PROJECT REPORT

(Submitted for the Degree of [Link]. Honours in Accounting & Finance

under the University of Calcutta)

TITTLE OF THE PROJECT:

“GOODS AND SERVICES TAX”

SUBMITTED BY:
Name of the Candidate: ANAMIKA RAJAK.
Registration Number: 115-1211-0730-21
Name of the College: Surendra Nath College.
College Roll Number: 139.
CU Exam Roll Number: 211115-11-0043

SUPERVISED BY:
Name of the Supervisor: .
Name of the College: Surendra Nath College.

MONTH & YEAR OF SUBMISSION:

MAY,2024
SUPERVISOR’S CERTIFICATE
This is to certify that ANAMIKA RAJAK a student of [Link]. Honours in
Accounting & Finance of SURENDRA NATH COLLEGE, under the University
of Calcutta has worked under my supervision and guidance for his Project
Work and prepared a Project Report with the title “GOODS & SERVICE
TAX” which he is submitting, is his genuine and original work to the best
of my knowledge.

Place: Kolkata Signature:

Date: / /2024 Name: Nandini Mitra

 STUDENT'S DECLARATION
I hereby declare that the Project Work with the title “GOODS & SERVICE
TAX” submitted by me for the partial fulfilment of the degree of [Link].
Honours in Accounting & Finance under the University of Calcutta is my
original work and has not been submitted earlier to any other University
/Institution for the fulfilment of the requirement for any course of study. I
also declare that no chapter of this manuscript in whole or in part has
been incorporated in this report from any earlier work done by others or
by me. However, extracts of any literature which has been used for this
report has been duly acknowledged providing details of such literature in
the references.

Place: Kolkata Signature:

Date: / /2023. Name: ANAMIKA RAJAK.

Registration Number: 115-1211-0730-21
College Roll Number: 139.
 ACKNOWLEDGEMENT.
First of all, thanks to God, for giving me the strength and will to complete
this task just in time. Even though I faced a lot of difficulties while trying
to complete this task, I still managed to complete it and I am glad about
it.
A special thanks to, Nandini Mitra for being such a guidance to us while
we were doing this task. He had given us an appropriate example and
knowledge in order to make us understand more about this topic. He
spends his time to explain the execution of this idea in all the way.
I also appreciate, her support to me to do this project in all the way and
made it possible. I also want to thank other pupils who were willing to
share their information about this topic. They gave us a lot of new ideas
about the task.
Also, a great thanks to my family and friends who tried their best to give
their support either by giving me a lot of encouragement to keep up with
this task or by supporting us financially and pay all the cost required to
complete this task.
 CONTENTS

CHAPTER NO: TOPICS PAGE.

NO
CHAPTER 1. INTRODUCTION 06-10
1.1-BACKGROUND OF THE PROJECT
1.2-NEED OF THE STUDY
1.3-OBJECTIVE OF THE STUDY
1.4-RESEARCH METHODOLOGY
1.5-LIMITATION OF THE STUDY
1.6-CHAPTER PLANNING.

CHAPTER 2. CONCEPTUAL FRAMEWORK. 11-19

2.1-CONCEPT 0F RATIO ANALYSIS
2.2-NATIONAL AND INTERNATIONAL
SCENARIO.

CHAPTER 3. PRESENTATION OF DATA, ANALYSIS 20-39

AND FINDINGS.
3.1-ANALYSIS AND FINDINGS
CHAPTER 4. CONCLUSION & RECOMMENDATION. 40-42
4.1-SUMMARY OF OBSERVATION
4.2-RECOMMENDATIONS
4.3-SCOPE OF FURTHER RESEARCH
CHAPTER 5. BIBLIOGRAPHY 43
 INTRODUCTION
1.1-Background of the project.
Introduction of the value at the tax at Central and state level has been
considered to be a major step and important step forward in the Globe of
indirect tax reform in India. If the vet is a major improvement over the
pre-existing central exercise duty at the National Lab and the sales tax
system at the state level then the goods and service tax will indeed be an
additional important perfection the next logical step towards a
widespread indirect tax reform in the country. Initially it was
conceptualized that there would be a national level goods and service
tax, however with the realize of the first discussion paper by the
empowered committee of the state finance ministers on 10th November
2009 it has been made clear that there would be a dual GST in India,
taxation power both by the central and the state to levy the taxes on the
goods and service. Almost 150 countries have introduced in some from
while countries such as Singapore and New Zealand tax virtually
everything at a single rate Indonesia has five positive rates A 0 rate and
over 30 categories of exemption. Under the GST scheme of person who
was liable to pay tax on his output whether the provision of service or
sale of goods is entitled to get input tax credit on the tax paid on its input.
1.2-Need of the Study.
This study will help to examine the problems and challenges of GST
after its implementation and will suggest
the measures for government and policy makers for effective
implementation of GST

