This presentation enumerates the constitutional aspect of GST with amendments, GST levy on goods and services in inter-state and intra-state supply, what is supply, types of supply, the supply of goods or services, persons liable to pay tax under GST, taxable and distinct persons under GST and reverse charge mechanism under GST.

1. GST Training Session
Day 1 – 16.04.2018
Pawan Arora
Joint Partner , ALA LEGAL

2. Contents
• This presentation covers:
1. constitutional aspect
2. levy,
3. supply,
4. taxable person,
5. distinct person, &
6. reverse charge

3. Before any other thing
• Basics of any tax
1. Tax is on what?
2. Who has to pay?
3. Rate, and
4. Value

4. Levy
• Intra State Supply: CGST + SGST
• Inter State Supply: IGST
• Import: BCD + IGST
• Export: IGST but Zero Rated

5. One Nation One Tax????
GST Laws
In India
IGST Act:
Parliament
CGST Act:
Parliament
520
UTGST Act:
Parliament
SGST Act: Each
State, Delhi and
Puducherry (31
Acts)

6. Illustrations
Situation Current Tax Tax under GST
Manufacturer Excise Duty + VAT Intra state: CGST+SGST
Inter State: IGST
Trader (Intra State) VAT CGST + SGST
Trader (Inter State) CST (2% with Form C, Full
Rate without Form C)
IGST at full rate
No concessional rate
Service provider Service tax throughout the
country
Intra state: CGST+SGST
Inter State: IGST
Cinema & Fun Parks etc Entertainment Tax GST
Hotel Luxury Tax + Service Tax +
VAT (food)
GST
Tobacco and Tobacco
products
Excise Duty + VAT Excise Duty + GST
Liquor for human
consumption
State Excise duty + VAT/ CST State Excise duty + VAT/ CST

7. 1. Constitutional Aspect

8. 101st Constitutional
Amendment Act, 2016

9. Why a Constitution Amendment Bill needed?
• Under the current system, power to levy taxes on
goods & services shared between the Union & States
• EXAMPLE: Service Tax & Excise levied by Union, while
Sales Tax (VAT) & Entry Tax levied by States.
• Under the proposed unified system, both Centre &
States will (together & in parallel) levy tax on the
same subject, i.e. GST on ‘supply’ of services as well
as goods.

10. Taxing Powers as per the amendment
Centre
Interstate
246A r/w 269A
r/w IGST Act
Import
Art 286 r/w
IGST Act
Export
Art 286 r/w
IGST Act
Outside the state
Art 286 r/w IGST Act
Intra-State Supply
A. 246A r/w SGST Act & CGST ActCentre & State

11. ARTICLE 246A
• Gives power to the Parliament & State legislatures to
make laws on GST imposed by Union or by such States
• Begins with a non-obstante clause
• Such GST to be imposed on supply
• Parliament reserves exclusive right to legislate when
supply happens in course of inter-state state trade or
commerce
• Exception: GST in respect of crude petroleum, HSD, MS,
Natural gas & ATF, to take effect from a later date to be
recommended by the GST Council

12. GST on supplies in course of inter-state trade or
commerce – Article 269A
• Supplies in course of inter-state trade or commerce & in course of
import into the territory of India
– levy & collection by Union
– to be apportioned between Union & States
• Method of apportionment between States to provided by Parliament
by law based on recommendations of the GST Council
• Parliament has been given the power to formulate principles for
determining
– when a supply takes place in course of inter-state trade or commerce
– place of supply

13. Definitions Clause – Article 366
• Clause 12A inserted, to define goods & services tax:
(12A) “goods and services tax” means any tax on
supply of goods, or services or both except taxes
on the supply of the alcoholic liquors for human
consumption
• Clause 26A inserted, to define services:
(26A) “services ”means anything other than
goods

14. Entry 84 substituted for the previous entry, as follows:
84. Duties of excise on the following goods
manufactured or produced in India, namely:
(a) petroleum crude;
(b) high speed diesel;
(c) motor spirit (commonly known as petrol)
(d) natural gas;
(e) aviation turbine fuel;
(f) tobacco and tobacco products
Our comments:
• Excise duty may only be charged in respect of the
aforesaid items i.e. by way of a positive list
• Above products leviable to excise duty even when it is
chargeable to GST too
Amendment in SCHEDULE VII
(Union List)

