RESOURCE PAPER - 13

Goods & Service Tax - GST

bySivakumar Ramjee

This Resource Paper is an earnest effort of IJCCI to present acomprehensive picture on GST to the business community at large. We
believe that the information contained in this booklet will help both national
and international businessmen understand GST clearly.
The author Mr. Sivakumar Ramjee is a qualified Chartered Accountant andCompany Secretary with over 14 years of experience in various industries
in areas of Tax Optimised Billing & Transaction Structuring, Indirect Tax
Litigation, Diagnostic Review, GST impact analysis, Advice managementon key GST decision and action points for industry. He has served in IT,
ITES, Automotive, Infrastructure and Manufacturing industries, besides
serving in renowned global tax consulting firms.
Mr. Sivakumar Ramjee is currently the Director, Indirect Tax & GST in
Grant Thornton India LLP,( a member firm within the Grant Thornton
International Ltd.) one of the oldest, the largest and the most prestigious
accounting and advisory firms in India with global - ambition raise global
capital, expand into global markets, adopt global standards or acquire
global businesses. Grant Thornton India LLP's professional contribution
also includes the recent Economic Survey Report - Tamilnadu “Indian
Industry Expectations from Japanese Companies”
along with A.K.
Mylsamy and Associates LLP for IJCCI.
We hope the readers find the Resource Paper informative and useful.

5th July 2017

Suguna Ramamoorthy
Secretary General

Goods & Service Tax - GST

Introduction
Goods and Services Tax (GST) is a significant step in the reform of indirect
taxation in India. Amalgamating several Central and State taxes into asingle tax would mitigate cascading or double taxation, defoliating acommon national market. The simplicity of the tax should lead to easieradministration and enforcement. The imminent implementation of Goods& Services Tax (GST) is expected to result in greater transparency, an
improved flow of credit, and reduced trade barriers from a tax perspective.
Taxes subsumed under GST
1. Goods and services tax (GST) will subsume various indirect taxes
including central excise duty, services tax, additional customs duty,
surcharges, state-level value added tax and octroi. Other levies which are
currently applicable on inter-state transportation of goods are also likely to
be done away with in GST regime.
2. The following taxes will be bound together by the GST:

•
•
•
•
•
•
•
•

Central Exercise Duty
Value Added Tax (VAT)
Central Sales Tax (CST)Entertainment Tax
Entry Tax
Purchase Tax
Luxury Tax
Advertisement taxes
5

GST is levied on all transactions such as sale, transfer, barter, lease, or
import of goods and/or services. India will adopt a dual GST model,
meaning that taxation is administered by both the Union and State
Governments. Transactions made within a single state will be levied with
Central GST (CGST) by the Central Government and State GST (SGST) by
the government of that state. For inter-state transactions and imported
goods or services, an Integrated GST (IGST) is levied by the Central
Government. GST is a consumption based tax, therefore, taxes are paid tothe state in which the goods or services are consumed not in the state inwhich they were produced. IGST complicates tax collection for State
Governments by disabling them to collect the tax owed to them directlyfrom the Central Government. Under the previous system, a state would
have to only deal with a single government in order to collect tax revenue.

Excise Duty
Excise Duty leviead under the Medicinal & Toiletries
Preparation Act
Additional duties of Excise
Surcharges & Cesses

CentralTaxes

Sertice Tax
Countervailing Duty
Special Additional Duty of Customers
Central Sales Tax (CST)

GST
VAT
Entry Tax and Octroi
Purchase Tax

State
Taxes

Luxury Tax
Entertainment Tax
Taxes on Advertisement
Taxed on lottery, betting & gambling
State cesses & surcharges

6

The following taxes shall not be subsumed in GST• Alcoholic Liquor for Human Consumption - the same shall be
exclusively taxed by States.

• Tax on Petroleum Crude/High Speed Diesel/ Motor Spirit / NaturalGas / Aviation Turbine.

• Tax on Electricity.
Goods
Goods means every kind of movable property other than money andsecurities but includes actionable claim, growing crops, grass and things
attached to or forming part of the land which are agreed to be severed before
supply or under the contract of supply.
GST on Goods
Intra-State Supply

Inter-State Supply

CGST-SGST
From location

To location

To location
IGST

Dual tax - CGST-SGST
Registered Office not relevant; location of goods
is relevant
Intra-State supply, if ‘from’ and ‘to’ in one StateOne tax - IGST
Movement for ‘delivery’ relevant; even stocktransfer taxable
Imports-basic customs+IGST

Following shall be deemed to be treated as supply of goods :1. Transfer of title in goods
2. An agreement in which transfer of title in property in goods will pass at
a future date upon payment of full consideration.
3. Where goods forming part of the assets of a business are transferred or
disposed of by or under the directions of the person carrying on thebusiness not for a consideration, such transfer or disposal.
4. Where any person ceases to be a taxable person, any goods forming
part of the assets of any business carried on by him shall be deemed to7

be supplied by him in the course or furtherance of his business
immediately before he ceases to be a taxable person, unless —a) The business is transferred as a going concern to another person; orb) The business is carried on by a personal representative who isdeemed to be a taxable person;c) Any unincorporated association or body of persons supplies goods
to a member for cash, deferred payment or other valuable.
Basic time of supply: In the case of goods, a registered supplier is obliged
to issue an invoice when the goods are removed for supply to the recipientor, if the goods are not to be removed, when the goods are delivered to therecipient [CGST Act, s. 31(1)]. The time of supply of those goods isgoverned by section 12(2) of that Act. The time of supply is the date of issueof the invoice, or the date that the payment is received for the supply,
whichever is earlier [CGST Act s.12 (2)].
Reverse charge goods acquired: If the supply of goods must be accounted
for on a reverse charge basis, then the time of supply is the earliest of thefollowing dates :•the date of receipt of the goods•

the date that payment is entered into the books of account•the date the payment is debited to the bank account•

31 days after the issue of the invoice or similar document by the
supplier.

