GST is known as the Goods and Services Tax.

It is an indirect tax which

has replaced many indirect taxes in India such as the excise duty, VAT,
services tax, etc. The Goods and Service Tax Act was passed in the
Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words, GOODS AND SERVICE TAX (GST) is levied on the

supply of goods and services. GST is a single domestic indirect tax law
for the entire country.
HOWEVER,

CHARGEABILITY OF GST DEPENDS ON THE OCCURRENCE

OF A TAXABLE EVENT.
 SUPPLY
(Sec 7 of CGST ACT)
• All forms of supply of goods or services or both such as SALE,
TRANSFR, BARTER, EXCHNGE, LICENCES, RENTAL, LEASE or DISPOSAL
made or agreed to be made for CONSIDERATION by a person in
Furtherance Course Of Business. Section 7 (1) of CGST ACT 2017
• For the purposes of this Act, the expression “supply” includes–
 Goods Services

(i) actionable claim**

(ii) growing crops, grass and
things attached to/forming
part of the land which are
agreed to be severed before
supply or under a contract of
supply.
 Forms of SUPPLY
• SALE & TRANSFER :- Sale is an act of selling specifically: the transfer of
ownership of and title of the property from one person to another for specific
price.
EX:- A shopkeeper sells a pen of 100 to buyer. After the sale the pen belongs
to buyer and seller has transfer ownership to buyer.

• BARTER & TRANSFR:- Barter is to exchange goods & services for other goods
services instead of using money. Exchange as an act of giving or taking one
things for another.
EX:- When a new car worth 500000 is purchased in exchange of an old car
alongwith the monetary consideration of 400000paid for the said purchase.
 CONSIDERATION
Consideration is a payment . It does not need to be in form of money only ,it
can be kind too.
It covers anything which might be possibly done , given or
made in exchange for something else
 In Course of Furtherance of
Business M

Those supplies that are in the course or furtherance of business qualify as supply
under GST.
Any supplies made by an individual in his personal capacity do
not come under the ambit of GST unless they fall within the definition of ‘business’.

EX:- Manas buys a car for his personal use later a year sells it to a car dealer.
Sale of car by Manas to car delear is not suppy under GST ACT because supply
is not under furtherance course of business.
 Exception of Furtherance course of
Business

.
There is one exception to this
‘course or furtherance of
business’ rule i.e., import of
services for a consideration

EX:- Ramaiyaa, a proprietor, has received the architect services for his
house
from an architect located in New York at an agreed consideration of $
5,000.
The import of services by Ramaiyaa is supply under section 7(1)(b)
 E x c e p t i o n s o f S U P P LY
There are certain scenario in which if there is either Consideration or
Furtherance course of Business or Vice Versa then also it will be
considered as SUPPLY.

• SUPPLY Without Consideration “Schedule 1 Sec {7 (1)(c)}”

• Activities Treated as GOODS or SERVICES “Schedule 2 Sec {7 (1A)}”

• Supply Exclude Negative List “Schedule 3 Sec {7 (2)}”

 S U P P LY W i t h o u t C o n s i d e r a t i o n “ S c h e d u l e 1 S e c { 7 ( 1 ) ( c ) } ”

• Permanent Transfer/Disposal of Business Assets

1. There must be a disposal or transfer of business assets
2. Transfer/disposal must be permanent
3. ITC must have been availed on such business assets.

• Ex: Dhruv gives old laptops being used in his business to his friend free of
cost. This will qualify as supply provided input tax credit has been availed
by Dhruv on such laptops.

• Supply between related person or disti nct persons

Supply of goods or services or both between ‘related persons’ or between ‘distinct persons’
will qualify as
supply even if made without consideration provided it is made in the course or furtherance
of business.
• Supply of goods or services or both between an employer
and employee –
Gifts upto ` 50,000 in value in a financial year by an employer to an
employee shall not be treated as supply of goods or services or both. However,
gifts of value more than ` 50,000 made without consideration are supply and are
subject to GST, when made in the course or furtherance of business.

• Principal – Agent
1. Only supply of goods and not supply of services is covered here.
2. Supply of goods between principal and agent without consideration is
also supply.
Agent should receive or supply the goods of his own name on behalf of his
principal, then supply will be levied and GST will apply.
• Importati on of ser vices- I f i m p o r t a ti o n o f s e r v i c e s a r e w i t h o u t
c o n s i d e r a ti o n t h e 2 c o n d i ti o n s s h o u l d b e f o l l o w e d .
1. I t s h o u l d b e f u r t h e r a n c e c o u r s e o f b u s i n e s s
2. P a r ti e s m u s t b e r e l a t e d w i t h e a c h o t h e r.