15. Entry 54 substituted as:
“54. Taxes on the sale of petroleum crude, high speed diesel,
motor spirit (commonly known as petrol), natural gas, aviation
turbine fuel and alcoholic liquor for human consumption, but
not including sale in the course of inter-State trade or
commerce or sale in the course of international trade or
commerce of such goods”
Previous Entry 54:
“Taxes on the sale or purchase of goods other than
newspapers, subject to the provisions of entry 92A of List I”
SCHEDULE VII
(State List)

16. Issue
• Issues raised in slides relating to Art. 286:
Whether sale in course of international trade or
commerce be also defined? If so, Art. 286 should
have been amended accordingly.

17. Entry 62 substituted as:
"62. Taxes on entertainments and amusements to the extent levied
and collected by a Panchayat or a Municipality or a Regional
Council or a District Council”
Previous Entry 62:
“62. Taxes on luxuries, including taxes on entertainments, amusements,
betting and gambling”
Entries Omitted:
52 – Taxes on entry of goods
55 – Taxes on advertisements
SCHEDULE VII
(State List)

18. Entries not touched upon:
49 – Taxes on lands & buildings
50 – Taxes on mineral rights
53 – Tax on sale/consumption of electricity
56 – Taxes on goods & passengers by road or
inland waterways
57 – Taxes on vehicles
58 – Taxes on animals & boats
63 – Stamp duty
SCHEDULE VII
(State List)

19. 2. Levy of GST

20. Levy of GST
(Section 9 of CGST Act)
• CGST/ SGST to be levied:
– On intra-state supplies of goods and/or services
– On value determined under Section 15 of the act
– Rate – to be notified by Central or State government – NOT EXCEEDING
20%
• To be paid by EVERY taxable person
• E-commerce Operators: Central/state government shall specify categories of
services on which e-com operators liable to pay tax if supplied through e-com
portal.
• Power to Grant Exemption: Exemptions may be granted by the Central/
State Govt. in terms of Section 11 of the Act

21. Levy of IGST
(Section 5 of IGST Act)
• IGST to be levied:
– on all supplies of goods and/or services - in the course of inter-State trade or
commerce
– on value determined under Section 15 of CGST Act
– at such rates as may be notified by the Central Government in this behalf –
NOT EXCEEDING 40%
• IGST on goods imported into India shall be levied and collected in accordance with
S. 3 of the Customs Tariff Act, 1975 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 first mentioned Act.
• E-commerce Operators: Central Government shall specify categories of services on
which e-com operators liable to pay tax if supplied through e-com portal.
• Exemptions granted by the Central Govt. in terms of Section 11 of CGST Act to
apply mutatis mutandis.

22. 3. ‘Supply’ under GST

23. Meaning of ‘Goods’ and ‘Services’
• Levy of CGST/ SGST/ IGST is on supply of goods and/or services in the
course of interstate and intrastate trade and commerce.
• S. 2(52): “goods’’ means every kind of movable property other than
money and securities 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 a contract of supply;
• S. 2 (102) “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;

24. Meaning of Supply – Taxable Event
(Section 7 of CGST)
• Supply is defined in an inclusive manner and it includes all forms of
supply of goods/ services such as:
• sale transfer
• barter exchange
• license rental
• lease disposal
– made or agreed to be made
– for consideration
– by a person in the course or furtherance of business
• Supply also includes:
– Import of service, for a consideration, whether or not in the course or
furtherance of business
– Supply to be specified by Notifications issued by Central or State
Government

25. Meaning of Supply
Contd…
• the activities specified in Schedule I, made or agreed to be made without a
consideration; and
• the activities to be treated as supply of goods or supply of services as
referred to in Schedule II
No Supply
• Activities specified in Schedule III or 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 shall be treated neither
as a supply of goods nor a supply of services.

