UNIVERSITY OF PETROLEUM & ENERGY STUDIES

SCHOOL OF LAW

B.COM LLB (HONS.)

SEMESTER-VIII

ACADEMIC YEAR: 2019-2020 SESSIONS: FEBRUARY-MAY

CUSTOMS & GST II

ASSIGNMENT

Submitted By:

SONAL AGARWAL (Batch-2)

SAP ID – 500055666

Roll No 92
 Write a detailed note on constitution on GST Council.

In order to implement GST, Constitutional (122nd Amendment) Bill (CAB for short) was
introduced in the Parliament and passed by Rajya Sabha on 03rd August, 2016 and LokSabha on
08th August, 2016. The CAB was passed by more than 15 states and thereafter Hon'ble President
gave assent to "The Constitution (One Hundred And First Amendment) Act, 2016" on 8th of
September, 2016. Since then the GST council and been notified bringing into existence the
Constitutional body to decide issues relating to GST. On September 16, 2016, Government of
India issued notifications bringing into effect all the sections of CAB setting firmly into motion
the rolling out of GST. This notification sets out an outer limit of time of one year that is till 15-
9-2017 for bringing into effect GST. As per Article 279A (1) of the amended Constitution, the
GST Council has to be constituted by the President within 60 days of the commencement of
Article 279A. The notification for bringing into force Article 279A with effect from 12th
September, 2016 was issued on 10th September, 2016.

As per Article 279A of the amended Constitution, the GST Council which will be a joint forum
of the Centre and the States, shall consist of the following members: -

Union Finance Minister - Chairperson

1. The Union Minister of State, in-charge of Revenue of finance - Member

2. The Minister In-charge of finance or taxation or any other Minister nominated by each
State Government - Members
As per Article 279A (4), the Council will make recommendations to the Union and the States on
important issues related to GST, like the goods and services that may be subjected or exempted
from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates
including the floor rates with bands, special rates for raising additional resources during natural
calamities/disasters, special provisions for certain States, etc.

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi approved
setting up of GST Council on 12th September, 2016 and also setting up its Secretariat as per the
following details:

1. Creation of the GST Council as per Article 279A of the amended Constitution;
2. Creation of the GST Council Secretariat, with its office at New Delhi;
 3. Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
4. Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a
permanent invitee (non-voting) to all proceedings of the GST Council;
5. Create one post of Additional Secretary to the GST Council in the GST Council Secretariat
(at the level of Additional Secretary to the Government of India), and four posts of
Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the
Government of India). The Cabinet also decided to provide for adequate funds for meeting
the recurring and non-recurring expenses of the GST Council Secretariat, the entire cost for
which shall be borne by the Central Government. The GST Council Secretariat shall be
manned by officers taken on deputation from both the Central and State Governments.

State the eligibility and conditions for taking Input Tax Credit.

ELIGIBILITY AND CONDITIONS FOR TAKING INPUT TAX CREDIT [Section 16]:

1. Every registered person shall, subject to such conditions and restrictions as may be
prescribed and, in the manner, as specified in section 49, be entitled to take credit of input tax
charged on any supply of goods or services or both to him which are used or intended to be
used in the course or furtherance of his business and the said amount shall be credited to the
electronic credit ledger of such person.
2. Notwithstanding anything contained in this section, no registered person shall be entitled to
the credit of any input tax in respect of any supply of goods or services or both to him unless,
a) he is in possession of a tax invoice or debit note issued by a supplier registered under this
Act, or such other tax paying documents as may be prescribed;
b) he has received the goods or services or both. To be eligible for ITC he must be in
possession of a tax invoice or debit note issued by a supplier registered under this Act, or
such other tax paying documents and received the goods or services or both. The
registered person need not receive the goods himself. It is sufficient even if the goods are
delivered to some other person on his direction.
Explanation. – For the purposes of this clause, it shall be deemed that the registered
person has received the goods where the goods are delivered by the supplier to a recipient
or any other person on the direction of such registered person, whether acting as an agent
 or otherwise, before or during movement of goods, either by way of transfer of
documents of title to goods or otherwise;
c) subject to the provisions of section 41, the tax charged in respect of such supply has been
actually paid to the Government, either in cash or through utilization of input tax credit
admissible in respect of the said supply; and
d) he has furnished the return under section 39: Provided that where the goods against an
invoice are received in lots or installments, the registered person shall be entitled to take
credit upon receipt of the last lot or installment.