• A c ti v i ti e s Tr e a t e d a s G O O D S o r S E R V I C E S “ S c h e d u l e 2 S e c { 7 ( 1 A ) } ”
Para No. Activity/ Transaction Type Nature of supply
1. Transfer Any transfer of title in goods. Supply of Goods

Shivaji sells readymade

garments to its customer

2. Transfer Any transfer of right in Supply of Services

goods/ undivided share in
goods without transfer of
title thereof.

Genius Equipments Ltd. gives

a machinery on rent to
Suhaasi Manufacturers.

3. Land and Building Any lease, tenancy, Supply of Services

easement, licence to occupy
land

4. Treatment or Process Any treatment or process Supply of Services

which is applied to another
person’s goods
Para No Activity/Transfer Type Nature of Supply

4. Transfer of Business assets Development, design, Supply of Services

programming, customisation,
adaptation, upgradation,
enhancement,
implementation of IT
software
5. Composite Supply Works contract Supply of Services

6. Supply of Services Renting of immovable Supply of Services

property
• S u p p l y E xc l u d e N e g a ti v e L i st “ S c h e d u l e 3 S e c { 7 ( 2 ) } ”

1. Services by an employee to the employer in the course of or in relation to

his employment.
2. Services by any court or Tribunal established under any law for the time
being in force.
3. Services of funeral, burial, crematorium or mortuary including
transportation of the deceased.
4. Actionable claims, other than lottery, betting and gambling from the ambit
of definition of supply.
C O M P O S I T E S U P P LY [ S E C T I O N 8 ]

• Comprises two or more taxable supplies of goods or services or both, or any combination
thereof.
• Are naturally bundled and supplied in conjunction with each other, in the ordinary course
of business.
• One of which is a principal supply.
• composite supply are dependent on the ‘principal supply’

E X : - Mobile phone is always sold with battery.

Bundle of services of catering on board and services of transport by air is a bundleD
offered by a majority of airlines.
 M I X E D S U P P LY
•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

EX:- A shopkeeper selling storage water bottles along with refrigerator. Bottles and the
refrigerator can easily be priced and sold independently and are not naturally bundled. So,
such supplies are mixed supplies.

A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits,
aerated drink 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.
 What Is Reverse Charge Mechanism under GST ?

“Reverse charge" means the liability to pay tax by the recipient of supply of goods or services
or both instead of the supplier of such goods or services or both
under subsection (3)or subsection (4)of section 9, or
under subsection (3)or subsection (4)of section 5 of the IGST Act.
 SEC 9 OF CGST Act

Sec 9(3) Sec 9 (4) Sec 9 (5)

Supply of
Specified
Services liable
Categories of Electronic
to Reverse
Goods & Commerce
Charge under
Services or both Operator
Notification no.
received from
13/2017
an Unregistered
supplier
 SEC 9 (3) NOTIFICATION NO. 13/2017-
Supply of Services leviable under Reverse Charge Basis

 Supply of Services by a Goods Transport Agency

“Goods Transport Agency” means any person who provides service in relation to transport of goods by
road and issues consignment note, by whatever name called; Thus, it can be seen that issuance of a
consignment note is the sine-qua-non for a supplier of service to be considered as a Goods Transport
Agency.

 Specified Recipient
a. any factory registered under or governed by the Factories Act, 1948
b. any society registered under the Societies Registration Act, 1860
c. any cooperative society established by or under any law
d. any body corporate established, by or under any law;
e. any partnership firm whether registered or not
f. any casual taxable person:
 Person Liable to pay tax
under GTA Services

Payable @ 5% Payable @12%

Service recipient is one of the Specific Service recipient is not one of the
recipient Specific recipient GST Payable on Forward Charge
GST Payable on reverse charge by
Service recipient Exempt Supply by GTA
 Supply of Services Recipient of services

•An individual advocate including a senior advocate or firm of Any business entity located in the taxable territory.
advocates.

•Services supplied by an arbitral tribunal to a business entity Any business entity located in the taxable territory.

•Services provided by way of sponsorship to any body Any body corporate or partnership firm located in the taxable
corporate or partnership firm. territory.

•Services supplied by the Central Government, State Any business entity located in the taxable territory.
Government, Union territory or local authority to a business
entity
•Services supplied by a director of a company or a body The company or a body corporate located in the taxable
corporate to the said company or the body corporate territory.

•Services supplied by an insurance agent to any person Any person carrying on insurance business, located in the
carrying on insurance business taxable territory.

•Services supplied by a recovery agent to a banking company A banking company or a financial institution or a non-banking
or a financial institution or a non-banking financial company. financial company, located in the taxable territory.
•Supply of services by an author, music composer, Publisher , music company, producer or the like, located
photographer, artist. in the taxable territory.

