Shraddha Prolect-converted.pdf

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GOODS AND SERVICES TAX 1.1 INTRODUCTIONGoods and Services Tax is a comprehensive indirect tax which is to be levied on the manufacture sale and consumption of goods and services in India. This is so far the biggest tax reform in the country. GST eliminates the cascading effect of taxes because it is taxed at every point of business and the input credit is available in the value chain. GST is paid on the procurement of goods and services can be set off against that payable on the supply of goods or services. But being the last person in the supply chain, the end consumer has to bear this tax and so in many respects. GST is like a last point retail tax. Finance was the first country to introduce GST in 1954. Worldwide, almost 150 countries have introduced GST in one or the other from since now. Most of the countries have a GST system. Brazil and Canada follow a dual system India is going to introduce. In china, GST applies only to goods and the provision of repairs, replacement and processing services.

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1.2 Historical BackgroundFrance was the first country to introduce GST system in 1954. More than 140countries have implemented the GST. Genesis of GST occurred doing the previous NDA Government under Atal Bihari Vajpayee Government when it set up the Asim Dasgupta committee to design a model for GST. The UPA Government took the matter further and announced in 2006 that this tax would be introduced from April 1, 2010. However so far it was not introduced. All the GST bills introducing Constitution Act have been passed now and GST is set to come into force from July 1, 2017.

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1.3 Taxes Replaced by GSTGST would replace almost all viral indirect taxes and cesses on Goods & services in the country. Among the taxes levied by centre, GST will subsume the following: • • • • • •

Central excise duty & Services Tax Additional Duties of Excise Additional Duties of Customs Special Additional Duty of Customs Central Duties of Excise Surcharges and Cesses so far as they relate to supply of goods and services.

Among the state taxes that would be replaced by GST include: • • • • • • • •

State VAT Central Sales Tax Including Luxury Tax Entry tax Entertainment and Amusement Tax Tax on Advertisements Purchase tax Taxes on lotteries, betting and gambling State Surcharges and Cesses so far as they relate to supply of goods and services.

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1.4 Principles Followed In Subsuming the Taxes – The following principles were adopted while subsuming the above taxes under GST. Firstly to be levied should primarily indirect taxes and should be part of the transaction chain the commence with production or manufacturing or import of goods/services at one end and consumption at other. Secondly, such replacement of taxes should result in free flow of tax credit in intra and inter-state level. Thirdly, the GST should give fair revenue to both centre and states.

Commodities Not under GSTNote that following have been kept out of the ambit of GST: • •

Potable alcohol Five petroleum products viz. Petroleum crude, motor spirit, high speed diesel, natural gas and aviation turbine fuel

Electricity The above arrangement is “temporary” and the GST Council will decide the date from which they shall be included in GST. For these commodities, the existing VAT and central excise will

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continue to operate until they are included in GST. It’s worth note here that Tobacco and tobacco products.

1.5 Understanding Dual GSTMost of the countries have a unified GST system. Brazil and Canada follow a dual system where GST is levied by both the Union and the State governments. India also has dual GST where Centre and States simultaneously levying it on a common tax base.

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1.6 Principles Followed in adopting dual GSTThe principle of fiscal federalism has been adapted where by centre and states have been assigned powers to levy and collect taxes through appropriate legislations. GST LegislationThe entire GST legislation is based on six separate acts/bills. Constitution 101st amendment Act, 2016 This is the enabler act for GST and it amends several important articles and schedules of the constitution of India so that necessary constitutional. •

The new articles added by this amendment to Indian Constitution are Article 246-A (special provision with respect to goods and services tax); Article 269A(Levy collection of goods and services tax in course of inter-State trade or commerce) and Article 297A(GST Council) • Two schedule have been changed viz. 6th schedule &7th

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As per article 246-A: •

Both union and states in India now have “concurrent powers’ to make law with respect to goods & services.

•

The intra-state trade now comes under the jurisdiction of both centre and states; while inter-state trade and commerce is “exclusively” under central government jurisdiction.

