1:  Where is the power to levy GST derived from?

Article 246A of the Constitution, which was introduced by the Constitution (101st Amendment) Act, 2016 confers concurrent powers to both, Parliament and State Legislatures to make laws with respect to GST i. e. central tax (CGST) and state tax (SGST) or union territory tax (UTGST). However, clause 2 of Article 246A read with Article 269A provides exclusive power to the Parliament to legislate with respect to inter-State trade or commerce i.e. integrated tax (IGST).

2:  What is the taxable event under GST?

Taxable event under GST is supply of goods or services or both. CGST and SGST/ UTGST will be levied on intra-State supplies. IGST will be levied on inter-State supplies.

3:  Whether supplies made without consideration will also come within the purview of supply under GST?

Yes, but only those activities which are specified in Schedule I to the CGST Act / SGST Act. The said provision has been adopted in IGST Act as well as in UTGST Act also.

4:  Will giving away essential commodities by a charitable institution be taxable activity?

In order to be a supply which is taxable under GST, the transaction should be in the course or furtherance of business. As there is no quid pro quo involved in supply for charitable activities, it is not a supply under GST.

5:  Who can notify a transaction to be supply of goods or services?

Central Government or State Government, on the recommendations of the GST Council, can notify an activity to be the supply of goods and not supply of services or supply of services and not supply of goods or neither a supply of goods nor a supply of services.

6:  What are composite supply and mixed supply? How are these two different from each other?

Composite supply is a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof, which are bundled in natural course and are supplied in conjunction with each other in the ordinary course of business and where one of which is a principal supply. For example, when a consumer buys a television set and he also gets warranty and a maintenance contract with the TV, this supply is a composite supply. In this example, supply of TV is the principal supply, warranty and maintenance service are ancillary.
Mixed supply is combination of more than one individual supplies of goods or services or any combination thereof made in conjunction with each other for a single price, which can ordinarily be supplied separately. For example, a shopkeeper selling storage water bottles along with refrigerator. Bottles and the refrigerator can easily be priced and sold separately.

7:  What is the treatment of composite supply and mixed supply under GST?

Composite supply shall be treated as supply of the principal supply. Mixed supply would be treated as supply of that particular goods or services which attracts the highest rate of tax.

8:  Are all goods and services taxable under GST?

Supplies of all goods and services are taxable except alcoholic liquor for human consumption. Supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be taxable with effect from a future date. This date would be notified by the Government on the recommendations of the GST Council.

9:  What is meant by Reverse Charge?

It means the liability to pay tax is on the recipient of supply of goods and services instead of the supplier of such goods or services in respect of notified categories of supply.

10:  Is the reverse charge mechanism applicable only to services?

No, reverse charge applies to supplies of both goods and services, as notified by the Government on the recommendations of the GST Council

11:  What will be the implications in case of receipt of supply from unregistered persons?

In case of receipt of supply from an unregistered person, the registered person who is receiving goods or services shall be liable to pay tax under reverse charge mechanism.

12:  Can any person other than the supplier or recipient be liable to pay tax under GST?

Yes, the Central/State government can specify categories of services the tax on which shall be paid by the electronic commerce operator, if such services are supplied through it and all the provisions of the Act shall apply to such electronic commerce operator as if he is the person liable to pay tax in relation to supply of such services.

13:  What is the threshold for opting to pay tax under the composition scheme?

The threshold for composition scheme is Rs. 50 Lakhs of aggregate turnover in the preceding financial year. The benefit of composition scheme can be availed up to the turnover of Rs. 50 Lakhs in current financial year.

14:  What are the rates of tax for composition scheme?

There are different rates for different sectors. In normal cases of supplier of goods (i.e. traders), the composition rate is 0.5 % of the turnover in a State or Union territory. If the person opting for composition scheme is manufacturer, then the rate is 1% of the turnover in a State or Union territory. In case of restaurant services, it is 2.5% of the turnover in a State or Union territory. These rates are under one Act, and same rate would be applicable in the other Act also. So, effectively, the composition rates (combined rate under CGST and SGST/UTGST) are 1%, 2% and 5% for normal supplier, manufacturer and restaurant service respectively.