26. Supply without consideration
(Schedule I of CGST Act)
• Schedule I specifies activities as supplies even if made without
consideration. This schedule includes:-
– Permanent transfer/disposal of business assets where ITC has been availed
on such assets.
– Supply between related persons or between distinct persons as specified in
Section 25 when made in the course or furtherance of business.
• Provided that gifts upto 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.
– Supply of goods:-
• by a principal to his agent where the agent undertakes to supply such goods on
behalf of the principal; or
• by an agent to his principal where the agent undertakes to receive such goods on
behalf of the principal.
– Importation of service by taxable person from a related person or from any
of his other establishments outside India, in the course or furtherance of
business.

27. Supply of services
(Schedule II of CGST Act)
• Transfer of right to use goods or of undivided share in goods, without
the transfer of title
• Lease, tenancy, easement, license to occupy land
• Lease or letting out of building for business of commerce either wholly
or partly
• Treatment or process, applied to another’s goods (Job work)
• Goods meant for business purposes put to private use or made
available for any use other than business use whether or not for a
consideration
• Renting of immovable property
• Construction of complex, building, civil structure or part thereof
intended for sale to buyer, wholly or partly – except where entire
consideration is received after issuance of completion certificate or
before first occupation whichever is earlier – (Works contract –
Composite Supply)

28. Supply of services…Contd..
• Temporary transfer or permitting to use any Intellectual
property rights – Copyright, trademark and patent
• Development, design, programming, customization,
upgradation of information technology software
• Agreeing to do or refrain, tolerate an act.
• Supply of goods, being food or any other article for human
consumption and or any drink (other than alcoholic liquor for
human consumption) as part of service or in any other manner
whatsoever. – (Restaurant)

29. Supply of Goods
(Schedule II of CGST Act)
• Transfer of title in goods
• Transfer of title in goods – when it shall pass at a future date upon
payment of full consideration as agreed
• Transfer or disposal of business assets
• Business assets transferred by a person who ceases to be taxable
person, except –
– When business transferred as going concern
– When business carried by personal representative who is a
deemed taxable person
• Goods supplied by any unincorporated association or body of
persons to a member for consideration.

30. Negative list under GST: Schedule III
ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS
NOR A SUPPLY OF SERVICES
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. (a) the functions performed by the Members of Parliament, Members of State Legislature,
Members of Panchayats, Members of Municipalities and Members of other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the provisions of the
Constitution in that capacity; or
(c) 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.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling.

31. 4. Taxable person

32. Taxable person
• Person registered or liable to be registered
• Taxable person is to pay the GST
• In case of reverse charge: taxable person is the person
receiving the service

33. Distinct person

34. Distinct person
• Two establishments registered or liable to be
registered - of same Person
• Registered establishment of same person and its
unregistered establishment outside that state
• Stock transfer of goods and services

35. 6. Reverse Charge Mechanism

36. Levy of GST on ‘Reverse Charge’
Basis
• Liability to pay GST on reverse charge basis shall arise in two situations:
– Specific notified Goods / Services: On specific notified supply of goods/services,
GST is payable under reverse charge by the recipient of service.
– Supply from unregistered person to Registered Person: On supplies made by a
unregistered person to registered person, GST is payable under reverse charge by
the recipient of service (This levy is exempted upto 31.03.2018 vide N.No.
38/2017-CT(R) dt. 13.10.2017).

37. Service Service Provider Service Recipient
Legal Services:
Services provided or agreed to be provided
by an individual advocate or firm of
advocates by way of legal services, directly
or indirectly
An Individual
Advocate
Including a senior
Advocate or firm
of advocates.
Any business entity
located in the taxable
territory.
Renting of immovable property :
Services supplied by the Central
Government, State Government, Union
territory or local authority by way of renting
of immovable property to a person registered
under the Central Goods and Services Tax
Act, 2017 (12 of 2017).
Central
Government, State
Government,
Union territory or
local authority
Any person registered
under
the Central Goods
and Services Tax
Act, 2017."
Notified Services
[N.No. 13/2017 Central Tax (Rate) & N.No. 10/2017 Integrated Tax (Rate)]

