OVER VIEW OF REVENUE SYSTEM GST by JKS.pptx

Welcome to this session on
Overview of Revenue System-Goods and Services Tax
Mandatory Training of AAOs for Promotion as SAOs by
J.K.Saha, AAO/MB

Session Overview
 Input Tax Credit, Computation of GST Liability
 Procedures of GST – registration, tax invoice, credit and debit notes, electronic way bill, accounts
and records

Learning Objective
 Given access to the background material on
 Input Tax Credit, Computation of GST Liability
 Procedures of GST – registration, tax invoice, credit and debit notes, electronic way bill, accounts
and records
Participants would be able to understand and apply these concepts in the performance of their
functions

References
 Constitution of India
 Central Goods & Services Tax Act, 2017
 Central Goods & Services Tax Rules, 2017

Introduction
 Under the erstwhile regime - Centre levied Excise duty on manufacture, Service tax
on services etc. while States levied VAT, Entry Tax, Luxury Tax etc.
 Purpose of 101st Constitution Amendment Act
 Creating a unified system of taxation by subsuming existing indirect taxes and
duties;
 Assigning concurrent powers to Centre and States to levy GST on all supplies of
goods or services or both.

Power of Taxation under the Constitution
Article 265: Taxes not to be imposed save by authority of law.
 The Power to levy tax has been allocated between:
 Parliament
 State Legislature

Article 246 - Power of Union and State to make laws
Article 246 of the Indian Constitution, distributes legislative powers including taxation,
between the Parliament of India and the State Legislatures;
Schedule VII enumerates the subject matters on which the Parliament and States have
the powers to make laws in three lists:
 List I (Union List);
 List II (State List); and
 List III (Concurrent list)

Schedule VII of Constitution
List – I
(Union List)
• entailing subjects on
which only the
Parliament has the
exclusive powers to
make laws
List – II
(State List)
which only the State
Legislatures are
competent to make
laws
List – III
(Concurrent List)
which both the
Parliament and the
State Legislatures are
competent to make
laws
8

Article 254
Inconsistency between laws made by Parliament and laws made by the State
Legislatures :
 If any provision of a law made by the Legislature of a State is repugnant to any
provision of a law made by Parliament, or to any provision of an existing law with
respect to one of the matters enumerated in the Concurrent List:
 The law made by Parliament shall prevail and the law made by the Legislature of
the State shall, to the extent of the repugnancy, be void.

Article 246A - Power to impose GST
[New Provisions]
10
Petroleum crude, High Speed Diesel, Motor Spirit (commonly known as petrol), Natural Gas
and Aviation Turbine Fuel
Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to
clause (2), the Legislature of every State, have power to make laws with respect to goods
and services tax imposed by the Union or by such state
246A(1)
246A(2)
Parliament has exclusive power to make laws with respect to goods and services tax where
the supply of goods, or of services, or both takes place in the course of inter-State trade or
commerce.
In respect of goods and services tax referred to in clause (5) of article 279A, Article 246A
will take effect from the date recommended by the Goods and Services Tax Council.’
Explanation
Goods under
279A(5)

Constitution (101st Amendment) Act, 2017
“Goods and services tax” means any tax on supply of
goods, or services or both except taxes on the supply of the
alcoholic liquor for human consumption
366(12A)
Definition of GST

GST – Other Changes in Definition
12
Sl No Definition Article Definition
1. Service 366 (26A) Anything other than goods
2. State 366 (26B) With reference to articles 246A, 268, 269, 269A and
article 279A includes a Union territory with
Legislature.
3. Goods 366 (12) includes all materials, commodities, and articles
[Definition Already Present prior to 101 Constitutional
amendment]

Levy and collection of GST in course of inter-State trade or
commerce – Article 269A
 GST shall be levied and collected by the Central Government and such tax shall be
apportioned between the Union and the States in the manner as may be provided
by Parliament by law on the recommendations of GST Council.
 Supply of goods, or of services, or both in the course of import into the territory of
India shall be deemed to be supply in the course of inter-State trade or commerce
 Parliament will formulate the principles for determining the place of supply, and
when a supply takes place in the course of inter-State trade or commerce.
13