Goods taken on approval : Sale or Return
1. When goods are taken on approval, there is no certainty that a sale willsubsequently occur, so the removal of the goods is not treated as asupply at that time.
2. Section 31(7) provides for the timing of issue of an invoice, being before
or at the time of supply, or six months from the date of removal, if that isearlier.
3. In this case, the time of supply is either when the sale is approved by thepurchaser, and an invoice is issued at that time, or payment is made, or
both.
84. In the event that the sale is not completed by acceptance, or the goods
are simply not returned, then a supply is deemed to occur after six
months in respect of the goods retained and not returned to the vendor[CGST Act s.31(7)].
Goods received in instalmentsa) As noted above, the general time of supply rule governing the
supply of goods is that the time of supply occurs at the earlier of thedate of invoice or the date of payment. If goods are received ininstalments against a single invoice, credit can be taken uponreceipt of last instalment of goods.
b) In that case, a timing mismatch occurs, in that the purchaser isdenied an input tax credit until the date of receipt of the last
instalment [Section 16(2)(d)].
Services
Services means anything other than goods, money and securities but
includes activities relating to use of money or conversion by cash or by anyother mode, from one form, currency or denomination, to another form,
currency or denomination for which separate consideration is charged.
GST on Services
Intra-State Supply

Inter-State Supply

CGST-SGST
Supplier’s address of
GST registration

Place of usage of service orrecipient’s address of GST
registration

Place of usage ofservice

IGST

Dual tax - CGST-SGST
Place of usage relevant‘Test’ of such place listed for various services

One tax - IGST
Imports - receiver to pay IGST
When ‘place of usage’ not fixed, usereciepient’s address

9Deemed Services
Following shall be deemed to be treated as supply of services:
1)

Transfer of right in goods or of undivided share in goods withouttransfer of title thereof.

2)

Lease, tenancy, easement, license to occupy land.

3)

Lease or letting out of the building including a commercial, industrial
or residential complex for business or commerce, either wholly or
partly.

4)Treatment or process being applied to another person’s goods.

5)

Where, by or under the direction of a person carrying on a business,goods held made available to any person for use, for any purpose
other than a purpose of the business, whether or not for aconsideration, the usage or making available of such goods.

6)

Renting of immovable property.

7)Construction of a complex, building, civil structure or a part thereof,
including a complex or building intended for sale to a buyer, whollyor partly, except where the entire consideration has been received
after issuance of completion certificate, where required, by thecompetent authority or before its first occupation, whichever isearlier.

8)

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

9)

Development, design, programming, customization, adaptation, up
gradation, enhancement, implementation of information technology
software.

10)

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

11)

Works contract (Works Contract means a contract for building,construction, fabrication, completion, erection, installation, fittingout, improvement, modification, repair, maintenance, renovation,
alteration or commissioning of any immovable property) whereintransfer of property in goods (whether as goods or in some other form
is involved in execution of such contract)
10

12)

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.

13)

Supply, by way of or as part of any service or in any other mannerwhatsoever, of goods, being food or any other article for humanconsumption or any drink (other than alcoholic liquor for humanconsumption), where such supply or service is for cash, deferredpayment or other valuable consideration.

Exempt Supply‘Exempt supply’ means supply of any goods or services or both which
attracts nil rate of tax or which may be wholly exempt and includes nontaxable supply.
“The value of exempt supply” shall include supplies on which the recipient
is liable to pay tax on reverse charge basis, transactions in securities, saleof land and sale of building (other than that regarded as supply).
The value of land and building shall be taken as the same as adopted for the
purpose of paying stamp duty and the value of security shall be taken as
one per cent of the sale value of such security
Composite Supply
Composite supply means a supply made by a taxable person to a recipientconsisting of two or more taxable supplies of goods or services or both, or
any combination thereof, which are naturally bundled and supplied inconjunction with each other in the ordinary course of business, one ofwhich is principal supply.
Example: Where goods are packed, and transported with insurance, thesupply of goods, packing materials, transport and insurance is a composite
supply. Insurance, transport cannot be done separately if there are no goods
to supply. Thus, the supply of goods is the principal supply – section 2(30)of CGST Act.
Principal Supply
Principal supply means the supply of goods or services which constitutes
the predominant element of a composite supply and to which any othersupply forming part of that composite supply is ancillary.
11

Mixed Supply
Mixed supply Means two or more individual supplies of goods services, or
any combination thereof, made in conjunction with each other by a taxable
person for a single price where such supply does not constitute a composite
supply.
Illustration: A supply of a package consisting of canned foods, sweets,
chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied
for a single price is a mixed supply. Each of these items can be supplied
separately and is not dependent on any other. It shall not be a mixed supply
if these items are supplied separately - section 2(74) of CGST Act.

Differences between Composite & Mixed Supply
Description

Composite Supply
Yes
Yes

Mixed SupplyNo
Yes

Can be supplied separately
One is predominant supply for recipient
Other supply is not ‘aim in itself’ of recipient
Each supply priced separately

No
Yes
Yes
No

Yes
No
No
No

All supplies are goods
All supplies are services
One supply is goods & the other supply is services

Yes
Yes
Yes

Yes
Yes
Yes

Naturally bundled
Supplied together

Outward Supply & Inward Supply
Outward supply means in relation to a taxable person, means supply of
goods or services or both, whether by sale, transfer, barter, exchange,
licence, rental, lease or disposal or any other mode, made or agreed to bemade by such person in the course or furtherance of business.
Inward supply in relation to a person, shall mean receipt of goods orservices or both whether by purchase, acquisition or any other means withor without consideration.
Basic time of supply for services: For a registered supplier making
supplies of services, the time of supply is described in section 13 of the
CGST Act. In general, the time of supply of services is the earliest of:12

(i) If the invoice is issued within 30 days (45 days for a bank orinsurance company), then the date of the invoice, or the date ofreceipt of payment if earlier [Tax Invoice Rule 2; CGST Act
s.13(2)].
(ii) If the invoice is not issued within 30 days (or 45, as above), then thedate of provision of the service, or the date of receipt of thepayment, if payment has been received in advance;(iii) In the unlikely event that the supplier neither issues an invoice nor
receives the payment, then, the date that the recipient records in his
books the receipt of the service will fix the time of supply[S. 13(2)(c) and Explanation (ii)].
Note that services can be delivered over a period of time. Services are
deemed to have been supplied, and accordingly the time of supply arises, tothe extent that they are covered by an invoice or a payment.
Reverse charge services acquired: If the supply of services must be
accounted for on a reverse charge basis then the time of supply is the earlierof the following dates:•

The date that payment is entered into the books of account, or thedate the payment is debited to the bank account [S.13(3)(a)];•61 days after the date of issue of the invoice or similar document by
the supplier [S.13(3)(b)];•In the event that it is not possible to determine the time of supply as
above, then the date that the recipient enters receipt of the supply
into his books of account shall fix the time of supply [S. 13(3) firstprovision].