• Need of SIP is to gain inside knowledge of auditing

• To know working environment of office.
• To tackle invoice and solve queries of clients.
• To handle roles and responsibilities in the company.
1.3-Objective of the study.
• To Develop national Market- One Nation, one Tax
• To reduce multiplicity of indirect taxes.
• To Eliminate classification dispute between goods & services
• To remove barriers in inter-State movement of goods
• To ease the administrative control.
• Uniformity of tax rates and automated compliances.
• Ensuring availability of input tax credit across the value chain
• Simplification of registration, filing of return, tax administration and
compliance
• Harmonization of tax base, laws, and administration procedures across
the country.
• Minimizing tax rate slabs to avoid classification issues.
• Prevention of unhealthy competition among states.
• Free movement of Goods across the country without any additional tax.
1.4-Research and Methodology
Our study is based on the basis of secondary data collected from various
books journals magazines reports newspaper Internet etc. We have also
collected data from the sources of Department of revenue and Ministry
of Finance after analysed with the help of simple statistical tools. We
have used Lucid language to present the data in a more comprehensive
manner. Some findings have been gathered to stablish objective.
1.5-Limitation of the study
The study has some limitation on its scope and interpretation of the
result. It covers only the narrow concept of goods and service tax and not
the whole, the present study has also the following limitation.
• The first and most shortage of time in fact we have not sufficient
time for in depth analysis international comparison and other
analysis of data this has indeed restricted a study to our mission.
• There are few common and unavoidable general problems in
collecting secondary data which are required for our study.
• There was a problem of cost involved in earning out the project.
 1.6-Chapter planning
Chapter-1- Background, Objectives, Literature
Introduction Review, Research & Methodology,
Limitations and Chapter Planning.

Chapter-2 Overview, National Scenario,

Conceptual Frame work International Scenario.

Chapter-3 Ratio Analysis of Automobile Industry

Presentation of Data, and its trend analysis through various
Analysis and Findings methods.

Chapter-4 The Chapter is about the Conclusions we

Conclusion and get from the Analysis of Data Collected
Recommendations and Recommendations for the
betterment of the GST System.
 CHAPTER-2
CONCEPTUAL FRAMEWORK
2.1- CONCEPT 0F RATIO ANALYSIS
Ratio Analysis is a quantitative method of gaining insight into a company
liquidity, operational efficiency and profitability by comparing information
contained in its financial statements.
Trend Analysis Trend Analysis of balance sheet involves calculation of
percentage change in the balance sheet items for number of successive
years. This is carried out by taking the items of the past financial year
used as a base year and items of the year are expressed as percentage of
the base year.
2.2- NATIONAL AND INTERNATIONAL SCENARIO.
• IMPACT OF GST ON NATION ON VARIOUS SECTORS.
The Enforcement of the tax was for the long-term benefit. There
were very few sectors that received an immediate benefit from
the implementation of Goods and Services Tax (GST).
The long-term benefit requires the patience of citizens. Some of
the major sectors that have been affected by the implementation
of GST are –
• Export-Import sector.
• Real estate.
• Entertainment industry.
• Hotel and tourism.
• Logistics industry.
• Banking sector.
• Gold industry.
• Textile/readymade garment sector.
• It industry.
• Fmcg industry.
Import and Export :
Import will be treated as inter-States supply and IGST will be
chargeable along with basic Customs duty. However, in GST Export
will be treated as Zero rated supplies and no IGST is payable.

