be furnished; (107) ―taxable person‖ means a person who is registered or liable to be registered under section 22 or section 24; (108) ―taxable supply‖ means a supply of goods or services or both which is 9 Inserted by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 17 CHAPTER I PRELIMINARY leviable to tax under this Act; (109) ―taxable territory‖ means the territory to which the provisions of this Act apply; (110) ―telecommunication service‖ means service of any description (including electronic mail, voice mail, data services, audio text services, video text services, radio paging and cellular mobile telephone services) which is made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire, radio, visual or other electromagnetic means; (111) ―the State Goods and Services Tax Act‖ means the respective State Goods and Services Tax Act, 2017; (112) ―turnover in State‖ or ―turnover in Union territory‖ 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) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter- State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess; (113) ―usual place of residence‖ means–– (a) in case of an individual, the place where he ordinarily resides; (b) in other cases, the place where the person is incorporated or otherwise legally constituted; (114) ―Union territory‖ means the territory of— (a) the Andaman and Nicobar Islands; (b) Lakshadweep; (c) [Dadra and Nagar Haveli and Daman and Diu;]10 (d) [Ladakh;]11 10 Substituted for ―(c) Dadra and Nagar Haveli; (d) Daman and Diu;‖ by The Finance Act, 2020 (No. 12 of 2020)–Brought into force w.e.f 30.06.2020. 18 CHAPTER I PRELIMINARY (e) Chandigarh; and (f) Other territory‖. Explanation.––For the purposes of this Act, each of the territories specified in sub- clauses (a) to (f) shall be considered to be a separate Union territory; (115) ―Union territory tax‖ means the Union territory goods and services tax levied under the Union Territory Goods and Services Tax Act; (116) ―Union Territory Goods and Services Tax Act‖ means the Union Territory Goods and Services Tax Act, 2017; (117) ―valid return‖ means a return furnished under sub-section (1) of section 39 on which self-assessed tax has been paid in full; (118) ―voucher‖ means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services or both and where the goods or services or both to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument; (119) ―works contract‖ means a contract for building, construction, fabrication, completion, erection, installation, fitting out, improvement, modification, repair, maintenance, renovation, alteration or commissioning of any immovable property wherein transfer of property in goods (whether as goods or in some other form) is involved in the execution of such contract; (120) words and expressions used and not defined in this Act but defined in the Integrated Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act shall have the same meaning as assigned to them in those Acts; (121) any reference in this Act to a law which is not in force in the State of Jammu and Kashmir, shall, in relation to that State be construed as a reference to the corresponding law, if any, in force in that State. 11 Substituted for ―(c) Dadra and Nagar Haveli; (d) Daman and Diu;‖ by The Finance Act, 2020 (No. 12 of 2020) –Brought into force w.e.f 30.06.2020. 19 CHAPTER II ADMINISTRATION CHAPTER II ADMINISTRATION 3. Officers under this Act.— The Government shall, by notification, appoint the following classes of officers for the purposes of this Act, namely:–– (a) Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax, (b) Chief Commissioners of Central Tax or Directors General of Central Tax, (c) Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax, (d) Commissioners of Central Tax or Additional Directors General of Central Tax, (e) Additional Commissioners of Central Tax or Additional Directors of Central Tax, (f) Joint Commissioners of Central Tax or Joint Directors of Central Tax, (g) Deputy Commissioners of Central Tax or Deputy Directors of Central Tax, (h) Assistant Commissioners of Central Tax or Assistant Directors of Central Tax, and (i) any other class of officers as it may deem fit: Provided that the officers appointed under the Central Excise Act, 1944 shall be deemed to be the officers appointed under the provisions of this Act. 4. Appointment of Officers.— (1) The Board may, in addition to the officers as may be notified by the Government under section 3, appoint such persons as it may think fit to be the officers under this Act. (2) Without prejudice to the provisions of sub-section (1), the Board may, by order, authorise any officer referred to in clauses (a) to (h) of section 3 to appoint officers of central tax below the rank of Assistant Commissioner of central tax for the administration of this Act. 20 CHAPTER II ADMINISTRATION 5. Powers of officers under GST.— (1) Subject to such conditions and limitations as the Board may impose, an officer of central tax may exercise the powers and discharge the duties conferred or imposed on him under this Act. (2) An officer of central tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him. (3) The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him. (4) Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the powers and discharge the duties conferred or imposed on any other officer of central tax. 6. Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances.— (1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. (2) Subject to the conditions specified in the notification issued under sub-section (1),–– (a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax; (b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter. 21 CHAPTER II ADMINISTRATION (3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by an officer appointed under this Act shall not lie before an officer appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act. 22 CHAPTER III LEVY AND COLLECTION OF TAX CHAPTER III LEVY AND COLLECTION OF TAX 7. Scope of supply.— (1) For the purposes of this Act, the expression ―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;[and]12 (c) the activities specified in Schedule I, made or agreed to be made without a consideration;[****]13 (d) [*****]14. [(1A) 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.]15 (2) Notwithstanding anything contained in sub-section (1),–– (a) activities or transactions specified in Schedule III; 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. 