GUIDE TO REVISED MODEL GST LAW, 2017

GST
GUIDE TO
REVISED MODEL
GST LAW
(With Draft Rules on
Registration, Payment,
Invoice, Returns and Refund)
BIMAL JAIN
ISHA BANSAL
Highlights of the Book
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Young Global Publications
ABOUT THE BOOK
KEY FEATURES OF THE BOOK
This Handbook on Revised Model GST Law discusses the various provisions of the Revised
Model GST Law and Draft Rules released by Government of India along with comparison with
First Model GST Law in a precise and lucid manner for providing a complete insight to the
readers for the preparation and assistance in smooth transition to GST.
This Book is user-friendly, containing the gist of the provisions of the Revised Model GST Law
and can be used by professionals, tax payers, tax officers, corporates, regulators, etc. for easy
reference.
• Highlights of changes in Revised Model GST Law for easy understanding
• Constitutional Amendments and likely date of GST Implementation
• GST – Need & Necessity, Overview and Model for India
• Discussion/analysis on Revised Model GST Law along with its comparison with First Model
GST Law
• Analysis of meaning of the terms ‘Supply’,‘Goods’ and ‘Services’ in GST.
• Gist of documents, information, procedure, etc., required for migration of existing
registrants in GST
• Discussion on various domains - intra-state supply and inter-state supply of goods and/or
services, principles of place of supply & time of supply, valuation of goods and/or services,
GST ITC, taxable person, appeals and revision, offences and penalties, demand and
recovery, GST rate, e-commerce operator, etc., along with transitional provisions.
• Discussion on contentious issues under Revised Model GST Law which requires
reconsideration
• Discussion on flow of input tax credit in GST with illustrations and negative list for GST ITC
• Discussion on Draft Rules and procedural aspect of GST- Registration, Payment, Invoice,
Returns and Refund
• Impact of GST on business and specifically on manufacturers, traders and service sectors
and preparation required for smooth migration
• Transitional issues under GST along with effective tools for planning.
• Likely challenges ahead for GST implementation
• Way forward and Procedural changes in GST
• Contains complete Revised Model GST Law, ModeI IGST Law and Draft GST Compensation
Law along with Draft Rules and Formats on Registration, Payment, Invoice, Returns and
Refund as released by the Government
Price ` 650
GUIDETOREVISEDMODELGSTLAW
(WithDraftRulesonRegistration,Payment,Invoice,ReturnsandRefund) • Summarized highlights of Revised Model GST Law and Draft Rules on Registration,
Payment, Invoice, Returns and Refund for easy digest.
• Contains action plan for smooth transition to GST regime along with suggestions for
effective planning.
• Discussion on various domains viz. supply of goods and/or services - intra-state and
inter-state, principles of place of supply & time of supply, Valuation, GST ITC, taxable
person, appeals and revision, demand and recovery, GST rates, e-commerce operator,
etc., along with transitional provisions.
• Contains complete Revised Model GST Law, Model IGST Law and Draft GST
Compensation Law along with Draft Rules and Formats on Registration, Payment,
Invoice, Returns and Refund as released by the Government.
BIMALJAIN
ISHABANSAL
DECEMBER, 2016

GUIDE
to Revised
Model GST Law
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®

Bimal Jain
FCA, FCS, LLB, B.Com (Hons.)
Isha Bansal
ACS, LLB, B.Com (Hons.)
An Insight into
Goods & Service Tax
YOUNG GLOBAL PUBLICATIONS
CA. Chitresh Gupta
B. Com (H), FCA,
IFRS (Certified), IDT (Certified)
®
GUIDE
to Revised
Model GST Law

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This book is dedicated to
Acharya 108 Sri Vidya Sagar Ji Maharaj
^^nwljksa ds fgr ds fy, vius lq[k dk R;kx djuk gh lPph lsok gS**

 

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vii
BIMAL JAIN
FCA, FCS, LLB with 21 years of experience
in Indirect Taxation – GST, Service tax,
Excise, Customs, VAT/CST, Foreign Trade
Policy, DGFT matters, etc.
Bimal Jain, qualified as a Chartered Accountant
in May 1994, and Company Secretary in
December 2006 and LLB in December, 2009. He
has worked in renowned companies viz. LG Electronics India Pvt. Ltd, Honda
Motorcycle & Scooters India Pvt. Ltd, Hindustan Development Corporation Ltd,
Khaitan & Company. Currently, he is the Chief Executive Director of A2Z Taxcorp
LLP.
Bimal is a Chairman of the Indirect Tax Committee of PHD Chamber of
Commerce, Chairman of the Corporate Advisory Committee of IPEM Group of
Institutions, Member of Indirect Tax Committee of FICCI & Assocham, Special
Invitee of Indirect Tax Committee of ICAI, and Member of eminent faculties in
Indirect tax committee of ICAI/ ICSI/ ICMA.
He is awarded as Best Participant Award in MSOP – 117th
Batch by ICSI, Business
Leader Award by Amity School Noida, Best Speaker Award by NIRC – ICAI/ ICMA
and Young Achievers Award at Igniting Minds, 2015.
He regularly writes articles on multiple indirect tax issues and has authored
books, namely, Service Tax Voluntary Compliance Encouragement Scheme, 2013,
About the Authors

viii Guide to Revised Model GST Law
GST books titling ‘Goods and Services Tax – Introduction and Way Forward’ and
‘GST Law and Analysis – With Conceptual Procedures’.
He has also represented PHD Chamber of Commerce, Assocham, ICAI, ICSI
before various Government Authorities/Committees viz. the Central Board of
Excise and Customs, Ease of doing Business Committee, Empowered Committee
of State Finance Ministers, etc.
Bimal’scorecompetencyandareaofexpertiseareindirecttaxation, international
and corporate taxation. He specializes in all aspects of GST, Excise, Service tax,
Customs, Sales tax/VAT laws, Free trade/economic cooperation agreements,
anti-dumping duty, foreign trade policy, etc.
He carries a blend of industrial and professional acumen, knowledge and
experience in carrying out diagnostic review of business operations, opinion
& advisory services, process review, structuring of various business models,
litigation services at all appropriate forums including Commissioner(Appeals),
CESTAT, High Court and representation made before the TRU/ CBEC/ DGFT, etc.,
for various matters concerning trade, industry and commerce.
ISHA BANSAL
ACS, LLB, B.Com (Hons.) with more than 5 Yrs. of
experience in indirect taxation matters
Isha, qualified as a Company Secretary and LLB, after
obtaining a Bachelor’s degree in Commerce (Hons.) from
University of Delhi in 2008. She worked as an intern with
DLF group looking after company secretarial and legal
matters before moving to indirect taxation for which she
had interest and flair.
Thereafter, she joined A2Z Taxcorp LLP and is presently working as Senior
Associate, providing legal and advisory services to various multinational
companies in the areas of GST, Excise, Customs, VAT, Service tax, anti-dumping
duty, foreign trade policy, etc. Her in-depth knowledge, drive and strategic
insights have contributed immensely to the organizations she has worked with.
Isha has done extensive study on GST in India and has been following all the
developments in the rollout of GST by the Indian Government. GST is therefore
one of her core competency areas along with other indirect tax laws.