HOTEL AND TOURISM

Tourism and hotel industry play an import part to grow India’s
GDP. GST rates for hotels are different according to their tariffs:
• Less than Rs. 1000 = 0% (GST free)
• Rs. 1000 to 2500 = 12%
• Rs. 2500 to 7500 = 18%
• Above Rs. 7500 = 28%
It is expected that the cost of tour packages may come down due
to the relief to tour operators under GST regime. 5% tax is liable
on tour operators currently.
BANKING SECTOR
18% GST rates levied on banking services like insurance policies,
ATM transactions etc. The earlier tax rate was 15%. Banking and
financial services become costly. GST has reduced indirect taxes,
i.e., Ease of doing business in the banking and financial sector
Which leads to increase in business. It will increase demand for
funds and digital transactions in the banking industry
GOLD INDUSTRY
18% GST rates levied on banking services like insurance policies,
ATM transactions etc. The gold industry is the biggest market in
the world. GST on the gold industry hits to consumers. 3% GST
rate that is applicable to 10% import duty and 5%, making charges
which lead to rising the jewellery prices in India. The demand for
Gold may fall 50 to 70 percent. But there is more transparency in
the gold industry due to the GST implementation. It will definitely
turn in a positive impact on a long term.

TEXTILE/READYMADE GARMENT SECTOR.

Textile industry will be benefitted through GST implementation in
India. Ready-made garments up to Rs. 1000 is exempted from GST
and branded garments above Rs. 1000 will be taxed at 12%.

IT INDUSTRY.
All IT services and software products, as well as freelancers, are
levied 18% GST rate. Overall positive impact on IT industry of GST.
Cascading effect is removed through GST implementation. IT will
make changes in the process of business process. ITC under GST
will Bring down the operating costs and increase the profitability
of the IT industry.
FMCG INDUSTRY.
FMCG sector is one of the biggest economic platforms in India.
After the GST implementation, Mostly FMCG products and
services are taxed under 18 to 20 percent. Lower GST rates, give
Benefits to the business holder, manufacturers and consumers
directly.

• GLOBAL IMPACT OF GST.

GST was first levied by France in 1954. Today, Malaysia is the most recent
country to join the bandwagon. In countries where GST has been
adopted, manufacturers, wholesalers, retailers and service providers
charge GST at the specified rate on price of the goods and services from
consumers and claim input credits for GST paid by them on procurement
of goods and services (raw material).
Globally, the broad principles of GST are as under:
▪ GST is a broad-based tax
▪ GST is a destination-based tax
▪ GST is technically paid by suppliers but it is actually funded by
consumers
▪ GST is collected through a staged process i.e. a tax on the value
added to goods or services at every point in the supply chain
▪ GST is a tax on the consumption of products from business
sources, and not on personal or hobby activities
▪ Under GST, input tax credit is provided throughout the value
chain for creditable acquisition.

AUSTRALIA
In Australia, the GST is a federal tax collected by the Australian Tax Office
and then distributed amongst the states. It was introduced in 2000, and
its current tax rate is 10%. There are many domestically-consumed items
that are zero-rated such as fresh food, health services, and education,
amongst others. Government charges and fees are also exempted,
considering that they are themselves in the nature of taxes.

INDONESIA.
VAT was introduced in Indonesia in 1985, and is collected by the
Directorate General of Taxation, Ministry of Finance. The standard rate is
fixed at 11%, with plans to raise it to 12%. Basic commodities have been
exempted from VAT.
France.
VAT in France is collected on products or services at each stage of
production or marketing and borne by the final consumer. The VAT rates
comprise 20%, 10%, 5.5% and 2.1% slabs. 20% is the standard rate and is
applicable to most goods.