12 Inserted w.e.f 01st July, 2017 by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force on 01st February, 2019. 13 Omitted ―and‖ w.e.f 01st July, 2017 by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force on 01st February, 2019. 14 Omitted ―(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.‖ w.e.f. 01st July, 2017 by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force on 01st February, 2019. 15 Inserted w.e.f. 01st July, 2017 by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force on 01st February, 2019. 23 CHAPTER III LEVY AND COLLECTION OF TAX (3) Subject to the provisions of [sub-sections (1), (1A) and (2)]16, 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. 8. Tax liability on composite and mixed supplies.— The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:— (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) 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. 9. Levy and collection.— (1) 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 twenty 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. (2) 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. (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. 16 Substituted for ―sub-sections (1) and (2)‖ w.e.f. 01st July, 2017 by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force on 01st February, 2019. 24 CHAPTER III LEVY AND COLLECTION OF TAX (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 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.]17 (5) 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: 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. 10. Composition levy.— (1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, [in lieu of the tax payable by him under sub-section (1) of section 9, an amount calculated at such rate]18 as may be prescribed, but not exceeding,–– 17 Substituted for ―(4) 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.‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 18 Substituted for ―ïn lieu of the tax payable by him, an amount calculated at such rate‖, by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 25 CHAPTER III LEVY AND COLLECTION OF TAX (a) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer, (b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and (c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers, subject to such conditions and restrictions as may be prescribed: Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding [one crore and fifty lakh rupees]19, as may be recommended by the Council: [Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent. of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher]20. [Explanation.––For the purposes of second proviso, the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount shall not be taken into account for determining the value of turnover in a State or Union territory]21. (2) The registered person shall be eligible to opt under sub-section (1), if:— (a) [save as provided in sub-section (1), he is not engaged in the supply of services;]22 19 Substituted for ―one crore rupees‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 20 Inserted by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 21 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 22 Substituted for ―(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II save as provided in sub-section (1), he is not engaged in the supply of services.‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into 26 CHAPTER III LEVY AND COLLECTION OF TAX (b) he is not engaged in making any supply of goods which are not leviable to tax under this Act; (c) he is not engaged in making any inter-State outward supplies of goods; (d) he is not engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; [****]23 (e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the [Council ;and]24 (f) [he is neither a casual taxable person nor a non-resident taxable person:]25 Provided that where more than one registered persons are having the same Permanent Account Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section. [(2A) Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, not eligible to opt to pay tax under sub-section (1) and sub-section (2), whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding three per cent. of the turnover in State or turnover in Union territory, if he is not–– (a) engaged in making any supply of goods or services which are not leviable to tax under this Act; (b) engaged in making any inter-State outward supplies of goods or services; (c) engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52; force w.e.f. 01st February, 2019. 23 Omitted ―and‖ by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 24 Substituted for ―Council:‖ by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 25 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 27 CHAPTER III LEVY AND COLLECTION OF TAX (d) a manufacturer of such goods or supplier of such services as may be notified by the Government on the recommendations of the Council; and (e) a casual taxable person or a non-resident taxable person: Provided that where more than one registered person are having the same Permanent Account Number issued under the Income-tax Act, 1961, the registered person shall not be eligible to opt for the scheme under this sub-section unless all such registered persons opt to pay tax under this sub-section.]26 (3) The option availed of by a registered person under sub-section (1) [or sub- section (2A), as the case may be,]27 shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1) [or sub-section (2A), as the case may be.] 28 (4) A taxable person to whom the provisions of sub-section (1) [or, as the case may be, sub-section (2A)]29 apply shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax. (5) If the proper officer has reasons to believe that a taxable person has paid tax under sub-section (1) [or sub-section (2A), as the case may be,]30 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 or section 74 shall, mutatis mutandis, apply for determination of tax and penalty. [Explanation 1.