ix
Preface
“Great Step by Team India, Great Step towards Transformation, Great Steps towards
Transparency, this is GST”
Shri. Narendra Modi, Hon’ble Prime Minister
Goods and Services Tax (“GST”), envisaged as the Single biggest tax reform
since Independence, is aimed to remove tax barriers between states to create
a single market. GST is going to replace plethora of indirect taxes currently
imposed at various stages of manufacturing, trading, etc. The implementation
of GST will help to create a common national market and reduce the cascading
effect of taxes on the costing and pricing of goods and services. It will have
a far-reaching impact on almost all the realms of business operations in our
country. It will impact tax structure, tax incidence, tax computation, supply
chain optimization, credit availment & utilization, compliance etc., leading to a
complete overhaul of the current indirect tax system in India.
GST is a tax on goods and services with comprehensive and continuous chain of
set-off benefits from the producer’s point and service provider’s point upto the
retailer’s level. It is essentially a tax only on value addition at each stage, and a
supplier at each stage is permitted to set-off, through a tax credit mechanism,
the GST paid on the purchase of goods and services as available for set-off on
the GST to be paid on the supply of goods and services. The final consumer will
thus bear only the GST charged by the last dealer in the supply chain, with set-
off benefits at all the previous stages.
On June 14, 2016, the central government put the Model GST Law on public
domain after getting an in-principle nod from the Empowered Committee of
State Finance Ministers for seeking suggestion from the public at large. Further,

x Guide to Revised Model GST Law
122nd
Constitutional Amendment Bill, 2014 (“GST Bill”) received the assent of
the Hon’ble President on September 8, 2016 and enacted as the Constitution
(101st
Amendment) Act, 2016 [“the 101st
Constitutional Amendment Act”].
In series of event for GST implementation, on September 12, 2016, the
Union Cabinet has approved formation of GST Council (Section 12 of the
101st
Constitutional Amendment Act) followed by the government notifying
September 16, 2016 as the appointed date for remaining Sections of the 101st
Constitutional Amendment Act (i.e. Section 1 to 20, except Section 12). Since
notification of the GST Council on 12 September 2016, six meetings of the
GST Council have been held in New Delhi. These meetings were held on 22-
23 September, 2016, 30 September, 2016, 18-19 October, 2016, 3-4 November,
2016, 2-3 December, 2016 and 11 December, 2016 (as mentioned in the report
card issued by the government on November 14, 2016). Further, the two day
seventh GST Council meeting took place recently on 22-23 December, 2016.
Earlier, the Central Board of Excise and Customs on September 26, 2016 has
unveiled Draft Rules and formats under GST relating to registration, invoice and
payment, followed by the Draft Rules and formats on GST returns and refunds
on September 27, 2016, which got approval from the GST Council in its meeting
dated September 30, 2016. Further, the government also unveiled the Revised
Model GST Law and Draft Goods and Services Tax Compensation Bill by placing
it in public domain on November 26, 2016 after incorporating suggestions from
trade and industry, in a way, signalling that the GST might mark its advent soon.
Though, the Government is committed to roll out GST as envisaged from April
1, 2017 but there may be some delay on account of the recent demonetisation
of high-value currency by the government which has led to lot of tussles in the
Parliament and moreover, the issue of dual control between the centre and state
is not yet settled. The 101st
Constitutional Amendment Act, to replace existing
indirect taxes with the new GST law was notified on September 16, 2016, and
the new ambitious tax reform has to be implemented within 12 months of that
date i.e. before September 16, 2017.
The Revised Model CGST/SGST Act, 2016 consists of 197 sections divided into
27 chapters along with 5 schedules as compared to 162 sections divided into
25 Chapters along with 4 schedules and Rules as to Valuation under First Model
GST Law. Further, the Model IGST Act, 2016 consists of 24 sections divided into
11 chapters in comparison to 33 sections divided into 11 chapters under First
Model GST Law. Furthermore, the Compensation bill consists of 11 clauses.
This book attempts to give an insight to readers about the basic principle and
theories of GST and relevancy of the same at the national & international level,
in an accessible manner along with comparison of First Model GST Law with the
Revised Model GST Law. I would like to highlight the title of the Book “Guide to
Revised Model GST Law (with Draft Rules on Registration, Payment, Invoice,
Returns and Refund)”, as the Book begins with a discussion on the present

Preface xi
indirect tax structure of the country - its shortcomings coupled with the need
of GST in India, Models of GST and Dual Model for India, various domains of
GST - intra-state/inter-state supply of goods and/or services, taxable person,
levy and exemption, principles of time of supply and place of supply, GST rate
etc., along with procedural aspects viz. registration, payment, invoice, returns,
refunds, etc. in a summarized and lucid manner for easy digest and furthermore
moves on to suggest the impact of GST along with preparations required for GST
and recommendations to the Revised Model GST Law.
The key areas under Revised Model GST Law viz. meaning scope of supply,
taxable person, threshold limits, principles of place of supply of goods and/or
services, time of supply, valuation, GST credit, Adjudication, Appeal, Advance
Ruling, Offences, Penalties, Imprisonment and Transitional provisions etc., have
been summarized along with comparison of provisions of the Revised Model
GST Law vis-à-vis First Model GST Law. The Book has also thrown light on the
major concerns that may arise in GST along with suitable recommendations on
the Revised Model GST Law.
This Book has left no stone unturned in explaining and providing a complete
understanding of the concept of GST and the provisions of the Revised Model
GST Law in a simplified manner, followed by its impact, on manufacturing,
service trading sector, and the preparation required for smooth transition
to GST. It encourages the readers to easily grasp and understand why GST is
proposed, its benefits, Dual model of GST for India and the problems/challenges
inherent in the GST.
I believe this book is user-friendly and can be used by students, professionals,
industries, revenue officers – Central or State etc., for reference.
I am thankful to my parents, family, friends, professional colleagues and office
colleagues–Anjali,Nikita,Aanchal,Sumit,Ashish, fortheir excellent engagement
efforts to support ensure enriched contents of the book. Moreover, I am
also thankful to Young Global Publications, for their continued support and
publication of this book and ensuring its nationwide reach. Further, with a view
to improve future editions of this book, I solicit the valuable suggestions, views
and healthy criticisms, if any, of my esteemed readers through any means of
communication convenient to them.
Place: New Delhi BIMAL JAIN
Date: December 21, 2016 FCA, FCS, LLB, B.Com (Hons.)
Email: bimaljain@hotmail.com

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xiii
Content at a Glance
ABOUT THE AUTHORS vii
PREFACE ix
REVISED MODEL GST LAW – ONE MORE STEP TOWARDS
BIGGEST INDIRECT TAX REFORM xxvii
PART A: MODEL GST LAW
Chapter 1 Overview of Present Indirect Taxation in India 1
Chapter 2 Overview and Need of GST 4
Chapter 3 How GST will work – Intra-State supply of
Goods and/or Services 8
Chapter 4 Inter-State supply of Goods and/or Services under GST 10
Chapter 5 Taxable Event - Meaning and Scope of Supply 13
Chapter 6 Meaning of ‘Goods’ and ‘Services’ under GST 20
Chapter 7 Taxable person under GST and Reverse
Charge Mechanism 22
Chapter 8 Composition scheme under GST 26
Chapter 9 Input tax credit under GST – Availment and Utilization 29
Chapter 10 Valuation of Goods and/or Services 43
Chapter 11 Exports and Imports of Goods and/or Services 47
Chapter 12 Place of Supply of Goods and/or Services 52
Chapter 13 Time of Supply (Point of Taxation) of

xiv Guide to Revised Model GST Law
Chapter 14 E-commerce under GST 67
Chapter 15 Job Work Transactions under GST 71
Chapter 16 Assessment and Audit 74
Chapter 17 Demands and Recovery under GST 79
Chapter 18 Inspection, Search, Seizure and Arrest 86
Chapter 19 Offences and Penalties 91
Chapter 20 Prosecution and Compounding of Offences 96
Chapter 21 Appeals and Revision 101
Chapter 22 Advance Ruling and Settlement of Cases 106
Chapter 23 Transitional Provisions in GST 109
Chapter 24 Anti-Profiteering Measure 121
Chapter 25 Other Important Provisions 122
PART B: PROCEDURES AS PER DRAFT RULES IN GST
Chapter 26 Registration in GST 126
Chapter 27 Ongoing migration of existing registrants in GST 130
Chapter 28 Tax Invoice, Credit and Debit Notes 133
Chapter 29 Payment of GST 138
Chapter 30 Returns under GST 144
Chapter 31 Refunds under GST 153
PART C: IMPACT, PREPARATION AND RECOMMENDATIONS
Chapter 32 Impact of GST 159
Chapter 33 Preparation and Challenges ahead 167
Chapter 34 Recommendations on the Revised Model GST Law 178
ANNEXURES
I. DRAFT MODEL CGST/SGST ACT, 2016 (AS RELEASED ON
NOVEMBER 26, 2016) 186
II. DRAFT MODEL IGST ACT, 2016 (AS RELEASED ON
NOVEMBER 26, 2016) 361
III. DRAFT GST (COMPENSATION TO THE STATES FOR LOSS
OF REVENUE) BILL, 2016 386
IV. DRAFT GOODS AND SERVICES TAX - REGISTRATION RULES 394
V. DRAFT GOODS AND SERVICES TAX RULES - REGISTRATION
FORMATS 405
VI. DRAFT GOODS AND SERVICES TAX - INVOICE RULES 477
VII. DRAFT GOODS AND SERVICES TAX RULES - INVOICE FORMATS 483
VIII. DRAFT GOODS AND SERVICES TAX - PAYMENT RULES 485