Provided further that where a recipient fails to pay to the supplier of goods or services or both,
other than the supplies on which tax is payable on reverse charge basis, the amount towards the
value of supply along with tax payable thereon within a period of one hundred and eighty days
from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed
by the recipient shall be added to his output tax liability, along with interest thereon, in such
manner as may be prescribed. This is known as INPUTTAX CREDIT REVERSAL.

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment
made by him of the amount towards the value of supply of goods or services or both along with
tax payable thereon.

3. Where the registered person has claimed depreciation on the tax component of the cost of
capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the
input tax credit on the said tax component shall not be allowed.
4. A registered person shall not be entitled to take input tax credit in respect of any invoice or
debit note for supply of goods or services or both after
• the due date of furnishing of the return under section 39 for the month of September
following the end of financial year to which such invoice or invoice relating to such debit
note pertains or
• furnishing of the relevant annual return whichever is earlier. Section 16 of the CGST Act,
2017, states the conditions and eligibility to obtain ITC.

Following four conditions are required to be fulfilled by a registered taxable person:

 • he should be in possession of tax invoice or debit note or such other taxpaying documents
as may be prescribed;
• he should have received the goods or services or both;
• the supplier should have actually paid the tax charged in respect of the supply to the
government; and
• he should have furnished the return under section 39. Where the goods against an invoice
are received in lots or installments, the registered person shall be entitled to take credit
upon receipt of the last lot or installment.

Availability of ITC to recipient has been made dependent on payment of tax by supplier. Thus,
even if the receiver has paid the amount of tax to the supplier and the goods and/or services so
procured are eligible for ITC, no credit would be available, till the time, tax so collected by the
supplier, is deposited to the Government. Every registered person is eligible to take credit of
GST charged to him for his inward supply of goods/ services if he uses such supplies in the
course or furtherance of his business. Such credit is called input tax credit and the same is to be
credited to his electronic ledger. Payment of tax and filing of return is also necessary to claim
ITC. However, Section 41 allows ITC on provisional basis. Depreciation under Section 32 of the
Income Tax Act shall not be claimed on the tax portion on which ITC has been claimed. It is a
violation under Income Tax Act also.

What do you understand by Input Tax Credit? What is the hierarchy of availing ITC of
IGST, SGST and CGST?

Section 2(63) “input tax credit” means the credit of input tax; Input Tax Credit (ITC) is
considered as a cornerstone of GST. In the previous tax regime, there was non- availability of
credit at various points in supply chain, leading to a cascading effect of tax i.e., tax on tax and
therefore increasing the cost of goods and services. This flaw has been removed under GST and
a seamless flow of credit throughout the value chain is therefore available consequently doing
away with the cascading effect of taxes. To avail the benefit of ITC, it is required that the person
availing such benefit is registered under GST. An unregistered person is not eligible to take the
benefit of ITC. Section 155, of the CGST Act, 2017 states that where any person claims that he
is eligible for input tax credit under this Act, the burden of proving such claim shall lie on such
person.
 State the cases when Input Tax Credit is not available.

NEGATIVE LIST FOR INPUT TAX CREDIT (Blocked Credits) [Section 17(5)]

Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section
18, input tax credit shall not be available in respect of the following, namely:

(a) motor vehicles and other conveyances except when they are used –

(i) for making the following taxable supplies, namely: –

(A) further supply of such vehicles or conveyances; or

(B) transportation of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances;

(ii) for transportation of goods;

(b) the following supply of goods or services or both –

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic
surgery except where an inward supply of goods or services or both of a particular category is
used by a registered person for making an outward taxable supply of the same category of goods
or services or both or as an element of a taxable composite or mixed supply;