As per article 269-A: •

In case of the inter-state trade, the tax will be levied and collected by the Government of India shared between the Union and States as per recommendation of the GST Council. • The article also makes it clear that the proceeds such collected will not be credited to the consolidated fund of India or state but respective share shall be assigned to that state or centre collects the tax, it assigns state’s share to state, while where state collects tax, it assigns centre’s share to centre. If that proceed is deposited in consolidated Fund of India or states, then, every time there will be a need to pass an appropriation tax.

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1.7 GST (Compensation to states) Bill, 2017 (Compensation Cess Bill)The salient features are as follows: •

This bill provides for compensation to states for any loss in revenue due to implementation of GST. The period of compensation will be five years from the date the state brings SGST in force. • For the purpose of calculating the compensation amount in any financial year, year 2015-16is to be considered as base year. The revenue in that year and a 14% growth rate in revenue will be taken for calculation for five years. • The base year revenue of the states will be calculated by adding its revenues from VAT, CST, entry

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tax, octroi and other local body taxes, taxes on luxury, entertainment, advertisement etc. However this will not include revenue on alcohol and certain petroleum products. • The compensation will be provisionally calculated and released at the end of every two months. The annual calculation of revenue will be audited by CAG. • The compensation payable to a state has to be provisionally calculated and released at the end of every two months. Further, an annual calculation of the total revenue will be undertaken, which will be audited by the comptroller and audit general of India.

1.8 GST is a Destination Based TaxGST the destination based tax, which means that it would accrue to the taxing authority which has jurisdiction over the place of consumption which is also termed as place of supply. The implies that the states which consume more of manufactured goods and services will benefits. It may not be encouraging for the states which are top in production of goods and services.

In GST, CGST and SGST will be simultaneously leviedThe CGST regime, both the CGST and SGST would be levied on every transaction of supply of goods and services. Both will Page 10

be levied on same price. The location of the supplier and recipient is immaterial for the purpose of levy of both the tax.

Both states and centre have a say in GST ratesUnder GST regime, both the CGST and SGST would be levied at rates jointly decided by centre and states. These rates would be notified on recommendations of GST Council.

GSTN is the special purpose vehicle for GST administrationGoods and Services Tax Network is a special purpose vehicle set up to cater to the needs of GST. The GSTN shall provide a shared IT infrastructure and services to central and state governments, tax payer and other stakeholders for implementation of GST. The key functions of the GSTN are as follows; 1. 2.

Facilitating registration Forwarding the returns to central and state authorities

3. 4.

Computation and settlement of IGST Matching of tax payment details with banking network Page 11

5.

Proving various MIS reports to the Central and the States government based on the tax payer return information 6. Providing analysis of the payers profile 7. Running the matching engine for matching, reversal and reclaim of input tax credit. The GSTN is developing a common GST portal and applications for registration, payment, return and MIS/Reports.

2. ADMINISTRATIVE PROVISIONS 2.1 IntroductionThe CGST Act confers powers for performing various statutory functions on various officers. Officers who are to discharge there functions derive their power and authority from section 3 of GST Act. It is therefore necessary for the efficient administration of the law that often authority be conferred on designated persons who will be the incumbents occupying positions identified in the law as being the authorized persons to discharge the said functions.

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Specific categories of officers have been named in this section whose appointment requires notification by the government. Notification issued under this section do not require to be laid before parliament as ‘laying before parliament’ is a requirement limited only to exemption notification and not designating officers under section 3. Only recently, central excise act has been amended perhaps to align itself in the administrative framework in view of the imminent introduction of GST. Accordingly, officers under the central excise act are deemed to be officers appointed under this act.

1.2 Appointment of Officers1.

The GST 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 officers under this act. 2. Without prejudice to the provisions of subsection, the board may, be order, authorise any officer referred to in clauses to of section 3 to appoint officers of central tax below the rank of assistant commissioner of central tax for the administration of this act.

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All statutory functions cannot be performed by executive officers. The power to appoint executive officers remains with the government but the authority to appoint administrative staff is left to the Board- Central Board of Excise and customs constituted under the Central Boards of Revenue Act, 1963. The administrative staff makeup the entire working team of administrative staff also called ‘field formations’. Which the authority to appoint administrative staff is vested with the board, express provision is made to permit officers under section 3 to appoint, for the purpose of central tax, certain administrative staff.