Content at a Glance xv
IX. DRAFT GOODS AND SERVICES TAX RULES - PAYMENT FORMATS 489
X. DRAFT GOODS AND SERVICES TAX - RETURN RULES 500
XI. DRAFT GOODS AND SERVICES TAX RULES - RETURN FORMATS 513
XII. DRAFT GOODS AND SERVICES TAX - REFUND RULES 613
XIII. DRAFT GOODS AND SERVICES TAX RULES - REFUND FORMATS 620

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xvii
Detailed Content
ABOUT THE AUTHORS vii
PREFACE ix
REVISED MODEL GST LAW – ONE MORE STEP TOWARDS
BIGGEST INDIRECT TAX REFORM xxvii
PART A: MODEL GST LAW
Chapter 1 Overview of Present Indirect Taxation in India 1
1.1 SHORTCOMINGS IN THE PRESENT INDIRECT TAXATION SYSTEM 2
Chapter 2 Overview and Need of GST 4
2.1 VARIOUS MODELS OF GST 4
2.2 GST MODEL FOR INDIA – CONCURRENT DUAL GST 5
2.3 TAXES LIKELY TO BE SUBSUMED IN GST 5
2.4 TAXES NOT LIKELY TO BE SUBSUMED IN GST 6
2.5 HOW GST CAN HELP IN OVERCOMING THE SHORTFALLS
IN OUR PRESENT INDIRECT TAXATION STRUCTURE 6
Chapter 3 How GST will work – Intra-State supply of
3.1 DETERMINATION OF SUPPLIES OF GOODS AND/OR SERVICES
IN THE COURSE OF INTRA-STATE TRADE OR COMMERCE 8
3.2 HOW INTRA-STATE TRANSACTION OF GOODS AND SERVICES
WOULD BE TAXED UNDER GST 9

xviii Guide to Revised Model GST Law
Chapter 4 Inter-State supply of Goods and/or Services under GST 10
4.1 DETERMINATION OF SUPPLIES OF GOODS AND/OR SERVICES
IN THE COURSE OF INTER-STATE TRADE OR COMMERCE 10
4.2 HOW INTER-STATE SUPPLY OF GOODS AND/OR SERVICES
WOULD BE TAXED UNDER GST 11
Chapter 5 Taxable Event - Meaning and Scope of Supply 13
5.1 MEANING OF TERM ‘SUPPLY’ – AN INCLUSIVE AND
SUBJECTIVE DEFINITION 13
5.2 IMPORT OF SERVICES 14
5.3 MATTERS TO BE TREATED AS SUPPLY EVEN IF MADE
WITHOUT CONSIDERATION 14
5.4 SUPPLY OF GOODS VS. SUPPLY OF SERVICES 15
5.5 ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED
NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 17
5.6 ACTIVITIES OR TRANSACTIONS UNDERTAKEN BY THE
CENTRAL GOVERNMENT, A STATE GOVERNMENT OR ANY
LOCAL AUTHORITY WHICH SHALL BE TREATED NEITHER
AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES 18
5.7 POWERS OF THE CENTRAL OR A STATE GOVERNMENT TO
NOTIFY TRANSACTIONS EITHER AS SUPPLY OF GOODS OR
SUPPLY OF SERVICES OR NEITHER OF THEM 18
5.8 TAXABILITY OF COMPOSITE AND MIXED SUPPLIES:
A NEW PROVISION INSERTED TO DETERMINE TAXABILITY
OF BUNDLED SUPPLIES – NATURALLY BUNDLED OR NOT
NATURALLY BUNDLED 18
Chapter 6 Meaning of‘Goods’and‘Services’under GST 20
6.1 MEANING OF ‘GOODS’ 20
6.2 MEANING OF ‘SERVICES’ 20
Chapter 7 Taxable person under GST and Reverse
Charge Mechanism 22
7.1 MEANING OF TERM ‘TAXABLE PERSON’ 22
7.2 PERSON REQUIRED TO BE REGISTERED UNDER GST:
SCHEDULE V 22
7.3 MEANING OF ‘AGGREGATE TURNOVER’ 24
7.4 DEEMED DISTINCT PERSONS UNDER GST 24
7.5 REVERSE CHARGE MECHANISM UNDER GST 25
Chapter 8 Composition scheme under GST 26
8.1 TURNOVER LIMIT FOR COMPOSITION SCHEME 26

Detailed Content xix
8.2 COMPOSITION SCHEME NOT AVAILABLE IN SPECIFIED CASES 27
8.3 NO COMPOSITION SCHEME IN CASE OF REVERSE
CHARGE LIABILITY 27
8.4 COMPOSITION SCHEME TO BE ADOPTED UNIFORMLY
BY ALL THE REGISTERED TAXABLE PERSONS, HAVING
THE SAME PAN 27
8.5 WITHDRAWAL OF COMPOUNDING SCHEME ON CROSSING
THRESHOLD LIMIT 27
8.6 COMPOUNDING DEALERS CANNOT ENTER INTO THE
CREDIT CHAIN 27
8.7 PENALTY IN CASE OF IRREGULAR AVAILMENT OF
COMPOSITION SCHEME 28
Chapter 9 Input tax credit under GST – Availment and Utilization 29
9.1 KEY DEFINITIONS 29
9.2 ELIGIBILITY AND CONDITIONS FOR TAKING ITC 31
9.3 APPORTIONMENT OF CREDIT AND BLOCKED CREDITS 32
9.4 AVAILABILITY OF CREDIT IN SPECIAL CIRCUMSTANCES 35
9.5. UTILISATION OF ITC 37
9.6. CONCEPT OF INPUT SERVICE DISTRIBUTOR (ISD) AND
MANNER OF DISTRIBUTION OF ITC 37
9.6.1 Conditions for distributing ITC by ISD 39
9.6.2 Manner of recovery of credit distributed in excess 40
9.7 ILLUSTRATIONS 40
Chapter 10 Valuation of Goods and/or Services 43
10.1 BASIS OF VALUATION UNDER THE GST REGIME –
TRANSACTION VALUE 43
10.2 INCLUSIONS IN THE TRANSACTION VALUE 44
10.3 EXCLUSION OF DISCOUNT IN THE TRANSACTION VALUE 45
Chapter 11 Exports and Imports of Goods and/or Services 47
11.1 IMPORT OF GOODS – DEEMED AS INTER-STATE SUPPLY
UNDER GST 47
11.2 IMPORT OF SERVICES – DEEMED AS INTER-STATE
SUPPLY UNDER GST 48
11.3 EXPORT OF GOODS AND/OR SERVICES – DEEMED AS
INTER-STATE SUPPLY 49
11.4 ZERO RATED SUPPLY 50
Chapter 12 Place of Supply of Goods and/or Services 52
12.1 NEED FOR THE PRINCIPLES OF PLACE OF SUPPLY IN GST 53
12.2 MEANING OF IMPORTANT TERMS 53

xx Guide to Revised Model GST Law
12.3 PLACE OF SUPPLY OF GOODS OTHER THAN SUPPLY OF
GOODS IMPORTED INTO, OR EXPORTED FROM INDIA 54
12.4 PLACE OF SUPPLY OF GOODS IMPORTED INTO, OR
EXPORTED FROM INDIA 55
12.5 PLACE OF SUPPLY OF SERVICES WHERE THE LOCATION
OF SUPPLIER OF SERVICE AND THE LOCATION OF RECIPIENT
OF SERVICE IS IN INDIA 55
12.6 PLACE OF SUPPLY OF SERVICES WHERE THE LOCATION OF
SUPPLIER OR THE LOCATION OF RECIPIENT IS OUTSIDE INDIA 59
Chapter 13 Time of Supply (Point of Taxation) of
13.1 TIME OF SUPPLY FOR GOODS AND/OR SERVICES 62
• General provision 62
• Supply of goods and/or services under reverse charge
mechanism (“RCM”) 63
• Specific scenario – Supply of vouchers 64
• Residuary provision 64
13.2 CHANGE IN THE RATE OF TAX IN RESPECT OF SUPPLY
OF GOODS OR SERVICES 64
• Where goods or services have been supplied BEFORE the
change in rate of tax 64
• Where goods or services have been supplied AFTER the
change in rate of tax 65
Chapter 14 E-commerce under GST 67
14.1 MEANING OF THE RELEVANT TERMS 67
14.2 COLLECTION OF TAX AT SOURCE (TCS) 67
14.3 MEANING OF TERM ‘NET VALUE OF TAXABLE SUPPLIES’ 68
14.4 OTHER PROVISIONS 69
Chapter 15 Job Work Transactions under GST 71
15.1 MEANING OF THE RELEVANT TERMS 71
15.2 SPECIAL PROCEDURE FOR REMOVAL OF GOODS FOR
CERTAIN PURPOSES 71
15.3 INPUT TAX CREDIT IN RESPECT OF INPUTS/CAPITAL
GOODS SENT FOR JOB WORK 72
Chapter 16 Assessment and Audit 74
16.1 MEANING AND TYPES OF ASSESSMENT 74
16.1.1 Self- Assessment 74
16.1.2 Provisional Assessment 75
16.1.3 Best Judgement Assessment 75