Article 269A – When GST collected will not form part of
Consolidated Fund of India?
14
• The amount apportioned to a State from the tax collected on supplies in the course of
inter-state trade or commerce
• Where an amount collected as tax levied in the course of inter-state trade or
commerce has been used for payment of the tax levied by a State under article 246A.
In other words, where IGST is used for payment of SGST.
• Where an amount collected as tax levied by a State under article 246A has been used
for payment of the tax levied under clause inter-state trade or commerce. When SGST
is used for payment of IGST.
These clauses will ensure that no separate appropriation will be required from the
Parliament to disburse money to the states.

GST Council – Article 279A
 Article 279A provides for constituting a council called the Goods and Services Tax
council within 60 days from date of commencement of 101st Constitution
Amendment Act, 2016.
 Members are as follows :-
(a) Union Finance Minister as Chairperson;
(b) Union Minister of State in charge of Revenue or Finance;
(c) Minister in charge of Finance or Taxation or any other Minister nominated by
each State Government.
(d) Vice Chairperson to be chosen among the members.
15

GST Council – Recommendations
GST Council can make recommendations on the following:
Taxes, cesses and surcharges that may be subsumed;
Goods and services that may be subjected to or exempted from GST;
Model Goods and Services Tax Laws, principles of levy, apportionment of Goods and
Services Tax levied under Article 269A and the principles that govern the place of supply;
Threshold limit of turnover below which goods and services may be exempted;
Rates, floor rates, band, special rates;
Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and
Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh
and Uttarakhand
Date on which GST be levied on petroleum crude, HSD, Petrol, natural gas and ATF and
Any other matter relating to the goods and services tax, as the Council may decide.
16

GST Council Meetings
17
Weightage of votes:
Central Government – 1/3rd of the total votes cast, and
State Governments – 2/3rd of the total votes cast.
Other important roles of GST Council:
The GST Council to be guided by the need for a
harmonised structure of goods and services tax and for
the development of a harmonised national market for
goods and services.
GST Council to devise mechanisms to adjudicate
disputes arising between the Centre and States.
Quorum:
One-half of the total number
of Members of the Goods and
Services Tax Council.
All decisions by a majority of
not less than three-fourths of
the weighted votes of the
members present and voting

Article 286 – Restrictions on the States to impose tax
 Prior to amendment, the clause restricted the states to impose taxes on sale or
purchase of goods.
 Now it has been amended to provide that the state shall not impose any tax on the
supply of the goods or services or both, where such supply takes place:
a. Outside the State
b. in the course of the import of the goods into, or export of the goods out
of, the territory of India
 Further, the Parliament will formulate the principals for determining when a supply
constitutes a supply as mentioned in the point above.
 Marginal Note to the Section has not been amended. It still reads “Restrictions as
to imposition of tax on the sale or purchase of goods”
18

Timeline - GST Enactments
After receiving presidential assent on 12th April, 2017 the following enactments came
into force with effect from 1st July, 2017
 The Central Goods and Services Tax Act, 2017
 The Integrated Goods and Services Tax Act, 2017
 The Union Territory Goods and Services Tax Act, 2017
 The Goods and Services Tax (Compensation to States) Act, 2017
19

Levy and Collection
20
• Services
• Goods
• Goods and services
1: Subject
• Included
• Implied
• Excluded
2: Supply
• Specified for goods
• Specified for services
4: Time
• Inter-State
• Intra-State
3: Place

Concept of ITC
 “Input tax" means IGST (including
that on import of goods), CGST,
SGST and UTGST;
 Charged on any supply of goods or
services
 System for a seamless flow of credit
 Extends to inter-State supplies
 Credit utilization would be as shown
in the table

© Indirect Taxes Committee, ICAI 22
Conditions for Availment of ITC by a Registered
Taxable Person – Sec 16
Basis - tax invoice
/ debit note
issued by a
registered
supplier, or other
prescribed
taxpaying
document
Goods and/or
services have
been received
Tax actually paid
by the supplier to
the credit of the
appropriate
Government,
either in cash or
by utilization of
ITC
Monthly return in
Form GSTR-3
under Section 39
has been
furnished

