Chapter 2

GST Acts: CGST, SGST, IGST

Learning Objectives
This chapter will help you understand the:
➢ brief definition of terms and concept of GST ACT
➢ Concepts of Aggregate turnover, Agent and others definitions
➢ Time of Supply and Place of supply
➢ Input tax credit and reverse charge
➢ Location of suppliers and recipient of service

2.1 Introduction
GST is a dual concept tax system. Tax is administered, collected and shared by both centre and
states based on the nature of transaction (within state or interstate).
The tax components of GST are:
1. CGST : Central GST
2. SGST: State GST
3. IGST : Integrated GST
2.2 Central Goods and Services Tax (CGST) Act, 2017
The Central Goods and Services Tax Act, 2017 has been enacted to make a provision for levy
and collection of Tax on Intra-State Supply of Goods or Services or both by the Central
Government and the matters connected therewith or incidental thereto
Every supplier shall be liable to be registered in the state or union territory (other than special
category states) from where he makes supply of goods or services or both, if his aggregate
turnover in a financial year exceeds Rs.20 lakhs. (In case of a person, who is engaged in
exclusive supply of goods, limit of 20 lakhs has been increased to 40 lakhs WEF 1.4.2019)
ITC would be admissible on all goods and services used in the course or furtherance of
business.
Central government has power to notify GST rates under CGST Act.
2.3 SGST Act
The SGST Act of each state is virtually a copy of CGST Act. Even section numbers and sub-
section numbers are same. Rules and notifications are also identical. The only change is in
respect of mention of state authority instead of central authority and state tax instead of central
tax.
Each state has passed its own SGST Act, 2017.
Telangana is the first State to pass the GST Bill.
2.4 UTGST Act
The Union Territory Goods and Services Tax Bill, 2017 was introduced in Lok Sabha on
March 27, 2017.
The Union Territory Goods and Services Tax Bill, 2017 provides for the levy of the Union
Territory Goods and Services Tax (UTGST).
The centre will levy UTGST on the supply of goods and services within the boundary of a
union territory.
2.5 IGST Act
The Integrated Goods and Services Tax Bill was introduced in Lok-Sabha on March 27, 2017.
The Integrated Goods and Services Tax Bill provides for the levy of the Integrated Goods and
Services Tax (IGST) by the centre on inter-state supply of goods and services.
The centre will levy IGST in the case of
(i) inter-state supply of goods and services,
(ii) imports and exports and
(iii) supplies to and from special economic zones
IGST rate is double the CGST rate and will be uniform all over India.
The IGST revenue collected by the centre will be apportioned between the centre and to the
state where the supply of goods or services was received.
The provisions of the CGST Act with respect to registration, valuation, time of supply of goods
and services, returns, refunds, prosecution, appeals will be applicable to the IGST Act.
2.6 Meaning & Definitions
Taxable event under GST law is supply of goods or services or both.
Supply of taxable goods or services should be made for a consideration, in the course or
furtherance of business by a taxable person, within the taxable territory.
The meaning and scope of supply under GST can be understood by applying the following six
parameters:
1.Supply of goods or services. Supply of anything other than goods or services does not attract
GST.
2.Supply should be made for a consideration.
3.Supply should be made in the course or furtherance of business.
4.Supply should be made by a taxable person.
5.Supply should be a taxable supply.