Detailed Content xxi
16.1.4 Summary Assessment 76
16.1.5 Re-Assessment 76
16.2 MEANING AND TYPES OF AUDIT 76
16.2.1 Audit by tax authorities 77
16.2.2 Special audit 77
16.2.3 Power of CAG to call for information for audit 78
Chapter 17 Demands and Recovery under GST 79
17.1 DETERMINATION OF TAX NOT PAID OR SHORT PAID OR
ERRONEOUSLY REFUNDED OR INPUT TAX CREDIT
WRONGLY AVAILED OR UTILIZED 79
17.2 GENERAL PROVISIONS RELATING TO DETERMINATION OF TAX 81
17.4 LIABILITY TO PAY IN CERTAIN CASES 84
Chapter 18 Inspection, Search, Seizure and Arrest 86
18.1 INSPECTION, SEARCH AND SEIZURE 86
18.2 INSPECTION OF GOODS IN MOVEMENT 88
18.3 ARREST PROVISION 88
Chapter 19 Offences and Penalties 91
19.1 PENALTY PROVISIONS IN RESPECT OF OFFENCES COMMITTED 91
19.2 GENERAL DISCIPLINES RELATED TO PENALTY 92
19.3 POWER TO IMPOSE PENALTY IN CERTAIN CASES 93
19.4 DETENTION, SEIZURE AND RELEASE OF GOODS AND
CONVEYANCES IN TRANSIT 93
19.5 CONFISCATION OF GOODS AND/OR CONVEYANCES AND
LEVY OF PENALTY 94
Chapter 20 Prosecution and Compounding of Offences 96
20.1 PROSECUTION 96
20.2 COGNIZABLE AND NON-COGNIZABLE OFFENCES 97
20.3 PRESUMPTION OF CULPABLE MENTAL STATE 98
20.4 COMPOUNDING OF OFFENCES 98
Chapter 21 Appeals and Revision 101
21.1 HIERARCHY OF APPELLATE AUTHORITY UNDER GST 101
21.2 PROVISIONS RELATING TO APPEALS AND REVISION 102
Chapter 22 Advance Ruling and Settlement of Cases 106
22.1 MEANING OF ADVANCE RULING 106
22.2 PROVISIONS OF ADVANCE RULING 107

xxii Guide to Revised Model GST Law
Chapter 23 Transitional Provisions in GST 109
PROVISIONS UNDER MODEL CGST/SGST LAW
• General Provision 109
• Migration of existing taxpayers having valid PAN to GST 109
• Amount of credit carried forward in last return to be allowed as
input tax credit (“ITC”) 110
• Unavailed Cenvat credit on capital goods, not carried forward in a return 110
• Credit of eligible duties and taxes in respect of inputs held in stock to
be allowed in certain situations 110
• Credit of eligible duties and taxes in respect of inputs held in stock for
manufacturer/service provider engaged in non-exempted and exempted
goods/services111
• Credit of eligible duties and taxes in respect of inputs or input services
during transit 111
• Credit of eligible duties and taxes allowed to a taxable person switching
over from composition scheme 112
• Exempted goods returned to the place of business on or after the
appointed day 112
• Duty/(tax in SGST Act) paid goods returned to the place of business
on or after the appointed day 112
• Inputs removed for job work and returned on or after the appointed day 113
• Semi-finished goods removed for job work and returned on or after the
appointed day 113
• Finished goods removed for carrying out certain processes and
returned on or after the appointed day 113
• Issue of supplementary invoices, debit or credit notes where price
is revised in pursuance of a contract entered prior to the appointed date 114
• Pending refund claims to be disposed of under earlier law 114
• Refund claims filed after the appointed day for goods cleared or services
provided before the appointed day and exported before or after the
appointed day to be disposed of under earlier law 115
• Refund claims filed after the appointed day for payments received and tax
deposited before the appointed day in respect of services not provided 115
• Claim of Cenvat credit to be disposed of under the earlier law 115
• Finalization of proceedings relating to output duty or tax liability 115
• Treatment of the amount recovered or refunded in pursuance of
assessment or adjudication proceedings 116
• Treatment of the amount recovered or refunded pursuant to revision
of returns 116
• Treatment of long term construction/works contracts 116
• Progressive or periodic supply of goods or services 116
• Taxability of supply of services in certain cases 117

Detailed Content xxiii
• Taxability of supply of goods in certain cases 117
• Credit distribution of service tax by Input Service Distributor (ISD) 117
• Provision for transfer of unutilized Cenvat credit by taxable person
having centralized registration under the earlier law 117
• Tax paid on goods lying with agents to be allowed as credit 118
• Tax paid on capital goods lying with agents to be allowed as credit 118
• Treatment of branch transfers 118
• Goods sent on approval basis returned on or after the appointed day 118
• Deduction of tax source (“TDS”) 119
• Transitional provisions for availing Cenvat credit in certain cases 119
PROVISIONS UNDER MODEL IGST LAW
• Import of services or inter-state supply of goods and/or services
made on or after the appointed day 119
Chapter 24 Anti-Profiteering Measure 121
Chapter 25 Other Important Provisions 122
25.1 GST RATE 122
25.2 SPECIAL PROCEDURE FOR CERTAIN PROCESSES 124
25.3 GST COMPLIANCE RATING 124
25.4 TAKING ASSISTANCE FROM AN IT PROFESSIONAL 124
25.5 DRAWAL OF SAMPLES 124
25.6 BURDEN OF PROOF FOR ELIGIBILITY OF GST ITC 124
25.7 ROUNDING OFF OF TAX, INTEREST, ETC. 125
PART B: PROCEDURES AS PER DRAFT RULES IN GST
Chapter 26 Registration in GST 126
26.1 LIABILITY TO BE REGISTERED 126
26.2 STRUCTURE OF GOODS AND SERVICES TAXPAYER
IDENTIFICATION NUMBER (GSTIN) 127
Chapter 27 Ongoing migration of existing registrants in GST 130
27.1 PROVISIONS FOR MIGRATION OF EXISTING
REGISTRANTS IN GST 130
27.2 MIGRATION OF 8 MILLION ASSESSEES STARTED
FROM 08-11-2016 131
27.3 INFORMATION AND DOCUMENTS REQUIRED FOR
ENROLMENT WITH GST 132
Chapter 28 Tax Invoice, Credit and Debit Notes 133
28.1 TAX INVOICE 133