UK.
The UK does not have any federal Value Added Tax levied on
goods and services. Instead, there is a sales tax governed at a
state level. 45 states, the District of Columbia, as well as the
territories of Puerto Rico and Guam have imposed a general sales
taxes that apply to both the sale or lease of many goods and some
services. The states may also grant local governments the authority
to levy additional general or selective sales taxes.
 CHAPTER-3
PRESENTATION OF DATA, ANALYSIS AND
FINDINGS.
3.1-ANALYSIS AND FINDINGS.
AUOTOMOBILE INDUSTRY
India has a robust automotive industry which ranges from two
wheelers to four wheelers as well as a presence in varieties of
commercial vehicles. It is now heading towards electrification,
albeit slowly. With increasing spending capacity, high levels of
product awareness, rapidly evolving expectations and demand for
personalized products & services, customers are taking the centre
stage of the entire automotive ecosystem. Understanding
changing customer needs and having the ability to serve them
differentially will be a key competitive advantage. An overview of
the automotive ecosystem is provided below for ease of
reference:
In this industry, there is a potential for a significant disruptive
impact of technology, primarily at three levels:
• On vehicles (e.g. electric, driverless, connected)
• On supply chain and operations (digitalization, robotics, 3-D
printing) and
• On business models (e.g. mobility as a service, vehicle sharing)
Given the above, industry participants are in a process to reinvent
themselves and find new ways of creating and delivering value in
the future.
Further, major regulatory interventions, such as the accelerated
transition from BS IV to BS VI, adoption of electric vehicles, safety
rules and stringent vehicle standards are leading to a shift in
vehicle technology. This is creating significant challenges, not only
for the automotive industry and supplier ecosystem but also in
related sectors such as energy, oil & gas, transportation, and
urban development. Also, the development of smart
infrastructure (e.g. smart cities), alternative modes of
transportation and the drive to enable electric vehicle charging
infrastructure will change the face of mobility infrastructure.
India is emerging as a priority market for global automotive
companies. Indian companies are globalizing as well. Thriving in
such an environment will need a clear strategy and the ability to
manage risks and build organization capability.
The GST implementation – Teething issues and current state of
play
GST has started changing India’s perception not just for policy
makers in other countries but also for global investors especially
in the context of big auto players. With the advent of GST, India
has moved the value chain and the tax system is almost on a par
with countries that have good indirect tax structures, including
those in China.
One of the biggest challenges in the GST implementation was the
technology infrastructure and experience of compliance given
that since Day Zero; there were bugs, the portal had a slow
response rate and performance related issues. The Government
constituted a committee to address the issues and it is working on
improving the tax payer experience and various steps at
simplification of process are being introduced.
The implementation of the E-way bill also brought with it
operational as well as technology challenges for which the
Government took additional time to get the framework up and
running. The portal was revamped and was introduced in
February 2018 and is completely functional since April 2018 on a
pan India basis. The automation of the E-waybill system is a
welcome relief from the previous practice of manual checking of
way bill information at check posts in different States which led to
different interpretations and maintenance of different types of
documentation/ records based on State VAT law provisions.
Multiple tax rates (5%, 12%, 18% and 28% excluding cess where
applicable) is another aspect which complicates the taxation
system and leads to unwarranted classification disputes. The GST
law also prescribes for a levy of compensation cess on certain
specific goods including certain categories of motor vehicles.
Further, the applicable rate also depends upon value-based
classification (footwear, apparel etc.), specification-based
classification and based on status of buyers. The Government has
indicated that it will continue to work on rationalization of rates
and try to move towards a more simplified tax rate structure,
certain initial steps in this regard have already been taken.
Issues – Completely / partially addressed till date.
[Link] payable on advances
One of the biggest issues for the sector post implementation of GST was
the requirement to deposit GST on receipt of advance which was leading
to significant blockage of working capital. It is a common practice in this
sector to receive advances from dealers/ distributors as well as customers
and thus, taxing the advance was leading to a significant working capital
blockage. However, the requirement to pay advances was done away
with w.e.f. November 15, 20177 , which was a welcome relief for the
industry players.

2. GST on sale of second-hand motor vehicles

GST is leviable only on margin i.e. Sale Price less Purchase Price/
Depreciated Value i.e. no GST in case the margin is negative. Clarity was
also provided on Original Equipment Manufacturers (‘OEMs’) using cars
for display, exhibition etc