Services supplied by associated enterprise outside India: In the casewhere a person in India acquires services from an associated person outside
India, and the business is obliged to account for India GST on a reverse
charge basis, then the time of supply will be the date that the recipient
records the receipt of the services in their books of account or, if payment
precedes the accounting, then the date of payment to the associated person[Section 13(3) second provision].

13

Advances
Explanations in subsection (2) of sections 12 and 13 note that a “supply” isdeemed to have been made to the extent it is covered by an invoice or apayment.
Accordingly, if an advance is received by the vendor before the issuing of
the invoice, and there has been a supply, and the advance is applied asconsideration for the supply, then GST is applicable on such advances
received.
If the advance is received in a month earlier than the month of invoice, andthe advance is applied immediately, then GST in the advance amountshould be accounted for separately from the subsequent accounting for thebalance of the invoice.
Neither Supply of Goods nor Services•

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

•

Services by any Court or Tribunal established under any law for thetime being in force.

•

The functions performed by the Members of Parliament, Membersof State Legislature, Members of Panchayats, Members ofMunicipalities and Members of other local authorities.

•

The duties performed by any person as a Chairperson or a Member
or a Director in a body established by the CG / SG / local authority
and who is not deemed as an employee.

•

Services of funeral, burial, crematorium or mortuary includingtransportation of the deceased.

•

Actionable claims, other than lottery, betting and gambling.

•

Sale of land and building: (Building subject to construction ofcomplex, civil structure or a part thereof, including a complex orbuilding intended for sale to a buyer, wholly or partly, except where
entire consideration is received after issuance of completion
certificate by competent authority or after first occupation
whichever is earlier).
14

•Activities or transactions undertaken by Central Government, aState Government or any local authority in which they are engaged
as public authorities as may be notified on recommendations ofCouncil.

Composition Levy
The Composition Scheme for small businesses has been provided to help
them with maintaining minimal compliance. The Composition Scheme will
make compliance with tax laws hassle-free for eligible businesses opting
for the scheme. The Composition Scheme is available as an option subject
to certain conditions in respect of registered taxable person whose
aggregate turnover during preceeding FY does not exceed Rs. 75 Lakhs.

•

Manufacturers - not exceeding 2% of turnover in State / Union
Territory•

Composite supply of Works Contract Services/Restaurants - notexceeding 5% of turnover in State / Union Territory•

Other Supplies - not exceeding 1% of turnover in State / Union
Territory

The Composition Scheme is subject to certain conditions. The scheme is
not applicable to taxable person who is engaged in the following supplies:•

he is not engaged in the supply of services other than supplies
referred to in para 6(b) of Schedule II of CGST Act [Works contract
service/restaurant service]•

he is not engaged in making any supply of goods which are notleviable to tax under this Act•

he is not engaged in making any inter-State outward supplies ofgoods [Thus he can make inter-state purchases but not inter-state
supplies]•

he is not engaged in making any supply of goods through anelectronic commerce operator who is required to collect tax atsource under section 52 of CGST Act and•he is not manufacturer of such goods as may be notified on therecommendation of the Council
15

•Composition Scheme is once opted, said scheme will be applicable
to all registered person holding same PAN•

The option availed by registered person in respect of Composition
Scheme shall lapse with effect from the date his aggregate turnover
during the FY exceeds Rs.75 lakhs.

•

A taxable person who opts for the said scheme shall not collect any
tax from the recipient supplies made by him nor shall he be entitledto any ITC.

A registered person paying tax under the Composition Scheme shall issue abill of supply with prescribed particulars instead of a tax invoice and shall be
liable to file quarterly returns. The GST law also provides for specificprovisions in case of switch over from normal scheme to composition
scheme and vice-a-versa.
Minimum Threshold and Registration Requirement
General Provisions and Threshold limit•

Every supplier shall be liable to be registered under each State GST
Act or UTGST Act for the State or Union Territory, other thanspecial category states, from where he makes a taxable supply, if his
aggregate turnover in a FY exceeds Rs. 20 lakhs.

•

With respect to the special category States of Arunachal Pradesh,
Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradesh and Uttarakhand, the supplier shall be
liable to be registered if his aggregate turnover in a FY exceeds
Rs.10 lakhs.

•

The grant for registration under SGST Act or UTGST Act shall bedeemed to be grant of registration under CGST Act.

•

Supply of goods after completion of job work shall be treated as
supply by principal and not of job work.

•

Any person though not liable for registration, has an option for
obtaining voluntary registration.

•

In case where a person liable to obtain registration, fails to obtainregistration, the proper officer may proceed to register such person
in a prescribed manner.
16•Person having multiple business verticals in a State has an option
for obtaining separate registration for each business vertical.
‘Business vertical’ means a distinguishable component of anenterprise that is engaged in supply of individual goods or service
or a group of related goods or services and that is subject to risks
and returns that are different from those of other business verticals.

•

In case a person is making supply from territorial waters of India(i.e. 12 nautical miles from the baseline of coastal line), he shall be
required to obtain registration in the coastal States or Union territory
where the nearest point of the appropriate base line is located.

•

A person without GST registration can neither collect GST fromrecipient nor claim any ITC.

•

PAN based registration having 15-digit alphanumeric structure
will be allotted to every assessee. For non-resident taxable person,
registration may be granted based on a prescribed document otherthan PAN.

•

Registration certificate and GSTIN has to be displayed at the
principal/every additional place of registered person.

•

Physical Verification of business premises in certain cases shall bedone after the grant of registration of the place of business. The
proper officer is required to get such verification done and upload
the verification report along with other documents including
photographs on the next day of such verification.

•

All applications including reply to the notices, returns, appeals or
any other document required to be submitted electronically at thecommon portal shall be digitally signed or e-signed.