(ii) membership of a club, health and fitness center;

(iii) rent-a-cab, life insurance and health insurance except where –

(A) the Government notifies the services which are obligatory for an employer to provide to its
employees under any law for the time being in force; or

(B) such inward supply of goods or services or both of a particular category is used by a
registered person for making an outward taxable supply of the same category of goods or
services or both or as part of a taxable composite or mixed supply;

(iv) travel benefits extended to employees on vacation such as leave or home travel concession;
(c) works contract services when supplied for construction of an immovable property (other than
plant and machinery) except where it is an input service for further supply of works contract
service;

(d) goods or services or both received by a taxable person for construction of an immovable
property (other than plant or machinery) on his own account including when such goods or
services or both are used in the course or furtherance of business.

Explanation. – For the purposes of clauses (c) and (d), the expression “construction” includes re-
construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the
said immovable property;

(e) goods or services or both on which tax has been paid under section 10; (Composition Supply
Scheme)

(f) goods or services or both received by a non-resident taxable person except on goods imported
by him;

(g) goods or services or both used for personal consumption;

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and

(i) any tax paid in accordance with the provisions of sections 74, 129 and 130. (Recovery
Sections)

Section 17(6) The Government may prescribe the manner in which the credit referred to in
subsections (1) and (2) may be attributed. Explanation. – For the purposes of this Chapter and
Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery
fixed to earth by foundation or structural support that are used for making outward supply of
goods or services or both and includes such foundation and structural supports but excludes

(i) land, building or any other civil structures;

(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises
Q. 5. Whenever a transaction takes place, different kinds of documents are issued under
different circumstances for procedural compliances under GST, like tax invoice, receipt
voucher, credit note, debit note etc. Explain the meaning of Tax Invoice, Receipt Voucher,
Debit note and Credit note.

Tax Invoices Section 2(66) of Central Goods & Services Tax Act, 2017 mandates “invoice” or
“tax invoice” as the tax invoice referred to in section 31. An invoice is a commercial instrument,
issued by a supplier of goods / services, to a recipient. It identifies both the parties involved, and
lists and describes the items sold / services supplied, quantifies them, exhibits the dates, prices
and necessary discounts.

Under Section 2(37) of Central goods & Services tax Act, 2017, “credit note” means a document
issued by a registered person under sub-section (1) of section 34. Where a tax invoice has been
issued for supply of goods / services / both, and where the taxable value in the invoice is greater
than the taxable value of supply; the tax charged per invoice is greater than the tax payable in
respect of such supply; OR where the goods so supplied have been returned by the recipient OR
where the goods / services have been found to be deficient; in these cases, the registered supplier
may issue a credit note to the recipient.

Under Section 2(38) of Central goods & Services tax Act, 2017, “debit note” means a document
issued by a registered person under sub-section (3) of section 34. Where a tax invoice has been
issued for supply of goods / services / both, and where the taxable value in the invoice is less
than the taxable value of supply; the tax charged per invoice is less than the tax payable in
respect of such supply; the registered supplier may issue a debit note to the recipient.

Receipt Voucher : When an advance payment is received with respect to any supply of goods or
services or both, a receipt voucher is required to be issued by the registered person. Further, if no
supply is made and no tax invoice is issued after the issue of receipt voucher, the said registered
person may issue to the person who had made the payment, a refund voucher against such
payment.