3. Valuation
Unlike the erstwhile Indirect tax regime, under GST there is no Maximum
Retail Price (MRP) based valuation, which applied to parts sold in the
after sales market. For all the OEM and auto component product
segments, uniform transaction valuation methodology is to be followed.
The automobile industry has seen significant disputes under central
excise valuation like:
• Inclusion of State or Industrial Promotion Subsidies (IPS) retained by
the manufacturer • Deducibility of post-sale discounts from the dutiable
value under excise
• Treatment of PDI charges and other dealer reimbursements,
advertisement charges recovered from dealers etc.,
• Sales through marketing companies and mutuality of interest
• Receipt or payment of subventions in the distribution chain
While all business usually offer different types of marketing schemes and
offers, in the automotive sector, the industry is structured in a way that
the manufacturers/ importers offer a variety of pre and post-sale
discounts to dealers, while the dealers also have various onward
schemes/ promotions for customers (where the cost is sometimes fully or
partly borne by the dealer, similarly by the automotive company and
sometimes shared with third parties, such as financing companies). The
secondary market schemes in this sector are distinctive and the players
have set up different transaction models (costs being shared by
manufacturer/ trading company or distributors). While the industry
players, during implementation of GST have taken positions relating to
different types of marketing schemes, a conclusive clarification on the
same is still not available. Further, in some States, officers at the ground
level have also raised queries relating to the positions taken

4. Valuation in case of supplies to ‘Related Parties’ -

Under GST Law, any supply of goods or services or both between related
persons or distinct persons, as per Section 25, when made in the course
or furtherance of business, will be treated as supply even if made without
any consideration and such supply would attract GST.
The valuation in case of supply to ‘related parties’ has always been a key
area of litigation under erstwhile excise regime. Under the GST regime
also, the valuation in case of related party transactions especially in case
of cross border transactions continues to remain a complex area due to
open ended valuation rules and lack of clear guidelines
Rule 28 of the Valuation Rules provides the following sequential options
to be adopted in case of supplies between related persons:
• Open Market Value (‘OMV’) of such supply
• Value of supply of goods or services of like kind and quality
• 110% of the cost of supply of such good services or
• Reasonable means consistent with the principles and general provisions
of section 15
Another option available for when goods are intended for further supply
‘as such’ (such as manufacturing company to trading company), is to
value goods are 90 percent of the final sales price.
5. Export Refund/ Rebate
While there was ambiguity surrounding the mechanism/ process of
seeking export related refunds/ rebates at the time of the GST
implementation, as highlighted above, the Government has focused on
setting up a process for speedy disbursal of pending IGST refund claims
and streamlining of the refund process. However, there as various
restriction to export rebates claimed under Rule 96(10) which will need
to be and analyzed.
6. Abolition of multiple cesses and transition credits
In the erstwhile Indirect tax regime, the automotive sector was required
to pay certain duties/ surcharges on over other Indirect tax levies. Some
such duties were National Calamity Contingency Duty, Infrastructure
Cess, Tractor Cess, Automobile Cess etc. Under GST, the only additional
cess relevant for the industry is the GST Compensation Cess. Further, the
Industry followed a practice of availing the credit of Education Cess and
the Secondary and Higher Education Cess (‘cesses’) in Form GST TRAN-1,
but the Government has recently but retrospectively amended the GST
Law with effect from 1 July 2017 to exclude these cesses from the eligible
duties to be transitioned to GST. As a result, the Department is issuing
notices to recover the cesses, the credit of which was taken in Form GST
TRAN-1 along with interest. This step is a point for many industries to
start reversing the Education

7. Job Work
There are various job work models relevant for this sector and at the
onset of GST there was considerable ambiguity surrounding aspects such
as the procedure for principal – job work related transactions, valuation
etc. An extensive clarification on clearance of goods from job worker
premises issued vide Circular8 highlighting the appropriate treatment in
case of different types of job work transactions. A quick summary of the
key aspects clarified is as follows:
• Use of own goods by Job worker: The job worker, in addition to the
goods received from the principal, can also use its own goods for
providing the job work services. However, there have been Advance
Rulings issued on this point, which raises a few questions around the final
treatment of the same
. • Registration of job worker: Job worker is required to obtain
registration only in cases where its aggregate turnover (to be computed
on pan-India basis) in a financial year exceeds the threshold limit
regardless of whether the principal and the job worker are located in the
same State.
• Supply of inputs/ capital goods by job worker
– Sending goods to a job worker is not a supply as such. However, it
acquires the character of supply when the inputs/ capital goods (other
than moulds and dies, tools etc.) sent by the principal for job work are
not received back or further supplied by the principal within the specified
time i.e. one year and three years respectively from the date when it was
sent out to the job worker
. – In such cases, return of goods by the job worker would also be treated
as a supply and would be liable to GST. The job worker would be liable to
pay GST if it is liable to be registered (if over the threshold limit for
registration), else, the principal has to pay GST on reverse charge basis.
– Further, in such cases, the principal would need to consider such goods
delivered to the job worker as a supply made on the date of original
delivery of the goods to the job worker and to be disclosed in the return
for the period in which the period of one year/ three year expires. The
principal will be required to pay tax along with interest for the
intervening period.