Aggregate Turnover
Aggregate Turnover means the aggregate value of all taxable supplies(excluding the value of inward supplies on which tax is payable by a personon reverse charge basis), exempt supplies, exports of goods or services orboth and inter-State supplies of persons having the same Permanent
Account Number, to be computed on all-India basis but excludes Central
tax, State tax, Union Territory tax, integrated tax and cess.
17

The phrase “aggregate turnover” is widely used under the GST laws.
Aggregate Turnover is an all-encompassing term covering all the supplies
effected by a person having the same PAN. It specifically excludes:•

Inward supplies effected by a person which are liable to tax underreverse charge mechanism. However, it is not to be understood thatthe value of such inward supplies is to be reduced from the value ofoutward supplies to arrive at aggregate turnover; and•Various taxes under the GST law, Compensation cess•There is a certain amount of ambiguity as to whether the value of
inward supplies would form part of ‘aggregate turnover’ since thedefinition covers all taxable supplies and excludes only inward
supplies to the extent liable to tax under reverse charge mechanism

The different kinds of supplies covered are:(a) Taxable supplies(b) Exempt Supplies:
1. supplies that have a ‘NIL’ rate of tax;
2. supplies that are wholly exempted from UTGST, CGST or
IGST; and3. supplies that are not taxable under the Act (alcoholic liquor forhuman consumption);•

Export of goods or services or both, including zero-rated supplies.

The following aspects among others need to be noted:•

Aggregate turnover is relevant to a person to determine:
1. Threshold limit to opt for composition scheme: Rs. 75 Lakhs
in a financial year
2. Threshold limit to obtain registration under the Act:Rs. 20 Lakhs (or Rs. 10 Lakhs in case of supplies effectedfrom Special Category States, as explained in our analysis on
Section 22) in a financial year•

Inter-State supplies between units of a person with the same PAN
will also form part of aggregate turnover18

•For an agent, the supplies made by him on behalf of all his
principals would have to be considered while analysing thethreshold limits•

For a job-worker, the following supplies effected on completionof job work would not be included in his ‘aggregate turnover’•

Goods returned to the principal•

Goods sent to another job worker on the instruction of theprincipal•

Goods directly supplied from the job worker’s premises (bythe principal): It would be included in the ‘aggregate
turnover’ of the principal

Registration of SEZ Units
Special Economic Zone unit (SEZ) or developer shall make a separate
application for registration as a business vertical distinct from its otherunits located outside the SEZ.
Time Limit for Registration•

Every person who, on the day immediately preceding theappointed day, is registered or holds a license under an existing
law, shall be liable to be registered under respective GST Acts witheffect from the appointed day.

•Every supplier shall apply for registration in every such State orUnion Territory in which he is so liable within 30 days from thedate on which he becomes liable to registration.

Not Liable for Registration
The following persons shall not be liable to be registered:•

Any person engaged exclusively in the business of supplying
goods / services that are not liable to tax or are wholly exempt
from tax under this act.

•

An agriculturist, to the extent of supply of produce out ofcultivation of land.

19

Registration for Casual Taxable Person (‘CTP’) or Non-Resident
Taxable Person (‘NRTP’)“Casual taxable person” means a person who occasionally undertakes
transactions involving supply of goods or services or both in the course or
furtherance of business, whether as principal, agent or in any other capacity,
in a State or a Union Territory where he has no fixed place of business.
“Non-resident taxable person” means any person who occasionally
undertakes transactions involving supply of goods or services or both,whether as principal or agent or in any other capacity, but who has no fixedplace of business or residence in India.
A CTP or a NRTP shall apply for registration at least 5 days prior to thecommencement of business. CTP or NRTP can make taxable supplies only
after issuance of registration certificate. Registration certificate to CTP or
NRTP shall be valid for a period specified in application for registration or
90 days from effective date of registration, whichever is earlier.
The period of 90 days can be extended by a further period not exceeding 90
days. CTP or NRTP along with registration application requires to make anadvance deposit of tax in an amount equivalent to estimated tax liability.
The said advance shall be credited to electronic cash ledger and can beutilized in a prescribed manner.
Mandatory Registration
The Central Government has notified following category of persons to
obtain mandatory registration:•

Person making any inter-state taxable supply•

Casual Taxable persons making taxable supply•

Person liable under Reverse Charge Mechanism•

Categories of services the tax on which shall be paid by the
e-commerce operator•

Input service distributor

Cancellation of Registration
The registration granted to a person is liable to be cancelled if the said
person:20

•does not conduct any business from the declared place of business;or•issues invoices or bill without supply of goods or services inviolation of the provisions of this Act / Rules•

The proper officer, either on own motion or on application filed,cancel the registration where:a. the business has been discontinued, transferred fully for any
reason including death of the proprietor, amalgamated withother legal entity, demerged or otherwise disposed of; orb. there is any change in the constitution of the business; orc. the taxable person is no longer liable to be registered under
section 22 or section 24•

The officer may cancel the registration from any retrospective dateafter giving the person an opportunity of being heard in caseregistered person has:a. contravened any provisions of the Act; orb. liable under composition scheme has not furnished returns for
3 consecutive period; orc. has not furnished returns for a continuous period of 6 months;
ord. obtained voluntary registration and has not commenced
business within 6 months from the date of registration

Revocation of Cancellation
A registered person can apply for revocation of registration within 30 days
from date of service of cancellation order.
Place of Supply
Import of goods / services
Import of Goods means bringing goods into India from a place outside
India. Import of Services means the supply of any service, where:•

the supplier of service is located outside India,•

the recipient of service is located in India, and21

•

the place of supply of service is in India.

IGST on goods imported into India shall be levied and collected inaccordance with the provisions of section 3 of the Customs Tariff Act, 1975
(CTA) at the point when duties of customs are levied on the said goods
under section 12 of the Customs Act, 1962 , on a value as determined under
the CTA.
Export of goods / services
Export of Goods means taking goods out of India to a place outside India.
Export of Services means supply of any service when:•

the supplier of service is located in India,•

the recipient of service is located outside India,•

the place of supply of service is outside India,•

the payment for such service has been received by the supplier ofservice inconvertible foreign exchange, and•the supplier of service and recipient of service are not merely
establishments of a distinct person.

Location of Supplier & Receiver
Nature of Transaction

Place of Supply

Supply involving movement of goods(whether by supplier or recipient)

Location where movement for delivery
to the recipient

Goods supplied by a supplier to a recipient /any other person on direction of a 3rd person

Location of person on whose direction goods
were supplied, i.e. 3rd person

Supply not involving movement of goods

Location where goods are located at time ofdelivery to recipient

Goods assembled / installed at site

Place of assembly / installation

Goods imported into India

Location of importer

Goods exported out of India

Location outside India

22

Input Tax Credit
Availability of Input Tax Credit (ITC)•

Every registered person shall be entitled to take credit of input tax
admissible on any supplies which are used or intended to be used in thecourse or furtherance of his business and said amount shall be credited
to the electronic credit ledger of such person.