Write a note on various types of Audit under GST

Audit under GST is of three types:-

 1. Audit by Chartered Accountant or Cost Accountants under Section 35(5) whose
turnover exceeds the prescribed limit - Section 35 of Central Goods & Services Tax
Act, 2017 also mandates that every registered person must get his accounts audited by
a Chartered Accountant or a Cost Accountant if his aggregate turnover during a
Financial Year exceeds Rs. 2 Crores. Such person has the additional responsibility of
furnishing along with the annual return:
• Audited annual accounts and
• Reconciliation statement duly certified which reconciles the value of supplies
declared in the Annual Return with the Annual Audited Financial Statements
2. Audit by Tax Authorities [SECTION 65] - The Commissioner or any other officer
authorized by him, at the place of business of the taxable person, may undertake the
audit of business transactions after giving proper advance intimation of 15 days. The
audit shall be completed within a period of 3 months or extended period for a
maximum of 6 months by the Commissioner. The taxable person is required to:
a) facilitate the verification of accounts/records available or requisitioned by the authorities,
b) provide such information as the authorities may require for the conduct of the audit, and
c) render assistance for timely completion of the audit.
3. Special Audit under Section 66 provides that a special audit can be instituted in
limited circumstances where during scrutiny, investigation, etc. it comes to the notice
that a case is complex or the revenue stake is high. The Assistant Commissioner is to
serve the communication for special audit only after prior approval of the
Commissioner. A Chartered Accountant or a Cost Accountant so nominated by the
Commissioner may undertake the audit. The auditor will have to submit the report
within 90 days or within the further extended period of 90 days. The expenses for
examination and audit including the remuneration payable to the auditor will be
determined and borne by the Commissioner. Based on the findings / observations of
the special audit, action can be initiated under Section 73 or Section 74 of the Act.
 Write a detailed note on the Returns required to be filed under GST Act.

Furnishing details of outward supplies [Section 37]- It mentions that the details of outward
supplies (form GSTR 1), of goods / services / both, are required to be furnished by every
registered person, including casual taxable person, but excluding:

a. Input Service Distributor (ISD)

b. Non-resident taxable person
c. Person paying tax under composition scheme
d. Person effecting TDS
e. Person effecting TCS
f. Supplier of Online Information and Data Base Access / Retrieval Services
(OIDAR)

GSTR 1 of any month has to be filed by 10th of the following month. It is prudent to note that
GSTR 1 cannot be filed within 11th to 15th of the month. Outward Taxable Supplies could be
Business to Business (B2B) or Business to Consumer (B2C). In case of B2B supplies, invoice-
wise details must be uploaded for all supplies. In case of B2C supplies, if the supplies are intra-
state, consolidated details of all supplies need to be uploaded. If the supplies are interstate, for
the Invoices which are greater than Rs. 2,50,000, invoice-wise details need to be uploaded, for
the Invoices which are less than Rs. 2,50,000, state-wise details need to be uploaded. The details
of the Outward Taxable Supplies are made available electronically to all the recipients in Form
GSTR 2A after the 10th of the following month. This gives the recipient the opportunity to
accept or modify or propose necessary changes. Post the changes, the recipients file the GSTR
2, which is the monthly return for all inward taxable supplies, by the 15th of the following
month. The changes are either accepted or rejected by the supplier and the amended details are
reflected in GSTR 3 which is to be filed by the 20th of the following month.

Furnishing details of inward supplies [Section 38] - Section 38 of Central Goods & Services tax
Act, 2017 mentions that the details of inward supplies (form GSTR 2), of goods / services / both,
are required to be furnished by every registered person, including casual taxable person, but
excluding:

a. Input Service Distributor (ISD)

 b. Non-resident taxable person
c. Person paying tax under composition scheme
d. Person effecting TDS
e. Person effecting TCS
f. Supplier of Online Information and Data Base Access / Retrieval Services
(OIDAR)

Type of taxable Periodicity Due Date

person Form No.
Every registered GSTR -3 Monthly 20TH of the following
person other than month
supplier of OIDAR,
Composition levy
subscribers, NR
taxable persons, ISD
and persons effecting
TDS/TCS
Composition Levy GSTR -4 Quarterly 18th of the month
taxpayers following the end of
quarter
NR taxable persons GSTR -5 Monthly 20TH of the following
month
Input Service GSTR -6 Monthly Before 13th of the
Distributor (ISD) following month
Persons effecting TDS GSTR -7/8 Monthly By 10th of the
& TCS following month
Annual Return GSTR -9 By 31st December of
next financial year
Final Return GSTR -10 Within three months
of the date of
cancellation or date of
 order of cancellation,
whichever is later

State the provisions related to Tax deduction at Source and Tax Collection at Source
under GST.