8. Vendor Tooling
The Central Board of Indirect Taxes and Customs (CBIC) has issued
Circular no. 47/21/2018-GST dated 8th June 2018 contemplating the
following tax implications on vendor tooling transactions between OEM
and a component manufacturer:
OEM owns tool and supplies free of cost to component manufacturer No
GST No reversal required No amortization required
The contract between OEM and component manufacturer is for supply of
components made by using the moulds / dies belonging to the
component manufacturer, but the same is supplied by the OEM to the
component manufacturer on FOC basis No GST OEM to reverse credit as
the same will not be considered to be provided by OEM to the
component manufacturer in the course or furtherance of the OEM’s
business Amortization of tool cost required for component manufacturer

Other Focus Areas and Open Issues

A long standing issue in this sector pertains to the classification of
vehicles in kit form at the stage of imports. Typically, vehicles can be
imported as Completely Built Units (‘CBUs’), Semi Knocked Down (‘SKD’)
kits, Completely Knocked Down (‘CKD’) kits OR as parts and components.
Moreover, there can be various levels of SKD / CKD kits, depending on the
level of dis-assembly. The fundamental difference in import at varying
stages of construct of the vehicle are the extent of localization or element
of processing/ manufacture in India. In case of CBUs, there is little or no
processing required on the vehicles in India. In SKDs, there is limited
assembling activity required to be undertaken in India. In case of CKD
kits, there is assembling activity required to be undertaken in India, while
in case of import of parts and components only, the entire manufacturing
of the vehicle is undertaken in India. For various historical policy reasons,
typically the customs duty rates on vehicles imported in CKD/SKD form
depends on the varying stages of construct differs, with Customs duty on
CBUs being the highest, whereas duty on import of only parts and
components being relatively lower. This issue of classification of imported
auto parts has come up for consideration before various forums
numerous times and now the stakes are considerably high given that the
effective Customs duty on import of such vehicles could be over 180% of
the import value. Given the same and tribunal level rulings on the same,
it is imperative that there is absolute clarity around classification and
rationalization of duty rates in relation thereto.

10. Classification of parts

While a number of auto parts and components are built for specific
purposes, there could be more than one way of application of such parts/
components, in absolutely different ways. Chapter 87 of the GST rate
schedule has a distinct heading for automobile parts, along with a
corresponding (higher) rate whereas such items (based on their use)
could also be classifiable under other more specific Chapter headings.
This could lead to considerable ambiguity surrounding applicable rate, for
e.g.: bearings may be classifiable under Chapter 82 (18%, whereas,
automobile parts are classifiable under Chapter 87 (28%). Similarly,
classification of other items such as windshields, fasteners, nuts bolts,
locks etc. could also be disputed. In such a case, the industry players have
two options i.e. adopt the highest rate on a conservative basis (which
could lead to an increased price in the hand of the final customer) or seek
an advance ruling on classification in such cases. Also, refund on account
of invested duty structure could be explored. However, this is one area in
which clarifications would be welcome.

11. After market transactions

In this industry, there are different kinds of aftermarket transactions in
which different roles are played by the OEM, Indian National Sales
Company, dealer and customers (depending on of supply chain model
and marketing schemes adopted). The after-market transactions may
consist of warranty, extended warranty, annual maintenance contracts
(AMC), paid services, etc. The issue of composite supply vs. mixed supply
vs. single supply needs to be tested in case of warranties, AMCs, repair
works, painting jobs, body-building works, etc. For instance, in case of
comprehensive AMCs contracts, the dominant intent is to keep the
vehicle in a running and well-maintained condition and not to merely
supply parts used in repair. Therefore, even though the supply of goods
may be of high value, these are still incidental to the overarching
requirement of maintenance and thus, it is to be seen whether the same
may be termed as a composite supply of service attracting GST
accordingly. .
However, in a GST circular on ‘Clarifications of certain issues under GST’
dated 8 June 2018 issued by CBIC, one of the issues addressed was “How
is servicing of cars involving both supply of goods (spare parts) and
services (labour), where the value of goods and services are shown
separately, to be treated under GST?” In this regard, it was clarified that
the taxability of supply would have to be determined on a case-to-case
basis looking at the facts and circumstances of each case. Thus, where a
supply involves supply of both goods and services and the value of such
goods and services supplied are shown separately, the goods and services
would be liable to tax at the rates as applicable to such goods and
services separately. Thus, the after-market transactions in automobile
industry need to be analysed properly in terms of facts of each case and
the manner in which the transactions are undertaken.