2.3

Powers of Officers-

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. Page 14

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 power and discharge the duties conferred or imposed on any other officer of central tax. The delegate must exercise the power conferred and notdelegate. While this is true on the principle of construction of statutes, the very law that creates the power also empowers creation of exception to this principle. An offer duty appointed under this act needs to be supplied with guidance as regards the manner of exercise of his authority including the boundaries for the same.

2.4 Authorization of officers of State tax or Union territory Tax as Proper officer in certain Circumstance1.

Without prejudice to the provision of this act, the officers appointed under the States Goods and Services Tax Act on 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

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Government shall on the recommendations of the Council, by notification, specify. 2. Subject to the conditions specified in the notification issued under sub- section – 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 Act, as authorised by the State Goods and Services Tax act, as authorised by the State Goods and Service tax act, as the case maybe under intimation to the jurisdictional officer of states 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 and proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter. 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. For purposes of administration of this act, it is permitted to authorise officers of State/UT Tax to simultaneously also be the officer of Central Tax. It is interesting to note that officers of

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State/UT Tax do not relinquish their authority but accept additional authority as officers of Central tax. However to do so requires the recommendations of the Council and adherence to the conditions that the government may impose in this regard.

3. LEVY AND COLLECTION OF TAX 3.1 Scope of supply – 1.

For the purpose of this Act, the expression “supply” includesa) 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 Page 17

consideration by a person in the course of furtherance of business; b) Import of services for a consideration whether or not in the course of furtherance of business; c) The activities specified in schedule 1, made for agreed to be made without a consideration ;and d) The activities to be treated as supply of goods or supply of services as referred in schedule 2. 2. Notwithstanding anything contained in sub-section(1),(a) activities or transactions specified in schedule 3; 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 asa)

A supply of goods and not as a supply of services; or

b)

A supply of service and not as a supply of goods.

The tax liability on a composite or a mix supply shall be determined in the follow manner namely: Page 18

a)

A composite supply comprising two or more supplies, one of which is principal supply, shall be treated as a supply of such principal supply; and b) A mix supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Subject to the project of sub- section (2), there shall be levied a tax called a 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. The central tax on the supply of petroleum crude, high speed diesel, motor spirit, 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 councils.

3.2 AnalysisEvery supply will be liable to tax. The natural of tax would depend upon the nature of supply, viz, inter-States supplies will be liable to IGST and intra-State supplies will be liable to CGST and SGST

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Supply should invoice goods and services- viz., either as wholly goods or wholly services. Even where a supply involves both, goods and services, the law provides that such supplies would classifiable either as, wholly goods or wholly services. Schedule 2 of the act provides for this classification. Where a supply involves multiple goods or services, or a combination of goods and services, the treatment of such supplies would be as follows: If it involves more than one goods or services which are naturally bundled together. These are referred to as composite supply of those goods or services, which constitutes the principal supply therein Illustration (provided in section 2(27))Where goods are packed, and transported with insurance, the supply of goods, packing materials, transport and insurance is composite supply and supply of goods is the principal supply. This implies that the supply will be taxed wholly as supply of goods.

Illustration (provided in section 2(66))A supply of a package consisting of canned foods, sweets, chocolates, cake, dry fruits, aerated drink and fruit juices when supplied for a single price is a mix supply. Each of this items can be supplied separately and is not dependent on any other. Page 20

SupplyGeneric meaning of supply; Supply includes all forms of supply and includes agreeing to supply when they are for a consideration and in the course or furtherance of business. It specifically included. i. ii. iii. iv. v. vi. vii. viii.

Sale Transfer Barter Exchange License Rental Lease Disposal

Such activities of 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 government or recommendation of the council.