38. Service Service Provider Service Recipient
GTA:
Supply of Services by a goods transport
agency (GTA), who has not paid central tax
at the rate of 6%, in respect of
transportation of goods by road to-
(a) any factory registered under or governed by the
Factories Act, 1948(63 of 1948);or
(b) any society registered under the Societies Registration
Act, 1860 (21 of 1860) or under any other law for the
time being in force in any part of India; or
(c) any co-operative society established by or under any
law; or
(d) any person registered under the Central Goods and
Services Tax Act or the Integrated Goods and Services
Tax Act or the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act; or
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under
any law including association of persons; or
(g) any casual taxable person.
Goods Transport
Agency (GTA)
(a) Any factory registered under or
governed by the Factories Act,
1948(63 of 1948); or
(b) any society registered under the
Societies Registration Act, 1860 (21
of 1860) or under any other law for
the time being in force in any part of
India; or
(c) any co-operative society established
by or under any law; or
(d) any person registered under the
Central Goods and Services Tax Act
or the Integrated Goods and Services
Tax Act or the State Goods and
Services Tax Act or the Union
Territory Goods and Services Tax Act;
or
(e) any body corporate established, by or
under any law; or
(f) any partnership firm whether
registered or not under any law
including association of persons; or
(g) any casual taxable person; located in
the taxable territory.
Contd…

39. Amendment in GTA Services vide Notification
no.20/2017-Integrated Tax (Rate)
The Goods Transport Agency can discharge its GST liability under two following options: -
• @ 5% without availing Input tax credit, where transport Services provided to persons
other than specified recipient liable to pay GST under reverse charge.
• @ 12%. Please note that in this case if the Goods Transport Agency opt to pay tax @
12% then it is required to pay tax on all the services supplied by it and no reverse charge
would be applied on recipient.
(iii) Services of goods transport agency (GTA) in relation to
transportation of goods (including used household goods for personal
use).
Explanation.- “goods transport agency” means any person who
provides service in relation to transport of goods by road and issues
consignment note, by whatever name called.
5% Provided that credit of input tax charged on
goods and services used in supplying the
service has not been taken [Please refer to
Explanation no. (iv)]
or
12% Provided that the goods transport agency
opting to pay integrated tax @ 12% under this
entry shall, thenceforth, be liable to pay
integrated tax @ 12% on all the services of
GTA supplied by it.”;
CGST@6%, SGST@6% and IGST @12%

40. Service Service Provider Service Recipient
Arbitral Tribunal:
Services provided or agreed to be provided by
an arbitral tribunal
An Arbitral Tribunal
Any business entity
located in the
taxable territory.
Sponsorship Services:
Services provided by way of sponsorship to
any body corporate or partnership firm
Any person
Any body corporate
or partnership firm
located in taxable
territory
Director:
Services supplied by a director of a company
or a body corporate to the said company or the
body corporate
A director of a
company or a body
corporate
The said company or
the body corporate
located in the
taxable territory.
Contd…

41. Contd…
Service Service Provider Service Recipient
Government Services:
Services provided or agreed to be provided by
Government or local authority excluding,-
1. renting of immovable property, and
2. services specified below-
(i) services by the Department of
Posts by way of speed post,
express parcel post, life insurance,
and agency services provided to a
person other than Government;
(ii) services in relation to an aircraft
or a vessel, inside or outside the
precincts of a port or an airport
(iii) Transport of goods or passengers
Central
Government, State
Government, UT
Government, or
local authority
Any business
entity located in
the taxable territory.

42. Contd…
Service Service Provider Recipient of Service
Any service supplied by any person who
is located in a non-taxable territory to
any person other than non-taxable online
recipient. (e.g. Import of Service)
Any person located in
non-taxable territory
Any person located in
the taxable territory other
than non-taxable online
recipient
Services supplied by a person located in
non-taxable territory by way of
transportation of goods by a vessel
from a place outside India up to the
customs station of clearance in India.
Any person located in
non-taxable territory
Importer, as defined in
clause (26) of Section 2
of the Customs Act, 1962
(52 of 1962), located in
the taxable territory

43. Contd…
Service Service Provider Service Recipient
Insurance Agent:
Services supplied by an insurance agent to any
person carrying on insurance business
An insurance agent
Any person
carrying on
insurance business,
located in the
taxable territory.
Copyright:
Supply of services by an author, Music
composer, photographer, artist or the like by
way of transfer or permitting the use or
enjoyment of a copyright covered under clause
(a) of sub-section (1) of section 13 of the
Copyright Act, 1957 relating to original
literary, dramatic, musical or artistic works to
a publisher, music company, producer or the
like.
Author, Music
composer,
photographer, artist
or the like
Publisher, music
company, producer
or the like located
in the taxable
territory.