As per section 51, TDS provision is meant for Government and Government undertakings and
other notified entities making contractual payments where total value of such supply under a
contract exceeds Rs. 2.5 Lakhs to suppliers. While making any payments under such contracts,
the concerned Government/authority shall deduct 1% of the total payment made and remit it into
the appropriate GST account. Any amount shown as TDS will be reflected in the electronic cash
ledger of the concerned supplier. He can utilize this amount towards discharging his liability
towards tax, interest fees and any other amount.

TDS Deductor will account for such TDS in the following ways:

1. Such deductors need to get compulsorily registered under section 24 of the

CGST/SGST Act.
2. They need to remit such TDS collected by the 10th day of the month succeeding the
month in which TDS was collected and reported in the prescribed return. Delay or
failure to remit such TDS will attract interest at the rate as the government may notify
but not exceeding 18%.
3. The amount deposited as TDS will be reflected in the electronic cash ledger of the
supplier.
4. They need to issue certificate of such TDS to the deductee within 5 days of deducting
TDS failing which fees of Rs. 100 per day subject to maximum of Rs. 5000/- will be
payable by such deductor.

COLLECTION OF TAX AT SOURCE [SECTION 52] - This provision is applicable only for E-
Commerce Operator under section 52 of CGST/SGST Act. Electronic Commerce Operator has
been defined to mean any person who owns, operates or manages digital or electronic facility or
platform for electronic commerce. Every E-Commerce Operator, not being an agent, needs to
withhold an amount calculated at the rate not exceeding 1% of the “net value of taxable supplies”
made through it where the consideration with respect to such supplies is to be collected by the
operator. The e-commerce operator should collect tax during the month in which supply was
made.The “net value of taxable supplies” means the aggregate value of taxable supplies of goods
or services or both, other than the services on which entire tax is payable by the e-commerce
operator, made during any month by all registered persons through such operator reduced by the
aggregate value of taxable supplies returned to the suppliers during the said month.Such withheld
amount is to be deposited by such ECommerce Operator to the appropriate GST account by the
10th of the next month. The amount deposited as TCS will be reflected in the electronic cash
ledger of the registered supplier on whose account such collection was made. The same can be
used at the time of discharge of tax liability in respect of the supplies by the registered supplier.
Thus the supplier can reduce his tax liability only after the Ecommerce operator has filed the
return. Every operator is required to furnish a statement, electronically, containing the details of
outward supplies of goods or services effected through it, including the supplies of goods or
services returned through it, and the amount collected by it as TCS during a month by 10th of
next month. The operator is also required to file an annual statement by 31st day of December
following the end of the financial year in which the tax was collected.The details of supplies and
the amount collected during a calendar month, and furnished by every operator in his statement
will be matched with the corresponding details of outward supplies furnished by the concerned
supplier in his valid return for the same calendar month or any preceding calendar month. Where
the details of outward supply, on which the tax has been collected, as declared by the operator in
his statement do not match with the corresponding details declared by the supplier the
discrepancy shall be communicated to both persons.

The value of a supply relating to any payment in respect of which any discrepancy is
communicated and which is not rectified by the supplier in his valid return for the month in
which discrepancy is communicated shall be added to the output liability of the said supplier, for
the calendar month succeeding the calendar month in which the discrepancy is communicated.
The concerned supplier shall, in whose output tax liability any amount has been added shall be
liable to pay the tax payable in respect of such supply along with interest on the amount so added
from the date such tax was due till the date of its payment.
 State the provisions under GST related to ‘Assessment of Non-filers of Returns’ and
‘Assessment of Unregistered persons’.

ASSESSMENT OF NON-FILERS OF RETURNS [SECTION 62]

Section 62(1); Notwithstanding anything to the contrary contained in section 73 or section 74,
where a registered person fails to furnish the return under section 39 or section 45, even after the
service of a notice under section 46, the proper officer may proceed to assess the tax liability of
the said person to the best of his judgement taking into account all the relevant material which is
available or which he has gathered and issue an assessment order within a period of five years
from the date specified under section 44 for furnishing of the annual return for the financial year
to which the tax not paid relates.