12. Free Services

For overseas auto manufacturers, overseas headquartered companies are
heavily involved in activities relating to research & development, brand
marketing, region wise marketing initiatives, central procurements
(especially on Information Technology such as software). While, in some
cases there is a clear charge for these transactions, from a Transfer
Pricing perspective, certain activities may qualify under the head of
‘stewardship function’ with no identifiable charge. It is to be reviewed,
however, from a GST perspective, as to whether such transactions would
qualify as free services being provided by the overseas entities to the
Indian entities. If yes, the same would be liable to GST under a reverse
charge mechanism. It is imperative to analyze all such transactions to
evaluate as to whether some of these could be construed as free services
being provided by the overseas entities to the Indian company. In case
such services qualify as taxable services, the valuation of the same needs
to be agreed and practical steps to be taken (such as Chartered
Accountant certificate certifying cost allocation) to mitigate potential
disputes.

13. Exemption for Export under FTP 2015 - 2020

The Foreign Trade Policy 2015-20, as notified by the FTDR Act, 1992,
would continue under the GST legislation thereby facilitating exporters to
procure goods under special export incentive schemes like Advance
Authorization scheme (AA) and Export Promotion Capital Goods Scheme
(EPCG), etc. Further, under GST, the incentive schemes would provide
exemption to exporters from payment of IGST and the compensation cess
leviable thereon. The said exemption was initially available till 31 March
2018 which was further extended up to 31 March 2019. The industry is
expecting that the said exemption should be continued even after 31
March 2019 for various reasons. Furthermore, the possibility to convert
into an EOU could be explored by the OEMs after getting a feasibility
analysis done qua a long-term intention to engage into exports.

14. Input Service Distributor vs. Cross Charge

Under GST, supplies between State registrations of an entity are subject
to tax, even if the same is without consideration. In view of this,
companies are required to undertake analysis of activities undertaken by
head office for its branches and vice versa; identify the value of such
services and discharge tax liability thereon or distribute it in by obtaining
an Input Service Distributor registration. The said exercise involves huge
effort and time. Further, it leads to complexities and additional GST
compliances..

15. Area based exemptions

In pre-GST regime, industry used to enjoy fiscal benefits in the North
Eastern region, Himachal Pradesh, Uttarakhand and J&K in the form of
excise duty exemptions/ refunds. Under GST, those refund benefits have
been withdrawn and are proposed to be compensated/refunded as
budgetary support. The current proposal restricts refunds to the extent of
prescribed percentage of CGST / IGST payout in cash (i.e. after adjusting
all input credits) for units in the fiscal benefit zones for area based
exemptions whereas percentage of SGST benefit for State Industrial
policy. This may result in substantial reduction of the quantum GST
refunds as compared to the present benefit available or extend the
period required to accrue the benefit and may make units unviable.
Further, it is to be highlighted that the proposed refund model seems to
restrict the eligibility of refund to only actual manufacturers, thereby not
addressing concerns related to principal manufacturers who operates
through business models such as third party manufacturer (3Ps) and job
working arrangements, mainly in Himachal & Uttarakhand. Thus, the
quantum impact of such change in the benefit schemes should be
carefully evaluated to ensure that the principle of promissory estoppel is
upheld. Further, some industry players have also filed writ petitions
against this reduction in the quantum of benefits, which are currently
pending.