44. Contd…
Service Service Provider Service Recipient
Recovery Agent:
Services supplied by an recovery agent to any
banking company or a financial institution or
NBFC.
A recovery agent
Any banking
company or a
financial institution
or NBFC located
in the taxable
territory.
Overseeing Committee:
Supply of services by the members of
Overseeing Committee to Reserve Bank of India
(RBI).
Members of
Overseeing
Committee
constituted by the
Reserve Bank of
India (RBI).
Reserve Bank of
India (RBI).

45. Supply of Goods or Service
By Unregistered Person To Registered Person
• Supply of goods or service by unregistered person to registered person – GST is payable
by recipient of goods or service.
• Exemption Limit provided vide N.No. 8/2017 – CT(R) dt. 28.06.2017 :
– GST is not payable under reverse charge
– Where supply by any or all unregistered person does not exceeds by `5000 in a day.
– If exceeds by `5000 in a day – Tax is to be paid on all supplies. [For eg. total
supplies from unregistered person in a day is ` 9000 – Then GST is to be paid under
RCM on ` 9000]
• However, irrespective of the supply amount of more than Rs. 5,000/- in a Day, this
levy is exempted for all registered persons upto 30.06.2018 vide N.No. 10/2018-
CT(R) dt. 23.03.2018.
• Supply of Exempt goods or Service by Unregistered Person: If goods or service
supplied by unregistered person is exempt under GST - Registered person is not
required to pay GST under reverse charge.

46. Supply received in other State – Where Company is not registered
[By Employees on Travel]
• Location of Unregistered Supplier & Place of Supply are in Same State - Where
Company is not registered:
– Where Location of Unregistered Supplier & Place of Supply are in same State :
CGST + SGST is leviable of that particular State.
– Thus, in such case if Company is unregistered that particular State
• Would be considered as supply of goods or service by unregistered person to
unregistered person in that State
• No Tax is to be paid by Company under Reverse Charge
• For example:
– If renting of immovable property service is received from unregistered person:
• If Company is not registered in that particular State – no GST under RCM.
• If Company is registered in that state – CGST+SGST to be paid under RCM.

47. Examples
Company is registered in Delhi and expenditure incurred by it, receiving services from an unregistered
person located in other State (e.g. Haryana).
Nature of Supply Place of Supply Levy
Liability under
RCM
Renting of Residential Dwelling for
use as residence
Where the immovable property
is located
Exempted -
Renting of Immovable Property
Where the immovable property
is located
CGST+SGST No
Hotel Where the Hotel is located CGST+SGST No
Food Where Food Served CGST+SGST No
Car Parking Charges
Location of immovable
property
CGST+SGST No
Vehicle repair Services (Not Parts) Location of the recipient IGST Yes
Staff Welfare (Assuming Snacks
Expenses)
Where Food Served CGST+SGST No
Toll Tax - Exempt No

48. Examples
Company is registered in Delhi and receiving services from an unregistered person located in
Delhi.
Nature of Supply Place of Supply Levy
Liability under
RCM
Renting of Residential Dwelling for use
as residence
Where the immovable property is
located
Exempted -
Renting of Immovable Property
Where the immovable property is
located
CGST+SGST Yes
Hotel Where the Hotel is located CGST+SGST Yes
Food Where Food Served CGST+SGST Yes
Car Parking Charges Location of immovable property CGST+SGST Yes
Vehicle repair Services (Not Parts) Location of the recipient CGST+SGST Yes
Staff Welfare (Assuming Snacks
Expenses)
Where Food Served CGST+SGST Yes
Toll Tax - Exempt No

49. THANK YOU
Contact us:
Pawan Arora
Joint Partner
ALA Legal, Advocates & Solicitors
pawan@alalegal.in | +91-88000-91636
Website: alalegal.in | Blog: gstlawindia.com