xxiv Guide to Revised Model GST Law
28.2 BILL OF SUPPLY 136
28.3 CREDIT AND DEBIT NOTES (DEBIT NOTE INCLUDES
A SUPPLEMENTARY INVOICE) 136
Chapter 29 Payment of GST 138
29.1 PAYMENT OF TAX, INTEREST, PENALTY AND OTHER AMOUNTS 138
29.2 ORDER OF DISCHARGING TAX AND OTHER DUES 139
29.3 INTEREST ON DELAYED PAYMENT OF TAX 140
29.4 PAYMENT OF TAX DEDUCTION AT SOURCE (TDS) 140
29.5 SPECIAL PROVISION FOR PAYMENT OF TAX IN CASE OF
ONLINE INFORMATION AND DATABASE ACCESS OR
RETRIEVAL (OIDAR) SERVICES 141
Chapter 30 Returns under GST 144
30.1 MEANING OF RETURN 144
30.2 WHO ARE REQUIRED TO FILE RETURN? 144
30.3 SUMMARIZATION OF DIFFERENT RETURNS –
REQUIREMENT AND PERIODICITY 145
30.4 STEPS FOR RETURN FILING (FORM GSTR-1, FORM GSTR-2
AND FORM GSTR-3) – AS PER THE DRAFT RULES ON RETURN 147
30.5 MATCHING, REVERSAL AND RECLAIM 148
30.5.1 Input tax credit 148
30.5.2 Output tax liability 150
Chapter 31 Refunds under GST 153
31.1 REFUND PROVISION 153
31.2 TIME LIMIT FOR FILING OF REFUND CLAIM 154
31.3 RELEVANT DATE FOR FILING REFUND APPLICATION 154
31.4 SANCTIONING OF REFUND 156
31.5 TIME LIMIT FOR PASSING ORDER 156
31.6 INTEREST ON DELAYED REFUNDS 157
31.7 ADJUSTMENT/WITHHOLDING OF REFUND 157
PART C: IMPACT, PREPARATION AND RECOMMENDATIONS
Chapter 32 Impact of GST 159
32.1 IMPACT OF GST ON MANUFACTURING SECTOR 160
32.2 IMPACT OF GST ON SERVICE SECTOR 163
32.3 IMPACT OF GST ON TRADERS 165
Chapter 33 Preparation and Challenges ahead 167

Detailed Content xxv
33.1 PREPARATION AND CHALLENGES FOR THE TAXPAYERS 168
33.1.1 Migration of existing registered person 168
33.1.2 Last return under the existing regime to play
important role 168
33.1.3 Computation of duties and taxes in respect of goods
held in stock 169
33.1.4 Credit of stock in transit 169
33.1.5 Inputs/semi-finished goods removed to job worker and
finished goods removed for carrying out certain processes 169
33.1.6 Exempted goods returned to the place of business on or
after the appointed day 170
33.1.7 Area based Exemptions 171
33.1.8 Stock transfer is taxable in GST 171
33.1.9 Matching concept under GST 171
33.1.10 Benefit of abatement may not be available under GST 172
33.1.11 Services provided to employees 172
33.1.12 Reporting and analysis 172
33.1.13 Requirement of amendment in purchase order 172
33.1.14 Review of pricing policy 172
33.1.15 Review of long term contracts 173
33.1.16 Principles of Place of supply – a new concept for
identifying intra-state and inter-state services 173
33.2 HOW TO GO ABOUT FOR GST – ACTION PLAN 173
33.2.1 Strengthening management of process change 173
33.2.2 Efficient strategic planning 174
33.2.3 Redefining operations and robust IT infrastructure 174
33.2.4 Education and training 174
33.3 PREPARATION AND CHALLENGES FOR THE GOVERNMENT 175
33.3.1 Dual control under GST 175
33.3.2 GST Council power only recommendatory in nature 175
33.3.3 Classification of goods and/or services in GST slab rate 176
33.3.4 Tax on services by the states 176
33.3.5 Whether existing cesses are going to be subsumed
under GST? 176
33.3.6 Tax cascading 176
33.3.7 Implementation of anti-profiteering measures 176
33.3.8 IT infrastructure 176
Chapter 34 Recommendations on the Revised Model GST Law 178
34.1 SUPPLY 178
34.2 REGISTRATION 180
34.3 VALUATION 180
34.4 INPUT TAX CREDIT (ITC) 181

xxvi Guide to Revised Model GST Law
34.5 TDS PROVISION 184
34.6 TRANSITIONAL PROVISIONS 184
34.7 DEMANDS AND RECOVERY 185
ANNEXURES
I. DRAFT MODEL CGST/SGST ACT, 2016 (AS RELEASED ON
NOVEMBER 26, 2016) 186
II. DRAFT MODEL IGST ACT, 2016 (AS RELEASED ON
NOVEMBER 26, 2016) 361
III. DRAFT GST (COMPENSATION TO THE STATES FOR LOSS
OF REVENUE) BILL, 2016 386
IV. DRAFT GOODS AND SERVICES TAX - REGISTRATION RULES 394
V. DRAFT GOODS AND SERVICES TAX RULES - REGISTRATION
FORMATS 405
VI. DRAFT GOODS AND SERVICES TAX - INVOICE RULES 477
VII. DRAFT GOODS AND SERVICES TAX RULES - INVOICE FORMATS 483
VIII. DRAFT GOODS AND SERVICES TAX - PAYMENT RULES 485
IX. DRAFT GOODS AND SERVICES TAX RULES - PAYMENT FORMATS 489
X. DRAFT GOODS AND SERVICES TAX - RETURN RULES 500
XI. DRAFT GOODS AND SERVICES TAX RULES - RETURN FORMATS 513
XII. DRAFT GOODS AND SERVICES TAX - REFUND RULES 613
XIII. DRAFT GOODS AND SERVICES TAX RULES - REFUND FORMATS 620
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xxvii
The Goods and Services Tax (GST) is envisioned as a biggest indirect tax reform
of the independent India. It is a single tax on the supply of goods and services,
right from the manufacturer to the consumer and credits of input taxes paid at
each stage will be available in the next stage of value addition, which makes GST
essentially a tax only on value addition at each stage.
The implementation of GST will help to create a common national market and
reduce the cascading effects of taxes on the costing and pricing of goods and
services. It appears that the design of GST itself will lead to substantial benefits
accruing to end consumers. The final consumer will thus have to bear only the
GST charged by the last dealer in the supply chain, with set-off benefits available.
GST will have a far-reaching impact on almost all the aspects of the business
operations in the country, for instance, pricing of products and services, supply
chain optimization, IT, accounting, and tax compliance systems. It will also help
to build a transparent and corruption-free tax administration.
GST is going to be a game changing indirect tax reform which was introduced
as 122nd
Constitutional Amendment Bill, 2014 (“the GST Bill”), replacing the
115th
Constitutional Amendment Bill, 2011 and was passed by the Lok Sabha
on May 6, 2015. However, it kept pending in the Rajya Sabha for long and was
finally passed on August 3, 2016 with certain key amendments. Meanwhile,
on June 14, 2016, the central government put the Model GST Law on public
domain after getting an in-principle nod from the Empowered Committee of
State Finance Ministers for seeking suggestion from the public at large. Further,
in the series of events for implementation of GST, the said GST Bill received the
assent of the Hon’ble President on September 8, 2016 and the same was enacted
Revised Model GST Law –
One more step towards
biggest Indirect tax reform

xxviii Guide to Revised Model GST Law
as the Constitution (101st
Amendment) Act, 2016 [“the 101st
Constitutional
Amendment Act”].
On September 12, 2016, the Union Cabinet approved the formation of the GST
Council (section 12 of the 101st
Constitutional Amendment Act) followed by the
government notifying September 16, 2016 as the appointed date for remaining
sections of the 101st
Constitutional Amendment Act ( i.e. section 1 to 20 except
section 12).
The GST Council’s first meeting was held on September 22-23, 2016, wherein
consensus was developed on contentious issues of threshold exemption
amount, dual control of the centre and states over assesses and base year of
compensation to states for 5 years in the event of revenue loss due to switch-
over to GST. However, the consensus initially arrived at on the aspect of dual
control was broken later with states demanding complete control over assesses
with turnover up to Rs. 1.5 crores.
Then, the Central Board of Excise and Customs on September 26, 2016 has
unveiled Draft Rules and formats under GST relating to registration, invoice and
payment, followed by the Draft Rules and formats on GST returns and refunds
on September 27, 2016, which got approval from the GST Council in its meeting
dated September 30, 2016.
Further, the government also unveiled the Revised Model GST Law and Draft
Goods and Services Tax Compensation Bill by placing it in public domain on
November 26, 2016 after incorporating suggestions from trade and industry, in
a way, signalling that the GST might mark its advent soon.
Since notification of the GST Council on September 12, 2016, six meetings of the
GST Council have been held, wherein some of the important decisions taken (as
mentioned in the report card issued by the government on December 14, 2016)
are as under:
(i) The threshold limit for exemption from levy of GST would be Rs. 20 lakhs
for normal states (Rs. 10 lakhs for the special category states enumerated in
Article 279A of the Constitution).
(ii) The threshold for availing the composition scheme would be Rs. 50 lakhs.
Service providers would be kept out of the composition scheme.
(iii) To compensate states for 5 years for loss of revenue due to implementation
of GST, the base year for the revenue of the state would be 2015-16 and a
fixed growth rate of 14% will be applied to it.
(iv) Approval of the Draft GST Rules on registration, payment, return, refund
and invoice, debit credit notes with the understanding that minor changes
may be permitted with the approval of the chairperson, if required, due to
suggestions from the stakeholders or from the law department.