Section 62(2): Where the registered person furnishes a valid return within thirty days of the
service of the assessment order under sub-section (1), the said assessment order shall be deemed
to have been withdrawn but the liability for payment of interest under sub-section (1) of section
50 or for payment of late fee under section 47 shall continue.

ASSESSMENT OF UNREGISTERED PERSONS [SECTION 63]:

Notwithstanding anything to the contrary contained in section 73 or section 74, where a taxable
person fails to obtain registration even though liable to do so or whose registration has been
cancelled under subsection (2) of section 29 but who was liable to pay tax, the proper officer
may proceed to assess the tax liability of such taxable person to the best of his judgment for the
relevant tax periods and issue an assessment order within a period of five years from the date
specified under section 44 for furnishing of the annual return for the financial year to which the
tax not paid relates: Provided that no such assessment order shall be passed without giving the
person an opportunity of being heard.

Q. 10. Mr. X, a supplier of goods, pays GST under regular scheme. Mr. X is an inter-state
supplier and hence is not eligible to any threshold exemptions.

He has made the following taxable supplies:

Outward Taxable Supplies Intra State 36,00,000 Inter State 13,50,000

He has also furnished the following details about his purchases:

Inward Taxable Supplies Intra State 13,50,000 Inter State 2,25,000

He has opening balances of ITC as under : CGST INR 1,35,000 SGST INR 1,35,000

IGST INR 3,15,000 If the supplies are exclusive of taxes (18% GST), compute his tax
liability.

Q.11. Write short notes on the following:

a) Input Service Distributor - Section 2(61): “Input Service Distributor” means an office of the
supplier of goods or services or both which receives tax invoices issued under Section 31
towards the receipt of input services and issues a prescribed document for the purposes of
distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the
said services to a supplier of taxable goods or services or both having the same Permanent
Account Number as that of the said office

d) Special Audit under GST - SECTION 66 provides that a special audit can be instituted in
limited circumstances where during scrutiny, investigation, etc. it comes to the notice that a case
is complex or the revenue stake is high. The Assistant Commissioner is to serve the
communication for special audit only after prior approval of the Commissioner. A Chartered
Accountant or a Cost Accountant so nominated by the Commissioner may undertake the audit.
The auditor will have to submit the report within 90 days or within the further extended period of
90 days. The expenses for examination and audit including the remuneration payable to the
auditor will be determined and borne by the Commissioner. Based on the findings / observations
of the special audit, action can be initiated under Section 73 or Section 74 of the Act.

e) Zero Rated Supply - In economics, zero-rated supply refers to items subject to a 0% VAT
tax on their input supplies. The term is applied to items that would normally be taxed under
valued-added systems such as Europe's Value Added Tax (VAT) or Canada's Goods and
Services Tax (GST). Examples of these items include: most exports, basic groceries, and
prescription drugs.
f) Summary Assessment under GST - Section 64(1): The proper officer may, on any evidence
showing a tax liability of a person coming to his notice, with the previous permission of
Additional Commissioner or Joint Commissioner, proceed to assess the tax liability of such
person to protect the interest of revenue and issue an assessment order, if he has sufficient
grounds to believe that any delay in doing so may adversely affect the interest of revenue:
Provided that where the taxable person to whom the liability pertains is not ascertainable and
such liability pertains to supply of goods, the person in charge of such goods shall be deemed to
be the taxable person liable to be assessed and liable to pay tax and any other amount due under
this section.

Section 64(2): On an application made by the taxable person within thirty days from the date of
receipt of order passed under sub-section (1) or on his own motion, if the Additional
Commissioner or Joint Commissioner considers that such order is erroneous, he may withdraw
such order and follow the procedure laid down in section 73 or section 74.

g) E-way bills - E-Way Bill is the short form of Electronic Way Bill. It is a unique
document/bill, which is electronically generated for the specific consignment/movement of
goods from one place to another, either inter-state or intra-state and of value more than INR
50,000, required under the current GST regime.