15:  A person availing composition scheme during a financial year crosses the turnover of Rs.50 Lakhs during the course of the year i.e. say he crosses the turnover of Rs.50 Lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?

No. The option availed shall lapse from the day on which his aggregate turnover during the financial year exceeds Rs.50 Lakhs.

16:  Will a taxable person, having multiple registrations, be eligible to opt for composition scheme only for a few of registrations?

All registered persons having the same Permanent Account Number (PAN) have to opt for composition scheme. If one registered person opts for normal scheme, others become ineligible for composition scheme.

17:  Can composition scheme be availed of by a manufacturer and a service supplier?

Yes, a manufacturer can opt for composition scheme generally. However, a manufacturer of goods, which would be notified on the recommendations of the GST Council, cannot opt for this scheme. This scheme is not available for services sector, except restaurants.

18:  Who are not eligible to opt for composition scheme?

Broadly, five categories of registered person are not eligible to opt for the composition scheme. These are:
(i) supplier of services other than supplier of restaurant service;
(ii) supplier of goods which are not taxable under the CGST Act/SGST Act/UTGST Act.
(iii) an inter-State supplier of goods;
(iv) person supplying goods through an electronic commerce operator;
(v) manufacturer of certain notified goods.

19:  Can the registered person under composition scheme claim input tax credit?

No, registered person under composition scheme is not eligible to claim input tax credit.

20:  Can the customer who buys from a registered person who is under the composition scheme claim composition tax as input tax credit?

No, customer who buys goods from registered person who is under composition scheme is not eligible for composition input tax credit because a composition scheme supplier cannot issue a tax invoice.

21:  Can composition tax be collected from customers?

No, the registered person under composition scheme is not permitted to collect tax. It means that a composition scheme supplier cannot issue a tax invoice.

22:  How to compute ‘aggregate turnover’ to determine eligibility for composition scheme?

The methodology to compute aggregate turnover is given in Section 2(6). Accordingly, ‘aggregate turnover’ means value of all outward supplies (taxable supplies+exempt supplies+exports + inter-state supplies) of a person having the same PAN and it excludes taxes levied under central tax (CGST), State tax (SGST), Union territory tax (UTGST), integrated tax(IGST) and compensation cess. Also, the value of inward supplies on which tax is payable under reverse charge is not taken into account for calculation of ‘aggregate turnover’.

23:  What are the penal consequences if a person opts for the composition scheme in violation of the conditions?

If a taxable person has paid tax under the composition scheme though he was not eligible for the scheme then the person would be liable to penalty and the provisions of section 73 or 74 shall be applicable for determination of tax and penalty.

24:  Does the GST Law empower the Government to exempt supplies from the levy of GST?

Yes. In the public interest, the Central or the State Government can exempt either wholly or partly, on the recommendations of the GST council, the supplies of goods or services or both from the levy of GST either absolutely or subject to conditions. Further the Government can exempt, under circumstances of an exceptional nature, by special order any goods or services or both. It has also been provided in the SGST Act and UTGST Act that any exemption granted under CGST Act shall be deemed to be exemption under the said Act.

25:  When exemption from whole of tax collected on goods or services or both has been granted absolutely, can a person pay tax?

No, the person supplying exempted goods or services or both shall not collect the tax in excess of the effective rate.

26:  What dos the expression “Supply” means?

As per section 7(1) of CGST Act, 2017, the expression “supply” includes:

(a) All forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) Import of services for a consideration whether or not in the course or furtherance of business;

(c) The activities specified in Schedule I, made or agreed to be made without a consideration;

(d) The activities to be treated as supply of goods or supply of services as referred to in Schedule II.

27:  Enumerate the activities which though made without consideration but shall be treated as supply?

Following are the activities, as specified in Schedule I as prescribed under section 7 of CGST Act, 2017, which shall be treated as supply even if made without consideration:                        

1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.

2. Supply of goods or services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business. However, gifts not exceeding fifty thousand rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both.