Revised Model GST Law – One more step towards biggest Indirect tax reform xxix
(v) All entities exempted from payment of indirect tax under any existing tax
incentive scheme would pay tax in the GST regime and the decision to
continue with any incentive scheme shall be with the concerned state or
central government. In case any state government or central government
decides to continue any existing exemption/incentive scheme, it will be
administered by way of a reimbursement mechanism.
(vi) Bands of rates of goods under GST shall be 5%, 12%, 18% and 28% and
in addition there would be a category of exempt goods. Further, a cess
would be levied on certain goods such as luxury cars, aerated drinks, pan
masala and tobacco products, over and above the rate of 28% for payment
of compensation to the states.
Further, the two day seventh GST Council meeting took place recently on 22-23
December, 2016. On the first day, the members debated over the provisions
of the Model central/state legislation. Finally, the Council reached a broad
consensus on the draft of central and state GST Legislations. On the subsequent
day, a consensus was also built on the method of compensation of revenue loss to
the states. It was also agreed that the states will get 100 percent compensation
for revenue losses and would be compensated every two months. “The CGST
and SGST laws, a total of 197 provisions and five schedules, have been approved.
The legally vetted copy of the drafts will be circulated to the states. Only issues of
dual control and cross empowerment are left.”, said Shri. Arun Jaitley during a
press conference following the completion of the seventh GST Council meeting
on December 23, 2016.
The Council, however, failed to arrive at consensus on Integrated GST Law and
dual control regarding division of jurisdiction and administrative powers over
tax assesses with an annual turnover of INR 1.5 crores, between the centre and
the states. The GST Council is scheduled to meet next on 3-4 January, 2017 to
take up the issue of cross empowerment and IGST Law.
It is pertinent to note that the government is all set and committed to roll out
GST as envisaged from April 1, 2017, but may be delayed on account of the recent
demonetisation of high-value currency by the government which has led to a lot
of tussles in the Parliament. The migration of traders and merchants registered
under various state and central tax regimes to the GST and the enrolment process
has been sluggish as they are apprehensive about the legal implications of the
GST. Moreover, the issue of dual control between the centre and state is a major
roadblock for the implementation of GST for assessees whose turnover is less
than Rs. 1.5 crores per year. Not only this, too many sections of the mammoth
law are also yet to be finalised.
Since the deadline of April 1, 2017, for rolling out GST appears little far from
reality with pace of time, the government may stretch for July 1 as the next
target date. The 101st
Constitutional Amendment Act, to replace existing indirect
taxes with the new GST law was notified on September 16, 2016, and the new

xxx Guide to Revised Model GST Law
ambitious tax reform has to be implemented within 12 months of that date i.e.
before September 16, 2017.
KEY HIGHLIGHTS OF THE REVISED MODEL GST LAW
The key highlights of major changes in the Model GST Law released in June,
2016 vis- a-vis November 2016 are as follows-
• Capping of GST rate:
The GST Council in its meeting held on 03-11-2016 has decided four-tier GST
tax structure of 5%, 12%, 18% and 28%, with zero rate for essential items and
the highest for luxury and de-merits goods that would also attract an additional
cess on specified items.
The lowest rate of 5% would be for common use items, while there would be
two standard rates of 12% and 18% and luxury goods demerit goods would
be covered under 28% tax rate slab with additional cess on specified items.
In this regard, in the Revised Model GST Law, provisions have been inserted,
thereby capping the central and state GST rates at 14% each and 28% for IGST.
• Though changes have been made in definition of term “Supply”, it still
continues to be inclusive and subjective one:
The Model GST Law has chosen to define ‘supply’ in inclusive manner, without
even defining what ‘supply’ means and its scope has been kept wide enough
to include any form of supply like, sale, transfer, lease, rental etc., and even
extended to cover barter and exchange.
However, in the Revised Model GST Law, scope of supply has been curtailed
to some extent by excluding importation of services without consideration
out of taxable net, except when imported from a related person or from other
establishment outside India.
Further, revamp changes have been made in Schedule I dealing with “Matters
to be treated as supply even if made without consideration” and nightmare
situations as given in the First Model GST Law like business assets/ services
put to private or non-business use, assets retained after deregistration, FOC
supplies, etc., has now been done away.
• Incorporation of new concept of ‘Mixed supply’ and ‘Composite supply’:
In the Revised Model GST Law, new provisions have been inserted to determine
taxability of mixed supply and composite supply which were not there in the
First Model GST Law.
 Composite supply i.e. the supplies that are naturally bundled  It shall be
treated as supply of principal supply.
 Mixed supply - The supplies that are not naturally bundled i.e. two or more
individual supplies or combination thereof, not constituting composite
supply  It shall be treated as a supply which attracts the highest rate of tax.

Revised Model GST Law – One more step towards biggest Indirect tax reform xxxi
• No GST on securities:
Unlike the First Model GST Law, the Revised Model GST Law has excluded
securities from the ambit of the term ‘goods’. Meaning thereby, that the concerns
of the stock market participants, brokers etc., has been addressed and there
would no GST on securities.
• Specified transaction in money to be services:
Transaction in money is included in the definition of services but is limited only
in cases when an activity relating to the use of money or its conversion by cash
or by any other mode, from one form, currency or denomination, to another
form, currency or denomination for which a separate consideration is charged.
• Increase in threshold limit for registration:
Threshold limit for registration has now been increased from Rs. 9 lakhs to
Rs. 20 lakhs for states excluding states specified in Article 279A(4)(g) of the
Constitution and special category states, wherein Rs. 10 lakhs is prescribed (In
the First Model GST Law, Rs. 4 lakhs was specified).
• Aggregate turnover to exclude non-taxable supplies:
The definition of aggregate turnover has been amended in the Revised Model
GST Law to exclude non-taxable supplies but, exempt supplies, exports of goods
and/or services still continues to be included in the aggregate turnover.
• Insertion of concept of distinct person:
Person/establishment of person who has obtained registration or required to
obtain more than one registration whether in one state or more than one state/
in a state in addition to any other establishment in another state, to be treated
as distinct person/establishment of distinct person.
• MandatoryregistrationforoverseassuppliersupplyingOIDARservices
to a person in India other than a registered taxable person:
In the Revised Model GST Law, provisions have been inserted regarding
mandatory registration for overseas supplier supplying online information and
database access or retrieval (“OIDAR”) services to a person in India other than
a registered taxable person, which was not there in the First Model GST Law.
Further, in the Revised Model GST Law, the definition of the same, principle for
determining place of provision of OIDAR services etc. have been inserted.
• Casual taxable person or non-resident taxable person to apply for
registration at least 5 days prior to commencement of business:
In the Revised GST Law, it has been specifically provided that a casual taxable
person or non-resident taxable person shall apply for registration at least 5
days prior to the commencement of business. However, a casual taxable person
or a non-taxable person shall make taxable supplies only after the issuance of
the certificate of registration.

xxxii Guide to Revised Model GST Law
• Registration can also be amended by person having unique identity
number:
In the Revised Model GST Law, it has been provided that the person to whom
a unique identity number has been assigned can get his registration amended.
However,intheFirstModelGSTLaw,theprovisionforamendmentofregistration
has been provided specifically to a registered taxable person only.
• Taxablepersontodischargedueobligationsinadditiontotaxliabilities
under GST even after cancellation of registration:
It has been provided in the Revised Model GST Law that despite of cancellation
of registration, the taxable person has to discharge all the tax liabilities and
other dues or any obligation under the GST Act and rules made thereunder for
any period prior to the date of cancellation, whether or not such liabilities are
determined before or after the date of cancellation.
• No requirement for registration also extended to a person engaged in
exclusive supply of exempted goods and/or services:
A person engaged exclusively in the business of supplying goods and/or services
that are non-taxable or wholly exempted under GST are not required to take
registration. Earlier, the person engaged exclusively in the business of supplying
non-taxable goods and/or services were only kept out of the purview of the
taxable person.
• Minimum tax rate of 1% for traders and 2.5% for manufacturers opting
for composition scheme:
In the Revised Model GST Law, minimum rate of tax under composition scheme
has been prescribed as not less than 1% for traders and 2.5% for manufacturers
i.e. effectively for CGST/SGST, it would be 2%/ 5%.
• No benefit of composition scheme to supplier of services and taxable
person making inter-state outward supply of goods:
In the First Model GST Law, benefit of the composition scheme was not available
topersonwhoeffectsanyinter-state supplies ofgoods and/or services. However,
in the Revised Model GST Law, the scope of the said scheme has been curtailed
by restricting taxable person engaged in supply of services for availment of
benefit of the composition scheme.
Also, now it has been specifically provided that the person making inter-state
outward supply of goods is not eligible for benefit of composition scheme
thereby removing the ambiguity as to the term ‘person effecting inter-state
supply’.
• Rules for valuation of goods or services not yet provided in the Revised
Model GST Law:
The Revised Model GST Law does not contain any GST Valuation Rules, unlike
the First Model GST Law i.e. GST Valuation (Determination of the Value of