•

The inward supplies shall be classified either as Input, Capital Goods or
Input Service which are defined as under:
Input

Capital Goods

Input Service

Means any goods other thancapital goods used or intended
to be used by supplier in course
or furtherance of business.

Means goods, the value of
which is capitalized in thebooks of accounts of theperson claiming the ITC andwhich are used or intended to
be used in the course or
furtherance of business.

Means any service used orintended to be used by asupplier in the course or
furtherence of business.

Non admissible Credits
The ITC shall not be available in respect of the following inward supplies:•

Motor vehicles and other conveyances except motor vehicles andother conveyances except when they are used(a) For making the following taxable supplies:o

Further supply of such vehicles or conveyances; oroTransportation of passengers; oroImparting training on driving, flying, navigating such vehicles
or conveyances•

Food and beverages, outdoor catering, beauty treatment, healthservices, cosmetic and plastic surgery except where such inward
supply of a particular category is used by a registered person formaking an outward taxable supply of the same category or as anelement of taxable composite or mixed supply•

Membership of a club, health and fitness Centre
23

•

Rent-a-cab, life insurance, health insurance except where theGovernment notifies the services which are obligatory for an employer
to provide to its employees under any law for the time being in force; orsuch inward supply of a particular category is used by a registeredperson for making an outward taxable supply of the same category oras an element of taxable composite or mixed supply.

•

Travel benefits extended to employees on vacation such as leave orhome travel concession.

•Works contract services when supplied for construction of immovable
property, other than plant and machinery, except where it is an input
service for further supply of works contract service.

•

Supply received by a taxable person for construction of an immovable
property, other than plant and machinery, on his own account including
when used in course or furtherance of business. The word“construction” includes re-construction, renovation, additions oralterations or repairs, to the extent of capitalization, to the said
immovable property.
[‘Plant and Machinery’ means apparatus, equipment, machinery fixed
to earth by foundation or structural support that are used for making
outward supply and includes such foundation and structural supports
but excludes•

land, building or any other civil structures;• telecommunication towers; &• Pipelines laid outside the factory premises.]•

Supply on which tax has been paid under composition scheme.

•

Supply received by non-resident taxable person except on goods
imported.

•

Supply used for personal consumption.

•

Goods lost, stolen, destroyed, written off or disposed of by way of giftor free samples.

•

Any tax paid in accordance with:24

•

Determination of tax not paid / short paid / erroneous refunded /ITC wrongly availed or utilized by reason of fraud / any willful
misstatements / suppression of facts.

•

Detention, seizure & release of goods & conveyances in transit.

•

Confiscation of goods or conveyances and levy of penalty.

Conditions for availing ITC
Registered Taxable
Person - 16(1)Admissible to take ITC on
supplies used / intended to be
used in the course /furtherance of business

ITC amount will be credited
to the electronic
Credit Ledger

Person applied forregistration within
30 days of becoming
liable to register, andregistration granted

ITC available in respect of:a) Inputsb) Semi-finished Goodc) Finished Goods

On the day immediately
preceding the date fromwhich he becomes liable
to pay tax

Person applied for
Voluntary
Registration

Same as above

On the day immediately
preceding the date ofregistration

Registered taxable
person ceases to pay
composition tax

Same as above

On the day immediately
preceding the date fromwhich he becomes liable
to pay tax u/s 8

ITC in respect of inward supply shall be eligible only if:•

If the person is in possession of tax invoice, debit note or such othertax paying document;•

The goods / services are received; (in respect of goods received inlots or installments, person is entitled to ITC upon receipt of last lot
or installment)•

The tax charged in respect of such supply been paid to the credit ofappropriate government either by cash or utilization of ITC (except
in case of ITC availed on provisional basis);•

Person should be mandatorily filed the return25

Tax paying document for claiming ITC
ITC can be availed on following documents:•

A Tax invoice issued by the supplier, containing all the details as are
required in tax invoice•

A Debit Note issued by the supplier, containing all the details as are
required in debit note•

A Bill of Entry•

An invoice raised by recipient where supplies are received fromunregistered person•

Document issued by Input Service Distributor

Conditions for making payment to inward supplier
Where a recipient fails to pay to the supplier within a period of 180 days
from the date of issue of invoice towards value of supply along with tax
payable thereon, other than the supplies on which tax is payable on RCM, anamount equal to the ITC availed by the recipient shall be added to his output
tax liability, along with interest for the period starting from date of availing
ITC till the date when the amount is added to the output tax liability.
The credit on such inward supplies shall be eligible on making payment toinward supplier along with tax payable thereon.
Depreciation and ITC cannot be availed together
No ITC shall be allowed of tax component on the cost of capital goods andplant & machinery of which registered person has claimed depreciation
under the Income-tax Act, 1961.
Time limit for availing ITC
No ITC in respect of any invoice / debit note for supply after following
period:Filing return for the month of September following the end of F.Y.
to which such invoice or invoice relating to such debit note pertains
Whichever is earlier

OR
FilingreturnFilingofofannualannual return

26

Reversals of ITC
The reversal of Input, Input Service & Capital Goods is required to be madein case of:•Partial use of inputs for non-business
The goods / services used by registered person partly for businessand partly for other purposes the credit amount shall be restricted to
input tax attributable to purposes of business•

Proportionate Reversal
Goods / services used by registered person partly for effecting
taxable supplies including zero-rated supplies and partly for:•Effecting exempted supplies; or•Outward supplies where recipient is liable to pay tax;•

Transactions in securities, sale of land & sale of building except
under construction sale of flat;•

The credit shall be restricted to such amount of ITC as
attributable to taxable supplies including zero-rated supplies.

The reversal of ITC on Capital Goods (‘CG’) shall be in thefollowing manner:•

ITC in respect of CG used or intended to be used exclusively for
exempted supplies or non- business purpose shall be indicated in
the return and not to credit in electronic credit ledger.

•

ITC in respect of CG used exclusively for taxable supplies
including zero rated shall be indicated in the return and be credited
in electronic credit ledger.

•

ITC in respect of CG which are used commonly for taxable
supplies, exempted supplies & non business purpose shall bereversed on applying tax period turnover ratio of taxable andexempted supplies.