16. State Incentives

The investments by automobile companies are significant and have a
multiplier effect on the State’s economy. As highlighted above, majority
of the automobile manufacturers enjoy special benefits from the State
Government in the form of State IPS, which are given in the form of
refund of VAT/GST paid or as a loan. With the introduction of GST, taxes
move from the originating State to consumption State. This would result
in significant reduction of flow-back of IPS since GST on interstate sales is
not credited to the originating state. The OEMs are seeking the SGST paid
to the State as subsidy from the Government. Unless there is a
compensation mechanism to the States or to the OEMs with regard to
the impact on the IPS due to GST, the effect on project viability for some
of the (newer) projects could be severe. A similar impact of the period
required to extend the period to accrue the IPS would in all likelihood be
experienced here.
17. Supply of cars/ parts/ components on FOC basis
for testing purposes
The cars manufactured in the plant are registered in the Company’s name
in the same State. In such a case, no GST should be payable on self-billed
cars. However, in case the cars are transferred from one State’s
registration to another, given that branches in different States would
qualify as distinct taxable entities, GST would be payable on such stock
transfer. However, it is unclear if temporary movement of such cars
should attract GST as a supply, and it so, on what value? FOC supplies to
third parties should not be liable to GST. Position on the same should be
confirmed by the authorities.

18. Sale of old car by customer to the dealer not in

exchange of any car
The term supply includes supplies for a consideration in the course of
furtherance of business. Given the same, the question is whether the
customer is not selling these old vehicles in the course of furtherance of
business, and thus, the transaction should not be subject to GST liability
in the hands of the customer. However, such a position needs to be
confirmed by the authorities. Further, in case it is a registered taxable
entity (such as a company), GST would be payable.

19. Cars sent for exhibitions/ events

In case cars are moved for the purpose of exhibition or event, the same
remains within ownership and control of the Company and applied for
self useand thus, should not be liable to GST. In needs to be analyzed as
to whether such supplies should be treated as FOC supplies between
distinct persons/ related parties and should be subject to GST.
20. Free Service Coupon vouchers
These coupons will be issued at the time of sale of the vehicle. As per the
time of supply rule, GST on such coupons needs to be paid immediately
on the date of issue of such vouchers. As per the policy of some
manufacturers, the amounts in respect of such coupons will be redeemed
to the dealers only once the customer brings the vehicle for repair to the
workshop. Therefore, dealers would have to pay tax on such coupons
immediately on its issue but the said taxes can be collected from the
automobile menu.

OPINION OF PUPILS REGARDING GST STRUCTURE.

 CHAPTER-4
CONCLUSION
Primarily, the concept of GST was introduced and proposed in India a few
years back, but implementation has been done by the current BJP
government under the able leadership of Prime Minister Shri Narendra
Modi on July 1, 2017.
The new government was in strong favour for the implementation of GST
in India by seeing many positive implications as discussed above in the
paper.
All sectors in India - manufacturing, service, telecom, automobile and
small SMEs will bear the impact of GST. One of the biggest taxation
reform- GST will bind the entire nation under a single taxation system
rate. As forecasted by experts, GST will improvise tax collections and
boost up India's economic development and break all tax barriers
between Central and State Governments.
No doubt, GST will give India a clear and transparent taxation system, but
it is also surrounded by various challenges. There is need for more
analytical based research for successful implementation.
 RECOMMENDATIONS

Goods and Service Tax was considered to be an epitome of the ideal tax
mechanism at the time of its implementation. The assumption is
somewhere proved right as the GST system has reduced effective tax
rates and boosted supply chain efficiencies of businesses.
On the other hand, it is also prevalent that the system is not at all simple
and has burdened the taxpayer even more with tax-filing complexities.
Now it is invariably needed to introduce a set of amendments
contributing towards the certainty of the GST system.

Steps to Make GST More Compliant:

• Reduction in Number of Tax Slabs Rates
• Effortless Input Tax Credit Claims
• Spreading the GST Net
• Renovating ITC System
• Practical Targets for GST Collection
• Including Some Exempted Goods in GST Regime:
• Let E-waybill Go Away.
 CHAPTER-5
BIBLIOGRAPHY
For successfully Completing my project file. I have taken help from
the INDIRECT TAXATION TEXT BOOK of “INSTITUTE OF COST
MANAGEMENT ACCOUNTANT”
I have also taken the help of the following website:
• [Link]
• [Link]
• [Link]

My supervisor “Miss Nandani Mitra” also guided to complete

my project work.