Revised Model GST Law – One more step towards biggest Indirect tax reform xxxiii
Supply of Goods and Services) Rules, 2016. However, it is specifically stated
that where the value of supply of goods or services cannot be determined in
terms of section 15(1), the same shall be determined in the manner as may be
prescribed. This means that the GST Valuation Rules are yet to be revised and
put on public domain.
• Reimbursable expenditure or cost incurred, free of cost supplies,
subsidies provided by central or state government etc., not to be
included in transaction value:
The items such as reimbursable expenditure or cost incurred, free of cost
supplies which were forming part of the value of supply as per the First Model
GST Law has now been removed. Further, it has been provided that subsidies
provided by the central or state government shall be excludible from the value
and only subsidies directly linked to the price will be included in the value of
supply.
• Removal of condition stipulating that discount should be allowed in
the course of normal trade practice, for exclusion from value of supply
In the First Model GST Law, it was provided that the discount allowed before
or at time of supply shall not be included in the transaction value provided
that such discount is allowed in the course of normal trade practice and duly
recorded in the invoice issued. However, now the said condition of “discount is
allowed in the course of normal trade practice” is removed.
Thus, any discount that is given before or at the time of the supply will not form
part of the value provided such discount has been duly recorded in the invoice
issued in respect of such supply.
• Interest or late fee or penalty for delayed payment of any consideration
for any supply to be included in transaction value:
Now, if interest or late fees or penalty for delayed payment of any consideration
for any supply is paid, then it shall be includible in the value of supply, which is
a departure from the provision under the present indirect taxation regime.
• Separate provisions for place of supply in case of mobile connection
for telecommunication services, DTH etc., provided on pre-payment
through the selling agent/re-seller/distributor
In the Revised Model GST Law, separate provisions have been provided for
determining the place of supply of telecommunication services in cases where
mobile connection for telecommunication, internet service and DTH services
are provided on pre-payment through a voucher or any other means through
selling agent/ re-seller/ distributor of SIM card/ re-charge voucher, which was
not there in the First Model GST Law. The place of supply in the said cases shall
be address of the selling agent/ re-seller/ distributor as per the record of the
supplier at the time of supply.

xxxiv Guide to Revised Model GST Law
• Deletion of concept of recipient showing receipt of supply in its books
of accounts for determining time of supply:
In the First Model GST Law, one of the parameter for determining time of supply
was that of the recipient showing receipt of supply in its books of accounts,
which has now been deleted from the list of events determining time of supply
in GST in the Revised Model GST Law.
• Extension of provisions for determination of time of supply when there
is change in rate of tax to supply of goods:
In the Revised Model GST Law, the provision for determination of time of supply
when there is change in rate of tax has been extended to supply of goods which
were restricted only to supply of services in the First Model GST Law.
• Credit note can also be issued in case of return of goods by recipient
and services found to be deficient :
In the Revised Model GST Law, it has been specifically provided that credit note
can be issued in the following cases also:
 Where the goods supplied are returned by the recipient
 Where services supplied are found to be deficient
• Limits for deducting TDS reduced from Rs. 10 lakhs to Rs. 5 lakhs:
In the Revised Model GST Law, threshold limit for deducting TDS has been
reduced from Rs. 10 lakhs to Rs. 5 lakhs, i.e. TDS required to be deducted where
the total value of such supply under a contract, exceeds Rs. 5 lakhs.
• TDS to be deducted @2% in inter-state supplies and 1% in intra-state
supplies:
It is specified in the Revised Model IGST Law that the deductor is required to
deduct TDS at the rate of 2% i.e. in case of inter-state supplies, as against 1% in
case of intra-state supplies.
• Changes in the provisions relating to input tax credit (ITC) in GST:
The definition of the terms ‘input’ and ‘input service’ for availing ITC under GST
has been elaborated to cover all goods/ services which are used or intended to
be used by a supplier. The condition requiring the supplier to use input/input
services for making outward supply has been removed.
Further, the definition of capital goods has also been simplified in the Revised
Model GST Law and has been brought in line with the accounting practices, to
include all goods which have been capitalized in the books of accounts. Also,
capital goods will be entitled for 100% credit immediately except for pipelines
and telecommunication tower fixed to earth by foundation or structural support
including foundation or structural support, on which credit shall be available is
1/3rd
on yearly basis.

Revised Model GST Law – One more step towards biggest Indirect tax reform xxxv
Furthermore, the negative list of goods and services on which no ITC shall be
admissible has also amended to restrict ITC to other conveyances along with
motor vehicles except when used for subsequent trading, transportation of
passengers or goods, imparting training on driving, flying and navigating such
vehicles and conveyances. Further, the government will notify services which
are obligatory for an employer to provide to its employees under any law in
force, on which credit shall be admissible.
ITC of works contract services received will be allowed, where it is used for
further supply of work contract services. Thus, the anomaly arising in the First
Model GST Law as to whether credit shall not pass even between sub-contractor
and contractor is now removed.
• Works contract definition restricted to activities relating to immovable
property:
IntheRevisedModelGSTLaw,thedefinitionofworkscontracthasbeenamended
and now it covers only the works contract relating to immovable property.
• No GST on high sea supplies:
It has been specifically provided in the Revised Model GST Law that IGST on
imports of goods shall be payable only when the duties of customs are payable.
However, the First Model GST Law was silent in this regard. Hence, high sea
supplies will continue to enjoy exemption under GST as well.
• Supplies to SEZ are now zero rated:
Provisions for zero rated supply has been inserted in the Revised Model IGST
Law, which provides that supply of goods and/or services to a SEZ developer or
an SEZ unit shall also treated as zero rated supplies. Thus, zero rated supplies
will attract nil rate of tax.
• Changes made in the provisions of TCS required to be collected by
e-commerce operator:
 Rate of TCS was not prescribed in the First Model GST Law and the same
has been now been fixed as 1% in case of intra-state supplies and 2% in case
of inter-state supplies.
 It may also be noted that in the First Model GST Law, TCS was payable out
of the ‘amount payable or paid to the supplier, representing consideration
towards the supply of goods and/or services made through it’, but, now it
has been clarified and stated that rate shall be applied on net value of
taxable supplies made through e-commerce operator.
 Definition of ‘e-commerce’ and ‘e-commerce operator’ has been
simplified and exclusion of persons engaged in supply of goods and/or
services on their own behalf, from the definition of ‘e-commerce operator’,
does not find place in the Revised Model GST Law.