3.3 Comparative ReviewUnder the current tax laws, central excise is levied on ‘manufacture of goods’, VAT/CST is levies on ‘sale of goods’ and service tax charged on ‘service provided on agreed to be provided’. Unlike such different incidence, under the GST laws, Page 21

it is ‘supply’ which would be the taxable event. Under the current law, e.g. while stock transfers are liable to central exercise, it would be not be liable to VAT/CST- however under the GST laws, it would be taxable as a ‘supply’ if such supplies are between distinct persons under section 25(4) or 25(5). Further, free supplies would be liable to excise duty, while under the VAT laws, free supplies would require reversal of input tax credit; under the GST law, the treatment would be similar to the present VAT laws, where the supplies are made without any consideration. However, where the free supplies are made between related persons then such supplies may be regarded as supply under section 1. In the current law, there are multiple transactions which apparently qualify of both ‘sale of goods’ as well as ‘provision of services’ E.g. license of software, providing a right to use a brand name, etc. To avoid the situation, GST law clarifies as to whether a transaction would qualify as a ‘supply of goods’ or as ‘supply of services’ by introducing a deeming fiction. A transaction composite contracts would either qualify as goods or as services, under the GST law.

3.4 Composition levyNotwithstanding anything to the contrary contained in this Act but subject to the provisions of sub section (3) and (4) of section 9, a registered person, whole aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may

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opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceedinga)

One per cent, of the turnover in state of 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 in clause (b) of paragraph 6 of schedule 2 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 rupees, as may be recommended by the council.

3.5 Power to Grant Exemption from TaxWhere 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 Page 23

subject to such conditions as may be satisfied 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 satisfied in such notification. 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 the exceptional nature to be started in such order, exempt from payment of tax any goods or services or both on which taxis leviable. The government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope of applicability of any notification issued under sub-section (1) or other 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.

4. TIME AND VALUE OF SUPPLY 4.1 Time of supply of goods-

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1.

The liability to pay the 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 invoice by the supplier or the last date on which he is required, under sub-section(1) of section 31, to issue the invoice 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. 3. In case of supply of vouchers by a supplier, the time of supply shall bea)

The data of issue of voucher, if the supply is identifiable at that point; or b) The date of redemption of voucher, in all other cases. 4. where it is not possible to determine the time of supply under the provision of sub-section (2)or sub section (3)or subsection (4), the time of supply shall-

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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 paid. 5. 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. Supply has been understood to hold the key to the incidence of GST, but it is the ‘times of supply’ that dictates the occasion when this incidence will come to rest. Taxable supply has been defined to mean a supply of goods and services which is chargeable to tax under this act. It is interesting to note the use of the expression ‘chargeable to tax’ as opposed to ‘leviable to tax’. It has been held that ‘chargeable to tax’ encompasses not only the incidence of tax but also its assessment. The opening words in section 12(1) are very interesting and forceful as it is here that the liability to pay GST arises. The subject matter of levy- goods or services- becomes encumbered with the tax upon occurrence of the taxable event- supply. But the tax levied in terms of section 9, comes to reside only at the time determined by section 12 and 1. Accordingly, these sections play a stellar role in the imposition of GST.

4.2 Time of Supply – Forward Charge-

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Time of supply is prescribed to be the earlier of (a) data of issue invoice and (b) date of receipt of payment. Date of issue of invoice requires us to examine section 31 which deals with the requirement to issue a “tax invoice”. Here two kind of situations are contemplated, namely I. II.

A case Where the supply involves movement Any other case

Before proceeding, it is necessary to admit the concept of ‘person and taxable person’. Person is defined in the most familiar manner in section 2(84) but taxable person is explained in detail in section 25. A proper reading of section 25 helps us understand- a state is the smallest unit in GST- except where multiple business verticals are registered separately under section 24. A taxable person is therefore the presence of the person in a state where taxable supplies are made therein, every place in the state such person shall be a taxable person. Now, we may return to our discussion regarding the two kinds of cases that are discussed on time of supply. It is noticeable that section 31 uses two expression- ‘removal of goods’ and ‘movement of goods’- which are not merely expressions of distinction without a difference. There is deliberate purpose for legislating in this manner. ‘Removal of goods’ is defined in section 2(85) and identifies the steps that may follow once that the decision to supply made.