•

The amount of ITC shall be computed per month for the purposeof reversal based on taking 5 years as useful life of CG.
27

Availing ITC on Inputs / Capital Goods held in stock
The tax paid on Inputs held in stock or contained in semi-finished orfinished goods (‘Inputs in Stock’) or on
Capital Goods are eligible as ITC in the following circumstances:

Scenario

Input in stock

Capital Goods

New registration
obtained within 30
days from the datewhen person becomes
liable to register

which he becomes
liable to register

Not admissible

Voluntary
Registration

As on date of grantof registration

Not admissible

Ceases out ofcomposition scheme

As on date on which person liable
to pay tax normal rate. AfterAs on date on which
reducing 5% per quarter of a year
person liable to pay
or part thereof from the date oftax at normal rateinvoice bill the date person ceases
out of composition scheme

Exempt supply
becomes taxable
supply

ITC on inputs
relating to exempt
supplies Day
immediately
preceding the datefrom which supply
becomes taxable

Conditions
A taxable person shall not be
entitled to take ITC in
respect of any supply after
expiry of 1 year from date ofissue of tax such supply

Electronic Declaration to be
filed within 30 days from thedate of his becoming
eligible. Certificate fromparciticing CA/CWA if credit
claims exceeds Rs. 2 lakhs

ITC on capital goods exclusively
used for exempt supplies Day
immdiately preceding the datefrom which supply becomestaxable After reducing 5% perquarter of a year or part thereof
from the date of invoice till thedate of supply becomes taxable

Transfer of ITC in case of change in constitution
In case of change in constitution of registered person on account of sale,merger, demerger, amalgamation, lease or transfer of business with specificprovision for transfer of liabilities, registered person shall be allowed totransfer ITC remaining unutilized in its books of accounts to such sold,merged, demerged, amalgamated, leased or transferred business as perfollowing:28

a. In case of demerger, the ITC shall be apportioned in the ratio of thevalue of assets of the new units as specified in the demerger.
b. Certificate from practicing CA/CWA certifying that the transfer ofbusiness been done with the specific provision for transfer of
liabilities.
c. The inputs and capital goods so transferred shall be duly accounted
for by the transferee in his books of account.
Lapse of ITC in case of opting for Composition Scheme or supply
becomes exempted
Registered person who has availed ITC switches over as a taxable personfor paying tax under composition scheme or where supplies by him become
absolutely exempt, he shall pay an amount by debit in electronic credit or
cash ledger, equivalent to ITC in respect of Inputs in Stock and on capital
goods, on day immediately preceding the date of such switch over, or thedate of exemption reduced as per following:•

For ITC on Inputs in Stock, reversal on proportionate basis ofcorresponding invoices on which credit had been availed. If
invoices are not available, estimated prevailing market price of
inputs to be applied.

•

For ITC on capital goods lying in stock, the remaining residual life
in months shall be computed on pro-rata basis, taking the residuallife as 5 years.

•

Illustration: Capital goods have been in use for 4 years, 6 month and
15 days.

Reversal of ITC on account of removal of capital goods or plant &machineryIn case of supply of capital goods or plant and machinery, on which ITC is
taken, the registered person shall pay an amount equal to ITC taken on thesaid capital goods or plant and machinery as reduced by such % as specified
or tax on transaction value of such capital goods or plant & machinery,
whichever is higher. However, refractory, bricks, moulds and dies, jigs andfixtures are supplied as scrap, the registered person may pay tax on thetransaction value of such goods.
29Input Service Distributor‘Input Service Distributor’ means an office of the supplier which receives
tax invoices issued towards the receipt of input services and issues aprescribed 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 having the same PAN as that of the said office.

(i) is the office of
supplier of goods
and / or services;(iv) the said officeissues tax invoiceor other prescribeddocument for
distribution of
credit.

The above
definition
providesthat, an ISD:(ii) the said officereceives tax
invoices towards
receipt of input
services;(iii) the said office
distributes credit of
CGST/SGST/IGST toa supplier ofgoods/services
having same PAN;

Conditions for distribution of ITC by ISD:•

ITC can be distributed to recipients against a document•

ITC distributed shall not exceed the amount of credit available for
distribution•

The credit of tax paid on input services attributable to a recipient:•

ITC attributable to more than 1 recipient shall be distributed
amongst such recipients to whom the input service is attributable30

on pro-rata basis of the turnover in a State or turnover in a Union
Territory of such recipient, during the relevant period, to theaggregate of the turnover of all such recipients to whom such input
service is attributable and which are operational in the current year,
during the relevant period••

ITC attributable to all recipients shall be distributed amongst such
recipients to whom the input service is attributable on pro-ratabasis of the turnover in a State or turnover in a Union Territory ofsuch recipient, during the relevant period, to the aggregate of theturnover of all recipients and which are operational in the current
year, during the relevant period•

The “relevant period” shall be:•

If the recipients of credit have turnover in their States or Union
Territories in the financial year preceding the year during which
credit is to be distributed, the said financial year; or•If some or all recipients of the credit do not have any turnover intheir States or Union Territories in the financial year preceding theyear during which the credit is to be distributed, the last quarter forwhich details of such turnover of all the recipients are available,
previous to the month during which credit is to be distributed•

ISD shall separately distribute amount of ITC as eligible andineligible.

ITC on account of central tax and state tax shall be distributed asfollows:•

Recipient located in same state in which ISD is located, ITC shallbe distributed as Central Tax and State Tax respectively.

•

Recipient is located in different state other than that of ISD, ITC
shall be distributed as Integrated Tax•

Any ITC required to be reduced on issuance of credit note shall beapportioned to each recipient in the same ratio in which ITC was
distributed and the amount so distributed shall be reduced from theamount to be distributed in the month in which credit note isincluded in the return and shall be added to the output tax liability,
if the amount of credit available is negative.
31

•

Where the amount of credit to be reversed is short reversed, thensuch short amount shall be added to the output tax liability for amonth not later than the month of September following the end of
the FY to which it belongs and the person shall be liable to pay
interest for the period starting from 1st day of April of thesucceeding FY till the date of payment.

Job Work‘Job Work’ means undertaking any treatment or process by a person on
goods belonging to another registered person. The Inputs / Capital Goods
can be sent to the place of the job worker with following conditions:•

Even if goods are sent directly to job worker premises, principal cantake ITC on goods. Time limit in case of goods sent directly to job
worker premises will be counted from the date of receipt of goods by
job worker.

•

Intermediate goods arising from any treatment or process carried out
on inputs shall also be treated as to be inputs. The responsibility forproper accounts for inputs / capital goods shall lie with the principal.

•

Waste and scrap generated during job work can be supplied from the
On intimation from
Principal Officer,
registered taxable
person “principal”
permitted

To send inputs / capital
goods without
payment of tax to a
job-worker

Subsequently fromthere to another jobworker etc.