xxxvi Guide to Revised Model GST Law
 TheRevisedModelGSTLawdoesnotprovideanydefinitionof‘aggregator’,
and provisions have been inserted in section 8(4) which states that the
government may come out with a notification specifying which type of
services that would be covered therein. Aggregators includes Ola, Uber,
etc., which work as platforms for providing transport and other services,
whereinbymeansoftheapplicationandacommunicationdevice,apotential
customer is connected with the persons providing service of a particular
kind under the brand name or trade name of the said aggregator.
The TCS provision will not apply to aggregators. But, it is to be noted that
section 8(4) is only for specified services and not for goods. Thus, TCS
provisions would be applicable on e-commerce operators for supply of
goods.
Further, two provisos are contained in section 8(4), to fix the liability of GST
on e-commerce operators that do not have a place of business in India – i.e.
their representative will be liable to discharge liabilities under GST or if they
don’t have a representative, a person has to be appointed for the purpose of
paying tax.
• Requirement to take permission from the proper officer for sending
inputs and/or capital goods to job work, without payment of tax has
been done away
In the Revised Model GST Law, the procedure of taking permission before
sending any inputs and/or capital goods, without payment of tax, to a job worker
for job-work and from there subsequently sending to another job worker and
likewise has been dispensed away and now only intimation is required.
• Insertion of provisions regarding no interest payable on the amount of
IGST or CGST/SGST payable where tax wrongly collected and deposited:
In the Revised Model GST Law, it has been provided that a taxable person
shall not be required to pay any interest on the IGST or CGST/SGST payable
on transaction of inter-state/ intra-state supply which is wrongly considered
as intra-state/ inter-state supply. The said provision was not there in the First
Model GST Law.
• Insertion of provision of power of CAG to call for information for audit:
In the Revised Model GST Law, provisions have been inserted pertaining to
power of CAG to call for information, records and returns furnished under the
GST Act from the proper officer, required for conducting an audit under the
Comptroller and Auditors General’s (Duties, Powers and Conditions of Service)
Act, which was not there in the First Model GST Law.
• Amendment in triggering amount of offences for imprisonment and in
other related provisions:
The triggering amount for imprisonment of 3 years in the First Model GST Law
was, amount exceeding Rs. 50 lakhs but not exceeding Rs. 2.5 crores, now the

Revised Model GST Law – One more step towards biggest Indirect tax reform xxxvii
said amount is increased to amount exceeding Rs. 1 crore but not exceeding Rs.
2.5 crores. Similarly, triggering amount for imprisonment of 1 year was amount
exceeding Rs. 25 lakhs but not exceeding Rs. 50 lakhs which is now increased to
amount exceeding Rs. 50 lakhs but not exceeding Rs. 1 crore.
Further, in the First Model GST Law, there was no provision for imprisonment
upto 6 months and/or with fine in the specified cases viz. obstruction or
prevention of any officer in the discharge of his duties, tampering with or
destroying any material evidence or documents, or failure to supply any
information or supplying false information. Also, earlier the words “amount of
tax evaded” was used in prosecution provisions but now the said words have
been replaced with “amount of tax evaded or the amount of input tax credit
wrongly availed or utilized or the amount of refund wrongly taken”. Thus, now
prosecution provisions will also apply if the amount relates to ITC wrongly
availed or utilized or refund wrongly taken.
• Determination of cognizable and non-cognizable offences:
In the Revised Model GST Law, it has been specified that in case of 5 prescribed
offences such as supply of any goods and/or services without issue of invoice
or grossly mis-declaring the description of the supply on invoice, tax collected
but not deposited beyond a period of 3 months from due date of payment etc.,
where the amount of tax evaded or ITC wrongly availed or refund wrongly
taken exceeds Rs. 1 crore, then the offences shall be cognizable and non-
bailable. However, in the First Model GST Law, the provision was “the offences
relating to taxable goods and/or services where the amount of tax evaded exceeds
two hundred and fifty lakh rupees shall be cognizable and non-bailable”. Thus,
threshold amount is now reduced from Rs. 2.5 Cr to 1 Cr and the general
provision has been made specific and the commissioner has been given power
to take cognizance of offence.
• Increase in time period for issuance of notice for retention of goods
The time period for issuance of notice in respect of retention of goods was
60 days plus extended period of 60 days at a time subject to a maximum of
6 months in the First Model GST Law, which was considered to be on higher
side. However, in the Revised Model GST Law, the said time period is further
increased to 6 months plus extension of 6 months.
• Time period for issuance of show cause notice in fraud and non- fraud
cases prescribed:
In the First Model GST Law, no time period was prescribed for issuance of show
cause notice. However, now it is prescribed under the Revised Model GST Law
and accordingly show cause notice is to be issued within the below mentioned
time period-
 In non-fraud case: Atleast 3 months prior to the time limit for issuance of
order (Time limit for issuance of order: within 3 years from the due date for

xxxviii Guide to Revised Model GST Law
filing of annual return related to the relevant period or within 3 years from
date of erroneous refund).
 In fraud case: Atleast 6 months prior to the time limit for issuance of order
(Time limit for issuance of order: within 5 years from the due date for filing
of annual return related to the relevant period or within 5 years from date
of erroneous refund).
• Order to be issued with 3/5 years from due date for filing annual
return:
The First Model GST Law prescribed that order has to be issued within 3 years
(in non- fraud case) /5 years (in fraud case) from the due date or the actual
date, whichever is earlier, for filing of annual return. However, the provision
now states that issuance of order shall be within the specified time period which
shall be calculated from the due date for filing of annual return.
• Provisions for settlement commission not yet provided:
In the First Model GST Law, extensive provisions regarding settlement of cases
by settlement commission were provided but in the Revised Model GST Law, the
said provisions have been deleted, which would create a question in the mind
of the stakeholders that whether no such mechanism shall be provided to the
assessee to assess their tax liability in case of doubt instead of entering into any
legal proceedings.
• Transitional provisions:
Transitional provisions have been revamped in the Revised Model GST Law, to
address the various concerns raised by the Industry like transitional credit on
goods in transit, carry forward of credit by exempted service providers, first
and second stage dealers, etc.
• Anti-profiteering measures:
Probably, picking a cue from Malaysia having provisions of anti- profiteering
measure, the Revised Model GST Law has incorporated the said provisions,
which were not there in the First Model GST Law, thereby making an attempt
to ensure that businesses do not take advantage of GST and should pass on the
benefit of GST ITC available or reduction in rates to the consumer.
However, there are concerns regarding proper implementation of this anti-
profiteering measure which will be used for identifying the profiteers and a fear
is raised in the minds of traders that it may result into undue power delegated
in the hands of the designated authority. Further, timing of implementation of
these measures will also play an important role in ascertaining its success.
• Draft Compensation Bill has also been released:
The government has also released Draft Compensation Bill to provide for
compensation to states for loss of revenue arising on account of implementation

Revised Model GST Law – One more step towards biggest Indirect tax reform xxxix
of GST for a period of five years. Some of the important provisions of the said
bill are as follows-
 Base year- For the purpose of calculating the compensation amount payable
in any financial year during the transition period, the financial year ending
31-3-2016 will be taken as the base year.
 Projected growth rate: The projected nominal growth rate of revenue
subsumed for a state during the transition period shall be 14% per annum.
 Base year revenue: Base year revenue for a state shall be the sum of the
revenue collected by the state and local bodies during the base year, on
account of the taxes levied by the respective state or centre, net of refunds,
with respect to the taxes imposed by the respective state or centre, which
are subsumed into GST viz. VAT, CST, entry tax, octroi etc. Further, in respect
of the state of Jammu and Kashmir, the base year revenue shall include the
amount of service tax collected by the state government.
 Levy and collection of GST compensation cess: A cess called GST
compensation cess at such rate as may be notified to be levied and collected
on the value determined under section 15 of the CGST Act, 2016 and on such
supplies of goods and services, including imports of goods and services, and
those supplies on which tax is payable on reverse charge basis, which may
be prescribed on the recommendations of the GST Council, for the purpose
of providing compensation to states for loss of revenue arising on account of
implementation of the GST for a period of 5 years, w.e.f. the date from which
the CGST Act is brought into force.
However, no such cess shall be leviable on supplies made by a taxable person
permitted to opt for composition levy.
 Returns, Payments and Refunds: Every taxable person registered under
the CGST Act, 2016, making a taxable supply of goods and/or services, shall
furnish such returns in such formats, as may be prescribed, along with the
returns to be filed under the CGST Act, 2016, shall pay the GST compensation
cess in the manner as may be prescribed and apply for refunds of cess paid
and refundable in such form as may be prescribed.
 GST Compensation Fund: The proceeds of the GST compensation cess shall
be credited to a non-lapsable fund known as the GST Compensation Fund in
the Public Account, and shall be utilized for purposes specified above.
• Insertion of other provisions:
Certain new provisions regarding special procedure for certain processes
i.e. registration, payment for certain classes of taxable persons and taking
assistance from an IT professionals have been inserted in the Revised Model
GST Law which were not existing in the First Model GST Law.

GUIDE TO REVISED MODEL GST LAW, 2017

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GUIDE TO REVISED MODEL GST LAW, 2017