––For the purposes of computing aggregate turnover of a person for determining his eligibility to pay tax under this section, the expression ―aggregate turnover‖ shall include the value of supplies made by such person from the 1st day of April of a financial year up to the date when he becomes liable for registration under this 26 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 27 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 28 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 29 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 30 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 28 CHAPTER III LEVY AND COLLECTION OF TAX Act, but shall not include the value of exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount. Explanation 2.––For the purposes of determining the tax payable by a person under this section, the expression ―turnover in State or turnover in Union territory‖ shall not include the value of following supplies, namely:–– (i) supplies from the first day of April of a financial year up to the date when such person becomes liable for registration under this Act; and (ii) exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.]31 11. Power to grant Exemption.— (1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification. (2) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable. (3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be. Explanation.––For the purposes of this section, where an exemption in respect of 31 Inserted by The Finance (No. 2) Act, 2019 (No. 23 of 2019) – Brought into force w.e.f. 01st January, 2020. 29 CHAPTER III LEVY AND COLLECTION OF TAX any goods or services or both from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or services or both. 30 CHAPTER IV TIME AND VALUE OF SUPPLY CHAPTER IV TIME AND VALUE OF SUPPLY 12. Time of Supply of Goods.— (1) The liability to pay tax on goods shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of goods shall be the earlier of the following dates, namely:— (a) the date of issue of invoice by the supplier or the last date on which he is required, under [******]32 section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply: Provided that where the supplier of taxable goods receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice in respect of such excess amount. Explanation 1.––For the purposes of clauses (a) and (b), ―supply‖ shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. Explanation 2.––For the purposes of clause (b), ―the date on which the supplier receives the payment‖ shall be the date on which the payment is entered in his books of account or the date on which the payment is credited to his bank account, whichever is earlier. (3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earliest of the following dates, namely:— (a) the date of the receipt of goods; or (b) the date of payment as entered in the books of account of the recipient or the 32 Omitted ―sub-section (1) of‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 31 CHAPTER IV TIME AND VALUE OF SUPPLY date on which the payment is debited in his bank account, whichever is earlier; or (c) the date immediately following thirty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier: Provided that where it is not possible to determine the time of supply under clause (a) or clause (b) or clause (c), the time of supply shall be the date of entry in the books of account of the recipient of supply. (4) In case of supply of vouchers by a supplier, the time of supply shall be— (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases. (5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall– – (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid. (6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value. 13. Time of Supply of Services.— (1) The liability to pay tax on services shall arise at the time of supply, as determined in accordance with the provisions of this section. (2) The time of supply of services shall be the earliest of the following dates, namely:— (a) the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under [******]33 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 33 Omitted ―sub-section (2) of‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 32 CHAPTER IV TIME AND VALUE OF SUPPLY prescribed under [******]34 section 31 or the date of receipt of payment, whichever is earlier; or (c) the date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply: Provided that where the supplier of taxable service receives an amount up to one thousand rupees in excess of the amount indicated in the tax invoice, the time of supply to the extent of such excess amount shall, at the option of the said supplier, be the date of issue of invoice relating to such excess amount. Explanation.––For the purposes of clauses (a) and (b)–– (i) the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment; (ii) ―the date of receipt of payment‖ shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. (3) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of supply shall be the earlier of the following dates, namely:–– (a) the date of payment as entered in the books of account of the recipient or the date on which the payment is debited in his bank account, whichever is earlier; or (b) the date immediately following sixty days from the date of issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier: Provided that where it is not possible to determine the time of supply under clause (a) or clause (b), the time of supply shall be the date of entry in the books of account of the recipient of supply: Provided further that in case of supply by associated enterprises, where the supplier of service is located outside India, the time of supply shall be the date of entry in the books of account of the recipient of supply or the date of payment, whichever is earlier. 34 Omitted ―sub-section (2) of‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 33 CHAPTER IV TIME AND VALUE OF SUPPLY (4) In case of supply of vouchers by a supplier, the time of supply shall be–– (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases. (5) Where it is not possible to determine the time of supply under the provisions of sub-section (2) or sub-section (3) or sub-section (4), the time of supply shall– – (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the tax is paid. (6) The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value. 14. Change in rate of tax in respect of supply of goods or services.