6.Supply should be made within the taxable territory

Electronic cash ledger: As per section 49(1) electronic cash ledger means a cash ledger
maintained in electronic form by each registered person. The amount deposited through internet
banking/NEFT/RTGS shall be credited to the electronic cash ledger.
Electronic credit ledger: The electronic credit ledger is maintained by each registered person,
who is eligible for input tax credit on the common portal. Every claim of input tax credit shall
be credited to the said ledger.
Tax invoice Evidences the supply of goods/services.
Aggregate turnover means Aggregate value of :
✓ all taxable supplies, (excluding the value of inward supplies on which tax is payable by
a person on reverse charge basis),
✓ exempt supplies, exports of goods or services or both and
✓ inter-state supplies of persons having the same Permanent Account Number, to be
computed on an all-India basis
➢ but excludes Central tax, State tax, Union territory tax, Integrated tax and GST
compensation cess.
Adjudicating authority means any authority, appointed or authorized to pass any order or
decision under this CGST Act.
Agent : An agent is a person, including a factor, broker, commission agent, del credere agent,
an auctioneer or any other mercantile agent, by whatever name called, who carries on the
business of supply or receipt of goods or services or both on behalf of another.
Business includes
(a) Any trade, commerce, manufacture, profession, vocation, adventure, wager or any other
similar activity, whether or not it is for a pecuniary benefit.
(b) Any activity or transaction in connection with or incidental or ancillary to sub-clause (a).
(c) Any activity or transaction in the nature of sub-clause (a), whether or not there is volume,
frequency, continuity or regularity of such transaction.
(d) Supply or acquisition of goods including capital goods and services in connection with
commencement or closure of business.
(e) Provision by a club, association, society or any such body (for a subscription or any other
consideration) of the facilities or benefits to its members.
(f) Admission, for a consideration, of persons to any premises.
(g) Services supplied by a person as the holder of an office, which has been accepted by him
in the course or furtherance of his trade, profession or vocation.
(h) Services provided by a race club by way of totalisator or a licence to book maker in such
club.
(i) Any activity or transaction undertaken by the Central Government, a State Government or
any local authority in which they are engaged as public authorities
Place of business
(a) A place from where the business is ordinarily carried on, and includes a warehouse, a go
down or any other place where a taxable person stores his goods, supplies or receives goods or
services or both or
(b) A place where a taxable person maintains his books of account or
(c) A place where a taxable person is engaged in business through an agent, by whatever name
called.
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.
Capital goods : As per Section 2(19) of the Central Goods and Services Tax (CGST) Act, 2017,
the term “capital goods” means goods, the value of which is capitalized in the books of account
of the person claiming the input tax credit and which are used or intended to be used in the
course or furtherance of business.
Export of goods: Export of goods means taking goods out of India to a place outside India.
Export of goods and services are zero rated.
Import of goods: The IGST (integrated goods and services) Act, 2017, defines the import of
goods as bringing commodities from overseas into India.
Services means anything other than goods, money and securities.
It includes activities relating to the use of money or its conversion by cash or by any other
mode to another form for which a separate consideration is charged.
Person : Person includes the following:
1. An individual
2. A Hindu undivided family
3. A company
4. A firm
5. An AOP/BOI, whether incorporated or not, in India or outside India
6. Any corporation established under any central Act, State Act or Provincial Act or a
Government company.
7. Anybody corporate incorporated under the laws of a country outside India.
8. A co-operative society registered under any law relating to co-operative societies
9. A local authority

10. Central or State Government

11. Society
12. Trust
13. Every artificial juridical person, not falling within any of the above
Taxable person : Taxable person means a person who is registered or liable to be registered
U/S 22 or 24 of the GST act.
A 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.
A 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 fixed place of business or residence in India.
2.7 Supplier
Supply of goods or services or both is defined as sale, transfer, barter, exchange, license,
rental, lease or disposal made or agreed to be made for a consideration by a person in the
course or furtherance of business.
2.8 Scope of Supply
(a) All forms of supply of goods or services or both such as sale, transfer, barter, exchange,
license, 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
Types of Supply
A. Based on location
Supply of goods or services within the same state or Union territory is called as intrastate
supply.
Supply of goods or services from one state to another would be called as interstate supply
B. Based on Combination
Composite supply means a supply made by a taxable person to a recipient consisting of two or
more taxable supplies of goods or services or both or any combination thereof, which are
naturally bundled and supplied in conjunction with each other in the ordinary course of
business, one of which is a principal supply.
Mixed supply means two or more individual supplies of goods or 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.
C. Based on Recipient
Inward supply means receipt of goods or services or both whether by purchase, acquisition or
any other means with or without consideration.
Outward supply 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 be made by such person in the course or furtherance of business.
D. Based on Tax treatment
Non-taxable supply is the sale of any goods or services which attracts nil rate of tax and is
similar to 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 from tax under section 11 or under section 6 of the Integrated
Goods and Services Tax Act, and includes non-taxable supply.
Zero Rated Supply in IGST is being introduced through Chapter VIII. Zero Rated Supplies
refers to items that are taxable under GST but the Rate of Tax is Nil.
2.9 Job Work
“Job work” means any treatment or process undertaken by a person on goods belonging to
another registered person and the expression “job worker” shall be construed accordingly.
A. Goods send out for job work must be accompanied with a challan
B. Goods send must be received back by the principal within the period mentioned below:
(i) Inputs, semi-finished or finished goods - 1 year.
(ii) Capital Goods - 3 years (of being sent out by the principal to the job worker).
C. In case where the goods sent have not been received back within the period as mentioned
above, such goods will be treated as supplied to the job worker by the principal. Further tax
will be required to be paid by the principal on such deemed supply.
D. Principal may on his own will receive back the goods after processing from job worker.
Supply to his customers from the place of business of job worker.
Under both the situations ITC paid on purchase of goods send on job work will be allowed to
the principal.
E. Waste and scrap generated during the initial process, intermediate process, assembly,
packing or any other completion process may be sold on payment of tax by:
(i) Job worker - if he holds a registration.
(ii) Principal - if job worker does not hold a registration
Valuation : The value of supply of goods or services in a case where the consideration is
wholly in money, transaction value shall be considered for payment of tax, with various
inclusions prescribed in the valuation provisions.
Certain inclusions in the valuation are as follows:

(i)Any taxes, duties, cesses, fees and charges levied under any statute, other than SGST/
UTGST/CGST/IGST.
(ii)Any amount that the supplier is liable to pay in relation to such supply but which has been
incurred by the recipient of the supply and not included in the price actually paid or payable
for the services.
(iii) Incidental expenses.
(iv) Interest or late fee or penalty for late payment of any consideration of supply.
(v) Subsidies directly linked to the price excluding subsidies provided by the Central and
State Governments
2.10 Input Tax Credit
A registered person will be eligible to claim Input Tax Credit (ITC) on fulfilment of the
following conditions:
1. Possession of a tax invoice or debit note or document evidencing payment.
2. Receipt of goods and/or services.
3. Goods delivered by supplier to other person on the direction of registered person against a
document of transfer of title of goods.
4. Furnishing of a return
5. Where goods are received in lots or instalments ITC will be allowed to be availed when the
last lot or instalment is received.
6. if supplier fails to supply of goods and/or services within 180 days from the date of
invoice, ITC already claimed will be added to output tax liability.
7. No ITC will be allowed if depreciation has been claimed on tax component of a capital
good
8. If invoice or debit note is received after
a) The due date of filing return for September of next financial year. or
b) Filing annual return.
9. Common credit of ITC used commonly for
a) Effecting exempt and taxable supplies.
b) Business and non-business activity.
Credit will be allowed according to the RULES
2.11 Reverse Charge
Reverse charge means the liability to pay tax by the recipient of supply of goods or services
or both instead of the supplier of such goods or services or both.
Reverse charge on services under GST:
(i) Insurance agent.
(ii) Services of a director to a company.
(iii) Manpower supply.
(iv) Goods Transport Agencies.
(v) Non-resident service providers.
(vi) Any service involving aggregators.
Situations where reverse charge will apply

1.Unregistered dealer selling to a registered dealer

In such a case, the registered dealer has to pay GST on the supply.

2.Services through an e-commerce operator

All persons who are required to pay tax under reverse charge have to register for GST irrespective of
the threshold.

In case of reverse charge, the time of supply shall be the earliest of the following dates -

(a) The date of receipt of goods OR

(b) The date of payment OR

(c) The date immediately after THIRTY days from the date of issue of invoice by the supplier (60 days
for services)

Composition scheme is not available to works contractors as it is treated as service under GST.

An Input service distributor (ISD) is a business which receives invoices for services used by its branches.
It distributes the tax paid, to such branches on a proportional basis by issuing an ISD invoice. The
branches can have different GSTINs but must have the same PAN as that of ISD.

Location of the supplier of services means –

(a) Where a supply is made from a place of business for which the registration has been obtained,
the location of such place of business.

(b) Where a supply is made from a place other than the place of business for which registration has
been obtained (a fixed establishment elsewhere), the location of such fixed establishment.

(c) Where a supply is made from more than one establishment, whether the place of business or
fixed establishment, the location of the establishment most directly concerned with the provisions
of the supply.
(d) In absence of such places, the location of the usual place of residence of the supplier.

Location of the recipient of services” means-

(a) Where a supply is received at a place of business for which the registration has been obtained,
the location of such place of business.

(b) Where a supply is received at a place other than the place of business for which registration has
been obtained (a fixed establishment elsewhere), the location of such fixed establishment.

(c) Where a supply is received at more than one establishment, whether the place of business or
fixed establishment, the location of the establishment most directly concerned with the receipt of
the supply.

(d) In absence of such places, the location of the usual place of residence of the recipient.

THANK YOU