© Indirect Taxes Committee, ICAI 23
Conditions for Availment of ITC by a Registered
Taxable Person – Sec 16
Note:
• Credit only upon receipt of the last lot/ instalment in case of goods received in lots / instalments.
• Goods deemed to be received by a taxable person when the supplier delivers the goods to the
recipient/ any other person, on the direction provided by the taxable person to the supplier.
• Exception in case of goods being directly sent to job worker
• If the recipient of services fails to pay (value + tax) within 180 days from date of invoice, (ITC availed +
interest @ 18%) shall be added to his output tax liability. ITC available when amount discharged later

ITC in case of Capital Goods
24
Depreciation claimed on Tax component of the cost of
capital goods under IT Act
Example:
Cost of asset = Rs. 100
Tax-10%(say) = Rs. 10
Total Cost Rs. 110
ITC not Available
If Depreciation charged on
Rs.100
ITC Available
If Depreciation charged on
Rs.110
ITC not Available
“capital goods” means the goods, the value of which is capitalized in the books of accounts of the person
claiming the credit and which are used of intended to be used in the course or furtherance of the business

Sec-22 : Person Liable for Registration
 Aggregate turnover > Rs20 Lakhs
 Special Category States, Aggregate turnover > Rs10 Lakhs
 What is Aggregate turnover?
 Taxable Supplies + Exempt Supplies + Exports + Inter State Supplies
 Taxable supplies does not include Alcoholic Liquor for human consumption
 Will it include turnover on which tax needs to be paid under reverse charge?
 Specific exclusion of inward supplies liable under reverse charge basis
25

Sec-22 : Person Liable for Registration
 Registration is required in the State from which he makes taxable supply.
 GST is destination based tax, tax goes to the “destination” State but registration is
in the “Origin State”.
 Person registered / licensed under erstwhile law on day immediately preceding the
appointed date.
 Transfer of Business –Transferee to obtain registration in case of
• Sale
• Succession
• Amalgamation or De-merger
26

Said process applicable to Inter-state, Voluntary,
Casual, Reverse Charge, ISD, Agents, E-com
Registration Certificate is Issued in Form GST Reg-06
• Form GST
Reg-01
• Part A (PAN, e-
Mail, Mobile
Verification)
• Part B (Other
details)
• Ack. Form
GSTReg-02
• Submit the
relevant docs
Application
Verification
• Approval within 3
working days
• If satisfactory
clarifications received–
approval shall be given in
next 7 days
• If clarifications not
satisfactory- intimate the
rejection in Form GST
REG-05
• Deemed registration--No
action taken within 3/7
working days
Approval
/Rejection
17 days
Process
Registration Process
 Initial verification
within 3 working
days
 Clarifications/inf
o required –
Form GST Reg-03
 Applicant furnish
clarifications in
Form GST Reg-04
within next 7
working day
27

Rule-10 : Registration Certificate
28
Certificate in Form GST REG-06 with GSTIN of 15 digit on GST
portal
00AAAAA0000A000
State
Code
PAN Number
Entity
Code
Check
sum

Tax Invoice – Sec 31
29
a) Revised invoices may be issued against the invoice already issued during the period starting from the
effective date of registration till the date of issuance of certificate of registration within one month from
date of issuance of certificate of registration.
b) No invoice required if value of goods or services or both < Rs. 200
c) Composition dealers and Person supplying exempted goods or services to issue a bill of supply instead of tax
invoice
Registered
taxable person
shall issue tax
invoice
Supply of
taxable
goods
Supply of
taxable
services
Before / at the time of :-
• Removal of goods for supply (supply involves
movement of goods)
• Delivery of goods/ making available to the recipient
(other cases)
Before / after provision of service but within
prescribed period

Credit / Debit Notes – Sec 34
30
Where Taxable
value and/or tax
Charged in Tax Invoice
> Amount Payable or
goods returned by
recipient or services
found deficient
Taxable
Person to
issue CREDIT
Note any time A Credit Note can be
declared in GST return
upto30th September
following end of FY of
supply or date of annual
return whichever is earlier
No Credit Note if incidence
of tax and interest on supply
has been passed to any
other person
Charged in Tax
Invoice < Amount
Payable
Taxable Person to
issue DEBIT Note
Registered taxable person issuing Debit / Credit notes to declare its details in the return for the month
during which such notes are issued / received or in the return for any subsequent month but not later than
September following the end of FY of supply, or the date of filing of the relevant annual return, whichever is
earlier, and the tax liability shall be adjusted in the manner specified in this Act.