Principal, after completion of job-work or otherwise can:•Bring back inputs/ capital goods (other than moulds and dies, jigs andfixtures, or tools) to any place of business without payment of tax forfurther supply within one year/ three years of their being sent out•

Directly supply inputs/ capital goods (other than moulds and dies, jigs
and fixtures, or tools) from job-worker premises on payment of tax
within India or without payment of tax for export within one year/
three years of their being sent out•

Direct supply from job-worker premises not permitted unless suchpremises is declared as an additional place of business of the ‘principal’32•

Direct Supply is permitted if:•

Job-worker is registered under the GST laws•

Principal is engaged in supply of certain goods (to be notified)•‘Principal’ is responsible for payment of tax and accountability of
the goods•

If inputs / capital goods (other than moulds and dies, jigs andfixtures, or tools) are not received back by the principal within one
or 3 years of their being sent out•

Deemed that such inputs / capital goods had been supplied byprincipal to job-worker on the day when they were sent out•

Any waste / scrap generated during job-work may be supplied by
job-worker directly from his place of business on payment of tax
by job-worker if he is registered. If jobworker is unregistered,
Principal will have to pay tax

Transitional provisions
One of the biggest challenges in implementing GST Act would be thetechnicalities that will affect the business during the phase of shifting from‘existing law’ (to be defined in respective GST Act) to GST regime. To
mitigate such issues, transitional provisions have been incorporated in the
GST Act for effective transition to CGST, SGST, UTGST and IGST.
Migration of existing taxpayers to GST•

Every registered person under existing laws other than a person
deducting tax at source (under VAT regime) or an Input Service
Distributor shall be issued a provisional registration certificate. On
receipt of such provisional registration certificate, person is required
to fill details in specified form to obtain certificate of registration.

•

The information required to be furnished for obtaining certificate
of registration after receipt of provisional registration certificate
needs to be submitted within 3 months from the appointed day.

•

Person registered under existing laws, who is not liable to beregistered under GST law, requires first obtaining the certificate ofregistration, thereafter submitting an application for cancellation ofregistration in specified form within 30 days from the appointed day.
33

Carry forward of CENVAT credit
A registered taxable person, other than a person opting for the composition
scheme, shall be entitled to carry forward under the CGST Act, the amountof CENVAT credit shown in the return furnished under the earlier laws forthe period ending on the day prior to the appointed day.
The said credit will be allowed to be carried forward to the GST regime, if
the following conditions are satisfied:(1) The said credit is admissible as input tax credit under theprovisions of the CGST Act;
(2) The registered person has furnished all the returns required underthe existing law for the period of six months immediately
preceding the appointed date.
(3) Input tax credit does not relate to goods manufactured and cleared
under exemption notifications as are notified by the Government.
(4) Input tax credit carried forward will not be allowed if such credit
relates to goods manufactured and cleared under exemption
notifications as notified by the government.
The carry forward of such credit under the CGST Act and UTGST Act shallnot be eligible if any of the following conditions is satisfied:(1) Where the said amount of credit is not admissible under the GST
Act; or(2) Where the supplier has not furnished all the returns required underthe existing laws for a period of 6 months prior to the appointed
day; or(3) Where the said amount of credit is in respect of goods sold undersuch exemption notifications as are notified by the Government.
Transfer of credit of taxes paid on goods in stock in certain situations
There will be several situations wherein a person was not required to pay
either Central Excise Duty or Service Tax or VAT on its outward supply,
however under GST such person or premises of a person has become liable
to pay GST.
In these situations it is necessary to make provisions for allowing theperson to take credit of taxes that have been paid in respect of inputs lying
34

in stock and inputs contained in semi-finished or finished goods lying instock. Migration of such credits has also been contemplated and provided
for in the transition provisions, such scenarios can occur in following
situations:•

Person manufacturing exempted goods or engaged in provision ofexempted services or person selling goods that are exempt underearlier regime but taxable under GST•

Person engaged in manufacture of non-exempted goods andexempted goods or provision of non-exempted service as well as
exempted service that have entirely become taxable under GST•

Credit of Excise Duty paid on goods lying in stock with retailers,
warehouses, wholesalers•

Persons switching over from composition schemes•

Persons providing services like works contract etc. and following
composition/abatement schemes that were subject to condition of
non-availment of credit

Treatment of tax credit held in inputs, WIP in stock, inputs containedin final productSituation
Person who was
not liable underearlier law
First stage dealer
Second stage
dealerImporter
WC availing benefit under
Notification No.26-2012
Person who was engaging
in business of exempted goods orservices
Person who is switching overfrom composition scheme

Transition to GST• Input tax credit of eligible taxes
allowedCondition• Credit should be in respect of
inputs held in stock and inputs
contained in semi-finished g oods
and finished goods held in stockon cutoff day (appointed day).

• Eligible duties and taxes include
Central Excise Duty, Additional
Duty of Excise (textile and textile • The taxable person is eligible forarticles), Additional Duty of input tax credit on such inputs
under GST law.
Excise(goodsofspecialimportance),NCCD, CVD, SAD
and Service Tax. Amongst statetaxes these include VAT and Entry• Should be in possssion ofTax.
invoice or other documents
evidencing payment of duty andthe relevant invoices / other• Eligible taxes does not include
documents are not issued earlier
ED cess, SHE cess, NCCD, KKC
than 12 months preceding theappointed day

35

Transitional Provisions in relation to job work:••

In case of removal of goods for job work before appointed day andwhich are not returned or after the appointed day:•Goods sent to job worker, received back within 6 months from
appointed day or such further extended period of not exceeding 2
monthsGoods include the following:•

Inputs removed as such or removed after being partially processed
to a job worker for further processing, testing, repair,reconditioning or any other purpose•

Semi-finished goods removed for carrying out certain
manufacturing processes.