3. Supply of goods:

(a) By a principal to his agent where the agent undertakes to supply such goods on behalf of the principal; or

(b) By an agent to his principal where the agent undertakes to receive such goods on behalf of the principal.

4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.

28:  Enumerate the example where activities which shall be treated as supply of goods?

Following are few examples, as specified in Schedule II of CGST Act, 2017, which shall be treated as supply of goods for the purpose of this Act.

a. Any transfer of the title in goods is a supply of goods;

b. Any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed, is a supply of goods.

c. When there is a transfer of business assets and goods forming part of such assets are transferred or disposed of by owner of such business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;

d. Where any person ceases to be a taxable person, the goods forming part of the assets of his business shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person.

However, this shall not be applicable where business is transferred as a going concern to another person; or the business is carried on by a personal representative who is deemed to be a taxable person.

e. Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

29:  Enumerate the example where activities which shall be treated as supply of services?

Following are few examples, as specified in Schedule II of CGST Act, 2017, which shall be treated as supply of services for the purpose of this Act.                                                

a. Any transfer of right in goods or of undivided share in goods without the transfer of title thereof, is a supply of services;

b. Any lease, tenancy, easement, licence to occupy land is a supply of services;

c. Any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services.

d. Any treatment or process which is applied to another person's goods is a supply of services.

e. When goods held for business purpose are made available, without consideration, to any other person for use for any purpose other than business, then such supply is supply of service.

f. Renting of immovable property;

g. Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

h. Temporary transfer or permitting the use or enjoyment of any intellectual property right;

i. Development, design, programming, customisation, adaptation, up gradation, enhancement, implementation of information technology software;

j. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and

k. Transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.

l. The following composite supplies shall be treated as a supply of services, namely:—

(i) Works contract as defined in clause (119) of section 2; and

(ii) Supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration.

30:  Is it possible that transaction is neither a supply of goods nor a supply of services?

Yes, as per provisions of sub section (2) of section 7 of CGST Act, 2017, following are the transactions which shall neither be supply of goods nor a supply of services:

(a) Activities or transactions specified in Schedule III; or

(b) Such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council

31:  Is it possible that transaction is neither a supply of goods nor a supply of services?

Yes, as per provisions of sub section (2) of section 7 of CGST Act, 2017, following are the transactions which shall neither be supply of goods nor a supply of services:

(a) Activities or transactions specified in Schedule III; or

(b) Such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council

32:  Enumerate the example where activities shall be neither a supply of goods nor a supply of services?

Following are few examples, as specified in Schedule III of CGST Act, 2017, which shall neither be treated as supply of goods nor as supply of services for the purpose of this Act:

1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services by any court or Tribunal established under any law for the time being in force.
3. The functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;
4. The duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
5. The duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.
6. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
7. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
8. Actionable claims, other than lottery, betting and gambling.

33:  Under which section GST is levied and who shall notify the rate?

In general, levy of tax shall be governed by the provisions of Section 9(1), and accordingly, all intra-State supplies, except on the supply of alcoholic liquor for human consumption, a tax called the Central/State Goods and Services Tax (CGST/SGST) is levied at such rates as notified by the Government in this behalf, on the recommendation of the Council and collected in such manner as may be prescribed.

34:  What shall be the nature of levy under GST?

Following are the characteristics of levy:

1. It will be a tax, not a duty.

2. It will be an indirect levy on the consumer.

3. Taxable event is supply

4. It will be part of a dual tax; not a unified tax, Mutual exclusivity is given a go-by.

5. It will be levied by statute. Further, it will be collected by the Government.

6. Levy and assessment are two different things.

35:  Who is liable to pay tax under GST?

In general, registered person making supply of goods or services or both is liable to pay tax under GST Act. However, there are some cases where recipient of service or e-commerce operator is liable to pay tax instead of supplier.

36:  Enumerate the cases where person other than the supplier or recipient be liable to pay tax under GST?

There are specified categories of activities where the tax shall be paid by the electronic commerce operator, if such services are supplied through it and all the provisions of the Act shall apply to such electronic commerce operator as if he is the person liable to pay tax in relation to supply of such services.