•Security services provided to a registered person A registered person, located in the taxable territory

•Services provided by way of renting any motor vehicle Any body corporate located in the taxable territory.
designed to carry passengers

•Services provided by an agent of business A business correspondent located in TT

correspondent to business correspondent

•Services provided by business facilitator (BF) to a Banking company located in TT

banking company

•Services supplied by Individual Direct Selling Agents Bank or non-banking financial company located in
taxable territory

•Services of lending of securities under Securities Borrower i.e., a person who borrows the securities
Lending Scheme

•Import of Service by any person who is located in a Tax is payable by the person importing such service.
non-taxable territory
Sec 9(4) Supply of Specified Categories of Goods & Services or both received
from an Unregistered supplier

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.
 Sec 9 (5) Electronic Commerce Operator (ECO)

 ECO means any person who owns, operates or manages digital or electronic facility or platform for
electronic commerce ,section 2(45)

 Section 9(5) deals with taxability of supply of services –output tax of which shall be paid by e-
commerce operator even though e-commerce operator is not the actual supplier.

In case services are notified u/s 9(5), actual supplier of services need not required to get registration even
if turnover exceeds threshold limit.

List of services notified under section 9(5)

List of services notified under section 9(5)
1. Passenger Transport Service:-Services by way of transportation of passengers by a radio-taxi,
motorcab, maxicab and motor cycle;
2. Accommodation Services :-Services by way of providing accommodation in hotels, inns, guest houses, clubs,
campsites or other commercial places meant for residential or lodging purposes, except where the person
supplying such service through electronic commerce operator is liable for registration under sub-section (1) of
section 22 of the said Central Goods and Services Tax Act.

3. Housekeeping Services:- Services by way of house-keeping, such as plumbing, carpentering etc, except where
the person supplying such service through electronic commerce operator is liable for registration under sub-
section (1) of section 22 of the said Central Goods and Services Tax Act.

4. Restaurant Services (Cloud Kitchen) :- Supply of restaurant service other than the services supplied by
restaurant, eating joints etc. located at specified premises.

“Specified premises means premises providing hotel accommodation service having declared tariff of any unit of
accommodation above seven thousand five hundred rupees per unit (Rs 7500/- per unit) per day or equivalent.”
 Sec 10 (1)
Notwithstanding anything to the contrary contained in this Act
● but subject to the provisions of subsections (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 of
tax calculated at such rate as may be prescribed, but not exceeding,-

a. one percent 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
 SECTION 10(1) READ WITH RULE 7

Prescribed threshold limit :-

Threshold Turnover States

Below 75 Lacs Arunachal Pradesh, Manipur, Meghalaya, Mizoram,

Nagaland, Sikkim, and Tripura.

Below 1.5 Crore Other than special category states.

Below 50 Lacs Taxpayers supplying services and / or mixed supplies.

 Sec 10 (2)
Person not eligible for Composition Levy
The registered person shall be eligible to opt composition scheme10, if—
a. save as provided in sub-section (1), he is not engaged in the supply of services
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; and
e. he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council

For Section 10(2)(e) – Notification 8/2017 CT Dated 27.06.2017

● Ice Cream and other edible ice, whether or not containing cocoa
● Pan Masala
● Tobacco and manufactured tobacco substitutes

All registered persons having the same Permanent Account Number (PAN) have to opt for a composition scheme
 Rule 5 Conditions and restrictions for composition levy
The person exercising the option to pay tax under section 10 shall comply with the following conditions, namely:-
a. he is neither a casual taxable person nor a non-resident taxable person;
b. he shall pay tax under sub-section (3) or sub-section (4) of section 9 on inward supply of goods or services or both;
c. He was not engaged in the manufacture of goods as notified under clause (e) of sub-section (2) of section 10, during the
preceding financial year;
d. He shall mention the words "composition taxable person, not eligible to collect tax on supplies" at the top of the bill of
supply issued by him; and
e. he shall mention the words "composition taxable person" on every notice or signboard displayed at a prominent place at his
principal place of business and at every additional place or places of business.
 Sec 10 (3)-Lapse of Composition Levy

The option availed of by a registered person under sub-section (1) or sub-section (2A) 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)
 Such a person is required to pay normal tax under section 9(1) from the day he ceases to satisfy any of the
conditions prescribed for composition levy.
He shall issue a tax invoice for every taxable supply made thereafter.
 Further, he is required to file an intimation for withdrawal from the scheme in prescribed form within 7
days of the occurrence of such an event.
However, such person shall be allowed to avail input tax credit in respect of the stock of inputs and inputs
contained in semi-finished or finished goods held in stock by him and on capital goods held by him on the
date of withdrawal and furnish a statement, within 30 days of withdrawal of the option, containing the details
of such stock held in prescribed form on the common portal.

Sec 10 (4)
A taxable person to whom the provisions of sub-section (1) 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.