•

Excisable goods removed without payment of duty for carrying out
tests or any other process not amounting to manufacture

Disclosure to be made by the manufacturer and the job worker
regarding details of inputs or goods held in stock by the job worker onbehalf of the manufacturer on the appointed day in the prescribed
FORM GST TRANS -1 within 30 days of the appointed day.
E-CommerceElectronic commerce is growing at a fast pace. Amazon, Flipkart, Uber etc.
are doing e-commerce business in big scale. In e-commerce, order for
supply of goods or services is placed through portal. The e-commercecompanies pass on these orders to actual suppliers of goods and services.
Supplies of goods are services are done by third party unknown to theperson placing order. 'Electronic commerce operator' means any person
who owns, operates or manages digital or electronic facility or platform forelectronic commerce - section 2(45) of CGST Act.
So far, e-commerce companies were not liable to pay Vat or CST as they
were not selling goods. Recently, the services provided through portal werebrought under service tax net. Now, e-commerce companies selling goods
on portal are being made liable to collect 1% GST at source. This 1% TCS(Tax Collected at Source) seems to be mainly for control purposes, asbalance GST will be paid by the actual supplier of goods or services. The
actual supplier can take credit of this TCS paid by e-commerce operator.
36

In case of supply of specified services, the e-commerce operator will
be liable to pay entire IGST/CGST/SGST on such services- section
5(5) of IGST Act and section 9(5) of CGST Act.
•Tax Collection at Source(TCS) by electronic commerce operatorNotwithstanding anything to the contrary contained in the Act, every
electronic commerce operator(hereinafter referred to in this section as
the "operator"), not being an agent, shall collect an amount calculated
at such rate not exceeding one per cent, as may be notified byGovernment, of the net value of taxable supplies made through it byother suppliers where the consideration with respect to such supplies is
to be collected by the operator.
Explanation - For the purposes of this sub-section, the expression "netvalue of taxable supplies" shall mean the aggregate value of taxable
supplies of goods or services or both, other than services notified under
section 9(5) of CGST Act, made during any month by all registeredtaxable persons through the operator reduced by the aggregate value oftaxable supplies returned to the suppliers during the said month section 52(1) of CGST Act.

•

Supplier can take credit of TCS paid by e-commerce operator - The
supplier who has supplied the goods or services or both through theelectronic commerce operator shall claim credit, in his electronic cash
ledger, of the amount collected and reflected in the statement of theoperator furnished under section 52(4), in the manner as may beprescribed - section 52(7)of CGST Act.

•

Amount collected by e-commerce operator to be paid to Government The amount collected by ecommerce operator under section 52(1) shallbe paid to the credit of the Government by the operator within ten days
after the end of the month in which such collection is made, in the mannerprescribed - section 52(3) of CGST Act.

•

E-commerce Operator to submit statement to Government every
month - Every operator shall, furnish a statement, electronically, of allamounts collected towards outward supplies of goods or services orboth effected through it, including supplies of goods or services or both
returned to it, and the amount collected under section 52(1) of CGST
Act during a calendar month, within ten days after the end of such
37

calendar month - section 52(4) of CGST Act. The statement can berectified by e-commerce operator. He is required to pay tax withinterest in such case. However, such rectification is not possible afterdue date of furnishing statement for the month of September following
the end of financial year or the actual date of furnishing relevant annual
statement, whichever is earlier- section 52(6) of CGST Act.
•

Annual Statement by e-commerce operator - The e-commerce operator
is required to file Annual Statement before 31st December of following
financial year, giving specified details - section 52(5) of CGST Act.

•

Matching of statement of e-commerce operator and credit taken by
supplier - The details of supplies and the amount collected furnished by
e-commerce operator shall be matched with the corresponding detailsof outward supplies furnished by the concerned supplier registeredunder CGST, in prescribed manner -section52(8) of CGST Act.

•

Discrepancy between the details of operator and supplier - Where thedetails of outward supply, on which the tax has been collected, as declaredby the operator do not match with the corresponding details declared by
the supplier, the discrepancy shall be communicated to both persons inprescribed manner- section 52(9) of CGST Act.
If the discrepancy is not rectified, it shall be added to the output liability ofthe said supplier for the calendar month succeeding the calendar month inwhich the discrepancy is communicated. The concerned supplier 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 - section 52(10) of CGSTAct.
The concerned supplier shall pay the tax payable with interest on theamount added to his turnover undersection 52(10) - section 52(11) of
CGST Act. 'Concerned supplier' shall mean the supplier of goods orservices or both making supplies through the ecommerce operator explanation to section 52 of CGST Act.

E-commerce operator to furnish details when called for:Any authority not below the rank of Deputy Commissioner may, by notice,either before or during the course of any proceeding under this Act, require
the operator to furnish such details relating to:38

(a) supplies of goods or services or both effected through such operator
during any period, or(b) stock of goods held by the suppliers making supplies through suchoperator in the godowns or warehouses, by whatever name called,
managed by such operators and declared as additional places ofbusiness by such suppliers as may be specified in the notice - section
52(12) of CGST Act.
Every operator on whom a notice has been served shall furnish the required
information within five working days of the date of service of such notice section 52(13) of CGST Act.
Penalty for not furnishing information - Any person who fails to furnish theinformation required by the notice shall, without prejudice to any actionthat is or may be taken under section 66, be liable to a penalty which may
extend to rupees twenty-five thousand - section 52(14) of CGST Act.
Tax on services by electronic commerce operator
The Central Government may, on the recommendations of the Council, by
notification, specify categories of services, the tax on inter-State supplies ofwhich shall be paid by the electronic commerce operator if such services aresupplied through it. All the provisions of the CGST/IGST Act shall apply tosuch electronic commerce operator as if he is the supplier liable for paying
the tax in relation to the supply of such services - section 5(5) of IGST Act
and section 9(5) of CGST Act.
Where entire tax is payable by e-commerce operator, persons who supply
goods or services or both, through such electronic commerce operator are
not required to register under GST - section 24(ix) of CGST Act.
Where an electronic commerce operator does not have a physical presencein the taxable territory, any person representing such electronic commerce
operator for any purpose in the taxable territory shall be liable to pay tax first proviso to section 5(5) of IGST Act and section 9(5) of CGST Act.
Where an electronic commerce operator does not have a physical presence in the
taxable territory and also does not have a representative in the said territory, suchelectronic commerce operator shall appoint a person in the taxable territory forthe purpose of paying tax and such person shall be liable to pay tax – second
proviso to section 5(5) of IGSTAct and section 9(5) of CGSTAct.
39

Conclusion:
GST is really a noteworthy step in the field of indirect tax
reforms. India, being the seventh largest country by area, areform of this nature - unified taxation, greatertransparency in operation, simplification of compliance
procedures, reduced compliance cost, rationalisation of tax
structure etc. would contribute to greater investment andtrade internationally. It would also strengthen the 'Make inIndia' initiative and would certainly propel greater
economic prosperity.

40