— Notwithstanding anything contained in section 12 or section 13, the time of supply, where there is a change in the rate of tax in respect of goods or services or both, shall be determined in the following manner, namely:–– (a) in case the goods or services or both have been supplied before the change in rate of tax,–– (i) where the invoice for the same has been issued and the payment is also received after the change in rate of tax, the time of supply shall be the date of receipt of payment or the date of issue of invoice, whichever is earlier; or (ii) where the invoice has been issued prior to the change in rate of tax but payment is received after the change in rate of tax, the time of supply shall be the date of issue of invoice; or (iii) where the payment has been received before the change in rate of tax, but the invoice for the same is issued after the change in rate of tax, the time of supply shall be the date of receipt of payment; (b) in case the goods or services or both have been supplied after the change in 34 CHAPTER IV TIME AND VALUE OF SUPPLY rate of tax,–– (i) where the payment is received after the change in rate of tax but the invoice has been issued prior to the change in rate of tax, the time of supply shall be the date of receipt of payment; or (ii) where the invoice has been issued and payment is received before the change in rate of tax, the time of supply shall be the date of receipt of payment or date of issue of invoice, whichever is earlier; or (iii) where the invoice has been issued after the change in rate of tax but the payment is received before the change in rate of tax, the time of supply shall be the date of issue of invoice: Provided that the date of receipt of payment shall be the date of credit in the bank account if such credit in the bank account is after four working days from the date of change in the rate of tax. Explanation.––For the purposes of this section, ―the date of receipt of payment‖ shall be the date on which the payment is entered in the books of account of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. 15. Value of Taxable Supply.— (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include––– (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both; (c) incidental expenses, including commission and packing, charged by the 35 CHAPTER IV TIME AND VALUE OF SUPPLY supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services; (d) interest or late fee or penalty for delayed payment of any consideration for any supply; and (e) subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments. Explanation.––For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy. (3) The value of the supply shall not include any discount which is given–– (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if— (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. (4) Where the value of the supply of goods or services or both cannot be determined under sub-section (1), the same shall be determined in such manner as may be prescribed. (5) Notwithstanding anything contained in sub-section (1) or sub-section (4), the value of such supplies as may be notified by the Government on the recommendations of the Council shall be determined in such manner as may be prescribed. Explanation.—For the purposes of this Act,–– (a) persons shall be deemed to be ―related persons‖ if–– (i) such persons are officers or directors of one another‘s businesses; (ii) such persons are legally recognised partners in business; 36 CHAPTER IV TIME AND VALUE OF SUPPLY (iii) such persons are employer and employee; (iv) any person directly or indirectly owns, controls or holds twenty-five per cent. or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control a third person; or (viii) they are members of the same family; (b) the term ―person‖ also includes legal persons; (c) persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other, shall be deemed to be related. 37 CHAPTER V INPUT TAX CREDIT CHAPTER V INPUT TAX CREDIT 16. Eligibility and conditions for taking input tax credit.— (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,–– (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. [Explanation.— For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services–– (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person;]35 (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of 35 Substituted for ―Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 38 CHAPTER V INPUT TAX CREDIT input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income- tax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. [Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 39 CHAPTER V INPUT TAX CREDIT 2019.]36 17. Apportionment of credit and blocked credits.— (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. (3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. [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;]37 (4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub- section (2), or avail of, every month, an amount equal to fifty per cent. of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse: Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year: Provided further that the restriction of fifty per cent. shall not apply to the tax paid on supplies made by one registered person to another registered person having the same 36 Inserted vide Order No. 02/2018 –Central Tax dated 31.12.2018 37 Inserted by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 40 CHAPTER V INPUT TAX CREDIT Permanent Account Number. (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the following, namely:— (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 41 CHAPTER V INPUT TAX CREDIT vehicles, vessels or aircraft insured by him;]38 (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.]39 38 Substituted for ―(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;‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 39 Substituted for ―(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 42 CHAPTER V INPUT TAX CREDIT (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; (d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation.––For the purposes of clauses (c) and (d), the expression ―construction‖ includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; (e) goods or services or both on which tax has been paid under section 10; (f) goods or services or both received by a non-resident taxable person except on goods imported by him; (g) goods or services or both used for personal consumption; (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and (i) any tax paid in accordance with the provisions of sections 74, 129 and 130. (6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed. Explanation.––For the purposes of this Chapter and Chapter VI, the expression ―plant and machinery‖ means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes— 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;‖ by The Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018) – Brought into force w.e.f. 01st February, 2019. 43 CHAPTER V INPUT TAX CREDIT (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. 18. Availability of credit in special circumstances.— (1) Subject to such conditions and restrictions as may be prescribed— (a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act; (b) a person who takes registration under sub-section (3) of section 25 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration; (c) where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi- finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9: Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed; (d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such person shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable: Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed. 44 CHAPTER V INPUT TAX CREDIT (2) A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply. (3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed. (4) Where any registered person who has availed of input tax credit opts to pay tax under section 10 or, where the goods or services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed, on the day immediately preceding the date of exercising of such option or, as the case may be, the date of such exemption: Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse. (5) The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated in such manner as may be prescribed. (6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15. 45 CHAPTER V INPUT TAX CREDIT 19. Taking input tax credit in respect of inputs and capital goods sent for job work.— (1) The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on inputs sent to a job worker for job work. (2) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled to take credit of input tax on inputs even if the inputs are directly sent to a job worker for job work without being first brought to his place of business. (3) Where the inputs sent for job work are not received back by the principal after completion of job work or otherwise or are not supplied from the place of business of the job worker in accordance with clause (a) or clause (b) of sub-section (1) of section 143 within one year of being sent out, it shall be deemed that such inputs had been supplied by the principal to the job worker on the day when the said inputs were sent out: Provided that where the inputs are sent directly to a job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. (4) The principal shall, subject to such conditions and restrictions as may be prescribed, be allowed input tax credit on capital goods sent to a job worker for job work. (5) Notwithstanding anything contained in clause (b) of sub-section (2) of section 16, the principal shall be entitled to take credit of input tax on capital goods even if the capital goods are directly sent to a job worker for job work without being first brought to his place of business. (6) Where the capital goods sent for job work are not received back by the principal within a period of three years of being sent out, it shall be deemed that such capital goods had been supplied by the principal to the job worker on the day when the said capital goods were sent out: Provided that where the capital goods are sent directly to a job worker, the period of three years shall be counted from the date of receipt of capital goods by the job worker. (7) Nothing contained in sub-section (3) or sub-section (6) shall apply to moulds and dies, jigs and fixtures, or tools sent out to a job worker for job work. Explanation.––For the purpose of this section, ―principal‖ means the person 46 CHAPTER V INPUT TAX CREDIT referred to in section 143. 20. Manner of distribution of credit by Input Service Distributor.— (1) The Input Service Distributor shall distribute the credit of central tax as central tax or integrated tax and integrated tax as integrated tax or central tax, by way of issue of a document containing the amount of input tax credit being distributed in such manner as may be prescribed. (2) The Input Service Distributor may distribute the credit subject to the following conditions, namely:–– (a) the credit can be distributed to the recipients of credit against a document containing such details as may be prescribed; (b) the amount of the credit distributed shall not exceed the amount of credit available for distribution; (c) the credit of tax paid on input services attributable to a recipient of credit shall be distributed only to that recipient; (d) the credit of tax paid on input services attributable to more than one recipient of credit shall be distributed amongst such recipients to whom the input service is attributable and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period; (e) the credit of tax paid on input services attributable to all recipients of credit shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period. Explanation.––For the purposes of this section,–– (a) the ―relevant period‖ shall be–– (i) if the recipients of credit have turnover in their States or Union territories in the financial year preceding the year during which credit is to be distributed, the said 47 CHAPTER VI REGISTRATION financial year; or (ii) if some or all recipients of the credit do not have any turnover in their States or Union territories in the financial year preceding the year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed; (b) the expression ―recipient of credit‖ means the supplier of goods or services or both having the same Permanent Account Number as that of the Input Service Distributor; (c) the term ‗‗turnover‘‘, in relation to any registered person engaged i