4.3 Time of Supply- Reserve ChargePage 27

Where tax is payable on reserve charge basis, the time of supply is appointed to be the earliest of (a)date of receipt of goods, (b)date of payment or (c) 30 days from the date of issue of invoice by the supplier. If for any reason, one or these three dates cannot be determined then the time of supply will be the date of recording the supply in the books of the recipient. Keeping in mind the definition of reserve charge in section 2(98), the above provision does not apply to payment of tax by an electronic commerce operator but only to those cases of supply which fall under sub-section 5 to section 9 of the act.

4.4 Time of Supply of Services-

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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 shall be the earliest of the following dates, namelya) The date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section(2) of section 31 or the date of receipt of payment, whichever is earlier; or b) The date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or c) The date of 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 purpose 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;

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ii.

‘The date of receipt 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 taxis 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 issue of invoice or any other document, by whatever name called, in lieu thereof by the supplier; 4. In case of supply of vouchers by a supplier, the time of supply shall bea)

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 subsection (4).

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4.5 Change in Rate of Tax in respect of Supply of Goods or servicesNotwithstanding 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: i.

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 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; ii. In case the goods or services or both have been supplied after the change in rate the 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 Page 31

shall be the date of 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 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 issue of invoice. Provided that the date of receipt 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.

AnalysisPayment of the tax requires the presence of all the following events: i. ii. iii.

Supply of goods or services Issue of invoice Payment for the supply

When there is a change in the rate of tax during the occurrence of these three events, there may be some concern about the applicability of the correct rate of tax. Section 14 addresses this aspect clearly.

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4.6 Value of Taxable Supply1.

The value of a supply 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 includea) Any taxes, duties, cesses, fees and charged 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 service tax 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 mot 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 supplier to the recipient of a supply and any amount changed 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 let fee or penalty for delayed of any consideration for any supply; and

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e)

Subsides directly linked to the price excluding subsides provided by the central government and state governments.

4.7 Consideration not Wholly in Money – It is important to consider the difference between ‘free’ and ‘no consideration’. It is probably common to consider that these two are synonymous. At the outset, there can be no contract without consideration. Experts in contract law will see the gross illegality if one were to say that there is a contract but has no consideration in it. If a contract is valid, then there is non-monetary consideration which is erroneously stated as having ‘no consideration’. It is impermissible that a contract subsists but lacks consideration. It is just impossible. Now, if there is a contract with nonmonetary consideration, rule1 of the valuation rules comes into operation. Although this rules states that it applies when the consideration is partly in money or wholly in non-monetary form. This rules provides that the value of supply “shall be” and not be “based on” or “guided by”, so that mandatory nature of the prescription of this rule can be appreciated.

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5. GST REGISTATION 5.1 Persons liable for RegistrationEvery supplier shall be liable to be registered under this act in the state or union territory, other than special category states, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty Lakh rupees: Provided that where such person makes taxable supplies of goods or services or both from any of the special category states, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees. Even person who, on the day immediately preceding the appointed day, is registered or holds a licence under an existing law, shall be liable to be registered under this act with effect from the appointed day. Where a business carried on by a taxable person registered under this act is transferred, whether an account of succession or otherwise, to another person as a going concern, the transferee or the successor, as the case maybe shall be liable to be Page 35

registered with effect from the date of such transfer or succession. Notwithstanding anything contained in sub- section (1) and (3), in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case maybe, demerger of two or more companies pursuant to an order of a high court, tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which the register of companies issues a certificate of incorporation giving effect from the date on which the register of companies issues a certificate of incorporation giving effect to such order of the high court or tribunal. Explanation. For the purpose of this sectionThe expression “aggregate turnover” shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals; ii. The supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker; iii. The expression “special category states” shall mean the states as specified in sub-clause (g) of clause (4) of article 279A of the constitutions. i.