37:  Who will be liable to pay tax where supply is made by agent on behalf of his principal?

As per the provisions of section 86 of CGST Act, 2017, where an agent supplies or receives any taxable goods on behalf of his principal, such agent and his principal shall, jointly and severally, be liable to pay the tax payable on such goods under this Act.

38:  Is the reverse charge mechanism applicable only to services?

No, reverse charge applies to supplies of both goods and services.

39:  Enumerate the cases where supplier is not liable to pay tax?

Following are the certain specific cases where liability to pay tax under the Act is not of supplier:

1. In case of transfer of business in whole or in part, transferor and transferee shall, jointly and severally, be liable wholly or to the extent of such transfer, to pay the tax, interest or any penalty due from the taxable person up to the time of such transfer, whether such tax, interest or penalty has been determined before such transfer, but has remained unpaid or is determined thereafter.
2. In case of amalgamation or merger of two or more companies in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of  supply and receipt shall be included in the turnover of supply or receipt of the respective companies and they shall be liable to pay tax accordingly.
3. When any private company is wound up and any tax, interest or penalty determined under this Act on the company for any period, whether before or in the course of or after its liquidation, cannot be recovered, then every person who was a director of such company at any time during the period for which the tax was due shall, jointly and severally, be liable for the payment of such tax, interest or penalty, unless he proves to the satisfaction of the Commissioner that such non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.
4. Where any tax, interest or penalty due from a private company in respect of any supply of goods or services or both for any period cannot be recovered, then, every person who was a director of the private company during such period shall, jointly and severally, be liable for the payment of such tax, interest or penalty unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

40:  What are goods under GST?

The definition of ‘goods’ can be derived from the following:

1. As per sub-section 52 of section 2 of CGST Act, Goods mean every kind of movable property other than money and securities but include actionable claims, growing crops, grass and things attached to or forming part of land which are agreed to be severed before supply or under a contract of supply.
2. As per Article 366(12) of the Constitution, Goods includes all materials, commodities, and article.
3. As per General Clauses Act, 1897, "Immovable property" shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.

As per General Clauses Act, 1897, "Movable property" shall mean property of every description, except immovable property.

41:  What are services?

The definition of services can be derived from the following:

1. As per sub section 102 of section 2 of CGST, “services” means anything other than goods, money and securities but includes activities 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.

2. As per Article 366(26A) of the Constitution of India, Services means anything other than goods.

42:  Whether actionable claims liable to GST?

As per section 2(52) of the CGST/SGST Act actionable claims are to be considered as goods. As per the list specified in Schedule III of the CGST Act there are certain activities which shall be treated neither as supply of goods nor supply of services. Said Schedule specifies actionable claims other than lottery, betting and gambling as one of such transactions. Thus only lottery, betting and gambling shall be treated as supplies under the GST regime. All other actionable claims shall not be supplies.

43:  Whether transactions in securities are taxable in GST?

Securities have been specifically excluded from the definition of ‘goods’ as well as from definition of ‘services’. Thus, the transaction in securities shall not be liable to GST.

44:  What will be the rate of GST for exports and for SEZ?

Export of goods or services or both is taxable at zero rates. Further, Supplies of goods or services or both to SEZ developer or SEZ units are also zero rated.

45:  What will be the implications in case of purchase of goods or services from unregistered dealers?

The recipient of goods or services will not be able to avail the benefit of ITC. Further, the recipients who are registered under composition schemes would be liable to pay tax under reverse charge.

46:  Whether government has a power to grant exemption?

Yes, under Section 11, government has been conferred a power to grant exemption, if it is necessary to do so in public interest, on recommendations of council by notification. Such exemption can be absolute or subject to satisfaction of certain conditions as specified in notification.

47:  Can a taxable person collect tax on supply of goods or services which are covered under absolute exemption by notification?

No, the taxable person, making supply of such goods or services or both which are exempted by government through notification, shall not collect the tax on same.

48:  What shall be the effective date of notification?

The notification shall take effect from such date as specified in Notification so issued.