E-Way Bill
 E-way bill is a document required by a person in charge of the conveyance carrying
any consignment of goods of value exceeding fifty thousand rupees as mandated
by the Government in terms of Section 68 of the Goods and Services Tax Act read
with Rule 138 of the rules framed thereunder.
 It is generated from the GST Common Portal for E-Way bill system by the registered
persons or transporters who cause movement of goods before commencement of
such movement.

Who can Register and use e-way bill Portal
Who can
Register
Registered
Dealer
Citizen /
Unregistered
Dealer
Transporter
Registered
under GST
Unregistered
32

Process
Set User
Name &
Password
Confirm
OTP
Enter GSTIN
eWay Bill
Registration
Registration
eWay Bill
Portal

Accounts and Records
Requirement for maintenance of records under Section 35 and Rule 56:
Every registered person will be required to maintain the following records at his
principal place of business and at each additional place of business, regarding:
 Production/Manufacture of goods (production accounts showing raw materials
or services used in the manufacture and the waste and by products of
manufactured goods)
 Inward and outward supply of goods of services or both (including concerned tax
documentation such as invoices, DC, bill of supply etc.)
 Stock of goods (Balance of stock including raw materials, FG, scrap and goods
lost, stolen, destroyed and written off or disposed off as gift or free sample
34

 Input Tax Credit availed and Output tax payable and paid. (along with register of
tax invoice, credit notes, debit notes, delivery challan issued or received.)
 Separate account of advances received, paid and adjustments made thereto.
 Names and addresses of the suppliers from whom supplies have been received
and recipients to whom supplies have been made.
 The complete address of all the premises where goods are stored by a registered
person
35
Accounts and Records Contd…

 Records may also be maintained in electronic form authenticated by digital
signature. Proper backup of the electronic record must be maintained and the
same are to be produced on demand
 Entries in records to not be erased, effaced or overwritten, and all incorrect
entries shall be scored out and attested. In case of electronic records, a log of
edited and deleted entries to be maintained.
 Each volume of books of account maintained manually to be serially numbered.
 Annual audit by a Chartered Accountant or a Cost Accountant if turnover
exceeds 1 crore during the financial year.
36

Period of retention
 Every registered person required to maintain records for 72 months from the due
date of furnishing of annual return for the year pertaining to such accounts and
records.
 In case of proceedings or investigation, the registered person to retain records for a
period of one year after final disposal of such proceedings or investigation or 72
months from the due date for filing annual return pertaining to such records,
whichever is later.
 In case such records are maintained manually, to be kept at every related place of
business of the registered person for the above period. In case such records are
maintained digitally, they are to be accessible at every related place of business for
the above period.

Penal provisions
 Section 35 (6) - If a registered person fails to account for goods and services as
specified under Section 35, the said unaccounted goods or services will be treated
as supplied by the said registered person and tax will be recoverable along with
interest.
 Rule 56 (6) - The complete addresses of all the premises where goods are stored by
a registered person are to be disclosed. If any taxable goods are found to be stored
at any place(s) other than the premises disclosed in the records by the registered
person, without the cover of any valid documents, tax shall be payable (along with
interest) on such goods as if such goods have been supplied by the registered
person.
38

GST Network (GSTN)
 Initially incorporated as a Private Limited Company in 2013 with 49% stake of the
Central and State Governments
 Now notified as a fully-owned Government Company registered under the
Companies Act, 2013 with 50% equity of the Central Government and the balance
50% by various States and Union Territories (notified in March 2019 but yet to take
effect)
 The Company has been set up primarily to provide IT infrastructure and services to
the Central and State Governments, tax payers and other stakeholders for
implementation of the Goods and Services Tax (GST)
39

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