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5.2 AnalysisEvery supplier shall be liable to be registered under the act in the state from which he makes a taxable supply of goods or services or both. Registration is required if his aggregate turnover in a financial year exceeds rupees twenty lakhs. This threshold limit will be rupees ten lakh if a taxable person conducts his business in any of the special category states as specified in sub-clause (g) of clause (4)of article 279A of the constitution i.e. Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. It means that for each state, the supplier liable for registration will have to take a separate registration even though such supplier may be supplying goods or services or both from more than one state as a single entity. The application for registration shall be made within 30 days from the date when he becomes liable for registration. Casual taxable person or a non-resident taxable person shall apply for registration at least five days prior to the commencement of business. Page 37

5.3 A Supplier Registration-

shall

a)

not

be

Liable

for

If hi aggregate turnover consists of only such goods and services which are not liable to tax or wholly exempt from the under this act. b) An agriculturist, to the extent of supply of produce out of cultivation of land • For calculating the threshold limit, the turnover shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals. Further, supply of goods by a registered Job-worker, after completion of job work, shall be treated as the supply of goods by the “principal” referred to in section 143 of this act. The value of such goods shall not be included in the aggregate turnover of the registered job worker. • Every person who, on the day immediately preceding the appointed day, is registered or holds a license under an earlier law, shall be liable to be registered under this act with effect from appointed day.

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•

Where the person who is liable to be registered under this Act fails to obtain registration, the proper officer can proceed to obtain register such person in the manner as may be prescribed.

Categories are persons who shall be required to be registered under this act irrespective of the threshold notwithstanding anything discussed in the paragraph above, the following categories of persons shall get registered compulsorily under this act: • Persons making any inter-state taxable supply; • Casual taxable persons making taxable supply: • Persons who are required to pay tax under reserve charge; • Persons who are required under sub-section (5)of section 9 • Non-resident taxable persons making taxable supply; • Persons who are required to deduct tax under section 51 (tax deduct or source); • Persons who supply goods or services or both on behalf of other registered taxable persons whether as an agent or otherwise; • Input service distributor;

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persons who supply goods and services, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52, • every electronic commerce operator;

5.4 Transfer of Business and RegistrationIf registered taxable person transfers business on account of succession or otherwise, to another person as a going concern, the transferee, or the successor, as the case may be, shall liable to be registered with effect from the date of such transfer or succession. This means that the registration certificate issued under section 22 of the act is not transferable to any other person. In a case of transfer pursuant to sanction of a scheme or an arrangement. The transference shall be liable to be registered with effect from the date on which the Registrar of companies issues a certificate of incorporation giving effect to such order of the High Court. 1. The following person shall not be liable to registration, namely: a)

any person engaged exclusively in the business of supplying goods or services or both that are not liable to

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tax are wholly exempt from tax under this act or under the integrated goods and services tax act; b) An agriculturist to the extent of supply of produce out of cultivation of land. 2. The government may, on the recommendations of the council, by notification, specify the category of persons who may be exempt from obtaining registration under this act.

5.5 Compulsory Registration in Certain Cases1. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of person shall be required to be registered under this Act, i. ii. iii.

Person making any inter-state taxable supply; Casual taxable persons making taxable supply; Person who are required to pay tax under reserve charge; iv. Person who are required to pay tax under subsection (5) of section 9; v. Non resident taxable persons making taxable supply vi. Persons who are required to deduct tax under section 51, whether or not separately registered under this act;

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vii.

Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; viii. Input service distributor whether or not separately registered under this act; ix. Person who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52 x. Every Electronic commerce operator.

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CONCLUSION From the above analysis it is clear that implementation of GST will have a significant impact on logistics sector in India. If GST is properly implemented, then it will have a double positive impact on the logistics industry that is logistics costs will come down and logistics efficiency will increase both within India and exports. So the main objective of logistics management, that is customer satisfaction at least logistics cost, will be achieved with the implementation of GST. The GST implementation will also leads to emergence of organized service providers since taxes will not be added costs for the business. In the current scenario the logistics sector is a highly fragmented industry with very few large organised players. The unorganized sector would have to shape up and join hands with the organized players for setting of economics of scale. In a nut shell, the successful implementation of GST could reduce transportation cycle times, enhance supply chain decisions, lead to consideration of warehouses etc. Which could help logistics reach itspotential in terms of services and growth. So it will be great boom for the logistics sector which leading to accelerated economic growth.

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